United States District Court, Northern District of Illinois, E.D
November 12, 1980
CHICAGO BRIDGE & IRON COMPANY, PLAINTIFF,
THE ISLAMIC REPUBLIC OF IRAN ET AL., DEFENDANTS.
The opinion of the court was delivered by: Grady, District Judge.
Plaintiff Chicago Bridge & Iron Company filed suit against
twelve Iranian and American defendants alleging breach of
contract, lost profits, conversion of equipment and
expropriation of funds. Plaintiff has now filed a motion to
attach the American assets of the Islamlic Republic of Iran
and seven Iranian-controlled corporations-National Iranian Oil
Company, Shahpur Chemical Company, Iran-Japan Petrochemical
Co., Lavan Petroleum Company, Iran Pan American Oil Co., Iran
Carbon Co. and Bank Melli Iran (collectively, "Iranian
defendants".*fn1 The motion was made prior to the Iranian
defendants' appearance in this action, and we have asked
plaintiff to file a memorandum on the issue of personal
jurisdiction.*fn2 The defendants have now appeared by counsel
and have filed their own briefs on this question.
The starting point for our analysis is 28 U.S.C. § 1330,*fn3
which was added to the United States Code in 1976 by enactment
of the Foreign Sovereign Immunities Act ("FSIA" or "the Act"),
28 U.S.C. § 1602 et seq. It gives federal district courts
subject matter and personal jurisdiction over nonjury civil
claims against foreign states, provided they are not entitled
to sovereign immunity under 28 U.S.C. § 1605-1607 or
pre-existing international agreements. The transactions
excepted from sovereign immunity by the Act "for the most part
concern commercial activities by a foreign state having a nexus
with the United States." Verlinden B. V. v. Central Bank of
Nigeria, 488 F. Supp. 1284, 1293 (S.D.N.Y. 1980); Carey v.
National Oil Corp., 453 F. Supp. 1097, 1101 (S.D.N.Y. 1978)
(requirements of minimum jurisdictional contacts and adequate
notice embodied in the Act), affirmed, 592 F.2d 673, 676 (2d
The substantive element of sovereign immunity and the
procedural element of personal jurisdiction are closely
related under the FSIA. As explained by Judge Tenney in
Yessenin-Volpin v. Novosti Press Agency, 443 F. Supp. 849, 851
The Act's central feature is its specification of
categories of actions for which foreign states
are not entitled to claim the sovereign immunity
from American court jurisdiction otherwise
granted to such states. These exceptions are
contained not in the sections of the Act which
describe the grounds on which jurisdiction may be
obtained, however, but are phrased as substantive
acts for which foreign states may be found liable
by American courts. This effects an identity
between substance and procedure in the Act which
means that a court faced with a claim of immunity
from jurisdiction must engage ultimately in a
close examination of the underlying cause of
action in order to decide whether the plaintiff
may obtain jurisdiction over the defendant.
As a threshold matter, we note that Iran is a "foreign
state" within the meaning of the Act, 28 U.S.C. § 1603(a), and
that the other defendants, Iranian-controlled corporations,
constitute "agencies or instrumentalities of a foreign state"
under § 1603(b).
Plaintiff asserts four discrete bases for personal
jurisdiction over the Iranian defendants in this case:
(1) A waiver of sovereign immunity clause in the
Treaty of Amity, Economic Relations and Consular
Rights Between the United States of America and
Iran, signed August 8, 1955, 8 U.S.T. 899,
T.I.A.S. 3853 ("Treaty of Amity"), provides
implied consent to jurisdiction.
(2) The arbitration clauses in many of the
construction and supply contracts which form the
basis of Counts I and II of the complaint
evidence waiver of sovereign immunity and consent
to jurisdiction of United States courts.
(3) By virtue of the Iranian defendants'
presence" in the United States and their "doing
business" generally in this country, personal
jurisdiction may be asserted over them.
(4) Significant and substantial commercial
contacts by the defendants with the United States
forum (as opposed to the Illinois forum) relating
to the instant transactions support jurisdiction.
We reject the first three theories of personal jurisdiction.
We will discuss them in turn.
United States-Iran Treaty of Amity
Plaintiff argues initially that this court need not engage
in a minimum contacts analysis because the Iranian defendants'
waiver of sovereign immunity in the Treaty of Amity
constitutes implied consent to jurisdiction. Article XI,
Section 4 of the Treaty provides:
No enterprise of either High Contracting Party,
including corporations, associations and
government agencies and instrumentalities, which
is publically owned or controlled shall, if it
engages in commercial, industrial, shipping or
other business activities within the territories
of the other High Contracting Party, claim or
enjoy, either for itself or its property,
immunity therein from taxation, suit, execution
of judgment or other liability to which privately
owned and controlled enterprises are subject
8 U.S.T. 909.
The FSIA, 28 U.S.C. § 1604, in turn, provides:
Subject to existing international agreements to
which the United States is a party at the time of
enactment of this Act a foreign state shall be
immune from the jurisdiction of the courts of the
United States and of the States except as
provided in sections 1605 to 1607 of this
See also 28 U.S.C. § 1605(a)(1).*fn4
A few preliminary observations on the scope and import of
the waiver clause in the United States-Iranian Treaty of Amity
are in order. First, there is substantial doubt whether the
waiver of immunity clause covers acts of the Islamic Republic
of Iran (and its instrumentalities) within its own borders.
The complaint alleges that the acts of conversion and
expropriation occurred in Iran. Complaint at ¶¶ 65-69, 75-77.
Judicial opinions and comments of American treaty draftsmen
interpreting identical waiver clauses in thirteen other
Friendship, Commerce and Navigation Treaties have concluded
that these clauses were designed to put American companies in
an equal competitive position with foreign state-owned
enterprises expanding their operation into the United
States-not to transform U.S. courts into international courts
of claims for extra-territorial suits against these foreign
enterprises. See Victory Transport, Inc. v. Comisaria General
de Abastecimientos y Transportes, 336 F.2d 354, 357-358 (2d
Cir. 1964); Brief of the United States as Amicus Curiae,
Electronic Data Systems Corp. v. The Social Security
Organization of the Government of Iran et al., 79-7696 (2d Cir.
October 1979), pp. 12, 19 (discussing US-Iran Treaty of Amity),
filed as Appendix to Defendant Islamic Republic of Iran's
Memorandum on Personal Jurisdiction ("Appendix"); Memorandum
from the Legal Advisor of the Department of State to the
Department of Justice, "Sovereign Immunity Clauses in
Friendship, Commerce and Navigation Treaties," August 13, 1957,
p. 2, filed as Exhibit A to Defendant's Appendix; Declassified
Annotations on the Draft Treaty of Friendship, Commerce and
Navigation between the United States of America and the
Republic of Portugal, April 1949 (excerpt), pp. 33 et seq.,
filed as Exhibit D to Defendant's Appendix. See generally,
Setser, "The Immunity Waiver of State-Controlled Business
Enterprises in United States Commercial Treaties," Proceedings
of Am. Society of Int'l.L. 89 (1961); Walker, "Modern Treaties
of Friendship, Commerce and Navigation," 42 Minn.L.Rev. 805,
806 et seq. (1958).
Second, courts have differed over whether the United
States-Iranian Treaty of Amity waives sovereign immunity from
prejudgment attachment. Compare e.g., American International
Group, Inc. v. Islamic Republic of Iran, 493 F. Supp. 522,
525-526 (D.D.C. 1980) (discussing court's
earlier opinion of December 19, 1979); Behring International v.
Imperial Iranian Air Force, 475 F. Supp. 383, 393-395 (D.N.J.
1979) (finding an implicit waiver from prejudgment attachment
based on "execution of judgment" and "or other liability"
clauses of Article XI, Section 4 of the Treaty) with New
England Merchants National Bank v. Iran Power Generation and
Transmission Co., 502 F. Supp. 120, 126-127 (S.D.N.Y. 1980);
E-Systems, Inc. v. Islamic Republic of Iran, 491 F. Supp. 1294,
1299-1301 (N.D.Tex. 1980) (finding no waiver from prejudgment
attachment). Although a few courts have discounted its
significance, see e.g., Behring International v. Imperial
Iranian Air Force, supra, 475 F. Supp. at 392 et seq.,
Section 1610(d) of the FSIA provides that a foreign state must
explicitly waive its immunity from prejudgment attachment.
Third, the waiver provision contained in the Treaty of Amity
does not necessarily confer personal jurisdiction.
Significantly, at the time the Treaty was signed the law
required a plaintiff to demonstrate an independent basis for
personal jurisdiction aside from any waiver of sovereign
immunity. See e.g., Petrol Shipping Corp. v. Kingdom of Greece,
et al., 360 F.2d 103, 106 (2d Cir. 1965) (only after
jurisdiction is acquired may sovereign immunity defense be
raised), cert. denied, 385 U.S. 931, 87 S.Ct. 291, 17 L.Ed.2d
213. Under these circumstances there is no basis for assuming
that the contracting parties to the Treaty, by their silence,
intended to consent to personal jurisdiction. Because the
Treaty of Amity does not cover personal jurisdiction, the
Foreign Sovereign Immunities Act, 28 U.S.C. § 1605(a)(2), must
control for purposes of establishing jurisdiction. H.R.Rep.No.
94-1487, 94th Cong., 2d Sess. 18, reprinted in  U.S.Code
Cong. & Admin.News, pp. 6604, 6616 (where a treaty is silent,
FSIA controls). Under this provision, the minimum contacts
requirements of International Shoe Co. v. Washington,
326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), must be satisfied before
this court can exercise jurisdiction over the Iranian
defendants. Id. at 6612.
Aside from these questions of interpretation, there is a
more fundamental objection to the exercise of personal
jurisdiction on the basis of a waiver of sovereign immunity.
In light of Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53
L.Ed.2d 683 (1977), World-Wide Volkswagen Corp. v. Woodson,
444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), and other
International Shoe descendants, we believe the fiction of
implied consent cannot obviate the need for establishing
minimum contacts with a forum.
Plaintiff argues otherwise:
Minimum contacts between non-resident defendants
and a forum have long been regarded as at best a
secondary consideration where jurisdiction could
be upheld on the basis of implied consent to suit
in the particular forum. Hess v. Pawlowski
[Pawloski], 274 U.S. 352 [47 S.Ct. 632, 71 L.Ed.
Plaintiff's Supplemental Memorandum in Support of Attachment,
p. 7. We reject this reasoning as irreconcilable with the
aforementioned personal jurisdiction decisions and the Due
Shaffer v. Heitner, supra, perhaps more than any other case,
refutes plaintiff's argument. That decision made clear that
International Shoe minimum contacts analysis governs all
exercises of personal jurisdiction. 433 U.S. at 204, 212, 97
S.Ct. at 2579-2580, 2584 (". . . all assertions of state-court
jurisdiction must be evaluated according to the standards set
forth in International Shoe and its progeny"), 216, 97 S.Ct.
2586 (opinion of the Court); at 217, 97 S.Ct. at 2586-2587
(Powell, J., concurring); at 220, 97 S.Ct. at 2588 ("The
primary teaching . . . of today's decision is that a State, in
seeking to assert jurisdiction over a person located outside
its borders, may only do so on the basis of minimum contacts
among the parties, the contested transaction, and the forum
State."), 227, 97 S.Ct. 2591-2592 (Brennan, J., concurring in
dissenting in part).*fn5 See also The Supreme Court, 1976
Term, 91 Harv.L.Rev. 70, 160 (1977) (". . . Shaffer removes any
doubt that International Shoe governs all exercises of
jurisdiction. . . .). In addition, Justice Marshall, writing
for the majority, declared that decisions like Hess v.
Pawloski, supra, implying consent to jurisdiction from certain
conduct or admissions, rest upon a "legal fiction":
The advent of automobiles, with the concomitant
increase in the incidence of individuals causing
injury in States where they are not subject to in
personam actions under Pennoyer [Pennoyer v. Neff,
5 Otto 714, 95 U.S. 714, 24 L.Ed. 565 (1878)],
required further modification of the territorial
limits on jurisdictional power. This
modification . . . was accomplished by use of a
legal fiction that left the conceptual structure
established in Pennoyer theoretically unaltered.
The fiction used was that of the out-of-state
motorist, who it was assumed could be excluded
altogether from a State's highways, had by using
those highways appointed a designated state
official as his agent to accept process. See Hess
v. Pawloski, 274 U.S. 352 [47 S.Ct. 632, 71 L.Ed.
433 U.S. at 202, 97 S.Ct. at 2578-2579 (citation omitted).
Shaffer, of course, overruled what remained of Pennoyer and its
"conceptual structure" for establishing jurisdiction. 433 U.S.
at 212 and n. 39, 97 S.Ct. at 2584 and n. 39. Justice
Marshall's reasoning places in doubt the constitutionality of
all `consent to jurisdiction' provisions, especially those
which are implicit. See generally 433 U.S. at 206-217, 97 S.Ct.
at 2580-2587 and the illustration at 216, 97 S.Ct. at 2586:
"[I]t strains reason . . . to suggest that anyone buying
securities in a corporation formed in Delaware `impliedly
consents' to subject himself to Delaware's . . . jurisdiction
on any cause of action." Compare 91 Harv.L.Rev. at 161
(questioning validity of statutes deeming acceptance of
corporate directorship to be consent to jurisdiction (in the
state of incorporation) after Shaffer).*fn6
The implied consent to jurisdiction concept as applied to
the United States-Iranian Treaty of Amity waiver clause is no
less a fiction. It is surely a leap in logic to suggest that
because Iran signed a friendship treaty with the United States
some 25 years ago waiving sovereign immunity for certain
limited acts*fn7 that it impliedly consented to personal
jurisdiction over any future claim brought in the United
States irrespective of any contacts in or even with that
forum. We are not the first court to question the use of
waiver as a substitute for due process fairness in the
exercise of jurisdiction over foreign sovereigns. Judge
Weinfeld recognized the overbreadth of the FSIA waiver
If the language of the Act is applied literally,
the result is that a foreign sovereign which has
waived its immunity can be subjected to the
personal jurisdiction of the United States courts
regardless of the nature or quality of its contacts
with this country.*fn8
Verlinden B. V. v. Central Bank of Nigeria, 488 F. Supp. 1284,
1302 (S.D.N.Y. 1980) (emphasis added). He regarded this
approach as a "problem" which "Congress did not anticipate"
(id. at n. 88):
On the one hand the legislative history indicates
that Congress intended the courts to exercise
personal jurisdiction only over foreign states
having sufficient contacts with the United
States. See House Report, supra note 7, at 13-14;
reprinted [1976 U.S.Code Cong. & Admin.News 6604]
at 6612. On the other hand, the statute it wrote
permits the assertion of jurisdiction either when
there are sufficient contacts (i.e., when one of
the commercial activity exceptions [of §
1605(a)(2)] have been met) or when there has been a
Id. at n. 88 (emphasis in the original). Although not
addressing the precise waiver issue presented here, Judge
Weinfeld concluded: "Because the Act's waiver provision is
written as broadly as it is, it is incumbent upon the Court to
narrow that provision's scope." Id. at 1302 (Dutch choice of
law clause in Nigerian government-Dutch corporation contract
does not result in Nigeria's implicit waiver of immunity to
jurisdiction of U.S. courts). Other courts have also been
troubled by congressional ambivalence in the application of due
process principles to foreign state personal jurisdiction. See
e.g., Hanis v. VAO Intourist, Moscow, 481 F. Supp. 1056, 1060
(E.D.N.Y. 1979) (Weinstein, J.):
Although the waiver provision, as a rough analogy
to consent, apparently incorporates that
traditional basis of jurisdiction, the draftsmen
of the Immunities Act concentrated on the bases
incorporated in the newer forms of long-arm
jurisdiction. These modern long-arm statutes
require a link between the "contact" with the
local jurisdiction which is the basis for in
personam jurisdiction in the suit and the facts
upon which the particular cause of action-in
federal parlance the claim for relief-is based.
It is to be noted that the "primary" purpose of the Foreign
Sovereign Immunities Act of 1976 was to strip foreign states
of their immunity from suit when they engaged in private
thereby placing them on the same
footing as nongovernmental enterprises. Cf. Carey v. National
Oil Corporation, supra, 453 F. Supp. at 1102. See also Behring
International v. Imperial Iranian Air Force, supra, 475 F. Supp.
at 395-396 (U.S.-Iranian Treaty of Amity treats foreign state
like "any private person" in the other's courts). Eliminating
the need to establish personal jurisdiction over those
governmental enterprises, however, through the fiction of
consent puts them in a far worse position.
For the foregoing reasons, we will not exercise personal
jurisdiction over the Iranian defendants based on the waiver
of sovereign immunity clause in the Treaty of Amity.
Plaintiff argues, in addition, that the arbitration clauses
in the contracts with the Iranians provide implicit consent to
jurisdiction in the United States Courts. We requested
plaintiff to file copies of these clauses. Having now reviewed
them, we categorically reject the arbitration clauses as a
basis for jurisdiction.
None of the arbitration clauses in these contracts contain
U.S. choice of law or choice of forum provisions. In fact,
those contracts which address the question, stipulate that
Iranian law or the Iranian courts shall resolve disputes in the
event of the breakdown of informal arbitration. We agree with
Judge Weinfeld's precise holding in Verlinden B. V. v. Central
Bank of Nigeria, supra, that the presence of third-party nation
choice of law and forum clauses does not in any sense
implicitly consent to United States jurisdiction:
Plaintiff's view, if adopted, would presage a
vast increase in the jurisdiction of federal
courts in matters involving sensitive foreign
relations: whenever a foreign sovereign had
contracted with a private party anywhere in the
chose to be governed by the laws or answer in the
forum of any country other than its own, it would
expose itself to personal liability in the courts
of the United States. Verlinden [plaintiff] and
Nigeria [defendant bank] could scarcely have
foreseen this untoward result when they signed the
contract; and it is unlikely that Congress could
have intended it.
488 F. Supp. at 1302 (emphasis added).
The Commercial Activity Exceptions to Sovereign Immunity Under
the FSIA, 28 U.S.C. § 1605(a)(2), and the "Doing Business"
The House report accompanying the FSIA describes § 1330(b),
the personal jurisdictional component of the Act, and §
1605(a)(2), the commercial activities exceptions to sovereign
immunity, as creating a "federal long-arm statute over foreign
states." H.R.Rep.No. 94-1487, 94th Cong., 2d Sess., reprinted
in  U.S.Code Cong. & Admin.News, pp. 6604, 6612 ("House
Report"). The Act's long-arm statute was patterned after the
District of Columbia's long-arm statute, the legislative
history indicating that the International Shoe requirements
of minimum contacts and adequate notice were embodied in the
Act. Id. See also Thos. P. Gonzalez Corp. v. Consejo Nacional
de Produccion De Costa Rica, 614 F.2d 1247, 1255 (9th Cir.
1980) ("[p]ersonal jurisdiction under the Act requires
satisfaction of minimum contacts standard"); Verlinden B. V. v.
Central Bank of Nigeria, supra, 488 F. Supp. at 1293 (discussing
§ 1605 of FSIA); Carey v. National Oil Corp., supra, 453
F. Supp. at 1101. However, the FSIA's bases of jurisdiction are
"less comprehensive than those found in the usual
jurisdictional statutes of the states and the District of
Columbia." Harris v. VAO Intourist, Moscow, supra, 481 F. Supp.
at 1059. Notwithstanding plaintiff's arguments to the contrary,
the Act has clearly rejected the "doing business" or "mere
presence in the forum" concept for the exercise of
jurisdiction. Verlinden B. V. v. Central Bank of Nigeria,
supra, 488 F. Supp. at 1295; Harris v. VAO Intourist, Moscow,
supra, 481 F. Supp. at 1059-1060. Oblique contacts with the
United States wholly unrelated to the instant suit may not be
considered. We will therefore not allow plaintiff to pursue any
discovery directed to the Iranian defendants' general
commercial activities in the United States.
The three "commercial activity" situations in which personal
jurisdiction may be exercised over a foreign state and its
instrumentalities, 28 U.S.C. § 1605(a)(2), remain to be
considered. The provision states in relevant part:
A foreign state shall not be immune from the
jurisdiction of courts of the United States or of
the States in any case-in which the action is
-upon a commercial activity carried on in the
United States by the foreign state; or
-upon an act performed in the United States in
connection with a commercial activity of the
foreign state elsewhere; or
-upon an act outside the territory of the United
States in connection with a commercial activity
of the foreign state elsewhere and that act
causes a direct effect in the United States;
Before analyzing these independent bases, we note that the
FSIA speaks only in terms of contacts with the United States,
not any particular state or subdivision.
28 U.S.C. § 1605(a)(2), 1605(a)(3). See also East Europe Domestic
International Sales Corp. v. Terra, 467 F. Supp. 383, 387 et
seq. (S.D.N.Y. 1979).
Commercial Activity Carried on in the United States
To prevail under this standard, plaintiff must identify "a
regular course of commercial conduct or a particular
commercial transaction or act." 28 U.S.C. § 1603(d). The
activity must involve "substantial contact with the United
States," § 1603(e), and the cause of action must be "based
upon" that commercial activity. See 28 U.S.C. § 1605(a)(2).
Congress never intended to bestow jurisdiction under the FSIA
where the only contact with this country is the U.S.
citizenship or residency of the plaintiff.
House Report at 17, reprinted at 6616. Accord, Verlinden B. V.
v. Central Bank of Nigeria, supra, 488 F. Supp. at 1296 ("[t]he
crucial question is whether [the activity] involves
`substantial contact' with the United States . . .").
Ultimately, it is "for the courts to determine whether a
particular commercial activity has been performed in whole or
part in the United States." House Report at 17, reprinted at
U.S.Code Cong. & Admin.News 1976, p. 6616.
Political acts by a foreign state obviously do not
constitute commercial undertakings. See e.g., Carey v. National
Oil Corp., supra, 453 F. Supp. at 1102 (cutback on oil
production by Libya during Middle East tensions). The
commercial activity providing the jurisdictional basis must
involve more than the mere transmission of telex messages
between a foreign state and the United States. See East
European Domestic International Sales Corp. v. Terra, supra.
Numerous visits by agents of a foreign instrumentality, on the
other hand, to review and "active[ly]" inspect the progress
made on a contract has been held to constitute sufficient
minimum contacts. Electronic Data Systems Corp. v. Social
Security Organization of the Government of Iran, CA3-79-218-F
(N.D.Tex. June 21, 1979), Slip Op. at 5-6. These cases, of
course, are merely illustrative of the contacts questions under
this first branch of § 1605(a)(2).
Act Performed in the United States in Connection with a
Commercial Activity of the Foreign State Elsewhere
This part of § 1605(a)(2) "looks to conduct of the foreign
state in the United States which relates either to a regular
course of commercial conduct elsewhere or to a particular
commercial transaction concluded or carried out in part
elsewhere." House Report at 19, reprinted at U.S.Code Cong. &
Admin.News 1976, p. 6617. There must, however, be some
"specific" act performed in the United States by the foreign
entity in order to invoke jurisdiction. Id. at 19, reprinted at
6618; East Europe Domestic International Sales Corp. v. Terra,
supra, 467 F. Supp. at 388. The acts covered by this subsection
are limited to those which independently "form the basis of a
cause of action." House Report at 19, reprinted at U.S.Code
Cong. & Admin.News 1976, p. 6618. Thus, an act by a foreign
state in the United States that violates United States
securities laws or the wrongful discharge of a foreign state
employee employed in the United States in connection with
overseas commercial activity satisfies the requirements. Id. at
19, reprinted at 6617.
An Act Outside the United States Which Causes a Direct Effect
in the United States
Although this section has been principally applied to
tortious conduct, the legislative history of the FSIA
indicates that it has a broader scope. Congress adopted by
reference the principles of § 18, Restatement of the Law,
Second, Foreign Relations Law of the United States (1965),
which cover conduct "whether tortious or otherwise." House
Report at 19, reprinted at 6618. Courts have applied this
exception only where there has been a "substantial effect
within the territory" as a result of "direct and foreseeable"
conduct outside the territory." Verlinden B. V. v. Central Bank
of Nigeria, supra, 488 F. Supp. at 1298 (emphasis in
original) (refusing to apply exception in commercial banking
context); Harris v. VAO Intourist, Moscow, supra, 481 F. Supp.
The direct effect intended by the FSIA "is one which has no
intervening element, but rather flows in a straight line
without deviation or interruption." Upton v. Empire of Iran,
459 F. Supp. 264, 266 (D.D.C. 1978), affirmed without opinion,
607 F.2d 494 (D.C. Cir. 1979). For example, in Carey v.
National Oil Corp., supra, the leading case discussing the
"direct effect" standard, breaches of petroleum contracts and
excessive payment charges by a Libyan-owned corporation against
the Bahamian subsidiaries of an American parent corporation
were held not to have a sufficient direct effect in the United
States. 453 F. Supp. at 1101. The court conceded that these
subsidiaries may have been "merely . . . conduits to supply
[the parent company]" and noted that the 1974 Libyan oil
embargo was "designed to have a direct effect of a sort
on the United States," but still refused to find the requisite
minimum contacts. Id. at 1101. The Court of Appeals
affirmed.*fn10 Similarly, mere injurious consequences within
the United States based on an act or omission outside the
country have not resulted in jurisdiction over foreign
defendants. Upton v. Empire of Iran, supra, (collapse of
Iranian airport terminal roof causing deaths of several
Americans does not have "direct effects" in the United States).
In summary, we do not exercise personal jurisdiction over
the Iranian defendants based on the waiver of sovereign
immunity provision in the United States-Iranian Treaty of
Amity or the arbitration clauses in the contracts pleaded in
this action. We also find that the FSIA long-arm provisions do
not provide for jurisdiction based on defendants' mere
presence in the United States. Jurisdiction may, however, be
grounded upon the Iranian defendants' contacts with the United
States relating to the instant transactions and claims,
provided that the threshold requirements of
28 U.S.C. § 1605(a)(2) are satisfied. Discovery may proceed along these
We reserve ruling on the dismissal of the suit or the denial
of the prejudgment attachment motion, based on lack of proper
jurisdiction over the parties, until the factual record is