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
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 ...