Second Circuit Holds that Forum Non Conveniens Applies Under the FSIA
April 25, 2022
In Aenergy, S.A. v. Republic of Angola, the Second Circuit held that the standard doctrine of forum non conveniens applies to suits against foreign states under the Foreign Sovereign Immunities Act (FSIA). This holding is consistent with what the D.C. Circuit has said about forum non conveniens in FSIA cases.
The Second Circuit’s decision would likely have been correct if it had stopped there. But the court went on to suggest that the doctrine of forum non conveniens should be given “greater weight” in suits against foreign states. That suggestion is in tension with section 1606 of the FSIA, which says that foreign states lacking immunity should be treated like private individuals.
In 2017, Angola awarded thirteen contracts for electricity generation to Aenergy, an Angolan company owned by a Portuguese citizen. Aenergy was to buy turbines for the project from General Electric (GE). A GE affiliate also provided financing to Angola. Accounting irregularities and forgery by GE employees in Angola allegedly caused Angola to terminate the contracts with Aenergy and seize the turbines. Aenergy sued Angola and GE in the Southern District of New York, and the district court dismissed under the doctrine of forum non conveniens, reasoning that the case should be heard in Angola instead.
The FSIA provides that foreign states and their agencies and instrumentalities are immune from suit in the United States unless one of the FSIA’s enumerated exceptions applies. Aenergy relied on the exceptions for commercial activities and for expropriations in violation of international law. If a foreign state is not immune, section 1606 of the FSIA says that “the foreign state shall be liable in the same manner and to the same extent as a private individual under like circumstances.”
The FSIA and Forum Non Conveniens
Aenergy argued that the doctrine of forum non conveniens should not apply (at least not at full strength) to claims against foreign states. Congress considered inconvenience to foreign states when it passed the FSIA, the reasoning went, and applying forum non conveniens would upset the balance that Congress struck. The Second Circuit rejected this argument, relying on dictum from the Supreme Court’s decision in Verlinden that “[t]he Act does not appear to affect the traditional doctrine of forum non conveniens.”
The Second Circuit’s holding finds further support in the language of section 1606—which the court did not mention—providing that a foreign state that is not immune shall be liable to the same extent as a private individual under like circumstances. Although one might read section 1606 as referring only to substantive and not to procedural rules, that is not how the D.C. Circuit has interpreted it. In Philipp v. Republic of Germany, Germany argued that plaintiffs should be required to exhaust local remedies before bringing suit in the United States under the FSIA. The D.C. Circuit rejected that argument on the ground that exhaustion was not a defense that private parties could raise, reasoning that section 1606 “permits only defenses, such as forum non conveniens, that are equally available to ‘private individual[s].’” (In an amicus brief to the Supreme Court in Philipp, Maggie Gardner and I noted that there are other reasons to reject an exhaustion requirement in FSIA cases. The Supreme Court decided Philipp on other grounds, however, without addressing exhaustion or comity.)
But rather than treating Angola as a private individual for purposes of forum non conveniens, the Second Circuit leaned in the other direction, suggesting that the doctrine applies with “greater weight” to suits against foreign states. Specifically, the court noted that “there may be a strong interest in resolving claims brought against a foreign state in that state’s courts,” and that “litigation involving foreign states may require applying foreign law.” Reviewing the district court’s application of the Gilbert factors later in its opinion, the Second Circuit returned to these points, concluding that “Angola has a significantly stronger interest in addressing disputes related to its government contracts” and that those contracts were governed by Angolan law.
It is perfectly proper for a court applying the doctrine of forum non conveniens to consider the interest in having localized controversies decided at home and difficulties in applying foreign law as part of their analysis. But the defendant’s identity as a foreign state is not one of the Gilbert factors. If the Second Circuit were writing on a clean slate, perhaps the sovereign character of the defendant should be incorporated into the forum non conveniens analysis. But for cases under the FSIA, Congress has specifically told courts to treat a foreign state the same “as a private individual under like circumstances.” Just as the D.C. Circuit held in Philipp that section 1606 precludes defenses like exhaustion that are not available to private parties, so too section 1606 would seem to preclude applying a stronger version of forum non conveniens as the Second Circuit appears to have done in Aenergy.