Wye Oak Technology v. Republic of Iraq, No. 10-1874 (4th Cir. 2011), addressed the question under the Foreign Sovereign Immunities Act, 28 U.S.C. sec. 1602 et seq., whether claims against the Republic of Iraq were jurisdictionally distinct from claims against the Iraqi armed forces. For jurisdictional purposes, held the Court, they are not. The Court of Appeals thereby affirmed the district court’s denial of a motion to dismiss for asserted lack of subject matter jurisdiction. The international dispute resolution issues in the case bear summary.
Plaintiff Wye Oak sued Iraq for breach by the Ministry of Defense of Iraq of a contract. To prove the existence of the commercial activities exception, the plaintiff relied on the claims against the Ministry of Defense. The Court of Appeals first ruled that federal law, specifically law developed under the FSIA, would govern the question of whether the entities are in law to be treated as one, not the law of Iraq. So far so good. But then the Court of Appeals ruled that if the “core functions” of the agency or instrumentality were governmental, then the “courts treat the entity as a mere political subdivision — not a legally separate entity from the foreign state”. The Court of Appeals did not address any of the thorny issues that the cases have discussed in determining that one juridical entity is or is not the same as another for subject matter jurisdictional purposes (we have a four-part series addressing these issues, including the alter ego question discussed here).
There is another aspect of this decision that bears brief mention: The District Court both transferred the case to the District of Columbia and refused to stay that transfer while the appeal on the FSIA issues were raised. The procedural posture of the case became confused as a result. The Fourth Circuit said that there were two preferred paths that might have been taken: transfer the case prior to reaching the issue of jurisdiction, which would have enabled the D.C. district court to address the issue, in which case the appeal would have been proper in the D.C. Circuit; or alternatively, the district court could have stayed its transfer order pending consideration by the Fourth Circuit of the merits of the subject matter challenge.