Jurisdiction

• Author: International Law Group

The former Cuban subsidiaries of Consolidated Development Corporation and Consolidated Cuban Oil & Gas Rights Corporation (hereinafter "Consolidated") held oil concessions in the Republic of Cuba which that government expropriated in 1959. Consolidated filed this action for damages in 1996 against the Cuban State, four Cuban corporations, and two Canadian corporations and their affiliates.

The district court dismissed the claims against the Canadian corporations and their affiliates ("the Canadian defendants") for failure to state a claim upon which relief may be granted. Consolidated appealed. The U.S. Court of Appeals for the Eleventh Circuit affirms the dismissal but on jurisdictional grounds. Consolidated's amended complaint relied on Fed.R.Civ.P. 4(k)(2), the national long-arm provision, as the basis for personal jurisdiction over the Canadian defendants. In cases - such as this one - where a defendant is not subject to the jurisdiction of the courts of general jurisdiction of any one state, Rule 4(k)(2) permits a court to aggregate a foreign defendant's nationwide contacts to allow for service of process, as long as (1) plaintiff's claims "arise under federal law," and (2) the exercise of jurisdiction is "consistent with the Constitution and laws of the United States." Here, the Court focuses on the first prong.

"Specific jurisdiction" arises out of a nonresident party's purposeful activities in the forum that relate to the cause of action alleged in the complaint. "General personal jurisdiction" arises from a defendant's substantial contacts with the forum that are unrelated to the cause of action being litigated. The due process requirements for general personal jurisdiction are more stringent than for specific personal jurisdiction, and require a showing of continuous and systematic general business contacts between the defendant and the forum state.

Here, Consolidated's allegations in the complaint do not arise out of any contacts the Canadian defendants have with the United States. The cause of action involves properties in Cuba which the Cuban government had seized and which the Canadian defendants had allegedly developed. Therefore, any exercise of jurisdiction must be under the higher "general jurisdiction" standard, thus requiring a review of whether the defendants have had continuous and systematic general business contacts with the U.S. so as to subject them to the jurisdiction of U.S. courts. The Canadian defendants have...