Sovereign Immunity

• Author: International Law Group
• Pages: 135-

Page 135

Yang Rong (a Chinese national residing in the United States), Rhea Yong, and Rong's company Broadsino Finance Company (Broadsino) (registered in Hong Kong) (Plaintiffs) brought suit against the Province of Lianoning in Northeast China (Defendant) based on the Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. ß1602.

The dispute arose from a 1991 joint venture agreement between Plaintiffs and the city of Shen Yang in the Defendant Province relating to automobile production. The venture called itself "Shen Yang Jin Bei Passenger Vehicle Manufacturing Company, Ltd." (Shen Yang Automotive). PlaintiffRong served as Shen Yang Automotive's chief executive and manager. Several other companies, including Broadsino, were also in on the deals. By October 2002, the Chinese Financial Educations Development Foundation (Foundation), a nongovernmental organization, owned almost 56 % of the joint venture's stock. Broadsino also transferred its stock to the Foundation to be held in trust for Broadsino.

In 2002, the Defendant declared the Foundation's stock "state assets," and fi red Plaintifffrom his positions with Shen Yang Automotive. Plaintiffs filed various court proceedings. Their action in Beijing Municipal High Court was unsuccessful. At issue here, the District of Columbia federal court also dismissed Plaintiff's case for lack of subject matter jurisdiction based on sovereign immunity.

On appeal, Plaintiffs argued that the FSIA "commercial activity" exception in 28 U.S.C. ß1605(a)(2), applied and removed the Defendant's actions from immunity under the FSIA. The U.S. Court of Appeals for the District of Columbia Circuit, however, finds the commercial activity exception inapplicable and afirms the dismissal of the complaint.

The Court fi rst reiterates that a foreign state is immune from suit in the U.S. unless one of the FSIA exception applies. In this case, Plaintiffs...