The opinion of the court was delivered by: DUFFY
KEVIN THOMAS DUFFY, D.J.:
Plaintiff Exchange National Bank of Chicago ("Exchange") brought this action on a promissory note issued by defendant Empresa Minera del Peru, S.A. ("Centromin") and guaranteed by defendant Banco Popular del Peru ("Banco Popular"). Defendants move to dismiss for lack of subject matter jurisdiction claiming immunity under the Foreign Sovereign Immunities Act of 1976, 28 U.S.C § 1602, et. seq. ("the Act" or "FSIA"). Alternatively, defendants assert lack of in personam jurisdiction.
On May 2, 1980, Centromin issued to Caterpillar Americas Co. ("Caterpillar") a negotiable primissory note for the principal sum of $498,216.23 plus interest in order to finance the purchase of various machinery and replacement parts manufactured in the United States by Caterpillar. The note was payable in New York, New York. The terms of the agreement with Caterpillar were negotiated in Peru by Centromin and a dealer for caterpillar equipment, Enrique Ferreyros y Cia, S.A. ("Enrique"). Upon receipt of the promissory note from Centromin, Caterpillar negotiated the promissory note to Chase Bank International who in turn negotiated the note to Central National Bank in Chicago ("Central"). Thereafter, Central merged with and changed its name to Exchange.
Centromin isan entity organized and existing under the laws of Peru with its principal place of business in Lima, Peru. It is wholly-owned and controlled by the Peruvian government. Banco Popular is also organized and existing under the laws of Peru with its principal place of business in Lima, Peru. The majority of the ownership interest of Banco Popular is owned by the government of Peru. Neither Centromin nor Banco Popular have offices in the United States.
Centromin remitted to Exchange only five of the eight semi-annual payments of principal and interest. The sixth and seventh payments, due May 2, 1983 and November 2, 1983 respectively, were not made. On November 7, 1983, Exchange exercised the option under an acceleration clause to demand immediate payment in full of the remaining unpaid principal. On May 2, 1984, Banco Popular as guarantor made a partial payment in the amount of $3,113.85. When no additional payments were forthcoming, plaintiff commenced this action. Defendants now move pursuant to the Foreign Sovereign Immunitites Act to dismiss the action for lack of subject matter jurisdiction and personal jurisdiction. For the reasons that follow, defendants' motion is granted.
The Foreign Sovereign Immunities Act provides that a foreign state "shall be immune from the jurisdiction of the courts of the United States and of the States except as provides in sections 1605 to 1607. . . ." 28 U.S.C. § 1604; see 28 U.S.C. § 1330.
Plaintiff does not dispute that defendants fall within the definition of an "agency or instrumentality" of a foreign state. See 28 U.S.C. §§ 1603(a), 1603(b)(2). Instead, Exchange asserts that defendants are subject to jurisdiction under the exceptions to foreign sovereign immunity set forth in the Act. See 28 U.S.C. § 1605. The exception relevant to this case provides for subject matter jurisdiction in actions which are based:
upon a commercial activity carried on in the United States by a foreign state; or upon an act performed in the United States in connection with a commmercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.
"Commercial activity carried on in the United States by a foreign state" is further defined by the Act as "commercial activity carried on by such state . . . and having substantial contact with the United States." 28 U.S.C. § 1603(e) (emphasis supplied). The purchase of the equipment by Centromin was made pursuant to negotiations between Centromin and Caterpillar's dealer, Enrique, which transpired in Peru. The promissory note was executed in Peru. Thus, the only potential contacts with the United States includes the fact that the ultimate seller, Caterpillar, exists under the laws of the United States and the fact that the note was made payable in New York. These two contacts do not satisfy the Act's definition of "commercial activity." See Verlinden B.V. v. Central Bank of Nigeria, 488 F. Supp. 1284, 1296 (S.D.N.Y. 1980) (provision for payment in United States is insufficient), aff'd on other grounds, 461 U.S. 480, 103 S. Ct. 1962, 76 L. Ed. 2d 81 (1983); Export Credit Corp. v. Diesel AutoParts Corp., 502 F. Supp. 207, 209 (S.D.N.Y. 1980) (guarantor's promise to pay in United States is insufficient). Cf. Plaza Realty Investors v. Bailey, 484 F. Supp. 335, 346 (S.D.N.Y. 1979) (personal jurisdiction is not conferred as a result of making a note payable in foreign state); American Recreation Group, Inc. v. Woznicki, 87 A.D.2d 600, 448 N.Y.S.2d 51, 52 (2d Dep't 1982) (fact that note payable within forum is insufficient as a matter of due process). Thus, subject matter jurisdiction does not exist based on the first clause of 28 U.S.C. § 1605(2).
The second subdivision of 28 U.S.C § 1605(2) confers jurisdiction on the court when the action is predicated on an "act performed in the United States in connection with a commercial activity of the foreign state elsewhere." 28 U.S.C. § 1605(a)(2). This clause has been interpreted according to legislative history as intending to cover conduct of the foreign state "which relates either to regular course of commercial conduct elsewhere or to a particular commercial transaction concluded or carried out in part elsewhere." H.R. Rep. No. 1487, 94th Cong., 2d Sess. 19 (1976), reprinted in 1976 U.S. Code Cong. & Ad. News at 6617.
In order for this exception to attach, the "act" -- defendants' nonpayment of the obligation -- must be deemed to have occurred in the United States and the failure to pay must be in connection with commerical activity transpiring elsewhere ...