The opinion of the court was delivered by: Sprizzo, District Judge:
Plaintiffs Weltover, Inc. ("Weltover"), Springdale
Enterprises, Inc. ("Springdale"), and Bank Cantrade, A.G.
("Bank Cantrade"), bring this action against the Republic of
Argentina ("Argentina") and Banco Central De La Republica
Argentina ("Banco Central") alleging that the defendants have
breached obligations arising out of the issuance of certain
bonds. The defendants move to dismiss the action for lack of
subject matter jurisdiction and lack of personal jurisdiction
or, in the alternative, pursuant to the doctrine of forum non
conveniens. For the reasons that follow, the motions are
Plaintiffs Weltover, Springdale and Bank Cantrade are all
holders in due course of various indentures denoted as
"Registered Bonds Denominated in United States Dollars," which
are referred to in the parties' papers as "Bonods".
See Complaint ¶¶ 10-15, 22-23, 29-30.*fn1 These indentures
were issued by Banco Central, which is the financial agent for
the Republic of Argentina, pursuant to Argentina's Foreign
Exchange Insurance Contract ("FEIC") program. See Complaint at
¶¶ 5, 11; Affidavit of Daniel Marx at ¶¶ 3, 9 (sworn to April
11, 1990) ("Marx Aff.").*fn2
That program, instituted in 1982, sought to deal with the
devaluation of Argentinian currency on the world market by
allowing an Argentinian borrower required to pay a debt in
dollars to pay a specified amount of the local currency to
Banco Central and receive in exchange the amount of U.S.
dollars necessary to repay the loan. See Marx Aff. at ¶¶ 7-8.
However, when the exchange insurance contracts matured in late
1982, Banco Central was unable to deliver the dollars necessary
to retire the Argentine debtors' original loans. See Marx Aff.
at ¶ 9. Accordingly, Banco Central issued two new types of
instruments to refinance those debts: Bonods and promissory
notes. See id.
The Bonods provided in relevant part that payment would be
made in United States dollars on scheduled dates in 1986 and
1987 and would bear interest at the annual prevailing London
Interbank market rate for 180-day Eurodollar deposits.
Furthermore, they would be paid into a holder's account at
either New York, London, Frankfurt or Zurich. See Complaint ¶
16; Marx Aff. ¶¶ 10-11 & Exs. B-C.
Significantly, foreign creditors were given the option of
maintaining their relationship with the original Argentine
with the Bonods given in guarantee, or to accept the Bonods or
promissory notes as payment of the original debt.*fn3
See Marx Aff. at ¶ 10. However, under Argentina's foreign
exchange laws only Banco Central could have paid the creditors
in American dollars. Moreover, Banco Central collected a
commission of one-tenth percent (0.1%) in connection with the
aforesaid transactions. See Marx Aff., Ex. B, Decree No. 1334,
at Art. 6; see also Affidavit of Richard W. Cutler, Esq. ¶ 3
(sworn to May 29, 1990) ("Cutler Aff.").
However, financial difficulties in Argentina continued, with
the consequence that on or about May 23, 1986 defendants,
acting pursuant to a governmental decree and an order from the
Ministry of the Economy, notified plaintiffs that payment would
not be made on the Bonods when due and requested that they
participate in a "rollover" of those obligations. See Complaint
at ¶¶ 17, 24, 31; Marx Aff. at ¶¶ 12-14. Plaintiffs refused to
participate in that rollover and now assert that Banco Central
is in default on its obligations under the Bonods. See
Complaint at ¶¶ 18-20, 25-27, 32-34.
Defendants urge three grounds for dismissal of the complaint:
(1) that the Court lacks jurisdiction over the defendants under
the Foreign Sovereign Immunities Act, 28 U.S.C. § 1602-1611
(1988) ("FSIA"); (2) that the exercise of personal jurisdiction
over the defendants violates due process; and (3) that the
Court should dismiss the complaint under the doctrine of forum
The Foreign Sovereign Immunities Act
The FSIA provides that foreign sovereigns and their
instrumentalities are immune from suit in United States courts
unless the conduct complained of fits within various specified
exceptions. See Letelier v. Republic of Chile, 748 F.2d 790,
793 (2d Cir. 1984), cert. denied, 471 U.S. 1125, 105 S.Ct.
2656, 86 L.Ed.2d 273 (1985); see also Argentine Republic v.
Amerada Hess Shipping Corp., 488 U.S. 428, 109 S.Ct. 683, 102
L.Ed.2d 818 (1989) (holding that the FSIA provides the sole
basis for obtaining jurisdiction over a foreign state in
federal court). Plaintiffs argue that Argentina and Banco
Central are subject to jurisdiction under the FSIA because the
complaint is based upon their commercial activities, see
28 U.S.C. § 1605(a)(2), and because they have waived sovereign
immunity.*fn4 See 28 U.S.C. § 1605(a)(1).
The commercial activity exception to sovereign immunity
provides that a foreign state does not enjoy immunity in a case
the action is 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 commercial activity of
the foreign state elsewhere; or upon an act
outside the territory of the United States in
with a commercial activity of the ...