the formation of a contract, the United States will be found to
have had a substantial contact with that activity if . . .
substantial aspects of the contract were to be performed here."
Gibbons v. Udaras na Gaeltachta, 549 F. Supp. 1094, 1113
(S.D.N.Y. 1982); see Morgan Equip. Co. v. Novokrivorogsky State
Ore Mining and Processing Enter., 57 F. Supp.2d 863, 872
(N.D.Cal. 1998). Applying this principle to the record before
the Court, it is apparent that the alleged guarantees had
substantial contact with this country.
As to the November 12, 1997 letter agreement, although it
contains no express provisions requiring material manufacture to
occur in this country, subsequent production status reports
submitted to the court indicate that through January 16, 1998
84,713 square meters of material were manufactured, at least
partially in the United States, as a result of the November
guarantee. This portion of material represented a significant
majority of the total amount of material Plaintiff produced
pursuant to the alleged guarantee and underlying material
contract. Moreover, since the Sovereign Defendants sent their
agent and his representatives to this Country before the first
letter agreement was signed in order to ensure that all
performance quotas would be met, the Court concludes as a
factual matter, that significant aspects of the alleged
guarantee were to be performed here.
This analysis is borne out upon examination of the second and
third letter agreements. In particular, the January 22, 1998
letter agreement, signed by Plaintiffs chief operating officer
and defendant Voss, declares that "Taconic will make tomorrow's
shipment of approximate [sic] 15,000m2 from Petersburgh and
7,000m2 from Ireland for a total of approximately 22,000m2 on
open terms." As compensation for this material delivery,
Plaintiff allegedly received four million deutsch marks
allegedly from the Sovereign Defendants. These terms reflect the
fact that both the Sovereign Defendants and Plaintiff understood
and expected Plaintiff to utilize its manufacturing facilities
located in this country to fulfill the majority of its duties
under the alleged guarantee.
Finally, the January 23, 1998 letter agreement, again signed
by Plaintiffs chief operating officer and defendant Voss,
reflects their mutual understanding that significant portions of
the guarantee were to be performed in this country. The terms of
that letter agreement state that Plaintiff agrees to "work
within a DM2mm credit limit, meaning the value of unpaid Taconic
goods outside of the U.S. or Ireland will not exceed this
amount." This statement implies that significant sums of
material manufacturing pursuant to this letter agreement, like
the two prior, was to occur in the United States. Given this
fact, the Court concludes that the commercial activity in
question, the Sovereign Defendants' alleged guarantee of
Plaintiffs manufacturing contract, had substantial contacts with
the United States such that it was carried on in this country.
Consequently, the Court holds that it has subject matter
jurisdiction over Plaintiffs claims against the Sovereign
Defendants and their motion to dismiss for lack of subject
matter jurisdiction is denied.
B. Personal Jurisdiction
Personal jurisdiction over the Sovereign Defendants under the
FSIA "equals subject matter jurisdiction plus valid service of
process" and is constrained only by constitutional due process
standards. Reiss, 235 F.3d at 746 (quoting Shapiro, 930 F.2d
at 1020). The Sovereign Defendants have not mounted any service
of process challenge in this case. They have, however, launched
a due process attack on
this Court's assertion of personal jurisdiction over them.
The due process clause permits a forum to exercise personal
jurisdiction over a non-resident defendant when the defendant
has "certain minimum contacts [with the forum] . . . such that
the maintenance of the suit does not offend `traditional notions
of fair play and substantial justice'" Calder v. Jones,
465 U.S. 783, 788, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984) (quoting
Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed.
278 (1940) and International Shoe Co. v. Washington,
326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)); see Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85
L.Ed.2d 528 (1985). When, as here, the action arises from
defendants' contacts with the forum state, a court need only
conclude that "limited" or "specific jurisdiction exists" in
order for the suit to proceed. Chaiken v. VV Publ'g Corp.,
119 F.3d 1018, 1027-28 (2d Cir. 1997). In such a case, the "required
minimum contacts exist where the `defendant purposefully
availed' itself of the privilege of doing business in the forum
and could foresee being `haled into court' there." U.S. Titan,
Inc. v. Guangzhou Zhen Hua Shipping Co., Ltd., 241 F.3d 135,
152-52 (2d Cir. 2001).
In addition to the above requirements, the assertion of
personal jurisdiction must be reasonable under the circumstances
of the case. See id. Whether it is reasonable for the court to
exercise personal jurisdiction depends on
(1) the burden that the exercise of jurisdiction will
impose on the defendant; (2) the interests of the
forum state in adjudicating the case; (3) the
plaintiffs interest in obtaining convenient and
effective relief; (4) the interstate judicial
system's interest in obtaining the most efficient
resolution of the controversy; and (5) the shared
interest of the states in furthering substantive
Chaiken, 119 F.3d at 1028 (quoting Metropolitan Life Ins. Co.
v. Robertson-Ceco Corp., 84 F.3d 560, 568 (2d Cir. 1996)).
Here the record establishes that the Sovereign Defendants
"purposefully availed" themselves of the United States forum by
negotiating and forming a contract with a corporation that has
its principal place of business in New York. To facilitate the
formation of this contract, the Sovereign Defendants sent their
agent to this country to check on the status of Plaintiffs
manufacturing capabilities and understood that substantial
portions of the contract were to be performed here. Given the
Sovereign Defendants' actions, they should have foreseen the
possibility of being haled into an American Court if a dispute
arose as to their guarantee of the underlying manufacturing
Additionally, the Court's exercise of jurisdiction is
reasonable. The United States has a distinctly palpable interest
in providing a forum for the resolution of contract disputes
that are substantially performed here. Moreover, because the
Plaintiff has its principal place of business here and conducted
the majority of its manufacturing here, resolution of the
current dispute in the United States is convenient and
effective. Resolving the current dispute here is also more
efficient than doing so elsewhere as good portions of the
evidence and witnesses reside here. Finally, providing a forum
to adjudicate contractual disputes that are substantially
performed here furthers the substantive social policy of
providing accountability against those that engage in commerce
in this country and injure those that they deal with here.
The only factor weighing against the reasonableness of
exercising personal jurisdiction over the Sovereign Defendants
this case is the burden that the exercise of jurisdiction
imposes on them. The Court finds, however, that on balance this
factor does not outweigh the other factors pertinent to this
Court's reasonableness analysis. As such, the Court concludes
that exercising personal jurisdiction over the Sovereign
Defendants is not unreasonable and it denies their motion to
dismiss based on lack of personal jurisdiction.
C. Improper Venue or Transfer to the United States District
Court for the District of Columbia
The statute governing venue in cases arising under the FSIA
against a "foreign state" provides that venue is proper "in any
judicial district in which a substantial part of the events or
omissions giving rise to the claim occurred."
28 U.S.C. § 1391(f)(1). A substantial part of the events or omissions giving
rise to a breach of contract claim occurs in any, district where
the contract "was negotiated or executed, where it was to be
performed, and where the alleged breach occurred." PI, Inc. v.
Quality Prods., Inc., 907 F. Supp. 752, 757-58 (S.D.N.Y. 1995).
As already discussed, the Court concludes that a substantial
portion of the alleged guarantee was to be performed in this
district. Accordingly, the Court concludes that venue is proper
here and denies the Sovereign Defendants' motion to dismiss for
improper venue or transfer to the United States District Court
for the District of Columbia.
Accordingly, it is hereby
ORDERED that the Sovereign Defendants' motion to dismiss is
DENIED; and it is further
ORDERED that the Clerk of the Court serve a copy of this ORDER
on all parties by regular mail.
IT IS SO ORDERED.