The opinion of the court was delivered by: Lamberth, District Judge.
Plaintiffs World Wide Minerals Ltd., World Wide Resources Finance
Inc., Kazuran Corporation, and Nuclear Fuel Resources Corporation
(hereinafter "World Wide") brought suit over a contract dispute with
the Republic of Kazakhstan concerning the mining and export of uranium.
After the filing of the Complaint and First Amended Complaint numerous
motions to dismiss were filed by the defendants. Most recently, the
plaintiffs have requested Leave to File Second Amended Complaint. The
defendants, the Republic of Kazakhstan, the State Committee of the
Republic of Kazakhstan on the Management of State Property, the National
Atomic Company Kazatomprom, and Nukem Inc., have opposed this motion and
moved to dismiss. Upon consideration of these motions, the corresponding
replies, the entire record herein, and the relevant law, the Court has
1. Plaintiff World Wide's Motion for Leave to File Second Amended
Complaint is denied for futility.
2. As to defendants the Republic of Kazakhstan, the State Committee on
the management of State Property, and Kazuran Corporation (hereinafter
Kazakhstan) the claims of plaintiff World Wide are barred by the act of
state doctrine. Therefore Kazakhstan's motion to dismiss is granted.
3. As to defendant Nukem, the Court lacks personal jurisdiction, and
therefore grants defendant Nukem's motion to dismiss.
After gaining independence from the Soviet union in 1991, Kazakhstan
began to seek foreign investment. Among the areas of interest to foreign
companies were the northern and southern uranium mines of Kazakhstan.
In June of 1996, World Wide Minerals Ltd., a Canadian corporation,
submitted a proposal for the management of the northern mines complex
in Kazakhstan. World Wide was simultaneously negotiating with the
Kazakhstan Joint Stock Company of Atomic Power, Engineering, and
Industry (KATEP) for the right to export and sell uranium from
On July 2, 1996, World Wide and KATEP agreed on the points of
negotiation. They called for good faith negotiations on the issue of
marketing the uranium. No final agreement to market the uranium was
On October 7, 1996, Kazakhstan and World Wide entered into the
Management Agreement. Under this agreement, World Wide took over
the state controlled holding company for the northern mines
complex. World Wide committed to paying the debt of the holding company,
some 5 million dollars. This agreement indicated that an export license
would be required for World Wide to sell the uranium. See Proposed
Second Am.Compl., Ex. 1, Management Agreement, Schedule 2, ¶ 2.3. World
Wide was entitled to terminate the agreement if the license was not
received by December 16, 1996. This deadline was extended to March 16,
1997. World Wide never received the export license, but did not suspend
activities until April 1997.
On March 25, 1997 World Wide, through its wholly owned subsidiary
World Wide Resource Finance Inc., entered into the Pledge Agreement with
the State Committee of Kazakhstan. This agreement secured the loans of
the Management Agreement. Under Article 19 of the Pledge Agreement, the
parties indicated that any disputes would be addressed first by
negotiations, and then by arbitration under UNCITRAL. Paragraph 19.5
provided that the parties would not be restricted in their right to
settle disputes in court. That paragraph also provides that Kazakhstan
waives immunity "for the purposes of the United States Foreign Sovereign
Immunities Act of 1976 in any action or proceedings to which such Act
On January 15, 1997, World Wide contracted with Nuclear Fuel Resources
Inc., (NFR) of Colorado to market uranium from the northern mines. NFR
and World Wide then entered into an agreement to provide uranium to
Consumer's Energy, a Michigan corporation, on March 27, 1997. When the
export license was not issued World Wide could not perform its duties
under the contract. As a result of the failure to obtain the export
license, World Wide suspended operations at the Northern Mines.
Kazakhstan informed World Wide that it would not be able to grant an
export license because of an earlier agreement with Nukem Inc., a U.S.
company, for exclusive marketing of the uranium. This agreement had been
kept confidential. In July of 1997, Nukem took over the failed contract
with Consumer's Energy. On August 1, 1997, Kazakhstan terminated the
northern mines management agreement. Plaintiffs filed suit, alleging
breach of contract, conspiracy, violations of the RICO statute and, in
the proposed second amended complaint violations of the Sherman Act.
The Plaintiff requested leave to file a second amended complaint.
Leave to amend pleading should be given when justice so requires. See
Firestone v. Firestone, 76 F.3d 1205 (D.C.Cir. 1996). The decision to
allow or deny amendment is firmly within the court's discretion. Id. It
is proper to deny leave for amendment if the amendment would be futile.
See Graves v. United States, 961 F. Supp. 314 (D.D.C. 1997). Futility is
determined by whether or not the amended complaint would survive a
motion to dismiss. Id. For reasons explained more fully below, the
second amended complaint would be futile.
A. FSIA and Minimum Contacts
The Republic of Kazakhstan is a foreign sovereign nation. Foreign
sovereigns traditionally have enjoyed immunity from suit in courts of
the United States. The Foreign Sovereign Immunities Act ("FSIA") of
1976 lays out the conditions of immunity. FSIA is the sole basis for
jurisdiction over foreign nations. See Argentine Republic v. Amerada
Hess Shipping Corp., 488 U.S. 428, 434, 109 S.Ct. 683, 102 L.Ed.2d 818
(1989). Instrumentalities of the State also have immunity from suit
under FSIA. Both the State Committee of the Republic of Kazakhstan on
the Management of State Property and the National Atomic Company
Kazatomprom, meet the definition of instrumentalities of state under
28 U.S.C. § 1603 (b)(2). The defendants maintain that the exceptions
to FSIA do not apply and argue that a minimum contacts test is necessary.
In Flatow v. Islamic Republic of Iran, 999 F. Supp. 1 (D.D.C. 1998),
this court concluded that the minimum contacts test was not required
when deciding jurisdictional issues concerning foreign sovereigns. See
Flatow, 999 F. Supp. at 21. In Flatow, this court stated that the
traditional minimum contacts test was subsumed in the exceptions to
FSIA. Id. This ruling drew on the Supreme Court's suggestion that a
foreign state might not be a "person" for due process considerations.
See Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 619,
112 S.Ct. 2160, 119 L.Ed.2d 394 (1992) (citing South Carolina v.
Katzenbach, 383 U.S. 301, 323-24, 86 S.Ct. 803, 15 L.Ed.2d 769 (1966)).
Since Flatow, this circuit has raised the issue but not decided it. See
Creighton Limited v. Government of the State of Qatar, 181 F.3d 118, 124
(D.C.Cir. 1999). Consistent with the decision in Flatow, we find that no
minimum contacts analysis is required concerning defendants the Republic
of Kazakhstan, the State Committee of the Republic of Kazakhstan on the
Management of State Property, and the National Atomic Company
Kazatomprom. See Flatow, 999 F. Supp. at 21. The jurisdictional analysis
instead depends on the presence or absence of one of the exceptions to
In this case, World Wide alleges that Kazakhstan waived its immunity
in the "Pledge Agreement." In the alternative, World Wide argues that
the acts of Kazakhstan qualify for the commercial activities exception
to the FSIA. 28 U.S.C. § 1605 (a)(2). Kazakhstan disputes these
points and, in addition, argues that the act of state doctrine applies.
These issues are discussed in turn below.
B. Waiver of Immunity under FSIA
FSIA provides that a sovereign may be sued if it has "waived its
immunity either explicitly or by implication[.]" 28 U.S.C. § 1605
(a)(1). World Wide claims that Kazakhstan explicitly waived its immunity
in the "Pledge Agreement." The waiver provision of FSIA is to be
interpreted narrowly, and it must be clear the foreign state intended to
waive its immunity. See Foremost-McKesson, Inc. v. Islamic Republic of
Iran, 905 F.2d 438, 444 (D.C.Cir. 1990).
The parties entered into the "Pledge Agreement" to secure various
loans required under the management agreement. Article 19 of the
"Pledge Agreement" provides for dispute resolution mechanisms. If
negotiations fail, the parties have the option to arbitrate but are
not required to do so. See Proposed Second Am.Compl., Ex. 2,
art. 19.5. The waiver clause specifically indicates that the waiver is
to apply to FSIA. Id. The dispute at hand involves all of the contracts
between the parties and therefore the dispute resolution requirements of
the "Pledge Agreement" are applicable here.
Defendant Kazakhstan argues that the waiver is void since the
agreement is between Kazakhstan and World Wide Financial Resources, a
British Virgin Islands corporation. Kazakhstan claims that since article
19.5 allows that the parties may sue in their jurisdictions, it was not
on notice that it would be sued in the United States. Article 19.5 does
allow that the parties may bring suit in court of the jurisdiction of
each party, but goes on to waive immunity in any jurisdiction. See
Proposed Second Am.Comp., Ex. 2, art. 19.5. Article 19.5 concludes by
stating that the waiver is intended specifically for jurisdictions in
which FSIA is applicable. Id.
The fact that World Wide Fincorp is a British Virgin Islands company
is not determinative in this case. See Verlinden B.V. v. Central Bank of
Nigeria, 461 U.S. 480, 490, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983)
(holding that FSIA did not bar actions brought by foreign plaintiffs).
The language of the waiver makes the United States the only possible
jurisdiction to which it could apply. Therefore, this court holds that
Kazakhstan intended to waive immunity to suit.