Foley Hoag Secures Victory for Tanzania before D.C. Circuit Court of Appeals under U.S. Foreign Sovereign Immunities Act

July 13, 2020

On July 10, 2020, the United States Court of Appeals for the District of Columbia Circuit affirmed the district court’s dismissal for lack of jurisdiction under the Foreign Sovereign Immunities Act (FSIA), Valambhia et al v. United Republic of Tanzania Case No. 1:18-c-00370-TSC.

The case was initiated in 2018 by the family of the late Devram Valambhia, who sought recognition of two alleged judgments rendered in Tanzanian courts against the Government of Tanzania. The judgments grew out of long-running and highly publicized litigation concerning Tanzania’s alleged obligations to Mr. Valambhia under a contract for the purchase of military equipment. Plaintiffs brought suit to enforce the Tanzanian judgments in the United States seeking nearly $120 million, including interests and costs.

Plaintiffs argued that because the Tanzanian judgments grew out of a contract dispute, their case was sufficiently based on a commercial activity to deprive Tanzania of its sovereign immunity under the FSIA’s commercial activities exception. Specifically, they alleged that under the third prong of the commercial activity exception, the judgments were acts “in connection with” the commercial activity of Tanzania outside the United States (i.e. the contract for military equipment) that had a “direct effect” in the United States.  

On March 31, 2019, the U.S. District Court for the District of Columbia dismissed Plaintiffs’ case for lack of jurisdiction. It reasoned that although the Tanzanian judgments ultimately grew out of a commercial activity, Plaintiffs’ recognition action was not “based upon” that activity, as the FSIA requires. Plaintiffs appealed.

On appeal, the D.C. Circuit affirmed the district court’s decision. In ruling that the third clause of the FSIA’s commercial activities exception did not apply, the Court found that the Tanzania judgment did not cause a “direct effect” in the United States, within the meaning of the law. The judgments did not require Tanzania to pay the Valambhias in the United States and the limited payments that Tanzania made through a New York bank did not result from the acts that formed the basis of the claim. 

Foley Hoag partners Lawrence Martin and Clara Brillembourg led the team defending Tanzania, with the assistance of associates Nicholas Renzler and Nick Anastasi.

Martin, who argued the appeal orally, commented, “This is a great outcome for Tanzania. It brings to an end litigation that has literally lasted for decades and allows Tanzania finally to turn the page. We could not have done it without the critical assistance we received from the Embassy of Tanzania in DC and the Solicitor General’s Office in Dar Es Salaam.” 

Brillembourg added, “We are very happy with the result, not only for the important victory for the Government of Tanzania, but also because of the important precedent in further defining the limits of the commercial activities exception and its application to the enforcement of foreign judgments against sovereigns.”

Foley Hoag specializes in representing sovereign States, and their entities and officials, in disputes before U.S courts. Chambers Global recently reported: “Foley Hoag LLP stands out because of its high level of competence and admirable record of cases handled and won.” 

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