## Facts

- Investors holding American Depository Receipts (ADRs) tied to shares of Yukos Oil Company alleged their investments became worthless after Russian governmental actions against Yukos.
- Yukos, formed during Russia’s early-1990s privatization efforts, grew into a major oil producer; its key production asset was Yuganskneftegaz (YNG).
- Beginning in 2003, Russian authorities pursued criminal investigations, raids, and related measures against Yukos personnel and affiliates.
- Russian authorities seized a controlling block of Yukos shares held through entities associated with Yukos’s principal shareholders, giving the state control over Yukos.
- Tax authorities issued large reassessments and pursued enforcement through court proceedings; plaintiffs alleged repeated additional assessments and freezes of Yukos-related assets and accounts.
- Russia scheduled an auction of YNG to satisfy asserted tax liabilities; plaintiffs alleged the auction used a purchaser financed by Russian-controlled banks to move YNG to state-aligned ownership.
- Plaintiffs sued the Russian Federation, senior officials (in official capacities), and related entities, alleging unlawful expropriation and other wrongful conduct causing U.S. investors’ losses.

## Issues

1. Whether the Russian Federation and its agencies or instrumentalities were immune under the Foreign Sovereign Immunities Act (FSIA), and whether the expropriation or commercial activity exceptions applied.
2. Whether individual Russian officials sued for official-capacity conduct shared the foreign state’s immunity.
3. Whether the court had personal jurisdiction over non-sovereign defendants based on forum contacts, including alleged “conspiracy jurisdiction.”

## Decision

- The court granted the motions to dismiss and terminated the case.
- The Russian Federation and covered state entities were presumptively immune under the FSIA, and plaintiffs did not establish an applicable exception.
- The FSIA expropriation exception did not apply because plaintiffs’ ADR interests did not constitute the requisite “rights in property” taken, and the alleged taken property lacked the required U.S. nexus.
- The FSIA commercial activity exception did not apply because the alleged conduct was sovereign (taxation, prosecution, seizures, and enforcement), and any U.S. effects from ADR value loss were not sufficiently “direct.”
- Claims against individual officials were dismissed because they were based on official-capacity acts treated as claims against the foreign state.
- Claims against remaining defendants were dismissed for lack of personal jurisdiction due to insufficient forum contacts; generalized conspiracy allegations were inadequate.

## Legal Principles

- Under the FSIA, a foreign state is presumptively immune from suit in U.S. courts unless a statutory exception applies; the FSIA provides the exclusive basis for jurisdiction over a foreign state.
- The FSIA expropriation exception requires (1) rights in property taken in violation of international law and (2) a statutorily defined U.S. territorial or commercial nexus to the property (or property exchanged for it); indirect investor losses tied to foreign-based assets may not satisfy these requirements.
- The FSIA commercial activity exception turns on whether the action is “based upon” commercial conduct; exercises of sovereign authority (e.g., tax enforcement and criminal prosecution) are not commercial acts even if they affect commercial enterprises and investors.
- Official-capacity claims against foreign officials are generally treated as claims against the foreign state for immunity purposes when the alleged conduct is undertaken on behalf of the state.
- Personal jurisdiction over foreign non-sovereign defendants requires sufficient forum contacts consistent with due process; conclusory conspiracy-based jurisdiction allegations do not substitute for specific, forum-linked acts attributable to each defendant.

## Conclusion

The district court dismissed investors’ Yukos-related claims on jurisdictional grounds, holding that the FSIA barred suit against the Russian Federation and official-capacity defendants and that the court lacked personal jurisdiction over the remaining defendants, without reaching the merits of the alleged expropriation.


Allen v. Russian Federation, 522 F. Supp. 2d 167 (D.D.C. 2007)