Facts
- Farm workers from several Central American countries filed a state-court tort action alleging injuries from exposure to the pesticide DBCP.
- The workers sued Dole Food Company and related entities.
- Dole impleaded Dead Sea Bromine Co. and Bromine Compounds, Ltd. (the “Dead Sea Companies”) as third-party defendants, alleging involvement in supplying DBCP.
- The Dead Sea Companies sought removal to federal court under the Foreign Sovereign Immunities Act (FSIA), asserting they were “agencies or instrumentalities” of the State of Israel based on state ownership interests held through corporate tiers.
- The Supreme Court granted review limited to (1) whether indirect, tiered ownership can satisfy FSIA’s instrumentality definition and (2) when instrumentality status must be measured.
Issues
- Whether an entity qualifies as an “agency or instrumentality” under FSIA when a foreign state does not directly own a majority of its shares but owns a majority of shares in an intermediate corporate parent.
- Whether FSIA instrumentality status is determined at the time of the alleged wrongful conduct or at the time the complaint is filed.
Decision
- The Court held (7–2) that FSIA requires a foreign state itself to directly own a majority of the corporation’s shares for the corporation to qualify as an instrumentality.
- The Court held (9–0) that instrumentality status is determined as of the time the complaint is filed.
- Applying these rules, the Dead Sea Companies did not qualify as Israeli instrumentalities because Israel did not directly own a majority of their shares.
- The Court dismissed the writ as to the Dole petitioners because the granted FSIA questions did not provide a basis to review Dole’s separate removal theory.
Legal Principles
- Under 28 U.S.C. § 1603(b)(2), “majority of whose shares ... is owned by a foreign state” requires direct majority share ownership by the foreign state (or its political subdivision), not ownership through intervening corporate entities.
- Corporate separateness governs FSIA instrumentality analysis; ownership of a parent does not constitute ownership of a subsidiary’s shares for § 1603(b)(2).
- FSIA instrumentality status for jurisdiction and removal is assessed at the time the complaint is filed, consistent with the time-of-filing rule.
Conclusion
The Court interpreted FSIA to apply a formal test: a corporation is an “agency or instrumentality” only if a foreign state directly owns a majority of its shares, and that status is determined when the lawsuit is filed, not when the underlying conduct occurred.