## Facts

- Bangladesh, through its Ministry of Agriculture, granted MOL, Inc. a ten-year license (1977) to capture and export rhesus monkeys from Bangladesh.
- The agreement set fixed prices and quantities, required MOL to build a rhesus monkey breeding farm in Bangladesh during 1978, and limited exported monkeys to medical and scientific research for the general benefit of people worldwide.
- The agreement required recordkeeping to allow Bangladesh to monitor the monkeys’ use, included an arbitration clause, and allowed Bangladesh to terminate without notice for failure to fulfill obligations.
- After India banned rhesus monkey exports in 1977, Bangladesh became a significant supplier and world prices rose, while MOL’s contract payments remained fixed.
- In 1978 Bangladesh threatened cancellation, asserting MOL failed to build the breeding farm and failed to export agreed quantities; MOL denied breach.
- In September 1978 MOL delivered some Bangladesh monkeys to the U.S. armed services for radiobiological research.
- On January 3, 1979 Bangladesh terminated the agreement, citing failure to construct the breeding farm in 1978 and violations of the use restriction.
- In 1982 MOL sued Bangladesh in the District of Oregon for about $15 million for wrongful termination; Bangladesh did not appear and MOL sought a default judgment.
- The district court denied default judgment and dismissed the action, holding Bangladesh immune under the Foreign Sovereign Immunities Act (FSIA) and also relying on the act of state doctrine.

## Issues

1. Whether Bangladesh’s grant and termination of an export license for rhesus monkeys constituted “commercial activity” under the FSIA, triggering the commercial-activity exception to sovereign immunity.
2. Whether a court must consider FSIA immunity as a jurisdictional prerequisite even when the foreign state does not appear to assert immunity.

## Decision

- The Ninth Circuit affirmed dismissal for lack of subject-matter jurisdiction under the FSIA.
- The court held that granting and revoking a license to export a natural resource are sovereign, regulatory acts, not “commercial activity,” so the FSIA commercial-activity exception did not apply.
- The court held that sovereign immunity under the FSIA is jurisdictional; courts must evaluate immunity on their own initiative even when a foreign state defaults, and may not enter default judgment absent an applicable exception.

## Legal Principles

- Under the FSIA, a foreign state is immune from suit unless a statutory exception applies; the plaintiff bears the burden of showing an exception confers jurisdiction.
- The FSIA “commercial activity” inquiry turns on the nature of the foreign state’s conduct, not its purpose or the presence of contract-like terms.
- Licensing, regulating, and terminating permission to exploit or export a state’s natural resources are governmental acts that private parties cannot perform; such acts are not commercial activity for FSIA purposes.
- FSIA immunity is a limit on subject-matter jurisdiction, not merely an affirmative defense; courts must address it sua sponte, including in default situations.

## Conclusion

The Ninth Circuit held that Bangladesh’s issuance and revocation of a rhesus-monkey export license were sovereign regulatory acts over natural resources rather than commercial activity, so the FSIA barred jurisdiction, and the court was required to consider immunity even though Bangladesh did not appear.


MOL, Inc. v. People’s Republic of Bangladesh, 736 F.2d 1326 (9th Cir. 1984)