## Facts

- S & Davis International, Inc., an Alabama grain trader, entered a 1996 contract for a Yemeni state-controlled trading entity to buy 300,000 metric tons of wheat.
- The contract contemplated major U.S. connections, including shipment from Portland, Oregon, and payment by a letter of credit issued by the Bank of Yemen and confirmed by a U.S. prime bank.
- The contract contained a clause requiring arbitration of disputes before the Grain and Feed Trade Association (GAFTA) in London.
- S & Davis alleged the Yemeni Ministry of Supply and Trade directed or approved the transaction, including that the minister signed the contract to reflect required governmental approval and that the contracting entity acted subject to ministry control.
- A dispute arose when the letter of credit allegedly was not issued on acceptable terms.
- S & Davis pursued GAFTA arbitration; the arbitral tribunal found the contracting entity in breach, and the appellate tribunal affirmed and awarded S & Davis roughly $17 million plus interest and costs.
- S & Davis filed suit in federal district court in Alabama to confirm and enforce the London award and sought relief against both the contracting entity and the Ministry.
- The Ministry moved to dismiss for lack of subject-matter and personal jurisdiction, asserting sovereign immunity under the Foreign Sovereign Immunities Act (FSIA).

## Issues

1. Whether the FSIA’s arbitration exception permits a U.S. enforcement action against a foreign ministry based on a London arbitral award rendered under a contract arbitration clause.
2. Whether the arbitration exception can apply where the foreign state is not a signatory to the New York Convention and where the award was formally entered against a state-controlled entity rather than the ministry.
3. Whether, assuming an FSIA exception applies, due process permits personal jurisdiction over the Ministry based on the contract’s U.S.-connected performance terms and alleged ministry involvement.

## Decision

- The Eleventh Circuit affirmed the denial of the Ministry’s motion to dismiss.
- The court held the Ministry was not entitled to FSIA immunity at the pleading/jurisdictional stage because an FSIA exception applied, including the arbitration exception for an action to confirm or enforce a foreign arbitral award.
- The court concluded the district court could consider allegations and evidence that the Ministry was a controlling actor or principal behind the contracting entity when assessing FSIA exceptions.
- The court held personal jurisdiction could be exercised consistently with due process given the Ministry’s alleged role in a commercial transaction with substantial U.S. performance and payment features.

## Legal Principles

- FSIA immunity is presumptive; jurisdiction exists only if a statutory exception applies, and courts may consider jurisdictional allegations and supporting evidence to determine exception applicability.
- The FSIA arbitration exception can apply to actions to confirm or enforce foreign arbitral awards governed by a treaty in force for the United States, even if the foreign state has not joined the relevant arbitration treaty.
- In evaluating FSIA exceptions, a court is not confined to formal party labels and may assess whether a foreign ministry allegedly acted as the principal or controlling entity behind a state-controlled contracting party.
- Commercial dealings involving U.S. goods, U.S. shipment points, and U.S. banking arrangements can supply the U.S. nexus supporting FSIA exceptions and can establish minimum contacts for personal jurisdiction when the foreign state actor is alleged to have purposefully directed or approved the transaction.

## Conclusion

The Eleventh Circuit allowed the enforcement action to proceed against Yemen’s Ministry of Supply and Trade, holding that FSIA immunity was displaced by applicable exceptions tied to enforcing a foreign arbitral award and that the Ministry’s alleged direction of a U.S.-connected commercial transaction supported personal jurisdiction.


S & Davis Int’l, Inc. v. Republic of Yemen, 218 F.3d 1292 (11th Cir. 2000)