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UC Law Journal

Thomas Albright

Abstract

In Dole v. Patrickson, the U.S. Supreme Court determined when a corporation owned by a foreign sovereign is entitled to invoke federal question jurisdiction under the Foreign Sovereign Immunities Act. Following Dole, a foreign government must directly own a majority of the shares of a corporation for that corporation to qualify as an instrumentality of the foreign government and thus be entitled to access the federal courts. However, the federal common law of foreign relations, earlier recognized by the Supreme Court in Banco Nacionale v. Sabbatino but never defined, undermines Dole's holding. As interpreted by the circuit courts, the federal common law of foreign relations allows corporations that are "important" to a foreign government to access the federal courts through federal question jurisdiction. Often, analysis of jurisdiction under Sabbatino will depend on factors defining the relationship between the foreign government and the defendant corporation that were specifically limited by the Court in Dole.

Therefore, in order to avoid undermining the decision of the Supreme Court in Dole, federal question jurisdiction based on the federal common law of foreign relations must be available only in limited circumstances. This Note creates a new approach for courts to apply in determining whether the federal common law of foreign relations properly permits federal question jurisdiction. Where a foreign sovereign substantially and effectively controls the actions of a corporation, federal question jurisdiction should be allowed so long as the complaint truly implicates vital economic interests of the foreign nation. Thus, by requiring that the foreign sovereign have control over the corporation seeking federal question jurisdiction, and that the vital economic interests of that sovereign be affected, federal question jurisdiction based on the federal common law of foreign relations will be limited to situations where either the commercial actions or the commercial well-being of a sovereign are at issue. This limited application is consistent with both the purposes of the federal common law of foreign relations, as well as the restrictive nature of the Supreme Court's holding in Dole.

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