Mohammad Hilmi Nassif & Partners, a Jordanian business, supplied Iraq with humanitarian and commercial goods in the early 1990s that Iraq failed to pay for. In 1995, Iraq issued an Export Commitment Letter agreeing to settle the $53 million debt by delivering sulfur and urea to Nassif via the Iraq-Jordan border. Iraq never delivered the goods. After years of negotiations and oral assurances from Iraqi officials that Iraq would honor the debt, Nassif sued in Jordan and obtained a $53 million judgment in 2015. When Iraq refused to pay, Nassif filed a suit in the U.S. District Court for the District of Columbia seeking recognition of that Jordanian judgment. Iraq moved to dismiss, asserting sovereign immunity under the Foreign Sovereign Immunities Act. The district court granted the motion, and Nassif appealed to the D.C. Circuit.
The court began by reaffirming that the Foreign Sovereign Immunities Act provides the sole basis for obtaining jurisdiction over a foreign state in U.S. courts. The court analyzed two potential exceptions: explicit waiver and commercial activity. First, regarding explicit waiver, the court held that claims must be narrowly construed in favor of the sovereign. The statute requires a clear, complete, unambiguous, and unmistakable manifestation of the sovereign's intent to waive immunity. The court examined oral statements by Iraqi officials, including assurances that Iraq would not object to being sued anywhere and would pay once a court order was obtained. The court concluded these statements fell short of the statutory standard. While they acknowledged liability and the absence of venue restrictions, they did not unambiguously address the surrender of sovereign immunity. The court noted that the statements were retrospective summaries rather than precise transcripts, further complicating the inquiry. Second, the court addressed the commercial activity exception. The court held that the phrase 'based upon' in the third clause of the exception means the action must be based on the conduct that constitutes the gravamen of the suit. The court found that Iraq's contractual obligations were confined to delivery at the Iraq-Jordan border, with no performance required in the United States. Although Nassif alleged that the parties contemplated a downstream sale to a buyer in New York, that expectation was not memorialized in the agreement. Consequently, any financial effect in the United States was indirect, resulting from an intervening decision to resell the goods, rather than a direct consequence of Iraq's breach. Because the breach did not cause a direct effect in the United States, the commercial activity exception did not apply.
The decision affirms the dismissal of the lawsuit, leaving the $53 million Jordanian judgment unenforceable in the United States. It reinforces the high bar for finding an explicit waiver of sovereign immunity, requiring unambiguous language that specifically addresses immunity rather than general acknowledgments of liability. It also clarifies that for the commercial activity exception to apply under the third clause, the foreign state's conduct must cause a direct effect in the United States, excluding indirect financial consequences arising from intervening commercial decisions by the plaintiff.
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