Summary:
Plaintiff is a U.S. corporation that purchased a tool-making factory in Wuhan, China, and expanded the factory by acquiring new land and built additional facilities. Plaintiff claimed the defendant demanded an additional investment of $10 million, withdrew $21 million from the factory's bank account before freezing the account, and expelled the American managers from the facilities. The district court found it lacked subject matter jurisdiction, because of foreign sovereign immunity.
The Ninth Circuit affirmed. The court found the defendant's actions were not "an act performed in the United States in connection with a commercial activity of the foreign state elsewhere[,]" as provided in the exceptions in the Foreign Sovereign Immunity Act.
Takeaway:
Short opinion, and fairly indisputable in terms of legal doctrine. But the case is a sobering one, as this type of straightforward thuggery against foreign investors is not uncommon in China. With the U.S. courts unable to provide a remedy, what can a plaintiff in this situation do, other than to simply not do any business with Chinese state-owned entities (which are a major part of the Chinese economy)?
They could have taken proper steps within China so that they could could have taken the matter to court in China. They most also likely have an avenue open to them as the business was transacted within China. Perhaps a little more forethought and planning would have left them in a better situation than what they face now.
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