* [The Introductory Note was prepared for International Legal Materials by Georges R. Delaume.]

* [Reproduced from the Slip Opinion at pp. 2577-2610 (2d Cir. Apr. 16, 1981).]

¹ “An equal has no dominion over an equal.”

² Act of October 21, 1976, Pub. L. 94-583, 90 Stat. 2891, codified at 28 U.S.C. §§ 1330; 1332(a)(2)-1332(a)(4); 1391(f); 1441(d); and 1602-1611.

³ Hearings on H.R. 11315 Before the Subcommittee on Administrative Law and Governmental Relations of the House Committee on the Judiciary, 94th Cong., 2d Sess. 53 (1976) (1976 Hearings”) (testimony of Monroe Leigh, Legal Adviser, Dep’t of State).

⁴ Id.

⁵ These four appeals are part of a group of seven, heard together on appeal and decided in concert today. The other three are Verlinden B. V. v. Central Bank of Nigeria, No. 80-7413, slip op. at(2d Cir. Apr. 16, 1981); Reale International, Inc. v. Federal Republic of Nigeria, No. 81-7183, slip op. at (2d Cir. Apr. 16, 1981); and Gemini Shipping, Inc. v. Foreign Trade Organization for Chemicals and Foodstuffs, No. 80-7851, slip op. at (2d Cir. Apr. 16, 1981).

⁶ Since Texas Trading was dismissed below on jurisdictional grounds, its facts arrive before us as mere allegations, assumed for purposes of this opinion to be true. The other three cases have gone to trial, and contain formal findings. The facts of all four cases are set forth in greater detail in the opinions of the district court.

⁷ The Texas Trading, Nikkei, and Chenax contracts provided for the sale of 240,000 tons, “plus or minus 10% at seller’s option.” The East Europe contract was for 240,000 tons, simpliciter.

⁸ Twenty-one days in the Texas Trading, Nikkei, and Chenax contracts; fourteen days in the East Europe contract.

⁹ The Texas Trading, Nikkei, and Chenax contracts set the price of the cement at S60 per ton, so each plaintiff was promised a letter of credit for $14.4 million. The cement price in the East Europe contract was S59.50 per ton; accordingly, the East Europe letter of credit was to be for $14.4 million.

¹⁰ The Texas Trading contract provided for thirty days, the East Europe contract for six weeks, and the Nikkei and Chenax contracts for forty-five days.

¹¹ The Nikkei and East Europe contracts provided for demurrage at a rate “not exceeding $4100 per diem,” and the Chenax contract set a flat rate of $4100 per day. The Texas Trading contract required Nigeria to pay demurrage “not exceeding $4000 per diem.’”

¹² Central Bank was established in 1958 under the Central Bank of Nigeria Act 1958. Section 4(1) of the Act provides:

¹³ The letters of credit as established varied from the contracts in other respects, but the discrepancies were cured by amendments to the letters of credit to which both parties agreed.

¹⁴ Nikkei contracted with Productos Fontanet, a Spanish corporation with an interest in a cement plant and a shipping company, for the purchase and delivery of 120,000 tons of cement with an option for 120,000 tons more. The price was S54 per ton for the first 8500 tons, and $52 per ton for the rest. East Europe secured a contract for 120,000 tons with Intrafinsa, another Spanish supplier, at $51.25 per ton, and the district court found East Europe would have been able to fulfill the rest of its contract at the same price. Texas Trading contracted with yet another Spanish company, at S53.10 per ton. Chenax searched for a subcontractor, but never found one: its efforts never rose above the level of oral negotiations.

¹⁵ E.g., Trendrex Trading Corp. v. Central Bank of Nigeria, [1977] 2 W.L.R. 356. 1 All E.R. 881 (United Kingdom): Hispano Americana Mercantil S.A. v. Central Bank of Nigeria, [1979] 2 Lloyd’s L.R. 277 (same); Ipitrade International, S.A. v. Federal Republic of Nigeria (Int’l Chamber of Commerce Arbitration Award. April 25, 1978), enforced 465 F. Supp. 824 (D.D.C. 1978): Youssef M. Nada Establishment v. Central Bank of Nigeria, 16 Int’l Legal Mat. 501 (1977) (Dist. Ct., Frankfurt/Main, Aug. 25, 1976) (West Germany).

¹⁶ Article 3 of the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce provides: An irrevocable credit is a definite undertaking on the part of an issuing bank and constitutes the engagement of that bank to the beneficiary or, as the case may be, to the beneficiary and bona fide holders of drafts drawn and/or documents presented thereunder, that the provisions for payment, acceptance or negotiation contained in the credit will be duly fulfilled, provided that all the terms and conditions of the credit are complied with. . . . Such undertakings can neither be modified nor cancelled without the agreement of all concerned.

¹⁷ Defendants appeal from both the jurisdictional rulings and the awards on the merits in Nikkei and East Europe; plaintiffs cross-appeal from the partial denial of damages. In Chenax, plaintiffs appeal from the total denial of damages, and defendants cross-appeal from the finding of jurisdiction. In Texas Trading, plaintiffs appeal from the jurisdictional ruling. All appeals are taken formally from the judgment below except in Texas Trading. That appeal is taken from Judge Cannella’s order, but the error is harmless. See Poss v. Lieberman, 299 F.2d 358 (2d Cir.), cert, denied, 370 U.S. 944 (1962).

¹⁸ See also Senate Judiciary Committee, Define Jurisdiction of U.S. Courts in Suits Against Foreign States, S. Rep. No. 1310, 94th Cong., 2d Sess. 8-9. The House and Senate Committees filed identical reports, and references infra to the House Report may be deemed to represent the views of the Senate Committee as well.

¹⁹ Leigh stated:

²⁰ The House Report calls § 1605(a)(2) “probably the most important instance in which foreign states are denied immunity.” See House Judiciary Committee, Jurisdiction of United States Courts in Suits Against Foreign States, H.R. Rep. No. 1487, 94th Cong., 2d Sess. 18, reprinted in [1976] U.S. Code Cong. & Admin. News 6604, 6617 (“House Report”).

²¹ Jurisdiction will be absent unless some other provision of the Act, such as § 1607 or other subsections of § 1605, intervenes. Section 1607 concerns counterclaims, and is not relevant here.

²² See Verlinden B. V. v. Central Bank of Nigeria, supra, note 5 (suit by an alien against a foreign state for breach of a contract not governed by federal law is not within federal judicial power).

²³ The 1973 bill was introduced as S. 566, 93d Cong., 1st Sess., see 119 Cong. Rec. 2204 (1973). and H.R. 3493, 93d Cong., 1st Sess., see id. at 2880. The language of § 2 of those bills is identical in material respects to the text of the present 28 L’.S.C. § 1330(a). See, e.g., 119 Cong. Rec. 2213-15 (1973) (reprinting S. 566). The 1973 bills were withdrawn by their sponsors, and introduced as revised in H.R. 11315, 94th Cong., 1st Sess.. see 121 Cong. Rec. 42017 (1975). and S. 3553, 94th Cong., 2d Sess., see 122 Cong. Rec. 1745-4 (1976). H.R. 11315 became

²⁴ Hearings on H.R. 3493 before Subcommittee on Claims and Governmental Relations of the House Committee on the Judiciary, 93d Cong., 1st Sess. 16 (1973) (“1973 Hearings”) (testimony of Charles N. Brower, Legal Adviser, Dep’t of State), 40 (State Dep’t Section-by-Section Analysis of 1973 bill). See also House Report at 6615.

²⁵ 1976 Hearings at 27 (testimony of Monroe Leigh).

²⁶ The “Tate Letter” is set forth at 26 State Dep’t Bull. 984 (1952).

²⁷ Dictum in Victory Transport, supra, 336 F.2d at 359, and Heaney v. Government of Spain, 445 F.2d 501, 504 (2d Cir. 1971), states that a contract made by a government for a public purpose, e.g., bullets for the army, is not “commercial activity.” This aspect of prior American law has been overruled by the FSIA, and the definition of “commercial activity” has been concomitantly expanded to include such contracts. See 28 U.S.C. § 1603(d); see also 1976 Hearings at 95 (testimony of Michael M. Cohen, Chairman, Committee on Maritime Legislation, Maritime Law Association of the United States).

²⁸ Section 1602 provides in part:

In the 1973 version of the bill, the word “chapter” was followed by “and other principles of international law.”

²⁹ E.g., Trendtex Trading Corp. v. Central Bank of Nigeria, [1977] 2 W.L.R. 356, 1 All E.R. 881 (United Kingdom); Hispano Americana Mercantil S.A. v. Central Bank of Nigeria, [1979] 2 Lloyd’s L.R. 277 (same); Ipitrade International S.A. v. Federal Republic of Nigeria (Int’l Chamber of Commerce Arbitration Award, April 25, 1978), enforced 465 F. Supp. 824 (D.D.C. 1978); Youssef M. Nada Establishment v. Central Bank of Nigeria, 16 Int’l Legal Mat. 501 (1977) (Dist. Ct., Frankfurt/Main, Aug. 25, 1976) (West Germany). See also 1976 Hearings at 76 & n. 13 (statement of Committee on International Law, Assoc, of the Bar of the City of New York).

³⁰ We need not belabor the point that the specific act or acts upon which these suits are based—the anticipatory repudiation of the cement contracts and letters of credit—took place at least in part “outside the territory of the United States.” It was from Nigeria that Central Bank sent the instructions amending the letters of credit; it was in Nigeria that Nigeria instructed Central Bank to do so. Congress in writing the FSIA did not intend to incorporate into modern law every ancient sophistry concerning “where” an act or omission occurs. Conduct crucial to modern commerce—telephone calls, telexes, electronic transfers of intangible debits and credits—can take place in several jurisdictions. Outmoded rules placing such activity “in” one jurisdiction or another are not helpful here.

Moreover, should defendants establish that the “act” or “commercial activity” the action is “based upon” took place not “outside the territory of the United States” but inside it, then the first or second clauses of § 1605(a)(2) might become relevant. We need not decide the question. Gi\en Congress’s broad approach in the language of § 1605(a)(2). it is not at all improbable that a suit could be brought under more than one clause. See House Report at 6618 (stating that all cases covered by second clause might also come within first clause), 1973 Hearings at 42 (State Dep’t Section-by-Section Analysis) (stating that § 1605(a)(2) covers all cases with an act or direct effect in United States). See generally Gemini Shipping, Inc. v. Foreign Trade Organization for Chemicals and Foodstuffs, supra note 5.

Moving to the second phrase of the clause, we have little doubt that the acts these actions are “based upon” were “in connection” with defendants’ commercial activity. Breach of an agreement is necessarily performed “in connection with” that agreement, or with a series of similar agreements.

³¹ E.g., Note, Direct Effect Jurisdiction under the Foreign Sovereign Immunities Act of 1976, 13 N.Y.U. J. Int’l L. & Pol. 571 (1981); Note, Effects Jurisdiction under the Foreign Sovereign Immunities Act and the Due Process Clause, 55 N.Y.U. L. Rev. 474 (1980) (“NYU Note”); Note, The Nikkei Case: Toward a More Uniform Application of the Direct Effect Clause of the Foreign Sovereign Immunities Act, 4 Ford. Int’l L.J. 109(1980).

³² As a result, certain limitations built into the text of § 18, such as the requirement that the “direct effect” be “substantial” or “foreseeable,” are not necessarily apposite to the direct effect clause of § 1605(a)(2). To the extent the substantiality and foreseeability requirements of the legislative reach cases are designed to minimize unnecessary conflict between United States and foreign substantive law, 28 U.S.C. § 1606 renders the requirements irrelevant, since it implies that federal substantive law will not always govern in FSIA cases. See generally Bersch v. Drexel Firestone, Inc., 519 F.2d 974, 988, 991 (2d Cir.). cert. denied, 423 U.S. 1018 (1975).

³³ It is therefore, less than determinative here that New York law holds that the repudiation by a Ugandan bank of a letter of credit payable in New York creates a cause of action which “arises in New York” under the New York Business Corporations Law. See J. Zeevi & Sons, Ltd. v. Crindlay’s Bank (Uganda), Ltd., 37 N.Y.2d 220, 371 N.Y.S.2d 892, 333 N.E.2d 168, cert, denied, 423 U.S. 866 (1976). Compare Friedr. Zoellner (N. Y.) Corp. v. Tex Metals Co., 396 F.2d 300. 302 (2d Cir. 1968) (injury located at place of performance), with Spectacular Promotions, Inc. v. Radio Station WING, 272 F. Supp. 734, 737 (E.D.N.Y. 1967) (injury located where defendant acts).

³⁴ Constitutional obstacles prevent our deciding the question in Verlinden B. V. v. Central Bank of Nigeria, supra note 5, decided this day.

³⁵ Harris and Upton involved Americans injured overseas, but since the injured parties there were natural persons, not corporations, it is easy to locate the “effect” outside the United States. Whether an American corporation injured overseas incurs a direct effect in the United States remains an open question.

³⁶ The House Report seems to require more, in its statement that, “The requirements of minimum jurisdictional contacts and adequate notice are embodied” in § 1330(b). House Report at 6612. Accord, 1976 Hearings at 96 (testimony of Michael M. Cohen). These statements are not in the Act itself, and are not by themselves sufficiently authoritative to introduce, ipsissimis verbis, the Fifth Amendment standard of due process into § 1330(b). Rather, the drafters in these words are merely confirming what they have no power to deny: that any exercise of personal jurisdiction under § 1330(b) is subject to the constitutional limitation of due process. See 1976 Hearings at 31 (testimony of Bruno A. Ristau).

³⁷ We recognize that International Shoe and its progeny were decided under the due process clause of the Fourteenth Amendment, while this case falls within the purview of the similar clause in the Fifth Amendment. In Leasco Data Processing, supra, a Fifth Amendment case, we applied the Fourteenth Amendment analysis, see 468 F.2d at 1340, but we added that the assertion of personal jurisdiction “must be applied with caution, particularly in an international context,” id. at 1341, citing von Mehren, & Trautman, , Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv. L. Rev. 1121, 1127 (1966)CrossRefGoogle Scholar. See also Bersch v. Drexel Firestone, Inc., supra, 519 F.2d at 1000. See generally Romero v. International Terminal Operating Co., 358 U.S. 354, 383 (1959). While circumspection is appropriate in transnational disputes, certain other factors which might limit the exercise of personal jurisdiction are not present in such suits. The concerns of federalism discussed at length by the Supreme Court in Shaffer, supra. 433 U.S. at 216-17, and World-Wide Volkswagen Corp., supra, 444 U.S. at 292, for example, would not be relevant in an FSIA suit since states within a federal system, strictly speaking, are not involved. Further, more or less solicitude might be in order because defendant is a government, not a natural person or corporation.

We find neither distinction dispositive here. Like the states of our nation, the United States is a member of an international community. While it has not formally renounced part of its long-arm power by signing an international constitution, considerations of fairness nonetheless regulate every exercise of the federal judicial machinery. See Restatement of the Law, Second, Foreign Relations Law of the United States § 37 (1965); von Mehren & Trautman, supra, 79 Harv. L. Rev. at 1125 n.8. The analogy between the national and international systems may not be sufficiently exact to lead to the same result in every case, but here we see no reason to stray from our former adherence to the analysis developed under the Fourteenth Amendment. Similarly, “we see no reason to treat a commercial branch of a foreign sovereign differently from a foreign corporation.” Victory Transport, Inc., supra, 336 F.2d at 363.

³⁸ Having lost the sovereign immunity decision and the jurisdictional questions, defendants attempt to place a further obstacle in the way of the speedy adjudication of the claims against them: the act of state doctrine. We decline to apply it here. Our decision does not depend on a determination that this case falls within one of the several purported “exceptions” to the rule. Act of state analysis depends upon a careful case-by-case analysis of the extent to which the separation of powers concerns on which the doctrine is based are implicated by the action before the court. Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682. 728 (1976) (Marshall, J., dissenting): see Banco Sacional de Cuba v. Sabbatino, 376 U.S. 398, 428 (1964). Here, adjudication of the legality of Nigeria’s and Central Bank’s challenged conduct does not threaten to embarrass the executive branch in its conduct of United States foreign relations, and hence does not seriously implicate the relevant policy considerations. These cases contain none of the elements that other courts have viewed to contain the seeds of such embarrassment. We are not being asked, as the Court was in Sabbatino, to judge a foreign government’s conduct under ambiguous principles of international law. These are not cases where the challenged governmental conduct is public rather than commercial in nature, see Alfred Dunhill of London, Inc. v. Republic of Cuba, supra, or where its purpose was to serve an integral governmental function, cf. Hunt v. Mobil Oil Corp., 550 F.2d 68, 78 (2d Cir.), cert, denied, 434 U.S. 984 (1977) (applying act of state doctrine where governmental conduct in question was part of “a continuing and broadened confrontation between the East and West in an oil crisis which has implications and complications far transcending those suggested by appellants”). Finally, the executive branch has not stated its views in these cases regarding either the propriety of applying the act of state doctrine, as in First National City Bank v. Banco Nacional de Cuba, 406 U.S. 759 (1972), or the validity of the very governmental act sub judice, as in Hunt v. Mobil Oil Corp., supra, 550 F.2d at 77.

^* Of the United States District Court for the Southern District of New, York, sitting by designation.

¹ The other cases are Decor by Nikkei International, Inc. v. Federal Republic of Nigeria, No. 80-7783, slip op. at (2d Cir. Apr. 16, 1981); Chenax Majesty, Inc. v. Federal Republic of Nigeria, No. 80-7771, slip op. at (2d Cir. Apr. 16, 1981); East Europe Import-Export, Inc. v. Federal Republic of Nigeria, No. 80-7773, slip op. at (2d Cir. Apr. 16, 1981); Verlinden B. V. v. Central Bank of Nigeria, No. 80-7413, slip op. at (2d Cir. Apr. 16, 1981); Texas Trading & Milling Corp. v. Federal Republic of Nigeria, No. 80-7703, slip op. at (2d Cir. Apr. 16, 1981); and Gemini Shipping, Inc. v. Foreign Trade Organization for Chemicals and Foodstuffs, No. 80-7851, slip op. at (2d Cir. Apr. 16, 1981).

² The three suits before Judge Pierce are also part of the group of seven decided on appeal today. They are the first three cases listed in note 1, supra.

³ The stipulation seems to have assumed that Judge Pierce would make the same jurisdictional decision in all three cases.

⁴ 28 U.S.C. § 1292(b) allows interlocutory appeals when, in the opinion of the district court, the appeal “involves a controlling question of law as to which there is substantial ground for difference of opinion and . . . an immediate appeal from the order may materially advance the ultimate termination of the litigation.” The House Report to H.R. 2638, the bill adding § 1292(b) to Title 28, mentions orders denying motions to dismiss for lack of subject matter jurisdiction to be proper subjects for interlocutory appeals. See H.R. Rep. No. 1667, 85th Cong., 2d Sess. 1 (1958). The Senate Report concurs. See S. Rep. No. 2434, 85th Cong., 2d Sess. 2-3, reprinted in [1958] U.S. Code Cong. & Admin. News 5255, 5256. Our cases have so held. E.g., Leasco Date Processing Equipment Corp. v. Maxwell, 468 F.2d 1326, 1330 (2d Cir. 1972); Movielab, Inc. v. Berkey Photo, Inc., 452 F.2d 662, 663 (2d Cir. 1971) (per curiam); Blackman. Hadron, Inc., 450 F.2d 781, 782 (2d Cir. 1971) (per curiam).

⁵ In Railway Co. v. Ramsey, 89 U.S. (22 Wall.) 322, 327 (1874), Chief Justice Waite stated, “Consent of parties cannot give the courts of the United States jurisdiction, but the parties may admit the existence of facts which show jurisdiction, and the courts may act judicially upon such an admission.” See also Verzosa v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 589 F.2d 974, 977 (9th Cir. 1978) (per curiam).

⁶ See notes 1 and 2, supra.

^* Of the United States District Court for the Southern District of New York, sitting by designation.

* [Reproduced from the Slip Opinion at pp. 2555-75 (2d Cir. Apr. 16, 1981).]

¹ See generally 2 M. Farrand, The Records of the Federal Convention of 1787, at 46 (notes of James Madison), 133 (notes of Committee of Detail), 186 (notes of James Madison), 238 (notes of Robert Yates), 576 (notes of Committee of Style), 661 (Constitution) (rev. ed. 1937) (hereinafter “Farrand”).

² Act of October 21, 1976, Pub. L. 94-583, 90 Stat. 2891, codified at 28 U.S.C. §§ 1330; 1332(a)(2)—1332(a)(4); 1391(f); 1441(d); and 1602-1611.

³ The other six are Texas Trading & Milling Corp. v. Federal Republic of Nigeria, No. 80-7703, slip op. at (2d Cir. Apr. 16, 1981); Decor by Nikkei International, Inc. v. Federal Republic of Nigeria, No. 80-7783, slip op. at (2d Cir. Apr. 16, 1981); Chenax Majesty, Inc. v. Federal Republic of Nigeria, No. 80-7771, slip op. at (2d Cir. Apr. 16, 1981); East Europe Import-Export, Inc. v. Federal Republic of Nigeria, No. 80-7773, slip op. at (2d Cir. Apr. 16, 1981); Reale International, Inc. v. Federal Republic of Nigeria, No. 81-7183, slip op. at (2d Cir. Apr. 16, 1981); and Gemini Shipping, Inc. v. Foreign Trade Organization for Chemicals and Foodstuffs, No. 80-7851, slip op. at (2d Cir. Apr. 16, 1981).

⁴ The Central Bank of Nigeria is an instrumentality of the Federal Republic of Nigeria. It performs functions similar to the United States Federal Reserve and the Bank of England.

⁵ The Uniform Customs and Practice for Documentary Credits (1962 Revision) Chamber of Commerce Brochure No. 222 (“UCP”) is a document setting forth standards of conduct relating to letters of credit. It is published by the International Chamber of Commerce, which has its headquarters in Paris.

⁶ Nigeria’s cement contract with Verlinden was one of 109 such contracts Nigeria entered in 1975. The details of this massive program for the purchase of cement, the port congestion it caused, and the litigation that ensued are described more fully in Texas Trading & Milling Corp. v. Federal Republic of Nigeria, supra note 3, decided this day.

⁷ Article 3 of the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce provides:

Central Bank does not seriously dispute that its instructions to Morgan violated the UCP.

⁸ See also Senate Judiciary Committee, Define Jurisdiction of U.S. Courts in Suits Against Foreign States, S. Rep. No. 1310, 94th Cong., 2d Sess. 8. The House and Senate Committees filed identical reports, and reference infra to the House Report may be deemed to represent the views of the Senate Committee as well.

⁹ Hearings on H.R. 11315 before the Subcommittee on Administrative Law and Governmental Relations of the Committee on the Judiciary, House of Representatives, 94th Cong., 2d Sess. 24 (1976) (“1976 Hearings”) (testimony of Monroe Leigh. Legal Adviser, Dep’t of State). President Ford, in signing the bill into law, stated that the Act’s provisions were “available to all American citizens.” 12 Weekly Comp. of Pres. Docs. 1554 (1976).

¹⁰ 1976 Hearings at 80 (testimony of Bruno A. Ristau, Chief, Foreign Litigation Section, Civil Division, Dep’t of Justice).

¹¹ 1976 Hearings at 80 (testimony of Cecil J. Olmstead, Chairman, The Rule of Law Committee).

¹² 1976 Hearings at 100 (statement of Charles N. Brower, Yale Law School).

¹³ Hearings on H.R. 3493 before Subcommittee on Claims and Governmental Relations of the Committee on the Judiciary, 93d Cong., 1st Sess. 18 (1973). (“1973 Hearings”) (testimony of Charles N. Brower, Legal Adviser, Dep’t of State). The 1973 bill was introduced as S. 566, 93d Cong., 1st Sess., see 119 Cong. Rec. 2204 (1973), and H.R. 3493, 93d Cong., 1st Sess., see id. at 2880. The language of § 2 of those bills is identical in material respects to the text of the present 28 U.S.C. § 1330(a). See, e.g., 119 Cong. Rec. 2213-15 (1973) (reprinting S. 566). The 1973 bills were withdrawn by their sponsors, and introduced as revised in H.R. 11315, 94th Cong., 1st Sess., see 121 Cong. Rec. 42017 (1975), and S. 3553, 94th Cong., 2d Sess., see 122 Cong. Rec. 17454 (1976). H.R. 11315 became the FSIA.

¹⁴ The clause provides in full:

¹⁵ See Ex Porte Edelstein, 30 F.2d 636 (2d Cir.) (L. Hand, J.), cert, denied, 279 U.S. 851 (1929).

¹⁶ Cf. 28 U.S.C. § 1350, conferring jurisdiction over suits “by an alien for a tort only, committed in violation of the law of Nations.” Section 1350 permits suits between aliens through the federal question grant of Article 111. Fitartiga v. Pena-Irala, 630 F.2d 876 (2d Cir. 1980). So do, inter alia, the securities laws and antitrust laws, again operating through the federal question grant. IIT v. Vencap, Ltd., 519 F.2d 1001 (2d Cir. 1975) (securities laws); Joseph Muller Corp. Zurich v. Societe Anonyme de Gerance et D’Armement, 451 F.2d 727 (2d Cir. 1971), cert, denied, 406 U.S. 906 (1972) (antitrust laws).

We stated in Filartiga that physical torture violates the law of nations, and thereby transgresses the “laws of the United States.” 630 F.2d at 888. We have elsewhere held that commercial violations, such as those here alleged, do not constitute breaches of international law. See Dreyfus v. von Finck, 534 F.2d 24, 30-31 (2d Cir.). cert, denied, 429 U.S. 835 (1976); IIT v. Vencap, Ltd., supra, 519 F.2d at 1015.

¹ At least, Congress is powerless to confer jurisdiction when, as here, the suit contains aliens only. If the case were between an alien and an American on one side and an alien on the other, diversity jurisdiction would not exist under § 1332, IIT. v. Vencap, Ltd., supra note 16, 519 F.2d at 1015, but it might be available to Congress under Article 111. Compare State Farm Fire & Casualty Co. v. Tashire, 386 U.S. 523 (1967), with Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806).

¹⁸ In Smith, the cause of action was created by state law; a shareholder sued to enjoin his corporation’s purchase of bonds, which purchase the shareholder considered unauthorized by the corporation’s charter. State law created the charter. But the ground on which the shareholder alleged the purchase to be improper—that the federal instrumentality which had issued them had done so unconstitutionally—clearly called for the interpretation of a federal law.

Justice Holmes dissented.

¹⁹ That is, “whether state or federal law is to be applied will depend on the nature of the issue before the court,” not the presence of a foreign state. “Under the Erie doctrine state substantive law. including choice of law- rules, will be applied if the issue before the court is non-federal.” 1973 Hearings at 47 (Dep’t of State, Section-by-Section Analysis of 1973 bill). Accord, House Report at 6621.

²⁰ House Report at 6616 (“sovereign immunity is an affirmative defense which must be specially pleaded”; “the burden will remain on the foreign state”). Accord, 1976 Hearings at 74 (statement of Committee on International Law of the Association of the Bar of the City of New York); id. at 81 (testimony of Cecil J. Olmstead). See also 1973 Hearings at 32 (testimony of Charles N. Brower) (“it is incumbent upon the defendant to raise the defense of sovereign immunity rather than the plaintiff being required to establish lack of immunity”).

Some confusion on this point arises from § 1604, which is drafted to create a general principle of immunity, not a presumption of amenability which defendant must overcome. The reasons for this aspect of the Act’s structure are historical. 1973 Hearings at 32 (testimony of Charles N. Brower and Bruno A. Ristau). The above citations establish that the “negative drafting” was not intended to revise the rules of pleading.

²¹ A simpler, but less germane, example of this is :he erstwhile presence of a jurisdictional amount requirement in most federal question cases. 28 U.S.C. § 1331(a). See Federal Question Jurisdictional Amendments Act of 1980, Pub. L. 96-486 (to be codified in 18 L’.S.C. § 1331), eliminating the requirement.

²² The Court in Mossman did not void § 11 insofar as it applied to such suits, since Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803), and the power to strike down statutes, still lay in the future. Instead, the Court construed § 11 to require that a citizen of the state be on at least one side of the dispute.

²³ That aliens were a subject of predominant—indeed, preemptive—federal concern as assumed by the Framers. See Filartiga v. Pena-Irala, supra note 16. 630 F.2d at 877-78. In fact, early drafts of Article 111 had included references to “all cases in which foreigners may be interested.” E.g., 1 Farrand 244 (notes of James Madison). See also id. at 247 motes of Rufus King).

²⁴ Beyond Mossman and Hodgson, the latter case of The Propeller Cenessee Chief v. Fitzhugh, 53 U.S. (12 How.) 443 (1852), provides support. Congress in the Great Lakes Act of 1845 had purported to create jurisdiction over cases “concerning” vessels on the Great Lakes, without changing the substantive rule of decision in those cases. 53 U.S. at 451-52. The Supreme Court, in an opinion by Chief Justice Taney, upheld the law on maritime grounds, but stated flatly that the jurisdictional provision would be unconstitutional if it were based only on the “arising under” grant and if it were unsupported by substantive regulations. Id. at 453. That is, a case brought under the jurisdictional provision would not “arise under” a law of the United States for purposes of Article 111.

The conclusion to be gleaned from these canescent cases is this: the Ivy Broadcasting rule, requiring as a condition of jurisdiction the interpretation of a federal substantive law, i.e., one which regulates conduct outside the courtroom, is of constitutional moment. We need not here hold whether the other aspect of the rule under § 1331 (that the necessity to interpret the federal law be disclosed by the complaint) is constitutionally required. Louisville & Nashville Railroad Co. v. Mottley (Mottley II), 219 U.S. 467 (1911), implies it is not.

²⁵ E.g., Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 481 (1957) (Frankfurter, J., dissenting).

²⁶ Osborn was extended to cases involving federally-chartered corporations, see The Pacific Railroad Removal Cases. 115 U.S. 1 (1885), but that holding has been called a “sport,” Mishkin, , The Federal “Question” in the District Courts, 53 Colum. L. Rev. 157, 160 n.24 (1953)CrossRefGoogle Scholar, and has been limited to its facts. See Textile Workers Union v. Lincoln Mills, supra note 25, at 481 (Frankfurter. J., dissenting).

^* Of the United States District Court for the Southern District of New York, sitting by designation.

^* [Reproduced from the Slip Opinion at pp. 2611-18 (2d Cir. Apr. 16, 1981).]

¹ See Texas Trading & Milling Corp. v. Federal Republic of Nigeria, No. 80-7703, slip op. at (2d Cir. Apr. 16. 1981). Texas Trading and this case are two of seven appeals decided today involving the Foreign Sovereign Immunities Act of 1976, Pub. L. 94-583. 90 Stat. 2891, codified at 28 U.S.C. §§ 1330; 1332(a)(2)-1332(a)(4): 1391(f): 1441(d); and 1602-1611. In the Texas Trading opinion, we disposed of three other cases as well. They are: Decor by Nikkei International, Inc. v. Federal Republic of Nigeria, No. 80-7783; Chenax Majesty, Inc. v. Federal Republic of Nigeria, No. 80-7771; and East Europe Import-Export, Inc. v. Federal Republic of Nigeria, No. 80-7773. The other two cases of the seven were treated in separate opinions. They are Verlinden B. V. v. Central Bank of Nigeria, No. 80-7413, slip op. at (2d Cir. Apr. 16, 1981), and Reale International, Inc. v. Federal Republic of Nigeria, No. 81-7183, slip op. at (2d Cir. Apr. 16, 1981).

² See 7 U.S.C. §§ 1427, 1431, 1691 et seq.

³ Gemini is a ship charterer. It promises one party it will transport goods by sea, and it secures shipping from another party to fulfill the promise.

⁴ Section 1605(a)(2) provides in full:

(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case—

⁵ Whether jurisdiction is present here under the third clause of § 1605(a)(2) remains an open question. See Texas Trading & Milling Corp. v. Federal Republic of Sigeria, supra note 1, slip op. at n.35.

⁶ Since Gemini is a New York corporation, the statutory subject matter jurisdiction finds a constitutional basis in the diversity grant. See Texas Trading & Milling Corp, v. Federal Republic of Nigeria, supra.