Overcoming the Doctrine of Sovereign Immunity in Order to Pursue a Foreign Government for Breaching an Agreement in Georgia

Having to pursue commercial litigation can be a complicated matter. It may be profoundly more so when the business partner whom you’re suing is a foreign government. The law provides wide latitude for foreign governments to avoid facing suit in the United States. This protection is called sovereign immunity. There are certain exceptions that remove that immunity and make the foreign government subject to a legal action in the U.S. Whether you are suing a sole proprietorship located five miles from your business or a foreign government, make sure that you protect your business interests by selecting skilled Georgia business counsel.

One recent case that has potential resonance here in Georgia and that involved sovereign immunity was an action that involved an alleged agreement between a Floridian and the government of Venezuela. Ricardo was the great-great-grandson of Joaquin de Mier, whose main significance within history (and this case) was his friendship with South American leader Simon Bolivar. Bolivar spent his final days at de Mier’s home and left his friend with a “treasure trove” of possessions. That trove eventually passed through inheritance to Ricardo.

The Venezuelan government allegedly stated an interest in purchasing the Bolivar collection that Ricardo held. The two sides entered into negotiations. That year, the Venezuelan government flew Ricardo and the collection from the United States to Venezuela. Ricardo believed the two sides had an agreement:  the Venezuelan government would inspect the collection and either would buy it or would, if declining to purchase, return the collection to Ricardo’s possession. Five years later, Ricardo had neither his collection back nor any payment from Venezuela.

Ricardo sued for breach of contract in federal court in Florida. The Venezuelan government asked the U.S. court to throw out the case, arguing that the legal principle of sovereign immunity blocked it from facing Ricardo’s lawsuit. The trial court disagreed, and the 11th Circuit Court of Appeals, whose rulings affect federal cases in Florida, Georgia, and Alabama, upheld that decision.

One of the exceptions to sovereign immunity is the commercial activity exception. The commercial activity exception can be triggered in any one of three possible ways. Two are if the lawsuit is “based upon a commercial activity carried on in the United States by the foreign state,” or it is based “upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere.” The third trigger is if the lawsuit is based “upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.”

The court in Ricardo’s case determined that Ricardo sufficiently alleged facts that triggered the third exception. He had proof that an act took place outside the U.S. (Venezuela’s failure to pay him for the collection or return it) and that this act was associated with commercial activity (the potential sale/purchase of the collection). Finally, the alleged breach had a direct effect in the United States because the Venezuelan government knew Ricardo lived in Orlando, so either payment for the collection or the return of the collection would take place in Florida. With a complaint that met all of the criteria of the exception, Ricardo was allowed to proceed with his lawsuit against the Venezuelan government.

Whether you are preparing to launch a commercial litigation action or defend against one, the experienced Atlanta contract litigation attorneys at Poole Huffman, LLC are here to help. Our attorneys have spent many years formulating and executing effective business litigation strategies to protect and enhance our clients’ interests. Contact our attorneys online or by calling 404-373-4008 to schedule your confidential consultation.

More blog posts:

Confirmation Letters – Avoiding Potential Conflict Regarding Agreement Terms, Atlanta Business Litigation Attorneys Blog, April 5, 2016

Commercial Real Estate Broker’s Liens, Atlanta Business Litigation Attorneys Blog, Sept. 23, 2013