Week 3 case study business law- Dr. Manahill
ProjectManager
case_study_wk_2_copy.pptxBusiness Law Case Study
David Harrison-Trimble
Week 2 Case Study
Keller v. Central Bank of Nigeria
MGMT-520
Keller University
Parties Involved
Prince Arthur Ossai
Central Bank of Nigeria- defendant
Henry Keller-Plaintiff
The key parties invovled in this case is Prince Arthur Ossai and Henry Keller. Prince Arthur Ossai is the defendant whereas Henry Keller is the plaintiff. Ossai was a government official in Nigeria, who entered into a contract with Henry Keller, who is a sales representative for H.K E enterprises, Inc, which is a Michigan-based manufacturer of medical equipments. Being a plaintiff, Keller accused The Central Bank of Nigeria of deffrauding him
428, 950 in fees for a transaction that was never successful. This is because upon payment if the money, Kellerr was supposed to receive $25.5 million for the contract to supply the needed equipments (United States Court of Appeals, 2002).
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Facts
Ossai and Keller entered into a contract to distribute medical equipment in Nigeria
Osai demanded that Keller grant him exclusive distribution rights
Ossai demanded that $25.5 million deposit in CBN be transferred to Keller’s account.
CBN employees charged Keller $28,950 in fees for the transaction, but never transferred the money.
Keller and H.K Company filed a lawsuit in a federal district court against CBN and others, citing the Racketeer Influenced and Corrupt Organizations Act (RICO)
However, the defendants filed a motion to dismiss it under the Foreign Sovereign Iimmunities Act (FSIA).
The court dismissed the motion, asserting that the claim fell within the FSIA’s commercial activity exception.
Prince Arthur Ossai, a Nigerian government official, entered into a contract with Henry Keller, a sales representative for H.K Enterprises, Inc, based in Michigan. Keller’s company manufacturers and supplies medical equipments. The parties agreed that Ossai would be granted exclusive distribution rights to sell H.K products in Nigeria. In addition, it was agreed that Ossai would buy $4.1 million of H.K products for $6.62 million, together with a $7.65 million licensing fee. Prior to the closure of the deal, Ossai requested that $25.5 million on deposit to the Central Bank of Nigeria be transferred into an account established by Keller. The CBN employees charged Keller $28,950 in fees for the transaction. However, the funds were never transferred. As a result, Keller filed a lawsuit against the CBN and others, basing his accusations on the Racketeer Influenced and Corrupt Organization Act (RICO). However, the defendants filed a motion to dismiss it, citing the Foreign Sovereign Immunities Act (United States Court of Appeals, 2002).
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Procedures
The defendants appealed to the United States Court of Appeals Sixth Circuit
This happened after the lower court denied their dismissal motion that was based on the Foreign Sovereign Immunities Act (FISA)
The lower court stated that the claim fell within FISA’s ‘commercial activity’ exception
Thereafter, the defendants moved to the U.S. Court of Appeals, Sixth Circuit.
The defendants appealed to the United States Court of Appeals for the Sixth Circuit. Initially, the defendants had filed a motion to dismiss the plaintiff’s accusation under the Racketeer Influenced and Corrupt Act. In the dismissal motion, the defendants dismissed the accusations under the Foreign Sovereign Immunities Act (FSIA). However, the lower court denied the motion, stating that the claim fell within the FSIA’s commercial activity exception. As a result, the defendants appealed to the U.S. Court of Appeals for the Sixth Circuit. The district court had the original jurisdiction without regard to amount of controversy of any nonjury civil action against a foreign state as described in section 1603(a) of the title on any claim for relief in person with regard to which the foreign state is not entitled to immunity either under sections 1603 to 1607 or under any applicable international agreement (United States Court of Appeals, 2002).
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Issue: The Central Question
The key question is whether ‘commercial activity’ exception is applicable under FSIA
The court also seeks to determine whether RICO provisions can be applied under the ‘commercial activity’ exception.
Another question is whether immunity under FSIA can be granted when there are individuals involved, who act on behalf of FSIA
The central question that the U.S Court of Appeals concerned itself with was whether the ’commercial activity exception’ to Foreign Sovereign Immunity Act was applicable. To begin with, the parties strongly dispute the relevance of immunity under FSIA. This law provides, in relevant part, that in view of the existing international agreements to which the US is a party at the time of enactment if this act, a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607 of the same chapter. Under FSIA, ‘commercial activity is either a regular course of commercial conduct or a particular commercial transaction or act (Hartley, 2009). This includes the commercial character of any transaction or activity (United States Court of Appeals, 2002).
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The Applicable Laws
The main applicable laws include:
Foreign Sovereign Immunities Act (FSIA)
Racketeer Influenced and Corrupt Organizations Act (RICO)
The ‘Commercial Activity’ exception clause under FSIA
The laws that are applicable in this case scenario include the Foreign Sovereign Immunities Act (FSIA) and the Racketeer Influenced and Corrupt Organizations Act (RICO). The FSIA governs all litigations that concern both state and federal courts, including their agencies and instrumentalities. It has provisions for the exclusive basis for gathering jurisdiction over these entities in the US courts (Hartley, 2009). FSIA recognizes immunity in every civil action against a foreign state or its political subdivisions, agencies, or instrumentalities. In addition, it also has ‘commercial activity’ exception that can be used as a basis to scrap off this immunity. The RICO, on the other hand, is a federal law that that is meant to avert organized crime in the United States by prosecution and civil penalties for racketeering activities undertaken as part of an ongoing criminal enterprise. Activities include bribery, money laundering, and embezzlement (Goldman & Sigismond, 2013).
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Holding: How the Court Resolved the Issue
The defendants acted within the scope of the sovereign
Defendants are protected by FSIA
Court upheld district court’s ‘commercial activity’ exception under FSIA.
Motion gives room fro civil claims under RICO against the defendants
The Sixth Circuit Court ruled that as a collective, the defendants acted within the scope of the sovereign. Therefore, they are potentially protected by FSIA. The Court also upheld the decision of the lower court, which regarded the transaction as a ‘commercial activity. As a result, an exception to the Act was granted. The Court also held that the motion can therefore give room for civil claims under RICO to be brought against the defendants, for criminal racketeering activities. Under RICO, racketeering is regarded as an indictable, punishable criminal act, and the final decision of the Court was that FSIA gives foreign sovereigns immunity from Civil claims (United States Court of Appeals, 2002).
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Reasoning
Commercial activity exception was applicable
The contract was a deal to license and sell medical equipments
Such an activity is private, not a regulator function of the CBN.
Thus, this was a commercial activity.
The defendants’ argument neglects the extended business dealings of the defendants
The Court reasoned that the commercial activity clause was applicable because in this case, the conduct was a deal to license and sell medical equipments. This type of activity is done by private parties and not a market regulator function of the CBN. Therefore, the district court correctly concluded that this was a commercial activity, and that any fraud and bribery involved did not render the plan for non-commercial (United States Court of Appeals, 2002). In addition, the court stated that the argument by other defendants that only Ossai, who is not a party to the appeal, entered into the contract with the plaintiffs is erroneous. To this, the court reasoned that the defendant’s argument neglects the extended business dealings of these defendants (Ogwuma, Rasheed, Sadiq, and the CBN), with the plaintiff in furtherance of the contract. In view of the above, the court determined that there is no reason to affirm that the continuing negotiations by other defendants at the CBN fell outside the confines of the ‘commercial activity’ of the arrangement.
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Conclusion
The above case clarifies the extent to which foreign sovereigns are immune to criminal prosecution in US Courts
It also explains the defining features of non-individual sovereign rights
It also clarifies that individuals who serve as agents on behalf of sovereigns also enjoy immunity under FSIA
The central idea of the above case scenario is sovereign immunity and the degree to which foreign sovereigns are immune from criminal prosecution in the United States Courts. Therefore, the above case served to identify the defining characteristics of non-individual sovereign. It also established that these people, who serve as agents on behalf of the sovereigns, still enjoy immunity under the FSIA. The fact that the defendants faced criminal persecution from which they were ultimately given immunity supersedes the fact that their initial activities were regarded as commercial, and not protected by FSIA. Thus, the court dismissed RICO (United States Court of Appeals, 2002).
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References
Goldman, A. J., & Sigismond, W. D. (2013). Cengage Advantage Books: Business Law: Principles and Practices. New York: Nelson Education.
Hartley, T. C. (2009). International commercial litigation: text, cases and materials on private international law. Cambridge University Press.
United States Court of Appeals. (2002). H. Henry KELLER; H.K. Enterprises, Inc., Plaintiffs-Appellees, v. CENTRAL BANK OF NIGERIA; Paul Ogwuma; Alhaji Rasheed; Alhaji M.A. Sadiq, Defendants-Appellants. Retrieved from http://www.findlaw.com
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