Peter Odhiambo v. Republic of Kenya

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 8, 2014 Decided August 29, 2014
No. 13-7100
PETER GEORGE ODHIAMBO,
APPELLANT
v.
REPUBLIC OF KENYA, A FOREIGN STATE, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:12-cv-00441)
Robert W. Ludwig argued the cause and filed the briefs
for appellant. With him on the briefs were W. Clifton Holmes
and Thomas K. Kirui.
David I. Ackerman argued the cause for appellees. With
him on the brief was Daniel D. Barnowski.
Before: GRIFFITH, KAVANAUGH, and PILLARD, Circuit
Judges.
Opinion for the Court filed by Circuit Judge
KAVANAUGH, with whom Circuit Judge GRIFFITH joins.
2
Opinion concurring in part and dissenting in part filed by
Circuit Judge PILLARD.
KAVANAUGH, Circuit Judge: Kenya wanted to crack
down on tax evasion. So it enlisted help from the Kenyan
public. The Kenya Revenue Authority issued an ad promising
monetary rewards in exchange for information about
undisclosed taxes. Enticed by that offer, Kenyan private bank
employee Peter Odhiambo blew the whistle on hundreds of
accountholders with potential tax deficiencies. Kenya
responded by making some rewards payments to Odhiambo.
But Odhiambo claimed that he was entitled to more – millions
more. When word got out that he was an informant,
Odhiambo feared for his safety, and Kenyan officials helped
him ultimately move to the United States as a refugee.
Odhiambo then sued Kenya in federal district court in
Washington, D.C., for breach of contract based on Kenya’s
alleged underpayment of rewards to Odhiambo.
Under the Foreign Sovereign Immunities Act, foreign
governments are immune from suit in U.S. courts unless the
plaintiff’s claim falls into one of the statute’s enumerated
exceptions. See 28 U.S.C. § 1604. Odhiambo argues that his
claims satisfy the FSIA’s waiver and commercial activity
exceptions. But Kenya has not waived its immunity in U.S.
courts “either explicitly or by implication.” Id. § 1605(a)(1).
And Kenya’s alleged breach of contract – a contract that was
offered, accepted, and performed in Kenya – lacks the
connection to the United States required by the commercial
activity exception to the FSIA. See id. § 1605(a)(2). We
therefore conclude, as did the District Court, that the FSIA
bars Odhiambo’s suit. We affirm.
3
I
For most of our Nation’s history, foreign sovereigns
enjoyed virtually absolute immunity from suit in U.S. courts.
See Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480,
486 (1983); The Schooner Exchange v. M’Faddon, 11 U.S.
116, 136-46 (1812) (Marshall, C.J.). That changed in 1952,
when the State Department and then the courts adopted the
“restrictive theory” of sovereign immunity. Under the
restrictive theory, foreign states retain immunity for sovereign
public acts but not for private commercial acts. See Republic
of Austria v. Altmann, 541 U.S. 677, 689-91 (2004);
Verlinden, 461 U.S. at 486-88. In the Foreign Sovereign
Immunities Act of 1976, Congress codified the restrictive
theory and further defined the scope of foreign sovereign
immunity. See Pub. L. No. 94-583, 90 Stat. 2891. Since then,
the FSIA has provided “the sole basis for obtaining
jurisdiction over a foreign state in our courts.” Argentine
Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434
(1989); see Peterson v. Royal Kingdom of Saudi Arabia, 416
F.3d 83, 86 (D.C. Cir. 2005). As the Supreme Court recently
reiterated, the FSIA supplies a “comprehensive set of legal
standards governing claims of immunity in every civil action
against a foreign state.” Republic of Argentina v. NML
Capital, Ltd., 134 S. Ct. 2250, 2255 (2014) (quoting
Verlinden, 461 U.S. at 488).
Under the FSIA, a district court has subject matter
jurisdiction over a suit against a foreign state if – and only if –
the plaintiff’s claim falls within a statutorily enumerated
exception. See 28 U.S.C. §§ 1330(a), 1604, 1605. In other
words, the FSIA exceptions are exhaustive; if no exception
applies, the district court has no jurisdiction. See Saudi
Arabia v. Nelson, 507 U.S. 349, 355 (1993); Peterson, 416
F.3d at 86.
4
Two FSIA exceptions are relevant to this case. The first
is the waiver exception, which permits a suit when “the
foreign state has waived its immunity either explicitly or by
implication.” Id. § 1605(a)(1). The second is the commercial
activity exception, which permits a suit when “the action is
based [1] upon a commercial activity carried on in the United
States by the foreign state; or [2] upon an act performed in the
United States in connection with a commercial activity of the
foreign state elsewhere; or [3] 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.” Id. § 1605(a)(2).
The dispute here arises from an “Information Reward
Scheme” developed by the Kenya Revenue Authority to enlist
public cooperation in enforcing Kenya’s tax laws. The
scheme “rewards persons who provide information as below:
Information leading to the identification of
hitherto undisclosed taxes – a reward amounting
to 1% of the tax identified [up to] a maximum of
[100,000 Kenyan shillings].
Information leading to the recovery of hitherto
undisclosed taxes – a reward amounting to 3% of
the taxes collected.”
J.A. 16. In essence, the rewards program encouraged
whistleblowers to come forward with information about tax
evasion by offering them a share of the proceeds – not unlike
our country’s False Claims Act or the common law qui tam
action. See 31 U.S.C. §§ 3729-3733; Vermont Agency of
Natural Resources v. United States ex rel. Stevens, 529 U.S.
765, 768 & n.1, 774-77 (2000).
5
The rewards program had its intended effect on Peter
Odhiambo, an auditor at a private Kenyan bank called
Charterhouse Bank. In April 2004, Odhiambo turned over
records implicating more than 800 accountholders in possible
tax evasion. The Kenya Revenue Authority rewarded
Odhiambo with an initial payment of 200,000 Kenyan
shillings (about $2,600). A year later, the Authority made an
additional payment of roughly 250,000 Kenyan shillings
(about $3,300).
At some point, Charterhouse apparently learned that
Odhiambo was the informant behind the investigation.
Odhiambo then reported receiving disquieting phone calls
telling him to leave Kenya. He was also the victim of alleged
police harassment, which he reported to the Kenya National
Commission on Human Rights. Believing Odhiambo’s safety
at risk, Kenyan officials supported his application for asylum
in the United States. He was granted asylum and arrived here
as a refugee in September 2006.
Before and after his relocation, Odhiambo insisted that
Kenya owed him more money for the tips that he had
provided about tax evasion at Charterhouse. Odhiambo
pressed his claims through written correspondence and in
face-to-face meetings with Kenyan officials in the United
States. Still unsatisfied, Odhiambo sued Kenya for breach of
contract in federal district court in Washington, D.C. He
sought approximately $24.5 million in damages to
compensate him for Kenya’s alleged underpayment of
rewards. See Odhiambo v. Republic of Kenya, 930 F. Supp.
2d 17, 20-24 (D.D.C. 2013) (Odhiambo I).
Kenya moved to dismiss Odhiambo’s complaint based on
its sovereign immunity to suit in U.S. courts. The District
Court agreed with Kenya that the FSIA bars the suit. See id.
6
at 23-35. We review the District Court’s sovereign immunity
determination de novo. See Cruise Connections Charter
Management 1, LP v. Attorney General of Canada, 600 F.3d
661, 664 (D.C. Cir. 2010).
II
Odhiambo invokes two FSIA exceptions to establish
district court jurisdiction over his suit: the waiver and
commercial activity exceptions. We consider each in turn.
A
Odhiambo first contends that the FSIA does not bar his
suit because the waiver exception applies. The waiver
exception provides in relevant part that sovereign immunity
will not apply when a “foreign state has waived its immunity
either explicitly or by implication.” 28 U.S.C. § 1605(a)(1).
In the district court, Odhiambo argued that Kenya had
implicitly waived its sovereign immunity to suit in the United
States by facilitating his asylum here. In essence,
Odhiambo’s claim was that Kenya should not be allowed to
collect both the benefits of his performance on the contract
and the benefits of sovereign immunity while simultaneously
reneging on its bargain and creating an environment in which
he had to flee the country. The District Court rejected that
conception of implicit waiver as inconsistent with the case
law, which has found implicit waiver only where the foreign
state had “at some point indicated its amenability to suit.”
Odhiambo v. Republic of Kenya, 930 F. Supp. 2d 17, 24
(D.D.C. 2013) (Odhiambo I) (quoting Princz v. Federal
Republic of Germany, 26 F.3d 1166, 1174 (D.C. Cir. 1994)).
Odhiambo does not renew this argument on appeal, so we do
not consider it.
7
Odhiambo now claims that Kenya waived its sovereign
immunity with respect to claims like his when it acceded to
the 1951 Convention Relating to the Status of Refugees. We
disagree for two alternative and independent reasons. First, in
his submissions to the district court, Odhiambo did not
mention the Refugee Convention, much less contend that
Kenya’s accession constituted a waiver of sovereign
immunity in U.S. courts. Odhiambo has therefore forfeited
this argument. See World Wide Minerals, Ltd. v. Republic of
Kazakhstan, 296 F.3d 1154, 1161 & n.10 (D.C. Cir. 2002).
Second, even if we were to overlook Odhiambo’s failure to
timely raise this argument, it would have little merit. The
ambiguous and generic language of the Refugee Convention
falls far short of the exacting showing required for waivers of
foreign sovereign immunity. See id. at 1162. Indeed, the
Supreme Court has explained that it cannot “see how a
foreign state can waive its immunity under § 1605(a)(1) by
signing an international agreement that contains no mention
of a waiver of immunity to suit in United States courts.”
Argentine Republic v. Amerada Hess Shipping Corp., 488
U.S. 428, 442 (1989). The waiver exception to the FSIA does
not permit Odhiambo’s suit.
B
Odhiambo next relies on the commercial activity
exception. That exception applies when
the action is based [1] upon a commercial activity
carried on in the United States by the foreign state; or
[2] upon an act performed in the United States in
connection with a commercial activity of the foreign
state elsewhere; or [3] upon an act outside the territory
of the United States in connection with a commercial
8
activity of the foreign state elsewhere and that act
causes a direct effect in the United States.
28 U.S.C. § 1605(a)(2).
1
Clause one of the commercial activity exception permits
a suit against a foreign sovereign when the plaintiff’s “action
is based upon a commercial activity carried on in the United
States by the foreign state.” Id. § 1605(a)(2). The FSIA in
turn defines the phrase “commercial activity carried on in the
United States by a foreign state” to mean “commercial
activity carried on by such state and having substantial
contact with the United States.” Id. § 1603(e). Thus, to
invoke the district court’s jurisdiction under clause one, the
plaintiff’s claim must be “based upon some commercial
activity by” the foreign state “that had substantial contact with
the United States.” Saudi Arabia v. Nelson, 507 U.S. 349,
356 (1993) (internal quotation marks omitted).
In the district court, Odhiambo alleged several instances
of commercial activity by Kenya that had substantial contact
with the United States, including the meetings that Kenyan
officials held with him in the United States to discuss the
disputed rewards. The problem for Odhiambo is that his
breach-of-contract claim is not “based upon” that activity. 28
U.S.C. § 1605(a)(2) (emphasis added). As the Supreme Court
has explained, a claim is “based upon” commercial activity if
the activity establishes one of the “elements of a claim that, if
proven, would entitle a plaintiff to relief under his theory of
the case.” Nelson, 507 U.S. at 357. In other words, the
alleged commercial activity must establish “a fact without
which the plaintiff will lose.” Kirkham v. Société Air France,
429 F.3d 288, 292 (D.C. Cir. 2005); see Goodman Holdings v.
9
Rafidain Bank, 26 F.3d 1143, 1146 (D.C. Cir. 1994)
(commercial activity unrelated to elements of claim is “legally
irrelevant”). Odhiambo does not seriously contend that his
meetings with Kenyan officials in the United States establish
any fact without which his breach-of-contract claim will fail.
He therefore cannot proceed under clause one.
On appeal, Odhiambo asserts a new twist. He contends
that (i) Kenya’s rewards offer constitutes a commercial
activity by a foreign state on which his claim is based, and (ii)
the asserted commercial activity had substantial contact with
the United States because of his meetings with Kenyan
officials in the United States.1 As an initial matter, Odhiambo
failed to raise this argument in the district court and therefore
has forfeited it. But even if we consider Odhiambo’s new
theory, his interpretation of clause one is doubly flawed under
our case law. First, our cases have held that mere business
meetings in the United States do not suffice to create
substantial contact with the United States for these purposes.
See Zedan v. Kingdom of Saudi Arabia, 849 F.2d 1511, 1513
(D.C. Cir. 1988); Maritime International Nominees
Establishment v. Republic of Guinea, 693 F.2d 1094, 1109
(D.C. Cir. 1982). Second, our cases make clear that clause
one requires a plaintiff’s claim to be “based upon” the aspect
of the foreign state’s commercial activity that establishes
substantial contact with the United States. Our decision in
Kirkham illustrates that rule. There, we considered a claim by
an airline passenger who had purchased a ticket in the United
States and alleged an injury negligently caused by an Air
France employee in France. We did not, as Odhiambo
1
The District Court assumed without deciding that the rewards
offer was a commercial activity. See Odhiambo v. Republic of
Kenya, 930 F. Supp. 2d 17, 26 (D.D.C. 2013) (Odhiambo I).
Kenya appears to accept that premise on appeal.
10
proposes here, ask first whether her claim was based on
commercial activity by France and then ask independently
whether that commercial activity had substantial contact with
the United States. Instead, reasoning from the Supreme
Court’s decision in Nelson, we explained that the “sole
question before us” was whether the plaintiff’s negligence
claim was based upon her ticket purchase in the United States
– that is, whether her claim was based upon the aspect of the
foreign state’s commercial activity that establishes substantial
contact with the United States. Kirkham, 429 F.3d at 291; see
Nelson, 507 U.S. at 356-58. That is precisely the approach to
clause one that Justice White articulated in his concurring
opinion in Nelson. See Nelson, 507 U.S. at 364-65, 370
(White, J., concurring).
Kirkham’s interpretation of Nelson is fatal to Odhiambo’s
argument. As explained above, the only aspect of Kenya’s
commercial activity that allegedly established substantial
contact with the United States – his meetings with Kenyan
officials in the United States – is not necessary to make out
any element of his breach-of-contract claim. Recognizing as
much, Odhiambo essentially concedes that Kirkham
forecloses his argument. See Odhiambo Reply Br. 13, 16, 21-
22. Odhiambo suggests that Kirkham was “implicitly
overruled” by Permanent Mission of India to the United
Nations v. New York, 551 U.S. 193 (2007). Id. at 21. But that
case had nothing to do with the commercial activity
exception. This panel must follow Kirkham. And in any
event, Kirkham is correct. Clause one of the commercial
activity exception does not permit Odhiambo’s suit.
2
Clause two of the commercial activity exception allows a
suit against a foreign sovereign when the plaintiff’s claim is
11
based “upon an act performed in the United States in
connection with a commercial activity of the foreign state
elsewhere.” 28 U.S.C. § 1605(a)(2). Even assuming that
Odhiambo alleged an act that fits that definition, Odhiambo’s
clause two argument falters on the same grounds as his clause
one argument: His breach-of-contract claim is not based
upon any alleged “act performed in the United States in
connection with” Kenya’s commercial activity. Cf. Nelson,
507 U.S. at 357; Kirkham, 429 F.3d at 292; Goodman, 26
F.3d at 1145-46.
To be sure, Nelson, Kirkham, and Goodman interpreted
the phrase “based upon” in clause one, not clause two. But
the virtually identical statutory text and structure of clauses
one and two lead us to conclude that “based upon” means the
same thing in both clauses. See Powerex Corp. v. Reliant
Energy Services, Inc., 551 U.S. 224, 232 (2007); IBP, Inc. v.
Alvarez, 546 U.S. 21, 34 (2005). Indeed, although Odhiambo
disagrees with our interpretation of “based upon” in clause
one, he does not argue that those same words mean something
different in clause two. And to the degree that the text leaves
any ambiguity, the legislative history is “crystal clear” that
clause two’s reference to acts “performed in the United States
in connection with a commercial activity of the foreign state
elsewhere” is “limited to those” acts “which in and of
themselves are sufficient to form the basis of a cause of
action.” Zedan, 849 F.2d at 1514 (quoting H.R. REP. NO. 94-
1487, at 19 (1976)); see S. REP. NO. 94-1310, at 18 (1976)
(same).
In sum, a suit against a foreign sovereign may proceed
under clause two only if the “act performed in the United
States in connection with a commercial activity of the foreign
state elsewhere” establishes a fact without which the plaintiff
12
will lose. See Nelson, 507 U.S. at 357; Kirkham, 429 F.3d at
292. None of the acts cited by Odhiambo satisfies that test.
3
The closest question in this case arises from clause three
of the commercial activity exception. Clause three permits a
suit against a foreign sovereign when the plaintiff’s claim 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.” 28 U.S.C. § 1605(a)(2). We agree with Odhiambo
that his suit satisfies the first part of clause three: His claim is
based upon the “act” of Kenya’s alleged breach of contract,
which happened outside the United States in connection with
the rewards offer – a presumptively commercial activity of
the Kenyan government. The question remaining is whether
Kenya’s alleged breach of the rewards offer caused a “direct
effect in the United States” given that Odhiambo now resides
in the United States.
The leading Supreme Court case on the meaning of
“direct effect” is Republic of Argentina v. Weltover, Inc., 504
U.S. 607 (1992). In Weltover, the Supreme Court considered
whether Argentina’s decision to delay payments on certain
bonds caused a direct effect in the United States. The Court
explained that “an effect is ‘direct’ if it follows as an
immediate consequence of the defendant’s” activity.
Weltover, 504 U.S. at 618 (internal quotation marks omitted).
The Court reasoned that Argentina’s delay of the bond
payments caused a direct effect in the United States because
the bond contract had established the United States as a “place
of performance.” Id. at 619. More specifically, the contract
provided for payment in U.S. dollars and directed investors to
elect one of four payment locations, including New York.
13
Thus, at the moment the contract was formed, Argentina
assumed “contractual obligations” to pay the bondholders in
New York (or one of the three other designated locations). Id.
The investors in Weltover chose New York as their place of
payment, and Argentina made payments to their New York
accounts. See id. When Argentina breached its contractual
obligations by failing to make bond payments that were
“supposed to have been delivered to a New York bank,” its
breach had a direct effect in the United States. Id.
Like Weltover, this Court’s direct effect cases involving
alleged breaches of contract have turned on whether the
contract in question established the United States as a place of
performance. That approach follows from the text and
purpose of the FSIA. By definition, breaching a contract that
establishes the United States as a place of performance will
have a direct effect here, whereas breaching a contract that
establishes a different or unspecified place of performance
can affect the United States only indirectly, as the result of
some intervening event such as the plaintiff’s move to this
country. See Princz v. Federal Republic of Germany, 26 F.3d
1166, 1172 (D.C. Cir. 1994). Construing clause three to
permit suits in that latter category would create an incentive
for every breach of contract victim in the world to move to the
United States, demand payment here, and then sue alleging a
direct effect of nonpayment in the United States. That result
would contradict the statutory term “direct” and undermine
Congress’s objective of avoiding turning U.S. courts into
“small international courts of claims.” Verlinden B.V. v.
Central Bank of Nigeria, 461 U.S. 480, 490 (1983) (internal
quotation marks omitted).
This Court’s decision in Peterson v. Royal Kingdom of
Saudi Arabia, 416 F.3d 83 (D.C. Cir. 2005), illustrates our
place of performance rule and dictates our result here. In that
14
case, an American who had worked in Saudi Arabia but
resided in the United States claimed that he was contractually
entitled to a refund of employee contributions that he had paid
to the Saudi government. We held that Saudi Arabia’s
alleged breach of the contract did not create a direct effect in
the United States. Even though Peterson was in the United
States at the time of the asserted breach, and even though the
Court assumed that Saudi government “understood” as much,
the contract included “no agreement – implied or express –
that Peterson was to be paid in the United States.” Peterson,
416 F.3d at 90-91. On the contrary, the contract envisioned
that the Saudi government would refund the employee’s
money to him wherever he was when the payment came due.
Of critical importance to our case, the Court in Peterson held
that such a “pay wherever you are” arrangement does not
suffice to create a direct effect in the United States. See id.
Likewise, in Goodman, this Court concluded that there
was no direct effect where the foreign sovereign “might well
have paid” its contract partner through a bank account in the
United States but “might just as well have done so” outside
the United States. Goodman, 26 F.3d at 1146-47. Similarly,
in Zedan, the Court held that there was no direct effect when
the allegedly breached contract required the foreign sovereign
to “forward the money to” the other party “wherever he chose
to travel.” Zedan, 849 F.2d at 1514.
In Cruise Connections Charter Management 1, LP v.
Attorney General of Canada, 600 F.3d 661 (D.C. Cir. 2010),
this Court again observed that “harm to a U.S. citizen, in and
of itself, cannot satisfy the direct effect requirement.” Cruise
Connections, 600 F.3d at 665 (citing Zedan, 849 F.2d at
1515). The Court in that case went on to find a direct effect
based on Canada’s alleged breach of a contract that required a
U.S. company “to subcontract with two U.S.-based cruise
15
lines” to provide ships during the Vancouver Olympics. Id. at
662. Because “the contract itself required the ships to come
from” U.S.-based cruise lines, Canada’s alleged breach “led
inexorably to the loss of revenues” by the U.S. company in
the United States, just as Argentina’s breach of the bond
contract led to a loss of revenues for the investors who had
designated New York as a place of payment in Weltover. Id.
at 665.
Applying that same place of performance rule, this Court
in De Csepel v. Republic of Hungary, 714 F.3d 591 (D.C. Cir.
2013), found that the plaintiffs had adequately alleged a direct
effect in the United States by asserting that Hungary had
breached a bailment contract obligating it to return artwork to
individuals in the United States. The key to the Court’s
reasoning was that Hungary had, in forming the bailment
contract, “promised to perform specific obligations in the
United States.” De Csepel, 714 F.3d at 600-01. Thus, from
the moment of contract formation, the United States was a
contractually designated place of performance. The Court
emphasized twice that Hungary “knew” the owners of the
borrowed artwork “to be residing in the United States” at the
time Hungary formed the bailment agreement. Id. at 601; see
id. (Hungary “knew at all relevant times that the Herzog Heirs
owned the Herzog Collection and that certain of the Herzog
Heirs resided in the United States”) (quoting Complaint ¶ 36)
(emphasis added); De Csepel Br. 50 (“United States residents
owned portions of the Herzog Collection” “at the time the
bailments were created” and Hungarian officials “knew that
to be the case when they created bailment agreements”)
(emphases added). And the Court expressly contrasted
Hungary’s promise to perform specific obligations in the
United States with the facts of a case in which the Sixth
Circuit declined to find a direct effect in the United States
because the plaintiffs had not alleged that the foreign state
16
“ever promised to deliver the art collection to the United
States.” De Csepel, 714 F.3d at 601 (quoting Westfield v.
Federal Republic of Germany, 633 F.3d 409, 415 (6th Cir.
2011)) (alteration omitted).
In short, Hungary’s knowledge – from the moment the
bailment agreement was formed – that performing its
contractual obligations would require it to return the artwork
to owners in the United States was crucial to the Court’s
finding of a “direct effect in the United States” and to its
explanation of why the case was not covered by precedents
such as Peterson. Indeed, the De Csepel Court cited Peterson
immediately before explaining the relevance of Hungary’s
knowledge at the time it formed that contract that the owners
of the artwork were residing in the United States. See id.
(quoting Peterson, 416 F.3d at 90). We see no indication that
the De Csepel Court intended to (or did) depart from Peterson
or our other “direct effect” precedents in any way.
To summarize, this Court’s cases draw a very clear line:
For purposes of clause three of the FSIA commercial activity
exception, breaching a contract that establishes or necessarily
contemplates the United States as a place of performance
causes a direct effect in the United States, while breaching a
contract that does not establish or necessarily contemplate the
United States as a place of performance does not cause a
direct effect in the United States.
In presenting his case for a direct effect, Odhiambo does
not argue that his U.S. presence or U.S. citizenship alone
suffices to create a direct effect in the United States. As
explained above, the relevant precedents would foreclose any
such contention. See, e.g., Cruise Connections, 600 F.3d at
665 (citing Zedan, 849 F.2d at 1515); Peterson, 416 F.3d at
90-91. Instead, Odhiambo tries to model his claim on De
17
Csepel by suggesting that the contract established or
necessarily contemplated the United States as a place of
performance. But nothing in Kenya’s rewards offer suggested
that the United States might be a place of performance. If the
contract designated any place of performance, that place
would be Kenya, because the contract expressly provided that
rewards would be paid in Kenyan shillings. See J.A. 16; cf.
Weltover, 504 U.S. at 609, 619 (noting that Argentine bond
contract that created direct effect in the United States
provided for payment in U.S. dollars). Otherwise, the
contract simply established the kind of “pay wherever you
are” arrangement that we have repeatedly held – particularly
in cases like Peterson – insufficient to cause a direct effect in
the United States. Put another way, no one could look at
Kenya’s rewards offer and reasonably conclude that Kenya
“promised to perform specific obligations in the United
States” or was “supposed to” pay recipients in the United
States. De Csepel, 714 F.3d at 600-01; Weltover, 504 U.S. at
619; Peterson, 416 F.3d at 90; Goodman, 26 F.3d at 1146.
Kenya’s alleged breach of its obligations therefore did not
create a direct effect in the United States. On the contrary, as
the District Court found, the effect in the United States arose
only after a variety of intervening events, including the
unveiling of Odhiambo’s role as a whistleblower, Odhiambo’s
phone call to a Kenyan newspaper and the subsequently
published story, Odhiambo’s outreach to Kenya’s Human
Rights Commission, and Odhiambo’s move to the United
States as a refugee. See Odhiambo I, 930 F. Supp. 2d at 32.
In our view, we could not rule for Odhiambo on this point
without departing substantially from our precedents. See
Princz, 26 F.3d at 1172 (a direct effect “has no intervening
element, but, rather, flows in a straight line without deviation
or interruption”) (internal quotation marks omitted).
18
In reaching that conclusion, we also note an Eleventh
Circuit precedent on a factually similar question. See
Guevara v. Republic of Peru, 608 F.3d 1297 (11th Cir. 2010)
(Guevara II). In Guevara II, Peru issued a public reward
offer in return for information that would directly enable the
locating and capture of a high-profile fugitive. During a trip
to Miami, one of the fugitive’s associates, Guevara, gave up
the fugitive’s location to the FBI and demanded the reward.
When the Peruvian government refused to pay, Guevara sued
for breach of contract in South Florida’s federal court. The
Eleventh Circuit concluded that Peru’s alleged breach of the
reward offer did not cause a direct effect in the United States.
See id. at 1300-02, 1309-10. In short, Guevara’s mere
presence in the United States and demand for payment here
did not suffice to create an effect arising directly from the
breach of a contract offered in Peru that never established or
contemplated the United States as a place of performance. So
too here.2
Odhiambo alternatively contends that Kenya modified
the contractual place of performance by helping him resettle
in the United States and knowingly making payments that
reached him here. That contention falters on multiple fronts.
2
Odhiambo relies on the Ninth Circuit’s decision finding a
direct effect in Adler v. Federal Republic of Nigeria, 107 F.3d 720
(9th Cir. 1997). But in Adler, the contract expressly required the
investors to designate an out-of-country location of payment. See
Adler, 107 F.3d at 727. Here, by contrast, nothing in Kenya’s
rewards offer allowed – much less required – claimants to demand
payment in particular locations. So even if we agreed with the
Ninth Circuit’s looser approach to the direct effect prong of the
analysis, we would still conclude that Odhiambo’s suit does not fall
within clause three under Adler.
19
First, Odhiambo failed to allege any payments in the
United States in his first amended complaint – or at any time
prior to the District Court’s judgment – even though he
apparently received those payments years before he filed his
complaint. The District Court therefore did not need to
consider those allegations. See Exxon Shipping Co. v. Baker,
554 U.S. 471, 485 n.5 (2008).
Second, even if we were to consider Odhiambo’s
allegations, they do not demonstrate that Kenya manifested
the consent necessary to modify the contract. Odhiambo
offers no reason to believe that Kenya’s assistance in his
asylum application had any impact on the place of
performance designated in the rewards offer. Although
Kenya knows that Odhiambo is in the United States, that
alone does not suffice. Kenya has not, in the words of De
Csepel, “promised to perform specific obligations in the
United States.” De Csepel, 714 F.3d at 600-01. Indeed, far
from agreeing with Odhiambo that the contract designates the
United States as a place of performance, Kenya has
continually refused to issue any payments outside Kenya.
Odhiambo has therefore received the payments in the United
States only through an intermediary in Kenya who obtained
the payments in Kenya and then sent them to Odhiambo.
Again, that is a far cry from De Csepel, in which the contract
never envisioned performance anywhere other than the
United States. See id.
Third, Odhiambo’s allegation that he received a payment
from the Kenyan government through the Kenyan
intermediary while he was in Tanzania further undercuts his
claim that the United States was a contractually designated
place of performance. In short, the evidence shows this:
When Odhiambo was in Kenya, Kenya made payment in
Kenya. When Odhiambo was in Tanzania, Kenya made
20
payment to an intermediary in Kenya, and that intermediary
later transferred the money to Odhiambo in Tanzania. When
Odhiambo was in the United States, Kenya made payment to
an intermediary in Kenya, and that intermediary later
transferred the money to Odhiambo in the United States. If
Odhiambo were to move somewhere else, we see no reason to
doubt that Kenya would make any further payments in Kenya,
and that the money would be transferred by an intermediary to
Odhiambo in his new locale. That record further buttresses
the conclusion that the contract operated precisely as the kind
of “pay wherever you are” arrangement that we rejected as a
basis for jurisdiction over foreign states in Peterson and
Goodman.
Odhiambo nonetheless suggests that our direct effect
analysis should apply differently here because Kenya
arranged for him to seek asylum in the United States. See
Odhiambo Br. 50; Odhiambo Reply Br. 25-26. Under his
theory, refugees would be allowed to bring suits in U.S.
courts against their former sovereigns if those sovereigns
played a role in the refugees’ relocation to the United States.
Whatever the wisdom of that proposed refugee exception as a
policy matter, the FSIA does not recognize it. So neither can
we. We must adhere to the text of the statute, especially in
FSIA cases. See Republic of Argentina v. NML Capital, Ltd.,
134 S. Ct. 2250, 2255-56 (2014). As we explained above, the
FSIA is the sole way for a plaintiff suing a foreign sovereign
to invoke the jurisdiction of U.S. courts, and the exceptions
enumerated by the FSIA are exhaustive. See Nelson, 507 U.S.
at 355; Peterson, 416 F.3d at 86; cf. Law v. Siegel, 134 S. Ct.
1188, 1196 (2014) (enumeration of exemptions “confirms that
courts are not authorized to create additional exceptions”). In
other words, any claim to a FSIA exception “must stand on
the Act’s text. Or it must fall.” NML Capital, 134 S. Ct. at
21
2256. Odhiambo’s proposed refugee exception cannot stand
on the FSIA’s text. So it must fall.
To be sure, Congress and the President of course may
enact new legislation to amend the FSIA and include an
exception of the kind that Odhiambo proposes. But until then,
the role of this Court “is to apply the statute as it is written –
even if we think some other approach might accord with good
policy.” Burrage v. United States, 134 S. Ct. 881, 892 (2014)
(internal quotation marks and alterations omitted); see NML
Capital, 134 S. Ct. at 2258 (“[t]he question . . . is not what
Congress ‘would have wanted’ but what Congress enacted in
the FSIA”) (quoting Weltover, 504 U.S. at 618).
***
None of the FSIA exceptions asserted by Odhiambo
applies to this case. His suit therefore cannot proceed. We
affirm the judgment of the District Court.3
So ordered.
3
The District Court did not abuse its discretion in denying
Odhiambo’s motion for reconsideration and leave to file a second
amended complaint. Odhiambo’s only plausible argument was that
he had new evidence, but the District Court reasonably concluded
that the evidence was not new. See Odhiambo v. Republic of
Kenya, 947 F. Supp. 2d 30 (D.D.C. 2013) (Odhiambo II); see also
Ciralsky v. CIA, 355 F.3d 661, 668, 671-73 (D.C. Cir. 2004).
PILLARD, Circuit Judge, concurring in part and dissenting
in part: I agree with the majority that this case involves
commercial activity under the Foreign Sovereign Immunities
Act, and that neither the waiver exception to the Act nor
either of the first two clauses of the FSIA’s commercial
activity exception applies to permit Peter Odhiambo’s suit. I
write separately to explain why I believe that this case should
have been allowed to proceed under the third clause of the
commercial activity exception.
Odhiambo’s claim is based on “an act outside the
territory of the United States in connection with a commercial
activity of the foreign state elsewhere . . . that . . . cause[d] a
direct effect in the United States.” 28 U.S.C. § 1605(a)(2).
An effect in the United States in connection with a
sovereign’s commercial activity abroad is “direct” under the
third clause of the FSIA’s commercial activities exception “if
it follows as an immediate consequence of the defendant’s
activity.” Republic of Arg. v. Weltover, Inc., 504 U.S. 607,
618 (1992) (internal quotation marks and ellipsis omitted).
To be “direct,” the effect need be neither “substantial” nor
“foreseeable,” so long as it is more than “purely trivial.” Id.
The facts that Odhiambo alleges, and the reasonable
inferences drawn in his favor from those facts, support the
conclusion that there is a direct effect in the United States
caused by actions of Kenya in connection with a commercial
activity. Various of Kenya’s actions in connection with the
reward contract that forms the basis of Odhiambo’s claim
constitute “direct effects,” including:
Kenya offered rewards to members of the public for
information about tax evasion, without limiting the
offer to Kenyan nationals or residents, and without
specifying the place of performance of such contract;
2
The offer contained the promise that the Kenyan
government would keep informants’ identities secret
in order to protect them from reprisals, but Kenya
failed to keep Odhiambo’s whistle blowing secret,
thereby exposing him to threats against his life and
those of his family members, in response to which
Kenyan government officials actively assisted in
resettling Odhiambo as a refugee in the United States;
Exiled in the United States, Odhimabo necessarily
experiences here the direct effect of Kenya’s
continued failure to pay.
In sum, Odhiambo is present here, cannot safely return to
Kenya, and experiences Kenya’s non-payment here in the
United States as the “immediate consequence” of Kenya’s
actions.
The FSIA requires that we consider all facts relevant to
whether the unlawful conduct of a foreign sovereign acting in
its commercial capacity had a “direct effect” in the United
States. We are bound to do so by the statute’s terms, the
Supreme Court’s decision in Weltover, 504 U.S. 607, and our
own court’s FSIA precedents, see, e.g., De Csepel v. Republic
of Hung., 714 F.3d 591 (D.C. Cir. 2013); Cruise Connections
Charter Mgmt. 1, LP v. Att’y Gen. of Can., 600 F.3d 661
(D.C. Cir. 2010).
The majority’s determination that the lack of a place-of-
performance clause defeats Odhiambo’s claim misconstrues
the FSIA’s direct-effects analysis. The court’s opinion
misreads the prior cases to “turn[] on whether the contract in
question established the United States as a place of
performance.” Slip Op. at 13. But our decision in Cruise
Connections explicitly held to the contrary, that “[t]he
3
FSIA . . . requires only that [the] effect [in the United States]
be ‘direct,’ not that the foreign sovereign agree that the effect
would occur” in the United States. 600 F.3d at 665 (emphasis
added). In conflict with Cruise Connections, the majority
insists that, unless the plaintiff can point to a contract term
explicitly or implicitly designating the United States as the
place of performance, any claim arising from foreign
commercial activity affects the U.S. “only indirectly” and thus
is barred by the FSIA. Slip Op. at 13. I disagree.
Not every claim that relates to a foreign sovereign’s
commercial activity must be governed by a place-of-
performance clause, such as one might expect to find in a
commercial contract, before the claim may proceed under our
FSIA direct-effect clause precedents. Indeed, claims based on
actions “in connection with” commercial activity need not
even be contract claims. See, e.g., Princz v. Fed. Republic of
Ger., 26 F.3d 1166, 1168 (D.C. Cir. 1994) (claiming false
imprisonment, assault and battery, negligent and intentional
infliction of emotional distress, and quantum meruit). But see
28 U.S.C. § 1605(a)(5)(B) (recognizing immunity for
noncommercial torts with respect to “any claim arising out of
malicious prosecution, abuse of process, libel, slander,
misrepresentation, deceit, or interference with contract
rights”). Even where the claim does arise out of a contract,
specification of the anticipated place of performance is
especially unlikely in a case such as this one, involving a
unilateral contract drafted by the foreign government whose
own inability to protect the plaintiff accounts for his having to
flee, cf. De Csepel, 714 F.3d 591, especially when that
government’s own officials helped to direct the plaintiff to the
United States. It is common ground that, in cases in which
parties engage in commercial activities abroad and a plaintiff
thereafter unilaterally decides to relocate to the United States
where he then seeks to enforce claims relating to the foreign
4
commercial activity, the direct-effects requirement is not
satisfied. See, e.g., Peterson v. Royal Kingdom of Saudi
Arabia, 416 F.3d 83 (D.C. Cir. 2005); Zedan v. Kingdom of
Saudi Arabia, 849 F.2d 1511 (D.C. Cir. 1988). But the result
should be different where, for example, a foreign government
hires an American employee or firm abroad without
specifying place of performance, and, once the work is
complete, reneges on payment and deports the employee to
the United States. Where a foreign government causes a
plaintiff to leave its country and helps direct him to the United
States, as is alleged here, the FSIA should not bar suit against
it in United States courts.
To the extent that the majority opinion is simply a fact-
specific application of Weltover and our precedents, I believe
it is in error for the reasons I explain. But the majority
opinion appears to go further, to create a new legal rule for
FSIA direct-effect clause claims, requiring an express or
implied place-of-performance clause specifying the United
States. Any such rule is in conflict with Weltover and our
own decisions, so cannot have binding effect. See United
States v. Old Dominion Boat Club, 630 F.3d 1039, 1045 (D.C.
Cir. 2011) (“[W]hen a conflict exists within our own
precedent, we are bound by the earlier decision.” (citing
Indep. Cmty. Bankers of Am. v. Bd. of Governors of the Fed.
Reserve Sys., 195 F.3d 28, 34 (D.C. Cir. 1999))).
I.
Odhiambo, a professional auditor at a private commercial
bank in Kenya, accepted his government’s unilateral offer of a
reward for information revealing tax fraud. The “Information
Reward Scheme” promised a 1% bounty for information
leading to the identification of “hitherto undisclosed taxes,”
and 3% for information leading to their recovery. J.A. 16.
5
The published offer called on the public to share such
information, and promised that “volunteers are assured of
strict confidentiality to safeguard identities.” Id. The offer
included e-mail addresses as well as other contact
information, and did not geographically place any limit on the
sources from whence whistleblowers might provide the
needed information.
Odhiambo responded to the Kenyan government’s offer
by providing reliable information about a widespread scheme
of criminal tax evasion that was being operated through the
private commercial bank at which he worked. The scheme
was so extensive that, once the government learned of it and
appointed a task force to investigate, the bank was placed
under statutory management and ultimately forced to close.
(By that time, Odhiambo had left its employ and was working
at the Central Bank of Kenya.) The information Odhiambo
submitted led to detection of hundreds of millions of dollars
in unpaid taxes and the recovery of a large part of that figure.
Kenya began to fulfill its end of the bargain by giving
Odhiambo initial payment of a token sum to show its
appreciation, followed by a percentage payment relating to
only a small fraction of the fraud he identified.
Kenya failed to keep Odhiambo’s identity secret, despite
its promise. He received anonymous phone calls telling him
to leave Kenya. As the bank investigation intensified, police
officers with “a bogus warrant” confronted Odhiambo at work
and sought to search his home—an effort that Odhiambo
managed to deflect with the help of the Central Bank’s
governor and that the police did not then pursue. J.A. 7.
Odhiambo received more threatening phone calls and
“suspicious people were seen lurking around his house.” Id.
6
Odhiambo’s performance under the reward contract and
leaks regarding his identity as the whistleblower led directly
to death threats against him and forced Odhiambo into exile in
the United States. Before he left the country, Odhiambo
moved his residence twice and changed his phone number. It
was the Kenyan government that facilitated Odhiambo’s
flight as a refugee, and that helped to select the United States
as his destination. Various Kenyan governmental agencies
and officials sought to help Odhiambo relocate abroad,
including the Kenyan National Commission on Human Rights
and the Kenyan Minister for Justice. The Kenyan Human
Rights Commissioner facilitated Odhiambo’s meeting with
the United States embassy, and helped to arrange for
Odhiambo to leave the country as a refugee.
Kenya actively facilitated Odhiambo becoming a refugee
in the United States because it recognized that it could not
protect his life in Kenya in the face of the threats against him
triggered by his performance under its reward contract. Now
that it is clear that Odhiambo cannot return to Kenya to sue,
Kenya has reneged on millions it owes, instead raising the
FSIA as a jurisdictional bar.
II.
The FSIA’s authorization of suit based on a foreign
sovereign’s “commercial activities” codifies the “restrictive
theory” of sovereign immunity ascendant in international law
at the time of the FSIA’s enactment. That theory recognizes
that foreign governments are not immune from suit when they
act in their commercial, as distinct from sovereign, mode.
Permanent Mission of India to the United Nations v. City of
New York, 551 U.S. 193, 199 (2007); Weltover, 504 U.S. at
612-14. The limitations in the commercial activities
exception—including, as relevant here, the direct-effects
7
requirement—fulfill the additional purpose of ensuring
sufficient connection to the United States to warrant resort to
our courts. See 28 U.S.C. § 1605(a)(2); see also id. § 1330(b)
(establishing personal jurisdiction over any claim not subject
to immunity under sections 1605-1607 in which the foreign
sovereign has been served with process). As the FSIA cases
consistently demonstrate, there is no single factual sine qua
non of a United States direct effect. Where the facts, taken
together, show that a foreign government’s commercial
activity has a direct effect in the United States, claims in
United States court relating to that commercial activity are not
barred by the FSIA.
In Weltover, the Supreme Court held that, under the
direct-effect prong of the commercial activities exception, “an
effect is ‘direct’ if it follows ‘as an immediate consequence of
the defendant’s activity.’” 504 U.S. at 618 (ellipsis omitted).
Weltover requires consideration of all facts relevant to that
inquiry. In that case, the Court’s conclusion that the
rescheduling of Argentina’s currency-stabilizing bond had a
direct effect in the United States was supported by various
facts: the Swiss and Panamanian creditors’ preference for
payment in New York; Argentina’s prior interest payments
there; the debt’s designation in U.S. dollars; and, principally,
the fact that money the creditors insisted be paid to their New
York bank “was not forthcoming.” Id. at 619. Weltover did
not turn on any ex ante contractual specification of the United
States as the sole place of performance. The contract
contemplated that the money could be paid in any one of
several international financial centers, at the election of the
creditor, and plaintiffs only later chose New York as the
payment locale. Id. at 609-10. Instead of requiring an ex ante
place-of-performance clause, the Court considered a range of
facts it deemed relevant to the connection between the
commercial activity, the plaintiffs’ claim, and the United
8
States. A handful of relevant facts sufficed to demonstrate
that the effect of Argentina’s rescheduling of its bonds was
directly felt in the United States, so that foreign sovereign
immunity did not bar the suit. Id. at 618-19.
Weltover overruled the precedents of this and other
circuits that had limited the effects that could qualify as
“direct” under the FSIA’s commercial activities exception to
those that were “substantial” and “foreseeable.” Id. at 618.
To the extent the majority adopts a requirement of a place-of-
performance clause designating the United States, its analysis
conflicts with Weltover by effectively “engraft[ing] on
§ 1605(a)(2)’s commercial activity exception” the
requirement of “foreseeability” that Weltover rejected.
McKesson Corp. v. Islamic Republic of Iran, 52 F.3d 346, 350
(D.C. Cir. 1995). Indeed, to require ex ante contractual
designation of the United States as the place of performance
imposes a particularly restrictive form of the overruled
“foreseeability” condition, demanding not only an objectively
“foreseeable” effect, as this court’s overruled precedent had,
but a contract term memorializing that the parties actually
contemplated an effect in the United States. Cf. Maritime
Int’l Nominees Establishment v. Republic of Guinea, 693 F.2d
1094, 1111 & n.28 (D.C. Cir. 1982) (noting, under overruled
foreseeability requirement, that inquiry did “not require intent
in the subjective sense,” but only must have been “reasonably
contemplated”).
Following Weltover, our sister circuits have rejected the
restrictive contention that a contract must explicitly specify
the United States as a place of performance for its breach to
cause a direct effect. See DRFP L.L.C. v. Republica
Bolivariana de Venez., 622 F.3d 513, 517 (6th Cir. 2010)
(“We do not read Weltover as creating an additional
requirement that the United States be specifically mentioned
9
in the terms of the notes, as suggested by Venezuela.”); Hanil
Bank v. PT. Bank Negara Indon. (Persero), 148 F.3d 127, 133
(2d Cir. 1998) (“Even assuming that Indonesia is the place of
performance under letter of credit law, Weltover does not
insist the ‘place of performance’ be in the United States in
order for a financial transaction to cause a direct effect in this
country. Rather, it only requires an effect in the United States
that follows as an immediate consequence of the defendant’s
actions overseas.”); see also Callejo v. Bancomer, S.A., 764
F.2d 1101, 1110-12 (5th Cir. 1985) (finding a direct effect in
case involving a claim for payment on Mexican Certificates
of Deposit despite an express clause specifying payment in
Mexico, even under pre-Weltover analysis requiring that a
direct effect be substantial and foreseeable). Because the
majority opinion’s narrowing approach to our FSIA direct-
effects precedent, which requires a U.S. place-of-performance
clause, conflicts with Weltover and the decisions of this and
other circuits, I decline to join it.
It is not the foreseeability or the bargained-for character
of an effect that matters. Weltover rejected a requirement of
foreseeability and, a fortiori, any requirement of a place-of-
performance clause. Instead, the animating rationale of the
direct-effect requirement is to assure that a foreign
sovereign’s commercial activity abroad has a sufficient
connection to the United States to warrant suit here. That is
why the decisions of the Supreme Court and our court have
stressed the need of an “immediate consequence” in the
United States relating to the foreign sovereign’s commercial
activity. See, e.g., Weltover, 504 U.S. at 618. It is also why
we have denied jurisdiction in cases in which plaintiffs
unilaterally, fortuitously, or after a long period of time and
intervening events move to the United States, and, without
any other effect here, invoke the jurisdiction of our courts.
See, e.g., Princz, 26 F.3d at 1172-73. The connection must not
10
be one created unilaterally by the plaintiff, but must be a
direct effect of an act in connection with the sovereign’s
commercial activity. That requirement prevents opportunistic
plaintiffs from unilaterally haling foreign sovereigns into
United States courts, but it also ensures that private parties are
not disadvantaged in commercial dealings with foreign state
entities by such entities’ inappropriate assertion of an
immunity designed to apply only to actions in the
government’s sovereign capacity. 1
The majority arbitrarily shrinks the class of contract
claims that may survive the FSIA sovereign-immunity bar to
those in which there is a United States place-of-performance
clause—most likely cases in which a foreign sovereign offers
or negotiates such a term to induce agreement from parties
who want to keep their money in the United States. Needless
to say, Kenya’s unilateral offer of reward for information
about tax evasion, accepted by a Kenyan national who at the
time had no intention of becoming a refugee from his home
country, was not such a case.
An ex ante contractual choice of the United States as the
place of performance would, of course, typically support a
finding of direct effect, but Weltover makes clear that such a
clause is not necessary. Indeed, even in those cases in which
the United States was contractually specified as the place of
performance, this court has not ended its inquiry once it
1
The “immediate consequence” inquiry does not hinge on the non-
existence of any arguably intervening event. It is always possible
to identify some “intervening event” if one parses finely enough, be
it changed economic or political conditions affecting commercial
activities, or the purchase of a plane ticket for travel with a
stopover. The focus of the inquiry is, instead, on whether the
actions of both parties create a sufficient nexus to the United States
for a breach to cause a non-trivial consequence here.
11
identified such a clause—as it presumably would, were a
place-of-performance clause to be the lynchpin the majority
makes it. Instead, following Weltover, our decisions have
taken account of all facts tending to show whether there is a
genuine nexus to the United States or, conversely, a plaintiff’s
unilateral or gratuitous choice of a U.S. forum.
In Cruise Connections, for example, we found a direct
effect in the absence of a U.S. place-of-performance clause.
The contract in that case directed “payments to an account of
Cruise Connections’ choosing rather than specifically to an
account in the United States.” 600 F.3d at 663-64 (internal
quotation marks omitted). This court declined to consider
whether “the contract required [the defendant] to pay via wire
transfer to a U.S. bank” or whether its “failure to do so
qualifie[d] as a direct effect.” Id. at 666. We instead found a
direct effect because Canada’s breach meant that “revenues
that would otherwise have been generated in the United States
were ‘not forthcoming.’” Id. at 665.
In Goodman Holdings v. Rafidain Bank, 26 F.3d 1143
(D.C. Cir. 1994), we also looked to all facts relevant to
discerning any potential “direct effect,” not restricting our
consideration to whether the United States was the
contractually designated place of payment or other contract
performance. The overarching question remained whether
there was an “‘immediate consequence’ in the United States”
of the defendant’s breach. Id. at 1146. In that case, past
practice was relevant to our conclusion that the defendant
“might well have paid [the plaintiffs] from funds in United
States banks but it might just as well have done so from
accounts located outside of the United States, as it had
apparently done before.” Id. at 1146-47. We accordingly
found no direct effect.
12
Odhiambo’s circumstances are in certain ways most
analogous to those of De Csepel, 714 F.3d 591. The bailment
contract in that case, like the unilateral contract here, arose in
circumstances in which it would be unrealistic to expect an
explicit place-of-performance clause, let alone one selecting
the United States as that place. The contract in De Csepel
was not written. The complaint alleged that the Hungarian
government and Nazi collaborators confiscated the Herzog
family’s art collection, and that Hungary’s “possession or re-
possession” of the collection “constituted an express or
implied-in-fact bailment contract.” Id. at 598 (internal
quotation marks omitted). The contract was formed as a
“bailment” following the collection’s emphatically non-
negotiated expropriation during World War II.
Hungary kept and used the confiscated artwork for
decades until the Herzog family sought its return. The
complaint did not clearly allege when the bailment arose, and
we noted that plaintiffs “never expressly allege[d] that the
return of the artwork was to occur in the United States.” Id. at
601. By the time the parties began their unsuccessful
negotiation for the return of the artwork, however, Hungary
was well aware that some of the family lived in the United
States (with others living in Italy), and we held that
Hungary’s commercial activity caused a direct effect in the
United States because “Hungary promised to return the
artwork to members of the Herzog family it knew to be
residing in the United States.” Id. The continued deprivation
of that artwork thus impinged on the rights of the Herzogs in
the United States, in a manner analogous to the effect on
Odhiambo of Kenya’s continued failure to pay him here.
The majority strives to fit De Csepel into its place-of-
performance clause rubric by describing the case as one in
which, “from the moment of contract formation, the United
13
States was a contractually designated place of performance.”
Slip Op. at 15. No contract clause in fact required
performance in the United States. See 714 F.3d at 601 (noting
that complaint did not specify any agreement that artwork was
to be returned to the United States). Rather, the reason this
court had little difficulty finding a direct effect was because in
that case, actions in relation to the commercial activity created
a genuine nexus between the claim and the United States.
The majority points to Peterson as support for its
requirement of a place-of-performance clause. In Peterson,
however, factors not present here tilted the scale against any
finding of a direct effect: most prominently, the underlying
transaction occurred entirely in Saudi Arabia, and the
defendant played no role in the plaintiff’s unilateral decision
to relocate to the United States. Peterson had worked in Saudi
Arabia for over a decade before he moved to the United States
and sued for the refund of retirement contributions to which
he was entitled once the Saudi government decided to exclude
foreigners from its retirement benefit program. In finding no
direct effect, we emphasized that “the entire transaction took
place outside the United States.” 416 F.3d at 91. The Saudi
government had paid Peterson his refund in Saudi Arabia, and
Peterson had previously deposited those funds in a Saudi
bank. Id. Peterson simply later chose to move to the United
States, and his desire for payment here was entirely of his
own making. Odhimabo’s move to the United States was not
unilateral like Peterson’s, but was necessitated by Kenya’s
failure to keep secret Odhiambo’s whistle blowing.
The place-of-payment contract term in Peterson (in
which we found no direct effect) was materially identical to
that in Cruise Connections (in which we did). In each case,
the contract permitted the plaintiff to elect where payment
would be made. See Peterson, 416 F.3d at 91 (“Saudi Arabia
14
‘represented’ to non-Saudi employees that it would refund
[their retirement] contributions ‘wherever the workers
lived.’”); Cruise Connections, 600 F.3d at 663, 666
(recounting district court’s finding that contract provided for
“payment to an account of [the plaintiffs’] choosing,” an issue
the court of appeals did not reach because it concluded that “it
makes no difference where [defendant] would have paid
Cruise Connections”). And, in each case, the plaintiff elected
payment in the United States. But in both cases, we looked
beyond the simple inquiry of whether a contract clause
designated the United States as the place of payment. See
also Weltover, 504 U.S. at 609-10 (contract provided for
payment “at the election of the creditor” in any of several
contractually permitted destinations, and creditor chose New
York only after Argentina unilaterally rescheduled the debt).
Taken together, the cases show that a place-of-performance
clause, which for the majority is conclusive, is correctly
considered to be neither the sole nor the determining factor.
Under the holistic analysis the precedents require, the
direct-effects test is readily met here, as it was in Weltover,
Cruise Connections, and De Csepel. At his own
government’s invitation, Odhiambo risked his life to help
Kenya recover a large amount of stolen money. Kenya’s
invitation placed no restrictions on where a whistleblower
such as Odhiambo could come from, nor on where he could
demand payment. And, given the serious risks he faced in
coming forward as a whistleblower, Kenya promised him
confidentiality. Odhiambo is in the United States and
experiencing the effect of Kenya’s nonpayment here as the
direct consequence of accepting Kenya’s offer of reward for
information, and Kenya’s failure to fulfill its part of the
bargain by keeping Odhiambo’s identity secret and paying
him what it owes. Odhiambo moved to the United States,
instead of some other locale, not merely with Kenya’s
15
knowledge, but with its guidance and help. Under these
circumstances, Odhiambo’s presence in the United States and
the financial loss he suffers here are a direct effect of actions
in connection with the commercial activity of the reward
contract. Those effects suffice to provide a non-trivial nexus
between the parties’ commercial activity and the United
States adequate to support jurisdiction here under the FSIA.
Odhiambo is no opportunistic forum shopper. He did not
unilaterally opt to come to the United States to experience the
effects of Kenya’s non-payment of the money it owes him.
As Kenya acknowledges, Odhiambo—unlike the plaintiffs in
any of the cases on which the majority relies—is unable to
return to sue in the foreign country that now asserts its
immunity. The United States may not have been the chosen
place of performance at the time Odhiambo accepted Kenya’s
offer, but Weltover expressly eschews any foreseeability
requirement. The absence of a United States place-of-
performance clause in Kenya’s reward scheme cannot negate
the fact that Kenya’s nonpayment is felt here, as the direct
effect in the United States of Kenya’s commercial activities
with Odhiambo. I would thus hold that Kenya is not entitled
under the FSIA to sovereign immunity from Odhiambo’s suit.
U.S. courts have enforced rewards-based contracts
against foreign sovereigns as far back as 1798. See Ellison v.
The Bellona, 8 F. Cas. 559, 559 (D.S.C. 1798). That is
because, as the Eleventh Circuit aptly explained, “[a]nything
that makes it easier for countries to welch on their promises to
pay for information decreases the real value of any reward
they offer and makes it less likely that an offer will be
accepted” and so “jeopardize[s] . . . [the] vital interests . . . of
every country that offers rewards for information, including
this country.” Guevara v. Republic of Peru, 468 F.3d 1289,
16
1303-04 (11th Cir. 2006). 2 Failing to recognize jurisdiction
here rewards Kenya’s decision to default on its promise to pay
Odhiambo for the valuable information he provided at great
risk to himself. It thereby threatens the interests of all
countries, including our own, to encourage disclosure of
information that may be critical to effective enforcement of
the law against threats ranging from tax evasion to terrorism. 3
I believe finding a direct effect on these facts is
warranted and so, respectfully, dissent.
2
The court eventually found no “direct effect” in the United States of the
reward contract in Guevara, but did so, not for lack of contractual
designation of the United States as the place of performance, but because
Guevara was in the United States as “‘an immediate consequence’ of his
criminal activity, not of Peru’s offer of a reward for Montesinos’s
capture.” Guevara v. Republic of Peru, 608 F.3d 1297, 1310 (11th Cir.
2010).
3
Reward contracts are an important source of valuable information for
governments around the world, and there are strong reasons to believe that
they should be enforceable, and be understood as such by people who
might respond to them. The U.S. Department of State, for example, runs a
“Rewards for Justice” program that currently offers a reward of up to $25
million for Ayman al-Zawahiri (the current head of al-Qaeda), among
others. See Rewards for Justice, Most Wanted,
http://www.rewardsforjustice.net/english/most-wanted/all-regions.html
(last visited Aug. 12, 2014). The United States additionally offers rewards
pursuant to the False Claims Act, and the Internal Revenue Service,
Securities and Exchange Commission, and Commodity Futures Trading
Commission also administer rewards programs. According to a 2012
news report, the biggest reward paid at that point was $104 million by the
IRS for to a bank employee who, like Odhiambo, provided information on
tax evasion. See David Kocieniewski, Whistle-Blower Awarded $104
Million by I.R.S., N.Y. Times, Sept. 12, 2012, at A1.