Everard Findlay Consulting, LLC v. Republic of Suriname

Background

Everard Findlay Consulting, LLC sued the Republic of Suriname for breach of contract and an account stated. The company alleged that Suriname hired it to develop a branding campaign intended to improve international and especially American perceptions of Suriname, promote tourism and investment, and showcase the country’s culture and tourist destinations. The work included web development, print and social-media advertising, events in New York, and visits to Suriname.

The company alleged that the projects were covered by written agreements negotiated in part in New York, that it performed most of its services in New York, and that Suriname made payments late and eventually stopped paying. It claimed that Suriname owed more than $2 million, most of it relating to the web-development and “We Are Suriname” project.

Suriname moved to dismiss based on sovereign immunity under the Foreign Sovereign Immunities Act, or FSIA. In the alternative, it moved to dismiss based on the doctrine that a case should be heard in a more suitable forum.

Legal Standard

The FSIA generally gives foreign states immunity from federal-court jurisdiction unless a statutory exception applies. The only exception at issue was the commercial-activities exception. That exception can apply when an action is based on commercial activity carried on in the United States, an act performed in the United States connected to commercial activity elsewhere, or an act outside the United States that causes a direct effect in the United States.

The FSIA defines “commercial activity” by the nature of the conduct rather than its purpose. The relevant question is whether the foreign state engaged in the type of conduct through which a private party ordinarily participates in trade or commerce.

Court’s Analysis

Judge Alison J. Nathan held that the Second Circuit’s decision in Kato v. Ishihara controlled. In Kato, the Second Circuit concluded that Tokyo’s activities promoting Japanese companies and Japanese business interests generally were not commercial activity under the FSIA. The court distinguished promoting commerce—a basic governmental function—from engaging in commerce itself.

The court found Suriname’s alleged conduct materially similar. Suriname had hired Everard Findlay to promote Suriname’s tourism sector and the country generally, rather than to advertise a particular hotel, tourist attraction, or other specific business. The court concluded that this conduct was not typical of a private party engaged in commerce. It also stated that the company’s promotional work was not merely incidental to Suriname’s activities; it was the work Suriname had hired the company to perform.

The court rejected the company’s argument that Suriname’s profit motive made the engagement commercial. It explained that the FSIA directs courts to examine the nature of the activity rather than its purpose. The court also rejected the argument that entering into and allegedly breaching a contract was enough by itself to establish commercial activity. It held that the content and scope of the contractual duties had to be examined.

The court further rejected the company’s attempt to limit Kato to employment-discrimination cases or employment relationships. It stated that the reasoning in Kato was not limited to those settings and that hiring an independent contractor to promote commerce was no more typical of a private commercial party than hiring an employee for that purpose.

Disposition

Because the commercial-activities exception did not apply, the court held that sovereign immunity barred the lawsuit and that it lacked subject matter jurisdiction. The court granted Suriname’s motion to dismiss and dismissed the action for lack of subject matter jurisdiction. It denied as moot Suriname’s earlier motion to dismiss and the letter motion for oral argument, and directed the Clerk of Court to close the case.