1Chuidian v. Philippine National Bank 912 F.

2d 1095 (1990) United States Court of Appeals, 9th Circuit Facts A. B. C. The 9th Circuit Court of the United States Court of Appeals delivered the judgement on August 29, 1990. The Philippine National Bank is a state-owned bank, and Daza is an employee of that bank. Chuidian owned businesses in California. In 1985, he was sued by the Philippine Export and Foreign Loan Guarantee Corporation under then President Ferdinand Marcos in Santa Clara, California court. In the settlement of the suit, the Philippine National Bank issued an irrevocable letter of credit to Chuidian. After the overthrow of the government in 1986, the new government formed the Presidential Commission on Good Government which was responsible for recovering ill-gotten wealth amassed by the former president and his associates. Daza was appointed a member of this new commission. Vincente B. Chuidian was a citizen of the Philippines. He sued Andrual Daza, an employee of the Philippine National Bank, and the Bank after Daza instructed the Philippine National Bank to dishonor a letter of credit issued to Chuidian by the Republic of the Philippines. He suspected that the settlement was made fraudulently, as Chuidian was suspected of being one of Marcos associates. Chuidian argued that, even if Daza was entitled to sovereign immunity, it was not warranted under the waiver exception, the takings exception, or the tort exception. Daza argued that, as a member of the Bank, he was given sovereign immunity as he was performing his government granted duties.

D.

E.

F. G.

Questions A. Does the federal court of the United States have jurisdiction since the suit is between individuals? B. Is Daza entitled to sovereign immunity under Act, 28 U.S.C. Sec. 1604 for acts committed under his official capacity granted to him by the Bank and Commission? C. Do any of Chuidians claimed exceptions apply in this case? D. Can individuals be granted sovereign immunity? Decisions A. The court used a ruling in the case of Arango v. Guzman Travel Advisors Corp., 621 F.2d 1371 (1980) to decide if it had jurisdiction in this case or if it should have been handled at the state level. In the Arango case, the Fifth Circuit Court found that where a sovereign defendant in a multi-party suit removes under section 1441(d), "the entire action against all defendants accompanies it to federal court." Like in that case, since the co-defendant was a state entity, the federal court does indeed have jurisdiction. B. The court found that since Daza was acting within his official capacity, he was

C.

D.

E. F.

acting on behalf of the state and entitled to the same sovereign immunity. It was decided that the waiver exception was not applicable in this case because the fact the bank waived its sovereign immunity does not automatically mean the codefendants do. If the court had ruled in favor of Chuidian on this issue, the court could be risking foreign jurisdictions from disregarding divisions between U.S. corporations and its possible subsidiaries. It could also allow suits which implicate one party for the wrong doings of another if both are defendants. Daza has not waived his right and therefore has not waived his right of sovereign immunity. The takings exception does not apply because property was not taken in violation of international law. Both Chuidian and Daza are Philippines citizens. Therefore, no violation of international law has occurred. The court did not have to rule whether or not the credit was in any way similar to the taking of property. The tort exception also does not apply. Taking of credit is not tort so it is not an applicable exception. The court found that this act was in fact a taking of property. The court found that Daza was indeed acting in his official capacity and therefore an instrumentality of a foreign state. Therefore, the court lacked jurisdiction in the case. The international law element of the case is sovereign immunity. The rules of law that were in the case are the principles found in the Foreign Sovereign Immunity Act, 28 U.S.C. Secs. 1602-1611. Sec. 1603 states who is covered by sovereign immunity under the act. It states: (a) A "foreign state" ... includes a political subdivision of a foreign state or an agency or instrumentality of a foreign state as defined in subsection (b). An "agency or instrumentality of a foreign state" means any entity (1) which is a separate legal person, corporate or otherwise, and (2) which is an organ of a foreign state or political subdivision thereof, or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof, and (3) which is neither a citizen of a State of the United States ... nor created under the laws of any third country. Section 1605(a)(1) states the definition of the waiver exception It states that, A foreign state shall not be immune from the jurisdiction of the Courts of the United States ... in any case in which the foreign state has waived its immunity either explicitly or by implication... Section 1605(a)(3) states that, immunity does not extend to cases "in which rights in property taken in violation of international law are in issue."This is the basis for the taking exception. 1605(a)(5) states the principles in the tort exception. It states that there is an exception to immunity for losses "occurring in the United States and caused by the tortious act or omission of [a] foreign state or any official or employee of that foreign state while acting within the scope of his office or employment."

Principles A. B. C. D.

E.

F. G.

Conclusion The findings in this case were important because they established that individuals other than government officials could possess sovereign immunity if they are acting within official

duties granted by the state. It also established situations where Chuidians argued exceptions were clearly not applicable. In this case, a waiver by one entity did not mean a waiver by all involved in a case. It reaffirmed that a violation in international law had to occur in order for the taking exception to be applied. It also established that if the word taking was used then the tort exception could not be applied. All of these displayed the United States position on sovereign immunity in international law and how it would be applied by U.S. courts. Bibliography Chiudian v. Philippine National Bank. 912 F.2d 1095 ( 9th Cir. 1990) Submitted Colin Miller, October 8, 2009