On May 23, 2023, the Eleventh Circuit issued an opinion affirming the district court decision below in Africa Growth Corporation v. Republic of Angola, No. 21-11136.
The dispute before the appellate court was "whether Angola has foreign sovereign immunity." The Court explained that "[t]he answer turns on what the “'gravamen' of the action is. Under the Foreign Sovereign Immunities Act, if the 'gravamen' of the action is Angola’s expropriation of AFGC’s property, then Angola has immunity. But if the 'gravamen' of the action is the breach of the settlement agreement—and if the breach of the settlement agreement is commercial, not sovereign, in nature—then the Foreign Sovereign Immunities Act’s exception for commercial activity applies and Angola isn’t immune from suit."
"After a thorough review of the record," the Eleventh Circuit affirmed the decision of the Southern District of Florida and "conclude[d] that Angola’s taking of AFGC’s property was what injured AFGC here."
The dispute commenced in 2015, when AFGC, a Nevada corporation, bought real estate properties in Angola through its subsidiaries. The next year, the Angolan government took control of AFGC's subsidiaries and, therefore, its real estate. AFGC fought this action on multiple fronts, including a lawsuit in the District of Columbia.
The parties decided to negotiate a settlement, and eventually "reached an agreement that Angola would pay AFGC $47.5 million in exchange for AFGC relinquishing all rights and claims to the properties and—upon payment in full—a promise that AFGC would dismiss its D.C. lawsuit and end its lobbying efforts against Angola. The parties agreed to meet the next week to sign a written settlement agreement," but never reconvened and the Angolan government refused to keep its end of the deal. The D.C. lawsuit was dismissed for sovereign immunity reasons.
AFGC sued again, this time in the Southern District of Florida. AFGC asserted a cause of action for breach of contract, seeking the $47.5 million owed for the expropriated property and “further consequential damages, which collectively total in excess of USD 95 million” and, in the alternative, unjust enrichment. Angola moved to dismiss, arguing that the district court lacked subject matter jurisdiction because of the Foreign Sovereign Immunities Act (“FSIA” or “the Act”), 28 U.S.C. § 1602, et seq. The Southern District of Florida agreed, holding that “the gravamen of this case is the expropriation of real property,” so Angola retained its immunity.
The Eleventh Circuit affirmed, reviewing whether the lawsuit qualified for a commercial activity exception under the FSIA. The Court explained that Eleventh Circuit precedent "compels" this result--specifically Beg v. Islamic Republic of Pakistan, where the Pakistani government seized millions of dollars from the plaintiff, agreed to compensate him, and then reneged on the promise. The Court explained that both in Beg and in this case, the plaintiff was actually injured by the expropriation, and not the breach. "In both cases, the agreement was the means of redressing an injury previously inflicted," the Court explained. The Court contrasted this situation to one where "a sovereign power forms a contract with a private party and then reneges on it." In the latter scenario, "the sovereign power is engaging in commercial activity—even if the way that the sovereign reneges is through what may look like expropriation." But in the first, Beg controls and the expropriation, and not the contract, is the "gravemen" of the action.
A copy of the opinion may be found below.
