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Chapter 54
International and World Trade Law
VI. Answers to Critical Legal Thinking Cases
54.1 Foreign Sovereign Immunity
Yes. Argentina is subject to the lawsuit in the United States. The commercial activity exception to the
Foreign Sovereign Immunities Act permits the plaintiffs to sue Argentina in a U.S. court. When a foreign
government acts as a private player in a financial market, the foreign sovereign’s actions are
“commercial” within the meaning of the Foreign Sovereign Immunities Act (FSIA). The commercial
character of the Bonods is confirmed by the fact that they are in almost all respects garden-variety debt
54.2 Act of State Doctrine
The United States government owns the depository account. The U.S. Supreme Court held that the United
States government, which has the power to deal in foreign affairs, properly recognized the government of
the Soviet Union. Thus, the government entered into a valid international compact with the Soviet Union
that covered the Petrograd Metal Work’s (Petrograd) deposit with August Belmont & Co. (Belmont) in
the United States. The Soviet Union had confiscated Petrograd’s deposit with Belmont and then assigned
this deposit to the United States in settlement of claims between the two countries. Under the Act of State
54.3 Act of State Doctrine
upon the doctrine of separation of powers, that only the executive branch of government, and not the
judicial branch, may arrange affairs with foreign governments. However, in the instant case, the court
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54.4 Forum-Selection Clause
Unterweser Reederei GMBH (Unterweser) is correct that the forum selection clause in its contract with
Zapata Off-Shore Company (Zapata) is enforceable. A forum selection clause (or choice of forum
selection) is a clause in a contract that designates which nation’s courts have jurisdiction to hear cases or
agreed to by sophisticated companies who conducted international business. The court found no
unfairness in the clause, fraud, or overreach in its inclusion in the Unterweser-Zapata contract. Therefore,
the Supreme Court held that the forum selection clause designating the London Court of Justice as the
VII. Answer to Ethics Case
54.5 Ethics Case
“direct effect” in the United States. The district court found that Nigeria was carrying on a “commercial
activity” when it signed the contract to purchase cement from Texas Trading to be used in building roads,
dams, and other infrastructures in the country. The court also held that this commercial activity had a
“direct effect” in the United States because many U.S. companies contracted to sell Nigerian cement. The
Circuit)
