Upon evaluating subject matter jurisdiction, the Eighth Circuit Court of Appeals dismissed the FSIA case of Community Finance Group, Inc., et al. v. Republic of Kenya, et al., No. 11-1816 (8th Cir. 2011). The case involved the Republic of Kenya’s refusal to release gold that Community Finance Group had purchased and paid for. The goods were not delivered to CFG because they were thought to contain diamonds as well as gold, yet the funds paid were not returned.
The Court of Appeals ruled on the case based on subject matter jurisdiction. It found that there was no basis for the commercial activity exception, determining that “the decisions regarding whether or how to investigate an allegedly fraudulent commercial transaction between private parties, regulate exports, enforce criminal laws, and seize property during criminal investigations are governmental rather than commercial activities.”
The Court further ruled that the tort exception to FSIA was inapplicable. This exception includes “only torts occurring within the territorial jurisdiction of the United States, regardless of whether the alleged tort may have had effects in the United States.” However, if the plaintiffs were U.S. entities, and the funds came from the U.S., and the loss was suffered in the U.S., it would seem to follow that the case would fall under the tort exception.
The Court of Appeals did not rule on the return of the monies paid.