GDG Acquisitions LLC v. Government of Belize, 849 F.3d 1299 (11th Cir. 2017) [click for opinion]
Plaintiff, a Belizean telecommunications equipment and services company, brought suit in Florida against the Government of Belize (the "Government") for breach of contract, seeking approximately $10 million in unpaid rent. The Government negotiated the rental of communications equipment and services from International Telecommunications, Ltd. ("Intelco"), through its Minister of Finance and Home Affairs, Ralph Fonseca. Minister Fonseca and Intelco ultimately signed a Master Lease Agreement ("MLA") which governed the transaction. Intelco then transferred all its assets to GDG Acquisitions LLC ("GDG"), including its interest in the Belize agreement. The MLA included a provision stating that the Government waived its sovereign immunity, a forum-selection clause, and a waiver of objections to venue or claims of inconvenient forum. Nonetheless, the Government moved to dismiss in district court, asserting foreign sovereign immunity, forum non conveniens, and international comity.
The district court granted the Government's motion to dismiss, citing forum non conveniens and international comity, but did not address foreign sovereign immunity. The Eleventh Circuit vacated the dismissal and remanded the case. On remand, the district court denied the Government's motion to dismiss holding, inter alia, that the waiver of sovereign immunity exception under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1605(a)(1), was satisfied because Fonseca had the authority to bind the Government; and thus, Belize could be sued in a United States court. The Government appealed and the Eleventh Circuit affirmed the denial of the Government's motion to dismiss.
The FSIA establishes that a foreign state is "presumptively immune" from jurisdiction of a United States court. In order to overcome this presumption, a plaintiff must produce evidence that the conduct which forms the basis of the complaint falls within one of the statutorily defined exceptions. The burden then shifts to the party arguing for immunity to prove by a preponderance of the evidence that the exception does not apply. Here, GDG asserted sufficient facts to establish that the exception applied, namely that the Government of Belize had waived its immunity either explicitly or by implication, and the Government failed to carry its burden of showing that the waiver exception did not apply.
The Government first argued that Minister Fonseca lacked the authority to waive Belize's sovereign immunity. Without deciding whether Fonseca in fact had actual authority to act on behalf of the Government, the Eleventh Circuit found that the Government had consented to and affirmed Fonseca's actions by ratification when it made payments for more than five years as required by the MLA, and by its retention of the telecommunications equipment.
The Eleventh Circuit rejected the Government's contention that "subsequent payments cannot create actual authority that did not exist at the time of the actions." The court noted that the Restatement (Third) of Agency § 4.01(1) expressly addresses this situation, in that it is precisely the Government's subsequent consent, through its payments, that gives the prior unauthorized act the "effect as if done by an agent acting with actual authority."
The Government's second argument was that the payments under the MLA only ratified its payment obligations, but not its waiver of sovereign immunity. However, the Eleventh Circuit rejected this argument, citing to the Restatement (Third) of Agency, which states that ratification encompasses the entirety of a contract. The Eleventh Circuit also rejected the Government's claim that the payments made under the MLA were unauthorized.
Finally, the Government claimed that the district court should have dismissed the case for forum non conveniens, yet the Eleventh Circuit was unpersuaded by this argument. Dismissal for forum non conveniens, in the face of a forum selection clause, would be permissible only if "extraordinary circumstances unrelated to the convenience of the parties" existed. As noted by the court, the Government did not allege that extraordinary circumstances were present to support a dismissal for forum non conveniens. Accordingly, the forum-selection clause was binding, given that Minister Fonseca possessed actual authority to act through the Government's ratification of the MLA.
The district court's decision to deny the Government's motion to dismiss was affirmed.