Ski Train Fire v. Gletscherbahnen Kaprun Aktiengesellschaft

Second Circuit

Ski Train Fire v. Gletscherbahnen Kaprun Aktiengesellschaft

67 F. App'x 24

CourtCourt of Appeals for the Second Circuit

DecidedMay 29, 2003

DocketDocket No. 02-7391

StatusPublished

Cited by2 cases

This text of 67 F. App'x 24 (Ski Train Fire v. Gletscherbahnen Kaprun Aktiengesellschaft) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Ski Train Fire v. Gletscherbahnen Kaprun Aktiengesellschaft, 67 F. App'x 24 (2d Cir. 2003).

Pincite

Opinion

SUMMARY ORDER

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of said District Court be and hereby is AFFIRMED.

Defendant Gletscherbahnen Kaprun Aktiengesellschaft (“GBK”) has filed an interlocutory appeal from an order of the District Court dated March 19, 2002, denying GBK’s motion to dismiss under the Foreign Sovereign Immunities Act of 1976 (“FSIA”), 28 U.S.C. §§ 1330(a), 1602-1611.

In the District Court, GBK argued that it is entitled to sovereign immunity because it is an “agency or instrumentality” of the Austrian government under the FSIA.¹ GBK is 45% owned by the corpora[26]*26tion Oesterreichische Elekrizitaetswirschafts AG (“OE AG”), which, in turn, is 51% owned by the Republic of Austria. An additional 33.98% of the shares of GBK are owned by the Village of Kaprun, Austria, which GBK argues is a “political subdivision” of Austria. Accordingly, GBK asserts that OE AG’s 45% share should be pooled with the Village of Kaprun’s 33.98% share, such that GBK is considered to be 77.98% (majority) owned by the Republic of Austria.

The District Court held that GBK is not entitled to sovereign immunity because the Republic of Austria’s indirect interest in GBK through its 51% ownership of OE AG was insufficient to render GBK an “instrumentality” of Austria under the FSIA. In re Ski Train, 198 F.Supp.2d 420, 426-27 (S.D.N.Y.2002). The District Court noted a split in authority between the Ninth Circuit, on the one hand, and the Fifth and Seventh Circuits, on the other, regarding whether a corporation that is the “second-tier subsidiary” of a foreign state may be considered an “instrumentality” of that state under the FSIA. Id. at 424-25. Noting that the Second Circuit has not yet ruled on the issue, the District Court found the reasoning of the Ninth Circuit, which does not recognize “tiering,” to be persuasive and denied GBK’s motion to dismiss. Id. at 424-27.

During the pendency of GBK’s appeal, the Supreme Court rendered its opinion in Dole Food Co. v. Patrickson, — U.S. -, 123 S.Ct. 1655, 155 L.Ed.2d 643 (2003), which has resolved any ambiguity or conflict regarding the treatment under the FSIA of corporate subsidiaries indirectly owned by a foreign state. The Supreme Court stated in Dole Food that “Congress had corporate formalities in mind” when it drafted the FSIA, id. at 1660, and the Court unequivocally held that “[a] corporation is an instrumentality of a foreign state under the FSIA only if the foreign state itself owns a majority of the corporation’s shares,” id. at 1662 (emphasis added).

In this case, there is no dispute that Austria does not itself own a majority of the shares of GBK, and it is thus clear that the opinion and order of the District Court should be affirmed because GBK is not an “agency or instrumentality” of the state of Austria entitled to sovereign immunity under the FSIA. In submissions to this Court in the wake of the Dole Food decision, the parties have not agreed to dismiss this appeal, but they have conceded that Dole Food is entirely dispositive of the issues currently before us.

Accordingly, the judgment of the District Court is hereby AFFIRMED. We remand the cause to the District Court for further proceedings as may be required in the circumstances.²

Free access — add to your briefcase to read the full text and ask questions with AI

SUMMARY ORDER

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of said District Court be and hereby is AFFIRMED.

Defendant Gletscherbahnen Kaprun Aktiengesellschaft (“GBK”) has filed an interlocutory appeal from an order of the District Court dated March 19, 2002, denying GBK’s motion to dismiss under the Foreign Sovereign Immunities Act of 1976 (“FSIA”), 28 U.S.C. §§ 1330(a), 1602-1611.

In the District Court, GBK argued that it is entitled to sovereign immunity because it is an “agency or instrumentality” of the Austrian government under the FSIA.¹ GBK is 45% owned by the corpora[26]*26tion Oesterreichische Elekrizitaetswirschafts AG (“OE AG”), which, in turn, is 51% owned by the Republic of Austria. An additional 33.98% of the shares of GBK are owned by the Village of Kaprun, Austria, which GBK argues is a “political subdivision” of Austria. Accordingly, GBK asserts that OE AG’s 45% share should be pooled with the Village of Kaprun’s 33.98% share, such that GBK is considered to be 77.98% (majority) owned by the Republic of Austria.

The District Court held that GBK is not entitled to sovereign immunity because the Republic of Austria’s indirect interest in GBK through its 51% ownership of OE AG was insufficient to render GBK an “instrumentality” of Austria under the FSIA. In re Ski Train, 198 F.Supp.2d 420, 426-27 (S.D.N.Y.2002). The District Court noted a split in authority between the Ninth Circuit, on the one hand, and the Fifth and Seventh Circuits, on the other, regarding whether a corporation that is the “second-tier subsidiary” of a foreign state may be considered an “instrumentality” of that state under the FSIA. Id. at 424-25. Noting that the Second Circuit has not yet ruled on the issue, the District Court found the reasoning of the Ninth Circuit, which does not recognize “tiering,” to be persuasive and denied GBK’s motion to dismiss. Id. at 424-27.

During the pendency of GBK’s appeal, the Supreme Court rendered its opinion in Dole Food Co. v. Patrickson, — U.S. -, 123 S.Ct. 1655, 155 L.Ed.2d 643 (2003), which has resolved any ambiguity or conflict regarding the treatment under the FSIA of corporate subsidiaries indirectly owned by a foreign state. The Supreme Court stated in Dole Food that “Congress had corporate formalities in mind” when it drafted the FSIA, id. at 1660, and the Court unequivocally held that “[a] corporation is an instrumentality of a foreign state under the FSIA only if the foreign state itself owns a majority of the corporation’s shares,” id. at 1662 (emphasis added).

In this case, there is no dispute that Austria does not itself own a majority of the shares of GBK, and it is thus clear that the opinion and order of the District Court should be affirmed because GBK is not an “agency or instrumentality” of the state of Austria entitled to sovereign immunity under the FSIA. In submissions to this Court in the wake of the Dole Food decision, the parties have not agreed to dismiss this appeal, but they have conceded that Dole Food is entirely dispositive of the issues currently before us.

Accordingly, the judgment of the District Court is hereby AFFIRMED. We remand the cause to the District Court for further proceedings as may be required in the circumstances.²

Cite This Page — Counsel Stack

Bluebook (online)

67 F. App'x 24, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ski-train-fire-v-gletscherbahnen-kaprun-aktiengesellschaft-ca2-2003.

Opinion

Related

Cite This Page — Counsel Stack