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In National American Corporation v. Federal Republic of Nigeria, 425 F. Supp. 1365, the U.S. District Court for the Southern District of New York denied a motion for permissive intervention by two applicants because the applicants had failed to establish a basis for jurisdiction on a theory of "minimum contacts" and because permissive intervention was not appropriate. The plaintiff in the action, National American Corporation (NAC), sued the Federal Republic of Nigeria (Nigeria) and the Central Bank of Nigeria (CBN) to recover damages for the alleged breach of NAC's contract to supply cement. The plaintiff also sued on a letter of credit issued by CBN having the plaintiff as a beneficiary. Nikkei International, Inc. (Nikkei) and Chenax Majesty (Chenax) moved for permissive intervention under Federal Rule of Civil Procedure 24 (b) claiming to have contracted to supply cement to Nigeria and to have been beneficiaries of a letter of credit issued by CBN.

The Court opinion of District Judge Gerard L. Goettel, issued on February 8, 1977, held, in connection with the defendants' maintenance of bank accounts in a New York bank and the role of that bank as an advising bank in the letter of credit transaction, that applicants had not established "minimum contacts" on the basis of their contentions that CBN was doing business in New York, that the defendants or their agents transacted business in New York, or that the acts of the defendants amounted to a tort causing injury within the State. A brief history of the case follows:

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In 1975, NAC entered into a written agreement with Nigeria in which it contracted to supply cement. Payment of the purchase price, which exceeded $14,000,000, was guaranteed by an irrevocable letter of credit issued in favor of plaintiff by CBN under which payments were to be made by Morgan Guaranty Trust Company of New York (Morgan Guaranty) upon presentation of sight drafts and other documents. Payments were to be made through the Bank of America in New York City. Thereafter, Morgan Guaranty advised plaintiff that, upon defendant's instructions, it would refuse payment unless the documents required by the letter of credit also were accompanied by a CBN certificate that plaintiff had given advance notice of sailing and the defendants had given clearance for the departure of each ship. Plaintiff regards this unilateral amendment to the documentation requirements as an anticipatory breach of the letter of credit agreement. Settlement discussions were held resulting in a "discharge agreement." Thereafter, plaintiff claimed the defendants breached the settlement agreement and defendants claimed it was obtained by plaintiff's fraudulent misrepresentation. Plaintiff commenced this action based upon the breach of the contract of sale and the letter of credit agreement seeking to recover

the unpaid balance of the purchase price and demurrage charges. At the commencement of the action, plaintiff applied for and was granted an attachment of defendants' funds held by Morgan Guaranty. A subsequent motion to prove the grounds of the attachment was granted upon a finding by Judge Weinfeld that plaintiff had established a prima facie case. National American Corp. v. Federal Rep. of Nigeria, 420 F.Supp. 954 (S.D.N.Y.1976) (Weinfeld, J.). Chenax and Nikkei claim a relationship to the defendants sufficiently similar to that of NAC to justify their intervention in this action. Chenax alleges in its proposed complaint that it contracted with Nigeria to supply 240,000 metric tons of cement with payment guaranteed by an irrevocable letter of credit to be paid by Morgan Guaranty upon presentation of the requisite documentation. Payment was to be made through a German bank, Schroeder, Munchmeyer, Hengst & Co. Chenax also alleges that it contracted to purchase cement from third parties in order to fulfill its commitments to Nigeria. Nikkei alleges a similar plight in that it contracted to supply 240,000 metric tons of cement with payment guaranteed by an irrevocable letter of credit, payable by Morgan Guaranty through First National City Bank in New York City. Both of the proposed intervenors, like NAC, claim the defendants placed further conditions upon payment of the letters of credit and that this change constituted an anticipatory breach of the letter of credit. Both seek to recover their lost profits and consequential damages.

Id. 1367-1368.

Portions of the opinion dealing with the question of in personam jurisdiction follow:

The parties to the action oppose permissive intervention on the ground that the applicants have failed to establish a separate basis of personal jurisdiction over the defendants. Both the instant plaintiff and the applicants for intervention rest their claim of Federal subject matter jurisdiction upon diversity of citizenship under 28 U.S.C. § 1332(b). The plaintiff, however, has sidestepped the need for personal jurisdiction by successfully attaching the defendants' funds in a New York bank. The applicants, in contrast, have not attempted to establish a similar quasi-in-rem basis and, therefore, run headlong into the issue in personam jurisdiction.

As a general rule, an applicant for permissive intervention must establish an independent ground of jurisdiction. . . . Where, as here, the court has acquired jurisdiction over only a res and the proposed intervenors assert personal claims without having an interest in that res, the court must be concerned with the presence of personal jurisdiction. . . . As the Second Circuit stated in Arrowsmith v. United Press Int'l, 320 F.2d 219, 223 (2d Cir. 1963):

There... exists an overwhelming consensus that the amenability of a foreign corporation to suit in a Federal court in a diversity action is determined in accordance with the law of the State where the court sits, with "Federal law" entering the picture only for the purpose of deciding whether a State's assertion of jurisdiction contravenes a constitutional guarantee.

The applicants rest their omnibus jurisdictional claim upon (1) the "minimum contacts" theory formulated by such cases as International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) and McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957); (2) their claim that CBN is doing business in New York, N.Y.C.P.L.R. § 301 (McKinney 1972); and (3) New York's long-arm statute under the alternate theories that the defendants or their agents transact business here or that the defendants' acts amounted to a tort causing injury within this State, N.Y.C.P.L.R. § 302 (a) (1) and (3) (McKinney 1972).

The first of these grounds is disposed of easily. As the quoted portion of the Second Circuit's opinion in Arrowsmith v. United Press Int'l, supra, indicates, State standards of jurisdiction apply in a Federal diversity case. New York has thus far declined to expand its jurisdiction to the constitutionally permissible limits of International Shoe...

The second theory of jurisdiction is that CBN is doing business in New York. This claim invokes the traditional basis that a corporation is present within the state when it does business "not occasionally or casually, but with a fair measure of permanence and continuity." Initially, it should be noted that Chenax and Nikkei bear the burden of proving the "definitive evidentiary facts" underlying their claim of jurisdiction. . . . The "definitive" facts relating to defendants' business activity relied upon by the proposed intervenors are: (1) conclusory statements that CBN does business here; (2) a characterization of Morgan Guaranty as CBN's agent; and (3) the maintenance by CBN of bank accounts at Morgan Guaranty.

Few of the traditional criteria of doing business have been demonstrated. Concededly, CBN does not have an office here nor are its employees present within the State. The isolated act of maintaining bank accounts here has been held not to constitute doing business. ... The applicants denominate Morgan Guaranty as CBN's agent. New York courts have recognized a foreign corporation's presence when its agent systematically performs services within the State which would have subjected the principal to jurisdiction had they been performed by it. . . . Clearly, Morgan Guaranty is an entity independent of CBN. While the agency theory has been interpreted, in some instances, to include the acts of independent contractors, ... the nature of Morgan Guaranty's actions on behalf of CBN would not appear to have that symbiotic quality which would subject CBN to jurisdiction here under the traditional "doing business" standards, N.Y.C.P.L.R. § 301 (McKinney 1972); . . .

Although the level of activity fails to have the continuity associated with doing business, casual or sporadic acts within the State may form the basis of long-arm jurisdiction under N.Y.C.P.L.R. § 302 (a) (1), provided the cause of action arises from the acts. The applicants claim that both defendants "transact business within the State" so as to bring them within the reach of the statute. The facts supporting their claim are (1) the maintenance of bank accounts at Morgan Guaranty; (2) the role of Morgan Guaranty as an advising bank in the letter of credit transaction; and (3) with regard to

Nikkei, the choice of First National City Bank in New York as the site of payment.

The courts of New York have examined activity similar to that present here and have found it insufficient to support long-arm jurisdiction. . . .

. . . In this case, the defendants acceded to Nikkei's request that payment be made in New York and, in the case of Chenax, similarly complied by arranging for payment in Hamburg, Germany.

... The applicants further urge this court to assert jurisdiction on the basis that New York's position as a financial capital creates a State interest which in turn justifies subjecting these defendants to its jurisdiction. The argument is untenable because the status of a State as the most "interested" or "convenient" forum, while relevant in the area of conflicts of law, cannot dispense with the need for a basis of in personam jurisdiction. . .

Nikkei and Chenax claim that the circumstances of the letter of credit transaction and the correspondence among the banks establish the presence of sufficient contact with New York to support longarm jurisdiction. This argument is rebutted by the letters of credit and the related documents submitted in support of their motion for intervention. The confirmation of the Nikkei letter of credit from CBN to Morgan Guaranty expressly states that the latter was to "advise beneficiary (without adding your confirmation) of our authority given to you to pay on sight of documents." The advice of the Chenax letter of credit from Morgan Guaranty contains the similar statement that "This letter is solely an advice and conveys no engagement by us." The correspondence among the banks and the beneficiaries is replete with references that Morgan Guaranty did not independently undertake to pay the letter of credit.

The nature of the relationship between Morgan Guaranty and CBN appears to be, therefore, that of an advising rather than a confirming bank. Uniform Customs and Practice for Commercial Documentary Credits (U.C.P.) art. 3. In light of the limited nature of its participation, i.e., advising the beneficiary of the issuance of the credit and its authorization to pay upon the presentation of appropriate documents, its transactions in this State on behalf of the issuing bank cannot form a basis for long-arm jurisdiction under N.Y.C.P.L.R. § 302 (a) (1).

The intervenors last asserted ground for jurisdiction rests upon N.Y.C.P.L.R. § 302 (a) (3) which establishes long-arm jurisdiction where a defendant commits a tort without the State which gives rise to injury within the State. The applicants characterize CBN's instructions to Morgan Guaranty to refuse payment as tortious interference with contract. As an advising bank, Morgan Guaranty had no obligation, beyond transmitting accurate information, to the beneficiaries of the letter of credit. U.C.P. art. 12, N.Y.U.C.C. § 5

107(1) (McKinney 1962). Consequently, there existed no contractual relationship with which to interfere. . .

Id. 1368-1372. (Footnotes and case citations omitted.)

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For further information concerning National American Corporation v. Federal Republic of Nigeria (1976), see the 1976 Digest at Ch. 6, § 7, p. 331.

For another case which arose after Nigeria allegedly posted without the consent of the other parties to an irrevocable letter of credit notification of a requirement that demurrage payments on a contract to deliver cement to "C.I.F. Lagos" be certified by the Central Bank of Nigeria, see Nat. Bank & Trust Co., etc. v. J. L. M. Intern, 421 F. Supp. 1269 (1976). The case deals with the attachment rights under New York law of a bank acting pursuant to a joint venture charter party agreement.

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U.S.-Korean Cooperation Agreement Concerning
Mr. Tongsun Park

Pursuant to section 28 of the International Security Assistance Act of 1977 (Public Law 95-92), President Carter reported to Congress in a letter dated November 4, 1977, concerning the extent to which the Republic of Korea was cooperating with the Department of Justice investigation into allegations of improper activity in the United States by agents of the Republic of Korea. Portions of the text of that letter outlining efforts to secure the return of Mr. Tongsun Park to the United States to testify in the prosecution of illegal acts by U.S. officials in the United States read as follows:

The principal cooperation sought from the Government of the Republic of Korea by the Department of Justice has been the important testimony which could be supplied by Korean businessman Tongsun Park (Pak Tong-son). The Department of Justice considers Mr. Park's verifiable and truthful testimony essential to the full investigation and successful prosecution of illegal acts by U.S. officials in the United States. The cooperation needed from Mr. Park involves both his early interrogation in connection with Grand Jury investigations and his eventual appearance before trial juries in resulting prosecutions in the United States.

In April, the Department of State, on behalf of and in full coordination with the Department of Justice, initiated discussions with the Government of the Republic of Korea. United States Am

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