Foremost-Mckesson, Inc. v. The Islamic Republic of Iran

Opinion for the Court filed by Circuit Judge HARRY T. EDWARDS.

This interlocutory appeal involves a claim by a United States business that the appellant, Islamic Republic of Iran (“Iran”), acting through various codefendants who controlled the shares and the board of directors of a dairy company in Iran, used its majority position to lock the appellee out of the management of the dairy and to deny the appellee its share of the company’s earnings. Iran claims that it is immune from suit under the Foreign Sovereign Immunities Act of 1976 (“FSIA”), 28 U.S.C. §§ 1330, 1602-1611 (1988). Iran also con *440 tends that, because it lacks the constitutionally mandated minimum contacts with the forum, the District Court could not exercise in personam jurisdiction. Accordingly, Iran seeks reversal of the District Court’s denial of its motion to dismiss.

The plaintiff-appellee companies are Foremost-McKesson, Inc., and its wholly owned subsidiaries Foremost Tehran, Inc., Foremost Shir, Inc., Foremost Iran Corporation, Foremost Foods, Inc. (individually and collectively “Foremost"), and the Overseas Private Investment Corporation (“OPIC”). In addition to responding to the issues raised by Iran, the plaintiff-appellees challenge the judgment of the District Court allowing Iran to amend its complaint to include the defenses of sovereign immunity and lack of personal jurisdiction under FSIA. Foremost also argues that, under the Treaty of Amity, 1 Iran waived its foreign sovereign immunity as to suits arising out of any commercial activity.

With respect to the claims concerning sovereign immunity, we are constrained to remand for further development of the record. Under FSIA, agencies and instrumentalities of a foreign nation are presumed to be separate from each other and from the foreign state. See First Nat’l City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 625-28, 103 S.Ct. 2591, 2599-2601, 77 L.Ed.2d 46 (1983). It is not enough to show that various government entities or officials represent a majority of the shareholders or constitute a majority of the board of directors of the applicable agency or instrumentality; in other words, mere involvement by the state in the affairs of an agency or instrumentality does not answer the question whether the agency or instrumentality is controlled by the state for purposes of FSIA. The presumption of separateness (and whether it has been rebutted) affects the jurisdiction of the court, as well as the liability of the state, under FSIA: in order for the case to proceed under FSIA, the District Court must consider whether Iran so dominated the operations of the dairy “that a relationship of principal and agent is created.” Id. at 629, 103 S.Ct. at 2601.

Although we affirm most of the holdings of the District Court, 2 we reject the legal test that it employed to determine Iran’s claim to sovereign immunity. On remand, the District Court will be required to make more extensive preliminary findings regarding the nature and degree of control exerted by Iran over the dairy and its shareholders. 3 With regard to Iran’s constitutional in personam (“minimum contacts”) jurisdiction claim, we conclude that, because this issue was never raised below, the claim has been waived.

I. Background

The procedural history of this case is unusually complicated. Foremost alleges that in 1959, at the request of a group of Iranian nationals, Foremost-McKesson, Inc., a Maryland corporation .with its principal place of business in California, assisted in establishing a dairy, the Sherkat Sahami Labaniat Pasteurize Pak (“Pak Dairy”), in the Republic of Iran. From 1959 to 1979, Foremost provided the top management for *441 the dairy and controlled its Board of Directors. During the period relevant in the instant case, Foremost held thirty-one percent of the equity interest in the dairy.

On January 22, 1982, Foremost and the Overseas Private Investment Corporation 4 filed a complaint in the District Court against Iran and several agencies and in-strumentalities of Iran through which Foremost claims Iran acted. These agencies and instrumentalities included the Financial Organization for the Expansion of Ownership of Productive Units, the National Investment Company of Iran, Industrial and Mining Development Bank of Iran, the Foundation for the Oppressed and Pak Dairy. The complaint alleged that Iran, acting through the codefendant agencies and instrumentalities, illegally divested Foremost of its investment in Pak Dairy. Foremost and OPIC sought compensation for the entire value of their jointly held 19.84% insured equity interest in Pak Dairy, 5 allegedly valued at not less than $7,040,000, plus interest; compensation for their share in any dividends declared and not received before the alleged divestment of their equity interest; and various other damages, including attorneys’ fees. See Complaint ¶¶ 38-39, reprinted in Appendix (“App.”) 36.

On June 29, 1982, Iran responded to the complaint in what it titled an “Answer to Complaint.” See Answer to Complaint [hereinafter 1982 Answer], reprinted in App. 46. In this response, Iran did not state the defenses raised in its motion to dismiss and did not admit or deny Foremost’s averments, cf. Fed.R.Civ.P. 8(b); rather, Iran contended that prosecution of the suit was barred by the so-called Algiers Accords of January 19, 1981, 6 and that, pursuant to Executive Order No. 12,294, 46 Fed.Reg. 14,111 (1981) (“Executive Order”), the “complaint ha[d] no legal effect other than to toll the applicable statute of limitations.” 1982 Answer at 1, reprinted in App. 46. 7 Pursuant to the terms of the Executive Order, the District Court took no action in this case while Foremost and OPIC presented their claims against Iran to the Iran-United States Claims Tribunal (“Claims Tribunal”) in The Hague.

On April 10, 1986, the Claims Tribunal concluded that interference with Foremost’s rights had not, by January 19, 1981, amounted to an expropriation. See Foremost Tehran, Inc. v. Islamic Republic of Iran, 10 Iran-United States Claims Trib. Rep. 228, 250, reprinted in App. 78. 8 However, the Claims Tribunal concluded that Pak Dairy had unlawfully withheld from Foremost cash dividends declared in 1979 and 1980, and it therefore awarded Foremost approximately $900,000, plus interest, against Iran. The Claims Tribunal also concluded that Pak Dairy unlawfully failed to deliver to Foremost stock certificates representing stock dividends declared in 1980 and that Pak Dairy had breached contractual obligations in failing to pay rental payments due and to return upon demand certain machines to Foremost. The Claims Tribunal awarded Foremost in excess of $500,000 in damages against Pak *442 Dairy for the contract breaches. See id. at 257-58, reprinted in App. 88. Iran paid the amounts awarded out of the security account established at The Hague pursuant to the provisions of the Algiers Accords.

On April 1, 1988, the plaintiffs — still seeking damages for claimed losses — revived this lawsuit by filing a motion for partial summary judgment against Iran on the issue of liability. The plaintiffs alleged facts that arguably support a conclusion that the dairy was expropriated after the 1981 limit to the Claims Tribunal’s jurisdiction. See Foremost-McKesson, Inc. v. Islamic Republic of Iran, Civ. Action No. 82-0220, slip op. at 2 (D.D.C. Apr. 18, 1989) (“Foremost III”), reprinted in App. 4. 9

In response to Foremost’s reactivation of the suit, Iran moved to strike its 1982 Answer from the record and separately moved to stay the proceedings. The District Court denied both motions, but it denied the motion to strike without prejudice to a motion by Iran to file an amended answer. See Foremost-McKesson, Inc. v. Islamic Republic of Iran, Civ. Action No. 82-0220, slip op. at 1 (D.D.C. Aug. 18, 1988) (“Foremost I” ), reprinted in App. 91. Iran then .moved to amend its 1982 Answer and the District Court granted its motion. See Foremost-McKesson, Inc. v. Islamic Republic of Iran, Civ. Action No. 82-0220, slip op. at 5 (D.D.C. Nov. 8, 1988) (‘‘Foremost II”), reprinted in App. 105. The District Court rejected Foremost’s and OPIC’s contentions that the court did not have authority to or, alternatively, could not, without abusing its discretion, permit Iran to assert certain jurisdictional defenses not included in the 1982 Answer. Id.

Concurrently, Iran filed a motion to dismiss the underlying complaint, pursuant to Rule 12(b)(1) and (2) of the Federal Rules of Civil Procedure, for lack of jurisdiction under FSIA. The District Court denied Iran’s motion to dismiss. See Foremost III, Civ. Action No. 82-0220 (D.D.C. Apr. 18, 1989), reprinted in App. 3. Iran then filed this interlocutory appeal.'

II. Analysis

A. Introduction

The Foreign Sovereign Immunities Act connects the issue of subject matter jurisdiction to the issue of sovereign immunity. See 28 U.S.C. § 1330(a). District courts in a civil action against a foreign state, or the agency or instrumentality of a foreign state, lack subject matter jurisdiction unless one of the exceptions to immunity applies. See 28 U.S.C. §§ 1330(a), 1603(a), 1605-1607. Personal jurisdiction under FSIA exists so long as subject matter jurisdiction exists and service has been properly made pursuant to 28 U.S.C. § 1608. See 28 U.S.C. § 1330(b). Thus, if none of the exceptions to sovereign immunity applies, district courts lack jurisdiction in suits against a foreign state, or an agency or instrumentality thereof. 10

Iran and Foremost present numerous challenges to the District Court determinations bearing on both subject matter and personal jurisdiction under FSIA. At the center of the challenges is the question whether Iran is immune from suit under FSIA. In the analysis that follows, we first address the issue of the jurisdiction of this court to review the District Court’s decisions on interlocutory appeal. We next consider whether the District Court properly permitted Iran to amend its 1982 Answer to include the defense of sovereign immunity. Third, we address Iran’s claim that the District Court erred in attributing to Iran the actions of Pak Dairy and its majority shareholders, which are allegedly agencies or instrumentalities of Iran. Fourth, we consider whether the District Court erred in concluding that the actions attributed to *443 Iran in the complaint were sufficiently commercial and the effects sufficiently "direct" -pursuant to the commercial activity exception to sovereign immunity, see 28 U.S.C. § 1605(a)(2)-to withstand Iran's motion to dismiss. Next we consider whether Iran waived its immunity by signing the Treaty of Amity. Finally, we address the claims regarding constitutional in personam ("minimum contacts") jurisdiction.

B. Interlocutory Appeal

Neither party has challenged this court's authority to review the District Court's determinations on interlocutory appeal. Even where our jurisdiction is uncontested by the parties, however, we are constrained to act only within our jurisdictional authority. See Tuck v. Pan American Health Organization, 668 F.2d 547, 549 (D.C.Cir.1981) ("Jurisdiction is, of necessity, the first issue for an Article III court. The federal courts are courts of limited jurisdiction, and they lack the power to presume the existence of jurisdiction in order to dispose of a case on any other grounds.").

In this case, we adhere to the law of this circuit, see Transamerican S.S. Corp. v. Somali Democratic Republic, 767 F.2d 998, 1000 (D.C.Cir.1985), and other circuits as well, see, e.g., Rush-Presbyterian-St. Luke's Medical Center v. Hellenic Republic, 877 F.2d 574, 576 n. 2 (7th Cir.), cert. denied, U.S. , 110 S.Ct. 333, 107 L.Ed.2d 322 (1989); Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445, 450-51 (6th Cir.1988); Compania Mexicana de Aviacion, S.A. v. United States District Court, 859 F.2d 1354, 1358 (9th Cir.1988) (per curiam); Reale Int'l Inc. v. Federal Republic of Nigeria, 647 F.2d 330, 331 & n. 4 (2d Cir.1981); Velidor v. L/P/G Benghazi, 653 F.2d 812, 816 (3d Cir.1981), cert. dismissed, 455 U.S. 929, 102 S.Ct. 1297, 71 L.Ed.2d 474 (1982), in granting interlocutory appeal of the District Court's denial of the foreign state's motion to dismiss on grounds of sovereign immunity. Such an appeal comes within the ambit of the "collateral order doctrine" articulated in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 545-47, 69 S.Ct. 1221, 1225-26, 93 L.Ed. 1528 (1949), because, as the Seventh Circuit explained, "sovereign immunity is an immunity from trial and the attendant burdens of litigation, and not just a defense to liability on the merits." Rush-Presby-te'rian-St. Luke's Medical Center, 877 F.2d at 576 n. 2.

C. Amendment of the 1982 Answer to Include the Defense of Sovereign Immunity

Foremost contends that the District Court erred in granting Iran's motion to amend its complaint to include the defense of sovereign immunity. Foremost argues that by filing the 1982 Answer without asserting the defense of sovereign immunity, Iran permanently waived its immunity "by implication," pursuant to 28 U.S.C. § 1605(a)(1). We cannot agree.

Section 1605(a)(1) provides that a foreign sovereign is not "immune from the jurisdiction of courts of the United States ... in any case ... in which the foreign state has waived its immunity either explicitly or by implication." Foremost is correct in asserting that, in most instances, a state's failure to assert sovereign immunity in a responsive pleading will constitute a waiver of the defense. But the situation here is different because, in 1982, Iran did not respond substantively to any of the averments in the complaint or pose any defenses to the claims; instead, Iran merely argued that the action should proceed in another forum, which it then did. Iran's actions in these circumstances did not constitute an implied waiver.

It is true that the House Report accompanying FSIA provides that "[a]n implicit waiver would ... include a situation where a foreign state has filed a responsive pleading in an action without raising the defense of sovereign immunity." H.Rep. No. 1487, 94th Cong., 2d Sess. 18 (1976), U.S.Code Cong. & Admin.News 1976, pp. 6604, 6616. We agree with the Seventh Circuit, however, that the example of an implied waiver

given in the legislative history-filing a responsive pleading without raising an *444 immunity defense — demonstrates that Congress anticipated, at a minimum, that waiver would not be found absent a conscious decision to take part in the litigation and a failure to raise sovereign immunity despite the opportunity to do so.

Frolova v. Union of Soviet Socialist Republics, 761 F.2d 370, 378 (7th Cir.1985) (citation omitted). Iran’s 1982 Answer does not exhibit such a conscious decision or opportunity.

The 1982 Answer does not admit or deny any of the averments upon which Foremost relied; nor does it state any defenses to the claims Foremost asserted. Cf. Fed.R. Civ.P. 8(b). Indeed, Iran explicitly stated in the 1982 Answer that “the action commenced by the filing of plaintiffs’ complaint has no legal effect other than to toll the applicable statute of limitations” and that “no response to plaintiffs’ complaint is required.” 1982 Answer at 1, 2, reprinted in App. 46, 47. As though to dispel any doubt, Iran further stated that “[t]he foregoing is without prejudice to any of defendant’s rights against the United States or plaintiffs, either in this forum or before the Arbitral Tribunal.” Id. at 2, reprinted in App. 47. While such statements would not, in most contexts, excuse the failure to assert a defense in a responsive pleading, the circumstances of this case are unusual because of the Executive Order. Iran contended, and Foremost conceded below, that Executive Order No. 12,294 did not even contemplate the filing of a responsive pleading in cases, like this one, that were referred to the Claims Tribunal under the Algiers Accords. See Foremost I, slip op. at 5 n. 6, reprinted in App. 95 & n. 6. We need not reach the issue whether the 1982 Answer is a responsive pleading for purposes of the Federal Rules of Civil Procedure. In the unusual circumstances of this case, it is clear that Iran did not make a “conscious decision to take part in the litigation” before the District Court.

Application of the implied waiver provision in the instant case would be inconsistent with the substantial precedent construing the implied waiver provision narrowly. The legislative history of FSIA gives three examples of circumstances in which courts have found implied waivers: (1) a foreign state has agreed to arbitration in another country; (2) a foreign state has agreed that the law of a particular country governs a contract; or (3) a foreign state has filed a responsive pleading in an action without raising the defense of sovereign immunity. See H.Rep. No. 1487, 94th Cong., 2d Sess. 18 (1976); Sen.Rep. No. 1310, 94th Cong., 2d Sess. 18 (1976). In reviewing the case law bearing on the breadth of the implicit waiver provision, the Seventh Circuit noted that “[cjases involving arbitration clauses illustrate that provisions allegedly waiving sovereign immunity are narrowly construed” and that the narrow construction of the implicit waiver clause is also evident in “the line of cases holding that a contract’s waiver of immunity does not apply to third parties not privy to the contract.” Frolova, 761 F.2d at 377; see also id. at n. 10 (citing cases). The Frolova court further noted that, with regard to contract provisions, “courts rarely find that a nation has waived its sovereign immunity, particularly with respect to suits brought by third parties, without strong evidence that this is what the foreign state intended.” Id. at 377.

In rejecting the plaintiff’s contention that the foreign sovereign had implicitly waived its immunity by not defending the action, the Seventh Circuit further noted that

[t]he case law evidences a reticence to find a waiver from the nature of a foreign state’s participation in litigation. For example, in Castro v. Saudi Arabia, 510 F.Supp. [309, 311-12 (W.D.Tex.1980)], the court held that the defendant’s failure to timely answer the complaint did not waive sovereign immunity. And in Canadian Overseas Ores Ltd. v. Compania de Acero del Pacifico S.A., 727 F.2d 274, 277-78 (2d Cir.1984), the court ruled that the district court did not err in finding that sovereign immunity was not waived, although the defendant never filed a responsive pleading but instead filed several motions which did not assert sovereign immunity, and a Rule 12(b)(1) motion to dismiss based on sovereign immunity was not filed until over *445 two and one-half years after the complaint was filed.

Id. at 378. 11

Finally, the mechanistic application of the implied waiver urged by Foremost would be inconsistent with the notions of “grace and comity” that underlie the statutory scheme. See Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 486, 103 S.Ct. 1962, 1967, 76 L.Ed.2d 81 (1983). In effecting these underlying policy concerns, this court noted in Practical Concepts that “[ijntolerant adherence to default judgments against foreign states could adversely affect this nation’s relations with other nations and ‘undermine the State Department’s continuing efforts to encourage ... foreign sovereigns generally[] to resolve disputes within the United States’ legal framework.’” 811 F.2d at 1551 n. 19 (quoting Brief for the United States as Amicus Curiae at 13-15). In this regard, the District Court “speculate[d] that an intolerant elevation of form over substance in this case, by deeming Iran’s original ‘answer’ to have waived the defense of sovereign immunity, will almost certainly undermine the confidence of foreign states in the fairness of our legal system.” Foremost II, slip op. at 18-19, reprinted in App. 118-19. We agree.

On the record before us, we conclude that the District Court properly permitted Iran to amend the 1982 Answer to include the defense of sovereign immunity. 12

D. Attributing Acts to the Sovereign

Before proceeding to consider the various exceptions to sovereign immunity at issue in this case, we must first address Iran’s attribution argument. In this suit, Foremost seeks to hold the foreign sovereign of Iran responsible for the actions of Pak Dairy and/or the entities holding the majority of Pak Dairy shares. Iran claims that the District Court erred in attributing to Iran the actions of the Board of Directors of Pak Dairy, even for purposes of jurisdiction. The District Court made few findings of its own regarding the degree of control exerted by Iran over Pak Dairy or over the shareholder-entities that Foremost alleges are government controlled, although Foremost tendered extensive affidavits in support of its position, see, e.g., Affidavit of Leonard M. Patterson, Jr., reprinted in Brief for Appellees addendum at 1-16; Affidavit of Frank Fisher, reprinted in Brief for Appellees addendum at 17-36. Instead, the District Court concluded that the Claims Tribunal had decided in Foremost’s favor an issue “sufficiently related to permit reliance on the Claims Tribunal’s finding, ... at least at this stage in the proceedings.” Foremost III, slip op. at 6, reprinted in App. 8.

While we agree with the District Court that the issue is “whether the government of Iran exercised the necessary degree of control over the other defendants to create a principal/agent relationship and thus permit this court to deem Iran responsible for their actions,” id., we conclude that the question of attribution under FSIA is not, as the District Court concluded, the “same question, or at least a very similar” ques *446 tion, id., to the one decided in Foremost’s favor by the Claims Tribunal. Thus, we must remand to the District Court so that it may make further factual determinations in light of the more rigorous attribution standard required by FSIA. The Claims Tribunal’s findings, without more, are not sufficient to answer the question posed by Iran’s motion to dismiss for want of jurisdiction under FSIA.

1. The Legal Standard Under FSIA

FSIA applies to instrumentalities and agencies of the foreign sovereign, as well as to the state itself. See 28 U.S.C. § 1603(a), (b). 13 But instrumentalities and agencies are accorded a presumption of independent status. See First Nat’l City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 626-27, 103 S.Ct. 2591, 2599-2600, 77 L.Ed.2d 46 (1983) (“Bancec ”). In Bancec, the Supreme Court applied this presumption in the liability context, considering the question whether a claim of a foreign agency was subject to set-off for the debts of its parent government. The Bancec Court explained that the presumption of juridical separateness may be overcome where “internationally recognized equitable principles” mandate attribution in order to avoid injustice, id. at 633-34, 103 S.Ct. at 2603-04, and suggested that the presumption would be overcome where “a corporate entity is so extensively controlled by its owner that a relationship of principal and agent is created.” Id. at 629, 103 S.Ct. at 2601. The House Report accompanying FSIA set forth the reasons for separating the liabilities of one state instrumentality from those of another or from those of the state. The House Report explained that “[tjhere are compelling reasons for” the presumption of separateness in 28 U.S.C. § 1610(b):

If U.S. law did not respect the separate juridical identities of different agencies or instrumentalities, it might encourage foreign jurisdictions to disregard the juridical divisions between different U.S. corporations or between a U.S. corporation and its independent subsidiary.

H.Rep. No. 1487, 94th Cong., 2d Sess. 29-30 (1976), U.S.Code Cong. & Admin.News 1976, pp. 6628-29; Bancec, 462 U.S. at 628, 103 S.Ct. at 2600 (quoting same passage).

The presumption of the juridical separateness of entities also applies to jurisdictional issues. See, e.g., Gilson v. Republic of Ireland, 682 F.2d 1022, 1029-30 (D.C.Cir.1982); Hester Int’l Corp. v. Federal Republic of Nigeria, 879 F.2d 170, 176 (5th Cir.1989). As noted in the Restatement, “[w]hen a state instrumentality is not immune ..., for instance because the claim arises out of a commercial activity, the claim is ordinarily to be brought only against the instrumentality.” 1 Restatement (Third) op the Foreign Relations Law of the United States § 452 comment c (1987) (emphasis added). In Gilson, as here, the plaintiff brought an action against a foreign state, the Republic of Ireland and instrumentalities thereof, for a variety of alleged commercial misdeeds. See 682 F.2d at 1024. This court acknowledged that “ ‘the activities of an agent may be attributed to the principal for jurisdictional purposes.’” Id. at 1026 n. 16 (quoting East Europe Domestic Int’l Sales Corp. v. Terra, 467 F.Supp. 383, 390 (S.D.N.Y.), aff 'd mem., 610 F.2d 806 (2d Cir.1979)); see also id. at 1029-30. But the Gilson court concluded that the subject matter jurisdiction determination could not be made absent factual determinations regarding whether an agency relationship existed among the various defendants. See id. at 1026 n. 16, 1029. In other words, *447 absent an agency relationship, the court lacks subject matter jurisdiction over the foreign state for the acts of its instrumentality. See Hester Int’l Corp., 879 F.2d at 176, 181: see also Gilson, 682 F.2d at 1026 n. 16, 1029-30. Hence, in the instant case, the District Court must determine whether the facts as alleged by Foremost — subject, of course, to challenge by Iran — show sufficient control by Iran over Pak Dairy to create a relationship of principal to agent.

It is further clear that the plaintiff bears the burden of asserting facts sufficient to withstand a motion to dismiss regarding the agency relationship. See Baglab Ltd. v. Johnson Matthey Bankers Ltd., 665 F.Supp. 289, 296-97 (S.D.N.Y.1987); cf . Hester, 879 F.2d at 176 (plaintiff “bears the burden of proving the agency relationship” at trial); Letelier v. Republic of Chile, 748 F.2d 790, 795 (2d Cir.1984) (“Plaintiffs had the burden of proving that [the state instrumentality] was not entitled to separate recognition”), cert. denied, 471 U.S. 1125, 105 S.Ct. 2656, 86 L.Ed.2d 273 (1985). Thus, we cannot agree with Foremost that the findings of the Claims Tribunal alone are sufficient to address Iran’s motion to dismiss for want of agency between Pak Dairy and Iran. The legal standards employed by the Claims Tribunal to determine liability under the Algiers Accords are not coterminous with the standards applicable to determine a claim of attribution under FSIA.

Under the Algiers Accords, Iran agreed by international compact to assume responsibility for compensating United States nationals not only for claims against Iran itself but also for claims against “any political subdivision of Iran, and any agency, instrumentality, or entity controlled by the Government of Iran or any political subdivision thereof.” See Algiers Accords, supra note 6, at art. VII ¶ 3. The Claims Tribunal held that “[t]he two main indicators of government control of a corporation are the identity of its shareholders and the composition and behavior of its board of directors.” See Foremost Tehran, Inc. v. Iran, 10 Iran-United States Trib.Rep. at 241-42, reprinted in App. 66. Because it was found that government controlled entities held a majority of the shares in Pak Dairy and that these entities also held a majority of the seats on the board of directors, the Claims Tribunal concluded that Pak Dairy was a corporation controlled by the government of Iran. 14

Thus, under the Algiers Accords, because of majority shareholding and majority control of the board of directors, Pak Dairy was seen as a government agency or instrumentality for which Iran had agreed *448 to assume responsibility. We recognize that the same factors that influenced the Claims Tribunal to find liability under the Algiers Accords are relevant to determining whether an entity is an “agency or instrumentality” under section 1603(a) of FSIA. But these factors are not conclusive with respect to a claim of attribution under FSIA, i.e., where a plaintiff seeks to overcome the presumption that a foreign state and agencies and instrumentalities thereof are separate juridical identities under FSIA. See Hester, 879 F.2d at 177 n. 5.

Majority shareholding and majority control of a board of directors, without more, are not sufficient to establish a relationship of principal to agent under FSIA. See, e.g., Bancec, 462 U.S. at 614, 620-21, 623, 103 S.Ct. at 2593, 2596-97, 2598 (looking to principles of international law and federal common law to determine when instrumen-talities should not be treated as distinct from the sovereign — though the government owned all the stock and appointed delegates from governmental ministries to all the positions on the Governing Board); Hester, 879 F.2d at 181. (“The two factors of 100% ownership and appointment of the Board of Directors cannot by themselves force a court to disregard the separateness of the judicial entities.”); Hercaire Int’l, Inc. v. Argentina, 821 F.2d 559, 565 (11th Cir.1987) (concluding that 100% stock ownership alone is insufficient to overcome the presumption of separate juridical existence and that there was no showing that the foreign sovereign exercised “such extensive control ... as to warrant a finding of principal and agent,” nor could the court “perceive any ‘fraud or injustice’ which results from insulating [the instrumentality’s] property from attachment in aid of execution of the judgment against” the foreign state); Baglab Ltd., 665 F.Supp. at 297 (instrumentality immune from suit where plaintiff failed to substantiate its contentions that the instrumentality either made the specific loan decision of a bank it acquired or exercised “general control over the day-to-day activities of [the eodefend-ant bank] such that [the eodefendant bank] might be considered its agent”). The Claims Tribunal’s findings simply do not answer the question with respect to attribution that is posed by this case.

Moreover, here, Iran’s alleged control over Pak Dairy was exercised through entities on Pak Dairy’s Board, which were in turn allegedly controlled by Iran. Thus, the alleged principal/agent relationship is not a direct one and, hence, the showing required to support a claim of attribution is far from straightforward. It cannot be presumed that the interests of a foreign state and its agencies or instrumentalities always are the same. Nor can it be assumed that an official from a state entity who serves on the board of directors of another such entity always will act to serve or promote the interests of the sovereign. Thus, the question concerning an alleged agent/principal relationship between the foreign state and an agency or instrumentality thereof does not involve a meaningless inquiry. The District Court will be required to address this issue on remand.

2. Conclusory Allegations

The District Court found “on the face of Foremost’s complaint allegations which, although conclusory, would amount to the degree of control necessary to attribute the actions of the co-defendants to the Government of Iran.” Foremost III, slip op. at 6 n. 8, reprinted in App. 8 n. 8. Where such conclusory allegations are challenged by the sovereign, the plaintiff must provide further proof of government involvement in order to overcome the presumption of juridical separateness. Determination of “who is and is not an agent of whom will be in great part factual,” Gilson, 682 F.2d at 1029, and the fact-finding should be “explicit,” id. at 1026. In the instant case, the fact-findings were not sufficiently explicit.

In Gilson, this court determined that dismissal of the action for lack of subject matter and personal jurisdiction was “premature in light of the dearth of fact-finding done by the district. court thus far,” id., and the court remanded for further development of the facts. Here, we conclude that the District Court’s denial of Iran’s motion to dismiss was premature in light of *449 the dearth of fact-finding and we remand for further development of the facts as to the relationship between Iran and Pak Dairy.

Where, as with foreign sovereigns, immunity involves protection from suit, not merely a defense to liability, more than the usual is required of trial courts in making pretrial factual and legal determinations. In such circumstances, it is particularly important that the court “satisfy itself of its authority to hear the case,” Prakash v. American University, 727 F.2d 1174, 1179 (D.C.Cir.1984), before trial. “[P]ostponing the determination of subject matter jurisdiction until some point during or after trial” would “frustrate the significance and benefit of entitlement to immunity from suit.” Gould, Inc. v. Pechiney Ugine Kuhlmann,