Court affirms dismissal of most claims against Republic of Indonesia and state-owned insurer under Foreign Sovereign Immunities Act

Anglo-Iberia Underwriting Management Company and Industrial Re International sued an employee of the Indonesian state-owned social security insurer, Jamsostek, who while on leave in Colorado studying for an M.B.A. perpetrated an international reinsurance fraud scam that cost the Plaintiffs an estimated $55 million. Plaintiffs also sued Jamsostek and the Republic of Indonesia, alleging that they had breached contractual obligations to Plaintiffs and negligently failed to supervise their employee. The district court had dismissed all claims against Indonesia and Jamsostek based upon the sovereign immunity conferred by the Foreign Sovereign Immunities Act. The Second Circuit addressed the issue of whether the immunity exception for commercial activities applied. The Court of Appeal found that the contract claims were properly dismissed, but that the district court had failed adequately to consider the negligent supervision claim, and remanded for further consideration with respect to that claim. In remanding, the appellate panel set out the standards for the application of the commercial activity exception. Anglo-Iberia Underwriting Management Co. v.Lodderhose, Case No. 03-9260 (2d Cir. May 25, 2007).