JPMorgan Chase Bank v. Traffic Stream (BVI) Infrastructure Ltd.

PETITIONER: JPMorgan Chase Bank
RESPONDENT: Traffic Stream (BVI) Infrastructure Ltd.
LOCATION: United States District Court Eastern District of Michigan

DOCKET NO.: 01-651
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 536 US 88 (2002)
ARGUED: Apr 17, 2002
DECIDED: Jun 10, 2002

ADVOCATES:
Craig J. Albert - Argued the cause for the respondent
Jeffrey P. Minear - Argued the cause for the United States, as amicus curiae, supporting the petitioner
Mark N. Bravin - for the Government of the United Kingdom of Great Britain and Northern Ireland as amicus curiae urging reversal
Peter Buscemi - for the Government of the United Kingdom of Great Britain and Northern Ireland as amicus curiae urging reversal
Sarah L. Reid - Argued the cause for the petitioner

Facts of the case

Traffic Stream (BVI) Infrastructure Ltd. is a corporation organized under the laws of the British Virgin Islands (BVI), an Overseas Territory of the United Kingdom. In 1998, Chase Manhattan Bank, now JPMorgan Chase Bank, agreed to finance certain Traffic Stream ventures, with the contract to be governed by New York law and with Traffic Stream agreeing to submit to the jurisdiction of federal courts in Manhattan. Subsequently, Chase sued Traffic Stream for defaulting on its obligations. The District Court found subject-matter jurisdiction under the alienage diversity statute, 28 USC section 1332(a)(2), which gives district courts jurisdiction over civil actions where the controversy is "between citizens of a State and citizens or subjects of a foreign state," and granted Chase summary judgment. In reversing, the Court of Appeals found that, because Traffic Stream was a citizen of an Overseas Territory and not an independent foreign state, jurisdiction was lacking.

Question

Is a corporation organized under the laws of the British Virgin Islands a "citizen or subject of a foreign state" for the purposes of alienage diversity jurisdiction?

Media for JPMorgan Chase Bank v. Traffic Stream (BVI) Infrastructure Ltd.

Audio Transcription for Oral Argument - April 17, 2002 in JPMorgan Chase Bank v. Traffic Stream (BVI) Infrastructure Ltd.

Audio Transcription for Opinion Announcement - June 10, 2002 in JPMorgan Chase Bank v. Traffic Stream (BVI) Infrastructure Ltd.

David H. Souter:

The second case that I have to announce this morning is No. 01-651 JP Morgan Chase Bank against Traffic Stream (BVI) Infrastructure Limited.

This case comes to us on writ of certiorari to the United States Court of Appeals for the Second Circuit.

By statute, the Federal Courts have jurisdiction over cases between citizens of State and citizens who are subjects of a foreign State.

The respondent, Traffic Stream, is a corporation organized under the laws of the British Virgin Islands, which is an overseas territory under the political authority of the United Kingdom.

After Traffic Stream and a New York corporation the petitioner, JP Morgan Chase Bank, became embroiled in a contract dispute, Chase attempted to sue Traffic Stream in Federal Court.

The Second Circuit held it because Traffic Stream is a corporation of the British Virgin Islands, and the islands are not recognized as an independent country, jurisdiction would not lie.

In a unanimous opinion filed today with the Clerk of the Court, we reverse.

Both the jurisdictional statute and the constitutional provision allowing alienage jurisdiction were intended to insure foreign as a neutral forum for dispute resolutin.

In this way, the United States could provide incentives for foreign investment and avoid angering foreign governments.

Given the pervasive authority exercised by the United Kingdom over the British Virgin Islands, these purposes of alienage jurisdiction must serve by treating the British Virgin Islands’ corporations, as citizens who are subjects of the United Kingdom.

It does not matter that United Kingdom law may provide fewer rights to residents of the British Virgin Islands than it does to other United Kingdom subjects.

It is our own law that we consult in determining whether a corporation will have access to our courts, and it is beyond dispute to the nationals of a foreign state, whatever their status in their home country, might be treated as citizens or subjects of that state for purposes of federal jurisdiction.