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Note: In connection with contractual agreements to repair and maintain F-5 fighter jets for the Royal Saudi Arabian Air Force, the Kingdom of Saudi Arabia was required to maintain an LC to effect payment. In order to draw on the LC, the Vendor, LSI, was required to submit and receive approval of an invoice. When the Kingdom decided to replace the Vendor, the Vendor still held in storage parts that had been ordered by the Saudi Air Force and stored by Vendor. Payment was also outstanding on the parts because Vendor had been unable to obtain approval for its invoices for their cost. In addition, the Kingdom refused to release a performance bond issued on behalf of Vendor in the amount of US$5,600,000.00 and froze Vendor's receivables in Saudi Arabia although the Vendor was unable to obtain verification of the freeze.

When Vendor sued the Kingdom in the U.S. District Court for the Western District of Texas for breach of contract, the Kingdom moved to dismiss on the basis of the Foreign Sovereign Immunities Act (FSIA), a U.S. statute protecting foreign sovereigns from suit, and the doctrine of forum non conveniens. The U.S. District Court for the Western District of Texas, Furgeson, J., denied the motion.

The Judge ruled that "jurisdiction is proper under the FSIA because the Kingdom's acts fall under the commercial activities exception." The Judge also ruled that the doctrine of forum non conveniens was not violated by the choice of Texas as the forum because it could not be shown that the forum choice was oppressive or anymore inconvenient than other available forum choices in Saudi Arabia, nor could it be shown that justice would be better served by an alternate forum choice.

[JEB/krp]

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