Callejo v. Bancomer, S.A.

764 F.2d 1101 (1985)

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Callejo v. Bancomer, S.A.

United States Court of Appeals for the Fifth Circuit
764 F.2d 1101 (1985)

Facts

In May and June 1982, Texans William and Adelfa Callejo (plaintiffs) purchased dollar-denominated certificates of deposit (CDs) issued by Mexico-based Bancomer, S.A. (defendant). Bancomer was privately owned at the time. The CDs were payable in Mexico. In August and September 1982, the Mexican government issued new currency-control regulations that required Mexican banks to pay dollar-denominated CDs in Mexican pesos using a dollar conversion rate that was substantially less favorable to the Callejos than was the market rate. Additionally, in September, Mexico nationalized Bancomer. The Callejos sued Bancomer for breach of contract. Bancomer responded that it was immune under the Foreign Sovereign Immunities Act (FSIA) because it was a government entity and because the Callejos challenged the Mexican government’s policies. The Callejos countered that Bancomer was not immune under the FSIA’s commercial-activity exception because they challenged commercial activities with a sufficient nexus with the United States (US). Bancomer further argued that the Callejos’ suit was barred by the act-of-state doctrine because the Callejos attacked Mexico’s in-Mexico acts. The Callejos replied that (1) the doctrine’s commercial-activity exception applied, (2) Texas law applied because the CDs were located in Texas, and (3) the doctrine’s treaty exception applied because Mexico’s actions violated its agreement with the International Monetary Fund (IMF). The IMF subsequently advised that Mexico did not violate its IMF agreement. The district court ruled that Bancomer was entitled to sovereign immunity because the Callejos’ suit was not based on commercial activity. The district court did not address the parties’ other contentions. The Callejos appealed.

Rule of Law

Issue

Holding and Reasoning (Goldberg, J.)

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