Cengage Advantage Books: Business Law 13th Edition by Roger LeRoy Miller

Exercise 20

Sovereign Immunity. Taconic Plastics, Ltd., is a manufacturer incorporated in Ireland with its principal place of business in New York. Taconic enters into a contract with a German firm, Werner Voss Architects and Engineers, acting as an agent for the government of Saudi Arabia. The contract calls for Taconic to supply special material for tents designed to shelter religious pilgrims visiting holy sites in Saudi Arabia. Most of the material is made in, and shipped from, New York. The German company does not pay Taconic and files for bankruptcy. Taconic files a suit in a U.S. court against the government of Saudi Arabia, seeking to collect $3 million. The defendant files a motion to dismiss the suit based on the doctrine of sovereign immunity. Under what circumstances does this doctrine apply? What are its exceptions? Should this suit be dismissed? Explain.