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War and neutrality — War in general — Effects of the outbreak of war — Trading with the enemy — Protection of interests of United Stated firm in trademark registered by State enterprise in German Democratic Republic — Whether action barred by regulations under the Trading with the Enemy Act — The law of the United States

Plaintiff Sheets sought sanctions under Rule 11 of the Federal Rules of Civil Procedure against defendants, the Yamaha Motor Co. Ltd. (Yamaha Japan) and its wholly owned American subsidiary, Yamaha Motors Corp., U.S.A. (Yamaha U.S.A.), for misconduct in discovery and frivolous insistence that service on the foreign parent be made in conformity with the Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, better known as the Hague Service Convention. Plaintiff had effected service under the Louisiana long-arm statute, which permitted service on the subsidiary as involuntary agent for the defendant parent company in an action arising out of business transacted or tortious conduct occurring in the state. The U.S. District Court for the Eastern District of Louisiana initially awarded $25,000 in sanctions to the plaintiff. On appeal, the U.S. Court of Appeals for the Fifth Circuit remanded the decision for further findings by the district court on the grounds for imposing sanctions. The district court held (per Schwartz, J.): in light of the decision of the Supreme Court in Volkswagenwerk Aktiengesellschaft v. Schlunk, involving a state service statute virtually identical to that of Louisiana, the defendants' failure to waive service under the Hague Convention needlessly increased the cost of litigation and was properly the subject of Rule 11 sanctions.

In Jam v. International Finance Corp., the U.S. Supreme Court held that the International Organizations Immunities Act of 1945 (IOIA) affords international organizations (IOs) the same immunity from suit in U.S. courts that foreign governments currently enjoy under the Foreign Sovereign Immunities Act of 1976 (FSIA), which codifies the restrictive theory of foreign sovereign immunity. The International Finance Corporation (IFC) had argued that the IOIA, which grants international organizations the "'same immunity' from suit … 'as is enjoyed by foreign governments'" (p. 15), should be understood to provide international organizations with absolute immunity, which it argued foreign governments enjoyed prior to the United States' explicit adoption of the restrictive theory in 1952. Under the restrictive theory, a foreign state is immune from suit for its sovereign acts (acta jure imperii), but not for its commercial acts (acta jure gestionis). By interpreting language in the IOIA as granting the "same immunity" to international organizations as foreign governments enjoy at the time the suit is filed, the Supreme Court aligned the regime for IO immunity with that of foreign state immunity, except in cases where the IO's founding charter provides a different rule or where the executive branch has explicitly limited immunity. It remains to be seen what IO activities are deemed "commercial" under this regime and what types of transactions are found to have a sufficient nexus to the United States to fall within the FSIA's commercial-activity exception.

Plaintiffs, Sperry Corp. and Sperry World Trade Inc. (Sperry), received an award from the Iran-United States Claims Tribunal (Tribunal). Upon payment of the award, the United States deducted 2 percent of the total amount pursuant to a directive license issued by the Secretary of the Treasury regarding recovered claims by U.S. nationals against Iran. When plaintiffs challenged the authority of the Treasury to make the deduction and the United States Claims Court announced a preliminary ruling that concurred with plaintiffs' position, the Executive persuaded Congress to approve legislation authorizing specified percentages to be deducted by the United States from Tribunal awards to U.S. citizens. Responding to the plaintiffs' challenge to the constitutionality of the newly enacted statute, the United States Claims Court dismissed the suit and, on appeal, the United States Court of Appeals for the Federal Circuit (per Meyer, J.) reversed and held: that the deduction constitutes a taking without compensation in violation of the Fifth Amendment to the United States Constitution. In September 1988, the United States filed notice of appeal with the Supreme Court.