In an multi-district litigation involving numerous manufacturers of cathode ray tubes (CRT) monitors, there was a default judgment against Irico, a state-owned enterprise of China. Irico initially refused to appear, only filing a declaration that it is not subject to suit in the United States based on sovereign immunity. After the entry of default, Irico retained counsel and moved to set aside the default.
The court first determined whether it had jurisdiction over Irico, and found the "commercial activity" exception of the sovereign immunity applied to Irico. The court then granted the motion to set aside the default, as the prejudice to the plaintiff is somewhat self-inflicted (because the plaintiffs were slow to move for a default judgment) and Irico may yet present meritorious defenses, i.e. the renewed claim under sovereign immunity defense.
This is fun, although I'm sure the plaintiffs' counsel would disagree. Sovereign immunity by state-owned enterprises is a particular problem with China, which is now an indispensable country in global manufacturing. Bears watching what ends up happening to Irico in this case.
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