Lost in the Judicial Wilderness: The Stateless Corporation after Matimak Trading

Baker, Mark | January 1, 1998

Statelessness clearly implicates issues concerning basic human rights. The United Nations has addressed some of these issues by taking steps to reduce statelessness and to minimize its results, most notably with the Convention on the Reduction of Statelessness and the Convention Relating to the Status of Stateless Persons. Although mitigating the effects of statelessness is noble and quite worthwhile, these efforts may fail to reach certain stateless persons, and, more specifically, certain stateless entities. Enter Matimak Trading Company (“Matimak”), a corporation formed under the laws of, and with its principal place of business in, Hong Kong. Recently, the U.S. Second Circuit Court of Appeals deemed Matimak to be “stateless” due to Hong Kong’s status as a dependent territory and Great Britain’s nationality law.The court dismissed the case for lack of subject matter jurisdiction since Matimak failed to meet one of the criteria set out in the Alienage Diversity statute, being a citizen of a foreign state. Matimak Trading Co. v. Khalily deviates from the opinions reached by other circuits when confronted with the citizenship issue of corporations formed under the laws of British Dependent Territories. Wilson v. Humphreys (Cayman) Ltd. best illustrates this departure In Wilson, the Seventh Circuit held that a Cayman Islands corporation, although incorporated under the laws of a British Dependent Territory, was a citizen of a “foreign state” under the Alien Diversity statute.It therefore could access United States federal courts.These irreconcilable decisions leave similarly situated corporations in a jurisdictional twilight zone where their ability to enter a federal courthouse is questionable. This inconsistent treatment of foreign corporations by the courts of appeals could have international ramifications. A remedy imposing certainty is crucial. This article investigates methods to alleviate this intercircuit conflict.