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IN RE TERRORIST ATTACKS ON SEPTEMBER 11, 2001 791
Cite as 349 F.Supp.2d 765 (S.D.N.Y. 2005)

(1) whether the foreign state created
the entity for a national purpose; (2)
whether the foreign state actively super-
vises the entity; (3) whether the foreign
state requires the hiring of public em-
ployees and pays their salaries; (4)
whether the entity holds exclusive rights
to some right in the [foreign] country;
and (5) how the entity is treated under
foreign state law.

Id. at 217 (citing Kelly v. Syria Shell
Petroleum Dev. B.V., 213 F.3d 841, 846–47
(5th Cir.2000) (alteration in original)).
The Second Circuit held that the KDIC
was an organ of Korea because it was
formed by statute and presidential decree;
it performs the governmental functions of
protecting depositors and promoting finan-
cial stability; its directors are appointed
by the Ministry of Finance and Economy;
its president is appointed by the President
of the Republic of Korea; and many of its
operations are overseen by the Ministry of
Finance and Economy. Id.

The banks argued that once the court
determined KDIC was an organ of the
foreign state, the banks automatically be-
came instrumentalities or agencies of the
state because KDIC owned a majority of
their stock. Id. The Second Circuit reject-
ed this argument, finding such a holding
would "permit an infinite number of sub-
sidiaries to enjoy sovereign immunity, . . .
would be incompatible with the purpose of
the FSIA, which is to grant governmental,
not private corporate immunity, and . . .
would reflect infidelity to the Supreme
Court's reasoning in Dole Food." Id. at
218. Accordingly, it reiterated that "'a
subsidiary of an instrumentality is not it-
self entitled to instrumentality status' . . .
and that 'only direct ownership of a major-
ity of shares by the foreign state satisfies
the statutory requirement.'" Id. (quoting
Dole Food, 538 U.S. at 473–74, 123 S.Ct.
1655).

The Second Circuit determined the
KDIC was an organ of Korea by consider-
ing whether it was created and supervised
by a foreign state and whether public em-
ployees were performing public functions.
Id. at 217. Under its reasoning, it would
appear the PIF is also an organ. It was
created by royal decree, it is supervised by
the Kingdom's Council of Ministers and
staffed with government employees. See
PIF Charter.

Yet, under the "legal characteristics"
test, the PIF could qualify as a political
subdivision. See Hyatt, 945 F.Supp. at
680. In Hyatt, a court in this district
reasoned that a statutory requirement of
an agency or instrumentality, as opposed
to a political subdivision, is that it is a
"separate legal person . . . that can func-
tion independent of the state." Id. at 684.
If an entity could sue and be sued, own
property, and contract in its own name, it
would be considered an agency or instru-
mentality and not a political subdivision.
Id. at 685. NCB submits the PIF sues
and is sued as, and generally holds proper-
ty on behalf of, the Ministry of Finance.
Al–Wohaibi Aff. ¶¶ 9, 12.

NCB argues the Court should employ
the "core functions" test outlined in Tran-
saero, Inc. v. La Fuerza Aerea Boliviana,
30 F.3d 148 (D.C.Cir.1994), to find that the
PIF is the equivalent of the Kingdom.
Under this test, if the entity's core func-
tions are governmental, it is considered
the state itself. Id. at 153. If its functions
are commercial in nature, it is considered
an instrumentality. Id. This Court is gov-
erned by Second Circuit precedent and
finds Filler and Hyatt to be controlling.
Even if it were to adopt Transaero, howev-
er, the Court finds on the record before it
that the PIF's emphasis on commercial
projects precludes a finding that its core
functions are governmental in nature. See
PIF Charter ¶ 2 (noting the PIF's primary

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