JPMORGAN CHASE BANK v. TRAFFIC STREAM (BVI) INFRASTRUCTURE LTD.

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Syllabus
JPMORGAN CHASE BANK v. TRAFFIC STREAM
(BVI) INFRASTRUCTURE LTD.
certiorari to the united states court of appeals for
the second circuit
No. 01–651. Argued April 17, 2002—Decided June 10, 2002
Respondent Traffic Stream (BVI) Infrastructure Ltd. is a corporation or-
ganized under the laws of the British Virgin Islands (BVI), an Overseas
Territory of the United Kingdom. In 1998, petitioner, then known as
Chase Manhattan Bank, agreed to finance some Traffic Stream ventures,
with the contract to be governed by New York law and with Traffic
Stream agreeing to submit to the jurisdiction of federal courts in Man-
hattan. Chase subsequently sued Traffic Stream for defaulting on its
obligations. The District Court for the Southern District of New York
found subject-matter jurisdiction under the alienage diversity statute,
28 U. S. C. § 1332(a)(2)—which gives district courts jurisdiction over
civil actions where the controversy, inter alia, is “between citizens of a
State and citizens or subjects of a foreign state”—and granted Chase
summary judgment. In reversing, the Second Circuit found that, be-
cause Traffic Stream was a citizen of an Overseas Territory and not an
independent foreign state, jurisdiction was lacking.
Held: A corporation organized under the laws of the BVI is a “citize[n]
or subjec[t] of a foreign state” for the purposes of alienage diversity
jurisdiction. Pp. 91–100.
(a) A corporation of a foreign state is deemed that state’s subject for
jurisdiction purposes. Steamship Co. v. Tugman, 106 U. S. 118, 121.
Although Traffic Stream was organized under BVI law and the BVI is
unrecognized by the United States Executive Branch as an independent
foreign state, this Court has never held that the requisite status as
citizen or subject must be held directly from a formally recognized state,
as distinct from that state’s legal dependency; and any such distinction
would be entirely beside the point of the alienage jurisdiction statute.
Pp. 91–92.
(b) The BVI Constitution was established by the Crown of the United
Kingdom. The United Kingdom exercises pervasive authority over the
BVI, e. g., the Queen may annul any BVI statute and make laws for the
BVI. The Crown’s representatives have imposed laws and interna-
tional obligations on the BVI. In a practical sense, then, the statutes
permitting incorporation in the BVI are enacted in the exercise of the
United Kingdom’s political authority, and it seems fair to regard a BVI

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Syllabus
company as a citizen or subject of this ultimate political authority.
Pp. 92–94.
(c) Whether, as the Second Circuit posits, the relationship between
the United Kingdom and its territories is too attenuated for that state
to be viewed as a governing authority for § 1332(a)(2) purposes depends
upon the statute’s objective. The state courts’ penchant before and
after the Revolution to disrupt international relations and discourage
foreign investment led directly to the alienage jurisdiction provided by
Article III of the Constitution. The First Congress granted federal
courts such jurisdiction, and the statute was amended in 1875 to track
Article III’s language. The similarity of § 1332(a)(2) to Article III thus
bespeaks a shared purpose. The relationship between the BVI’s pow-
ers over corporations and the sources of those powers in Crown and
Parliament places the United Kingdom well within the range of concern
that Article III and § 1332(a)(2) address. It exercises ultimate author-
ity over the BVI’s statutory law and responsibility for the BVI’s exter-
nal relations. Pp. 94–97.
(d) Two flaws defeat Traffic Stream’s alternative argument that, be-
cause the United Kingdom does not recognize BVI residents as citizens
or subjects, and because corporations are legally nothing more than a
collection of shareholders residing in the corporation’s jurisdiction, Traf-
fic Stream is not a citizen or subject under the alienage diversity statute.
First, its outdated notion that corporate citizenship derives from natural
persons has long since been replaced by the conception of corporations
as independent legal entities. Second, it fails to recognize that juris-
dictional analysis under United States law is not governed by United
Kingdom law. Traffic Stream’s status under United Kingdom law does
not disqualify it from being a citizen or subject under the domestic stat-
ute at issue. Section 1332(a)(2) has no room for the suggestion that
members of a polity, under a sovereign’s authority, do not qualify as
“subjects” merely because they enjoy fewer rights than other members
do. Because Traffic Stream concedes that BVI citizens are “nationals”
of the United Kingdom, it is immaterial that United Kingdom law may
provide different rights of abode for individuals in the territories.
Pp. 97–99.
251 F. 3d 334, reversed.
Souter, J., delivered the opinion for a unanimous Court.
Sarah L. Reid argued the cause for petitioner. With
her on the briefs were Joseph N. Froehlich and Edward
H. Tillinghast III.

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Opinion of the Court
Jeffrey P. Minear argued the cause for the United States
as amicus curiae urging reversal. With him on the brief
were Solicitor General Olson, Assistant Attorney General
McCallum, Deputy Solicitor General Kneedler, Michael Jay
Singer, Wendy M. Keats, William Howard Taft IV, James G.
Hergen, and John P. Schnitker.
Craig J. Albert argued the cause for respondent. With
him on the brief was Lauren K. Kluger.*
Justice Souter delivered the opinion of the Court.
The question here is whether a corporation organized
under the laws of the British Virgin Islands is a “citize[n] or
subjec[t] of a foreign state” for the purposes of alienage di-
versity jurisdiction, 28 U. S. C. § 1332(a)(2). We hold that
it is.
I
Respondent Traffic Stream (BVI) Infrastructure Ltd. is a
corporation organized under the laws of the British Virgin
Islands (BVI), an Overseas Territory of the United King-
dom. 1 In 1998, petitioner Chase Manhattan Bank, now
JPMorgan Chase Bank, agreed to finance some ventures
Traffic Stream had organized to construct and operate toll
roads in China, with the parties’ contract to “be governed
by and construed in accordance with the laws of the State of
New York,” App. 85a. Traffic Stream agreed to “submi[t] to
the jurisdiction” of federal courts in Manhattan, and to
“waiv[e] any immunity from [their] jurisdiction.” Ibid.
*Mark N. Bravin and Peter Buscemi filed a brief for the Government
of the United Kingdom of Great Britain and Northern Ireland as amicus
curiae urging reversal.
1 In 1998, the Government of the United Kingdom announced that its
“ ‘Dependent Territories’ ” would, from that point on, be known as “ ‘Over-
seas Territories.’ ” Apparently the change of name implied nothing more.
Lodging, Amended Brief for Government of United Kingdom of Great
Britain and Northern Ireland as Amicus Curiae in No. 99–10385 (CA5),
p. 7, n. 2 (available in Clerk of Court’s case file).

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Chase subsequently charged Traffic Stream with default-
ing on its obligations. It sued in the United States District
Court for the Southern District of New York, which found
subject-matter jurisdiction under the alienage diversity stat-
ute, 28 U. S. C. § 1332(a)(2), and granted summary judgment
to Chase. When Traffic Stream appealed, the United States
Court of Appeals for the Second Circuit sua sponte raised
the question whether Traffic Stream was a citizen or subject
of a foreign state for the purposes of alienage diversity juris-
diction. The court relied on its precedent in Matimak Trad-
ing Co. v. Khalily, 118 F. 3d 76 (1997), in answering that
because Traffic Stream was a citizen of an Overseas Terri-
tory and not an independent foreign state, jurisdiction was
lacking. 251 F. 3d 334, 337 (2001). The judgment of the
District Court was reversed, and the case ordered to be re-
manded with instructions to dismiss the complaint. Ibid.
Chase was denied rehearing en banc.
Because the Second Circuit’s decision conflicts with those
of other Circuits, see Southern Cross Overseas Agencies,
Inc. v. Wah Kwong Shipping Group Ltd., 181 F. 3d 410, 413
(CA3 1999); Koehler v. Dodwell, 152 F. 3d 304, 308 (CA4
1998); Wilson v. Humphreys (Cayman) Ltd., 916 F. 2d 1239,
1242–1243 (CA7 1990), and implicates serious issues of for-
eign relations, we granted certiorari, 534 U. S. 1074 (2001).
We now reverse.
II
Title 28 U. S. C. § 1332(a)(2) provides district courts with
“original jurisdiction of all civil actions where the matter in
controversy exceeds the sum or value of $75,000 . . . and is
between . . . citizens of a State and citizens or subjects of
a foreign state.” A “corporation of a foreign State is, for
purposes of jurisdiction in the courts of the United States,
to be deemed, constructively, a citizen or subject of such
State.” Steamship Co. v. Tugman, 106 U. S. 118, 121 (1882).
Cf. Restatement (Third) of Foreign Relations Law of the
United States § 213 (1986) (“For purposes of international

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law, a corporation has the nationality of the state under the
laws of which the corporation is organized”). In spite of this
general rule of corporate citizenship, this case presents two
issues about the application of the statute to Traffic Stream:
whether Traffic Stream has been incorporated under the
laws of a “foreign state” given the BVI’s status as an Over-
seas Territory, and whether the BVI’s corporate citizens are
“citizens or subjects” within the meaning of § 1332(a)(2).
A
The argument that the status of the BVI renders the stat-
ute inapplicable begins by assuming that Traffic Stream, or-
ganized under BVI law, must be a citizen or subject of the
BVI alone. Since the BVI is a British Overseas Territory,
unrecognized by the United States Executive Branch as an
independent foreign state, it is supposed to follow that for
purposes of alienage jurisdiction Traffic Stream is not a citi-
zen or subject of a “foreign state” within the meaning of
§ 1332(a)(2).
Even on the assumption, however, that a foreign state
must be diplomatically recognized by our own Government
to qualify as such under the jurisdictional statute (an issue
we need not decide here), we have never held that the requi-
site status as citizen or subject must be held directly from a
formally recognized state, as distinct from such a state’s
legal dependency. On the contrary, a consideration of the
relationships of the BVI and the recognized state of the
United Kingdom convinces us that any such distinction
would be entirely beside the point of the statute providing
alienage jurisdiction.
1
The current BVI Constitution was established when the
Crown of the United Kingdom, in the exercise of power
granted by the West Indies Act, 1962, c. 19, § 5(1), issued
the Virgin Islands (Constitution) Order 1976, SI 1976/2145.
Under that order, the United Kingdom exercises pervasive

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authority over the territory. The Constitution provides, for
example, that the BVI Government shall include a Governor
and Deputy Governor appointed by the Queen to “hold office
during Her Majesty’s pleasure,” id., pt. II, § 3(1), an Exec-
utive Council mainly appointed by the Governor on the
basis of the popular election for the Legislative Council,
§§ 14–15, and a Legislature comprising the Queen and a Leg-
islative Council of mainly popularly elected representatives,
§§ 25–26.
Bills take effect as laws only when approved by the royally
appointed Governor or by the Queen acting through a Secre-
tary of State, § 42. The Governor is instructed to withhold
assent from any bill that may conflict with the laws of the
United Kingdom or is “likely to prejudice the Royal prerog-
ative.” § 42(2)(b). The Queen, acting through a Secretary
of State, has authority to annul any BVI statute, § 43(1),
and “[t]here is reserved to Her Majesty full power to make
laws for the peace, order and good government of the Virgin
Islands,” § 71. “[I]f the Legislative Council fails to pass . . .
a Bill or motion . . . the Governor may, at any time that he
thinks fit, . . . declare that such Bill or motion shall have
effect as if it had been passed . . . .” § 44.
The Crown’s representatives have not slept on their pow-
ers, which have recently been exercised to impose laws and
international obligations upon the territory, as in the Carib-
bean Territories (Abolition of Death Penalty for Murder)
Order 1991, and the Merchant Shipping (Salvage Conven-
tion) (Overseas Territories) Order 1997, the latter of which
brought the BVI into compliance with the International Con-
vention on Salvage, 1989. In a very practical sense, then,
the statutes that permit incorporation in the BVI, see BVI
Companies Act (CAP. 285); BVI International Business Com-
panies Act (CAP. 291), are laws enacted in the exercise of
the political authority of the United Kingdom, and it seems
fair to regard a BVI company as a citizen or subject of this
ultimate political authority. This view of the relationship

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seems especially reasonable when such a corporation is en-
gaged in an international transaction, since the United King-
dom acts on the BVI’s behalf in the international arena. See
6 Halsbury, Laws of England ¶ 983, p. 471 (4th ed. 1991)
(“Her Majesty’s government in the United Kingdom is in-
ternationally responsible for the external affairs of United
Kingdom dependent territories”); see also United Nations
Act, 1946, c. 45 (empowering the Crown to bring “His Majes-
ty’s dominions” into compliance with directives of the United
Nations Security Council).
2
The Second Circuit nonetheless takes the position that the
relationship between the United Kingdom and its territories
is “too attenuated” for the United Kingdom to be viewed
as a governing authority for purposes of the relationship
assumed by § 1332(a)(2). Matimak Trading Co., 118 F. 3d,
at 86. This, of course, depends upon the statute’s objective.
Both during and after the Revolution, state courts were
notoriously frosty to British creditors trying to collect debts
from American citizens, and state legislatures went so far
as to hobble British debt collection by statute, despite the
specific provision of the 1783 Treaty of Paris that creditors
in the courts of either country would “meet with no lawful
impediment” to debt collection. Definitive Treaty of Peace,
United States-Great Britain, Art. IV, 8 Stat. 82. See Holt,
“To Establish Justice”: Politics, the Judiciary Act of 1789,
and the Invention of the Federal Courts, 1989 Duke L. J.
1421, 1438–1449. Ultimately, the States’ refusal to honor
the treaty became serious enough to prompt protests by
the British Secretary of State, particularly when irked by
American demands for treaty compliance on the British side.
See 31 Journals of the Continental Congress, 1774–1789,
pp. 781–784 (J. Fitzpatrick ed. 1934).
This penchant of the state courts to disrupt international
relations and discourage foreign investment led directly to
the alienage jurisdiction provided by Article III of the Con-

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stitution. See U. S. Const., Art. III, § 2 (federal jurisdiction
“extend[s] to . . . Controversies . . . between a State, or the
Citizens thereof, and foreign States, Citizens or Subjects”).
“[T]he proponents of the Constitution . . . made it quite clear
that the elimination or amelioration of difficulties with credit
was the principal reason for having the alienage and diver-
sity jurisdictions, and that it was one of the most important
reasons for a federal judiciary.” Holt, supra, at 1473. This
is how James Wilson put it during the debates at the Penn-
sylvania ratification convention:
“Let us suppose the case, that a wicked law is made in
some one of the states, enabling a debtor to pay his cred-
itor with the fourth, fifth, or sixth part of the real value
of the debt, and this creditor, a foreigner, complains to
his prince . . . of the injustice that has been done him. . . .
Bound by inclination, as well as duty, to redress the
wrong his subject sustains . . . [h]e must therefore apply
to the United States; the United States must be account-
able. ‘My subject has received a flagrant injury: do me
justice, or I will do myself justice.’ If the United States
are answerable for the injury, ought they not to possess
the means of compelling the faulty state to repair it?
They ought; and this is what is done here. For now,
if complaint is made in consequence of such injustice,
Congress can answer, ‘Why did not your subject apply
to the General Court . . . ?’ ” 2 Debates on the Federal
Constitution 493 (J. Elliot ed. 1876) (hereinafter Elliot’s
Debates).
Wilson emphasized that in order to “extend our manufac-
tures and our commerce” there would need to be a “proper
security . . . provided for the regular discharge of contracts.
This security cannot be obtained, unless we give the power
of deciding upon those contracts to the general government.”
Id., at 492. His concerns were echoed by James Madison:
“We well know, sir, that foreigners cannot get justice done

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them in these courts, and this has prevented many wealthy
gentlemen from trading or residing among us.” 3 id., at 583.
Madison also remarked that alienage jurisdiction was neces-
sary to “avoid controversies with foreign powers” so that a
single State’s courts would not “drag the whole community
into war.” Id., at 534; see also The Federalist No. 80, p. 536
(J. Cooke ed. 1961) (A. Hamilton) (“[A]n unjust sentence
against a foreigner [may] be an aggression upon his sover-
eign” rendering alienage jurisdiction “essential to . . . the
security of the public tranquility”).
Thus, the First Congress granted federal courts the alien-
age jurisdiction authorized in the Constitution, even while
general federal-question jurisdiction was withheld. See Ju-
diciary Act of 1789, ch. 20, § 11, 1 Stat. 78 (providing for juris-
diction where “an alien is a party” and more than $500 in
controversy). The language of the statute was amended in
1875 to track Article III by replacing the word “aliens” with
“citizens, or subjects,” Act of Mar. 3, 1875, 18 Stat. 470, the
phrase that remains today. Although there is no need here
to decide whether the current drafting provides jurisdiction
up to the constitutional hilt, cf. Tennessee v. Union & Plant-
ers’ Bank, 152 U. S. 454 (1894) (despite similar language,
federal-question jurisdiction under 28 U. S. C. § 1331 does not
extend as far as Article III), there is no doubt that the simi-
larity of § 1332(a)(2) to Article III bespeaks a shared purpose.
The relationship between the BVI’s powers over corpora-
tions and the sources of those powers in Crown and Parlia-
ment places the United Kingdom well within the range of
concern addressed by Article III and § 1332(a)(2). The
United Kingdom exercises ultimate authority over the BVI’s
statutory law, including its corporate law and the law of cor-
porate charter, and it exercises responsibility for the BVI’s
external relations. These exercises of power and responsi-
bility point to just the kind of relationship that the Framers
believed would bind sovereigns “by inclination, as well as
duty, to redress the wrong[s]” against their nationals, 2 El-

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liot’s Debates 493 (J. Wilson). See J. Jones, British National-
ity Law and Practice 288 (1947) (“It is the practice of His
Majesty’s Government in the United Kingdom to protect, as
against foreign Powers, . . . [c]orporations owing their exist-
ence to the law in force in the United Kingdom and colo-
nies”). Any doubters may consult the United Kingdom’s
own filings in this matter and others comparable, which ex-
press apprehension that expulsion of corporations like Traffic
Stream from federal courts would cloud investment opportu-
nity and raise the sort of threat to “the security of the public
tranquility” that the Framers hoped to avoid. See, e. g.,
Brief for Government of United Kingdom of Great Britain
and Northern Ireland as Amicus Curiae; Diplomatic Note
No. 13/2000 from British Embassy in Washington, D. C., to
U. S. State Dept., Feb. 2, 2000, Lodging 29, p. 1 (available in
Clerk of Court’s case file); Diplomatic Note No. 90/2001 from
the British Embassy in Washington, D. C., to the U. S. State
Dept., Oct. 5, 2002, App. to Motion to File Brief as Amicus
Curiae for Government of United Kingdom of Great Britain
and Northern Ireland 1a.
B
Traffic Stream’s alternative argument is that BVI corpora-
tions are not “citizens or subjects” of the United Kingdom.
Traffic Stream begins with the old fiction that a corporation
is just an association of shareholders, presumed to reside
in the place of incorporation, see, e. g., Tugman, 106 U. S.,
at 120–121, with the result that, for jurisdictional purposes,
a suit against the corporation should be understood as a suit
against the shareholders, see id., at 121. Traffic Stream pro-
ceeds to read the British Nationality Act, 1981, as a declara-
tion by the United Kingdom that BVI residents are not its
citizens or subjects, but mere “nationals,” without the rights
and privileges of citizens or subjects, such as the right to
travel freely within the United Kingdom. See I. Macdon-
ald & N. Blake, Macdonald’s Immigration Law and Practice
in the United Kingdom 130–131 (4th ed. 1995) (describing

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categories of United Kingdom citizenship).2 Traffic Stream
insists that because it is legally nothing more than a collec-
tion of noncitizen individuals, the corporation itself cannot be
treated as deserving of access to the courts of the United
States under a statute that opens them to foreign citizens
and subjects.
The less important flaw in the argument is its reliance on
the outdated legal construct of corporations as collections of
shareholders linked by contract, see M. Horwitz, The Trans-
formation of American Law 1870–1960, pp. 69–93 (1992), a
view long since replaced by the conception of corporations as
independent legal entities, see id., at 93–107.3 Thus, Traffic
Stream’s whole notion of corporate citizenship derived from
natural persons is irrelevant to jurisdictional enquiry in the
United States today.
But the argument’s more significant weakness is its failure
to recognize that jurisdictional analysis under the law of
the United States is not ultimately governed by the law
of the United Kingdom, whatever that may be. While it is
perfectly true that “every independent nation [has the inher-
ent right] to determine for itself . . . what classes of persons
shall be entitled to its citizenship,” United States v. Wong
Kim Ark, 169 U. S. 649, 668 (1898), our jurisdictional concern
here is with the meaning of “citizen” and “subject” as those
2 Ironically, in passing the British Nationality Act, 1981, c. 61, § 36, the
United Kingdom identified one goal as “reducing statelessness.”
3 Indeed, Congress itself rejected the earlier rule in 1958 when it pro-
vided that “a corporation shall be deemed to be a citizen of any State by
which it has been incorporated and of the State where it has its principal
place of business.” 28 U. S. C. § 1332(c)(1). There has been raised some
question as to whether § 1332(c) applies to foreign, as well as domestic,
corporations, although those Circuits that have reached the issue are
in agreement that § 1332(c) extends to alien corporations. See Danjaq,
S. A. v. Pathe Communications Corp., 979 F. 2d 772, 773–774 (CA9 1992);
Vareka Investment, N. V. v. American Investment Properties, Inc., 724
F. 2d 907, 909 (CA11 1984); Jerguson v. Blue Dot Investment, Inc., 659 F.
2d 31, 35 (CA5 1981). There is no need for us to weigh in on this point.

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terms are used in § 1332(a)(2). In fact, we have no need
even to decide whether Traffic Stream’s reading of the Brit-
ish Nationality Act is wrong, as the United Kingdom says it
is, 4 but only whether the status Traffic Stream claims under
the Nationality Act would so operate on the law of the
United States as to disqualify it from being a citizen or sub-
ject under the domestic statute before us here. We think
there is nothing disqualifying.
Although the word “citizen” may imply (and in 1789 and
1875 may have implied) the enjoyment of certain basic rights
and privileges, see Black’s Law Dictionary 237 (7th ed. 1999)
(defining “citizen” as “entitled to enjoy all its civil rights and
protections” of a community), a “subject” is merely “[o]ne
who owes allegiance to a sovereign and is governed by that
sovereign’s laws,” id., at 1438. Thus, contrary to Traffic
Stream’s view, the text of § 1332(a)(2) has no room for the
suggestion that members of a polity, under the authority of
a sovereign, fail to qualify as “subjects” merely because they
enjoy fewer rights than other members do. For good or ill,
many societies afford greater rights to some of its members
than others without any suggestion that the less favored
ones have ceased to be “citizens or subjects.” And although
some persons, like resident aliens, may live within a foreign
state without being treated under American law as members
of that particular polity, cf. Wong Kim Ark, supra, at 660
(“ ‘children . . . born in a place . . . then occupied . . . by
conquest, are still aliens’ ”), Traffic Stream concedes that
BVI citizens are at least “nationals” of the United Kingdom.
See Brief for Respondent 25. Given the object of the alien-
age statute, as explained earlier, there is no serious ques-
tion that “nationals” were meant to be amenable to the juris-
diction of the federal courts, leaving it immaterial for our
purposes that the law of the United Kingdom may provide
different rights of abode for individuals in the territories.
4 See Brief for Government of the United Kingdom of Great Britain and
Northern Ireland as Amicus Curiae 12–13.

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III
Because our opinion accords with the positions taken by
the Governments of the United Kingdom, the BVI, and the
United States, the case presents no issue of deference that
may be due to the various interested governments. It is
enough to hold that the United Kingdom’s retention and ex-
ercise of authority over the BVI renders BVI citizens, both
natural and juridic, “citizens or subjects” of the United King-
dom under 28 U. S. C. § 1332(a). We therefore reverse the
judgment of the Court of Appeals.
It is so ordered.