On December 7, 2015, in Global Technology, Inc. v. Yubei (XinXiang) Power Steering System Co., Ltd., the US Court of Appeals for the Sixth Circuit held that a challenge to federal jurisdiction under FRCP 12(b)(1) based on applicability of the Foreign Sovereign Immunities Act (FSIA) is a factual challenge rather than a facial one, and underlying factual disputes must be determined to establish jurisdiction ( (6th Cir. Dec. 7, 2015)).

The plaintiff, Global Technology, Inc. (GTI), is an American corporation that served as a US sales representative and consultant for the defendant, Yubei Power Steering System Co., Ltd. (Yubei), a Chinese automotive company. Yubei is a subsidiary of the Aviation Corporation Industry of China (AVIC), which is owned by the People's Republic of China.

In 2008, GTI attempted to secure an alliance between Yubei, AVIC, and Delphi Corporation's Global Steering Division (Delphi), a Michigan company. Ultimately, General Motors (GM) purchased Delphi. Later, GTI was involved in several, additional unsuccessful attempts by AVIC and Yubei to purchase the company from GM. However, GM sold it to another Chinese company, Pacific Century Motors, in 2010. In 2011, AVIC Auto Control (AVIC Auto), an AVIC subsidiary, purchased 51% of Pacific Century's shares, giving AVIC Auto control of the company.

In 2012, GTI filed suit against Yubei, AVIC, and AVIC Auto in the US District Court for the Eastern District of Michigan, alleging that AVIC orchestrated this series of events to independently purchase Delphi and avoid compensating GTI for its role as an intermediary. After its motion to dismiss for failure to state a claim under FRCP 12(b)(6) was denied, AVIC filed a motion to dismiss for lack of subject matter jurisdiction under FRCP 12(b)(1), asserting immunity under the FSIA. AVIC claimed that GTI failed to show that AVIC's actions fell within FSIA's commercial activity exception, which provides that a foreign state is not immune when a lawsuit is based on the foreign state's conduct of commercial activity in the US. The district court denied AVIC's motion and AVIC appealed.

The Sixth Circuit vacated the district court's judgment and remanded the case, holding that AVIC's challenge to federal jurisdiction was a factual one and that the district court should have resolved the underlying factual disputes before establishing jurisdiction. When an FRCP 12(b)(1) motion attacks a complaint's factual basis, as in this case, a court does not presume that the factual allegations in the complaint are true. Rather, the plaintiff bears the burden to show that the defendant engaged in commercial activity. If the plaintiff makes that showing, the burden falls to the defendant to explain why its actions are not the type of private commercial activities that a private corporation would perform in the competitive marketplace.