Introduction

In Hamilton Reserve Bank Ltd. v. Democratic Socialist Republic of Sri Lanka, No. 24-1459-cv (2d Cir. Apr. 10, 2025), the U.S. Court of Appeals for the Second Circuit confronted a dispute over whether third parties seeking to intervene in a federal suit must clear the same “common nucleus of operative fact” threshold under 28 U.S.C. § 1367(a) that governs other supplemental-jurisdiction claims. Hamilton Reserve Bank had sued Sri Lanka for failing to pay approximately $250 million in matured sovereign bonds. More than a year into that litigation, Jesse Guzman, Ultimate Concrete LLC, and Intercoastal Finance Ltd. (collectively, “Appellants”) moved to intervene to assert conversion and fraud claims against Hamilton, alleging that their $50 million deposit funded Hamilton’s bond purchases and was being wrongfully withheld. The district court denied intervention for lack of subject-matter jurisdiction under § 1367(a). The Appellants urged that meeting the Federal Rule of Civil Procedure 24(a)(2) standard for intervention as of right automatically conferred supplemental jurisdiction. A three-judge panel (Lynch, Robinson, Nathan) affirmed.

Summary of the Judgment

The Second Circuit held that:

1. Federal courts derive their supplemental jurisdiction over both non-federal claims and intervention claims from 28 U.S.C. § 1367(a), not from the Federal Rules of Civil Procedure.
2. Section 1367(a) requires that all supplemental-jurisdiction claims—including those by proposed intervenors—“derive from a common nucleus of operative fact” with an existing claim properly before the district court.
3. Rule 24(a)(2)’s intervention-as-of-right criteria do not expand a district court’s subject-matter jurisdiction.
4. The intervenors’ conversion and fraud claims against Hamilton did not share a sufficient factual overlap with Hamilton’s breach-of-contract suit against Sri Lanka, and thus § 1367(a)’s jurisdictional test failed.

Analysis

Precedents Cited

• 28 U.S.C. § 1367(a) (supplemental jurisdiction statute): Provides that federal courts “shall have supplemental jurisdiction” over all claims forming part of “the same case or controversy” under Article III.
• Promisel v. First Am. Artificial Flowers, Inc., 943 F.2d 251, 254 (2d Cir. 1991): Early Second Circuit articulation that supplemental jurisdiction extends to claims sharing a common nucleus of operative fact.
• Achtman v. Kirby, McInerney & Squire, LLP, 464 F.3d 328, 335 (2d Cir. 2006): Reaffirmed the “common nucleus” test as governing § 1367(a) inquiries.
• Royal Canin U.S.A., Inc. v. Wullschleger, 604 U.S. 22, 31 (2025): Supreme Court confirms that § 1367(a) extends supplemental jurisdiction to state-law claims sharing the “common nucleus of operative fact.”
• Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 558 (2005): Warns against assuming § 1367 merely codified prior case law without examining text and structure.
• Finley v. United States, 490 U.S. 545 (1989): Finley’s requirement of an affirmative statutory grant prompted Congress to enact § 1367.
• Fed. R. Civ. P. 82: Clarifies that the Federal Rules “do not extend or limit the jurisdiction of the district courts.”

Legal Reasoning

The panel’s reasoning proceeded in three steps:

1. Statutory Basis over Procedural Rule: 28 U.S.C. § 1367(a) alone supplies the authority for supplemental jurisdiction, including intervention claims. The Federal Rules—including Rule 24—cannot enlarge subject-matter jurisdiction (Fed. R. Civ. P. 82).
2. “Common Nucleus of Operative Fact” Test: As codified, § 1367(a) grants jurisdiction over all claims that “form part of the same case or controversy.” The Supreme Court and this Court have consistently interpreted that phrase to require a shared factual nucleus, regardless of whether the claim is asserted by an original party or an intervenor.
3. Application to the Facts: Hamilton’s breach-of-contract claim against Sri Lanka arose from sovereign bonds and default. The proposed intervenors’ claims arose from an unrelated banking relationship, wire transfers, alleged conversion of deposit funds, and an assertion that those deposits indirectly purchased the bonds. Those facts did not substantially overlap, and one suit did not necessarily bring the other’s facts before the court. Section 1367(a) therefore did not provide jurisdiction over the intervention claims.

Impact

This decision clarifies and reinforces three key points in federal practice:

• Intervenors seeking to join an ongoing federal suit must clear the same § 1367(a) threshold as non-federal or pendent state-law claims. Meeting Rule 24(a)(2) does not by itself confer federal jurisdiction.
• Courts must apply a uniform “common nucleus of operative fact” test to all potential supplemental-jurisdiction claims, absent specific statutory instruction to the contrary.
• Parties cannot circumvent the statutory limits on supplemental jurisdiction by styling claims as interventions rather than independent suits. This promotes coherence in Article III jurisprudence and prevents expansion of federal jurisdiction by rule alone.

Complex Concepts Simplified

• Supplemental Jurisdiction: The power of a federal court to hear additional claims closely related to claims that invoke federal‐question or diversity jurisdiction, so that all related disputes can be resolved in one proceeding.
• Common Nucleus of Operative Fact: A test requiring that the additional claim and the jurisdiction‐invoking claim share enough facts that they form part of the same case or controversy.
• Intervention as of Right (Rule 24(a)(2)): A procedural mechanism by which a non‐party may join a lawsuit if it claims an interest in the subject matter that could be impaired by the disposition of the original suit and is not adequately represented by existing parties.
• Fed. R. Civ. P. 82: A rule stating that the Federal Rules of Civil Procedure do not enlarge or restrict a federal court’s jurisdiction, making clear that jurisdictional questions turn on statute and Constitution, not on procedural rules.

Conclusion

The Second Circuit’s decision in Hamilton Reserve Bank v. Sri Lanka underscores that the statutory text of 28 U.S.C. § 1367(a) governs all supplemental-jurisdiction inquiries, including those involving would‐be intervenors. Federal courts must apply the “common nucleus of operative fact” test uniformly, and cannot rely on Rule 24(a)(2) to expand their jurisdiction. By reaffirming the limits on supplemental jurisdiction, this ruling preserves the careful balance between judicial efficiency and the constitutional bounds of federal power.