### FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT December 22, 2003 THOMAS K. KAHN CLERK [PUBLISH]

IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH

CIRCUIT

_________________ No. 03-10849 Non-Argument Calendar

__________________ D.C. Docket No. 00-09050-C V-DTKH MIRZA SHAMIM AHMED BEG, Plaintiff-Appel lant,

versus ISLAMIC REPUBLIC OF PAKISTAN, PAKISTAN ARMY, THE GOVERNMENT OF PUNJAB Defendants-Appe llees.

_________________ Appeal from the United States District Court for the Southern D istrict of Florida

__________________ (December

22, 2003)

Before BARKE

TT, HULL a

nd KRAVITCH , Circuit Judges. KRAVITCH, Circuit Judge:2

This case involves the issue of whether a foreign go vernment’s expropriation of property and subs equent failure to c ompensate for the expropriation fa lls under the commercial

activity excep

tion to the Foreign Sov

ereign Imm

uniti es A ct. See 28 U.S.C. § 1605(a)(2). Th

e district court fou

nd that the commercial

activities excepti

on did n ot app ly. We af firm.

I. Background MirzaShamim Ahmed Beg filed suit against the Gove

rnment of Pakistan, the Pakistan Army, and the regional Gov ernment of Pun

jab concerning the

expropriation of land in Pakistan. In h is complaint, Beg alleges that he owned eleven and one -half

acres in the Punjab region of Pakistan valued at $10 million, which were expropriated from him by the

Pakistani government. Beg states that the property was then used for military housing or otherwise transferred to members of the m ilitary. L ater, the Government

of Punjab sent a

representative to the United States and offered Beg an alternative

parcel of land. Beg alleges that the exchange

was accepted by the Lahore High Court but reje cted by the Supreme Court of Pakistan. The latter court determined

the Governme

nt of Punjab did not ha

ve good title to the second

property and refused to recogniz

e Beg’s title but i

nvited him to pursu

e further legal remedies in regard to the origin

al parcel. Beg claims to have abandoned any further li

tigation3

in Pakistan, and, instead, has decided to seek monetary compensation in United States federal court. The district court dismissed on the ground that the court lacked subject matter jurisdiction und er the Foreign Soverei gn Immunities Act, 28 U.S.C. § 1602, et seq
. The district court found that the suit did not fa ll u nder the statute’s except ion to foreign government immunit

y for commercial activity , 28 U.S.C. § 1605(a)(2), because Pakistan had not engaged in any commercial activity and bec ause the actions at issue did not result in a direct effect in the United State s. Beg, now proceeding pro

se , appeals.

II. Standard of Review We review issues of

jurisdiction de novo. See Fogade v. ENB R evocable Trust, 263 F.3d 1274, 1285 (11th Cir. 2001).

III. Discussion Federal courts have

jurisd iction to hear claim s against foreign gove

rnments only if authorized by

the Foreign

Sovereign

Immunities Act (“FSIA”). See Republic of Argentina v. Weltover , 504 U.S. 607, 611 (1992) (st atin g that “[t]he

FSIA thus provides the ‘sole basis’ for obtaining juris diction over a forei gn sovereign in the4

United S tates.”) (citation omitted). The FSIA roughly codifies the “ restrict ive theory ” of sovereign

immunity, which

grants foreign gover

nments imm

unity for their p

ublic acts but not their priv ate, commercial acts. See Verlinden B.V. v. Cent. B ank o f Nigeria , 4 61 U.S. 480, 486- 89 (1983). The FSI A is structured as a

general grant o f immunity for foreign governments an d their ag ents, 28 U.S.C . § 1604, unless the foreign government act

i vity is su

bject to a specific excep tion. See Verlinden , 461 U.S. at 488. Th e m ost prominent exception, and the one at issue here, is the “comm ercial activities exceptio

n,” 28 U.S.C. § 1605(a)(2). Th e exception provides: (a) A foreig

n state sha ll not be imm

une from the j urisdiction of courts of the United States or of the States in any case– (2) in which the action is based upon a commercial ac tivity carr ied on in the United States by the foreign state; or upon an act performed in the Un ited States in connection with a comm

ercial activity

of the for

eig n state elsewhere; or upon an act outside the t erritory of the

United States in connection with a commercial activity of the forei

gn state elsewhere and that act causes a direct effect in the United States ; (emphasis

added). On appeal, Beg relies excl usively on t his except ion’s third clause , which requi res that an act (1) takes place outside o f the United State s, (2) is5

conn ected

with a comm

ercial activity

, and (3) causes a

direct effect in

the Uni te d States. Beg argues that the expr

opriation falls wit

hin this exception because (1) it took place in Pakistan, (2)

the regional government did not have good title to the a

lternate property that was offered

to him, and (3) he has suffere d a financial loss tha

t has a direct effect w

ithin the United Sta

tes. The key issue we address is whether the Pakistani government was engaged in commercial

activi ty. The touchstone for determining if a foreign government’s act is commercial is whether the nature of the act is public o r private. See Weltover , 504 U.S. at 614-16. Th e Supreme Cou rt defined com

mercial act

s as those in which the state engages in transact ions as a private part y would. See id. Public acts,however, require sovereign power an d th us cann ot be performed by a private part y. See id. The Court emphasiz

ed that public acts

must make use of the

state’s soverei

gn author ity: [W]e conclude that when a foreign gove rnment acts,

not as regulator of a market, but in

the manner of a

private player

with in it, the foreign sovereign's actions are "commercial" within the m eaning o f the FSIA .... [T]he is su e is whether the pa rticular actions th

at the foreign state perfo rms (whatever

the motive behind them) are the type of actions by which a private

party engages in "trade an d traffic or commerce." Thus, a foreign government's issuance of regulations limiting foreign currency exchange is a sovereign activ ity, because s

uch authoritative co

ntrol of commerce

cannot be exerc ised by a private party; whereas a contra

ct to buy army boo

ts or e ven bullets is a "com mercial" ac

tivity, because6

private companies can si milarly use sales contracts to acquire goods. Id. at 614 (citations o mitted). A gov ernment’s a

ct is thus comm

ercial if it is the type of transac tion tha t private actors could

complete. F or

instance, in Weltover , the Court determined that Argentina ’s issuance of bonds to finance a curre ncy-e xchange program was a commercial

activity because private corporations could raise c apita l through the issuance of debt instruments in the same man ner. Id. at 616. Similarly, this court determined

that the Governm

ent of Yemen e

ngaged in commercial activity when it entered into a contract to

purchase grain from an American corporation because

the contract was “just a contract and . . . not based upon regulatory reasons.” S & Davis Int’l v. Republic of Yemen , 218 F.3d 1292, 1303 (11th Cir. 2000). By contrast, a government ’s regulation of the market, use of police power, or other activities requiring state authority are not commercial

. See Saud i Arabia v. Nelson , 507 U.S. 349, 359-63 (1993); see also Weltover , 504 U.S. at 614 (finding that the regulation of fore

ign exchange policy

would be a sovereign activity ). In Nelson , the Supreme Court found that the alleged detentio

n and torture by Saudi police of an American citizen, who had e

ntered into an em

ployment con

tract with a state hospital, was not commercial activity. See 507 U.S. at 361-62. The alleged tortious activity

was pursuant to the state’ s p olice p ower and was “not the sort of action by which private parties can engage in commerce.” Id. at 362. Although the plaintiff claimed7

that the Saudi governm

ent’s actions

were simila

r to those of

a private actor be

cause the government had e

ntered in to an empl oyment contract with him, the Court determined

that the basis of the c

laim was the t

ortious conduct by

government age

nts, not the employment contract. See id. at 361-63. Consequently , foreign governm

ent acts, “however monstrous,” that are “pec uliarly sovere

ign in nature” are not subject to review by our courts under the FSIA’s commercial activities excep tion. Id. at 361. Here, we conclude

that the Pakistani government’s actions involve the power of eminent dom

ainand, therefore, ar

e not comme

rcial. The powe

r of eminent dom

ain is a sovereign power. See United States v. Carmack , 329 U.S. 230, 236 -37 (1946) (stating that “[t]he

power of emin

ent domain is

essential to a sover

eign government”). Confiscation

of real property

is a public act because private actors are not allowed to engage in “takings” in the manner th at governments are. See Shakour v. Fed. Republic of Germany

, 199 F. Supp. 2d 8, 13 (E.D. N.Y. 2002) (fi nding that the German Democratic

Republic’s exprop

riation of three fa

ctories is a public,

not a commercial

act); see also Haven v. Polska , 215 F.3d 7 27, 736 (7t h Cir. 2000) (determining

that the comme

rcial activity

exception did not

apply to expropri

ation of real property in Pola

nd because it was not

based upon any

commerc ial activity

within the United States); but see Siderman de Blake v . Republ ic of Argentina , 965 F.2d 699, 708-11 (9th Cir. 1992) (f inding that the

Argentinian governm

ent’s expropriat

ion1 Our divergence with the Ninth Circ

uit is very narrow. W

e disagree only with that court’s determination

that an expropriat

ion “may” f

all with in th e FSIA ’s third clause, which addresses foreign government activity outside of the United States. See Siderman de Blake , 965 F.2d at 708. In Siderman de Blake , the p laintiffs alleged that the Argentinian government had expropriated a hotel fromthe Siderman family and tortured Jose Siderman, an Argentinian national, because the family was Jewish. Id. at 703. The Argentinian gove rnm ent con tin ued to o pera te t he p rop ert y, generated revenue from American to urists, and adver

tised the hotel in the

United States. The

Ninth Circuit found that this commercial activity was sufficient to bring the Sidermans’ claim under the first and second clauses of the FSIA’s exception for commercial act s or act s “r ela ted to c omm erci al a cti vit y” that take place within the United States. Id. at 708-09. The first and second clauses are not relevant here and, there

fore, we have n

o issue with this ana

lysis. Our disagreement

is with the Ninth Circuit’s holding that the activity “may also fall within the third [clause].” Id. at 708. That court determined that the expropriation was c ommercial activi

ty of the foreign state outside of the United State s because the Argentinia

n government co

ntinued to opera te the hotel for profit. Id. The Ninth Circuit focused on what the govern ment did wit

h property after the expropriation, not whether the government was acting like a private person in the marketplace at the time of the expropriation. Id. at 708-10. We decline to examine the government’s motives in determini ng what is commercial activit y. In Weltover , decided less than a month after Siderman de Blake , the Supreme Court stated that the nature of the act, not the purpose or motive, is dispositive in cl assifying a government act as commercial. 504 U.S. at

614-15. Specifically, the Court explained that “the question is not whether the foreign government is acting with a profit motive or instead with

the aim of fulfillin

g uniquely sovereign objectives. Rather , the i ssue is whether the particular acti

ons that the forei

gn state performs (whatever the mo

tive behind them)

are the type of actions by

which a private

party engages in‘trade and traffic or commerce.’” Id. at 614. Here the government actions were not those of private party engaged in commerce. Applying Weltover , we conclude that the government’s actions were not commerc

ial and, therefo

re, are immune f

rom suit in this nation ’s courts.

2 The district court relied primarily on Garb v. Republic of Polan d , 207 F. Supp . 2d 16 (E.D.N. Y. 2002), for the proposition that government expropriation of property, even if subsequentl y resold commercially, was

not commercial ac

tivity subjec

t to federal court review under the FSIA. The Second

Circuit, in an unpublished opinion, has since vacated and remanded Garb to reconsider whether the FSIA appl

ies retroactive

ly to World

War II ta kings. See Garb v. Republic of Poland , 2003 WL 21890843, *2 (2d Cir. 2003). Retroactive application of the FSIA is no t an issue here. Beg bases his commercial activity claim on the expropriation of the replacement property to which he only clai

ms title since December 1990. The FSIA came into effect in January 197

7 and would 8 of a hotel was com

mercial whe

n the government

generated revenue

from American tourists and paid for advertising in the United States). 1 Consequently, t he Pakistani government’s actions do not fall under the co mmercial exception to the FSIA. 2govern

this event. See Jackson v. People’s Republic of China , 794 F.2d 1490, 1499 (11th Cir. 1986) (finding that the FSIA ’s exceptions to foreign sovereign immunity apply after 1977 but should not be applied retroactively to pre-1952 events). 9 Determining

whether or how to compensate property owners for takings is also

a sovereign function,

not a market tr

ansacti on . See Carmack , 329 U.S. at 236 -37. The Supre me Court specificall y noted that expro

priation does not take place ina freemarket setting : The power of emin

ent domain is esse

ntial to a sovereign go

ve rnm ent. If the United States has determined its need for

certain land for a

public use that is within its federal sovereign powers, it must have the r

ight to appropriate

that land. Otherw

ise, the owner of the

land, by refus

ing to sell it or by

consenting t o do so only at an unr easonably high pri

ce, is enabled to subordinate the cons titutiona l po wers of Congress t o his perso nal will. The Fift h Amendme

nt, in turn, provide s him wit h important prote

ction against abuse of

the power of

eminent dom

ain by the Federal Gove

rnment

. Id. Although the Pakistani government allegedly failed to pro vide Beg with the alternative

property, the natur e of the fo reign governme nt’s act is public a

nd not

commerc ial. Beg contends that the Pun jabi regional gover

nment’s agre

ement to com

pensate him is the equival ent of a contract a nd, therefore, is commer cial activity. This

a nalogy is not persuasive. F irst, as the Supre me Court m

ade clear in Weltover , th e dispositive issue in determ ining whether an ac

tivity is commercial is whether private actors could undertake th is type of activity in a market. See We ltover , 504 U.S. at3 The FS IA has a distinct jurisdictional exception for some types of expropriation performed in violation of international law. See 28 U.S.C. § 1605(a)(3). It grants subject matter jurisdiction over suits inwhich rights in

property taken in violation of international law are in issue and that property or any property exchang

ed for such

property is present in the United States inconnection with a commercial activity carried on in the United States by the foreign state; or

that property or any

property exchanged for such property is owned or operated by an agency

or instrumen tality of t

he foreign state and that agency or instrumentality

is engaged in a

commercial acti

vity in the Uni

ted States. Id. Internationa

l law prohibits

expropriation of

alien property without compensation, but does not prohibit governments fr

om expropriating p

roperty from their own nationals without compensation. See Fogade v. ENB Revocable Trust , 263 F.3d 1 274, 1294 ( 11th Cir. 2001) (“[W ]hen a forei gn nation confiscates the property of its own nationals, it does not implicate principles of international law.”). The district court found that Beg was born in Pakistan, al though Beg

has since become a naturalized American citizen. Inan earlier action, Beg asserted jurisdiction under this exception. That suit was dismissed by the district court. Beg did not appeal that dismissal, so we do not discuss that cla

im, including when Beg became an American citizen. 10 614. Expropriation is ne

ither the type of

activity in

which private act

ors engage nor is it a market transaction. See Carmack , 329 U.S. at 236-37. Second, the FSIA has

a separate excepti

on for certain for

eign government expropr

iations, further i

ndicating that a foreign government’s use of its eminent domai n p ower is not commercial activi ty. 3 Becausewe conclude that the defendants did not engage in commercial activi ty, this suit

does not fall under the

§ 1605(a)(2) excep

tion to foreign governm

ent immunity. The federal courts thus lack subject matter jurisdiction under the FSI A. Accordingly,

we affirm the dismissal by the district court.

AFFIRMED.