Opinion ID: 626379
Heading Depth: 3
Heading Rank: 2

Heading: The Governmental Purpose of the Commercial Activity Is Irrelevant

Text: Relying on Letelier v. Republic of Chile , [8] the Republic argues that the essential nature of the Republic's payments to equipment sellers is sovereign because the equipment is purchased in order to implement a national program of scientific research and development. [9] As noted above, ANPCT does not negotiate contracts with the sellers, nor does it take delivery of the equipmentall such logistical matters are handled by the research facilities for whom the Republic purchases the equipment. According to the Republic, ANPCT merely performs grant-making functions by conveying the purchase price to the sellers. The Republic's argument is unavailing. The essential nature argument rests on the governmental purpose of the purchases and the absence of a profit motive in the program. But neither is relevant to the commercial activity analysis. See 28 U.S.C. § 1603(d) (The commercial character of an activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose.). The Supreme Court has held that a state engages in commercial activity ... where it exercises `only those powers that can also be exercised by private citizens,' as distinct from those `powers peculiar to sovereigns.' Saudi Arabia v. Nelson, 507 U.S. 349, 360, 113 S.Ct. 1471, 123 L.Ed.2d 47 (1993) (quoting Weltover, 504 U.S. at 614, 112 S.Ct. 2160); see also H.R.Rep. No. 94-1487, at 14 (1976) ([T]he sovereign immunity of foreign states should be `restricted' to cases involving acts of a foreign state which are sovereign or governmental in nature, as opposed to acts which are either commercial in nature or those which private persons normally perform.). In other words, the relevant inquiry concerns the power that is exercised, rather than the motive for its exercise. [10] Indeed, in Texas Trading we directly considered activity having a public purpose, and we noted that [d]ictum in [our pre-FSIA cases] states that a contract made by a government for a public purpose, e.g., bullets for the army, is not `commercial activity.' Tex. Trading & Mill. Corp., 647 F.2d at 310 n. 27. But we expressly held that [t]his aspect of prior American law has been overruled by the FSIA, and the definition of `commercial activity' has been concomitantly expanded to include such contracts. Id.; see also Weltover, 504 U.S. at 612-14, 112 S.Ct. 2160. It is eminently clear that the governmental purpose of the commercial activity does not immunize the ANPCT Account from attachment and execution, if it is commercial activity within the meaning of the FSIA. [11] We addressed the issue of profit motive in Weltover, Inc. v. Republic of Argentina, 941 F.2d 145, 149-50 (2d Cir.1991), aff'd Weltover, 504 U.S. 607, 112 S.Ct. 2160. In Weltover, we rejected the Seventh Circuit's characterization of Letelier as requir[ing] a showing that the activities could be conducted by a private person and that the foreign sovereign has a profit motive. Id. (citing Rush-Presbyterian-St. Luke's Med. Ctr. v. Hellenic Republic, 877 F.2d 574, 578 n. 4 (7th Cir.1989)) (emphasis omitted). We observed that [s]uch a requirement would eviscerate the `commercial activity' exception of the FSIA, because foreign sovereigns often act without a profit motive. Id. at 150. We accordingly held that [w]hen a foreign sovereign engages in [conduct in which a private party would customarily engage for profit], that activity retains its commercial nature, even though the foreign sovereign acts without a profit motive. Id.; see also Weltover, 504 U.S. at 614, 112 S.Ct. 2160. As the Republic itself acknowledges, pharmaceutical companies regularly purchase scientific equipment for researchers in exchange for the prospect of profiting from the researchers' findings. Although not taken with a profit motive, the arrangement ANPCT has with Argentine scientists is otherwise no different from such enterprises. The Republic's lack of a profit motive is simply irrelevant. To reiterate, Argentina's asserted eleemosynary or governmental motives do not change the fact that the ANPCT Account is used to purchase scientific equipment. A private party engage[d] in trade and traffic or commerce can purchase scientific equipment. Weltover, 504 U.S. at 614, 112 S.Ct. 2160 (internal quotation marks omitted). [I]t is irrelevant why Argentina made the purchases in the manner of a private actor; it matters only that it did so. Id. at 617, 112 S.Ct. 2160. The commercial use requirement of the FSIA is satisfied, and the Republic may not claim sovereign immunity as to the funds in the ANPCT Account.