Opinion ID: 1433952
Heading Depth: 1
Heading Rank: 1

Heading: The definition of commercial activity under the FSIA

Text: The FSIA is often described as having codified the restrictive theory of sovereign immunity. See, e.g., H.R.Rep. No. 94-1487, 7 (1976), U.S.Code Cong. & Admin.News 6604; Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 487, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983). Under the restrictive theory, a state is immune from the jurisdiction of foreign courts as to its sovereign or public acts ( jure imperii ), but not as to those that are private or commercial in character ( jure gestionis ). Saudi Arabia v. Nelson, 507 U.S. 349, 359-60, 113 S.Ct. 1471, 123 L.Ed.2d 47 (1993). The Supreme Court has explained that a foreign state engages in commercial activities when it do[es] not exercise powers peculiar to sovereigns, but rather exercise[s] only those powers that can be exercised by private citizens. Republic of Argentina v. Weltover, 504 U.S. 607, 614, 112 S.Ct. 2160, 119 L.Ed.2d 394 (1992) (alteration in original) (internal quotation marks omitted). Clarifying the statute's requirement that courts look not at the purpose of a foreign state's actions but rather at the nature of its actions, 28 U.S.C. § 1603(e), Weltover explained that the question is not whether the foreign government is acting with a profit motive or instead with the aim of fulfilling uniquely sovereign objectives, but whether the government's actions are the type of actions by which a private party engages in commerce. 504 U.S. at 614, 112 S.Ct. 2160. The reason why the sovereign engages in that activity  its purpose or motive  is immaterial. What is more, no profit need be made, or need even be possible, for the activity to qualify as commercial. In Weltover, Argentina's issuance of bonds to refinance its debt was held to be commercial activity, even though the consideration Argentina received for them was in no way commensurate with [their] value. Id. at 616, 112 S.Ct. 2160 (alteration in original). That fact, the Court held, ma[de] no difference, because [e]ngaging in a commercial act does not require the receipt of fair value, or even compliance with the common-law requirements of consideration. Id. Applying this understanding, courts have found that non-profit organizations can engage in commercial activity. See, e.g., Malewicz v. City of Amsterdam, 362 F.Supp.2d 298, 314 (D.D.C.2005) (holding that the loan of artwork by a Dutch nonprofit museum to non-profit museums in the United States constitutes commercial activity, because exchanging artwork is an activity in which private individuals can engage, sometimes for profit). In sum, a foreign state engages in commercial activity when it engages in acts that any private citizen has the power to undertake, regardless of the state's motive or the possibility of making a profit therefrom. Applying the Weltover definition of commercial activity, this Circuit has repeatedly held that an employment relationship between a foreign sovereign and its employee constitutes commercial activity, so long as the employee is not a civil service, diplomatic, or military employee. In Holden v. Canadian Consulate, 92 F.3d 918 (9th Cir.1996), for example, a former Commercial Officer in the Trade and Investment Section of the Canadian Consulate in San Francisco brought an action alleging that the Canadian government illegally discriminated against her on the basis of sex and age. Id. at 919-20. Examining the FSIA's legislative history, we noted that the House Report listed the employment of diplomatic, civil service, or military personnel ... by the Foreign state in the United States as examples of acts that are public or governmental and not commercial in nature. Id. at 921 (quoting H.R.Rep. No. 94-1487, at 16, U.S.Code Cong. & Admin.News at 6615). In contrast, the employment or engagement of [such other employees as] laborers, clerical staff or public relations or marketing agents would be ... included within the definition of commercial activity. Id. (quoting H.R.Rep. No. 94-1487, at 16, U.S.Code Cong. & Admin.News at 6615). Based on this legislative history, we held that employment of diplomatic, civil service or military personnel is governmental and the employment of other personnel is commercial. Id. We applied the Holden standard to the hiring of a domestic servant for a diplomat's residence in Park v. Shin, 313 F.3d 1138 (9th Cir.2002). Park brought an action against the Deputy Consul General of the Korean Consulate in San Francisco, alleging that during her tenure as a domestic servant in the Deputy Consul General's home, the Deputy Consul General withheld her pay, denied her medical care, and confiscated her passport. Id. at 1140-41. We held that the commercial activity exception applied because [t]he act of hiring a domestic servant is not an inherently public act that only a government could perform. Id. at 1145. Because the plaintiff's claims were based on an employment relationship with the defendant, the defendant was not entitled to sovereign immunity. Id.