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

Heading: The ANPCT Account Was Used for Commercial Activity

Text: The FSIA provides the sole basis for obtaining jurisdiction over a foreign state in the courts of this country. Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 443, 109 S.Ct. 683, 102 L.Ed.2d 818 (1989). As a general matter, the property of a foreign state present in the United States is immune from execution in satisfaction of a debt. Such property may be attached and executed upon only when one of the FSIA's exceptions applies. 28 U.S.C. § 1609; [6] see Letelier v. Republic of Chile, 748 F.2d 790, 793 (2d Cir.1984) ([U]nder [28 U.S.C.] § 1609 foreign states are immune from execution upon judgments obtained against them, unless an exception set forth in §§ 1610 or 1611 of the FSIA applies.). [7] Subsections 1610(a) and (d), the applicable exceptions in this case, provide that when the foreign state has waived its immunity from attachment and execution, a court may attach or execute upon property that the sovereign used for commercial activity in the United States. 28 U.S.C. § 1610(a) (post-judgment); id. § 1610(d) (pre-judgment). The Republic has waived its immunity, see EM Ltd., 473 F.3d at 480-81 & n. 18, and does not dispute that ANPCT is responsible for the Republic's debts. The only question on appeal is whether the Republic used the ANPCT Account for a commercial activity in the United States under § 1610. Stated another way, we must decide whether the Republic's remittance to a seller of goods of a prearranged purchase price for those goods, which are then conveyed directly from the seller to a third partyreturning no tangible benefit to the Republicconstitutes activity in the market. We hold that it does.
The FSIA defines commercial activity as a regular course of commercial conduct or a particular commercial transaction or act. 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. Id. The legislative history of the FSIA explicitly asserts the congressional intention to leave to the `courts ... a great deal of latitude in determining what is a commercial activity for purposes of [the FSIA].' Kato v. Ishihara, 360 F.3d 106, 110 (2d Cir.2004) (quoting H.R.Rep. No. 94-1487, at 16 (1976), 1976 U.S.C.C.A.N. 6604, 6615) (ellipses and alteration in original). To determine the nature of a sovereign's act, we ask `whether the particular actions that the foreign state performs (whatever the motive behind them) are the type of actions by which a private party engages in trade and traffic or commerce.' Anglo-Iberia Underwriting Mgmt. v. P.T. Jamsostek, 600 F.3d 171, 177 (2d Cir.2010) (quoting Republic of Argentina v. Weltover, 504 U.S. 607, 614, 112 S.Ct. 2160, 119 L.Ed.2d 394 (1992)) (internal quotation marks omitted). We begin by examining the act of the foreign sovereign that serves as the basis for the plaintiff's claim. Id. In this case, the allegedly commercial act of the foreign sovereign is the purchase of scientific equipment. In Weltover, the Supreme Court concluded that when a sovereign purchases goods in the market, it has engaged in a commercial activity because such a purchase is the type of action[] by which a private party engages in trade and traffic or commerce. Weltover, 504 U.S. at 614, 112 S.Ct. 2160 (internal quotation marks omitted). Thus, the Supreme Court noted that a contract to buy army boots or even bullets is a `commercial' activity, because private companies can similarly use sales contracts to acquire goods. Id. at 614-15, 112 S.Ct. 2160. We reached a similar conclusion in Texas Trading & Mill. Corp. v. Fed. Republic of Nigeria, 647 F.2d 300 (2d Cir.1981), in which we considered whether Nigeria's purchase of cement qualified as a commercial activity. Id., overruled on other grounds by Frontera Res. Azerbaijan Corp. v. State Oil Co. of Azerbaijan Republic, 582 F.3d 393, 400 (2d Cir.2009). Because Nigeria's activity was in the nature of a private contract for the purchase of goods, we held that [i]ts purpose to build roads, army barracks, whatever[,] is irrelevant. Id. at 310. Accordingly, we concluded that Nigeria's cement purchase program constituted commercial activity. Id.
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.