Opinion ID: 4539653
Heading Depth: 2
Heading Rank: 2

Heading: The Commercial-Activity Exception

Text: The FSIA’s commercial-activity exception abrogates sovereign immunity in cases in which the action is: based [i] upon a commercial activity carried on in the United States by the foreign state; or [ii] upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or [iii] upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States. 10 28 U.S.C. § 1605(a)(2). In this case, only the first clause of the commercial-activity exception is at issue. The FSIA defines “commercial activity” as “either a regular course of commercial conduct or a particular commercial transaction or act.” Id. § 1603(d). As the Supreme Court has noted, this definition “leaves the critical term ‘commercial’ largely undefined.” Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 612 (1992). Of particular significance to this case, “[t]he 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.” 28 U.S.C. § 1603(d). A “commercial activity carried on in the United States by a foreign state” is defined as “commercial activity carried on by such state and having substantial contact with the United States.” Id. § 1603(e). The district court concluded both that the acts of the Welsh Government on which the claims in this case are based constituted commercial activity and that that activity had substantial contact with the United States. The Welsh Government challenges both conclusions. 11