Opinion ID: 696239
Heading Depth: 3
Heading Rank: 4

Heading: Interpreting the FSIA

Text: 30
31 We are not the first court to acknowledge the confusing nature of the language and structure of 28 U.S.C. Sec. 1605. See Saudi Arabia v. Nelson, --- U.S. ----, ----, 113 S.Ct. 1471, 1478, 123 L.Ed.2d 47 (1993) (criticizing the Act's inadequate definition of commercial activity); United World Trade, Inc. v. Mangyshlakneft Oil Production Ass'n, 33 F.3d 1232, 1237 (10th Cir.1994) (describing direct effect clause as hopelessly ambiguous), cert. denied, --- U.S. ----, 115 S.Ct. 904, 130 L.Ed.2d 787 (1995); Callejo v. Bancomer, S.A., 764 F.2d 1101, 1107 (5th Cir.1985); Gregorian, 658 F.Supp. at 1235. Fully aware of this statutory complexity, we still have no choice but to 'begin with the language employed by Congress and the assumption that the ordinary meaning of that language accurately expresses the legislative purpose.'  Metropolitan Life Ins. Co., v. Massachusetts, 471 U.S. 724, 740, 105 S.Ct. 2380, 2389, 85 L.Ed.2d 728 (1985) (quoting Park'n Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 194, 105 S.Ct. 658, 661, 83 L.Ed.2d 582 (1985)); Straub v. A P Green, Inc., 38 F.3d 448, 452 (9th Cir.1994). 32 The clear statutory language of section 1605(a)(5) indicates that both this exception and the restrictions upon this exception are intended to apply only to torts not otherwise encompassed in [section 1605(a)(2) ]. Joseph v. Office of Consulate General of Nigeria, 830 F.2d 1018, 1025 (9th Cir.1987), (stating that [t]he tortious activity exception provides jurisdiction over tort actions not encompassed in the commercial activity exception), cert. denied, 485 U.S. 905, 108 S.Ct. 1077, 99 L.Ed.2d 236 (1988); McKeel v. Islamic Republic of Iran, 722 F.2d 582, 588 (9th Cir.1983), cert. denied, 469 U.S. 880, 105 S.Ct. 243, 83 L.Ed.2d 182 (1984); See also Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 439, 441, 109 S.Ct. 683, 691, 692, 102 L.Ed.2d 818 (1989) (referring to section 1605(a)(5) as the noncommercial torts exception); Siderman de Blake, 965 F.2d at 714 (same); Schoenberg v. Exportadora de Sal, S.A. de C.V., 930 F.2d 777, 780, 782 (9th Cir.1991) (same); see also H.R.Rep. No. 1487, 94th Cong., 2d Sess. 20 (1976), reprinted in U.S.C.C.A.N. 6604, 6619 [hereinafter House Report with citations to U.S.C.C.A.N.] (classifying section 1605(a)(5) as Noncommercial torts). Similarly, the phrase that establishes the two sets of restrictions on the waiver of sovereign immunity established by section 1650(a)(5) (subsection (A) for discretionary functions and subsection (B) for enumerated torts) states that in those cases this paragraph shall not apply. Thus, by its plain and unambiguous terms, section 1605(a)(5) limits the reach of those restrictions only to noncommercial torts. 33 Established canons of statutory construction state that [g]enerally an exception is considered a limitation only upon the matter which directly precedes it. 6 and exceptions are not to be implied. An exception cannot be created by construction. Norman J. Singer, 2A Sutherland Stat. Const. Sec. 47.11 (5th ed. 1992). In addition, there is a presumption that Congress would not enumerate specific exemptions in section 1605(a)(5) but leave the exemptions in another section of the same statute to judicial identification. Henry C. Black, Handbook of the Construction and Interpretation of the Laws Secs. 27, 32 (2d ed. West 1911); Sutherland, supra Sec. 47.23 (The force of the maxim ['expressio unius est exclusio alterius'] is strengthened where a thing is provided in one part of a statute and omitted in another.). 34 The district court in Gregorian looked to the Federal Torts Claims Act (FTCA) to inform its interpretation that Sec. 1605(a)(5)(B) applies to commercial activities. 7 Consistent application of that court's logic would require that clause section 1605(a)(5)(A), which restores sovereign immunity for discretionary functions of foreign state actors, would also apply beyond the clearly expressed limits of that subsection to a foreign state's commercial activities, since that clause is on an equal structural footing with section 1605(a)(5)(B). Thus, any commercial activity in which the foreign state actor engaged in a discretionary function would also be immune, 8 effectively rendering section 1605(a)(2) a hollow shell. See Colautti v. Franklin, 439 U.S. 379, 392, 99 S.Ct. 675, 684, 58 L.Ed.2d 596 (1979) (stating that [it is an] elementary cannon of construction that a statute should not be interpreted so as to render one part inoperative.), overruled in part on other grounds, Webster v. Reproductive Health Services, 492 U.S. 490, 109 S.Ct. 3040, 106 L.Ed.2d 410 (1989). Thus, there is no compelling reason to construe the FSIA in a way that departs from the Act's plain language. See Sutherland, supra, Sec. 47.11 (Supp.1995) (stating that only where the construction of a statute would lead to a manifest contradiction of the apparent purpose of the statute, it is to be presumed that some exception or qualification was intended by the legislature). 35
36 To date, the district court in Gregorian is the only court to rule that foreign states and their agents are immune from claims for torts listed in section 1605(a)(5)(B) when those claims arise from the foreign actor's commercial activities. Gregorian v. Izvestia, 658 F.Supp. 1224, 1234-35 (C.D.Cal.1987), aff'd in part, rev'd in part, 871 F.2d 1515 (9th Cir.), cert. denied, 493 U.S. 891, 110 S.Ct. 237, 107 L.Ed.2d 188 (1989). Neither the Supreme Court nor any circuit court has explicitly decided whether the exceptions listed in section 1605(a)(5)(B) restrict the commercial activity exceptions of section 1605(a)(2). But see Letelier v. Republic of Chile, 748 F.2d 790, 795 (2d Cir.1984) (construing statutory language of two clauses and finding that [t]his language suggests that the commercial activity exception to jurisdictional immunity under (2) and the tort exception under (5) are mutually exclusive), cert. denied, 471 U.S. 1125, 105 S.Ct. 2656, 86 L.Ed.2d 273 (1985); Gilson v. Republic of Ireland, 682 F.2d 1022, 1028 n. 27 (D.C.Cir.1982) (stating as dictum that the exceptions in section 1605(a)(5)(B) do not limit section 1605(a)(2)). Every other court that has addressed this issue has construed the two clauses as mutually exclusive. See Carnival Cruise Lines, 159 B.R. at 1002; Foremost-McKesson, Inc. v. Islamic Republic of Iran, 759 F.Supp. 855, 859 (D.D.C.1991) (stating that the clear language of the statute declares that section 1605(a)(5) does not apply to section 1605(a)(2)); Le Donne v. Gulf Air, Inc., 700 F.Supp. 1400, 1410-11 (E.D.Va.1988) (expressly disagreeing with the district court's opinion in Gregorian and holding that subsection (a)(5)(B) ... operates only where ... the foreign state's acts are governmental, not commercial); Tifa, Ltd. v. Republic of Ghana, 692 F.Supp. 393, 404 (D.N.J.1988) (Section 1605(a)(5) does not apply to cases ... which involve commercial activity encompassed in section 1605(a)(2).); United Euram Corp. v. U.S.S.R., 461 F.Supp. 609, 612 (S.D.N.Y.1978) (same); Yessenin-Volpin v. Novosti Press Agency, 443 F.Supp. 849, 855 (S.D.N.Y.1978) (same). 37 Moreover, several courts, including this one, have addressed claims alleging the torts listed in section 1605(a)(5)(B) exclusively under the commercial activity exception, without mentioning the potential applicability of the noncommercial torts exemption. See, e.g., United World Trade, Inc. v. Mangyshlakneft Oil Production Ass'n, 33 F.3d 1232 (10th Cir.1994) (fraud and misrepresentation), cert. denied, --- U.S. ----, 115 S.Ct. 904, 130 L.Ed.2d 787 (1995); General Elec. Capital Corp. v. Grossman, 991 F.2d 1376 (8th Cir.1993) (fraud and misrepresentation); Siderman de Blake, 965 F.2d at 710 (fraud and interference with business relationships); Richmark Corp., 937 F.2d at 1446 & n. 1 (fraud); Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445, 447 (6th Cir.1988) (unfair competition, misappropriation of trade secrets, and interference with contractual relationship); Gilson, 682 F.2d at 1022 (dismissing claims for deceit and interference with contractual rights on statute of limitations grounds); Maizus v. Weldor Trust Reg., 820 F.Supp. 101 (S.D.N.Y.1993) (fraud and negligent misrepresentation); AMPAC Group Inc. v. Republic of Honduras, 797 F.Supp. 973 (S.D.Fla.1992) (finding jurisdiction under section 1605(a)(2) for claims of fraud and misrepresentation); L'Europeenne de Banque v. La Republica de Venezuela, 700 F.Supp. 114 (S.D.N.Y.1988) (finding jurisdiction under section 1605(a)(2) for fraud claim); Gibbons v. Udaras na Gaeltachta, 549 F.Supp. 1094, 1115 & n. 11 (S.D.N.Y.1982) (finding jurisdiction under section 1605(a)(2) for claims of fraud and interference with contractual relations). Thus, other courts have not found that section 1605(a)(5)(B) provides across-the-board immunity from these types of torts. 38
39 Reference to the statute's Findings and Declaration of Purpose makes clear what Congress intended: Under international law, states are not immune from the jurisdiction of foreign courts insofar as their commercial activities are concerned.... 28 U.S.C. Sec. 1602 (1988). Legislative history indicates that Congress intended to adopt 40 the so-called restrictive theory of sovereign immunity; that is the sovereignty 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. 41 House Report, supra, at 6613; see also Saudi Arabia v. Nelson, --- U.S. ----, ----, 113 S.Ct. 1471, 1479, 123 L.Ed.2d 47 (1993) (citing legislative history to justify the rule that there is no immunity when the foreign state acts in the manner of a private player within the market) (internal quotations and citations omitted); id. at ---- - ---- n. 2, 113 S.Ct. at 1482-83 n. 2 (Kennedy, J., concurring in part and dissenting in part) (quoting legislative history, and stating that [t]he purpose of the commercial exception [is] to prevent foreign states from taking refuge behind their sovereignty when they act as market participants); id. at ----, 113 S.Ct. at 1489 (Stephens, J., dissenting) (stating that when a foreign nation sheds its uniquely sovereign status and seeks out the benefits of the private marketplace, it must, like any private party, bear the burdens and responsibilities imposed by that marketplace); Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 612-15, 112 S.Ct. 2160, 2165-66, 119 L.Ed.2d 394 (1992); Amerada Hess Shipping, 488 U.S. at 434 n. 1, 109 S.Ct. at 688 n. 1; Verlinden B.V., 461 U.S. at 488, 103 S.Ct. at 1968; Alfred Dunhill of London v. Republic of Cuba, 425 U.S. 682, 703-04, 96 S.Ct. 1854, 1865-66, 48 L.Ed.2d 301 (1976); In re Estate of Ferdinand Marcos, Human Rights Litigation, 25 F.3d 1467, 1472 (9th Cir.1994) (stating that the restrictive principle of sovereign immunity codified in the FSIA limits the immunity of a foreign state to its inherently governmental or public acts but does not extend to suits based upon its commercial or private acts), cert. denied, --- U.S. ----, 115 S.Ct. 934, 130 L.Ed.2d 879 (1995); Siderman de Blake, 965 F.2d at 705-06; accord Commercial Bank of Kuwait v. Rafidain Bank, 15 F.3d 238, 241 (2d Cir.1994) (If the sovereign's activity is commercial in nature ... then the jurisdictional nexus is met, no immunity attaches, and a district court has the authority to adjudicate disputes based on that activity.). It is consistent with the broader legislative intent of Congress, which is to hold foreign states accountable in United States courts for all acts committed in their capacity as market participants, to interpret the plain language of section 1605(a)(2) as not restricted by other clauses that establish separate and alternative exceptions to sovereign immunity applicable to actions of foreign states performed in a noncommercial capacity. 42 There is an even more explicit indication that Congress intended the commercial activity exception to encompass even those non-personal-injury tort claims from which foreign states acting as sovereigns are immune under section 1605(a)(5)(B). In its Section-by-Section Analysis of the Act, the House Report clarifies the meaning of section 1603(e), which defines commercial activity carried on in the United States by a foreign state, the first of the three categories of commercial activities that is excepted from sovereign immunity in Sec. 1605(a)(2). House Report, supra, at 6615. Among other examples listed, the report includes import-export transactions involving sales to, or purchases from, concerns in the United States[;] business torts occurring in the United States (cf. Sec. 1605(a)(5)). Id. (emphasis added). Congress could not have provided a more explicit and unequivocal indication of its intent to have all commercial activities, including those torts enumerated in section 1605(a)(5)(B), be exempt from sovereign immunity. 43 (4) The Comparison Made by the District Court in Gregorian to the FTCA is Inapposite 44 The district court in Gregorian reasoned that since the exceptions of section 1605(a)(5)(B) mirrored the exceptions of the FTCA, House Report, supra, at 6620, it was unlikely that Congress wished to create a double standard under which foreign sovereigns could be sued in United States courts on tort claims, such as libel, for which the United States Government is immune. Gregorian, 658 F.Supp. at 1234. While this may have been true specifically of section 1605(a)(5), the analogy does not apply to commercial activities of foreign states, an exception to the general grant of sovereign immunity afforded by the FSIA which has no counterpart in the FTCA. See Joseph W. Dellapenna, Suing Foreign Governments and Their Corporations 193 (1988) (analyzing the structural differences between the FTCA and the FSIA). 45 Congress did not intend the FSIA to subject foreign states--acting either in their private or public (sovereign) capacity--to the same liability that the United States government faces in the United States courts. Rather, Congress intended to subject foreign states to the same treatment in United States courts that the United States government receives in foreign courts. See House Report, supra, at 6605, 6607-08 (stating that the restrictive principle of sovereign immunity is regularly applied against the United States in suits against the U.S. Government in foreign courts); McKeel v. Islamic Republic of Iran, 722 F.2d 582, 587 (9th Cir.1983), cert. denied, 469 U.S. 880, 105 S.Ct. 243, 83 L.Ed.2d 182 (1984). 46 Moreover, Congress expressly acknowledged that international law does not extend immunity to the acts of any state that are not governmental or public acts (jure imperii). House Report, supra, at 6605; see Restatement (Third) of the Foreign Relations Law of the United States Sec. 451 (1987) (Under international law, a state or instrumentality is immune from the jurisdiction of the courts of another state, except with respect to claims arising out of activities of the kind that may be carried on by private persons) (cited in Saudi Arabia v. Nelson, --- U.S. at ----, 113 S.Ct. at 1479)); see also Nelson, --- U.S. at ----, 113 S.Ct. at 1486 (Kennedy, J., concurring in part and dissenting in part) (distinguishing between the language of the FTCA and the FSIA). 47 Lastly, the legislative history squarely rebuts INMECAFE's argument that section 1605(a)(5)(B) restores sovereign immunity for all non-bodily injury tort claims whether or not they arise in the course of commercial activity. 10 In discussing the meaning and intended scope of an act performed in the United States in connection with a commercial activity of the foreign state elsewhere, which is the second of three clauses within section 1605(a)(2), the House Report includes a representation in the United States by an agent of a foreign state that leads to an action for restitution based on unjust enrichment; an act in the United States that violates U.S. securities laws or regulations; [and] the wrongful termination in the United States of an employee of the foreign state who has been employed in connection with a commercial activity carried on in some third country. House Report, supra, at 6617-18. These examples of commercial activity for which there is no sovereign immunity indicate Congress' intent that jurisdiction should not be limited to tort claims involving bodily injury, such as in traffic accidents. 11 Thus, the legislative history indicates that the commercial activity exception created in section 1605(a)(2) encompasses tortious activities for which immunity is retained in section 1605(a)(5)(B) for foreign states when acting in their noncommercial, sovereign capacity, as it is for the United States government under the FTCA.