Opinion ID: 175877
Heading Depth: 3
Heading Rank: 2

Heading: FSIA Commercial Activity Exception

Text: As relevant in this appeal, the FSIA's commercial activity exception provides, in part, that a foreign state is not immune from suit in any case in which the action is based upon a commercial activity carried on in the United States by the foreign state. 28 U.S.C. § 1605(a)(2). The term commercial activity is defined in the FSIA to mean either a regular course of commercial conduct or a particular commercial transaction or act. 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. 28 U.S.C. § 1603(d). The phrase commercial activity carried on in the United States by a foreign state is defined in the FSIA to mean a commercial activity carried on by such state and having substantial contact with the United States. Id. § 1603(e); see also Saudi Arabia v. Nelson, 507 U.S. 349, 356, 113 S.Ct. 1471, 123 L.Ed.2d 47 (1993) (stating that, for the commercial activity exception to apply, the [plaintiff's] action must be `based upon' some `commercial activity' by [the foreign state] that had `substantial contact' with the United States within the meaning of the Act). In light of what the Supreme Court has called the obtuse statutory language of the commercial activity exception, the Court has further explained that a foreign 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, 507 U.S. at 358, 360, 113 S.Ct. 1471 ([A] foreign state engages in commercial activity ... only where it acts in the manner of a private player within the market. (internal quotation marks omitted)). Thus, to determine the applicability of the commercial activity exception, we ask not whether the foreign government is acting with a profit motive or instead with the aim of fulfilling uniquely sovereign objectives but rather 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) (internal quotation marks omitted). Here, Swarna argues that Kuwait cannot claim sovereign immunity because its diplomats, namely, the individual defendants, engaged in a commercial activity by employing, paying, and supervising Swarna. Specifically, Swarna argues that her contract-based claims, wage and hours claims, and tort claims under the ATCA are necessarily `based on' the employment relationship between the Individual Defendants and Swarna and that Kuwait is vicariously liable for the individual defendants' breach and wrongful acts. As explained above, however, Kuwait cannot be held vicariously liable for the ATCA claims that Swarna makes against the individual defendants, supra note 10 and 11 and accompanying text. Moreover, to the extent Swarna asserts her state law claims, e.g., that the individual defendants breached their contract with her, this argument fails because the commercial activity exception specifically identifies the foreign state as the commercial actor. Compare 28 U.S.C. § 1605(a)(2) (A foreign state shall not be immune ... in any case ... in which the action is based upon a commercial activity carried on in the United States by the foreign state....), with 28 U.S.C. § 1605(a)(5) (A foreign state shall not be immune ... in any case ... for personal injury or death, or damage to or loss of property, occurring in the United States and caused by the tortious act or omission of that foreign state or of any official or employee of that foreign state while acting within the scope of his office or employment....). Swarna has never been an employee of Kuwait. She was a servant to the individual defendants for their personal needs and was accordingly paid for by the individual defendants. [13] Any breach of contractual obligations in this case between Swarna and the individual defendants cannot support applying the commercial activity exception to Kuwait's sovereign immunity. Accordingly, we reject Swarna's claim that the commercial activity exception applies to pierce Kuwait's sovereign immunity.