Law School Case Brief
Republic of Arg. v. Weltover, Inc. - 504 U.S. 607, 112 S. Ct. 2160 (1992)
Under the Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C.S. § 1604, a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States unless one of several statutorily defined exceptions applies. The FSIA thus provides the "sole basis" for obtaining jurisdiction over a foreign sovereign in the United States. The most significant of the FSIA's exceptions is the "commercial" exception of § 1605(a)(2), which provides 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; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or 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.
Petitioners, a foreign state and bank, refinanced the debts they owed respondent creditors by issuing government bonds to respondents, which were denominated in United States dollars. Petitioners subsequently attempted to reschedule the bonds, and respondents sued petitioners for breach of contract. The district court denied petitioners' motions to dismiss for lack of subject matter jurisdiction, lack of personal jurisdiction, and forum non conveniens. The appellate court affirmed the judgment and held that petitioners were not immune from the federal courts' jurisdiction under the Foreign Sovereign Immunities Act of 1976 (the Act), 28 U.S.C.S. § 1602 et seq.
Were the bonds' issuance as public debt a "commercial activity" so as to subject petitioner to suit in a United States Court under the Foreign Sovereign Immunities Act of 1976?
The court affirmed the judgment. Petitioners' issuance of the bonds was a commercial activity under the Act because petitioners' actions could be exercised by private parties; the bonds could be held by private parties, were negotiable, and were traded on the international market. Petitioners' attempted rescheduling of the bonds had a direct effect on the United States because New York was the place of performance for petitioners' ultimate contractual obligations.
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