From Cassirer v. Kingdom of Spain, 580 F.3d 1048 (9th Cir. 2009):

Claude Cassirer ("Cassirer") filed this action in federal district court against the Kingdom of Spain ("Spain") and the Thyssen-Bornemisza Collection Foundation (the "Foundation") 1 to recover a Camille Pissarro painting now on display at the Foundation's museum in Madrid, Spain. Cassirer alleges that the painting was taken from his grandmother in violation of international law in 1939 by an agent of the government of Nazi Germany.***

We consider for the first time whether the expropriation exception of the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1605(a)(3), applies when the foreign state (against whom a claim is made) is not the entity that expropriated the property in violation of international law. We hold that it does. We also hold that advertising and promotional activity, purchase and sale of goods and services, and the exchange of artwork with persons and entities, all within the United States, are sufficient to constitute "commercial activity in the United States" under § 1605(a)(3). ***

The district court has original jurisdiction of any non-jury civil action against a foreign state, including its agencies and instrumentalities. See 28 U.S.C. § 1330(a). Under the FSIA, however, foreign states are immune from the jurisdiction of United States courts, subject only to the specific exceptions in §§ 1605, 1607, and specified existing international agreements. See id. at § 1604. Thus, the sole basis for obtaining jurisdiction over a foreign state in federal court is the existence of an exception to the FSIA. Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 439, 109 S. Ct. 683, 102 L. Ed. 2d 818 (1989). The FSIA exceptions include "waiver of immunity, § 1605(a)(1), commercial activities occurring in the United States or causing a direct effect in this country, § 1605(a)(2), property expropriated in violation of international law, § 1605(a)(3), inherited, gift, or immovable property located in the United States, § 1605(a)(4), non-commercial torts occurring in the United States, § 1605(a)(5), and maritime liens, § 1605(b)." ***

B. The Expropriation Exception. ***

Section 1605(a)(3) provides that a "foreign state shall not be immune . . . in any case . . . in which rights in property taken in violation of international law are in issue . . . ." The issue regarding the applicability of this exception arises because the statute uses the passive voice and does not expressly require that the foreign state (against whom the claim is made) be the entity that took the property in violation of international law. Appellants invite us to read such a requirement into the statute. The parties agree that Germany, and not Spain, allegedly took the Painting in violation of international law. Therefore, under the construction urged by Appellants, the expropriation exception could not apply. We disagree.

We find § 1605(a)(3) to be unambiguous. ***

C. Commercial Activity in the United States. ***

In this case, after allowing limited jurisdictional discovery, the district court found that the Foundation engaged in commercial transactions in the United States, including transacting business as a purchaser and a seller of goods and services and as an advertiser in distributing marketing and other commercial promotional materials. *** For example, the Foundation made numerous purchases of books, posters, post cards, and related materials from United States businesses in New York, California, and Washington, D.C. The Foundation also purchased books about Nazi expropriation of great works of art and a book presumably about the works of Pissaro. *** The Foundation sold posters and books to United States residents and businesses, and licensed the reproduction of images to various United States businesses.... The Foundation also admitted that it worked with U.S. entities to secure goods to be sold in the Museum gift shop, including paying U.S. citizens to write for its exhibit catalogs.... Further, it admitted that it has shipped gift shop items to purchasers in the United States.... Notably, the Foundation sold a poster of the Painting at issue in this case to individuals in both California and North Carolina. The California purchaser resides in the Central District of California and used her American Express credit card to consummate the transaction....

The Foundation also solicited, recruited, and commissioned writers and speakers from the United States to provide services at the Museum.... The Foundation facilitated the production of a film on the Foundation collection, featuring the Painting, which it knew would be presented in-flight on Iberia Airlines flights to and from the United States....

The Foundation placed advertisements in magazines that are distributed in the United States and sent press releases, brochures, and general information to TourEspana and the Spanish National Tourist Offices in the United States. For example, the Foundation advertised in news publications such as Newsweek, Time Magazine, and the New Yorker. .... It also distributes its Museum bulletin, "Perspectives," to individuals in the United States, including two in the Central District of California. ***

The Foundation also contracted with museums in the United States to loan its artwork to the U.S. institutions or to borrow artwork for display in the Foundation Museum in Spain. ***

***Cassirer has produced numerous examples of the Foundation's commercial activity in the United States that are "of a kind in which a private party might engage." ... Much of that activity was connected with the Painting. Thus, Cassirer has adequately demonstrated that the Foundation has engaged in sufficient commercial activity in the United States to satisfy § 1605(a)(3).

IV. Exhaustion of Remedies.

Cassirer unsuccessfully petitioned the Foundation for return of the Painting, but Cassirer has not alleged that he made recourse to the Spanish or German judiciaries to settle his claim to the Painting. Thus, Spain argues that § 1605(a)(3) cannot apply, because Cassirer has not exhausted judicial remedies in the foreign forum. The district court held that the plain language of § 1605(a)(3) of the FSIA contains no "exhaustion-of-foreign-remedies requirement" and therefore the court refused to impose such a requirement on Cassirer. Cassirer, 461 F. Supp. 2d at 1164. Whether the FSIA, specifically § 1605(a)(3), requires exhaustion is a matter of statutory interpretation and an issue of first impression. ***

Neither Congress nor this court have imposed an absolute exhaustion of remedies requirement in cases brought against foreign states under an exception to the FSIA. Yet, where principles of international comity and rules of customary international law require exhaustion, we exercise sound judicial discretion and consider exhaustion on a prudential, case-by-case basis. See Sarei, 550 F.3d at 828. In Sarei, we held that domestic prudential standards and core principles of international law require a district court to consider exhaustion in appropriate cases. Id. at 824 (citing Sosa, 542 U.S. at 733 n.21). Under our prudential approach, when a defendant affirmatively pleads failure to exhaust remedies, the district court must, as a discretionary matter, determine in the first instance whether to impose such a requirement on a plaintiff. Id. at 832.