Sovereign Immunity — Commercial Activities - Joseph Hage Aaronson

Commercial Litigation and Arbitration

Commercial Litigation and Arbitration

Sovereign Immunity — Commercial Activities

The Foreign Sovereign Immunities Act provides, in 28 U.S.C. § 1609, that "the property in the United States of a foreign state shall be immune from attachment[,] arrest and execution except as provided in section[] 1610...." Section 1610 in turn provides: "The property in the United States of a foreign state ... used for a commercial activity in the United States, shall not be immune from attachment in aid of execution, or from execution, upon a judgment entered by a court of the United States or of a State ... if: (1) the foreign state has waived its immunity from attachment in aid of execution, or from execution...." In Af-Cap Inc. v. Chevron Overseas (Congo) Ltd, 2007 U.S. App. LEXIS 1638 (9th Cir. Jan. 25, 2007), the Ninth Circuit confronted an issue of first impression in that Circuit — the precise meaning of ‛used for“ in § 1610’s commercial activities exception. The Ninth Circuit adopted the Fifth Circuit’s interpretation of the term in Connecticut Bank of Commerce v. Republic of Congo, 309 F.3d 240 (5th Cir. 2002) that: "To use property for a commercial activity, within the ordinary meaning of 'use,' would be to put the property in the service of the commercial activity, to carry out the activity by means of the property." Id. at 254. "What matters under the statute is what the property is 'used for,' not how it was generated or produced," id. at 251, and not whether the property merely has a "nexus or connection to a commercial activity in the United States." Id. at 254. The Ninth Circuit rejected the argument that it should expand the Fifth Circuit's definition and determine whether property was used for a commercial activity in the United States by examining the entire underlying activity that generated the property in question.

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