District Court Finds FSIA “Commercial Exception” Inapplicable where US Conduct of Non-Employee Advisor to Defendant was neither Substantial nor Commercial in Nature

The World in U.S. Courts: Winter 2016 - Alien Tort Statute (ATS)/Political Question Doctrine/Foreign Sovereign Immunity Act (FSIA)/ Act of State Doctrine | October.14.2016

Telchi v. Israel Military Industries, Ltd., US District Court for the Southern District of Florida, October 14, 2016

Telchi, a Bolivian resident, sued his former employer, an arms manufacturer wholly owned by the State of Israel, for the recovery of damages he allegedly incurred in connection with the manufacturer’s efforts to sell products to the Bolivian military.  In this opinion, the Court noted that the FSIA itself is the sole basis for determining whether the Court has jurisdiction over the sovereign defendant.  Specifically, personal jurisdiction exists where the FSIA confers upon a court jurisdiction over a dispute, and service of process has been made.

The FSIA generally establishes a sovereign’s immunity from suit in US courts but is subject to statutory exceptions.  In the case at bar, subject-matter jurisdiction was allegedly based on the FSIA’s “commercial exception,” which applies where “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” commercial transactions.  Telchi sued under the FSIA provision applicable to commercial activity undertaken in the US, and the activity he cited was the presence in Miami of a non-employee advisor of the manufacturer who was involved with the Bolivian contracts. 

The Court found the activities inadequate to meet the requirements of the exception.  The advisor, while in Miami, was not an employee of the manufacturer and had no authority to bind the manufacturer to any obligations or perform other “commercial” acts.  His activities were directed “through” the manufacturer’s office in Bolivia or Israel, and when Telchi and the advisor met in the US any discussion of business was incidental. 

In the course of its discussion the Court noted that the applicability of traditional Due Process requirements to the assertion of jurisdiction under the FSIA was unsettled, but that any such requirements would not be satisfied because the manufacturer was not alleged to have the minimum necessary contacts with the US.  With the “commercial exception” to the FSIA inapplicable, the case was dismissed.

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