The Foreign Sovereign Immunities Act of 1976 (FSIA) may well be the most inaptly named statute on the books. Its title suggests that the FSIA was meant to grant immunity to foreign states, but the statute actually was designed to codify the many circumstances in which sovereign immunity will not apply. While section 1604 of the statute ostensibly immunizes foreign states from suit in American courts, the language of section 1605 carves out broad categories of cases that form exceptions to the traditional presumption of immunity. Federal courts historically have interpreted one of these exceptions, the “commercial activities” exception, broadly enough to nearly swallow the basic rule of immunity. As we discuss below, the commercial activities exception removes the immunity protection for state actors who engage in traditional business activities.

In the wake of the Supreme Court’s affirmation of the U.S. Court of Appeals for the Second Circuit’s seminal decision on the commercial activities exception in Weltover Inc. v. Republic of Argentina,1 however, the Second Circuit has, in the last decade, significantly curtailed the application of this exception. This article will explore this trend, treating a recent decision as illustrative of the move to limit the application of the commercial activities exception.

History of the Exception

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