Lead Opinion
Judge STRATJB dissents in a separate opinion.
We consider here claims emerging from the re-drawing of the map of Europe following the defeat of the Axis Powers in the Second World War, the displacement of millions of people, particularly surviving Jews, in much of the continent, and the installation by force of governments in Central and Eastern Europe. See Michael R. Marrus, The Unwanted: Ewropean Refugees in the Twentieth Century 335-36 (1985) (describing the forced migration of Jews and expropriation of Jewish assets throughout Central and Eastern Europe following the Second World War); Compl. ¶ 3;
Plaintiffs appeal from a judgment of the United States District Court for the Eastern District of New York (Edward R. Kor-man, Chief Judge) dismissing their claims against the Republic of Poland and the Ministry of the Treasury of Poland for lack of subject matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1). See Garb v. Republic of Poland,
As the District Court aptly noted, "strong moral claims are not easily converted into successful legal causes of action." Id. at 39 (internal quotation marks and alteration omitted.) Despite the severe injuries asserted by plaintiffs, the capacity of United States courts to exercise jurisdiction over plaintiffs' claims hinges on a legal inquiry narrowly circumscribed by statute. It is well settled that the only source of subject matter jurisdiction over a foreign sovereign in the courts of the United States is the Foreign Sovereign Immunities Act of 1976 ("FSIA"), 28 U.S.C. §~ 1330, 1602-1611, which codifies several exceptions to the long-established doctrine of foreign sovereign immunity.
Following a remand from the Supreme Court, see Republic of Poland v. Garb,
We hold that none of the FSIA’s exceptions to foreign sovereign immunity applies here and that subject matter jurisdiction is therefore lacking. First, we hold that plaintiffs have not satisfied the “commercial activity” exception of the FSIA, 28 U.S.C. § 1605(a)(2), because (a) a state’s confiscation of property within its borders is not a “commercial” act, (b) the subsequent commercial treatment of expropriated property is not sufficiently “in connection with” the prior expropriation to satisfy the “commercial activity” exception, and (c) we decline to credit plaintiffs’ recharac-terization of what are in essence “takings” claims as “commercial activity” claims. Second, we hold that plaintiffs have not satisfied the “takings” exception of the FSIA, 28 U.S.C. § 1605(a)(3), because (a) plaintiffs seek to recover property that is not “present in the United States,” (b) in such circumstances, plaintiffs must show that the property “is owned or operated by an agency or instrumentality of the foreign state,” (c) plaintiffs allege that the property is “owned by” the Ministry of the Treasury of Poland, Appellants’ Br. at 15, and (d) the Ministry of the Treasury of Poland is not an “agency or instrumentality” of the Republic of Poland because its “core function” is governmental rather than commercial.
Background
Plaintiffs are “Jewish persons and entities (and their heirs and successors) who owned real property ... in Poland during the period September 1, 1939 to May 30, 1945.” Garb,
Because this suit sought to hold a foreign sovereign State liable in the courts of the United States, and because, under the FSIA, “a foreign state is presumptively immune from the jurisdiction of United States courts[J unless a specified [statutory] exception applies,” Saudi Arabia v. Nelson,
The District Court also concluded that plaintiffs could not rely on the “takings” exception to foreign sovereign immunity because (1) the FSIA’s “takings” exception could not be applied retroactively to hold a foreign sovereign liable for conduct that predates the 1976 enactment of the FSIA, id. at 25-30; and alternatively, even if the “takings” exception were to be applied retroactively, defendants would still enjoy sovereign immunity because (2) plaintiffs had not established that a State’s expropriation of property from its own nationals violates international law — a prerequisite for the application of the “takings” exception, id. at 33-34; and (3) the property in question is apparently neither “present in the United States” nor “owned or operated by an agency or instrumentality of the foreign state,” id. at 34-38.
The District Court granted defendants’ motion to dismiss in an order entered June 24, 2002, and plaintiffs timely filed a Notice of Appeal on July 19, 2002. We consolidated the appeal with Republic of Austria v. Whiteman, Nos. 02-9361 & 02-3087, for the purposes of oral argument.
We heard oral argument on April 15, 2003, and, in light of a supervening and controlling decision by another panel of our Court in Abrams v. Société Nationale des Chemins de Fer Francais,
As required by Abrams, we then remanded this case to the District Court to determine “the Department of State’s policy prior to [the enactment of the] FSIA with respect to sovereign immunity for Poland ... in the circumstances presented” here. Id. at 854. Defendants moved to stay the issuance of our mandate pending their petition to the Supreme Court for a writ of certiorari. We granted defendants’ request for a stay on September 10, 2003.
On June 14, 2004, the Supreme Court granted defendants’ petition for a writ of certiorari, vacated our judgment, and remanded this case to us “for further consideration in light of Republic of Austria v. Altmann,
Following the Supreme Court’s order, the parties and various amici curiae, including the United States, filed supplemental letter briefs with this Court concerning the post-Altmann disposition of this appeal. Although the legal views of the Executive concerning the proper scope of the FSIA statutory scheme are entitled to “no special deference,” such views are nevertheless of “considerable interest” to federal courts. Altmann,
Discussion
On remand, we are left to determine whether, in light of Altmann’s requirement of retroactive application of the FSIA, the District Court may properly exercise subject matter jurisdiction over .this case pursuant to either the FSIA’s “commercial activity” or “takings” exceptions to the long-established doctrine of foreign sovereign immunity. We hold that the District Court correctly found both exceptions inapplicable and therefore properly dismissed the complaint for lack of subject matter jurisdiction.
I. The Effect of Altmann
In Altmann, the Supreme Court departed from what it termed a pre-existing “an-tiretroactivity presumption,”
We have since interpreted Altmann as rendering unnecessary precisely the sort of investigation into pre-FSIA sovereign immunity doctrine that had been prescribed in our 2003 Abrams decision and required by our August 6, 2003 summary order in this case. See Abrams v. Société Nationale des Chemins de Fer Français,
II. The Foreign Sovereign Immunities Act
In 1812, Chief Justice Marshall famously articulated the doctrine of absolute sovereign immunity, a doctrine deeply rooted in the principles of sovereign consent and reciprocity — concepts that form the touchstones of international law. Because a sovereign enjoys “full and complete power ... within its own territories,” and because “[t]he jurisdiction of courts is a branch of that which is possessed by the nation as an independent sovereign power,” the courts of the United States will not “degrade the dignity of [another] nation” by asserting jurisdiction over claims affecting the rights of the foreign sovereign, absent that sovereign’s consent. The Schooner Exchange v. McFaddon,
This general doctrine of absolute sovereign immunity survived until 1952, when the so-called Tate Letter enunciated as-United States policy a new, “restrictive” theory of sovereign immunity. See Letter of Jack B. Tate, Acting Legal Adviser, Department of State, to Acting Attorney General Philip B. Perlman (May 19, 1952), reprinted in 26 Dep’t of State Bull. 984, 984-85 (1952), and in Alfred Dunhill of London, Inc. v. Republic of Cuba,
When Congress enacted the FSIA in 1976, it intended to codify the Tate Letter. See Sugarman,
III. The “Commercial Activity” Exception to Presumptive Foreign Sovereign Immunity (28 U.S.C. § 1605(a)(2))
Plaintiffs assert that the District Court may exercise jurisdiction over their claims pursuant to 28 U.S.C. § 1605(a)(2), see note 3, ante, the “commercial activity” exception of the FSIA. Under this provision, a plaintiff may establish an exception to the immunity of a foreign sovereign defendant if his claims are “based upon”
[1]a commercial activity carried on in the United States by the foreign state; or upon
[2] an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon
[3] 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[.]
28 U.S.C. § 1605(a)(2). Plaintiffs rely on the third of these three alternative grounds. Appellants’ Br. at 62.
As a threshold step in assessing plaintiffs’ reliance on the “commercial activity” exception, we must identify the act of the foreign sovereign State that serves as the basis for plaintiffs’ claims. The District Court found that, regardless of the subsequent commercial treatment of the expropriated property, plaintiffs’ claims are “based upon” the acts of expropriation.
We also agree with the District Court that the expropriations by defendants do not fall within the “commercial activity” exception of the FSIA. Expropriation is a decidedly sovereign — rather than commercial — activity.
Moreover, plaintiffs’ property was not expropriated “in connection with a commercial activity of the foreign state.” The statutory term “in connection,” as used in the FSIA, is a term of art, and we interpret it narrowly. Accordingly, we have noted that “[a]cts are ‘in connection’ with ... commercial activity so long as there is a ‘substantive connection’ or a ‘causal link’ between them and the commercial activity.” Hanil Bank v. Pt. Bank Negara Indonesia (Persero),
Concededly, the expropriation of property from plaintiffs — indeed, from anyone who claims unlawful .taking of property— is, in some sense, “connected” to any subsequent commercial treatment of that property or its proceeds. Had there been no expropriation, there would 'have been no properties to treat in a commercial manner; in the circumstances presented here, Poland would have no properties to manage or sell. Such a connection, however, is simply too “attenuated,” and not substantive enough, to satisfy § 1605(a)(2). See Drexel,
Our reasoning — that subsequent commercial transactions involving expropriated property do not give rise to subject matter jurisdiction over claims arising from the original expropriation — is consistent with Congress’s intention to deny sovereign immunity to foreign States only with respect to commercial, and not sovereign, acts. In recommending passage of the FSIA, the Report of the Judiciary Committee of the House of Representatives (“House Report” or “Report”) explained that the third clause of § 1605(a)(2) was intended to “embrace commercial conduct.” H.R.Rep. No. 94-1487, at 19 (1976), reprinted in 1976
Finally, we reject plaintiffs’ assertion that the “commercial activity” exception applies to their claims because this assertion simply recharacterizes plaintiffs’ “takings” argument. Federal courts have repeatedly rejected litigants’ attempts to establish subject matter jurisdiction pursuant to other FSIA exceptions when their claims are in essence based on disputed takings of property. The Fifth Circuit, for example, has held that a plaintiffs claim,
although sounding in tort [namely, a government’s “conversion” of property], is essentially a claim for an unjust taking of property_ Congress has provided an exception in Section 1605(a)(3) for takings of property that violate international law. We do not believe that Congress intended plaintiffs to be able to rephrase their takings claims in terms of [another FSIA exception] and thereby bring the claims even where the takings are permitted by international law.
De Sanchez v. Banco Central de Nicaragua,
in substance a taking of property .... it should be considered only under the takings exception of section 1605(a)(3). To hold otherwise would be to allow plaintiffs to escape the requirements of section 1605(a)(3) through artful rechar-acterization of their takings claims.
Chuidian v. Philippine Nat’l Bank,
IV. The “Takings” Exception to Presumptive Foreign Sovereign Immunity (28 U.S.C. § 1605(a)(3))
To establish subject matter jurisdiction pursuant to the “takings” exception of the FSIA, a plaintiff must demonstrate each of four elements:
(1) that rights in property are at issue;
(2) that the property was “taken”;
(3) that the taking was in violation of international law; and either
(4)(a) “that property ... is present in the United States in connection with a commercial activity carried on in the United States by the foreign state,” or (4)(b) “that property ... is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States[.]”
28 U.S.C. § 1605(a)(3); note 4, ante; see also Zappia Middle E. Constr. Co. v. Emirate of Abu Dhabi,
Defendants assert that plaintiffs have failed to satisfy several of these requirements. Appellees’ Br. at 32^40. We assume for the sake of discussion that
In the alternative, the District Court held that plaintiffs’ claims failed to meet the fourth element of the “takings” exception, because they have not shown that the property at issue is either (a) “present in the United States in connection with a commercial activity carried on in the United States by the foreign state,” or (b) “owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States.” 28 U.S.C. § 1605(a)(3). The first of these alternative showings sets a higher threshold of proof for suing foreign states in connection with alleged takings by requiring that the property at issue be “present in the United States.” The amended complaint in this case defined the relevant properties as “real properties and improvements thereon in Poland.” Compl. ¶ 2 (emphasis added). Accordingly, the District Court concluded that “the property at issue here is in Poland.” Garb,
Rather, plaintiffs rely on the second clause of the fourth element, which permits a plaintiff to bring suit against an “agency or instrumentality of [a] foreign state,” provided that the agency or instrumentality “own[s] or operate[s]” the property in question and “is engaged in a commercial activity in the United States.” 28 U.S.C. § 1605(a)(3). The District Court concluded that, “as plaintiffs concede, the Republic of Poland is not an ‘agency or instrumentality’ of a foreign state,” because it is “the foreign state itself.” Garb,
Because we hold that the Ministry of the Treasury of Poland is not an “agency or instrumentality” of the Republic of Poland, plaintiffs’ claims fail to satisfy the fourth element of the “takings” exception, and we need not consider the questions of international law raised under the third element.
a. “Agency or Instrumentality” Under the FSIA
The distinction between, on the one hand, agencies or instrumentalities of a foreign state, and, on the other hand, other organs or subdivisions of a foreign state, pervades the FSIA. For example, the statute provides that “a foreign state except for an agency or instrumentality thereof shall not be liable for punitive damages.” 28 U.S.C. § 1606 (emphasis added). Also, unlike the property of a foreign state generally, the property of an agency or instrumentality of a foreign state is subject to attachment or execution “regardless of whether the property is or was involved in the act upon which the claim is based.” 28 U.S.C. § 1610(b)(2).
In order to satisfy the fourth element of the “takings” exception where, as here, the property at issue is located outside the United States, plaintiffs must show that the property they seek to recover is “owned or operated by an agency or instrumentality of the foreign state.” 28 U.S.C. § 1605(a)(3). An “agency or instrumentality of a foreign state” is a term of art to which the FSIA assigns a specific definition, namely “any entity”
(1) which is a separate legal person, corporate or otherwise, and
(2) which is an organ of a foreign state or political subdivision thereof,11 or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof, and
(3) which is neither a citizen of a State of the United States as defined in [28 U.S.C. § 1332(c) and (e)] norcreated under the laws of any third country.
28 U.S.C. § 1608(b) (footnote added). Only the first criterion is contested here— namely, whether the Ministry of the Treasury of Poland is “a separate legal person, corporate or otherwise,” from the Republic of Poland.
In Transaero, Inc. v. La Fuerza Aerea Boliviana,
The Fifth Circuit adopted Transaero’s “core functions” approach in another case concerning the FSIA’s service of process provisions, holding that “[wjhether an entity is a ‘separate legal person’ depends upon the nature of its ‘core functions’— governmental vs. commercial — and whether the entity is treated as a separate legal entity under the laws of the foreign state.” Magness v. Russian Federation,
While neither Transaero nor Magness directly concern the amenability-to-suit of an alleged “agency or instrumentality of a foreign state” under 28 U.S.C. § 1605(a)(3), we nonetheless regard Transaero as instructive because, prior to invoking “ease of administration” as “a final reason” to prefer its “core functions” approach,
Indeed, our Circuit has already relied on the reasoning of Transaero (as well as on the reasoning of the District Court in this case) outside the context of the FSIA’s service of process provisions. See, e.g., Compagnie Noga D’Importation Et D’Exportation S.A. v. Russian Fed’n,361 F.3d 676 , 688 (2d Cir.2004). In Compagnie Noga — -which concerned the confirmation and enforcement of arbitral awards under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 53 (“Convention”) — we found “no meaningful legal distinction ... between a sovereign and one of its political organs,” Compagnie Noga,361 F.3d at 688 , and therefore concluded that “the Russian Federation and the Government [of Russia] are not separate ‘parties’ for the purposes of confirming and enforcing an arbi-tral award under” the Convention, id. at 690. We reached this conclusion partly by relying on Transaero as an authoritative restatement of “federal common-law principles.”15 Id. at 688.
Because we are persuaded by Transae-ro ’s analysis of legislative and international law sources,
b. The Ministry of the Treasury of Poland Is Not an “Ayency or Instrumentality ”
Applying the Transaero standard to the circumstances of this case, the District Court concluded that “[t]he Ministry of the Treasury would appear to be an integral part of Poland’s political structure, and its core function — to hold and administer the property of the Polish state — is indisputably governmental.” Garb,
The 1997 Constitution of the Republic of Poland provides for a Council of Ministers charged with conducting the Republic’s “internal affairs and foreign policy.” The Polish Constitution: Text and Introduction 86 (R. van der Wolf ed., 2000) (translating Pol. Const. art. 146) (“The Polish Constitution ”). One recent study of Poland’s government describes the operation of the country’s ministers and ministries as follows:
Ministers are individually accountable to the Sejm [ie., the lower house of the Polish parliament] for their departmental responsibilities and can face votes of no confidence.... Ministers may, but do not have to be, parliamentarians (as in the British case) but if they are they do not have to resign their seats (as in France). They are assisted in running their ministries by secretaries and under-secretaries of state, appointed by the prime minister on their proposal and whose numbers vary according to the ministry. Since 1996, they have been divided into politically nominated figures — who compose their political cabinet who resign along with ministers— and administrative ones who remain, and who are encouraged to behave as civil service functionaries. Administrative structures were standardized in the 1999 reform and ministries all now have the minister’s political cabinet along with ten identical organizational units. Ministers can issue orders (zarzadzen-ie) but, unlike prime ministerial regulations, they are only binding internally, within their own ministries.
George Sanford, Democratic Government in Poland: Constitutional Politics Since 1989, at 164 (2002).
Among the functions of the Council of Ministers enumerated in Poland’s constitution is the “protect[ion of] the interests of the State Treasury.” The Polish Constitution at 86 (translating Pol. Const. art. 146). Defendants have submitted to the District Court a translation of Article 3.2 of Poland’s Law of August 8, 1996 on
The Ministry is part of the central government of Poland and exists to act on behalf of the Republic of Poland. By statute, the Ministry manages property, including land, on behalf of the Polish State. It does not hold property separately from the Polish State. The Ministry also represents the Polish State with respect to financial claims brought against the State.
Kostórkiewicz Aff. ¶ 16, J.A. at 230.
Upon review of this evidence, and the full record before us, we find no error in the District Court’s finding that the Ministry of the Treasury of Poland is “an integral part of Poland’s political structure” and that the Ministry’s “core function... is indisputably governmental” rather than commercial. Garb,
On appeal, plaintiffs assert that “[t]he District Court’s conclusion is clearly at odds with the legislative history of the FSIA,” relying principally on two passages from the House Report. Appellants’ Br. at 55-56. We are not persuaded by plaintiffs’ reading of the Report.
First, the House Report explains that the requirement that an “agency or instrumentality” be a “separate legal person, is intended to include a corporation, association, foundation, or any other entity which, under the law of the foreign state where it was created, can sue or be sued in its own name, contract in its own name or hold property in its own name.” H.R.Rep. No. 94-1487, at 15, reprinted in 1976 U.S.C.C.A.N. at 6614. Plaintiffs argue that the Ministry of the Treasury of Poland falls squarely under this definition because, as Kostórkiewiez’s affidavit concedes, the Ministry is “not immune from suit in Poland.” Kostórkiewicz Aff. ¶ 4, J.A. at 226.
The Transaero Court properly cautioned against reading the Report’s passage in the manner suggested by plaintiffs. Because “any nation may well find it convenient (as does ours) to give powers of contract and litigation to entities that on any reasonable view must count as part of the state itself,” giving dispositive weight to such powers would extend the definition of “agencies or instrumentalities” “well beyond” the “public commercial enterprises” that Congress apparently intended to target. Transaero,
[T]he term “foreign state” as used in every section [of the FSIA besides that codified at 28 U.S.C. § 1608] includes not only the foreign state but also political subdivisions, agencies and instru-mentalities of the foreign state.20 The term “political subdivisions” includes all governmental units beneath the central government, including local governments.
H.R.Rep. No. 94-1487, at 15, reprinted in 1976 U.S.C.C.A.N. at 6613 (footnote added). This suggests that all governmental units beneath the central government— and the Ministry of the Treasury is indisputably one such unit — constitute “political subdivisions,” a category that is not congruent with “agencies and instrumentalities.” Thus, the House Report, read as a whole, offers at best conflicting indications about the Ministry’s status.
Conclusion
For the reasons stated above, we hold that:
(1) Altmann requires us to apply the FSIA, and its exceptions, to claims based on conduct that predates the 1976 enactment of the FSIA;
(2) plaintiffs have not. satisfied the “commercial activity” exception of the FSIA, 28 U.S.C. § 1605(a)(2), because (a) a state’s confiscation of property within its borders is not a “commercial” act, (b) the subsequent commercial treatment of expropriated property is not sufficiently “in connection with” the prior expropriation to satisfy the “commercial activity” exception, and (c) we decline to credit plaintiffs’ recharacterization of what are in essence “takings” claims as “commercial activity” claims; and
(3) plaintiffs have not satisfied the “takings” exception of the FSIA, 28 U.S.C. § 1605(a)(3), because (a) plaintiffs seek to recover property that is not “present in' the United States,” and (b) plaintiffs fail to show that the property “is owned or operated by an agency or instrumentality of the foreign state” within the meaning of the FSIA.
Accordingly,, we affirm the judgment entered by the District Court granting defendants’ motion to dismiss the action for lack of subject matter jurisdiction.
Notes
. All references to the "complaint" are to the amended complaint filed March 13, 2000.
. See also 28 U.S.C. § 1604 ("[A] foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607 of this chapter.”); Kato v. Ishihara,
. 28 U.S.C. § 1605(a)(2) provides that
(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case ... (2) 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!.]
. 28 U.S.C. § 1605(a)(3) provides that
(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case ... (3) in which rights in property taken in violation of international law are in issue and that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state; or that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United Statesf.]
. The Whiteman case was decided in a separate opinion issued on November 23, 2005. See Whiteman v. Dorotheum GmbH & Co. KG,
. In Whiteman v. Dorotheum GmbH & Co. KG,
. We intend the term "expropriation” to include acts "against individual property” that are carried out "on a wide scale and impersonally” and are "commonly referred to as 'nationalization.' ” See F.V. García-Amador, Louis B. Sohn & R.R. Baxter, Recent Codification of the Law of State Responsibility for Injuries to Aliens 48 (1974).
. 28 U.S.C. § 1603(d) defines a "commercial activity” as "either a regular course of com
a state engages in commercial activity under the restrictive theory where it exercises only those powers that can also be exercised by private citizens, as distinct from those powers peculiar to sovereigns. Put differently, a foreign state engages in commercial activity for purposes of the restrictive theory only where it acts in the manner of a private player within the market.
Nelson,
. Nor must we decide whether the Ministry of the Treasury of Poland "own[s] or operatefs]” property that has been taken in violation of international law, or whether the Ministry is "engaged in a commercial activity in the United States.”
. Compare 28 U.S.C. § 1610(a)(7) (providing for attachment of "property in the United States of a foreign state ... used for a commercial activity in the United States ... regardless of whether the property is or was involved with the act upon which the claim is based” where "the judgment relates to a claim for which the foreign state is not immune under section 1605(a)(7)”), with id. § 1610(b)(2) (providing for attachment of "any property in the United States of an agency or instrumentality of a foreign state engaged in commercial activity in the United States ... regardless of whether the property is or was involved in the act upon which the claim is based” where "the judgment relates to a claim for which the agency or instrumentality is not immune by virtue of section 1605(a)(2), (3), (5), or (7), or 1605(b)”).
.The phrase "which is an organ of a foreign state or political subdivision thereof” could carry one of two different meanings: (1) "which is an organ of a foreign state or which is a political subdivision of a foreign state,” or (2) "which is an organ of a foreign state or an organ of a political subdivision of a foreign state.” The House Report on the bill that became the FSIA appears to clarify that the latter is the correct construction. H.R.Rep. No. 94-1487, at 15 (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6614 ("The second criterion [of 28 U.S.C. § 1603(b)] requires that the entity be either an organ of a foreign state (or of a foreign state's political subdivision). ...”).
. Moreover, the District of Columbia Circuit has recently reaffirmed the holding of Transaero. See TMR Energy Ltd. v. State Prop. Fund of Ukraine,
. The "ease of administration” which the Transaero Court cited as a final rationale for its analytical approach applied particularly to the service of process context, where complex inquiries "may derail cases-rather than ensuring their prompt and orderly commencement.” Transaero,
. Our dissenting colleague asserts that the “core functions" test is "cut from judicial whole cloth,” Dissent at 600, and "override[s]" the plain language of the FSIA "based on a general, conclusory assertion about the ‘rich background of federal and international law’ against which the FSIA was enacted," Dissent at 601 (quoting Transaero,
Far from relying on a mere "general or conclusory assertion” about the backdrop against which the FSIA was enacted, the Transaero Court established that the undisputed purpose of the FSIA was to codify the " 'restrictive' theory of sovereign immunity, under which 'immunity is confined to suits involving the foreign sovereign’s public acts, and does not extend to cases arising out of a foreign state’s strictly commercial acts.' ” Transaero,
Our dissenting colleague's suggestion that we may discern a "plain legislative history,” Dissent at 603, that definitively resolves the question of how to interpret the phrase "agency of instrumentality” is belied by the recognition of other courts that the House Report is confusing and internally inconsistent, see, e.g., Segni v. Commercial Office of Spain,
Because we agree with the Transaero Court that any attempt to extract a literal reading of what is, in the final analysis, an ambiguous statutory provision, will simply have courts running in circles, we conclude that the "core functions” test is the most effective way to remain faithful to Congress's intent in enacting the takings exception to sovereign immunity.
. In Compagnie Noga, we also remarked upon certain parallels between sovereign immunity under the FSIA and well-settled principles of Eleventh Amendment immunity:
[In Transaero ], the United States took the view that if a "judgment would essentially be one against the state and an entity's assets are not separate from those of the state, then the entity is not a legal person separate from the state even if, in a formalistic sense, that entity can enter into contracts in its own name, and sue or be sued in its own name.” The legal standard articulated in the Transaero amicus brief [of the United States] is the same standard that has been adopted by the Supreme Court in determining whether an agency or instrumentality of a state is entitled to Eleventh Amendment Immunity.
Compagnie Noga,
We note that, in this appeal, the United States "continue^] to adhere to the view articulated in the United States’ amicus brief in Transaero.’’ United States Supplemental Letter at 10.
. According to a recent decision in the District Court for the District of Columbia, the holding in Roeder "indicates that the categorical approach in analyzing the § 1603 distinction between the foreign state and an 'agency or instrumentality' of the foreign state applies to FSIA contexts other than the service-of-process provision at issue in Transaero.” Dammarell v. Islamic Republic of Iran (“Dammarell I”),
. Our dissenting colleague insists that Tran-saero 's dichotomy between commercial and governmental activities is "inapt, ... particularly for § 1605(a)(3), which applies to the sovereign act of expropriating property in violation of international law.” See Dissent at 602. Inasmuch as § 1605(a)(3) specifies conditions under which "foreign state[s]” may be liable for takings, it is true that not all "inherently sovereign or public acts,” see Transaero,
. Although neither Poland’s constitution nor the work of Dr. Sanford (who is Reader in Politics at the University of Bristol) are included in the record of this case, both are appropriate for judicial notice, which "may be taken at any stage of the proceeding.” Fed. R. Evid 201(f). Under Federal Rule of Evidence 201(b)(2), "[a] judicially noticed fact must be one not subject to reasonable dispute in that it is ... capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” We have previously taken judicial notice of "authoritative text[s,]” such as a book setting forth the "history of Lincoln Center.” See Hotel Employees & Rest. Employees Union, Local 100 v. City of N.Y. Dep’t of Parks & Rec.,
. Indeed, it may be that, apart from the departments of government charged with national defense and public order, no department of government is more essential to the daily functioning and long-term survival of that government than its treasury. See generally The Federalist No. 30, at 188 (Alexander Hamilton) (Clinton Rossiter ed., 1961) (“Money is ... considered as the vital principle of the body politic; as that which sustains its life and motion and enables it to perform its most essential functions. A complete power, therefore, to procure a regular and adequate supply of revenue, as far as the resources of the community will permit, may be regarded as an indispensable ingredient in every constitution.”). It is thus not surprising that, in the history of our own Republic, the first four departments of the Executive to be created were State, Treasury, War, and Justice. In Poland, where the Ministry of the Treasury also holds property in the name of the sovereign state, the central importance of that political subdivision is even more pronounced.
. It bears repeating that, while a "foreign state” includes all its "agencies and instru-mentalities” for the purposes of the "takings” exception, 28 U.S.C. § 1603(a), not every organ of a foreign state constitutes an "agency or instrumentality” within the meaning of 28 U.S.C. § 1603(b). In order to meet the second clause of the fourth element of the takings exception, plaintiffs must show not merely that the Ministry of the Treasury of Poland is part of a "foreign state,” but that the Ministry has the characteristics of an "agency or instrumentality.” 28 U.S.C. § 1605(a)(3).
. Our dissenting colleague attempts to minimize the internal inconsistencies within the House Report by interpreting the phrase "political subdivisions” as referring "not to various central state entities, but rather to different geographical levels of government, such as national, regional, provincial, state, and local governments.” Dissent, at 601-02 n.4. Such an interpretation is flawed for several reasons. First, it squarely contradicts existing case law holding that departments or ministries of a central government qualify as "political subdivisions of a foreign state” under FSIA. See, e.g., First Nat’l City Bank v. Banco para el Comercio Exterior de Cuba,
Second, even assuming arguendo that scattered excerpts of the Restatement (Third) of the Foreign Relations Law of the United States ("Restatement”) constituted an authoritative source for construing the meaning of a particular phrase as used in the FSIA, our colleague fails to account for those portions of the Restatement in which the phrase "political subdivision” plainly does not refer exclusively to local units of government. See Restatement § 207 cmt. c ("[State] responsibility [under international law] extends also to action or inaction by local officials or officials of political subdivisions. ”) (emphases added).
Third and finally, the mere fact that, as used in the FSIA, "[t]he term 'political subdivisions' includes all governmental units beneath the central government,” H.R.Rep. No. 94-1487, at 15, reprinted in 1976 U.S.C.C.A.N. at 6613 (emphasis added), does not imply that the only political subdivisions subsumed within the FSIA’s definition of a
. Although our dissenting colleague objects that our analysis "conflicts with the House Report[]” inasmuch as — in his view — "all ministries would seem, by definition, to be governmental rather than commercial in their core functions,” Dissent at 600-01, we malee no such categorical statement. Indeed, the very purpose of the "core functions” test is to look beyond mere labels to discern whether an entity is actually engaged in predominantly governmental activity or whether its primary functions are instead commercial.
. The conclusion that the Ministry of the Treasury of Poland is to be treated the same as the Republic of Poland for the purposes of foreign sovereign immunity is also supported by the analogy between foreign sovereign immunity and Eleventh Amendment immunity. See ante, at 592-93 n. 15. As we explained in Compagnie Noga, "it is black letter Eleventh Amendment law that the political agencies and departments of states are entitled to the same sovereign immunity as the state.”
.By placing determinative weight on three characteristics of a public entity — namely, whether it "can sue and be sued in its own name, contract in its own name or hold property in its own name,” Dissent, at 600 (quoting Hyatt Corp. v. Stanton,
Dissenting Opinion
dissenting.
Garb et al.’s (“Garb”) complaint describes a campaign of ethnic cleansing waged in the aftermath of World War II against Poland’s Jewish Holocaust survivors. Specifically, Garb alleges that Poland’s newly-formed nationalist government expropriated Jewish property— including homes, businesses and community centers — through violence, intimidation, and murder as part of its efforts to create an ethnically homogeneous state by inducing hundreds of thousands of Jews to flee the country. The Foreign Sovereign Immunity Act (“FSIA”) affords a cause of action for such violations of international law under certain conditions. The property at issue must be present in the United States or be owned or operated by a state “agency or instrumentality” that “is engaged in commercial activity in the United States.” 28 U.S.C. § 1605(a)(3).
The majority dismisses Garb’s complaint based on a narrow reading of the term “agency or instrumentality” that excludes the Polish Ministry of the Treasury (“Treasury”) without any jurisdictional discovery. This reading is contrary to the language and the legislative history of the FSIA, and thus arbitrarily eliminates the right of victims such as Garb to seek compensation for what was done to them and to their ancestors. Because I find that we may (depending on facts that the District Court failed to develop) have jurisdiction under the FSIA to hear Garb’s claims, I respectfully dissent.
I. Subsection 1605(a)(3)
The provision at issue here abrogates immunity in all cases
in which rights in property taken in violation of international law are in issue and that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state; or that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States.
28 U.S.C. § 1605(a)(3). As the majority explains, whether this subsection applies to the Treasury depends on whether, under the FSIA, the Treasury is an agency or instrumentality of Poland or is a political subdivision or the Polish state itself.
The FSIA defines “agency or instrumentality” broadly, as “any entity — (1) which is a separate legal person, corporate or otherwise, and (2) which is an organ of a foreign state or political subdivision thereof, or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof.” Id. § 1603(b) (emphasis added).
As a general matter, entities which meet the definition of an ‘agency or instrumentality of a foreign state’ could assume a variety of forms, including a state trading corporation, a mining enterprise, a transport organization such as a shipping line or airline, a steel company, a central bank, an export association, a governmental procurement agency or a department or ministry which acts and is suable in its own name.
Id. at 15-16 (emphasis added). Thus, reading the statute alongside the House Report, departments or ministries would appear to be “agenc[ies] or instrumental-ities]” if, under that country’s own laws, they are treated separately from the state for purposes of litigation, contract or property law. As for the term “political subdivision,” the House Report explains that this term “includes all governmental units beneath the central government, including local governments.” Id. at 15. If an entity is a political subdivision, it cannot be sued unless it is engaged here in commercial business that involves the property at issue. 28 U.S.C. § 1605(a)(3).
Because both “agencies or instrumental-ities” and “political subdivisions” are defined broadly in the FSIA and House Report, the line between the two categories is not absolutely clear. As a result, courts have formulated two conflicting tests for distinguishing between them: the “legal characteristics” test, which focuses on whether the entity is legally separate from the state in a number of ways, and the “categorical” or “core functions” test, which focuses on whether the core functions of the entity are primarily govern
The majority chooses the narrower core functions test, holding that any government entity whose core functions are governmental rather than commercial is by definition a political subdivision rather than an agency or instrumentality. Ante at 594. The principal flaw in this reading of the FSIA is that it finds no support in the statute’s definition of “agency and instrumentality,” which turns on whether an entity is a “separate legal person” rather than on its functions. 28 U.S.C. § 1603(b)(1). The legal characteristics test is plainly designed to identify whether an entity is a “separate legal person,” and it derives directly from specific language in the House Report. See House Report, at 15 (stating that an entity is a separate legal.entity if it “can sue and be sued in its own name, contract in its own name or hold property in its own name”); Hyatt,
The majority’s core functions test, on the other hand, is cut from judicial whole cloth. There is nothing in the statute or legislative history that makes commercial activity “the ultimate touchstone for FSIA analysis” in all respects. Transaero,
Indeed, the majority’s view conflicts with the House Report’s statement that an agency or instrumentality could assume the form of “a department or ministry which acts and is suable in its own name,” House Report at 16, since all ministries would seem, by definition, to be governmental rather than commercial in their “core functions.” The majority attempts to explain away this inconsistency by arguing that, simply because a ministry “could” be an agency or instrumentality, it does not follow that it must be such. Of course, “could” does not mean “must”; but “could” cannot mean “could not,” as the majority would have it. The only possible reading of the House Report is that whatever test the courts devise, this test must allow for the possibility that at least some state ministries will fall within the FSIA’s definition of “agency or instrumentality.”
The legal characteristics test, by contrast, fully comports with the House Report because it enables courts to distinguish between ministries, classifying those with an independent legal character as agencies or instrumentalities. See Hyatt Corp.,
The majority’s reading also undercuts the very existence of § 1605(a)(3). See Duncan v. Walker,
To overcome these statutory obstacles, the majority relies on the House Report’s definition of “political subdivision” as “in-cludflng] all governmental units beneath the central government, including local governments.” Ante at 596 (citing House Report at 15). The majority construes the House Report language as sweeping in all administrative ministries, departments, and the like. However, the House Report language relating to political subdivisions is far vaguer than the language clarifying the FSIA’s definition of “agency or instrumentality,” offers less evidence of specific congressional intent, and therefore cannot be given the same weight.
For these reasons, statutory considerations, on balance, weigh heavily.in favor of applying the legal characteristics test, rather than the majority’s “core functions” test, to determine whether the Polish Treasury is a political subdivision of Poland or an agency or instrumentality.
II. Caselaw
Notwithstanding the statutory obstacles discussed above, the majority herein is “persuaded by” the majority’s analysis in Transaero to reject Garb’s literal reading of the FSIA. See ante at 594. I am not. To begin with, the circumstances in Tran-saero were different from those here in at least one crucial respect: the D.C. Circuit was merely deciding whether service had been properly effected (a question which depended on the defendant’s status under the FSIA), not whether an entire class of defendants was immune under § 1605(a)(3). Indeed, one of the reasons given by the Transaero majority for its categorical “core functions” test was that “[sjervice of process should be the prologue to the suit rather than the central drama,” and that an unnecessarily complex test would “derail cases rather than ensuring their prompt and orderly commencement.” Transaero,
As for the persuasiveness of Transae-ro ’s remaining analysis, the Transaero majority relied on three additional grounds of doubtful validity or significance. First, the Transaero majority presumed that, because FSIA generally codified a “restrictive” theory of sovereign immunity, an “agency or instrumentality” must be a commercial, as opposed to a public enterprise. See Transaero,
Second, the Transaero majority also relied on the fact FSIA allows venues in suits against agencies or instrumentalities wherever they are licensed to do business or are doing business. Transaero, Inc. v. La Fuerza Aerea Boliviana,
The majority also relies on the fact that Transaero was cited in two subsequent cases: Magness v. Russian Federation,
Similarly, the rather narrow issue before us in Compagnie Noga was whether the Russian Federation could be held to an arbitration agreement entered into by the Russian Government. We found that, under the Constitution of the Russian Federation, the Russian Government constituted one half of a bicameral executive, and functioned analogously to our executive cabinet.
Conclusion
As set forth above, the majority’s reading is in tension with the text of the FSIA, conflicts with the House Report’s clear, specific definition of “agency or instrumentality,” and places undue weight on the House Report’s vague definition of “political subdivision.” The majority’s strained reading of the FSIA, moreover, is unnecessary. The FSIA’s distinction between “political subdivisions” and “agencies or instrumentalities” makes sense if the dividing line is between government entities with a separate legal existence — i.e., possessing their own budget, suable in their own name, etc. — and those without such.
Because this case was dismissed before any jurisdictional discovery took place, and because the record therefore does not clearly indicate how Garb would fare on the legal characteristics test, this case should be remanded for further proceedings. It is important, as well, to bear in mind the seriousness of the events alleged in Garb’s complaint, which I think merits something more than dismissal based on a
. Because I would remand for jurisdictional discovery as to the applicability of
. There is a third condition, which is irrelevant. The majority concedes that the first prong of this statutory definition is the only one at issue in this case. See ante at 591.
. Similarly, the majority's analogy to Eleventh Amendment immunity, see ante at 597 n. 23, is inapt. While "it is black letter Eleventh Amendment law that the political agencies and departments of states are entitled to the same sovereign immunity as the state,” Compagnie Noga D’Importation et D’Exportation, S.A. v. Russian Federation,
. Further complicating the meaning of “political subdivision” is the fact that this term is often used to refer not to various central state entities, but rather to different geographical levels of government, such as national, regional, provincial, state and local governments. See Restatement (Third) of the Foreign Relations Law of the United States ("Restatement”) § 452 comment b (emphasis added) ("Immunity of political subdivisions. Under international law, cities, towns, counties, and comparable subordinate units of government ordinarily are not entitled to sovereign immunity. The immunity of constituent units of federal states — e.g. provinces, cantons, States — is disputed .... The States of the United States enjoy immunity in United States courts under ... the Constitution