The "Based Upon" Analysis for the Commercial Activity Exception Under the United States Foreign Sovereign Immunities Act - Comment on OBB Personenverkehr AG v. Sachs

Abstract

On December 1, 2015, the United State Supreme Court in OBB Personenverkehr AG v. Sachs held that the United States courts lacked jurisdiction over the state-owned railway in Austria, OBB, by accepting the OBB's argument of sovereign immunity. This lawsuit against the Austrian railway was brought by a California resident, Sachs, who bought a Eurail pass from a travel agent in the United State and suffered injuries while she was boarding on a train of OBB in Austria. OBB asserted its sovereign immunity not to be sued in the United States courts while Sachs claimed that the commercial activity exception to sovereign immunity applies to this case, and thus, that the United States courts may exercise jurisdiction over OBB. Under the Foreign Sovereign Immunities Act, foreign states or their instrumentalities shall be immune from jurisdiction of the United States courts unless one of exceptions to sovereign immunity including commercial activity exception applies. The commercial activity exception under the FSIA can be recognized if the action of a foreign state is based upon a commercial activity carried on in the United States by the foreign state or other activity having contacts with the United States. Relying on the phrase of the FSIA, the plaintiff claims that the rail pass sale by an OBB's agent can be categorized as a commercial activity which meets the meaning of the FSIA’s commercial activity exception. However, the United States Supreme Court rejected the plaintiff’s argument. The Court ruled that the particular act of Sachs's claims is the incident occurred in Austria, not the rail pass sale in the United States, and the incident in Austria is not a commercial activity for purposes of the commercial activity exception. The incident was caused by wrongful conduct and dangerous conditions in Austria which led to Sachs's injuries. To determine whether the commercial activity exception applies or not, the Court in Sachs elaborated how to identify the particular conduct on which a plaintiff's action is based and looked for whether the plaintiff's claim is based upon the conduct constituting the gravamen of her suit.