On June 9, 2020, the United States Court of Appeals for the Second Circuit concluded that there was no jurisdiction for the suit of the Saretta Barnet Trust Foundation and Sotheby’s Inc. against the Greek Ministry of Culture and Sports. The viability of the suit, which arose from Greece’s patrimony claims to a miniature horse figurine placed on auction by Sotheby’s, depended on the court’s interpretation of the commercial activities exemption to the Foreign Sovereign Immunities Act. While the United States District Court for the Southern District of New York initially determined Greece’s claim was a commercial activity that exempted it from sovereign immunity, the Court of Appeals has remanded that decision.
The case hinged on the court’s interpretation of the Foreign Sovereign Immunities Act. The Act states that 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.’” The exception at question in this lawsuit was section 1605 or the commercial-activities exception to FSIA. Section 1605 reads, “A foreign state shall not be immune from the jurisdiction of courts of the United States … in any case … 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.” The district court and the appeals court agreed that the third clause, or the “direct-effect clause,” was relevant in this case.
However, the appeals court and district court reached different conclusions of the direct-effect clause. While the appeals court agreed that the “direct-effect clause” was the relevant clause of the commercial activities exception to consider in this case, it did not regard Greece’s act of sending a letter to be in connection with a commercial activity. It regarded it as a sovereign activity. The court writes, “Identifying the activity in connection with which the letter was sent, as the statute requires, reveals its sovereign nature: Greece has claimed ownership over the figurine by adopting legislation that nationalizes historical artifacts and by enforcing those patrimony laws… Just as nationalization or expropriation of property is considered a sovereign activity rather than a commercial ‘claim of ownership’ by the foreign state, so too here Greece is acting in a sovereign capacity by enforcing laws that regulate ownership and export of nationalized artifacts.” In other words, the court determined that the act of sending a letter was an exercise of the state’s sovereign rights rather than a commercial activity.
The district court had previously determined that to send a letter claiming ownership was to “act… in connection with a commercial activity of the foreign state elsewhere.” But the appeals court disagreed, stating that while this act could be a commercial activity in some circumstances, it was not a commercial activity in this particular case, due to the sovereign nature of the laws and rights invoked in the letter.
Furthermore, the appeals court pointed out that the district court’s interpretation necessarily regarded the act of sending the letter as the “precipitate act” as well as the effect, in which case clause three would no longer apply. The decision reads, “If the letter were properly considered to be both the act and the commercial activity—that is, if Plaintiffs were seeking relief for a single, self-contained commercial activity—it would suggest that Plaintiffs should proceed under the first clause of the commercial activity exception, which authorizes suits ‘based upon a commercial activity carried on in the United States by the foreign state,’ rather than the direct-effect clause…” The interpretation of the district court would entirely negate the discussion of the direct-effect clause. However, the Appeals court decided that the direct-effect clause was the applicable cause, because the letter was not a “single, self-contained activity.”
The appeal is a victory for the Greek government and the many supporters of efforts by sovereigns to bring actions in foreign courts to recover stolen cultural artifacts. The Greek government had support in the way of amici. One amicus brief was filed by Laina Lopez of Berliner Corcoran & Rowe LLP on behalf of a coalition. The amici include the Hellenic College Holy Cross Greek Orthodox School of Theology; the Antiquities Coalition; Ministry for Cultural Activities and Heritage and for Tourism for Italy; Department of Antiquities, Ministry of Transport, Communications and Works of Cyprus; and The United Mexican States.
The next issue of the IELR will have a more comprehensive article on the decision and its implications.