Commercial Nexus in the United States

Expropriations in the Foreign Sovereign Immunities Act of 1976

According to research about Commercial nexus from the Federal Judicial Center:The so-called “fourth prong” requires a connection between the taking and commercial activity in the United States. As is often the case under the FSIA, standards established for the foreign state differ from those established for its agencies and instrumentalities. If the suit is against the foreign state itself, the seized property in question (or property exchanged for such property) must be present in the United States in connection with a commercial activity carried on by that foreign state in the United States. If the property in question (or property exchanged for it) is owned or operated by an agency or instrumentality of the foreign state, then all that is required is for that agency or instrumentality to be engaged in commercial activity in the United States. In Agudas Chasidei Chabad of United States v. Russian Federation, the D.C. Circuit considered the application of § 1605(a)(3) to two entities that were admittedly agencies or instrumentalities of the Russian government. The court noted that Congress had intentionally used different wordings in the two parts of this “prong,” with the result that the second part (which concerns the commercial activities of a foreign state’s agencies and instrumentalities) is clearly less demanding than the first (which applies to activities “carried on by the foreign state”). It therefore rejected the defendants’ argument that the “substantiality” requirement of § 1603(e) should apply to the agencies and instrumentalities in question.

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