This Note considers whether, under the direct effect clause of the FSIA commercial activities exception, a foreign sovereign must have minimum contacts with the United States in order for a U.S. court to assert personal jurisdiction over the entity.
When United States citizens initiate legal action against a foreign entity, they face a significant jurisdictional obstacle—the Foreign Sovereign Immunities Act (FSIA). The FSIA provides a general grant of immunity to foreign states and their instrumentalities from United States court jurisdiction; however, it establishes a number of exceptions where a foreign sovereign’s acts are subject to adjudication in the United States. Prior to the FSIA, the United States exercised absolute sovereign immunity, leaving any citizen injured by foreign state action with no remedy. But increased international commerce during the twentieth century led to the application of a more restrictive interpretation of immunity and the adoption of the FSIA’s commercial activities exception. The commercial activities exception contains three clauses, each providing grounds for lifting a foreign state’s immunity when a state’s commercial act impacts the United States. This Note examines the third clause of the commercial activities exception—the “direct effect” clause. The direct effect clause provides an exception to the grant of immunity for “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.” This note argues that recognizing foreign sovereigns as “persons” under the Due Process Clause is improper, and that reading a minimum contacts test into the direct effect clause is contrary to the structure and intent of the FSIA commercial activities exception.