Cassirer v. Thyssen-Bornemisza

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CLAUDE CASSIRER, 

Plaintiff-Appellee,

v.

KINGDOM OF SPAIN, a foreign state,

Defendant, No. 06-56325

and  D.C. No.

CV-05-03459-GAF

THYSSEN-BORNEMISZA COLLECTION

FOUNDATION, an agency or

instrumentality of the Kingdom of

Spain,

Defendant-Appellant.



CLAUDE CASSIRER, 

Plaintiff-Appellee,

v.

KINGDOM OF SPAIN, a foreign state,

No. 06-56406

Defendant-Appellant,

 D.C. No.

CV-05-03459-GAF

and

THYSSEN-BORNEMISZA COLLECTION OPINION

FOUNDATION, an agency or

instrumentality of the Kingdom of

Spain,

Defendant.



Appeal from the United States District Court

for the Central District of California

Gary A. Feess, District Judge, Presiding

12691

12692 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

Argued September 24, 2007

Submitted September 8, 2009

Pasadena, California

Filed September 8, 2009

Before: Thomas G. Nelson, Sandra S. Ikuta, and

N. Randy Smith, Circuit Judges.

Opinion by Judge N.R. Smith;

Partial Concurrence and Partial Dissent by Judge Ikuta

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12695

COUNSEL

William M. Barron of Alston & Bird, LLP, New York City,

New York; Anthony A. De Corso of Beck, De Corso, Daly,

Kreindler & Harris, for defendant-appellant the Kingdom of

Spain.

Thaddeus J. Stauber and Walter T. Johnson of Nixon Pea-

body, LLP, Los Angeles, California, for defendant-appellant

Thyssen-Bornemisza Collection Foundation.

Stuart R. Dunwoody of Davis Wright Tremaine, LLP, Los

Angeles, California, for plaintiff-appellee Claude Cassirer.

12696 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

OPINION

N.R. SMITH, Circuit Judge:

Claude Cassirer (“Cassirer”) filed this action in federal dis-

trict court against the Kingdom of Spain (“Spain”) and the

Thyssen-Bornemisza Collection Foundation (the “Founda-

tion”)1 to recover a Camille Pissarro painting now on display

at the Foundation’s museum in Madrid, Spain. Cassirer

alleges that the painting was taken from his grandmother in

violation of international law in 1939 by an agent of the gov-

ernment of Nazi Germany. On appeal, Appellants challenge

the district court’s denial of their respective motions to dis-

miss for lack of (1) personal jurisdiction, (2) standing, (3) a

justiciable case or controversy, and (4) subject matter jurisdic-

tion based on sovereign immunity.

We dismiss this appeal with regard to Appellants’ chal-

lenges to personal jurisdiction, standing, and the existence of

a justiciable case or controversy. We lack appellate jurisdic-

tion because there has been no final judgment and these issues

are not immediately appealable under the collateral order doc-

trine.

However, under the collateral order doctrine, we have juris-

diction to consider the issue of sovereign immunity. Gupta v.

Thai Airways Int’l, Ltd., 487 F.3d 759, 763, 764 n.6 (9th Cir.

2007). We consider for the first time whether the expropria-

tion exception of the Foreign Sovereign Immunities Act

(“FSIA”), 28 U.S.C. § 1605(a)(3), applies when the foreign

state (against whom a claim is made) is not the entity that

expropriated the property in violation of international law. We

hold that it does. We also hold that advertising and promo-

tional activity, purchase and sale of goods and services, and

the exchange of artwork with persons and entities, all within

1

When referred to collectively, Spain and the Foundation are referred to

as “Appellants.”

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12697

the United States, are sufficient to constitute “commercial

activity in the United States” under § 1605(a)(3). Finally,

based on guidance in our recent decision in Sarei v. Rio Tinto,

PLC, 550 F.3d 822, 832 (9th Cir. 2008) (en banc) (plurality

opinion), we remand to the district court to determine, in the

first instance, whether the circumstances of this case warrant

judicial imposition of an exhaustion requirement.

I. Background.

For the purposes of this appeal, we take the factual allega-

tions in this case as true.2 At the heart of the present dispute

is the Rue Saint-Honoré, après-midi, effet de pluie (the

“Painting”), an oil painting by the French impressionist mas-

ter Camille Pissarro. The Painting was originally purchased in

1898 by Cassirer’s great-grandfather, Julius Cassirer, a mem-

ber of a wealthy Jewish family living in Germany. The Paint-

ing remained in the family for the next forty years. First

passing upon Julius’s death to his son, Fritz, and later to

Fritz’s widow, Lilly Cassirer.

In 1939, as persecution of Jews living in Nazi Germany

increased, Lilly and her new husband sought official permis-

sion to leave Germany and take their possessions, which

included the Painting. Before granting permission, the Nazi

government appointed Munich art dealer Jakob Scheidwim-

mer as the official appraiser to evaluate the works of art that

Lilly wished to take with her. After his appraisal, Scheidwim-

mer refused to allow Lilly to take the Painting out of Ger-

many and demanded that she sell it to him for approximately

2

In reviewing the district court’s denial of a motion to dismiss, we

accept all well-pleaded factual allegations in the complaint as true, Alt-

mann v. Republic of Austria, 317 F.3d 954, 962 (9th Cir. 2002) (citing

Zimmerman v. City of Oakland, 255 F.3d 734, 737 (9th Cir. 2001)),

amended by 327 F.3d 1246 (9th Cir. 2003), aff’d by 541 U.S. 677 (2004),

and determine whether the factual content “allows the court to draw the

reasonable inference that the defendant is liable for the misconduct

alleged,” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009).

12698 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

$360. Because she feared she would not be allowed to leave

Germany, she relinquished the Painting, knowing that she

would never receive the funds she was promised.3

Scheidwimmer traded the Painting to another art dealer

who, also persecuted by the Nazis, fled Germany and took the

Painting to Holland. After Germany invaded Holland, the

Gestapo confiscated the Painting and returned it to Germany,

where it was sold at auction to an anonymous purchaser in

1943. The Painting surfaced at a New York gallery in 1952

and was then sold to a private collector in St. Louis. It was

sold again in 1976 to an unknown dealer, who subsequently

sold it to Baron Hans-Heinrich Thyssen-Bornemisza (the

“Baron”), a resident of Switzerland and one of the world’s

foremost private art collectors.

In 1988, Spain paid the Baron $50 million to lease his col-

lection for ten years. Five years into the lease, Spain paid the

Foundation approximately $327 million to purchase the

Baron’s entire collection, including the Painting. Under the

terms of the purchase, Spain provided the Foundation a palace

in Madrid, free of charge, for use as the Thyssen-Bornemisza

Museum (the “Museum”). In addition, the purchase agree-

ment requires that the collection be exhibited at the Museum

in Spain and sets limits regarding loans to other art institu-

tions. If the collection is not used in accordance with the pur-

chase agreement or if the Foundation ceases to exist, Spain

will become the owner of the collection.4

3

Lilly’s sister, who remained in Germany, was later imprisoned in the

Theresienstadt extermination camp, where she was subsequently killed.

Lilly died in 1962, never having recovered the Painting or learned of its

whereabouts.

4

Under Spanish law, at least two-thirds of the Foundation’s Board of

Directors must be representatives of Spain, who are nominated and

removed freely by the Spanish government through royal decree. Cur-

rently, Spain’s Minister of Culture, Secretary of State for Culture, Secre-

tary of State for Budget and Expenses, and Undersecretary of Culture all

sit as ex officio members of the Foundation’s Board.

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12699

In 2000, Claude Cassirer,5 the grandson and heir of Lilly

Cassirer, discovered that the Painting was on display in

Madrid at the Museum. He petitioned Spain’s Minister for

Education, Culture and Sports (who was also chair of the

Foundation’s Board), requesting the return of the Painting.

His request was denied. In July 2003, five United States Con-

gressmen wrote to the Minister, again requesting that Appel-

lants return the Painting to Cassirer. The request was again

denied. Cassirer never attempted to obtain the Painting

through judicial proceedings in Spain.

On May 10, 2005, Cassirer filed suit against the Foundation

and Spain in the Central District of California. On February

28, 2006, the Foundation filed a motion to dismiss, contend-

ing that the district court lacked subject matter and personal

jurisdiction and that venue did not lie in the Central District

of California. While the Foundation’s motion was pending,

Cassirer moved the court for leave to conduct jurisdictional

discovery.

On April 5, 2006, the district court reviewed, as a question

of law, whether the expropriation exception to sovereign

immunity in § 1605(a)(3) of the FSIA applied to a sovereign

entity that was not alleged to have taken property in violation

of international law. After receiving further briefing from the

parties, the district court ruled that § 1605(a)(3) requires only

that property was seized in violation of international law, not

that the foreign sovereign itself violated international law.

The district court also granted sixty days to conduct discovery

for the purpose of determining whether the Foundation con-

ducted “commercial activity in the United States within the

meaning of the FSIA.”

On June 9, 2006, Spain filed its own motion to dismiss,

contending lack of subject matter jurisdiction due to sovereign

immunity and various other grounds. On August 30, 2006,

5

Claude Cassirer is a United States citizen and resident of California.

12700 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

after hearing argument, the district court issued a Memoran-

dum and Order denying both the motions to dismiss. The dis-

trict court held that 1) Cassirer presented a case or

controversy against both the Foundation and Spain; 2) Cas-

sirer was not required to exhaust judicial remedies; 3)

§ 1605(a)(3) of the FSIA applies to the Foundation and Spain,

despite Cassirer’s admission that neither took the Painting in

violation of international law (affirming its earlier decision on

this point); 4) the Foundation and Spain engage in commer-

cial activity in the United States within the meaning of

§ 1605(a)(3), such that they are not entitled to sovereign

immunity; 5) under the language of the FSIA, personal juris-

diction exists over the Foundation and Spain by virtue of the

fact that subject matter jurisdiction existed; and 6) venue is

proper in the Central District of California. See Cassirer v.

Kingdom of Spain, 461 F. Supp. 2d 1157 (C.D. Cal. 2006).

The Appellants brought this timely interlocutory appeal.

Cassirer subsequently filed a Motion to Dismiss, contending

that this court lacks appellate jurisdiction over any issues

other than whether the Appellants are entitled to sovereign

immunity.

II. Jurisdiction.

We first address the issue of appellate jurisdiction raised by

Cassirer. We have jurisdiction to review “final decisions” of

the district court. 28 U.S.C. § 1291. “Final decisions end the

litigation on the merits and leave nothing for the court to do

but execute the judgment.” Am. States Ins. Co. v. Dastar

Corp., 318 F.3d 881, 884 (9th Cir. 2003) (internal quotations

and alterations omitted). Typically, a district court’s denial of

a motion to dismiss is not final for purposes of 28 U.S.C.

§ 1291. See Marx v. Government of Guam, 866 F.2d 294, 296

(9th Cir. 1989). Under the “collateral order doctrine,” we may

nonetheless review that “small category of decisions” that are

“conclusive [because they] resolve important questions sepa-

rate from the merits, and that are effectively unreviewable on

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12701

appeal from the final judgment in the underlying action.”

Swint v. Chambers County Comm’n, 514 U.S. 35, 42 (1995)

(citation omitted).

[1] “[T]he denial of a claim of lack of [personal] jurisdic-

tion is not an immediately appealable collateral order.” Van

Cauwenberghe v. Biard, 486 U.S. 517, 526-27 (1988); Batzel

v. Smith, 333 F.3d 1018, 1023 (9th Cir. 2003) (orders denying

motions to dismiss for lack of personal jurisdiction are not

final and are not appealable under the collateral order doc-

trine). Therefore, we do not have jurisdiction to review the

district court’s denial of Appellants’ motions to dismiss for

lack of personal jurisdiction, and we dismiss this appeal with

regard to that issue.

[2] Likewise, we dismiss the appeal with regard to the

issues of standing and Article III case or controversy. The dis-

trict court’s order denying Appellants’ motion to dismiss on

these issues is fully reviewable on appeal from a final judg-

ment. Therefore, we hold that such a denial is not immedi-

ately appealable as a collateral order.6 See Swint, 514 U.S. at

42 (to be immediately appealable under collateral order doc-

6

See also, e.g., Moniz v. City of Ft. Lauderdale, 145 F.3d 1278, 1281

n.3 (11th Cir. 1998) (question of standing is not a final decision under the

collateral order doctrine); Triad Assocs., Inc. v. Robinson, 10 F.3d 492,

496-97 n.2 (7th Cir. 1993) (denial of a motion to dismiss for lack of stand-

ing does not qualify as a final judgment and is not immediately appeal-

able); Crymes v. DeKalb County, Ga., 923 F.2d 1482, 1484 (11th Cir.

1991) (observing that denial of motion to dismiss on ripeness grounds is

not immediately appealable); Shanks v. City of Dallas, 752 F.2d 1092,

1099 n.9 (5th Cir. 1985) (case or controversy considerations are not

appealable under the collateral order exception because they obviously

“involve considerations that are emeshed in the legal issues surrounding

[the merits of the] cause of action”); City of Detroit v. Grinnell Corp., 495

F.2d 448, 474-75 (2d Cir. 1974) (question of ripeness and standing are not

immediately appealable under collateral order doctrine), abrogated on

other grounds by Goldberger v. Integrated Res., Inc., 209 F.3d 43 (2d Cir.

2000).

12702 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

trine, decision must be effectively unreviewable on appeal

from the final judgment in the underlying action).7

We have jurisdiction to review the district court’s order as

it pertains to sovereign immunity. “[A]n order denying immu-

nity under the FSIA is appealable under the collateral order

doctrine,” because sovereign immunity is immunity from suit,

which is effectively lost if a case is erroneously permitted to

go to trial. Gupta, 487 F.3d at 763, 764 n.6.

III. Sovereign Immunity Under the FSIA.

The primary issue before us is whether Appellants are enti-

tled to sovereign immunity under the FSIA, such that the dis-

trict court lacks subject matter jurisdiction. The existence of

subject matter jurisdiction under the FSIA is a question of law

reviewed de novo. Adler v. Fed. Republic of Nigeria, 107

F.3d 720, 723 (9th Cir. 1997). A district court’s factual find-

ings on jurisdictional issues are reviewed for clear error. Id.

7

In Swint, the Supreme Court left open the possibility that we might

exercise pendent appellate jurisdiction when we properly have jurisdiction

over one ruling and “related rulings that are not themselves independently

appealable” are “inextricably intertwined,” or when review of the related

ruling is “necessary to ensure meaningful review of the [issue over which

the court has jurisdiction],” Swint, 514 U.S. at 50-51, and we have done

so under some circumstances. See Idaho Watersheds Project v. Hahn, 307

F.3d 815, 824 (9th Cir. 2002); Hook v. Ariz. Dep’t of Corr., 107 F.3d

1397, 1401-02 (9th Cir. 1997). We decline to do so here, however.

Whether Appellants are “persons” within the meaning of the Due Process

Clause for purposes of personal jurisdiction is not inextricably intertwined

with our determination of sovereign immunity. Likewise, whether the case

involves a case or controversy against Spain does not relate to or necessar-

ily involve our consideration of sovereign immunity. Further, because we

can resolve the sovereign immunity issue without reaching the merits of

Appellants’ challenge to Article III case or controversy and standing, we

do not exercise pendent appellate jurisdiction under Swint. Accordingly,

we dismiss this appeal as to these issues.

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12703

A. The FSIA Provides Limited Exceptions to Sovereign

Immunity.

[3] The district court has original jurisdiction of any non-

jury civil action against a foreign state, including its agencies

and instrumentalities.8 See 28 U.S.C. § 1330(a). Under the

FSIA, however, foreign states are immune from the jurisdic-

tion of United States courts, subject only to the specific

exceptions in §§ 1605, 1607, and specified existing interna-

tional agreements. See id. at § 1604.9 Thus, the sole basis for

obtaining jurisdiction over a foreign state in federal court is

the existence of an exception to the FSIA. Argentine Republic

v. Amerada Hess Shipping Corp., 488 U.S. 428, 439 (1989).

The FSIA exceptions include “waiver of immunity,

§ 1605(a)(1), commercial activities occurring in the United

States or causing a direct effect in this country, § 1605(a)(2),

property expropriated in violation of international law,

§ 1605(a)(3), inherited, gift, or immovable property located in

the United States, § 1605(a)(4), non-commercial torts occur-

ring in the United States, § 1605(a)(5), and maritime liens,

§ 1605(b).” Id.

B. The Expropriation Exception.

[4] Cassirer contends that neither the Foundation nor Spain

is entitled to sovereign immunity due to the “expropriation

exception” of § 1605(a)(3).10 Section 1605(a)(3) provides that

8

Section 1603(a) defines “foreign state” to include “a political subdivi-

sion of a foreign state or an agency or instrumentality of a foreign state

. . .”

9

Section 1604 provides: “Subject to existing international agreements to

which the United States is a party at the time of enactment of this Act 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.” 28 U.S.C. § 1604.

10

Section 1605(a)(3) provides: “A foreign state shall not be immune

from the jurisdiction of courts of the United States or of the States in any

12704 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

a “foreign state shall not be immune . . . in any case . . . in

which rights in property taken in violation of international law

are in issue . . . .” The issue regarding the applicability of this

exception arises because the statute uses the passive voice and

does not expressly require that the foreign state (against

whom the claim is made) be the entity that took the property

in violation of international law. Appellants invite us to read

such a requirement into the statute. The parties agree that Ger-

many, and not Spain, allegedly took the Painting in violation

of international law. Therefore, under the construction urged

by Appellants, the expropriation exception could not apply.

We disagree.

[5] We find § 1605(a)(3) to be unambiguous. Where “the

intent of Congress is clear and unambiguously expressed by

the statutory language,” that is normally the end of the statu-

tory analysis. Zuni Pub. Sch. Dist. No. 89 v. Dep’t of Educ.,

550 U.S. 81, 93 (2007). We hold that the plain language of

§ 1605(a)(3) does not require that the foreign state (against

whom the claim is made) be the entity who expropriated the

property in violation of international law.

[6] Our holding is consistent with the legislative history.11

In reviewing Congress’s intent in enacting the FSIA, we con-

case . . . 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).

11

Under appropriate circumstances, we may consider legislative history

even when the plain language is clear. We do this, however, only where

the legislative history “clearly indicates that Congress meant something

other than what it said.” Carson Harbor Vill., Ltd. v. Unocal Corp., 270

F.3d 863, 877 (9th Cir. 2001) (emphasis added).

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12705

sider § 1602, which sets forth Congress’s findings and pur-

pose. This section expresses Congress’s understanding that

foreign states are not immune from suit “insofar as their com-

mercial activities are concerned.”12 In explaining § 1602, the

House Report states that Congress is adopting the restrictive

theory of sovereign immunity, that is, “[T]he sovereign

immunity of foreign states should be ‘restricted’ to cases

involving acts of a foreign state which are sovereign or gov-

ernmental in nature, as opposed to acts which are either com-

mercial in nature or those which private persons normally

perform.” H.R. Rep. No. 94-1487, at 14 (1976), reprinted in

1976 U.S.C.C.A.N. 6604, 6613.

[7] Consistent with the restrictive theory of sovereign

immunity described in § 1602 and the House Report, the

exceptions in § 1605(a) apply to situations in which foreign

states act more like private persons or are engaged in com-

mercial activities. The plain language of § 1605(a)(3) is

entirely consistent with Congress’s intent, because

§ 1605(a)(3) gives a court jurisdiction over a foreign state in

cases involving stolen property only if the foreign state (or its

agency) is engaged in a commercial activity in the United

States.

12

In its statement of “Findings and declaration of purpose,” 28 U.S.C.

§ 1602 provides:

The Congress finds that the determination by United States courts

of the claims of foreign states to immunity from the jurisdiction

of such courts would serve the interests of justice and would pro-

tect the rights of both foreign states and litigants in United States

courts. Under international law, states are not immune from the

jurisdiction of foreign courts insofar as their commercial activi-

ties are concerned, and their commercial property may be levied

upon for the satisfaction of judgments rendered against them in

connection with their commercial activities. Claims of foreign

states to immunity should henceforth be decided by courts of the

United States and of the States in conformity with the principles

set forth in this chapter.

12706 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

Citing In re Republic of Philippines, 309 F.3d 1143 (9th

Cir. 2002), Appellants argue that § 1605(a)(3) applies only

when the foreign state against whom the claim is leveled actu-

ally took property in violation of international law. Republic

of Philippines required us to interpret the exception in

§ 1605(a)(4), which provides that a foreign state loses its

immunity in any case “in which rights in property in the

United States acquired by succession or gift or rights in

immovable property situated in the United States are in

issue.” We construed the statute as applying only to rights in

property in the United States acquired by succession or gift by

the foreign state. In reaching this conclusion, we relied on

language in the House Report which stated:

There is general agreement that a foreign state may

not claim immunity when the suit against it relates

to rights in property, real or personal, obtained by

gift or inherited by the foreign state and situated or

administered in the country where the suit is brought

. . . The reason is that, in claiming rights in a dece-

dent’s estate or obtained by gift, the foreign state

claims the same right which is enjoyed by private

persons.

Republic of Philippines, 309 F.3d at 1151 (quoting H.R. Rep.

No. 94-1487) (emphasis added). In other words, to effectuate

Congress’s intent to grant courts jurisdiction over foreign

states only when they act more like private persons, we read

“by the foreign state” into § 1605(a)(4). Under this reading,

courts gain jurisdiction over a foreign state only if the state

acted like a private person and by claiming rights in a dece-

dent’s estate or obtaining a gift. Contrary to Appellant’s argu-

ment, our interpretation of § 1605(a)(4) in Republic of

Philippines is entirely consistent with a plain language read-

ing of § 1605(a)(3). It is not necessary to read “by the foreign

state” into § 1605(a)(3) to achieve consistency with the

restrictive theory of sovereign immunity. The plain language

of § 1605(a)(3) already grants courts jurisdiction over foreign

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12707

states only if they act like a private person by engaging in

commercial activities. Republic of Philippines therefore pro-

vides no justification to depart from the plain language of

§ 1605(a)(3).

[8] Because nothing in the plain language of the FSIA or

the legislative history requires us to read additional language

into the statute, we hold that the expropriation exception to

sovereign immunity found in § 1605(a)(3) does not require

that the foreign state against whom the claim is made be the

foreign state that took property in violation of international

law.

C. Commercial Activity in the United States.

[9] For the expropriation exception to apply, the FSIA also

requires “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). The Foundation admits that it is an

“agency or instrumentality” of Spain and that it owns the

Painting. We agree with the district court that the Foundation

has engaged in sufficient commercial activity in the United

States to satisfy § 1605(a)(3).

As defined in the FSIA, “commercial activity”

means either a regular course of commercial conduct

or a particular commercial transaction or act. The

commercial character of an activity shall be deter-

mined by reference to the nature of the course of

conduct or particular transaction or act, rather than

by reference to its purpose.

28 U.S.C. § 1603(d). “The central question is whether the

activity is of a kind in which a private party might engage.”

12708 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

Siderman de Blake v. Republic of Argentina, 965 F.2d 699,

708 (9th Cir. 1992) (internal quotation marks omitted).

In Siderman, we concluded that Argentina conducted com-

mercial activity in the United States, because (1) it advertised

an expropriated hotel in the United States; (2) it solicited

guests through its United States agent (Argentina’s national

airline); (3) numerous Americans stayed at the hotel; and (4)

the hotel accepted all major American credit cards. Id. at

712-13.

Likewise, in Altmann, we concluded that authoring, pro-

moting, and distributing books and other publications in the

United States to exploit expropriated paintings were “suffi-

cient to constitute ‘commercial activity’ for the purpose of

satisfying the FSIA.” Altmann, 317 F.3d at 959.

In this case, after allowing limited jurisdictional discovery,

the district court found that the Foundation engaged in com-

mercial transactions in the United States, including transact-

ing business as a purchaser and a seller of goods and services

and as an advertiser in distributing marketing and other com-

mercial promotional materials. Cassirer v. Kingdom of Spain,

461 F. Supp. 2d 1157, 1173-75 (C.D. Cal. 2006). For exam-

ple, the Foundation made numerous purchases of books, post-

ers, post cards, and related materials from United States

businesses in New York, California, and Washington, D.C.

The Foundation also purchased books about Nazi expropria-

tion of great works of art13 and a book presumably about the

works of Pissaro. Id. at 1173. The Foundation sold posters

and books to United States residents and businesses, and

13

The district court noted, “As particularly ironic examples, the Founda-

tion purchased through Amazon.com The Lost Museum: The Nazi Con-

spiracy to Steal the World’s Greatest Works of Art, . . . and from the

American Association of Museums in Washington, DC purchased a vol-

ume on Museum Policy and Procedure for Nazi Era Issues.” Cassirer, 461

F. Supp. 2d at 1173 (internal citations omitted).

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12709

licensed the reproduction of images to various United States

businesses. Id. The Foundation also admitted that it worked

with U.S. entities to secure goods to be sold in the Museum

gift shop, including paying U.S. citizens to write for its

exhibit catalogs. Id. Further, it admitted that it has shipped

gift shop items to purchasers in the United States. Id. Notably,

the Foundation sold a poster of the Painting at issue in this

case to individuals in both California and North Carolina. The

California purchaser resides in the Central District of Califor-

nia and used her American Express credit card to consummate

the transaction. Id.

The Foundation also solicited, recruited, and commissioned

writers and speakers from the United States to provide ser-

vices at the Museum. Id. The Foundation facilitated the pro-

duction of a film on the Foundation collection, featuring the

Painting, which it knew would be presented in-flight on Iberia

Airlines flights to and from the United States. Id. at 1174.

The Foundation placed advertisements in magazines that

are distributed in the United States and sent press releases,

brochures, and general information to TourEspaña and the

Spanish National Tourist Offices in the United States. For

example, the Foundation advertised in news publications such

as Newsweek, Time Magazine, and the New Yorker. Id. It also

distributes its Museum bulletin, “Perspectives,” to individuals

in the United States, including two in the Central District of

California. Id.

The Foundation also contracted with museums in the

United States to loan its artwork to the U.S. institutions or to

borrow artwork for display in the Foundation Museum in

Spain. Id. at 1174-75.

[10] The record supports the district court’s factual find-

ings, which are not clearly erroneous. Cassirer has produced

numerous examples of the Foundation’s commercial activity

in the United States that are “of a kind in which a private

12710 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

party might engage.” Siderman, 965 F.2d at 708 (internal quo-

tation marks omitted). Much of that activity was connected

with the Painting. Thus, Cassirer has adequately demonstrated

that the Foundation has engaged in sufficient commercial

activity in the United States to satisfy § 1605(a)(3).

IV. Exhaustion of Remedies.

[11] Cassirer unsuccessfully petitioned the Foundation for

return of the Painting, but Cassirer has not alleged that he

made recourse to the Spanish or German judiciaries to settle

his claim to the Painting.14 Thus, Spain argues that

§ 1605(a)(3) cannot apply, because Cassirer has not exhausted

judicial remedies in the foreign forum. The district court held

that the plain language of § 1605(a)(3) of the FSIA contains

no “exhaustion-of-foreign-remedies requirement” and there-

fore the court refused to impose such a requirement on Cas-

sirer. Cassirer, 461 F. Supp. 2d at 1164. Whether the FSIA,

specifically § 1605(a)(3), requires exhaustion is a matter of

statutory interpretation and an issue of first impression.

“Of paramount importance to any exhaustion inquiry is

congressional intent.” McCarthy v. Madigan, 503 U.S. 140,

144 (1992) (citing Patsy v. Board of Regents of Florida, 457

U.S. 496, 501 (1982) (internal quotation marks omitted)),

superceded by statute as stated in Booth v. Churner, 532 U.S.

731, 732 (2001).15 “Where Congress specifically mandates,

14

The record does not indicate what, if any, judicial actions have been

brought in Germany. We note that there is some indication in publicly

available material that, in 1958, the West German government may have

acknowledged Lilly Cassirer to be the legal owner of the Painting, conced-

ing that she retained the full rights of ownership. See Emma Daly, Ameri-

can Says Painting in Spain is Holocaust Loot, N.Y. Times, Feb. 10, 2003,

at E1.

15

Although these decisions generally involve the exhaustion of adminis-

trative remedies, we have previously approached exhaustion of claims

invoking international law in a manner consistent with our application of

exhaustion in other domestic contexts. See Sarei, 550 F.3d at 831-32

(“[E]xhaustion under the [Alien Torts Statute] should be approached con-

sistently with exhaustion principles in other domestic contexts.”).

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12711

exhaustion is required.” Id. (citing Coit Independence Joint

Venture v. FSLIC, 489 U.S. 561, 579 (1989); Patsy, 457 U.S.

at 502 n.4). “But where Congress has not clearly required

exhaustion, sound judicial discretion governs.” McCarthy,

503 U.S. at 144 (citing McGee v. United States, 402 U.S. 479,

483 n.6 (1971)). To discern the intent of Congress, “ ‘[w]e

look first to the plain language of the statute, construing the

provisions of the entire law, including its object and policy.’ ”

United States v. $493,850.00 in U.S. Currency, 518 F.3d

1159, 1167 (9th Cir. 2008) (quoting Carson Harbor Vill., Ltd.

v. Unocal Corp., 270 F.3d 863, 877 (9th Cir. 2001)).

[12] As the district court noted, the FSIA is silent as to any

exhaustion requirement. The legislative history is also devoid

of any enlightening reference to exhaustion.16 Accordingly,

16

Cassirer’s argument that Congress’s prior inclusion of an arbitration

requirement in § 1605(a)(7)(B)(i) evidences an intent to exclude an

exhaustion requirement from § 1605(a)(3) is not persuasive. A mandatory

arbitration requirement, although similar, is not the same as an exhaustion-

of-local-remedies requirement. The phrase “local remedies” has been “in-

terpreted broadly, [to include] the whole system of legal protection, as

provided by municipal law, not only the courts and tribunals but also the

use of procedural facilities which municipal law makes available to liti-

gants.” Restatement (Third) of Foreign Relations Law § 713, Reporters’

Note 5 (citing Ambatielos Case (Greece v. United Kingdom), 1951, 12 R.

Int’l Arb. Awards 91, 120, 122) (internal quotation marks omitted). There-

fore, one might fulfil an arbitration requirement without exhausting local

remedies.

Further, § 1605(a)(7)(B)(i) was enacted approximately twenty years

after § 1605(a)(3). Thus, the exclusio unius doctrine does not apply. See

Cipollone v. Liggett Group, Inc., 505 U.S. 504, 520 (1992) (noting that

“the views of a subsequent Congress form a hazardous basis for inferring

the intent of an earlier one”) (internal quotation marks omitted). For this

reason, we disagree with the D.C. Circuit’s suggestion that the inclusion

of § 1605(a)(7)(B)(i) “strengthens the inference that its omission from a

closely related section must have been intentional.” Agudas Chasidei Cha-

bad v. Russian Fed’n, 528 F.3d 934, 948 (D.C. Cir. 2008) (suggesting, but

not deciding, that § 1605(a)(3) does not impose an exhaustion require-

ment).

Congress has since repealed the arbitration requirement of § 1605(a)(7).

See National Defense Authorization Act for Fiscal Year 2008, Pub. L. No.

110-181, div. A, § 1083(b)(1)(A)(iii), 122 Stat. 3, 341 (2008) (repealing

28 U.S.C. § 1605(a)(7)).

12712 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

we hold that Congress has not clearly required exhaustion for

claims brought under the FSIA. This, however, does not end

our analysis.

To determine whether an action brought against a foreign

state (invoking an exception to the FSIA) requires exhaustion,

it is important to put into context what the FSIA is and what

it is not. The FSIA is not a source of substantive law and does

not create any causes of actions. Rather, it is a jurisdictional

statute incorporating international law principles to guide U.S.

courts in determining when a foreign state is or is not entitled

to sovereign immunity. See § 1602. In other words, claims

brought in U.S. courts, against foreign states, for violations of

international law depend on the applicability of an exception

to the FSIA for jurisdiction. Such claims, however, depend on

the law of nations to define the substantive rights embodied

in any cause of action. The Supreme Court has similarly rec-

ognized the Alien Tort Statute (ATS), 28 U.S.C. § 1350, to be

a jurisdictional statute that creates no new causes of action

and relies on the common law and the present-day law of

nations to define substantive rights. See Sosa v. Alvarez-

Machain, 542 U.S. 692, 724 (2004) (“[T]he ATS is a jurisdic-

tional statute creating no new causes of action . . .).17

[13] The doctrine of exhaustion of domestic remedies is a

“well-established rule of customary international law.” See

Sarei, 550 F.3d at 829 (quoting Interhandel Case (Switz. v.

U.S.), 1959 I.C.J. 6, 26 (Mar. 29)). This rule generally pro-

vides that a state is not required to consider a claim, made by

a person against a foreign state, and alleging a violation of

international law “until that person has exhausted domestic

remedies, unless such remedies are clearly sham or inade-

quate, or their application is unreasonably prolonged.” See

17

The ATS provides that “[t]he district courts shall have original juris-

diction of any civil action by an alien for a tort only, committed in viola-

tion of the law of nations or a treaty of the United States.” 28 U.S.C.

§ 1350.

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12713

Sarei, 550 F.3d at 829 (citing Restatement (Third) of Foreign

Relations Law § 713 cmt. f & § 703 cmt. d)). Because United

States courts import well-settled principles of international

law to define substantive rights in cases brought under the

FSIA, there are logical arguments suggesting that courts

should also import the well-settled limitations to such causes

of action, including the doctrine of exhaustion of remedies.

Cf. Sarei, 550 F.3d at 833-35 (Bea, J., concurring) (discussing

exhaustion in the context of the ATS); Sarei, 487 F.3d at

1231-45 (Bybee, J., dissenting) (same). Nonetheless, where

Congress has not clearly required exhaustion, we have not

(and likely cannot) impose exhaustion as an absolute jurisdic-

tional requirement. See Sarei, 550 F.3d at 824 (“[W]e decline

to impose an absolute requirement of exhaustion in ATS

cases.”). See also Sampson v. Federal Republic of Germany,

250 F.3d 1145, 1153-54 (7th Cir. 2001) (“[A]lthough interna-

tional law is ‘part of our law,’ it does not follow that federal

statutes must be read to reflect the norms of international

law.”) (citation omitted).

The jurisdiction of federal courts derives from and is cir-

cumscribed exclusively by Article III of the United States

Constitution and by federal statutes enacted by Congress. See

Karcher v. May, 484 U.S. 72, 77 (1987) (“The power of fed-

eral courts to hear and decide cases is defined by Article III

of the Constitution and by the federal statutes enacted there-

under.”); Sheldon v. Sill, 49 U.S. (8 How.) 441, 448-49 (1850)

(“Congress, having the power to establish the courts, must

define their respective jurisdictions. . . . Courts created by

statute can have no jurisdiction but such as the statute con-

fers.”). In the domestic context, we have acknowledged that

statutory exhaustion requirements are jurisdictional in nature.

See Sarei, 550 F.3d at 828 & n.6 (gathering cases).18 Where

18

See, e.g., Coit Independence Joint Venture v. FSLIC, 489 U.S. 561,

579 (1989) (establishing that “exhaustion of administrative remedies is

required where Congress imposes an exhaustion requirement by statute”);

Weinberger v. Salfi, 422 U.S. 749, 764-67, 95 S.Ct. 2457, 45 L.Ed.2d 522

12714 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

Congress requires exhaustion, a failure to exhaust available

remedies typically deprives the federal court of jurisdiction.

Such is not necessarily the case, however, when international

norms, and not Congress, purport to circumscribe jurisdiction

by requiring exhaustion of remedies. International law may

define the substantive rights of parties in actions permitted by

the FSIA, but it cannot compel or restrict Article III jurisdic-

tion. Cf. Sampson, 250 F.3d at 1152 (“[I]nternational law

itself does not mandate Article III jurisdiction over foreign

sovereigns.”). Absent clear Congressional intent, we cannot

incorporate exhaustion as an absolute requirement merely

because international law would require it. An absolute

exhaustion requirement amounts to an absolute limitation on

the jurisdiction of federal courts. To impose such a require-

ment would, in essence, usurp the Constitutional power vested

in Congress and cede foreign lawmakers and jurists with

power to limit the jurisdiction of United States federal courts.

[14] Neither Congress nor this court have imposed an abso-

lute exhaustion of remedies requirement in cases brought

against foreign states under an exception to the FSIA. Yet,

where principles of international comity and rules of custom-

ary international law require exhaustion, we exercise sound

judicial discretion and consider exhaustion on a prudential,

case-by-case basis. See Sarei, 550 F.3d at 828. In Sarei, we

(1975) (holding 42 U.S.C. § 405(h) of the Social Security Act contains a

jurisdictional exhaustion requirement); Barron v. Ashcroft, 358 F.3d 674,

677 (9th Cir. 2004) (holding that exhaustion of administrative remedies

under 8 U.S.C. § 1252(d)(1) is a jurisdictional requirement, and failure to

exhaust deprives the court of subject-matter jurisdiction); Platte River

Whooping Crane Critical Habitat Maint. Trust v. FERC, 876 F.2d 109,

112-13 (D.C. Cir. 1989) (interpreting Federal Power Act statute, 16 U.S.C.

§ 825/(b), to provide a jurisdictional exhaustion requirement); Dhangu v.

INS, 812 F.2d 455, 460 (9th Cir. 1987) (stating that exhaustion of adminis-

trative remedies with the BIA is a jurisdictional requirement); Lindsey v.

U.S., 448 F. Supp. 2d 37, 51 (D.D.C. 2006) (interpreting provision of the

Internal Revenue Code, 26 U.S.C. § 7422(a), as imposing a jurisdictional

exhaustion requirement).

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12715

held that domestic prudential standards and core principles of

international law require a district court to consider exhaus-

tion in appropriate cases. Id. at 824 (citing Sosa, 542 U.S. at

733 n.21).19 Under our prudential approach, when a defendant

affirmatively pleads failure to exhaust remedies, the district

court must, as a discretionary matter, determine in the first

instance whether to impose such a requirement on a plaintiff.

Id. at 832.

[15] Although Sarei addressed exhaustion in the context of

the ATS, where Congress has not clearly adopted or rejected

exhaustion as a jurisdictional prerequisite, our formulation of

prudential exhaustion applies equally to cases brought against

foreign states (and their instrumentalities) under the FSIA.20

In this case, Appellants have asserted that Cassirer failed to

exhaust available remedies in Spain or Germany. Although

the district court correctly concluded that the FSIA does not

19

Justice Breyer, joined by Justice Souter, indicated, in dicta, that they

would likely read § 1605(a)(3) to require exhaustion. Concurring in

Republic of Austria v. Altmann, Justice Breyer wrote “a plaintiff may have

to show an absence of remedies in the foreign country sufficient to com-

pensate for any taking. . . . A plaintiff who chooses to litigate in this coun-

try in disregard of the postdeprivation remedies in the expropriating state

may have trouble showing a tak[ing] in violation of international law.”

Republic of Austria v. Altmann, 541 U.S. 677, 714 (2004) (Breyer, J., con-

curring) (internal quotation marks omitted).

20

We respectfully disagree with the concurring-and-dissenting opinion’s

conclusion that Sarei is not on point. As in Sarei, the substantive claims

here are based on alleged violations of international law. Both the ATS (at

issue in Sarei) and the FSIA are jurisdictional statutes, and Congress has

not expressly required or rejected exhaustion in either. With regard to

principles of prudential exhaustion, the only meaningful difference

between the international tort claims in Sarei and the claims made in the

present case (and the only reason the FSIA is at issue) is that the defendant

here is a sovereign foreign state. That is, if the defendant here were a pri-

vate party, there could be little doubt that Sarei would apply. That the

defendant is a foreign state does not undermine the applicability of Sarei.

Rather, that fact and the principles of international comity weigh strongly

in favor of the district court’s consideration of exhaustion of local reme-

dies on a prudential basis.

12716 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

require exhaustion of remedies, the court erred by failing to

conduct a prudential exhaustion analysis.21

On remand, the district court should be guided by the prin-

ciples we outlined in Sarei. Summarizing the Sarei frame-

work generally, we first note that the district court need only

consider exhaustion to the extent the defendant has affirma-

tively pleaded Cassirer’s failure to exhaust local remedies.

See Sarei, 550 F.3d at 832 (“The defendant bears the burden

to plead and justify an exhaustion requirement, including the

availability of local remedies.”) (citation omitted). Second,

the court must consider whether Congress has clearly required

exhaustion for the specific claims asserted in the complaint.

If, as in this case, Congress has not imposed or rejected such

a requirement, the court must then determine whether the

applicable substantive law would require exhaustion.22 Third,

the court must consider whether the defendant has met its bur-

den to show the availability of local remedies and that such

remedies have not been exhausted. Id. The plaintiff may rebut

a showing of unexhausted remedies abroad by demonstrating

the futility of exhaustion (“by showing that the local remedies

were ineffective, unobtainable, unduly prolonged, inadequate,

21

Contrary to the concurring-and-dissenting opinion’s assertion, we are

not writing an absolute exhaustion requirement into the FSIA. Nor are we

absolutely precluding an exhaustion requirement where one might ordinar-

ily be required by the applicable international law and justified under the

circumstances. We do not hold that the district court must impose an

exhaustion requirement in this case. Rather, we direct the district court (in

the absence of clear Congressional intent otherwise) to examine the record

before it, the applicable substantive law, and various equitable factors and

then to carefully weigh whether to require exhaustion of local remedies on

the claims before it. Where Congress has neither clearly imposed or

rejected exhaustion as a prerequisite to exercising jurisdiction against a

foreign state, the district court has discretion to consider exhaustion on a

prudential basis. See Sarei, 550 F.3d at 828.

22

Although exhaustion is, generally, a well-established rule of interna-

tional law, it may not be firmly established in all areas of international

law. See Sarei, 550 F.3d at 844 (Reinhardt, J., dissenting) (discussing

exhaustion in the context of international human rights).

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12717

or obviously futile.”). Id. (citations omitted). Finally, the court

may, in its sound discretion, impose or waive exhaustion after

assessing the availability, effectiveness, and possible futility

of any unexhausted remedies in light of various prudential

factors, including but not limited to: (1) the need to safeguard

and respect the principles of international comity and sover-

eignty, (2) the existence or lack of a significant United States

“nexus,”23 (3) the nature of the allegations and the gravity of

the potential violations of international law, and (4) whether

23

The concurring-and-dissenting opinion would limit the reach of Sarei

by suggesting that prudential exhaustion applies only in cases where there

is a weak nexus with the United States. Therefore, the concurring-and-

dissenting opinion suggests that, if an FSIA exception to sovereign immu-

nity applies, then prudential exhaustion should not be considered because

the claim necessarily has a strong nexus with the United States. We

respectfully disagree. First, we do not read Sarei to hold that exhaustion

may only be considered where there is a weak nexus to the United States.

As we explained in Sarei, “The lack of a significant U.S. ‘nexus’ is an

important consideration in evaluating whether plaintiffs should be

required to exhaust their local remedies in accordance with the principle

of international comity.” Sarei, 550 F.3d at 831 (emphasis added). That is,

courts should “carefully consider the question of exhaustion,” particularly

where the nexus is weak and where the claims “do not involve matters of

‘universal concern.’ ” See id.

Second, some of the exceptions to sovereign immunity under the FSIA

require little (if any) nexus with the United States. See, e.g., § 1605(a) (1)

(exception to sovereign immunity where there is an explicit or implicit

waiver of immunity by the foreign state); § 1605(a)(6) (exception to sov-

ereign immunity for actions to enforce an agreement made by the foreign

state with or for the benefit of a private party to submit to arbitration);

§ 1605(b) (exception to sovereign immunity for a suit in admiralty brought

to enforce a maritime lien against a vessel or cargo of the foreign state

which maritime lien is based upon a commercial activity of the foreign

state). But see, e.g., §§ 1605(a)(2)-(5) (generally requiring that the foreign

state have engaged in some commercial activity within or having direct

impact in the United States). Thus, we cannot say that a claim’s nexus

with the United States is necessarily strong any time an exception to sov-

ereign immunity applies. In some cases, a relatively isolated or weak

nexus may be sufficient to subject a foreign state to jurisdiction. Yet a

weak nexus may also weigh in favor of requiring exhaustion of local rem-

edies in the appropriate case.

12718 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

the allegations implicate matters of “universal concern” for

which a state has jurisdiction to adjudicate the claims without

regard to territoriality or the nationality of the parties. See id.

at 830-31.

V. Conclusion.

[16] We dismiss this appeal with regard to the issues of

personal jurisdiction, standing, and Article III case or contro-

versy. We affirm the district court with regard to its statutory

interpretation of 28 U.S.C. § 1605(a)(3). We likewise affirm

the district court’s conclusion that the Foundation engaged in

sufficient commercial activity within the United States to sat-

isfy the requirements of § 1605(a)(3). We reverse the district

court, however, with regard to exhaustion of remedies and we

remand for the limited purpose to determine in the first

instance whether to impose an exhaustion requirement on

Cassirer.

AFFIRMED in part, REVERSED in part, and

REMANDED.

Each party shall bear its own cost.

IKUTA, J., concurring in part and dissenting in part:

I concur in Sections I, II and III. I disagree with Section IV,

however, because in my view we should not take it upon our-

selves to write an exhaustion requirement into the Foreign

Sovereign Immunities Act (“FSIA”) when Congress has cho-

sen not to. In enacting the FSIA, Congress created uniform

and clear standards for litigants seeking to bring lawsuits

against foreign sovereigns, and there is no indication that

Congress contemplated that courts would impose an addi-

tional exhaustion requirement on litigants. Moreover, our case

law on prudential exhaustion in the context of the Alien Tort

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12719

Statute (“ATS”) is both inapposite and non-binding. Because

imposing a judge-made exhaustion requirement here is con-

trary to Congressional intent and does nothing more than

create a trap for the unwary, I respectfully dissent.

I

As always, we begin with the plain language of the statute.

Prince v. Jacoby, 303 F.3d 1074, 1079 (9th Cir. 2002). As the

majority acknowledges, the FSIA does not include an exhaus-

tion requirement. Maj. Op. at 12711-12.

Nor is there any evidence that Congress intended to require

plaintiffs to exhaust their remedies in a foreign nation before

bringing suit under the FSIA. To the contrary, as explained

below, the history of the FSIA indicates that Congress

intended to create a comprehensive scheme governing law-

suits in federal courts against a foreign sovereign that would

establish once and for all a plaintiff’s rights, thereby eliminat-

ing inconsistency and uncertainty.

Before the enactment of the FSIA, federal courts “deferred

to the decisions of the political branches—in particular, those

of the Executive Branch—on whether to take jurisdiction over

actions against foreign sovereigns and their instrumentalities.”

Verlinden B.V. v. Cent. Bank of Nig., 461 U.S. 480, 486

(1983) (citing The Schooner Exchange v. M’Faddon, 7

Cranch 116 (1812)). Before 1952, the Executive Branch gen-

erally asked federal courts to recognize the sovereign immu-

nity of friendly sovereigns in all lawsuits. Id. In 1952,

however, the State Department changed course, and

announced that the Executive Branch had adopted the “re-

strictive theory” of sovereign immunity,1 under which the

Executive Branch would request courts to recognize sover-

1

See Letter from 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. 984-85 (1952).

12720 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

eign immunity only in “suits involving the foreign sovereign’s

public acts,” and not in “cases arising out of a foreign state’s

strictly commercial acts.” Id. at 487.

Judicial application of the restrictive theory “proved trou-

blesome” however. Id. Foreign sovereigns often put diplo-

matic pressure on the State Department to recommend that

courts recognize sovereign immunity in cases not fitting the

restrictive theory, and the Executive Branch’s involvement in

judicial immunity determinations proved inconsistent. Id.

These problems resulted in a lack of uniform, predictable

standards regarding when federal courts would exercise juris-

diction in lawsuits against foreign sovereigns. See id. at

487-88; see also Republic of Austria v. Altmann, 541 U.S.

677, 690-91 (2004).

Seeking to remedy these problems, Congress passed the

FSIA in 1976. Id. at 691. The statute’s purpose was “to free

the Government from the case-by-case diplomatic pressures,

to clarify the governing standards, and to assure litigants that

decisions are made on purely legal grounds and under proce-

dures that insure due process.” Verlinden, 461 U.S. at 488

(internal quotation marks omitted) (citing H.R. REP. NO. 94-

1487, at 7 (1976), reprinted in 1976 U.S.C.C.A.N. 6604,

6605).

The FSIA “codif[ied], as a matter of federal law, the

restrictive theory of sovereign immunity,” and created “a

comprehensive set of legal standards governing claims of

immunity in every civil action against a foreign state or its

political subdivisions, agencies, or instrumentalities.” Id. Sec-

tion 2 of the FSIA added § 1330(a) to Title 28, thereby con-

ferring on federal courts subject matter jurisdiction “as to any

claim for relief in personam with respect to which the foreign

state is not entitled to immunity either under sections

1605-1607 of this title or under any applicable international

agreement.” 28 U.S.C. § 1330(a) (2006).2 Section 1604 pro-

2

The full text of § 1330(a) states:

The district courts shall have original jurisdiction without regard

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12721

vides foreign sovereigns with a presumption of immunity,3

and §§ 1604 and 1330(a) “work in tandem: § 1604 bars fed-

eral and state courts from exercising jurisdiction when a for-

eign state is entitled to immunity, and § 1330(a) confers

jurisdiction on district courts to hear suits brought by United

States citizens and by aliens when a foreign state is not enti-

tled to immunity” by operation of an exception in §§ 1605 to

1607. Argentine Republic v. Amerada Hess Shipping Corp.,

488 U.S. 428, 434 (1989). The exceptions to immunity in

§§ 1605 to 1607 (including actions based on specified com-

mercial activities, rights in personal and real property under

certain conditions, and enforcement of certain agreements,

among others) generally require “some form of substantial

contact with the United States.” Verlinden, 461 U.S. at 490

(citing 28 U.S.C. § 1605).

If a foreign state is not entitled to sovereign immunity

under the FSIA, it is treated like any other private individual

litigant (with the exception that punitive damages are unavail-

able),4 because the state is acting as a private party rather than

a sovereign exercising power over its own citizens. See

Republic of Arg. v. Weltover, Inc., 504 U.S. 607, 614 (1992)

(“A foreign state engaging in ‘commercial’ activities does not

to amount in controversy of any nonjury civil action against a

foreign state as defined in section 1603(a) of this title as to any

claim for relief in personam with respect to which the foreign

state is not entitled to immunity either under sections 1605-1607

of this title or under any applicable international agreement.

28 U.S.C. § 1330(a).

3

28 U.S.C. § 1604 (2006) states:

Subject to existing international agreements to which the United

States is a party at the time of enactment of this Act 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.

4

See 28 U.S.C. § 1606 (2006).

12722 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

exercise powers peculiar to sovereigns; rather, it exercises

only those powers that can also be exercised by private citi-

zens.” (internal quotation marks and alterations omitted)); see

also Permanent Mission of India to the U.N. v. City of New

York, 551 U.S. 193, 200-01 (2007) (holding that a foreign

sovereign is not immune from an action for declaratory relief

regarding tax liens on the sovereign’s real property, and stat-

ing that “property ownership is not an inherently sovereign

function”); Weltover, 504 U.S. at 614 (holding that sovereign

immunity does not apply “when a foreign government acts,

not as a regulator of a market, but in the manner of a private

player within that market”).

The FSIA “governs the types of actions for which foreign

sovereigns may be held liable in a court in the United States,”

Verlinden, 461 U.S. at 496-97, but it does not focus on inter-

national law claims. Rather, it “merely opens United States

courts to plaintiffs with pre-existing claims against foreign

states[.]” Altmann, 541 U.S. at 695; see also id. at 704 (Scalia,

J., concurring) (noting that plaintiff’s claims were based pri-

marily in California law and explaining that “the FSIA affects

substantive rights only accidentally, and not as a necessary

and intended consequence of the law”). The FSIA treats

claims arising under international law the same as claims aris-

ing under federal or state law, granting federal courts jurisdic-

tion over foreign sovereigns in circumstances that meet the

requirements of §§ 1605 to 1607, while granting immunity “in

those cases involving alleged violations of international law

that do not come within one of the FSIA’s exceptions.”

Amerada Hess, 488 U.S. at 439, 443 (holding that federal

courts lacked jurisdiction over a Liberian corporation’s suit

against Argentina for damage to an oil tanker during war

between Great Britain and Argentina, because the FSIA was

the sole source of jurisdiction over a foreign state, and it did

not authorize jurisdiction in that case); see also Saudi Arabia

v. Nelson, 507 U.S. 349, 361 (1993) (holding district court

lacked jurisdiction over claims against Saudi Arabia for

wrongful arrest, imprisonment, and torture because the “con-

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12723

duct boils down to abuse of the power of its police by the

Saudi Government, and however monstrous such abuse

undoubtedly may be, a foreign state’s exercise of the power

of its police has long been understood for purposes of the

restrictive theory as peculiarly sovereign in nature”).

In short, the FSIA established clear and comprehensive

standards regarding the limited situations in which Congress

deemed it appropriate to allow plaintiffs to sue foreign sover-

eigns in federal courts. Plaintiffs may bring such suits only in

cases having a substantial connection to the United States and

involving claims relating to a sovereign’s private or commer-

cial activities. The purpose of this comprehensive framework

was to rectify the inconsistency and lack of uniformity that

had previously beleaguered litigants. The Supreme Court has

emphasized “the importance of developing a uniform body of

law in this area,” and that the FSIA’s “standards control in the

courts of the United States and of the States.” Verlinden, 461

U.S. at 489 (internal quotation marks omitted).5

II

Given Congress’s intent to establish a uniform and consis-

tent framework for jurisdiction over and litigation involving

foreign sovereigns, and given that Congress chose not to

include an exhaustion requirement in the FSIA, there appears

to be little room for federal courts to impose a new, judge-

made requirement on top of the statutory requirements already

in the FSIA itself. “[F]ederal courts are vested with a virtually

unflagging obligation to exercise the jurisdiction given them,”

McCarthy v. Madigan, 503 U.S. 140, 146 (1992) (internal

quotation marks omitted), and courts have no authority to

5

The Court has further explained that “Congress’[s] intention to enact

a comprehensive statutory scheme is also supported by the inclusion in the

FSIA of provisions for venue, 28 U.S.C. § 1391(f), removal, § 1441(d),

and attachment and execution, §§ 1609-1611.” Amerada Hess, 488 U.S. at

435 n.3.

12724 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

devise an additional exhaustion requirement when a statute

clearly sets out the prerequisites for federal jurisdiction, see

Darby v. Cisneros, 509 U.S. 137, 138 (1993).

A

In imposing a judge-made exhaustion requirement on liti-

gants in the FSIA context, the majority relies primarily on

cases addressing exhaustion of administrative remedies. Maj.

Op. at 12710-11 (citing McCarthy, 503 U.S. at 145; Coit

Independence Joint Venture v. FSLIC, 489 U.S. 561, 579

(1989); Patsy v. Bd. of Regents of Fla., 457 U.S. 496, 501

(1982); McGee v. United States, 402 U.S. 479, 483 n.6

(1971)). Because the reasoning in these cases is based on con-

siderations of separation of powers, administrative efficiency

and expertise, and other agency-related concerns, they pro-

vide little assistance in determining whether an exhaustion

requirement should be imposed in the FSIA context. See, e.g.,

McCarthy, 503 U.S. at 145 (“[T]he exhaustion doctrine recog-

nizes the notion, grounded in deference to Congress’[s] dele-

gation of authority to coordinate branches of Government,

that agencies, not the courts, ought to have primary responsi-

bility for the programs that Congress has charged them to

administer.”); accord McGee, 402 U.S. at 484 (noting that the

task for courts in deciding the applicability of the administra-

tive exhaustion requirement is “whether allowing all similarly

situated registrants to bypass the administrative avenue in

question would seriously impair [the agency’s] ability to per-

form its functions”) (internal quotation marks and modifica-

tions omitted).

To the extent it is appropriate to look to these cases for

guidance, they do not support the majority’s conclusion.

Rather, they counsel exercising caution and considering care-

fully whether an exhaustion requirement is consistent with

congressional intent. In both McCarthy and Patsy, the

Supreme Court looked first for an indication that Congress

intended to impose exhaustion requirements upon plaintiffs.

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12725

See McCarthy, 503 U.S. at 144 (“[A]ppropriate deference to

Congress’[s] power to prescribe the basic procedural scheme

under which a claim may be heard in a federal court requires

fashioning of exhaustion principles in a manner consistent

with congressional intent and any applicable statutory

scheme.”); Patsy, 457 U.S. at 501-02 (“[T]he initial question

whether exhaustion is required should be answered by refer-

ence to congressional intent; and a court should not defer the

exercise of jurisdiction under a federal statute unless it is con-

sistent with that intent.”). The Court has rarely discerned such

an intent, and indeed has in general declined to require claim-

ants to exhaust administrative remedies when it is not

required by statute. See, e.g., Darby, 509 U.S. at 138 (holding

that courts may not impose a prudential exhaustion require-

ment on litigants under the Administrative Procedure Act

when “neither the statute nor agency rules specifically man-

date exhaustion as a prerequisite to judicial review.”); McCar-

thy, 503 U.S. at 149 (holding that a prisoner was not required

to exhaust the Bureau of Prisons’ administrative procedure

before making a Bivens claim for money damages); Coit, 489

U.S. at 565 (holding that creditors were not required to

exhaust the Federal Home Loan Bank Board’s administrative

claims procedure before bringing suit against a federal bank);

Patsy, 457 U.S. at 516 (holding that a plaintiff claiming dis-

criminatory treatment was not required to exhaust state

administrative remedies before bringing a § 1983 claim in

federal court).6

6

Only one of the cases cited by the majority held that a claimant must

exhaust administrative remedies before initiating suit in federal court, and

that case arose in the unique context of the federal Selective Service sys-

tem. McGee v. United States, 402 U.S. at 485. Before requiring exhaus-

tion, the Court undertook “a discrete analysis of the particular default in

question, to see whether there is a governmental interest compelling

enough to justify the forfeiting of judicial review.” Id. (internal quotation

marks omitted). In this context, the Court determined that a deliberate

flouting of the administrative processes would undermine “the scheme of

decisionmaking that Congress has created,” and “jeopardize the interest in

full administrative fact gathering and utilization of agency expertise.” Id.

at 484, 486; see also McKart v. United States, 395 U.S. 185, 195 (1969)

(“In Selective Service cases, the exhaustion doctrine must be tailored to

fit the peculiarities of the administrative system Congress has created.”).

12726 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

Nothing in these administrative law cases suggests that a

court should require exhaustion in the FSIA context, where

allowing plaintiffs immediate access to federal courts does not

raise any risk of undermining the Congressional scheme. To

the contrary, imposing an exhaustion requirement not contem-

plated by Congress is inconsistent with Congress’s intent to

have the FSIA’s “comprehensive jurisdictional scheme” pro-

vide litigants with “clear guidelines” that were previously

lacking. Altmann, 541 U.S. at 699, 700; see also Darby, 509

U.S. at 147 (refusing to impose additional exhaustion require-

ments under the APA, noting that doing so would “transform

[the APA provision] from a provision designed to remove

obstacles to judicial review of agency action into a trap for

unwary litigants.” (internal quotation marks omitted)). When

Congress seeks to create such uniformity and clear standards

for litigants, see Verlinden, 461 U.S. at 488, the administra-

tive law cases cited by the majority counsel that we should

defer to Congressional intent and decline to impose a new

exhaustion requirement that will create a trap for unwary

plaintiffs. Cf. El Paso Natural Gas Co. v. Neztsosie, 526 U.S.

473, 485-86 (1999) (holding that imposing a prudential

exhaustion requirement was inappropriate where Atomic

Energy Act gave district courts original jurisdiction over cer-

tain types of cases, and imposing such a requirement “would

invite precisely the mischief . . . that the Act sought to

avoid”).

B

Nor is the majority’s assertion that Sarei compels us to

write an exhaustion requirement into the FSIA persuasive.

Maj. Op. at 12715-16; see Sarei v. Rio Tinto, PLC, 550 F.3d

822 (9th Cir. 2008) (en banc) (plurality op.). First, the lead

opinion in Sarei, which adopts the principle of prudential

exhaustion for purposes of the Alien Tort Statute (ATS), is a

plurality opinion that is not binding on subsequent panels. See

Nevius v. Sumner, 105 F.3d 453, 460 n.6 (9th Cir. 1996).

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12727

Second, even as persuasive authority, Sarei is not on point.

In Sarei, the plaintiffs (who were aliens) brought a lawsuit

under the ATS charging a British corporation with violations

of customary international law regarding matters of universal

concern stemming from its operations in Papua New Guinea.

Sarei, 550 F.3d at 825-26.7 As noted by the plurality, this law-

suit had no nexus of any kind with the United States. Id. at

831. The Sarei plurality was concerned that the ATS gave

courts potentially sweeping jurisdiction over civil tort actions

raising customary international law claims that lacked any

nexus to the United States. Id. In order to cabin this supposed

limitless jurisdictional reach, the plurality adopted the

Supreme Court’s suggestion in Sosa v. Alvarez-Machain, 542

U.S. 692, 733 n.21 (2004), that federal courts consider adopt-

ing a prudential exhaustion requirement as a jurisdiction-

limiting principle in the appropriate circumstances. Sarei, 550

F.3d at 824. Sarei held that prudential exhaustion is appropri-

ate in cases “where the United States ‘nexus’ is weak” partic-

ularly “with respect to claims that do not involve matters of

‘universal concern.’ ” Id. at 831.

The concerns expressed by the Sarei plurality are not at

issue in the FSIA context. There is no analogous concern

about unlimited jurisdiction due to the lack of a nexus with

the United States: Unlike the ATS (in which courts must

7

Specifically, the plaintiffs brought claims alleging:

(1) crimes against humanity resulting from the blockade; (2) war

crimes for murder and torture; (3) violation of the rights to life,

health, and security of the person resulting from the environmen-

tal damage; (4) racial discrimination in destroying villages and

the environment, and in working conditions; (5) cruel, inhuman,

and degrading treatment resulting from the blockade, environ-

mental harm, and displacement; (6) violation of international

environmental rights resulting from building and operating the

mine; and (7) a consistent pattern of gross violations of human

rights resulting from destruction of the environment, racial dis-

crimination, and [Papua New Guinea] military activities.

Sarei, 550 F.3d at 825-26.

12728 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

create jurisdiction-limiting principles), the FSIA does not give

federal courts jurisdiction unless the claim has a nexus to the

United States as required by § 1605. In enacting the FSIA,

“Congress was aware of concern that our courts might be

turned into small international courts of claims, open to all

comers to litigate any dispute which any private party may

have with a foreign state anywhere in the world.” Verlinden,

461 U.S. at 490 (internal quotation marks and alteration omit-

ted). The FSIA “protect[s] against this danger not by restrict-

ing the class of potential plaintiffs, but rather by enacting

substantive provisions requiring some form of substantial

contact with the United States.” Id. (citing 28 U.S.C. § 1605).8

Although the Supreme Court recognized that the implications

of vast, unchecked federal jurisdiction under the ATS would

be “breathtaking,” Sosa, 542 U.S. at 736, these concerns are

simply not present under the FSIA.

Moreover, the concern that jurisdictional overreaching

under the ATS could have a negative effect on foreign rela-

tions, see Sosa, 542 U.S. at 727, are not present in the FSIA

context. The FSIA’s jurisdictional reach is consistent with

that exercised by foreign nations over the United States.

Indeed, the Supreme Court noted that Congress “join[ed] the

majority of other countries by adopting the ‘restrictive theory’

of sovereign immunity[.]” Permanent Mission of India, 551

U.S. at 199; see also Alfred Dunhill of London, Inc. v. Repub-

lic of Cuba, 425 U.S. 682, 702 & n.15 (1976) (explaining that

8

The Supreme Court has acknowledged that certain provisions of the

FSIA do not (on their face) require a nexus to the United States. For exam-

ple, the Court explained that “Section 1605(a)(1), which provides that sov-

ereign immunity shall not apply if waived, may be seen as an exception

to the normal pattern of the Act, which generally requires some form of

contact with the United States.” Verlinden, 461 U.S. at 491 n.15. In noting

“[w]e need not decide whether, by waiving its immunity, a foreign state

could consent to suit based on activities wholly unrelated to the United

States,” id., the Court hinted that such a nexus might nevertheless be nec-

essary in order for a federal court to have jurisdiction over a foreign sover-

eign under the FSIA.

CASSIRER v. THYSSEN-BORNEMISZA COLLECTION 12729

the United States adopted the restrictive view in part based

“on the fact that this approach has been accepted by a large

and increasing number of foreign states in the international

community,” and listing countries). Further, the Supreme

Court has recognized that “subjecting foreign governments to

the rule of law in their commercial dealings presents a much

smaller risk of affronting their sovereignty than would an

attempt to pass on the legality of their governmental acts.” Id.

at 703-04. Here, Cassirer’s case is a property dispute with

Spain in its role as a private party, not as a sovereign exercis-

ing power over its own citizens.9

In sum, while the Sarei plurality strove to fill in both proce-

dural and substantive gaps in the ATS to cabin its potentially

unlimited jurisdiction and avoid impinging on relations with

foreign sovereigns, see Sosa, 542 U.S. at 727, applying the

FSIA’s clear language does not require the same creative

approach. In creating the FSIA’s comprehensive and detailed

scheme, Congress expressed its intent that foreign sovereigns

meeting the statutory criteria be subject to suit in federal

court, and did not invite us to read in anything more. See 28

U.S.C. § 1602 (“Claims of foreign states to immunity should

henceforth be decided by courts of the United States and of

the States in conformity with the principles set forth in this

chapter.” (emphasis added)); Amerada Hess, 488 U.S. at 434

(concluding that “the text and structure of the FSIA demon-

strate Congress’[s] intention that the FSIA be the sole basis

for obtaining jurisdiction over a foreign state in our courts”

(emphasis added)).

9

Contrary to the majority’s assertion, Cassirer does not bring claims

“based on non-domestic, international law,” Maj. Op. at 12715 n.20, but

rather brings state common-law claims of conversion. Indeed, allegations

similar to those in Cassirer’s complaint have been made, and adjudicated,

in lawsuits between two private persons. See, e.g., DeWeerth v. Baldinger,

836 F.2d 103 (2d Cir. 1987) (painting owner’s heir brought conversion

suit against good-faith purchaser for return of oil painting by Claude

Monet, allegedly stolen during the Second World War).

12730 CASSIRER v. THYSSEN-BORNEMISZA COLLECTION

III

Nothing in the statutory language, history, or the Supreme

Court’s interpretation of the FSIA suggests that we should

read an exhaustion requirement into the statute. Doing so will

tend to defeat Congress’s goal of achieving consistency and

uniformity in suits against foreign sovereigns. The concerns

addressed by the Sarei plurality are entirely distinguishable,

and in any event, the plurality’s decision to write an exhaus-

tion requirement into the ATS is not binding on us. There is

no need to create judge-made law in this context, and there-

fore, I would refrain from doing so. I respectfully dissent.