The case of the day is Valambhia v. United Republic of Tanzania (D.D.C. 2019). In 1985, the Tanzanian Ministry of Defense contracted with Transport Equipment Ltd. for tanks, troop carriers, and other military equipment. Tanzania paid the amount due under the contract for a few years through the Bank of Tanzania. In 1989, Transport Equipment entered into a contract with its director, Devram Valambhia, under which Valambhia would receive 45% of the contract revenue, and Tanzania acknowledged that agreement and promised to begin paying Valambhia. At first, Tanzania paid as promised, but it then began litigation in Tanzania aimed at proving that the contracts were unenforceable. The ultimate outcome was a judgment in Valambhia’s favor and even a garnishment order, but the Bank of Tanzania refused to honor it, leading ultimately to a finding that its Governor was in contempt of court. Valambhia died disappointed, and his heirs sought recognition and enforcement of the Tanzanian judgment in Washington.

The question was whether the action was “based upon” commercial activity so as to bring the case within one of the prongs of the commercial activity exception to FSIA immunity in 28 U.S.C. § 1605(a)(2). As the Supreme Court held in Saudi Arabia v. Nelson, the phrase “based upon” refers to “those elements of a claim that, if proven, would entitle a plaintiff to relief under his theory of the case.” In a 2011 unpublished decision, the Second Circuit had held that when the action is for recognition of a foreign judgment, you look to the underlying conduct to see whether the case is based on commercial activity. But the Court disagreed with that approach, which even the Second Circuit might not adhere to after Nelson. The elements of a claim for recognition of a foreign judgment have nothing to do with the underlying conduct, but only with the finality of the judgment etc. There’s nothing commercial about that, and so the court held that Tanzania was immune from jurisdiction.

The judge seemed to think this result was problematic though required by precedent, since it left the judgment creditor with no remedy. But if the commercial activity exception does apply to the underlying conduct, then the judgment creditor could have brought the case in the US in the first instance, and maybe (subject to limitations problems) could bring it in the US now.