The case of the day is MMA Consultants 1, Inc. v. Republic of Peru (2d Cir. 2017). MMA claimed it was the holder of bearer bonds Peru issued in 1875. In 2015, it sent demand letters to the Peruvian embassy seeking payment, but it received no response. It sued for breach of contract. Peru moved to dismiss for want of jurisdiction, arguing that it was immune from suit under the FSIA. The district court agreed, and MMA appealed.

In a summary order, the Second Circuit affirmed. The FSIA issue was whether the case came within the commercial activity exception to foreign sovereign immunity. The statute, 28 U.S.C. § 1605(a)(2), applies to cases:

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.

MMA argued that the case was “based upon” Peru’s failure to respond to the demand letter in 2015, which, MMA claimed, was either a commercial activity carried on in the United States or a commercial activity elsewhere the caused a direct effect in the United States. This is clearly wrong (I think the Second Circuit’s decision to decide the case by summary order shows that the court agreed with my take on the simplicity of the issue). Under the Supreme Court’s precedents, Saudi Arabia v. Nelson and OBB Personenverkehr AG v. Sachs, to determine what an action is “based upon,” you look at the “gravamen” of the case. This doesn’t mean doing an “exhaustive, claim-by-claim, element-by-element analysis” of the action, but rather, by identifying the “core” or “foundation” of the suit—by asking what conduct of the foreign state actually injured the plaintiff? Here the gravamen of the claim was clearly the failure to pay, not the failure to reply to the demand letter.