1. Would the Nelsons have had a claim in U.S. courts if the employment contract Mr. Nelson had signed in the United States had expressly agreed not to detain him in the absence of criminal activity? Would such a clause have made his action one for breach of contract? Would that have made a difference? 

2. If his Saudi employer had failed to pay him the amounts he had contracted to pay, would Mr. Nelson been barred from suing in the United States by the FSIA? Would a U.S. court have had jurisdiction to hear such a suit? 

3. What would have been the result in the case if Congress had adopted the “absolute” theory of foreign sovereign immunity?

The Nelsons, a married couple, filed an action for damages against the Kingdom of Saudi Arabia, a Saudi hospital, and the hospital’s purchasing agent in the United States. The purchasing agent had, at the direction of the Saudi government, recruited the husband through advertising in the United States to work at a hospital in Saudi Arabia. The plaintiffs alleged that, once in Saudi Arabia, the Saudis had unlawfully detained and tortured the husband. The Court of Appeals found subject matter jurisdiction. It concluded that the husband’s recruitment and hiring were “commercial activities” that Saudi Arabia and the hospital carried on in the United States and that the Nelsons’ action was “based upon” these activities within the meaning of the statute. 

The Foreign Sovereign Immunities Act of 1976 entitles foreign states to immunity from the jurisdiction of courts in the United States … subject to certain enumerated exceptions. One is that a foreign state shall not be immune in any case “in which the action is based upon a commercial activity carried on in the United States by the foreign state … ” The Act defines such activity as “commercial activity carried on by such state and having substantial contact with the United States … .” 

We begin our analysis by identifying the particular conduct on which the Nelsons’ action is “based” for purposes of the Act… . In denoting conduct that forms the “basis,” or “foundation,” for a claim … the phrase is read most naturally to mean those elements of a claim that, if proven, would entitle a plaintiff to relief under his theory of the case … . Earlier … we noted that [the commercial activity exception] contains two clauses following the one at issue here. The second allows for jurisdiction where a suit “is based … upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere,” and the third speaks in like terms, allowing for jurisdiction where an action “is based … 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 … .” Congress manifestly understood there to be a difference between a suit “based upon” commercial activity and one “based upon” acts performed “in connection with” such activity … . 

In this case, the Nelsons have alleged that petitioners recruited Scott Nelson for work at the hospital, signed an employment contract with him, and subsequently employed him. While these activities led to the conduct that eventually injured the Nelsons, they are not the basis for the Nelsons’ suit. Even taking each of the Nelsons’ allegations about Scott Nelson’s recruitment and employment as true, those facts alone entitle the Nelsons to nothing under their theory of the case. The Nelsons have not, after all, alleged breach of contract … but personal injuries caused by petitioners’ intentional wrongs and by petitioners’ negligent failure to warn Scott Nelson that they might commit those wrongs. Those torts, and not the arguably commercial activities that preceded their commission, form the basis for the Nelsons’ suit. Petitioners’ tortious conduct itself fails to qualify as “commercial activity” within the meaning of the Act … . [T]he Act defines “commercial activity” as “either a regular course of commercial conduct or a particular commercial transaction or act,” and provides that “[t]he commercial character of an activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose … .” If this is a definition, it is one distinguished only by its diffidence; as we observed in our most recent case on the subject, it “leaves the critical term ‘commercial’ largely undefined.” Republic of Argentina v. Weltover, Inc … . We do not, however, have the option to throw up our hands. The term has to be given some interpretation, and congressional diffidence necessarily results in judicial responsibility to determine what a “commercial activity” is for purposes of the Act. 

We took up the task just last Term in Weltover … which involved Argentina’s unilateral refinancing of bonds it had issued under a plan to stabilize its currency. Bondholders sued Argentina in federal court, asserting jurisdiction under the third clause of [the exception]. In the course of holding the refinancing to be a commercial activity for purposes of the Act, we observed that the statute “largely codifies the so-called ‘restrictive’ theory of foreign sovereign immunity first endorsed by the State Department in 1952.” We accordingly held that the meaning of “commercial” for purposes of the Act must be the meaning Congress understood the restrictive theory to require at the time it passed the statute. 

Decision. The Supreme Court reversed the judgment of the Court of Appeals, dismissing the case. This meant that the Nelsons could not bring suit in an American court over the alleged actions in Saudi Arabia.