Letelier v. Republic of Chile
748 F.2d 790, 53 U.S.L.W. 2286 (1984)
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Rule of Law:
Under the Foreign Sovereign Immunities Act, the assets of a foreign state's instrumentality are not subject to execution to satisfy a judgment against the state for a non-commercial tort, such as political assassination. An act of state-sponsored terrorism is a sovereign, not a commercial, activity, and therefore does not fall within the 'commercial activity' exception to execution immunity under § 1610(a)(2).
Facts:
- Orlando Letelier, the former Chilean Ambassador to the United States, was a prominent critic of the Chilean government.
- In September 1976, an explosive device planted in Letelier's car was detonated in Washington, D.C., killing Letelier and his aide, Ronni Moffitt, and injuring Michael Moffitt.
- A U.S. government investigation revealed that the assassination was carried out by agents of the Chilean government, including Michael Townley, an American citizen working for Chilean intelligence.
- Agents of Chile allegedly used the facilities and personnel of Linea Aerea Nacional-Chile (LAN), the state-owned airline, to carry out the assassination.
- This use included transporting Townley and explosives between Chile and the U.S., assisting with currency transactions to pay co-conspirators, and providing meeting places.
Procedural Posture:
- The personal representatives of Letelier and Moffitt filed a civil tort action against the Republic of Chile in the U.S. District Court for the District of Columbia.
- Chile asserted sovereign immunity through diplomatic notes but did not appear in court, resulting in a default.
- The D.C. district court found it had jurisdiction under the FSIA's noncommercial tort exception (§ 1605(a)(5)) and entered a default judgment against Chile for over $5 million.
- Chile did not appeal the judgment.
- Plaintiffs registered the judgment in the U.S. District Court for the Southern District of New York to execute on the property of Linea Aerea Nacional-Chile (LAN), the state airline.
- The S.D.N.Y. district court granted the plaintiffs' motion, holding that LAN's corporate identity could be disregarded and that its assets were subject to execution because its role constituted 'commercial activity' under § 1610(a)(2).
- LAN, the airline, appealed the district court's orders to the U.S. Court of Appeals for the Second Circuit.
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Issue:
Does the Foreign Sovereign Immunities Act permit execution against the U.S. assets of a foreign state's wholly-owned airline to satisfy a tort judgment against the foreign state for an act of political assassination, where the airline was allegedly used in carrying out the assassination?
Opinions:
Majority - Cardamone, J.
No. The Foreign Sovereign Immunities Act does not permit execution against LAN's assets to satisfy the judgment against Chile because the underlying claim is not based on commercial activity. First, the court declines to disregard LAN's separate juridical status from the Republic of Chile. Citing First National City Bank v. Bancec, the court found that joint participation in a tort is not the type of 'gross abuse of the corporate form' necessary to overcome the presumption of separateness between a state and its instrumentality. There was no evidence that Chile disregarded corporate formalities or established LAN to shield itself from liability. Second, even if LAN's assets were treated as Chile's, the exception to execution immunity in § 1610(a)(2) does not apply. That section requires that the property was 'used for the commercial activity upon which the claim is based.' The underlying claim is for political assassination, which is a quintessential sovereign and governmental act, not a commercial one. The nature of the act is terrorism, which is not an activity that private persons customarily carry on for profit. Although this interpretation creates a 'right without a remedy' for the plaintiffs, the legislative history of the FSIA shows that Congress deliberately chose to lift execution immunity only partially, fully aware that some valid judgments against foreign states might be unenforceable.
Analysis:
This decision significantly clarifies the scope of the FSIA's exceptions to execution immunity, establishing a high bar for both piercing the corporate veil of a state-owned enterprise and for classifying a state's tortious conduct as 'commercial activity.' The ruling reinforces the distinction between a state's commercial dealings and its sovereign acts, holding that even the use of commercial instrumentalities in the commission of a political crime does not transform the nature of the underlying act. This creates a substantial hurdle for victims of state-sponsored terrorism seeking to collect judgments in U.S. courts, effectively leaving them with a valid legal claim but no practical means of enforcement against the foreign state's commercial assets in the U.S.
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