Business Law 13th Edition by Frank Cross, Kenneth Clarkson, Roger LeRoy Miller

Exercise 7

Commercial Activity Exception. Technology Incubation and Entrepreneurship Training Society (TIETS) entered into a joint-venture agreement with Mandana Farhang and M.A. Mobile to develop and market certain technology for commercial purposes. Farhang and M.A. Mobile filed a suit in a federal district court in California, where they both were based, alleging claims under the joint-venture agreement and a related nondisclosure agreement. The parties agreed that TIETS was a "foreign state" covered by the Foreign Sovereign Immunities Act (FSIA) because it was a part of the Indian government. Nevertheless, Farhang and M.A. Mobile argued that TIETS did not enjoy sovereign immunity because it had engaged in a commercial activity that has a direct effect in the United States. Could TIETS still be subject to the jurisdiction of U.S. courts under the commercial activities exception even though the joint venture was to take place outside the United States? If so, how? [Farhang v. Indian Institute of Technology, 2012 WL113739 (N.D.Cal. 2012)] (See page 458.)