216 F.3d 29 (D.C. Cir. 2000)
Mohamed Salem El-Hadad, Appelleev.United Arab Emirates and The Embassy of the United Arab Emirates, Appellants
No. 99-7220
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 19, 2000Decided June 16, 2000

Appeal from the United States District Court for the District of Columbia(No. 96cv01943)
James M. Johnstone argued the cause for appellant.  John  P. Szymkowicz was on the brief for appellant.
Sylvia J. Rolinski argued the cause and filed the brief for  appellee.
Before:  Ginsburg, Tatel, and Garland, Circuit Judges.
Opinion of the court filed by Circuit Judge Garland.
Garland, Circuit Judge:


1
Plaintiff Mohamed Salem ElHadad is a citizen of Egypt and a former employee of the  Embassy of the United Arab Emirates located in Washington,  D.C.  After his employment was terminated, El-Hadad sued  both the Embassy and the United Arab Emirates (collectively, "the U.A.E.") for alleged breach of contract and defamation.1  The U.A.E. moved to dismiss, asserting immunity from  suit under the Foreign Sovereign Immunities Act (FSIA), 28  U.S.C. §§ 1602 et seq.  The district court denied the U.A.E.'s  motion on the pleadings, holding that the employment relationship between the U.A.E. and El-Hadad came within the  "commercial activity" exception to sovereign immunity because El-Hadad was not a national of the U.A.E.  The court  also rejected the U.A.E.'s contention that even if plaintiff's  suit fell within the "commercial activity" exception, the FSIA  contains an "exception to that exception" for defamation  claims.


2
The U.A.E. appeals from the denial of its motion to dismiss. We conclude that there are factual questions that must be  resolved before the relationship between El-Hadad and the  U.A.E. can be characterized as commercial rather than governmental, and we therefore reverse in part and remand for  further proceedings.  We agree with the district court, however, that if El-Hadad's action is based upon commercial  activity, the U.A.E. is not immune from his claim for defamation.


3
* The denial of a foreign state's motion to dismiss on the  ground of sovereign immunity is subject to interlocutory  appeal under the collateral order doctrine.  See Trans-america Leasing, Inc. v. La Republica de Venezuela, 200  F.3d 843, 847 (D.C. Cir. 2000).  Because the district court  decided the motion on the pleadings, our standard of review is  de novo.  See id.


4
The FSIA provides the sole avenue by which American  courts can obtain jurisdiction over foreign states.  See Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 611 (1992).Under the FSIA, a foreign state is immune from the jurisdiction of our courts unless certain statutory exceptions are met.See 28 U.S.C. §§ 1604-1605.  The principal exception at issue  here is that for "commercial activity."  The Act provides that  a "foreign state shall not be immune from the jurisdiction of  courts of the United States or of the States in any case-...  (2) in which the action is based upon a commercial activity  carried on in the United States by the foreign state...."  Id.   1605(a).


5
Our precedent makes clear that the employment of personnel by a foreign state is not per se commercial activity under  the FSIA.2  In Broadbent v. Organization of American  States, applying an analysis based on the FSIA, we held that  the firing of staff members of the General Secretariat of the  Organization of American States (OAS) was not commercial  activity and therefore that the OAS was immune from suit for  improper discharge.  See 628 F.2d 27, 35 (D.C. Cir. 1980).  In  support, we cited the House Report on the FSIA, which states in part:  "Also public or governmental and not commercial in nature, would be the employment of diplomatic, civil  service, or military personnel...."  H.R. Rep. No. 94-1487, at  16 (1976).3  The words replaced by the ellipses in this quotation will soon become important, but for now it is enough to  note that, as we concluded in Broadbent, the "report clearly  marks employment of civil servants as noncommercial for  purposes of restrictive immunity."  628 F.2d at 34.4


6
The U.A.E. contends that El-Hadad was a civil servant of  the U.A.E., and that his firing is therefore noncommercial  and immune from suit in our courts.  Although El-Hadad is  an Egyptian citizen, it is uncontested that he worked for the  government of the U.A.E. for sixteen years.5  For the first  thirteen of those years, he worked in the U.A.E. as an  auditor.  Beginning in January of 1993, El-Hadad worked as  an auditor in the Cultural Division of the U.A.E.'s Embassy  in Washington.  The U.A.E. terminated El-Hadad's employment in February 1996.  El-Hadad alleges that he was  terminated after he uncovered misappropriation of U.A.E.  public funds.  The U.A.E. disputes this allegation, but contends that even if it were true, the auditing function ElHadad performed is the work of a civil servant and the  U.A.E. is therefore immune from suits arising from such  activity.


7
The district court held that regardless whether El-Hadad  was a member of the U.A.E.'s civil service, his employment  would nonetheless constitute commercial activity because he  is not a U.A.E. national.  The court based that conclusion on  language in our Broad bent opinion, which stated that there is  "an exception from the general rule" that civil service employment is noncommercial "in the case of employment of American citizens or third country nationals by foreign states."Broad bent, 628 F.2d at 34.  The district court did note,  however, that other circuits have not invoked such an exception.  Instead, those courts examine the specifics of the  employment relationship for indicia of civil service, treating  the employee's nationality--if they consider it at all--as a  non-dispositive factor.  See Holden v. Canadian Consulate,  92 F.3d 918, 920-22 (9th Cir. 1996) (examining details of  American's employment with Canadian Consulate to determine whether Consulate was immune on ground that plaintiff  was member of civil service);  Segni v. Commercial Office of  Spain, 835 F.2d 160, 165 & n.7 (7th Cir. 1987) (noting that  nationality can be a factor, but deciding the case by reference  to specifics of employment relationship rather than fact of  third country nationality).


8
We cannot fault the district court for its legal conclusion,  resting, as it did, on the language of Broadbent.  But that  language was plainly dictum, not necessary to decide the case  and therefore not binding upon us.  See, e.g., United States v.  Torres, 115 F.3d 1033, 1036 (D.C. Cir. 1997).  While Broadbent did opine that third country nationality would be dispositive in a case involving a sovereign state, Broadbent itself  involved an international organization.  Notwithstanding that  some of the plaintiffs were Americans, the court declined to  apply a "third country nationality" exception to the civil  service rule in that case, reasoning that since an international  organization has no nationals of its own, applying such an  exception in the context of international organizations would  "swallow up the rule of immunity for civil service employment  disputes."  Broadbent, 628 F.2d at 34.


9
Now that we are squarely faced with the question, we  conclude that a per se rule of non-immunity for a foreign state's employment of third country nationals is inconsistent  with Congress' intent to immunize foreign governmental activity from suit in American courts.  Indeed, when pressed at  oral argument, both sides appeared to agree.  Both concurred, for example, that if El-Hadad had been the U.A.E.'s  ambassador to the United States, the U.A.E. would have  immunity for firing him despite his Egyptian nationality. Nor, apparently, is this scenario particularly far-fetched.Both parties agreed that small countries such as the U.A.E.  do, at times, employ nationals of other countries (and particularly citizens of regional neighbors) in high governmental  positions.6


10
We now return to the ellipses noted above.  The full  quotation from the House Report is as follows:  "Also public  or governmental and not commercial in nature, would be the  employment of diplomatic, civil service, or military personnel,  but not the employment of American citizens or third country  nationals by the foreign state in the United States."  H.R.  Rep. No. 94-1487, at 16.  Broadbent read the language beginning with "but not" (for which we substituted the ellipses  above) as creating a per se exception from the general rule  that civil service employment is governmental rather than  commercial.  See Broadbent, 628 F.2d at 34.  That is surely a  reasonable interpretation.  But we think it at least as likely  that Congress was attempting to contrast civil service (and  diplomatic and military employment, not at issue here) with  non-civil service employment, operating on the assumption  that it was unlikely a country would employ an American or  third country national in such a position.  This view of the  legislative history is bolstered by the next paragraph of the  House Report, which lists, as additional examples of commercial activity, a foreign government's "employment or engagement of laborers, clerical staff or public relations or marketing agents," H.R. Rep. No. 94-1487, at 16--job categories which Congress apparently also thought unlikely to be occupied by members of a government's civil service.


11
In any event, the language that must control our decision is  that of the statute rather than of the somewhat muddy  legislative history.  Under the FSIA, the immunity exception  depends solely on whether the action is based upon a "commercial activity," without any mention of the nationality of the  participants.  See 28 U.S.C.  1605(a)(2).  We have no warrant, therefore, for formulating a test that turns solely on  nationality.  To the contrary, because under the usual understanding of the terms a foreign state can engage in noncommercial (i.e., governmental) activity through third country  nationals, the statutory language dictates that the inquiry  cannot end with the fact that the employee is not a citizen of  the employing state.  At oral argument, both parties agreed.

II

12
Because defendants' motion was dismissed on the pleadings, we remand the case to the district court to undertake a  further inquiry.  The ultimate question to be answered is  whether El-Hadad's employment constituted commercial activity.  As we held in Broadbent, the employment of civil  servants is noncommercial for purposes of the FSIA.  See  Broadbent, 628 F.2d at 34-36.  Hence, the operative question  is whether El-Hadad was a member of the U.A.E.'s civil  service.  In order to guide the proceedings on remand, we  suggest some questions that appear relevant to making that  determination in this case.  We do not regard them as an  exclusive list, nor as necessarily applicable in all cases.


13
First, how do the U.A.E.'s own laws define its civil service,  and do El-Hadad's job title and duties come within that  definition?


14
Second, what was the nature of El-Hadad's employment  relationship with the U.A.E.?  Did he have a true contractual  arrangement, or is his "contract" claim instead based, as the  U.A.E. contends, solely upon the civil service laws of the  U.A.E.?


15
Third, what was the nature of El-Hadad's employment  relationship when he worked in the U.A.E., and how did his  subsequent employment at the Embassy relate to that prior  tenure?  The U.A.E. contends that El-Hadad was a long-time  resident and member of its domestic civil service, who was  merely "transferred" to Washington to perform the same  functions (governmental audits) he had been performing at  home.  El-Hadad contends, on the other hand, that he quit  his position in the U.A.E. and began a "new" job in the  United States, "separate from his previous employment."


16
Fourth, what was the nature of El-Hadad's work?  As  noted above, Congress indicated that the "employment or  engagement of laborers, clerical staff or public relations or  marketing agents" would come within the definition of commercial activity.  H.R. Rep. No. 94-1487, at 16.


17
Fifth, what is the relevance of El-Hadad's Egyptian nationality on the facts of this case?  Is the U.A.E. a country in  which, as the House Report assumed, non-nationals are unlikely to be employed as governmental officers?  Or does the  U.A.E. often employ non-nationals in governmental positions?


18
We appreciate that this multi-factor inquiry is not analytically precise.  That is a consequence of Congressional preferences, however, rather than our own.  Congress expressly  concluded that it was "unwise to attempt an excessively  precise definition" of "commercial activity," and chose instead  to give the "courts ... a great deal of latitude in determining  what is a 'commercial activity' for purposes of" the FSIA,  providing only a few (sometimes conflicting) examples of the  kinds of employment it regarded as falling within that category.  Id. at 16.  Although the Supreme Court has repeatedly  lamented this situation, see Saudi Arabia v. Nelson, 507 U.S.  349, 359 (1993) (noting that the FSIA "leaves the critical term  'commercial' largely undefined") (quoting Weltover, 504 U.S.  at 612), it has also noted that courts "do not have the option  to throw up [their] hands" and must instead accept "judicial  responsibility to determine what a 'commercial activity' is for  purposes of the Act."  Id.

III

19
The U.A.E. contends that even if its termination of ElHadad were regarded as coming within the "commercial  activity" exception to sovereign immunity, plaintiff's claim  that he was defamed in connection with that termination  would nonetheless have to be dismissed under a "defamation"  exception to that exception.  As the district court correctly  held, however, defamation is not an "exception to the exception" for commercial activity, but rather an exception to a  separate FSIA exception for noncommercial torts.


20
The FSIA provides that a "foreign state shall not be  immune from the jurisdiction of courts of the United States  ... in any case" in which one of several exceptions applies.28 U.S.C.  1605(a).  The second exception, contained in  paragraph (2) of  1605(a), is the one considered above:  any  case "in which the action is based upon commercial activity  carried on in the United States by the foreign state."  Id.   1605(a)(2).  Paragraph (2) does not contain a defamation  exception to its commercial activity exception.  There is,  therefore, no indication that defamation arising out of a  commercial activity is immune from suit.


21
It is the fifth exception to immunity, contained in paragraph (5) of  1605(a), that is implicated by the U.A.E.'s  argument here.  That paragraph applies to any case "not  otherwise encompassed in paragraph (2) above, in which  money damages are sought against a foreign state for ...  damage to or loss of property occurring in the United States  and caused by the tortious act or omission of that foreign  state."  Id.  1605(a)(5).  Unlike the exception for commercial activity, this tort exception does contain an exception for,  inter alia, defamation:  "[T]his paragraph," the FSIA states,  "shall not apply to ... any claim arising out of ... libel, [or]  slander...."  Id.  1605(a)(5), (a)(5)(B).


22
The U.A.E. contends that the defamation exception to  paragraph (5) is applicable not only to the torts covered by  that paragraph, but also to the commercial activity covered by  paragraph (2).  That reading, however, is expressly contradicted by the language of the statute.  As just quoted, paragraph (5) begins by stating that it applies only to cases  "not otherwise encompassed in paragraph (2) above," i.e., only  to those tort cases not encompassed by the commercial  activity paragraph.  And in subsequently introducing its own  exceptions, paragraph (5) goes on to state that "this paragraph"--i.e., paragraph (5)--"shall not apply to" libel or  slander.  Id.  1605(a)(5), (a)(5)(B) (emphasis added).  The  language therefore makes clear that paragraph (5) and its  defamation exception are inapplicable to tort cases based  upon commercial activity.


23
This reading is confirmed by the legislative history, which  repeatedly refers to the category encompassed by paragraph  (5) as "noncommercial torts."  H.R. Rep. No. 94-1487, at 20,  21 (emphasis added);  see Argentine Republic v. Amerada  Hess Shipping Corp., 488 U.S. 428, 439 (1989) (referring to   1605(a)(5) as the "noncommercial torts exception");  cf.  Nelson, 507 U.S. at 361-62 (finding that the tortious activity  alleged in that case, wrongful arrest by Saudi police, failed to  qualify as commercial activity because it was "not the sort of  action by which private parties can engage in commerce").Paragraph (5), the House Report states, "is directed primarily at the problem of traffic accidents but is cast in general  terms as applying to all tort actions for money damages, not  otherwise encompassed by section 1605(a)(2) relating to commercial activities."  H.R. Rep. No. 94-1487, at 20-21 (emphasis added).  Its "purpose," the Report continues, "is to permit  the victim of a traffic accident or other noncommercial tort to  maintain an action against the foreign state to the extent  otherwise provided by law."  Id. at 21.


24
This reading is also consistent with the case law.  This  circuit has previously stated that the exceptions to paragraph  (5) do not limit the commercial activity exception.  See Gilson  v. Republic of Ireland, 682 F.2d 1022, 1028 n.27 (D.C. Cir.  1982) (stating that 28 U.S.C.  1605(a)(5)(B) "does not limit  id.  1605(a)(2)").  Those of our sister circuits that have  considered the question have reached the same conclusion. See Southway v. Central Bank of Nigeria, 198 F.3d 1210,  1219 (10th Cir. 2000);  Export Group v. Reef Industries, Inc.,  54 F.3d 1466, 1473-77 (9th Cir. 1995);  see also Letelier v.  Republic of Chile, 748 F.2d 790, 795 (2d Cir. 1984) (noting that the statutory language "suggests that the commercial  activity exception to jurisdictional immunity under paragraph  (2) and the tort exception under (5) are mutually exclusive").Accordingly, we affirm the district court's decision that activity encompassed by the waiver of sovereign immunity contained in 28 U.S.C.  1605(a)(2) does not become subject to  suit by virtue of the provisions of  1605(a)(5)(B).7

IV

25
The decision of the district court is reversed in part and the  case is remanded for further proceedings consistent with this  opinion.



Notes:


1
 The complaint also named three individuals acting in their  official capacities.  The district court granted the individuals' motion to dismiss for lack of personal jurisdiction, see El-Hadad v.  Embassy of U.A.E., 69 F. Supp. 2d 69, 76-79 (D.D.C. 1999), and  that decision is not at issue in this appeal.


2
 The FSIA provides that:  "The 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."  28 U.S.C.  1603(d).  As the Supreme Court  recognized in Weltover, however, this definition "leaves the critical  term 'commercial' largely undefined."  504 U.S. at 612.  The sentence "merely specifies what element of the conduct determines  commerciality (i.e., nature rather than purpose), but still without  saying what 'commercial' means."  Id.  The Court concluded that  the defining "issue is whether the particular actions that the foreign  state performs (whatever the motive behind them) are the type of  actions by which a private party engages in trade and traffic or  commerce."  Id. at 614 (internal quotation marks and citation  omitted).


3
 The Senate Report contains the same language, both on this  point and on the others quoted below.  See S. Rep. No. 94-1310, at  16 (1976);  see also id. at 20-21.


4
 That point distinguishes Broadbent from Janini v. Kuwait  University, 43 F.3d 1534 (D.C. Cir. 1995), in which we held that the  firing of teachers at Kuwait University came within the commercial  activity exception.  There was no claim in that case that the  teachers were civil servants of the government of Kuwait.


5
 The district court decided the motion to dismiss on the pleadings, and we therefore assume that this and the following facts,  taken from p 9 of the complaint, are true.  See Saudi Arabia v.  Nelson, 507 U.S. 349, 351 (1993).  In any event, except where noted,  the U.A.E. does not contest their validity.


6
 An estimated 75% of the U.A.E.'s population between the ages  of 15 and 64 consists of non-nationals.  See CIA, The World Fact  Book 1999, at 504 (available at http://www.odci.gov/cia/  publications/factbook/tc.html.)


7
 We reject the U.A.E.'s argument that foreign sovereigns  should be immune from actions for defamation under the FSIA  because the United States is immune from such actions under the  Federal Tort Claims Act (FTCA), 28 U.S.C.  2680(h).  Although  both statutes contain defamation exceptions, see H.R. Rep. No. 941487, at 21, the analogy becomes inapposite when applied in the  context of the FSIA's commercial activity exception because there  is no comparable immunity exception under the FTCA.  See Export  Group, 54 F.3d at 1476 (describing FSIA's commercial activity  exception as "ha[ving] no counterpart in the FTCA").


