Reference no: EM131662635

Question: Sovereign Immunity. Tonoga, Ltd., doing business as Taconic Plastics, Ltd., is a manufacturer incorporated in Ireland with its principal place of business in New York. In 1997, Taconic entered into a contract with a German construction company to supply special material for a tent project designed to shelter religious pilgrims visiting holy sites in Saudi Arabia. Most of the material was made in, and shipped from, New York. The company did not pay Taconic and eventually filed for bankruptcy.

Another German firm, Werner Voss Architects and Engineers, acting as an agent for the government of Saudi Arabia, guaranteed the payments due Taconic to induce it to complete the project. When it did not receive the final payment, Taconic filed a suit in a U.S. district court against the government of Saudi Arabia, claiming a breach of the guaranty and seeking to collect, in part, about $3 million. The defendant filed a motion to dismiss based, among other things, on the doctrine of sovereign immunity. Under what circumstances does this doctrine apply? What are its exceptions? Should this suit be dismissed under the "commercial activity" exception? Explain.