UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
July 5, 1983;
O'CONNELL MACHINERY COMPANY, INC., Plaintiff,
M. V. "AMERICANA" and ITALIA DI NAVIGAZIONE, S.P.A. (d/b/a ITALIAN LINE), Defendants
The opinion of the court was delivered by: KNAPP
MEMORANDUM & ORDER
WHITMAN KNAPP, D.J.
Plaintiff brought an action against the Italian Line and the M.V. "AMERICANA," one of its vessels, for damages alleged to have been suffered by a generator transported on that ship from Genoa, Italy, to the port of New York. The case is before us on a motion to dismiss the complaint against the M.V. "AMERICANA." For reasons stated below, the motion is granted.
Section 4 of the Foreign Sovereign Immunities Act of 1976 ("FSIA"), Pub. L. No. 94-583, 90 Stat. 2892, declares, in substance, that actions brought against a vessel owned by a "foreign state" to enforce a maritime lien, shall be deemed an in personam claim against the foreign state, provided certain procedures as to service and notice are followed. 28 U.S.C. § 1605(b).
The self-same section also states that, in exchange for what is in practice a "long arm" statute against a foreign state, see Geveke & Co. v. Kompania di Awa I Elektrisidat (S.D.N.Y. 1979) 482 F. Supp. 660, 662-63 (Weinfeld, J.), attachment of the vessel for jurisdictional purposes will no longer be an accepted procedure.
In order to discourage the use of jurisdictional attachment, the statute specifically provides that the in personam action shall be forfeited for all time if the plaintiff arrests a vessel for purposes of filing suit and is not able to show that, at the time of such arrest, he was unaware that the vessel was owned by a foreign state. See Kane, Suing Foreign Sovereigns: A Procedural Compass, 34 Stan. L. Rev. 385, 409-10 (1982).
This action was filed on September 23, 1982. On several occasions during the subsequent two weeks, counsel for the Italian Line advised plaintiff's counsel that Italian Line was, indirectly, owned by the Italian Government and would therefore invoke the protection of the FSIA as an "agency or instrumentality of a foreign state." See 28 U.S.C. § 1603(b).
Thereafter and before the time to answer had expired,
plaintiff brought on, by order to show cause, a motion which sought to compel the defendant immediately to establish its entitlement to invoke the FSIA. We denied the motion as premature on the ground that its object was to circumvent the professional responsibility which 28 U.S.C. § 1605(b) placed on plaintiff's counsel: namely, to decide whether the intended arrest was proper and then to face the unpleasant consequence of dismissal should that judgment be proven incorrect. Plaintiff then sought a Writ of Mandamus to compel us to decide the issue raised by his order to show cause. The Writ was denied.
Undaunted, plaintiff arrested the M.V. "AMERICANA" upon its arrival in New York.
Before us is a motion to dismiss the in personam action against the vessel on grounds that it was improperly attached for jurisdictional purposes.
Upon defendant's showing that Italian Line is an "agency or instrumentality of a foreign state," the foregoing would ordinarily require that we grant the motion to dismiss. Jet Line Services, Inc. v. M/V Marsa El Hariga (D.Md. 1978) 462 F. Supp. 1165, 1174-78. Plaintiff seeks to avoid this result by arguing, seriatim, (a) that Italy has waived immunity from pre-judgment attachment; (b) that defendant has failed to provide sufficient proof as to the ownership of Italian Line; (c) that Italian Line is not entitled to FSIA protection; and (c) that 28 U.S.C. § 1605(b) is unconstitutional. All these arguments are without merit.
Plaintiff contends, first, that Article XXIV(6) of the Treaty of Friendship, Commerce and Navigation Between the United States of America and the Italian Republic, February 2, 1948, T.I.A.S. No. 1965,
waives defendant's immunity from pre-judgment attachment. To be sure, the protections of the FSIA -- including that of immunity from pre-judgment attachment, 28 U.S.C. § 1609 -- may be explicitly waived by future treaties, 28 U.S.C. § 1610(d)(1), or by agreements, such as the one here at issue, in force at the time the FSIA was enacted. See 28 U.S.C. § 1609 ("Subject to existing. . . agreements . . .). However, the "waiver of immunity from prejudgment attachment [must] be explicitly made . . ." S&S Machinery Co. v. Masinexportimport 706 F.2d 411, 416 (2d Cir. 1983) (emphasis in original). Plaintiff relies solely on Libra Bank Ltd. v. Banco Nacional de Costa Rica (2d Cir. 1982) 676 F.2d 47, for the proposition that the words "shall [not] . . . claim . . . immunity . . . from any other liability " in the U.S.-Italy treaty indicate such explicit waiver of immunity as to pre-judgment attachment. Our Court of Appeals has recently held, however, that Libra Bank may not be so read and, therefore, that the words "from any other liability" do not -- in and of themselves -- operate as the required waiver. S&S Machinery, supra, 706 F.2d 411 (dealing with similar language in a treaty between the United States and Romania). Plaintiff has offered no more than his reliance on Libra Bank ;
accordingly, his first contention must fail.
Plaintiff next argues that insufficient proof has been presented to support defendant's contention that Italian Line is an "agency or instrumentality" of the Republic of Italy. We have before us, however, the affidavit of Gerardo Carante, "Counselor of Commercial Activities of the Republic of Italy" and "chief officer of the Commercial office at the Embassy of the Republic of Italy," describing the ownership of Italian Line. This affidavit, executed on the letterhead of the Italian Embassy in Washington, states that the majority of the shares of Italian Line is owned by FINAMARE, a "subdivision of the Instituto per la Riconstruzione Industriale ("IRI"), a government entity which coordinates the management of Italian government enterprises. IRI's annual budget and plans, in turn, are approved by a member of the Italian Cabinet and, ultimately, submitted to the Parliament. See Carante's Affidavit paras. 4-8. In our view this establishes that Italian Line is, indeed, an "agency or instrumentality of a foreign state," as defined in 28 U.S.C. § 1603(b). See also H.R. 94-1487, 94th Cong., 2d Sess., 15-16, reprinted in 1976 U.S. Code Cong. & Ad. News 6604, 6613-14. "Statements of foreign officials . . . have been accorded great weight in determining whether an entity is entitled to claim the protection of the FSIA." S&S Machinery, supra, 706 F.2d 411 at 415 (citing with approval Yessenin-Volpin v. Novosti Press Agency (S.D.N.Y. 1978) 443 F. Supp. 849, 854). As was also the case in S&S Machinery, "[plaintiff] failed to rebut any of this persuasive evidence, arguing instead that more was required to prove agency or instrumentality status." Id. Plaintiff's insistence that "more" be provided goes, in fact, to the form of defendant's submission, rather than to its contents. These demands are without merit.
We have before us an affidavit substantially more explicit than the -- by comparison -- conclusory remarks submitted in Novosti Press, supra, 443 F. Supp. at 854 ("[defendant] was an instrumentality of the [government]"), cited with approval in S & S Machinery, supra, 706 F.2d 411 at 414. Accordingly, plaintiff's second argument in opposition must also fail.
Third, plaintiff contends that, in any event, Italian Line is not entitled to protection under the FSIA because it is not an "agency or instrumentality of a foreign state." Whereas it is conceded that IRI may qualify as a "foreign state," plaintiff argues that the chain of ownership so far removes Italian Line from direct government control as to make it "'too remote' to be considered as a 'foreign state'." Plaintiff's Memorandum of Law at 8-9. This argument is without merit. It rests on scant and inapposite precedent
and boils down to the red herring that "what [Italian Line] requests this Court to do is ignore its corporate form . . ." Id. at 9. The FSIA specifically provides that "corporate form" -- in and of itself -- be immaterial to the relevant determination. See 28 U.S.C. § 1603(b)(1). Accordingly, we conclude that Italian Line is indeed an "agency or instrumentality" of the Republic of Italy as defined in 28 U.S.C. § 1603(b). See also H.R. Rep. No. 94-1487, 94th Cong., 2d Sess., 15-16, reprinted in 1976 U.S. Code Cong. & Ad. News 6604, 6613-15 (shipping line suable in its own name as a specific example of "agency or instrumentality").
Finally, it is contended that the curtailment of pre-judgment attachment is unconstitutional. The substance of plaintiff's argument is that a statute may not eliminate "traditional" in rem actions -- which existed at the time the Constitution was adopted -- because Article III extends the judicial power of the United States to all cases in admiralty. Accordingly, the FSIA infringes on the constitutional grant of admiralty jurisdiction. The major premise implicit in plaintiff's argument is that an action against a sovereign is an action in "admiralty" when it is of a maritime nature. We have been offered nothing to support this proposition. Indeed, such brief review as we have made suggests that suits against a sovereign are outside constitutionally granted power and, in particular, outside the scope of traditional admiralty jurisdiction.
Under English law the jurisdiction of all courts derived, ultimately, from the Crown, proceedings ran in the King's name, see 10 W. Holdsworth, A History of English Law 414-17 (1938), and the sovereign could not be sued in his court without consent. See 9 W. Holdsworth, supra, 8-39 (1926). The comparable principle of "sovereign immunity" was also adopted by American law. See Briggs v. The Lightboats (1865) 93 Mass. (11 Allen) 157 (thorough review of sovereign immunity in old English and American law). We have found nothing to suggest either that, at the time the Constitution was adopted, the Court of Admiralty was otherwise empowered to entertain suits against the sovereign, see 5 W. Holdsworth, supra, 125-29, 137-39, 143 (3d ed. 1923); T. Plucknett, A Concise History of the Common Law 657-664 (5th ed. 1956), or that American courts viewed admiralty jurisdiction as comprehending such actions. See, e.g., 1 Kent, Commentaries on American Law *354-*380; United States v. Lee (1882) 106 U.S. 196, 209, 27 L. Ed. 171, 1 S. Ct. 240. In fact, the Supreme Court first articulated the doctrine of sovereign immunity in a maritime case involving the arrest of a foreign man-of-war, The Schooner Exchange v. M'Faddon (1812) 11 U.S. (7 Cranch) 116, 3 L. Ed. 287, and specifically declared that the Constitution of the United States granted no jurisdiction over the foreign sovereign there involved. Id. at 123. It has therefore been axiomatic that, where the defendant is a sovereign, it is immaterial that the action be of a maritime nature -- there is no subject matter jurisdiction, except as granted by (implicit or statutory) consent. Cf., e.g., G. Gilmore & C. Black, The Law of Admiralty §§ 9-12, 11-11 (2d ed. 1975) (sovereign immunity may bar recovery against the sovereign). Therefore, it cannot be said that admiralty jurisdiction encompassed suits against a sovereign, even if the actions were of a maritime character. Cf. McElrath v. United States (1880) 102 U.S. 426, 440, 26 L. Ed. 189 (suits against the sovereign are not at "common law" for purposes of right to jury trial); United States v. Sherwood (1940) 312 U.S. 584, 85 L. Ed. 1058, 61 S. Ct. 767 (same); Glidden Co. v. Zdanok (1962) 370 U.S. 530, 572, 8 L. Ed. 2d 671, 82 S. Ct. 1459 (same).
Inasmuch as suits against a sovereign are subject to its consent, the correlative power generally to condition such consent -- in the maritime context or otherwise -- is, by now, an established principle. See, e.g., Szyka v. Secretary of Defense (2d Cir. 1975) 525 F.2d 62, 65; Roberts v. United States (9th Cir. 1974) 498 F.2d 520, 525. The curtailment of the right to proceed in rem is one such proper limitation.
The foregoing observations can best be illustrated in this context by reference to the Suits in Admiralty Act ("SIAA"), 46 U.S.C. §§ 741-52. It provides, in relevant part, for the elimination of the right to arrest United States vessels and for the substitution of "an equivalent remedy in personam [against the United States] for the [eliminated] right in rem against the vessel." Schnell v. United States (2d Cir.) 166 F.2d 479, 481, cert. denied (1948) 334 U.S. 833, 92 L. Ed. 1760, 68 S. Ct. 1346. See also 46 U.S.C. §§ 741-42; Szyka v. Secretary of Defense, supra, 525 F.2d at 65, n.4.
This is precisely the restriction which, as enacted by the FSIA,
plaintiff contends is beyond the power of Congress to impose. Yet this particular SIAA restriction has never been questioned as improper, Schnell v. United States, supra, 166 F.2d at 481; Eastern Transport Co. v. United States (E.D.N.Y. 1951) 98 F. Supp. 36, 38 (exemption from arrest merely restores immunity taken away by another statute) and, indeed, none of the several restrictions under the SIAA has been subjected to serious judicial challenge. See Szyka v. Secretary of Defense, supra, 525 F.2d at 62 (upholding constitutionality of SIAA); Roberts v. United States, supra, 498 F.2d 520 (same). Plaintiff has suggested nothing to explain why Congress may not impose precisely the same limitation under the FSIA which for more than sixty years it has been able to require under the SIAA.
For the foregoing reasons the in personam action created by the FSIA is hereby DISMISSED. We observe, however, that -- unlike the situation in Jet Line Services, supra -- the practical consequence of such dismissal is, in this case, insignificant. Defendant has conceded in oral argument that the separate in personam action against Italian Line arising out of the bill of lading contract and in which jurisdiction is predicated on the presence of Italian Line in New York, continues unaffected by this dismissal. Cf. Velidor v. L/P/G Benghazi (3d Cir. 1981) 653 F.2d 812, 817-19.