The opinion of the court was delivered by: STEWART
This case concerns a contract between plaintiff Bulk Oil (Zug) A.G. ("Bulk (Zug)") and defendant Sun International Ltd. ("SIL") for a supply of North Sea crude oil. Also named as defendants are Sun Company, Inc. ("Sunoco"), Sun Oil Trading Company ("SOTC") and Sun International, Inc. ("SII"). Occasionally we may refer to the defendants collectively as "Sun".
Plaintiff claims that SIL's refusal to deliver the oil contracted for violated section 1 of the Sherman Act, the Export Administration Act, and the Racketeering Influenced and Corrupt Organizations Act. In addition, plaintiff seeks recovery for defendants' alleged wrongful attachment of property of an affiliate of plaintiff, Bulk Oil (Milano) S.r.l. Defendants move to dismiss al claims. As many of the facts of this case have been reported in the Interim Award of the Aribtrator in London dated October 8, 1982 (which is annexed as Exhibit A to the Complaint), we will not restate them here, but will develop them in our discussion of the various points of defendants' motion.
Plaintiff alleges that defendants' refusal to deliver the oil violated section 1 of the Sherman Act. Specifically, plaintiff alleges that the defendants' refusal to deliver constituted a combination and conspiracy "to comply with, further, and support the Arab Boycott of Israel by refusing to deliver crude oil contracted for by plaintiff and similarly sitated companies for delivery to Israel". Complaint P71. We grant defendants' motion to dismiss this claim becaause we find defendants' refusal to deliver was neither a "refusal to deal" nor a boycott. We further find we lack subject matter jurisdiction over this claim, and that the Act of State doctrine precludes adjudication of this claim.
The contract between Bulk (Zug) and SIL called for SIL to deliver "certain quantities of United Kingdom North Sea crude oil for the price and in accordance with the terms set forth in that contract".Complaint P35. As the Arbitrator's Interim Aware indicates, the contract contained a "Destination Clause" which read:
Destination Free but always in line with exporting country's Government policy.
United Kingdom Government policy, at present, does not allow delivery to South Africa.
Interim Award at P34. As the Arbitrator further found, in 1981, U.K. Government policy "precluded the direct export of North Sea crude to Israel". Id. at P53. Bulk Zug's nomination of Haifa as the oil's destination thus constituted a breach of contract that relieved SIL of its obligations under the agreement. Id. at PP61, 148. See also Final Award at P7. SIL's refusal to deliver the oil therefore was a lawful exercise of its rights under the law of contract, not a violation of the antitrust laws.
Even if SIL's failure to deliver the oil could be construed as a boycott or refusal to deal for the purposes fo the antitrust statute, we find we lack jurisdiction to hear this claim under National Bank of Canada v. Interbank Card Association, 666 F.2d 6 (2d Cir. 1981). In Interbank, the Second Circuit stated that the proper test of jurisdiction inc ases alleging extraterritorial violations of the antitrust laws was "whether the challenged restraint has, or is intended to have, any anticompetitive effect upon United States commerce, either commerce within the United States or export commerce from the United States". Id. at 8. In stating this test, the Second Circuit specifically rejected the Ninth Circuit's test for jurisdiction in such cases as stated in Timberlane Lumber Co. v. Bank of America N.T. & S.A., 549 F.2d 597 (9th Cir. 1977).
Timberlane's test, the Second Circuit noted, could "lead unwarrantedly to an assertion of jurisdiction whenever the challenged conduct is shown to have some effect on American foreign commerce, even though the actionable aspect of the restraint, the anticompetitive effect, is felt only within the foreign market in which the injured plaintiff seeks to compete". Id.
In this case, plaintiff has alleged the following effects in the Complaint at paragraph 73:
(a) the flow of crude oil in the foreign trade and commerce of the United States hsa been burdened by the defendants' complaince with Arab Boycott;
(b) the availability of crude oil in the United States has been affected by defendants' compliance with the Arab boycott;
(c) plaintiff has been deprived of the benefits of free and open competition; and
(d) plaintiff has benn injured in its business by defendants' compliance with the Arab Boycott.
Paragraph 73(b), (c) and (d) do not state effects sufficient to confer subject matter jurisdiction under Interbank since none of them allege anticompetitive effects on United States commerce. Read alone, paragraph 73(a) appears to be a sufficient statement of anticompetitive effects, but we find this conclusion under cut by other information contained in the complaint. As a preliminary matter, the transaction in question here was a contract between a Swiss company (P4) and a Bermuda corporation (P6) to deliver North Sea oil (P35) to an Israeli customer (P56). The suppliers of the oil were Swedish (PP20, 58) and British (PP20, 60). These facts alone suggest a most tenuous connection to United States commerce.More significantly, however, defendants' non-delivery of the oil to plaintiff in fact resulted in eight of thirteen cargoes being delivered to the United States. P54. As counsel conceded at oral argument, the net result of defendants' non-delivery was to increase the supply of crude oil in the United States, and thus the actual effect in the United States was pro-competitive. On this record, we cannot conclude that subject matter jurisdiction exists uner Intercard's standard.
Plaintiff does not elaborate upon any of these alleged effects in its papers in opposition to this motion. Rather, it argues that jurisdiction is proper under Interbank because the anticompetitive effects of a group boycott are presumed as a matter of law, citing Northern Pacific Railway Co. v. United States, 356 U.S. 1, 5, 2 L. Ed. 2d 545, 78 S. Ct. 514 (1958) (which cites, in turn, Fashion Originators' Guild v. Federal Trade Commission, 312 U.S. 457, 85 L. Ed. 949, 61 S. Ct. 703 (1941)). Northern Pacific and Fashion Originators' Guild do state that group boycotts are per se violations of the antitrust laws, not subject to a rule of reason analysis. They do not say, however, that any boycott, anywhere, is presumed to have anticompetitive effects in the United States.
We also find that plaintiff's claim raises substantial Act of State problems that render adjudication inappropriate. The Act of State doctrine precludes judicial inquiry into "the validity of the public acts of a recognized foreign sovereign power committed within its own territory". Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 401, 11 L. Ed. 2d 804, 84 S. Ct. 923 (1964). In this case, the contract between Bulk and Sun was specifically pegged to "U.K. policy". U.K. policy, as stated by the British Secretary of State for Energy, precluded direct sales of North Sea oil to Israel.Interim Award at PP40-48. To hold defendants in violation of the United States antitrust laws would thus seem to require an inquiry into the validity of official British policy.This is recisely the type of inquiry the Act of State doctrine is supposed to bar.
Plaintiff argues that the Act of State doctrine should not apply here because the British ministers' statements do not constitute formal governmental acts. Plaintiff cites the following language from Dominicus Americana Bohio v. Gulf & Western Industries, 473 F. Supp. 680, 689 (S.D.N.Y. 1979) in support of its argument:
In order to trigger application of the act of state doctrine, the government act concerned must be a public one such as legislative enactment, regulatory decree, or executive use of the police powers.
(emphasis supplied by plaintiff). It is not entirely clear to us that U.K. policy as expressed by Secretaries of State in response to inquiries by members of Parliament does not constitute "executive use of the police powers", mentioned in Dominicus, but not underscored by plaintiff. At any rate, the use of the phrase "such as" in the quoted passage suggests that the listing was not intended to be exhaustive.
The more relevant inquiry appears to be whether the defendants' acts were compelled by the acts of a foreign sovereign. See Timberlane, 549 F.2d at 606
(quoting Interamerican Refining Corp. v. Texaco Maracaibo, Inc., 307 F. Supp. 1291, 1298 (D. Del. 1970) ("When a nation compels a trade practice that firms there have no choice but to obey, acts of business become effectively acts of the sovereign")). With respect to this point, plaintiff asserts that the U.K.'s policy did not compel defendants' refusal to deliver crude oil to plaintiff since "defendants were always free to supply plaintiff with oil from a source other than the North Sea". Memo in Opp. at 35. Inasmuch as plaintiff alleges in its complaint, however, that the contract was one for the sale of "certain quantities of United Kingdom North Sea crude oil", P35, it would appear defendants had no obligation under the contract to do so.
Plaintiff also asserts that the defendants were not bound by the U.K. policy because the policy was enforcled only sporadically. However, plaintiff undercuts the strength of this argument with its statement: "So long as violations were not made blatantly public, noncompliance was largely ignored by the United Kingdom's Department of Energy". Memo in Opp. at 34. Yet it was precisely plaintiff's nomination of Haifa that made the noncompliance attempted here public, and that disabled the defendants from performing.
For all these reasons, therefore, we grant defendant's motion to dismiss plaintiff's antitrust claim.
II. Export Administration Act Claim
Bulk also claims that Sun's refusal to deliver the oil contracted for violated the antiboycott provisions of the Export Administration Act, 50 U.S.C. App. § 2407 et seq. (Supp. III 1979). Sun argues (1) that no private right of action exists under this statute, and (2) even if one does, the sstatute was not violated. We agree that no private right of action exists under the Export Administration Act, and grant defendants' motion to dismiss this claim.
The Export Administration Act of 1979 ("the Act") directs the President or his delegate to issue regulations prohibiting certain actions taken with intent to comply with, further, or support a foreign boycott. 50 U.S.C. App. § 2407. Violators are subject to criminal and civil penalties and administrative sanctions pursuant to § 11 of the Act. Id. § 2410(a)-(c). Actions for the recovery of penalties may be brought in the name of the United States. Id. § 2410(f). The statute does not contain any reference to a private right of action to enforce its substantative ...