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First Fidelity Bank, N.A. v. Government of Antigua & Barbuda

decided: June 7, 1989.


Appeal from an order in the United States District Court for the Southern District of New York, Louis L. Stanton, Judge, denying a motion under Fed. R. Civ. P. 60(b) for relief from a default judgment and a consent order. Appellant claims that it is not bound by the actions of its ambassador to the United Nations and that it retains its sovereign immunity under the Foreign Sovereign Immunities Act. Judgment reversed and cause remanded.

Oakes, Chief Judge, Newman, Circuit Judge, and Haight, District Judge.*fn*

Author: Oakes

OAKES, Chief Judge

The Government of Antigua and Barbuda appeals from a decision of the United States District Court for the Southern District of New York, Louis L. Stanton, Judge, which denied its motion for relief under Rule 60(b) of the Federal Rules of Civil Procedure. First Fidelity Bank had secured a default judgment against Antigua in a suit on a note signed by Antigua's ambassador to the United Nations and had then entered into a consent order also executed by the ambassador purportedly on his country's behalf. Antigua requested the court to set aside the default judgment and dismiss the complaint or, in the alternative, to vacate the consent order. The issue is the extent to which Antigua is bound by the actions of its ambassador to the United Nations. We conclude that the default judgment should have been set aside and therefore reverse the decision and remand the case to the district court for further proceedings.


In November 1983, First Fidelity's predecessor, First National State Bank of New Jersey, loaned $250,000 to Lloydstone Jacobs, Antigua's ambassador to the United Nations. Jacobs signed for the loan as ambassador, representing the "Government of Antigua & Barbuda -- Permanent Mission." The stated purpose of the loan was to pay for the renovation of Antigua's Permanent Mission to the United Nations in New York. Repayment of the loan ceased in mid-1985. In September 1985, the bank contacted government officials in Antigua, seeking repayment. The following month, the bank wrote to Jacobs and to Prime Minister Vere C. Bird's permanent secretary, threatening legal action. According to an officer of the bank, the permanent secretary told the officer by telephone in November that Jacobs and Robert Healy, in-house counsel for Antigua's Permanent Mission, were authorized to negotiate a settlement, but this is now disputed by Antigua.

No settlement was reached, and in July 1986 First Fidelity sued Antigua for repayment. Antigua did not answer the complaint, although it concedes that it was properly served. Representatives of the bank met with Jacobs and Healy. According to the bank, Jacobs and Healy acknowledged that Antigua had no defense against the action and revealed that the proceeds from the loan had in fact been invested in a casino. There was still no settlement, however, so the bank sought a default judgment. The bank decided, "[after] a review of Mr. Healy's involvement and appearance in this action," to obtain the default judgment by formal motion. The district court granted the default judgment on December 19, 1986.

First Fidelity's efforts to levy upon Antigua's bank accounts in New York provoked a response from Jacobs. He wrote to the district court in September 1987, acknowledging the debt and seeking a settlement. The following month, the bank and Jacobs agreed to a settlement and signed a consent order. The consent order included a complete waiver of Antigua's sovereign immunity from jurisdiction, attachment, and execution; it was signed on behalf of the Government of Antigua and Barbuda by Lloydstone Jacobs, "Ambassador Extraordinary and Plenipotentiary," and by Robert Healy as the Government's attorney.

First Fidelity received $70,000 pursuant to the consent order, but in January 1988 payments ceased again. The bank executed upon a New York account of Antigua's Permanent Mission but obtained only $500. First Fidelity then sought to attach bank accounts maintained by Antigua's embassy in Washington, D.C. The Government of Antigua, sitting in the capital city of St. John's, then took its first direct action in this case: it moved in the district court to dismiss First Fidelity's complaint for lack of subject matter jurisdiction or, alternatively, to vacate the consent order. Antigua claimed that it was not bound by Jacobs' actions because he had acted without authority in borrowing the money and in consenting to the settlement. Since Antigua was not responsible for Jacobs' fraudulent activities, the argument ran, it retained its sovereign immunity. Judge Stanton denied the motion; in a brief memorandum, he applied agency law to hold Antigua responsible for Jacobs' actions. Antigua could not interpose sovereign immunity, he decided, because the loan fell within the Foreign Sovereign Immunity Act's commercial activity exception. Antigua then filed this appeal.*fn1


First Fidelity asserts that Jacobs possessed the actual authority to bind Antigua. The bank goes on to claim that, even if Jacobs lacked that actual authority, under applicable agency law he nevertheless had ample apparent authority to bind Antigua. In this context, First Fidelity emphasizes the power inherent in an ambassador's position: the bank claims that, as "Ambassador Extraordinary and Plenipotentiary," Jacobs occupied the highest rank in diplomacy, as established by the Congresses of Vienna (1815) and Aix-la-Chapelle (1818). Under the Headquarters Agreement with the United Nations, an ambassador to the U.N. possesses the same privileges and immunities as diplomatic envoys accredited to the United States. See Agreement Between the United Nations and the United States of America Regarding the Headquarters of the United Nations, June 26, 1947, art. V, § 15, 61 Stat. 3416, 3427-28, T.I.A.S. No. 1676, at 13-15, authorized by S.J. Res. of Aug. 4, 1947, Pub.L. No. 80-357, 61 Stat. 756, set out in 22 U.S.C. § 287 note (1982).

The powers of an ambassador may include the authority to conclude international agreements. See Restatement (Third) of Foreign Relations § 311 (1987). "Heads of diplomatic missions and representatives accredited to international organizations are regarded as possessing powers to negotiate agreements on matters within their jurisdiction." Id. comment b. An ambassador thus may have the poker to bind the state that he represents. Normally, of course, a state authorizes a representative to act on its behalf. However, a state can be bound by the representative's unauthorized actions where the lack of authority is not obvious. Id. § 311(3) & Reporters' Note 4. Legal Status of Eastern Greenland (Den. v. Nor.), 1933 P.C.I.J. (ser. A/B) No. 53 (Apr. 5), is an example of this. There, the Permanent Court of International Justice held that Norway was bound by an oral declaration of its foreign minister that his country would not contest Danish sovereignty over Eastern Greenland. Id. at 71. First Fidelity argues that this application of the principles of agency law of developed states in international law supports its claim against Antigua here.

The implication of First Fidelity's argument is that Antigua is bound by Jacobs' actions solely because he was Antigua's ambassador to the U.N. In effect, First Fidelity is telling us: "L'etat, c'est lui." If it were true, as a matter of law, that an ambassador's actions under color of authority automatically bind the state that he represents, then we must affirm the decision below: Antigua would be bound by Jacobs' settlement of this lawsuit. We do not believe, however, that a person's position as ambassador, and nothing more, should be dispositive in this case, let alone all cases.

The authority to conclude international agreements, described in Restatement (Third) of Foreign Relations § 311, does not support an automatic rule binding the state in any transaction with non-sovereign third parties. The issue here is not whether Jacobs, as ambassador, possessed the authority to borrow money or to waive Antigua's sovereign immunity in a settlement of the lawsuit. Assuming that he had that authority does not lead inevitably to the conclusion that his actions here must be attributed to Antigua. Put another way, the possession of authority does not, ipsofacto, validate every exercise of it. In the Eastern Greenland case, it was not simply the Norwegian minister's position or title that made his declaration binding upon Norway. The Court carefully examined the context in which the declaration was made. See 1933 P.C.I.J. (ser. A/B) No. 53, at 71-73. International agreements have considerably more dignity than Jacobs' purely commercial transactions with First Fidelity. See Restatement (Third) of Foreign Relations § 301(1) (defining international agreement). Even so, an ambassador's signature does not make an international agreement automatically binding upon the state. Coercion of a state's representative, for example, renders an agreement signed by that representative void, id. § 331(2)(a), and corruption of the representative permits the ...

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