767 F.2d 998 (D.C. Cir. 1985), 84-5524, Transamerican S.S. Corp. v. Somali Democratic Republic

Docket Nº84-5524, 84-5542.
Citation767 F.2d 998
Party NameTRANSAMERICAN STEAMSHIP CORPORATION v. SOMALI DEMOCRATIC REPUBLIC Somali Shipping Agency, Appellants. TRANSAMERICAN STEAMSHIP CORPORATION, Appellant v. SOMALI DEMOCRATIC REPUBLIC, et al.
Case DateJuly 12, 1985
CourtUnited States Courts of Appeals, United States Court of Appeals (District of Columbia)

Page 998

767 F.2d 998 (D.C. Cir. 1985)

TRANSAMERICAN STEAMSHIP CORPORATION

v.

SOMALI DEMOCRATIC REPUBLIC Somali Shipping Agency, Appellants.

TRANSAMERICAN STEAMSHIP CORPORATION, Appellant

v.

SOMALI DEMOCRATIC REPUBLIC, et al.

Nos. 84-5524, 84-5542.

United States Court of Appeals, District of Columbia Circuit

July 12, 1985

Argued May 14, 1985.

As Amended July 17, 1985.

Page 999

Appeals from the United States District Court for the District of Columbia (D.C.Civil Action No. 82-2043).

Daniel J. O'Callaghan, New York City, for appellant Somali Shipping Agency in No. 84-5524 and appellees Somali Democratic Republic, et al., in No. 84-5542. Martin R. Ganzglass, Washington, D.C., also entered an appearance for appellant/cross-appellees.

Reuben B. Robertson, III, Washington, D.C., for Transamerican Steamship Corporation, appellee in No. 84-5524 and appellant in No. 84-5542.

Before WRIGHT, TAMM, and WALD, Circuit Judges.

Opinion for the court filed by Circuit Judge TAMM.

Page 1000

Opinion concurring in part and concurring in the judgment filed by Circuit Judge WALD.

TAMM, Circuit Judge:

Transamerican Steamship Corporation ("Transamerican") brought an action in the district court for declaratory and monetary relief against the Somali Democratic Republic ("SDR") and the Somali Shipping Agency ("the Agency"). The district court held, inter alia, that it had subject matter jurisdiction under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. Secs. 1330, 1602 et seq. (1982), to adjudicate Transamerican's claim against the Agency, but that it lacked subject matter jurisdiction with respect to the SDR. The Agency and Transamerican appeal. (The district court certified for interlocutory appeal its order denying the Agency's motion to dismiss, and we granted permission to appeal.) For the following reasons, we affirm the district court's ruling with respect to the Agency, reverse its determination that it lacked jurisdiction over the SDR, and remand the case for proceedings on the merits. 1

I. BACKGROUND

In March 1981, the Agency for International Development ("AID") approved a $20 million famine relief program to ameliorate widespread starvation and malnutrition in Somalia. Under this Title II (7 U.S.C. Secs. 1721 et seq.) emergency program, the United States donated 40,000 tons of corn plus ocean transportation to Somalia. AID and the Somali government executed a Transfer Authorization Agreement to implement the emergency grain program, which specifically incorporated by reference the provisions of AID Regulation 11. Under Regulation 11, commodities shipped under Title II must be admitted duty free and exempt from all taxes, including "all customs duties, duties, tolls, taxes or governmental impositions levied on the act of importation." 22 C.F.R. Secs. 211.2(g), 211.7(b).

In April 1981, the Commodity Credit Corporation of the United States Department of Agriculture ("the Department") commissioned Transamerican to carry 5,000 tons of corn from Houston, Texas, to the Somali port of Kismayu. The Department agreed to pay $580,000 for this transportation. Upon receipt of the Somali corn in June, Transamerican issued its bill of lading in Houston and shortly thereafter contacted the Somali Shipping Agency to inform it that its ship--the M.V. Klaus Leonhardt--would arrive at Kismayu in mid-July.

Just before the scheduled arrival of the Klaus Leonhardt, the Agency telexed Transamerican and demanded $36,162.57 as a "pro forma disbursement," payable in U.S. funds to the Djibouti Branch of the Commercial and Savings Bank of Somalia (the "Somali Bank"). Transamerican objected to the amount demanded, evidently on grounds that Regulation 11 placed responsibility for such levies on the AID recipient--the Somali government. The Agency warned Transamerican, however, that the ship would be detained until the money was paid.

Transamerican then notified the Agency that it would pay the full amount, offset by $10,636.99 owed it by the Agency from previous transactions and, accordingly, transmitted $25,525.28 to the Somali Bank in Djibouti. The Agency initially claimed that it had not received the money and detained the ship following discharge of its cargo on July 26. Finally, the Agency on July 30 confirmed that it had received the money but insisted that an additional $28,312.30 be paid in order to release the ship because the initial amount demanded was "not correct." The Agency directed Transamerican to pay the amount to the Somali embassy in Washington, D.C.

According to Transamerican, the detention of the ship was costing the company

Page 1001

approximately $10,000 per day. To secure its prompt release, a Transamerican executive personally went to the Somali embassy the next morning and presented a check for $28,312.30 payable to the Somali Shipping Agency. The embassy, however, refused to accept the check and instead directed Transamerican to electronically transfer the funds from Transamerican's New York bank into the SDR's commercial account in the Riggs National Bank in Washington. Although Transamerican complied with this demand the same day, the Agency did not release the ship until August 3. At that point the ship had been detained for a total of eight days at a cost to Transamerican of almost $100,000. 2

When efforts to obtain redress through diplomatic channels proved unsuccessful, Transamerican sued both the SDR and the Agency in the district court. The district court granted the SDR's motion for dismissal, finding that the SDR had neither waived sovereign immunity nor engaged in commercial activities that would subject it to suit in the United States under the FSIA and therefore the court lacked subject matter jurisdiction. The district court further concluded that it had jurisdiction over Transamerican's claims against the Agency under the FSIA's commercial activity exception. Transamerican appeals the dismissal of its suit against the SDR, and the Agency appeals the denial of its motion to dismiss.

II. SUBJECT MATTER JURISDICTION

  1. The Statutory Framework

    The Foreign Sovereign Immunities Act of 1976, 28 U.S.C. Secs. 1330, 1602 et seq. (1982), grants foreign sovereigns immunity from suit in the United States unless one of the specified statutory exceptions applies. If an exception applies, section 1330 confers subject matter jurisdiction on the district courts to hear claims against foreign states. The purpose of the FSIA is to facilitate suits in United States courts arising from the commercial conduct of foreign sovereigns. As this court has stated

    [W]e think it ought to be difficult for defendants engaged in commercial activity with substantial American contact ... to invoke successfully sovereign immunity when sued for underlying commercial misdeeds. This is especially so in view of the fact that FSIA was written in great measure to ensure that "our citizens will have access to the courts in order to resolve ordinary legal disputes."

    Gilson v. Republic of Ireland, 682 F.2d 1022, 1028 (D.C.Cir.1982) (quoting H.R.Rep. No. 1487, 94th Cong., 2d Sess. 6 (1976), U.S.Code Cong. & Admin.News 1976, p. 6604). See also Velidor v. L/P/G Benghazi, 653 F.2d 812, 816-17 (3d Cir.1981) (objective of Act is to facilitate suits against foreign governments in United States courts arising out of commercial activity), cert. denied, 455 U.S. 929, 102 S.Ct. 1297, 71 L.Ed.2d 474 (1982); Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300, 312 (2d Cir.1981) (Congress's primary concern in FSIA was providing access to courts to parties aggrieved by commercial acts of foreign sovereigns), cert. denied, 454 U.S. 1148, 102 S.Ct. 1012, 71 L.Ed.2d 301 (1982).

    Thus, a foreign state may not invoke sovereign immunity in any case in which the foreign state has implicitly or explicitly waived its immunity, 28 U.S.C. Sec. 1605(a)(1), or where the claim arises from commercial activities by the foreign state. The Act provides in relevant part that

    [a] foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case ... in which the action is based upon

    Page 1002

    a commercial activity carried on in the United States by a foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.

    28 U.S.C. Sec. 1605(a)(2). In accordance with the restrictive view of sovereign immunity reflected in the FSIA, the burden of proof in establishing the inapplicability of these exceptions is upon the party claiming immunity, in this case the SDR and the Agency. See H.R.Rep. No. 94-1487, 94th Cong., 2d Sess. 7 (1976), U.S.Code Cong. & Admin.News 1976, p. 6604. See also Vencedora Oceanica Navigacion, S.A. v. Compagnie Nationale Algerienne de Navigation, 730 F.2d 195, 199 (5th Cir.1984). Transamerican argues that neither the SDR nor the Agency have sustained that burden. It contends that clause 1 of the commercial activities exception applies to the SDR's claim of immunity, 3 and clause 3 applies to that of the Agency.

  2. The SDR

    If the relevant activity of the Somalian embassy constituted "a commercial activity carried on in the United States by a foreign state," 28 U.S.C. Sec. 1605(a)(2) (1982), the district court has subject matter jurisdiction over Transamerican's claims against the SDR. The problem, as the drafters of the FSIA themselves admitted, is that the statute is vaguely worded and offers little guidance to courts construing its terms. See Hearings on H.R. 11315 Before the Subcommittee on Administrative Law and Governmental Relations of the House Committee on the Judiciary, 94th Cong., 2d Sess. 53 (1976). See also Texas Trading & Milling Corp. v....

To continue reading

Request your trial
56 practice notes
  • 290 F.Supp.2d 108 (D.D.C. 2003), Civ. A. 02-01485, Global Index, Inc. v. Mkapa
    • United States
    • Federal Cases United States District Courts District of Columbia
    • November 4, 2003
    ...(1976). The defendant then has the ultimate burden of proving immunity. See, e.g., Transamerican S.S. Corp. v. Somali Democratic Republic, 767 F.2d 998, 1002 (D.C.Cir.1985). When a defendant "challenges only the legal sufficiency of the plaintiff's jurisdictional allegations, then the ......
  • 834 F.Supp. 167 (E.D.Va. 1993), Civ. A. 93-CV-457, Eckert Intern., Inc. v. Government of Sovereign Democratic Republic of Fiji
    • United States
    • Federal Cases United States District Courts 4th Circuit Eastern District of Virginia
    • September 24, 1993
    ...or to refer disputes to the laws of Page 170 another country"); see also Transamerica S.S. Corp. v. Somali Democratic Republic, 767 F.2d 998, 1005 (D.C.Cir. 1985) (Wald, J., Fiji seeks to distinguish these decisions by noting that the choice of law provision found in the 1991 contract ......
  • 882 F.Supp.2d 23 (D.D.C. 2012), C. A. 10-1689 (RCL), Harrison v. Republic of Sudan
    • United States
    • Federal Cases United States District Courts District of Columbia
    • March 30, 2012
    ...Consulting, Inc. v. Republic of Angola, 216 F.3d 36, 40 (D.C.Cir.2000) (citing Transamerican S.S. Corp. v. Somali Democratic Republic, 767 F.2d 998, 1002 (D.C.Cir.1985) and Princz v. Federal Republic of Germany, 26 F.3d 1166, 1171 (D.C.Cir.1994)); Owens v. Republic of Sudan, 412 F.Supp.2d 9......
  • Rodriguez v. Pan American Health Organization, 110920 DCDC, C. A. 20-928 (JEB)
    • United States
    • Federal Cases United States District Courts District of Columbia
    • November 9, 2020
    ...function to act for another in collecting and holding funds, ” Transamerican S.S. Corp. v. Somali Democratic Republic, 767 F.2d 998, 1002 (D.C. Cir. 1985), and it is also a normal commercial function to act as a financial intermediary transferring funds, for a fee, ......
  • Request a trial to view additional results
55 cases
  • 290 F.Supp.2d 108 (D.D.C. 2003), Civ. A. 02-01485, Global Index, Inc. v. Mkapa
    • United States
    • Federal Cases United States District Courts District of Columbia
    • November 4, 2003
    ...(1976). The defendant then has the ultimate burden of proving immunity. See, e.g., Transamerican S.S. Corp. v. Somali Democratic Republic, 767 F.2d 998, 1002 (D.C.Cir.1985). When a defendant "challenges only the legal sufficiency of the plaintiff's jurisdictional allegations, then the ......
  • 834 F.Supp. 167 (E.D.Va. 1993), Civ. A. 93-CV-457, Eckert Intern., Inc. v. Government of Sovereign Democratic Republic of Fiji
    • United States
    • Federal Cases United States District Courts 4th Circuit Eastern District of Virginia
    • September 24, 1993
    ...or to refer disputes to the laws of Page 170 another country"); see also Transamerica S.S. Corp. v. Somali Democratic Republic, 767 F.2d 998, 1005 (D.C.Cir. 1985) (Wald, J., Fiji seeks to distinguish these decisions by noting that the choice of law provision found in the 1991 contract ......
  • 882 F.Supp.2d 23 (D.D.C. 2012), C. A. 10-1689 (RCL), Harrison v. Republic of Sudan
    • United States
    • Federal Cases United States District Courts District of Columbia
    • March 30, 2012
    ...Consulting, Inc. v. Republic of Angola, 216 F.3d 36, 40 (D.C.Cir.2000) (citing Transamerican S.S. Corp. v. Somali Democratic Republic, 767 F.2d 998, 1002 (D.C.Cir.1985) and Princz v. Federal Republic of Germany, 26 F.3d 1166, 1171 (D.C.Cir.1994)); Owens v. Republic of Sudan, 412 F.Supp.2d 9......
  • Rodriguez v. Pan American Health Organization, 110920 DCDC, C. A. 20-928 (JEB)
    • United States
    • Federal Cases United States District Courts District of Columbia
    • November 9, 2020
    ...function to act for another in collecting and holding funds, ” Transamerican S.S. Corp. v. Somali Democratic Republic, 767 F.2d 998, 1002 (D.C. Cir. 1985), and it is also a normal commercial function to act as a financial intermediary transferring funds, for a fee, ......
  • Request a trial to view additional results
1 firm's commentaries
  • Corporations, Directors, And Officers: Potential Criminal And Civil Liability
    • United States
    • Mondaq United States
    • November 30, 2018
    ...on the corporation's behalf "in performance of the agent's general line of work." See United States v. Hilton Hotels Corp., 767 F.2d 1000, 1004 (9th Cir. 1972); Hamm v. United States, 483 F.3d 135, 138 (2d Cir. 2007). Courts generally have found that an employee or agent acts with......