Chemical Natural Resources, Inc. v. Republic of Venezuela

Decision Date04 January 1966
Docket NumberNo. 3,3
Citation215 A.2d 864,420 Pa. 134
Parties, 25 A.L.R.3d 283 CHEMICAL NATURAL RESOURCES, INC. and Venezuelan Sulphur Corporation, C. A., v. REPUBLIC OF VENEZUELA, Appellant. REPUBLIC OF VENEZUELA, Petitioner, v. The Honorable Byron A. MILNER, President Judge, and the Honorable David L. Ullman, Judge, of the Court of Common Pleasof Philadelphia County.
CourtPennsylvania Supreme Court

Thomas F. Mount, Rawle & Henderson, Philadelphia, William A. Dobrovir, Washington, D. C., Howard C. Westwood, B. Scott Custer, Jr., Covington & Burling, Washington, D. C., Paul D. Hardy, of counsel, for appellant.

Abraham E. Freedman, Martin J. Vigderman, Freedman, Borowsky & Lorry, Philadelphia, for appellees.


BELL, Chief Justice.

The Republic of Venezuela 1 (1) took an appeal, pursuant to the Act of March 5, 1925, P.L. 23 (12 P.S. § 672 et seq.), from an Order of the Court below which decided it had jurisdiction of plaintiffs' action in assumpsit, commenced by foreign attachment, and (2) filed in this Court an application petitioning this Court to issue a writ of mandamus or prohibition, or both, and dismiss plaintiffs' action against it.

The principal question involved in each case is the legal effect of a Suggestion of Immunity made by the Department of State. The two actions were consolidated here and will be considered together in this Opinion.


Chemical Natural Resources, Inc., 2 and Venezuelan Sulphur Corporation, C.A. 3 sued Venezuela in an action of assumpsit commenced by a writ of foreign attachment which in this case is an action quasi in rem. 4 Chemical is a Delaware Corporation of which not less than 50 percent of its stock is beneficially owned by United States citizens. Sulphur is a corporation organized under the laws of Venezuela and is a wholly owned subsidiary of Chemical.

On October 21, 1963, the plaintiffs (Chemical and Sulphur) commenced their action of assumpsit against Venezuela by filing a (praecipe for a) writ of foreign attachment (together with a complaint) under which writ the sheriff was directed to attach and seize the SS CUIDAD DE VALENCIA, allegedly the property of defendant Venezuela, which was then in the Port of Philadelphia and in the custody of Stockyard Shipping and Terminal Corp. 5 The complaint demanded damages in the sum of $116,807,258.28.

Plaintiffs' pertinent allegations in its amended complaint may be thus summarized:

In April of 1952 the plaintiffs, acting through Sulphur, purchased all mineral rights and interest or denouncements 7 located in the Municipality of El Pilar, State of Sucre, Venezuela. Solely by reason of plaintiffs' exploitation reservoirs of mineral-laden geothermal steam were discovered in El Pilar. Subsequently, plaintiffs through Sulphur entered into several contracts with a department of the Venezuelan Government under which, inter alia, plaintiffs agreed to erect facilities for converting the steam into electrical power and defendant agreed to purchase the resulting power. Plaintiffs expended large sums of money in order to carry out their part of the contract. Thereafter, Venezuela unilaterally and without any justifiable cause cancelled the contract and confiscated plaintiffs' property and property rights with a resulting loss to plaintiffs of over $116,000,000. Plaintiffs further averred that Venezuela operates its merchant vessels, including the ship which was seized, through a nationalized company wholly owned by Venezuela, and thus was engaged in a commercial and private or proprietary capacity as distinguished from a Governmental or public capacity. Plaintiffs further averred that they could not obtain Justice in any Venezuelan Court.

Venezuela has never entered a general appearance in this action, but improperly entered a special appearance for the purpose of challenging the jurisdiction of the Court of Common Pleas. However, Venezuela, more importantly and properly, challenged the jurisdiction of the Court by filing preliminary objections to plaintiffs' complaint and writ of foreign attachment. 8 On December 5, 1963, Venezuela averred in irs preliminary objections (a) that plaintiffs did not have a cause of action, and (b) that the Courts of Venezuela are available to the plaintiffs to assert any claim they may have, and (c) that the vessel allegedly operated by the nationalized Company is not, in fact, the property of Venezuela, and (d) that under the principle or doctrine of Sovereign Immunity the Court below could not obtain jurisdiction through an action quasi in rem. Plaintiffs filed an answer which denied virtually all of Venezuela's material averments of fact and conclusions of law.

Venezuela also sought and obtained the intervention of the United States Department of State which, by the United States Attorney for the Eastern District of Pennsylvania acting under orders of the Attorney General of the United States, filed a 'Suggestion of Immunity', which included a prayer to dismiss plaintiffs' action against Venezuela because of a certification of Sovereign Immunity which was recognized and allowed by the Department of State. The Attorney General acted upon a request received from the Legal Adviser of the State Department dated January 13, 1964--after all parties had been wisely given a hearing by the Legal Adviser both on the facts and the law--reading pertinently:

'The Department recognizes and allows the sovereign immunity of the Republic of Venezuela, defendant in the above suit, from the jurisdiction of the Court of Common Pleas of Philadelphia County, Pennsylvania, and it will be appreciated if appropriate instructions can be issued to the United States Attorney in that jurisdiction to file a suggestion of immunity with the Court.' 9

On December 18, 1964, the Court below entered the following Order:

'In re the Suggestion of Immunity'

AND NOW, this 18th day of December, 1964, in re the Suggestion of Immunity, the motion of the defendant, the Republic of Venezuela, to dismiss the complaint is overruled, with leave to the defendant to file an answer within thirty days from date of this Order.

What the Court apparently intended to do was to deny the State Department's prayer and Venezuela's motion to dismiss (which was contained in its preliminary objections), basing its denial on its determination that Venezuela was not entitled to Sovereign Immunity. Venezuela then took a timely appeal of this Court under Section 3 of the Act of March 5, 1925, supra.

Thereafter (on March 8, 1965), Venezuela, we repeat, filed in this Court a petition for a writ of mandamus or, in the alternative, a writ of prohibition, or both, naming as respondents Judges Milner and Ullman. These Judges duly filed an answer opposing a grant of the writ and this Court ordered argument on the merits of the petition and answer at the time of oral argument on Venezuela's appeal. Briefs, counter briefs, supplemental briefs and reply briefs were filed by some or all of the parties in one or both of these cases and have been carefully studied by us.


The Court below undoubtedly acquired jurisdiction by service of the writ of foreign attachment upon the Captain of the vessel, and its jurisdiction was not subsequently divested or lost as a result of plaintiffs' voluntary dissolution of the (foreign) attachment without prejudice. Cf. Ex Parte Republic of Peru, 318 U.S. 578, 63 S.Ct. 793, 87 L.Ed. 1014 and Pa.R.C.P. 1272, 12 P.S. Appendix. For reasons hereinafter appearing we deem it unnecessary to decide whether on the present complicated and controversial record, with so many conflicting averments, Venezuela's preliminary objections could be sustained. Cf. Pa.R.C.P. 1030 and 1017(b)(1) and 1028(c).

We shall proceed to discuss the very important and crucial question of Sovereign Immunity which, we repeat, was raised (1) in Venezuela's preliminary objections and (2) also in its petition for a writ of mandamus or prohibition or both, as well as in the State Department's Suggestion of Immunity, and which the parties themselves consider the principal question in these cases.


Venezuela's appeal which, under the Act of 1925, 10 challenges the jurisdiction of the lower Court, cannot be sustained and must be quashed. It is important to note that the Order of the lower Court overruled Venezuela's motion to dismiss the complaint 'with leave to the defendant to file an answer within thirty days * * *'. This is an interlocutory Order, 11 and an appeal under the Act of 1925 raises only questions of jurisdiction, as that term has been interpreted and defined by the Courts. Vendetti v. Schuster, 418 Pa. 68, 208 A.2d 864; see also University Sq. No. 1, Inc. v. Marhoefer, 407 Pa. 257, 180 A.2d 427; Simpson v. Simpson, 404 Pa. 247, 172 A.2d 168; McGinley v. Scott, 401 Pa. 310, 164 A.2d 424; County Const. Co. v. Livengood Const. Corp., 393 Pa. 39, 142 A.2d 9; Welser v. Ealer, 317 Pa. 182, 176 A. 429.

In the Vendetti case the defendant, a surgeon employed by the Government in a veterans hospital, moved to dismiss a malpractice suit brought against him by a patient on the ground that, as such surgeon he was immune from suit 12 for negligent conduct. The lower Court dismissed his motion. This Court quashed the appeal, holding that the lower Court's Order was interlocutory and was not appealable under the Act of 1925. In its Opinion the Court said (418 Pa. page 71, 208 a.2d page 866):

'Even if the defendant is in fact immune from suit as he contends, the Court below undoubtedly had jurisdiction of the cause of action 13 because it has the jurisdiction and power to inquire into actions of trespass. In McWilliams v. McCabe, 406 Pa. 644, 649, 179 A.2d 222, page 224, the Court said: '* * * '* * * the test for determining whether a court has jurisdiction of the subject matter is the competency of the court to determine...

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