International Tin Council v Amalgamet Inc.

CourtUnited States State Supreme Court (New York)
Date25 January 1988
United States Supreme Court, New York County.

(Parness J.)

International Tin Council
Amalgamet Inc

International organizations Immunity Whether international organization entitled to immunity in State which is not a member of organization Whether organization has sovereign status International Tin Council Whether entitled to immunity under United States law Foreign Sovereign Immunities Act International Organizations Immunities Act Immunity of International Tin Council under United Kingdom law Whether comity requires recognition of that immunity by courts in the United States International Tin Council-United Kingdom Headquarters Agreement, 1972 International Tin Council (Immunities and Privileges) Order 1972 Scope of immunity under United Kingdom law Arbitration proceedings Waiver of immunity Whether act of State doctrine applicable to commercial contract between International Tin Council and New York corporation

Relationship of international law and municipal law Act of State and justiciability United States act of State doctrine Whether applicable to commercial transactions Whether applicable to acts of international organizations

Comity Recognition of foreign laws required by comity Whether comity requires courts in the United States to give effect to immunity accorded to international organization by United Kingdom law Whether that immunity intended to have extraterritorial effect The law of the United States

Summary: The facts:Amalgamet Inc, a New York corporation, concluded a number of contracts for the purchase and sale of tin with the International Tin Council (ITC).1 The ITC was an international organization, whose headquarters were in London. At the relevant time the ITC was established under the Sixth International Tin Agreement, 1982, to which the United States was not a party. Its members were 23 States and the European Economic Community.2 In October 1985 the ITC announced that it was unable to meet its commitments and ceased trading, owing several hundred million pounds to its creditors. Amalgamet commenced arbitration proceedings against the ITC in New York in respect of three contracts which the ITC had refused to honour. The ITC sought an order staying the arbitration proceedings on the grounds that it was entitled to immunity from suit and legal process under the International Tin Council-United Kingdom Headquarters Agreement, 1972 (the Headquarters Agreement) and Article 6 of the International Tin Council (Immunities and Privileges) Order 1972 (the 1972 Order)3 adopted by the United Kingdom Government. The ITC maintained that it thus enjoyed sovereign status which entitled it to immunity in the United States or that, as a matter of comity, courts in the United States should recognize and give effect to its immunity under the law of the United Kingdom. The ITC also argued that it had never consented to arbitration, since the provision for arbitration was contained only in a confirmation of sale form employed by Amalgamet and used to confirm contracts made orally.

Held:The ITC's petition for a stay of arbitration was dismissed.

(1) The ITC was not entitled to immunity under the Foreign Sovereign Immunities Act, because it was not a foreign State, or under the International Organizations Immunities Act, because that Act applied only to organizations in which the United States participated and which had been designated by Executive order as entitled to immunity, neither of which conditions applied in the case of the ITC (pp. 334).

(2) The act of State doctrine was not applicable. The doctrine applied only where political or sovereignty issues were involved and not to disputes arising out of purely commercial transactions such as those in the present case. Since the International Fin Council-United Kingdom Headquarters Agreement, 1972, Article 23,4 required the ITC to include arbitration clauses in contracts with United Kingdom corporations, it was difficult to see how arbitration proceedings in New York could infringe the act of State doctrine (p. 34).

(3) Considerations of comity did not require the Court to accord immunity to the ITC in the present case. Immunity was a derogation from the normal exercise of jurisdiction by the courts and should be granted only in clear cases. The 1972 Order granted the ITC immunity only within the United Kingdom and was not intended to have extraterritorial effect. Moreover, the 1972 Order and the Headquarters Agreement would have permitted enforcement of an arbitration claim in the United Kingdom by a United Kingdom corporation or resident (pp. 346).

(4) Even if the Court were to give effect to the 1972 Order, Article 6 of the Order permitted the ITC to waive its immunity and the arbitration clauses in the present case constituted such a waiver (p. 36).

(5) The ITC had consented to the arbitration clauses which formed part of the contracts between the ITC and Amalgamet (pp. 368).

The text of the judgment of the Court commences on the opposite page.

This is a motion by International Tin Council to stay arbitration at the American Arbitration Association in New York City. Respondent, Amalgamet Inc., is a New York domiciled corporation engaged in the business of buying and selling metals. Petitioner, International Tin Council (ITC) is an organization based in London, composed of traders in tin which include 22 member countries who produce or consume tin. Its purpose is to make a market in tin contracts and futures so as to stabilize the international trading of tin and to ensure the availability of adequate supplies in the world market.

During the period from 19821985 Amalgamet had entered into 38 buy and sell contracts with ITC. On October 25, 1985, the bottom had apparently dropped out of the tin market and the price of tin fell from $5.43/lb to $2.50/lb. The London Exchange immediately suspended trading in tin. As a result petitioner, ITC, refused to honor three contracts in which it had agreed to purchase quantities of tin from respondent at pre-crisis prices.

Respondent's claim is for the damages sustained by reason of ITC's failure to complete these three tin purchases at the price agreed. In attempting to enforce its claim, respondent served a demand for arbitration relying upon an arbitration clause contained in a confirmation of sale form employed by Amalgamet in its transactions with ITC.

In the within proceeding, petitioner, ITC, seeks to stay arbitration on two grounds. First, that petitioner is immune from suit and legal process based on a sovereign status it claims to enjoy under the laws of the United Kingdom and also under the law of international comity and, second, that petitioner had never consented to arbitration nor is it bound by any arbitration clause contained in the sales form.

As to this first ground, ITC predicates its immunity from process and suit upon the fact that...

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