Isbrandtsen Tankers, Inc. v. President of India

• Decision Date: 27 July 1971
• Docket Number: Docket 71-1198.,No. 928,928
• Parties: ISBRANDTSEN TANKERS, INC., Plaintiff-Appellant, v. PRESIDENT OF INDIA, Represented by the Director General of the India Supply Mission, Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

446 F.2d 1198 (1971)

ISBRANDTSEN TANKERS, INC., Plaintiff-Appellant, v. PRESIDENT OF INDIA, Represented by the Director General of the India Supply Mission, Defendant-Appellee.

No. 928, Docket 71-1198.

United States Court of Appeals, Second Circuit.

Argued June 23, 1971.

Decided July 27, 1971.

Woodson D. Scott, New York City (Lord, Day & Lord, New York City), for plaintiff-appellant.

Eberhard P. Deutsch, New Orleans, La. (Deutsch, Kerrigan & Stiles, New Orleans, La., H. Barton Williams, New Orleans, La., and Charles L. Trowbridge, New York City, of counsel), for defendant-appellee.

Before SMITH and HAYS, Circuit Judges, and POLLACK, District Judge.^*

J. JOSEPH SMITH, Circuit Judge:

Appellant shipowner instituted suit in the United States District Court for the Southern District of New York against the defendant-appellee, seeking damages resulting from alleged delays of its vessels during October and November of 1966 near the port of Calcutta. The District Court (Thomas F. Croake, Judge) dismissed one of the three causes of action alleged in appellant's second amended complaint, and the shipowner appeals.¹ We find no error and affirm the dismissal.

The dismissal by Judge Croake was premised upon a formal written suggestion of immunity by the United States Department of State, transmitted through the office of the United States Attorney General, after hearings and the filing of briefs with the State Department.

Appellant shipowner and appellee entered into a charter party in July of 1966 for the transportation of grain to India. The shipment was part of a massive effort on the part of the Indian government to end a food shortage, resulting from an extreme drought in 1965 and 1966. The cause of action which is the subject of this appeal sought damages for improper and unreasonable detention of appellant's vessels,² preventing discharge of their cargo and causing substantial loss of time and money. Appellant contends that notwithstanding the advisory letter from the State Department recommending immunity, the District Court has jurisdiction in this matter because of the existence of a waiver of immunity by appellee, said to be contained in paragraph 34 of the contract charter between the parties.³ Additionally, appellant argues that the appearance by appellee by means of serving and filing answering papers constitutes a waiver of any sovereign immunity that may have previously existed.

Whether or not these arguments possess logical force, in cases involving the governments of foreign powers the judiciary has candidly admitted that there exist interests beyond those of purely legal concern. A judicial decision against the government of a foreign nation could conceivably cause severe international repercussions, the full consequences of which the courts are in no position to predict. As this court noted in Victory Transport, Inc. v. Comisaria General, 336 F.2d 354, 358 (2d Cir. 1964), cert. denied, 381 U.S. 934, 85 S. Ct. 1763, 14 L.Ed.2d 698 (1965), "in delineating the scope of a doctrine designed to avert possible embarrassment to the conduct of our foreign relations, the courts have quite naturally deferred to the policy pronouncements of the State Department." See also, National City Bank of New York v. Republic of China, 348 U.S. 356, 360-361, 75 S.Ct. 423, 99 L.Ed. 389 (1955).

Appellant emphasizes that traditionally, sovereign immunity has been afforded to foreign governments only in regard to actions of a public, as opposed to a private/commercial, nature. Here, it is contended, the actions of the Indian government were wholly concerned with a commercial purchase of grain, and therefore do not concern matters of public policy or governmental discretion. This argument is premised upon the famed letter of Jack B. Tate, Acting Legal Advisor to the State Department, to Philip B. Perlman, Acting Attorney General, dated May 19, 1952 appearing in 26 State Dept. Bull. 984 (1952), indicating that it was the policy of our government to adopt the restrictive theory of sovereign immunity, i. e. to grant immunity to acts of a public nature, and to deny it to those of a private nature.

This proposed distinction between acts which are jure imperii (which are to be afforded immunity) and those which are jure gestionis (which are not), has never been adequately defined, and in fact has been viewed as unworkable by many commentators.⁴ In Victory Transport, this court adopted the view that acts which are jure imperii would be limited to the following:

(1) internal administrative acts, such as expulsion of an alien;

(2) legislative acts, such as nationalization;

(3) acts concerning the armed forces;

(4) acts concerning diplomatic activity;

(5) public loans.

336 F.2d at 360.

Were we required to apply this distinction, as defined, to the facts of the present case, we might well find that the actions of the Indian government were, as appellant contends, purely private commercial decisions.

It is true that the mere fact that a contract with a private commercial interest is involved does not automatically render the acts of the foreign government private and commercial. As this court recently noted:

The view that all contracts, regardless of their purpose, should be deemed "private" or "commerical" acts would lead to the conclusion that a contract by a foreign government for the purchase of bullets for its army or for the erection of fortifications do not constitute sovereign acts — a result we viewed as "rather astonishing" in Victory Transport, 336 F.2d at 359. Heaney v. Government of Spain, 445 F.2d 501 p. 504 (2d Cir., 1971).

In Victory Transport, the contract was, as here, for the carriage of grain, and in the absence of State Department action, jurisdiction was upheld. See also, Petrol Shipping Corp. v. Kingdom of Greece, 360 F.2d 103 (2d Cir. 1966).

In situations where the State Department has given a formal recommendation, however, the courts need not...