New York and Cuba M SS Co. v. Republic of Korea

• Decision Date: 13 July 1955
• Parties: NEW YORK AND CUBA MAIL STEAMSHIP COMPANY, owner of steamship VIRGINIA CITY VICTORY, Libellant, v. REPUBLIC OF KOREA, Respondent.
• Court: U.S. District Court — Southern District of New York

132 F. Supp. 684

NEW YORK AND CUBA MAIL STEAMSHIP COMPANY, owner of steamship VIRGINIA CITY VICTORY, Libellant, v. REPUBLIC OF KOREA, Respondent.

United States District Court S. D. New York.

July 13, 1955.

Burlingham, Hupper & Kennedy, New York City, Eugene Underwood and Richard W. Palmer, New York City, of counsel, for libellant.

Maxwell T. Cohen, New York City, for respondent, appearing specially.

WEINFELD, District Judge.

On filing this suit in admiralty to recover for damages sustained by libellant's steamship, process in personam with writ of foreign attachment issued¹ pursuant to which respondent's funds on deposit in New York banks were attached.

The respondent, Republic of Korea, appearing specially, moves to vacate the attachment and to dismiss the libel on the ground that as a recognized sovereign and independent state it is immune from suit.

The libel alleges that on April 18, 1951 libellant's ship, The Virginia City Victory, which had unloaded a cargo of rice at the port of Pusan, Korea, was damaged by respondent's lighter which had assisted in the unloading operation. The respondent alleges that the cargo of rice had been acquired by it — not for sale, resale, barter or exchange — but for free distribution to its civilian population and military personnel in Korea.

Libellant commenced an earlier suit on the same claim and effected personal service of process on respondent's Consul General in New York. A motion to dismiss the prior suit was made based upon the affidavit of the Consul General who, though asserting sovereign immunity on behalf of his government, also stated that in any event he was not authorized to accept service of process on its behalf. The libellant appeared but did not oppose the motion and accordingly the suit was dismissed. It is obvious that this disposition in nowise determined the claim of sovereign immunity and the respondent's contention that the dismissal is res judicata is without merit.

Following the attachment of the bank accounts in the pending suit the Korean Ambassador made formal representation to the Secretary of State of the United States requesting the assistance of the State Department in establishing the immunity of the Republic of Korea from suit, and of its funds from attachment. On this motion the United States Attorney for the Southern District of New York, acting under the direction of the Attorney General, has filed a suggestion with the Court. Attached to the suggestion are copies of the Ambassador's communication to the Secretary of State and the latter's letter to the Attorney General setting forth the Department's position.

Since the suggestion filed with the Court restates the State Department position in practically the same language as that contained in its letter to the Attorney General, the following quotation therefrom is appropriate for consideration of the issue posed on this application:

"The letter from the Secretary of State of the United States to the Attorney General of the United States recognizes that under international law property of a foreign government is immune from attachment and seizure, and that the principle is not affected by a letter dated May 19, 1952, from the Acting Legal Adviser to the Department of State to the Acting Attorney General of the United States, in which the Department of State indicated its intention to be governed by the restrictive theory of sovereign immunity in disposing of requests from foreign governments that immunity from suit be suggested in individual cases. The Department of State accordingly has requested that a copy of the note of the Ambassador of Korea be presented to the Court and that the Court be informed of the Department of State's agreement with the contention of the Ambassador that property of the Republic of Korea is not subject to attachment in the United States.

"The Department of State, however, has not requested that an appropriate suggestion of immunity be filed, inasmuch as the particular acts out of which the cause of action arose are not shown to be of purely governmental character."

Thus the State Department has taken a direct and unequivocal position with respect to the Republic of Korea's claim that its funds are immune from attachment, but has declined to make the requested suggestion of immunity from suit, asserting that upon the facts as presented it does not appear the claim rests upon acts of a purely governmental character.

It is therefore not surprising that the parties are in sharp disagreement as to the effect which the Court should give to the suggestion. The libellant insists that the suggestion is an outright rejection of the claim of immunity and that the statement in it that the property of a foreign sovereign is not subject to attachment and seizure is not only gratuitous but an intrusion on the judicial function. The respondent, on the other hand, argues that the funds are immune from attachment generally, and specifically so because they were used and required by it in the United States for public and governmental purposes; further that it may not be sued in our courts without its consent; and finally it urges that even under the new policy of the State Department whereby the rule of absolute sovereign immunity was relaxed in favor of the newer or restrictive theory of sovereign immunity with respect to private acts or commercial transactions,² it is still entitled to exemption from suit since the acts on which the libellant founds its claims...