Ocean Transport Co. v. Government of Republic of Ivory Coast, 67-99.

• Decision Date: 23 May 1967
• Docket Number: No. 67-99.,67-99.
• Parties: OCEAN TRANSPORT COMPANY, Inc., Plaintiff, v. The GOVERNMENT OF the REPUBLIC OF the IVORY COAST and the FISHING VESSEL PRESIDENT KENNEDY, Defendant.
• Court: U.S. District Court — Eastern District of Louisiana

269 F. Supp. 703

OCEAN TRANSPORT COMPANY, Inc., Plaintiff, v. The GOVERNMENT OF the REPUBLIC OF the IVORY COAST and the FISHING VESSEL PRESIDENT KENNEDY, Defendant.

No. 67-99.

United States District Court E. D. Louisiana, New Orleans Division.

May 23, 1967.

Joaquin Campoy, New Orleans, La., for plaintiff.

Carl J. Schumacher, Jr., New Orleans, La., for defendant.

CASSIBRY, District Judge.

This cause came on for hearing on April 19, 1967 on motion of defendant to dismiss.

Ocean Transport Company, Inc., a Louisiana corporation, has sued the Government of the Republic of the Ivory Coast, a sovereign nation, and the Fishing Vessel, President Kennedy, for breach of contract, civil and maritime. The President Kennedy is a tuna and sardine fishing boat, constructed in the United States, the ownership of which was acquired by the Republic of the Ivory Coast from the United States of America through the Agency for International Development (A.I.D.) pursuant to the Foreign Assistance Act of 1961. The Republic of the Ivory Coast intends to use the President Kennedy to train and educate its Nationals to become fishermen.

In August 1966, plaintiff entered into negotiations with representatives of defendant, acting through A.I.D., which culminated in a contract effective December 10, 1966. Under the terms of the contract, defendant was to deliver the vessel to plaintiff in a seaworthy condition fully found and ready for sea and, upon delivery of the vessel, plaintiff would be obligated to place a crew on board and deliver the vessel to Abidjan, Ivory Coast. The contract further provided that upon delivery of the vessel to the defendant at Abidjan, defendant would have paid the plaintiff the total sum of $23,000.00, plus $215.00 for each day, or portion thereof, that the voyage might be delayed by reason of the vessel having to put into a port for major repairs or alterations. To make certain that funds would be available to discharge defendant's obligations to pay plaintiff the agreed upon contract price for delivery of the vessel to Abidjan, defendant, on or about November 29, 1966, deposited the sum of $23,000.00 in the Hibernia National Bank in New Orleans in the form of a letter of authorization to disburse portions of said funds to plaintiff prior to, and at various stages of the contemplated voyage. At the time suit was filed, sums totalling $10,000.00 had been disbursed to the plaintiff. The vessel was finally delivered to the plaintiff who placed a crew aboard and the ship duly sailed for Abidjan. On January 15, 1967, enroute to the Republic of the Ivory Coast, the Master of the vessel discovered that the ship was unstable and unseaworthy. As a result, he felt constrained to put in to Key West, Florida for the safety of the crew and the vessel. The vessel has remained in Key West since that date. Defendant refused to authorize any further disbursement of funds and, as a consequence, plaintiff has filed this suit alleging breach of contract. To obtain jurisdiction and assure payment of at least a portion of his alleged losses, plaintiff has filed this suit in personam against the Republic of the Ivory Coast and in rem against the vessel and has obtained a writ of attachment on the balance of the contract funds now in the Hibernia National Bank of New Orleans.

Defendant has moved to dismiss the action in its entirety on the grounds that the Republic of the Ivory Coast as a sovereign nation, is immune to suit. The State Department of the United States has declined the Republic of the Ivory Coast's request for immunity, saying that it does so because the contract at issue is of a "private" nature. (jure gestionis)¹

Absolute sovereign immunity became firmly established in the United States in 1812 with The Schooner Exchange v. McFaddon.² Courts have generally considered that sovereign immunity was a political or diplomatic problem, more than a legal one, and have deferred to the State Department's judgment in these cases to avoid possible embarrassment to those responsible for the Nation's foreign policy.³ The Supreme Court has said, "It is therefore not for the courts to deny an immunity which our government has seen fit to allow, or to allow an immunity on new grounds which the government has not seen fit to recognize."⁴

The United States Court of Appeals for the Second Circuit has construed the Republic of Mexico case to mean, "that the courts should deny immunity where the State Department has indicated, either directly or indirectly that immunity need not be accorded."⁵ Judge Smith felt that it made no sense to deny a litigant a deserved day in court if the suit did not embarrass the State Department.

In any event, many nations around the world relaxed the absolute rule to one more in tune with the times. The United States State Department, in the "Tate Letter,"⁶ in 1952, broadly pronounced against granting sovereign immunity for commercial or private activities of foreign governments and outlined a policy to follow the newer or restrictive theory, whereby immunity is...