Outbound Maritime Corp. v. PT Indonesian Consortium, 83 Civ. 8403 (KTD).

• Decision Date: 22 December 1983
• Docket Number: No. 83 Civ. 8403 (KTD).,83 Civ. 8403 (KTD).
• Parties: OUTBOUND MARITIME CORPORATION, Plaintiff, v. P.T. INDONESIAN CONSORTIUM OF CONSTRUCTION INDUSTRIES and ICCI/AME Joint Venture, Defendants.
• Court: U.S. District Court — Southern District of New York

575 F. Supp. 1222

OUTBOUND MARITIME CORPORATION, Plaintiff, v. P.T. INDONESIAN CONSORTIUM OF CONSTRUCTION INDUSTRIES and ICCI/AME Joint Venture, Defendants.

No. 83 Civ. 8403 (KTD).

United States District Court, S.D. New York.

December 22, 1983.

Poles, Tublin, Patestides & Stratakis by Alan Van Praag, William J. Brady, III, New York City, for plaintiff.

White & Case by Edna Sussman, Richard Sypher, New York City, for defendants.

Buckley, Kremer, O'Reilly, Piper, Hoban & Marsh, by James G. Marsh, Mineola, N.Y., for Marine Midland Bank.

MEMORANDUM DECISION

KEVIN THOMAS DUFFY, District Judge.

Plaintiff Outbound Maritime Corporation ("Outbound") filed a complaint in admiralty against Defendants P.T. Indonesian Consortium of Construction Industries ("ICCI") and ICCI/AME Joint Venture ("JV") claiming $1,455,762.39 in damages for breach of an oral maritime contract. At the filing of the complaint, plaintiff, pursuant to Rule B(1) of the Supplemental Rules of Certain Admiralty and Maritime Claims, attached an account belonging to defendants at the Marine Midland Bank in New York. Outbound is a corporation organized under the laws of New York and acts as a non-vessel owning common carrier ("NVOCC"). ICCI is a corporation organized under the laws of Indonesia and owns a majority ownership interest in JV. The matter is presently before me on defendants' motion, by way of order to show cause, to vacate the attachment.

For the purposes of this motion only, I will assume that plaintiff on June 2, 1983 entered into an oral contract with ICCI to ship various cargoes from New York to Saudi Arabia as alleged in plaintiff's complaint. In connection with the contract, defendants procured a letter of credit from the Marine Midland Bank in the amount of $1,500,000 for the benefit of plaintiff. During the course of plaintiff's performance under the contract, plaintiff presented several sight drafts against the letter of credit all of which were honored, leaving a balance of $1,455,762.39 on the letter. In September of 1983, defendants notified plaintiff that they would no longer accept shipments under the contract and that plaintiff's damages would be the balance remaining on the letter of credit. Plaintiff filed this complaint in November seeking damages and attaching defendants' letter of credit at Marine Midland Bank which, in turn, apparently asserted a banker's lien against the defendants' operating account. Defendants, on December 7, 1983, requested, by order to show cause, that the attachment of the Marine Midland Bank account be vacated.

I heard argument on defendants' motion to vacate the attachment on December 8, 1983. Defendants contend that because this action is not properly within the admiralty jurisdiction of the court, I am without subject matter jurisdiction and the attachment is improper. Specifically, defendants argue that the activities of Outbound as a freight forwarder constitute acts preliminary to a maritime contract and do not give rise to admiralty jurisdiction. Defendants further raise the affirmative defense of sovereign immunity. Defendants contend that ICCI was nationalized by a proclamation of the Indonesian government on May 5, 1983 and that its private shares were effectively transferred to the government on June 11, 1983. In support, defendants present the affidavit of Koko Widayatmoko, President of ICCI, which states that ICCI is a wholly-owned corporation of the Republic of Indonesia, and an unauthenticated translated version of the May 5th Presidential Proclamation.

At the hearing, I reserved decision on the issues and directed defendants to submit further documentary evidence of the nationalization and to address the question of whether sovereign immunity is a defense if the defendant was not sovereign at the time the contract was formed. In subsequent papers, defendants present the affidavit of the Consul General of the Republic of Indonesia. Because I find that this action properly lies in admiralty and that defendants have failed to establish their claim of immunity, I will not address the question of whether defendants had to have been immune at the time of contracting in order to avail themselves of the defense.

A. Admiralty Jurisdiction

There is no question that this matter properly lies in a court of admiralty. Defendants argue that plaintiff's status as a non-vessel owning common carrier makes plaintiff simply a freight forwarder, and thus the contract between the two parties is not a maritime contract. In focusing on plaintiff's status, defendants miss the key issue. As the Second Circuit recently stated in finding that a lease for the sale of containers fell within the admiralty jurisdiction of the court, the inquiry solely concerns the nature of the contract. CTI-Container Leasing Corp. v. Oceanic Operations Corp., 682 F.2d 377, 379 (2d Cir. 1982). The question is whether the contract "relates to a ship in its use as such, or to commerce or to navigation on navigable waters, or to transportation by sea or to maritime employment, ... or to one for the furnishing of services, supplies or facilities to vessels ... in maritime commerce or navigation." Id. (citations omitted).

In this case, the oral contract, as evidenced by the letter of credit, required the transportation of cargo from the United States to Saudi Arabia. That the parties intended to transport the goods by way of ocean carriage is clear from the terms of the letter of credit. The letter included the payment of ocean freight and port clearance charges. Moreover, plaintiff issued bills of lading...