Republic of Panama v. Air Panama Internacional

• Decision Date: 14 June 1988
• Docket Number: No. 88-435-Civ.,88-435-Civ.
• Citation: 745 F. Supp. 669
• Parties: REPUBLIC OF PANAMA, Plaintiff, v. AIR PANAMA INTERNACIONAL, S.A., Carlos Pere, Fred Durling, and Oderay Botello, Defendants.
• Court: U.S. District Court — Southern District of Florida

745 F. Supp. 669

REPUBLIC OF PANAMA, Plaintiff, v. AIR PANAMA INTERNACIONAL, S.A., Carlos Pere, Fred Durling, and Oderay Botello, Defendants.

No. 88-435-Civ.

United States District Court, S.D. Florida.

June 14, 1988.

Mark A. Cohen, Richard A. Lehrman, Cohen & Silver, P.A., Miami, Fla., Melvin C. Garbow, Daniel A. Rezneck, Rebecca E. Swenson, Arnold & Porter, Washington, D.C., for plaintiff.

Ira Kurzban, Kurzban, Kurzban & Weinger, Miami, Fla., Terry Gross, Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P.C., New York City, for defendants.

ORDER ENTERING PRELIMINARY INJUNCTION AND OMNIBUS RULING ON PENDING MOTIONS

HOEVELER, District Judge.

THIS CAUSE is before the Court upon the Complaint of plaintiff, the Republic of Panama, for a preliminary injunction enjoining the defendants from making any payments to, or transferring to the control of, the Noriega/Palma regime any funds or other property of defendant Air Panama Internacional, S.A. ("Air Panama"), and from interfering with the exercise of control of Air Panama by any person authorized by His Excellency Juan B. Sosa.

THE COURT has considered the application for a preliminary injunction, heard oral argument, and reviewed documentary evidence and the relevant parts of the record. Being otherwise fully advised in the premises, it is ORDERED AND ADJUDGED as follows:

I.

BACKGROUND

This is an action to establish the rights of plaintiff, the Republic of Panama, to the funds, aircraft and other property owned by the plaintiff but at the outset of this litigation controlled by persons appointed by the Noriega/Palma regime in Panama. The action arises out of the current political struggle in the Republic of Panama. On February 25, 1988, the President of Panama, Eric Arturo Delvalle ("Delvalle") dismissed General Manuel Antonio Noriega ("Noriega") as Commander of the Panamanian Defense Forces. General Noriega refused to accept the decision of President Delvalle and, on February 26, 1988, caused the National Assembly of Panama to take actions purportedly removing President Delvalle from office and causing Panama's Cabinet Council to name Manuel Solis Palma ("Palma") as the new President of Panama. In an Executive Order of April 8, 1988, of which the Court takes judicial notice, President Reagan responded to these actions by declaring "that the policies and actions in Panama of Manuel Antonio Noriega and Manuel Solis Palma constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States." Executive Order Prohibiting Certain Transactions With Respect to Panama at 1 (April 8, 1988). President Reagan "declared a national emergency to deal with that threat." Id.

The United States has recognized the Delvalle government as the lawful government of the Republic of Panama and has recognized Ambassador Juan B. Sosa "as the accredited representative of the Government of Panama in the United States with authority to speak for, and represent the interests of, the government of Panama in" this country. (Attachment E to Sosa Declaration).¹

The defendants in this action are Air Panama and three employees of Air Panama. Air Panama is a corporation formed to provide international airline service to and from Panama. The government of Panama owns 100 percent of the stock of Air Panama and administers the airline through the economic development agency of Panama, the Corporacion Financiera National ("COFINA"). The President of Panama is empowered to appoint the directors of COFINA, who in turn have the authority to vote the shares of Air Panama.

On March 5, 1988, the Noriega regime took control of Air Panama's operations in the United States by replacing the company's chief executive officer, Mario Oriani, with defendant Carlos Pere. Mr. Pere and two other named defendants, Fred Durling and Oderay Botello, exercised control of Air Panama in the United States until the Court issued a temporary restraining order on March 11, 1988.

On March 10, 1988, Ambassador Sosa, acting in his capacity as chairman of the board of directors of Air Panama, and acting on behalf of the President of the Republic of Panama, appointed a new board of directors to Air Panama. Ambassador Sosa also appointed Mr. Rene Picans as assistant to the Chairman of Air Panama, Mr. Mario Oriani as Regional Manager, and Ms. Marcela Cucalon as Regional Assistant Manager. But those persons could not take their positions without assistance from the Court.

Plaintiff filed this lawsuit on March 10, 1988. On March 11, 1988, after hearing argument of counsel, this Court entered a temporary restraining order precluding the defendants, their affiliates, agents, subsidiaries, directors, officers, and representatives, servants and employees from making any payments to, or transferring to the control of, the Noriega regime any funds or other property belonging to or properly held in the name of Air Panama and from interfering in any way with the exercise of control of all property of Air Panama by any person authorized by Ambassador Sosa. The Order also empowered the Sosa designees, Oriani, Picans, and Cucalon to assume their positions at the airline. After a further hearing, this Court extended the temporary restraining order on March 16, and again on March 21.

Upon receipt of this Court's March 16, 1988 order, Mr. Oriani, as Regional Manager of Air Panama, appointed the law firm of Cohen & Silver to advise the airline and to serve as counsel to Air Panama in all actions by or against Air Panama. Cohen & Silver, with the law firm of Arnold & Porter, are also counsel to the Republic of Panama.

On the same date, Ira J. Kurzban, Esq., and Terry Gross, Esq., filed a "Notice of Appearance of Counsel for Defendant Air Panama International, S.A." Mr. Gross also filed an application for permission to appear Pro Hac Vice as "counsel for Defendant Air Panama Internacional, S.A." Plaintiff opposed both applications. On March 21, 1988, Messrs. Kurzban and Gross also filed a "Motion to Dissolve Plaintiff's TRO and to Enter A TRO and Preliminary Injunction on Behalf of Defendant Air Panama."

This Order reaffirms the Court's ruling on plaintiff's motion for a temporary restraining order and denies the motion filed by Messrs. Kurzban and Gross to dissolve the temporary restraining order and to enter a temporary restraining order and preliminary injunction. It appears to the Court that Messrs. Kurzban and Gross, although styling their actions as "appearances" on behalf of Air Panama, are in fact attempting to intervene on behalf of the unrecognized Noriega/Palma regime. Therefore, the Court will treat their actions as an effort to intervene. Inasmuch as the Noriega/Palma regime has no standing to intervene, the applications to appear by Messrs. Gross and Kurzban are denied. Jurisdiction in this case is predicated upon the existence of a federal question and the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1602-1610. See Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 492-94, 103 S.Ct. 1962, 1970-72, 76 L.Ed.2d 81 (1983).

II.

PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION

It is well-settled in this jurisdiction that a preliminary injunction is warranted upon a showing by the plaintiff of the following four prerequisites:

(1) a substantial likelihood that plaintiff will prevail on the merits,

(2) a substantial threat that plaintiff will suffer irreparable injury if the injunction is not granted,

(3) that the threatened injury to plaintiff outweighs the threatened harm the injunction may do to defendant, and

(4) that granting the preliminary injunction will not disserve the public interest.

Canal Authority of State of Florida v. Callaway, 489 F.2d 567, 572 (5th Cir.1974). Plaintiff has established each of these elements and is therefore entitled to the relief it seeks.

A. Likelihood of Success

The Court concludes that plaintiff is likely to succeed on the merits of its claim. This conclusion is founded upon the political question doctrine, which prescribes that the recognition by the United States of a foreign government is a political question within the exclusive province of the Executive Branch. Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 410, 84 S.Ct. 923, 931, 11 L.Ed.2d 804 (1964); Guaranty Trust Co. v. United States, 304 U.S. 126, 137-38, 58 S.Ct. 785, 791-92, 82 L.Ed. 1224 (1938). Thus, this Court must give "complete judicial deference"² to and is "conclusively bound"³ by the decision of the Executive Branch to recognize the government of President Delvalle as the lawful constitutional government of the Republic of Panama. Moreover, where property owned by a foreign government is located in the United States and two competing regimes claim to be the government which owns the property, recognition by the Executive Branch of one regime as the lawful foreign government conclusively establishes that government's title to the property.

Thus, in Bank of China v. Wells Fargo Bank & Union Trust Co., 104 F.Supp. 59 (N.D.Cal.1952), modified, 209 F.2d 467 (9th Cir.1953), the Court confronted a situation wherein the Chinese government owned an entity known as the "Bank of China" which had a bank account in a United States bank. Both the Nationalist government of China and the Peoples Republic government of China claimed title to the bank account. The court concluded that it was bound by the United States government's recognition of the Nationalist government and consequently awarded the account to the Nationalist government:

It is not a proper function of a domestic court of the United States to attempt to judge which government best represents the interests of the Chinese State in the Bank of China. In this situation, the Court should justly accept, as the representative of the Chinese State, that government which our executive deems best able to further the mutual interests of China and the United States.

104 F.Supp. at 66.

In the instant case it is...