Transportes Aereos de Angola v. Ronair, Inc.

• Decision Date: 18 August 1982
• Docket Number: Civ. A. No. 81-120.
• Citation: 544 F. Supp. 858
• Parties: TRANSPORTES AEREOS DE ANGOLA, Plaintiff, v. RONAIR, INC., and Jet Traders Investment Corporation d/b/a Commercial Air Transport Sales, Defendants.
• Court: U.S. District Court — District of Delaware

544 F. Supp. 858

TRANSPORTES AEREOS DE ANGOLA, Plaintiff, v. RONAIR, INC., and Jet Traders Investment Corporation d/b/a Commercial Air Transport Sales, Defendants.

Civ. A. No. 81-120.

United States District Court, D. Delaware.

August 18, 1982.

F. Alton Tybout of Tybout, Redfearn, Casarino & Pell, P. A., Wilmington, Del., and Michael B. Standard and Emily M. Bass of Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P. C., New York City, for plaintiff, Transportes Aereos de Angola.

Allen M. Terrell, Jr., of Richards, Layton & Finger, Wilmington, Del., and Thomas E. Engel and Michele K. Spike of Hale, Russell & Gray, New York City, of counsel, for defendant Ronair, Inc.

James A. Robb, Wilmington, Del., and Linda K. Raspolich of Abrams, Anton, Robbins, Resnick, Schneider & Mager, P. A., Hollywood, Fla., for defendant Jet Traders Inv. Corp.

OPINION

LATCHUM, Chief Judge.

In this case of first impression in this Circuit, the Court must decide whether a state-owned corporation of the People's Republic of Angola, a country with which the United States at present maintains no diplomatic relations, is entitled to prosecute a breach of contract action in the courts of the United States. Relying upon a long-standing principle that instrumentalities of foreign governments not recognized by the United States may not have access to its courts, defendant, Ronair, Inc. ("Ronair"), has moved to dismiss the complaint of plaintiff, Transportes Aereos de Angola ("TAAG"). In addition, defendant, Jet Traders Investment Corporation ("Jet Traders"), has moved to dismiss the complaint as to it for lack of in personam jurisdiction. For the reasons discussed in this opinion, the Court concludes that both motions will be denied and that this suit will be allowed to proceed against both defendants.¹

I. Background

TAAG is a juridical entity of the Ministry of Transport of the People's Republic of Angola ("Angola"), organized under the laws of Angola, with its principal place of business in the city of Luanda. About May 11, 1979, TAAG entered into a written contract with Jet Traders, a Florida corporation with its principal place of business in Florida, to purchase a Boeing 707-321 aircraft for a price of $7.5 million. Under the terms of the contract, delivery of the aircraft was to be made to TAAG by June 25, 1979 at Wilmington Airport, Wilmington, Delaware.

At the time this contract was executed, title to the aircraft was held not by Jet Traders, but by defendant Ronair. On May 23, 1979, Ronair entered into a contract with a corporation operating under the name of Tekair Limited ("Tekair") to sell the Boeing airplane for a purchase price of $4.98 million. On that same date, Tekair in turn executed an agreement with Jet Traders under which the aircraft was to be sold to Jet Traders for a purchase price of $6 million. These two contracts were to be implemented in such a way that delivery of the aircraft would be tendered to Jet Traders on or before June 14, 1979, so that Jet Traders could insure delivery to TAAG by June 25, 1979.

The plane was never delivered by Tekair to Jet Traders, and, consequently, Jet Traders did not meet its obligation to deliver the aircraft to TAAG by June 25, 1979. Title to the aircraft, apparently, has continued to reside in Ronair. TAAG, however, claims to have performed all of the conditions for delivery of the plane described in its contract with Jet Traders, including payment to Jet Traders of $6.55 million towards the purchase price. After the June 25, 1979 deadline had passed without the expected delivery, TAAG tendered written notice to Jet Traders that it was terminating the contract and demanded a refund of all monies paid towards the purchase price, together with consequential damages and accrued interest. Jet Traders has refused to comply with this request in any respect.

On July 21, 1979, Jet Traders filed suit in this Court against Tekair claiming breach of contract based on Tekair's failure to deliver the Boeing airplane as provided by the May 23, 1979 agreement. (Jet Traders Investment Corporation v. Tekair Ltd., C.A. 79-363.) Subsequently, on August 9, 1979, Jet Traders filed an amended complaint, adding Ronair as a defendant and further alleging that Ronair and Tekair, both of which are said to be under the dominion and control of the same individuals, conspired to, and did in fact, defraud Jet Traders and illegally interfere with the TAAG contract. TAAG sought leave to intervene in this action under Rule 24, F.R.Civ.P., alleging claims against Ronair, Tekair and Jet Traders. In an opinion dated March 16, 1981, this motion was denied. Jet Traders Inv. Corp. v. Tekair Ltd., 89 F.R.D. 560 (D.Del.1981). Shortly thereafter, on March 24, 1981, TAAG initiated the present suit against Ronair and Jet Traders. Jurisdiction is predicated on diversity of citizenship under 28 U.S.C. § 1332(a)(4).

II. Ronair's Motion to Dismiss

Ronair has moved to dismiss the complaint pursuant to Rule 12(b)(1), F.R.Civ.P., on the ground that TAAG, an agency of a government not recognized by the United States as the true sovereign of the territory it purports to control, does not have standing to pursue its claim in the courts of the United States. Relying on a series of decisions which have refused litigant status to non-recognized governments and certain of their instrumentalities, see e.g., Republic of Vietnam v. Pfizer, Inc., 556 F.2d 892 (C.A.8, 1977); Federal Republic of Germany v. Elicofon, 358 F.Supp. 747 (E.D.N.Y.1970), aff'd, 478 F.2d 231 (C.A.2, 1973), cert. denied, 415 U.S. 931, 94 S.Ct. 1443, 39 L.Ed.2d 489 (1974), and Supreme Court dicta which also has subscribed to this underlying principle, see Pfizer, Inc. v. India, 434 U.S. 308, 98 S.Ct. 584, 54 L.Ed.2d 564 (1978); Guaranty Trust Co. v. United States, 304 U.S. 126, 58 S.Ct. 785, 82 L.Ed. 1224 (1938), Ronair argues that this Court is without jurisdiction to adjudicate this dispute. Any contrary holding purportedly would eliminate the fundamental political sanction of nonrecognition, and thus undermine the right of the executive branch to control the foreign policy of the United States.

In response, TAAG has raised a number of arguments which may be synthesized as follows. First, TAAG contends that the concept of "recognition," once utilized as an effective weapon by the executive branch in its conduct of international affairs, is no longer considered a viable means of influencing foreign regimes and has for all practical purposes been abandoned by the Department of State. Thus, in keeping with this political judgment, the judiciary likewise should discontinue the practice of denying unrecognized governments access to United States courts. Second, TAAG argues that 28 U.S.C. § 1332(a)(4), which confers diversity jurisdiction on federal courts in cases involving claims brought by foreign states, draws no distinctions between unrecognized and recognized governments. Thus, jurisdiction properly resides in this Court. Third, TAAG asserts that it is a separate and distinct juridical entity whose status must be considered apart from its parent country. Although Angola itself may be precluded from bringing suit in the courts of the United States, TAAG, as an independent agency, cannot be saddled with this disability. Finally, TAAG argues that because the commercial transaction which is at the heart of this controversy was approved by the Department of Commerce, as reflected in its issuance of an export license for the Boeing aircraft, fairness requires that this suit be allowed to proceed.

During the course of this litigation, the views of the Department of State concerning the propriety of this suit were solicited both by counsel for TAAG and counsel for Ronair. In a letter dated September 28, 1981, addressed to TAAG's counsel, the Deputy Legal Adviser of the State Department conceded that the United States government does not now maintain diplomatic relations with Angola. Nonetheless, he further stated that it was the position of the State Department that TAAG should have standing to prosecute its claim:

DEPARTMENT OF STATE

Washington, D. C. 20520

September 28, 1981 Michael B. Standard, Esquire Rabinowitz, Boudin, Standard, Krinsky &amp Lieberman, P. C 30 East 42nd Street New York, N. Y. 10017 Re: Transportes Aereos De Angola v Ronair, Inc. and Jet Traders Investment Corporation

Dear Mr. Standard:

In response to requests from counsel for Transportes Aereos de Angola (TAAG) and from counsel for Ronair, Inc. in the above (sic) referenced litigation, the Department of State is pleased to offer the following information.

The United States does not maintain, and has never maintained diplomatic relations with the People's Republic of Angola. At the same time, the United States Government has not discouraged trade between the United States and Angola. The volume of trade between the two countries in 1980 was $638.6 million, making the United States one of Angola's largest trading partners. The Export-Import Bank of the United States has granted substantial credits for U. S. exports to Angola.

In these circumstances, the Department of State believes that allowing access to U. S. courts by the Angolan Airline TAAG, a State-owned business enterprise, for the resolution of a claim arising out of a purely commercial transaction, would be consistent with the foreign policy interests of the United States.

Sincerely James H. Michel Deputy Legal Adviser

TAAG argues that two conclusions must be drawn from this letter. First, by purposely avoiding the use of the word "recognition," the letter expressly signals the abandonment of the recognition dichotomy as a vehicle for exerting pressure on foreign governments. Second, and more significantly, the State Department's position that this litigation should be pursued to its logical conclusion must be honored by this Court. Ronair responds, in somewhat circular reasoning, that the refusal of the United...