Van Brokkelen and Rohr SA v Grumman Aerospace Corporation

• Date: 26 May 1977
• Court: U.S. District Court — Eastern District of New York

United States, District Court, Eastern District, New York

(Platt, District Judge)

Van Bookkelen and Rohr S.A.

and

Grumman Aerospace Corporation

States as international persons In general Recognition of acts of foreign States and governments Act of State doctrine Commercial activity exception to act of State doctrine Action for interference with exclusive distributorship rights Denial of import licences by Government of Brazil The law of the United States

Summary: The facts:In 1972 the plaintiff, an aerospace broker, undertook to act as exclusive agent for the defendants, manufacturers of aircraft, for the purpose of selling aircraft in Brazil. Negotiations took place for the sale of crop-dusting aircraft. Finance was to be supplied by the Brazilian Government. In 1974 a Government agency was established to oversee the importation of aircraft. In 1975 the agency decided to deny import licences for these aircraft on the ground, inter alia, that equivalent aircraft could be produced in Brazil. The plaintiff brought an action for interference with his exclusive distributorship rights. It was alleged that the refusal to issue import licences had been caused by employees of the defendants enabling a Brazilian manufacturer to assert to the agency that it would be capable of producing equivalent aircraft.

Held:The defendants' motion to dismiss was granted. The act of State doctrine applied and there was no justiciable issue of fact.

(1) The act of State doctrine precluded the courts of the United States from inquiring into the validity of acts of a recognised foreign sovereign committed within its own territory in the exercise of governmental authority. The justification for the doctrine was that adjudication by a court of the legality of acts of foreign States within their own territory might embarrass the Executive in the conduct of foreign relations. The decision of the agency to deny import licences clearly stated the intention of the Brazilian Government and fell within the powers normally exercised by a sovereign. Moreover, inquiry into the motivation behind the decision would necessarily include the question of whether the decision had been procured by improper influence. That in itself might embarrass the Executive in its conduct of relations with Brazil.

(2) The Court was not satisfied that there was an exception to the act of State doctrine for cases where the sovereign was engaged in purely commercial activity. In any event, such an exception would not have been applied in this case, because the denial of import licences was the type of activity normally considered to lie within the power of a government and was not a purely commercial activity.

The following is the text of the judgment of the Court:

Defendants have made two motions herein; the first for an order pursuant to Rules 36 and 37 of the Federal Rules of Civil Procedure providing (i) that Request to Admit No. 6 of Defendants' First Request for Admissions dated March 10,1976 be deemed admitted, and that plaintiff pay the attorneys' fees and disbursements of this motion to defendants or, in the alternative, (ii) that they admit or deny Request to Admit No. 6 and that plaintiff pay the attorneys' fees and disbursements of this motion to defendants and the second for an order pursuant to Rule 56(b) of the Federal Rules of Civil Procedure granting summary judgment in favor of defendants and against plaintiff and dismissing plaintiff's complaint in its entirety, and awarding defendants their costs and reasonable attorneys' fees incurred in defending this action.

In this decision we will consider defendants' motions in inverse order to which they were actually made.

According to plaintiff's complaint, it entered into an agreement with the defendant Grumman Aerospace Corp. dated April 15, 1972, as a broker with exclusive distributorship rights in the South American countries of Argentina, Brazil, Chile, Paraguay, Bolivia, Uruguay and Ecuador, and the right (not exclusive) to sell a specific type of plane (Ag-Cat) within the limits of Peru, the Guianas and Central America. The Ag-Cat is a farm type of crop dusting plane. The contract was for a two year period but was extended for an additional two years by virtue of a telegram submitted in October of 1973.

Pursuant to the contract, plaintiff undertook to negotiate the sale of 44 Ag-Cat planes to a corporation known as ANAPLA which was acting on behalf of ten Brazilian companies concerning the purchase of Ag-Cats with financing to be supplied from the Government of Brazil.

Plaintiff alleges in...