Venus Lines Agency v. CVG Industria Venezolana

• Decision Date: 25 April 2000
• Docket Number: Nos. 98-6223,98-6562,s. 98-6223
• Citation: 210 F.3d 1309
• Parties: (11th Cir. 2000) VENUS LINES AGENCY, Plaintiff-Appellant, v. CVG INDUSTRIA VENEZOLANA DE ALUMINIO, C.A., Defendant-Appellee. Venus Lines Agency, Plaintiff-Appellee, v. CVG Industria Venezolana de Aluminio, C.A., Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1309

210 F.3d 1309 (11th Cir. 2000)

VENUS LINES AGENCY, Plaintiff-Appellant, v. CVG INDUSTRIA VENEZOLANA DE ALUMINIO, C.A., Defendant-Appellee.

Venus Lines Agency, Plaintiff-Appellee, v. CVG Industria Venezolana de Aluminio, C.A., Defendant-Appellant.

Nos. 98-6223, 98-6562.

United States Court of Appeals Eleventh Circuit.

April 25, 2000.

Appeals from the United States District Court for the Southern District of Alabama.(No. 9-0070-P-C), Virgil Pittman, Judge.

Before BLACK and WILSON, Circuit Judges, and RONEY, Senior Circuit Judge.

PER CURIAM:

These consolidated appeals arise from a United States steamship cargo company's attachment of cargo belonging to a Venezuelan corporation to secure any award the cargo company might receive in pending arbitration proceedings. The district court vacated the attachment previously entered by a magistrate judge, on the ground that the property was immune from attachment under the Foreign Sovereign Immunities Act, 28 U.S.C. 1602-1611 (the "FSIA"). On this issue, we reverse and remand. We affirm, however, the district court's order granting a stay and providing for a release bond.

In February 1995, Venus Lines Agency ("Venus Lines"), a shipping company, contracted with CVG Industria Venezolana de Aluminio, C.A. ("Venalum"), a corporation that produces aluminum products, for Venus Lines to deliver Venalum's monthly shipments of aluminum products from Venezuela to Mobile, Alabama and Veracruz, Mexico. In late 1996, Venus Lines commenced arbitration against Venalum, claiming that Venalum owed it more than $4,000,000 for a number of charges due under the contract.

In early January 1998, Venus Lines' vessel arrived in Mobile, Alabama and offloaded the aluminum intended for delivery to Venalum's customers there (the "Mobile cargo"). Rather than proceeding to Veracruz, Mexico, the delivery point for the remaining aluminum (the "Mexico cargo"), Venus Lines filed a motion for a writ of foreign attachment pursuant to Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure seeking attachment of the Mexico cargo.

A magistrate judge issued the writ of attachment. Venalum filed a motion to vacate the attachment, which was granted by the district court on March 4, 1998. Thereafter, pursuant to motions by Venus Lines and Venalum, the court issued a series of orders providing for a stay of execution of the March 4 judgment pending appeal and the posting of bonds by Venalum and Venus Lines in the amounts of $4,200,000 and $286,000, respectively.

In appeal no. 98-6562, Venus Lines appeals the district court's March 4 order vacating the writ of foreign attachment. In appeal no. 98-6223, Venalum contests the district court's order granting a stay and requiring Venalum to post bond. We address Venus Lines' appeal first.

I. Writ of foreign attachment (Appeal No. 98-6562)

The FSIA grants immunity to a foreign state's property in the United States from attachment, arrest and execution except as provided in specific provisions of the Act. See 28 U.S.C. 1609, which states in pertinent part:

[T]he property in the United States of a foreign state shall be immune from attachment, arrest and execution except as provided in sections 1610 and 1611 of this chapter.

The issue is whether the exception to immunity in section 1610(d) regarding prejudgment attachment applies in this case. Section 1610(d) states:

The property of a foreign state ... used for a commercial activity in the United States, shall not be immune from attachment prior to entry of judgment in any action brought in a court of the United States ... if-

(1) The foreign state has explicitly waived its immunity from attachment prior to judgment ..., and

(2) The purpose of the attachment is to secure satisfaction of a judgment that has been or may ultimately be entered against the foreign state, and not to obtain jurisdiction.

28 U.S.C. 1610(d). The parties do not dispute that Venalum is considered a "foreign state" under the FSIA, because it is majority-owned by an agency or instrumentality of the Venezuelan government. See 28 U.S.C. 1603(a). Therefore, the exception will apply if (i) Venalum explicitly waived its immunity from prejudgment attachment; (ii) the purpose of the attachment was to obtain security, not jurisdiction; and (iii) the attached aluminum was used for a commercial activity in the United States. See 1610(d). The district court's conclusion as to whether Venalum enjoys sovereign immunity under the FSIA is a question of law we review de novo. See Aquamar, S.A. v. Del Monte Fresh Produce, 179 F.3d 1279,1289-90 (11th Cir.1999).

A. Whether Venalum explicitly waived its immunity from prejudgment attachment.

A waiver of immunity from prejudgment attachment must be explicit. See 28 U.S.C. 1610(d)(1). To determine whether Venalum explicitly waived immunity, we look to the pertinent language of the contract of affreightment, which states:

CLAUSE O8-ATTACHMENT

THE SHIPOWNERS [Venus Lines] shall have the right to attach the cargo for the payment of the freight, dead freight, demurrages and losses due to detention. THE CHARTERERS [Venalum] shall be responsible for the dead freight and demurrages which may have been caused at the port of lading.

THE CHARTERERS shall also be responsible for the demurrages which may have been caused at the port of discharge or unloading.

The issue is whether the clear reference to Venus Lines' right to "attach" the cargo is a sufficiently explicit waiver of immunity from prejudgment attachment. (Though the original contract was in Spanish, the parties agree that the word "embarger" is properly translated as attachment). Although no court has addressed this precise issue, the Second Circuit has rejected the contention that the words "prejudgment attachment" must be recited to effect a waiver. See Libra Bank, Ltd. v. Banco Nacional de Costa Rica, S.A., 676 F.2d 47, 49-50 (2d Cir.1982). In Libra Bank, the defendant issued four promissory notes, each "irrevocably and unconditionally waiv[ing] any right or immunity from legal proceedings including suit judgment and execution on grounds of sovereignty." Libra Bank, 676 F.2d at 49. The requirement of an "explicit" waiver, the court held, was intended by Congress to preclude only an "unintended waiver." Therefore, the language "any ... immunity from legal proceedings" constituted an explicit waiver of immunity under section 1610(d)(1) because, although the words "prejudgment attachment" were not explicitly mentioned, the language demonstrated a "clear and unambiguous intent to waive all claims of immunity in all legal proceedings." Libra Bank, 676 F.2d at 49.

Similarly, the use of the term "attachment" in this case evinces the parties' "clear and unambiguous intent" to waive immunity from prejudgment attachment. Libra Bank, 676 F.2d at 49. Under a common sense reading, prejudgment attachment is wholly encompassed by the broader term "attachment." A simple reference to "attachment," therefore, explicitly covers both prejudgment and postjudgment attachment. There is no reason to believe that Venalum's waiver of prejudgment attachment was "unintended." Libra, 676 F.2d at 50. We determine that the district court erred in holding that Venalum did not explicitly waive its immunity from prejudgment attachment.

Because the district court decided the case based on this issue, the court did not reach the other two prongs of section 1610(d). We address each prong in turn.

B. Whether the cargo was attached to obtain security.

Under section 1610(d), the "purpose" of the prejudgment attachment must be to "secure satisfaction of a judgment ... and not to obtain jurisdiction." Venalum argues that the attachment violates this requirement of section 1610(d) because, under Rule B, it confers on the district court jurisdiction over Venalum through its property. See Nehring v. Steamship M/V Point Vail, 901 F.2d 1044,1051 (11th Cir.1990)(Rule B "cannot be used purely for the purpose of obtaining security: 'The two purposes may not be separated, however, for security cannot be obtained except as an adjunct to obtaining jurisdiction.' "), quoting Seawind Compania, S.A. v. Crescent Line, Inc., 320 F.2d 580, 582 (2d Cir.1963). Venalum misreads section 1610(d): so long as the purpose of the prejudgment attachment is to obtain security and not jurisdiction, it is irrelevant that an effect of the attachment is to obtain jurisdiction. Compare Mangattu v. M/V IBN HAYYAN, 35 F.3d 205, 209 (5th Cir.1994)(Rule B attachment improper under section 1610(d) where "[t]he Motion for Issuance of Warrant of Arrest filed by Appellants specifically sought to attach the vessel in order to subject UASC, a non-resident defendant, to personal jurisdiction.").

It is clear that the purpose of the attachment was to obtain security. Venus Lines' complaint expressly states that it "seeks to attach property of Defendant within the district to secure any arbitration award that [Venus Lines] might obtain." Furthermore, Venus Lines had no incentive to seek attachment merely to obtain jurisdiction. Jurisdiction over Venalum in the underlying action is not in dispute because in the contract of affreightment, Venalum consented to jurisdiction in a New York arbitration, which was in progress at the time of this appeal.

Because the purpose of the attachment was to obtain security, not jurisdiction, this condition for waiver of immunity under section 1610(d) was satisfied.

C. Whether Venalum's property was "used for a commercial activity in the United States."

To satisfy the immunity exception under section 1610(d), the property must be "used for a commercial activity in the United States." The only property subject to the disputed attachment was the Mexico cargo, which remained on Venus Lines' ship docked in Mobile Bay awaiting its delivery by Venus Lines to Veracruz, Mexico. The mere presence of the property in the United...