Williams v. Shipping Corp. of India

Decision Date07 July 1981
Docket NumberNo. 80-1243,80-1243
Citation653 F.2d 875
PartiesLenwood WILLIAMS, Jr., Appellant, v. The SHIPPING CORPORATION OF INDIA, Appellee.
CourtU.S. Court of Appeals — Fourth Circuit

John H. Klein, Norfolk, Va. (Breit, Rutter & Montagna, Norfolk, Va., on brief), for appellant.

John R. Crumpler, Jr., Norfolk, Va. (Seawell, McCoy, Dalton, Hughes, Gore & Timms, Norfolk, Va., on brief), for appellee.

Bruno A. Ristau, Dept. of Justice, Washington, D. C. (Alice Daniel, Asst. Atty. Gen., Washington, D. C., Justin W. Williams, U. S. Atty., Alexandria, Va., Eloise E. Davies, Dept. of Justice, Washington, D. C., on brief), for amicus curiae.

Before FIELD, Senior Circuit Judge, and WIDENER and HALL, Circuit Judges.

FIELD, Senior Circuit Judge:

The plaintiff, Lenwood Williams, Jr., a Virginia citizen, filed an action in a Virginia state court against the Shipping Corporation of India, a corporation which is wholly owned by the Government of India, seeking to recover damages for personal injuries allegedly sustained by the plaintiff while working as a longshoreman aboard defendant's ship. The defendant corporation is concededly a "foreign state" within the definition of the Foreign Sovereign Immunities Act (hereinafter the "Immunities Act" or "Act"), 28 U.S.C. § 1603, which includes any corporate entity owned or controlled by a foreign state. 1 The defendant removed the case to the federal court, and following removal, moved to strike the plaintiff's demand for a jury trial on the basis of section 6 of the Immunities Act, 28 U.S.C. § 1441(d). In resisting the motion, the plaintiff, noting that the removal petition omitted any reference to the Immunities Act, contended that the district court's jurisdiction could properly be based upon diversity of citizenship pursuant to 28 U.S.C. § 1332(a)(2) and was therefore removable under 28 U.S.C. § 1441(a) which carries no proscription against a trial by jury in the federal forum. The district court rejected Williams' contention that jurisdiction could be predicated upon diversity under section 1332(a)(2) as an alternative to 28 U.S.C. §§ 1330 and 1441(d). In making this ruling, the court concluded that the Immunities Act constituted the sole jurisdictional basis for suits against a foreign sovereign. The court also rejected Williams' contention that the Act violated his Seventh Amendment guarantee to a trial by jury and was, for that reason, unconstitutional. See Williams v. Shipping Corporation of India, 489 F.Supp. 526. On this appeal, the plaintiff challenges both of these rulings of the district court.

In considering the issues on appeal, it is necessary to review briefly the history of foreign sovereign immunity leading up to enactment of the Immunities Act. Historically, a sovereign was regarded as immune from judicial coercion both in its own courts as well as those of other nations although, of course, the immunities rested on different bases. A sovereign's immunity in its own courts was a matter of right, while in a foreign court a sovereign's immunity was not a right but a privilege which was granted politically by the forum state. The American doctrine of absolute jurisdictional immunity for a foreign sovereign was announced by Chief Justice Marshall in The Schooner Exchange v. McFaddon, 7 Cranch 116, 3 L.Ed. 281 (1812), where he stated that since all sovereigns possess "equal rights and equal independence" under international law, a sovereign enters the territory of a friendly foreign government "in the confidence that the immunities belonging to his independent sovereign station, though not expressly stipulated, are reserved by implication, and will be extended to him." Id. at 136-137.

The Schooner Exchange involved a foreign military vessel and left open the question of the immunity of a commercial vessel owned by a foreign sovereign. In 1926, however, the Court applied the principle of absolute sovereign immunity to commercial vessels of foreign states. Berizzi Bros. Co. v. S. S. Pesaro, 271 U.S. 562, 46 S.Ct. 611, 70 L.Ed. 1088. The Court concluded that "the principles (of sovereign immunity) are applicable alike to all ships held and used by a government for a public purpose, and that when, for the purpose of advancing the trade of its people or providing revenue for its treasury, a government acquires, mans and operates ships in the carrying trade, they are public ships in the same sense that warships are." Id. at 574, 46 S.Ct. at 612. In the ensuing 20 years the inequities consequent to carte blanche immunity eventually led to judicial deference to recommendations of exemptions by the State Department. The Court, in effect, moved away from the view that the issue of foreign sovereign immunity was purely a legal question and adopted the view that it was a mixed legal and political question with respect to which determinations of the Executive Branch should be accorded conclusive effect. See Ex Parte Republic of Peru, 318 U.S. 578, 63 S.Ct. 793, 87 L.Ed. 1014 (1943) and Mexico v. Hoffman, 324 U.S. 30, 65 S.Ct. 530, 89 L.Ed. 729 (1945). The Court's rationale was stated in Ex Parte Peru:

(C)ourts may not so exercise their jurisdiction, by the seizure and detention of the property of a friendly sovereign, as to embarrass the executive arm of the Government in conducting foreign relations.

318 U.S. at 588, 63 S.Ct. at 799.

In 1952, the State Department announced in the now famous "Tate letter" 2 that in making a sovereign immunity determination it would no longer apply the traditional or absolute theory of sovereign immunity, but would henceforth apply the restrictive theory of immunity which had gained currency in most civil law jurisdictions. The "Tate letter", however, contained few guidelines for distinguishing between public and commercial acts, and did nothing to depoliticize immunity decisions. In Victory Transport, Inc. v. Comisaria General, 336 F.2d 354, (1964), cert. denied, 381 U.S. 934, 85 S.Ct. 1763, 14 L.Ed.2d 698 (1965), the Second Circuit, noting that courts of other countries had applied the restrictive immunity doctrine with widely divergent results, held that a foreign government's charter of a vessel to transport wheat was a commercial act, regardless of its underlying public purpose, and stated that it would deny claims of sovereign immunity except for "the categories of strictly political or public acts about which sovereigns have traditionally been quite sensitive." 336 F.2d at 360. The Supreme Court's subsequent denial of certiorari did little to clarify the uncertain parameters of the restrictive theory of immunity.

In addition to the uncertainty of jurisdictional immunity, there was no satisfactory procedure by which a judgment against foreign entities could be enforced, and even in cases in which a foreign sovereign was not accorded jurisdictional immunity, absolute immunity from execution of judgment often produced a right without any effective remedy. 3 It was against this ambiguous and confusing background that the Congress considered and passed the Immunities Act in 1976.

The Immunities Act codified the restrictive theory of sovereign immunity, and its broad purpose, as stated by the House Committee on the Judiciary, is "to provide when and how parties can maintain a lawsuit against a foreign state or its entities in the courts of the United States and to provide when a foreign state is entitled to sovereign immunity." H.R.Rep.No.94-1487, 94th Cong., 2nd Sess. (1976) 5 U.S.Code Cong. & Ad.News 6604, 6604. The Act is designed to accomplish four objectives:

First, it codifies and amplifies the restrictive theory of foreign sovereign immunity.

Second, it depoliticizes the issue of sovereign immunity and places on the judiciary the responsibility of deciding whether in a given case a foreign sovereign is entitled to immunity.

Third, it provides a statutory "long-arm" procedure for obtaining in personam jurisdiction over foreign sovereigns, while eliminating quasi-in-rem jurisdiction based on the attachment of property of a foreign state.

Fourth, it provides judgment creditors specific remedies for the satisfaction of judgments against a foreign state and disposes of traditional absolute immunity from execution.

The Act establishes comprehensive and exclusive standards to be used in resolving questions of sovereign immunity raised by foreign states in either federal or state courts in the United States. Under the legislative scheme a plaintiff may bring a foreign state or one of its agencies or instrumentalities before an American court, obtain a ruling on the sovereign immunity of the entity, and if an immunity is not found to exist secure an adjudication and satisfaction of the plaintiff's claim.

The greater part of the legislation, both substantive and procedural, was included in section 4 of the bill, and is codified in 28 U.S.C. §§ 1602 through 1611. However, to implement the legislative pattern the Congress found it necessary to modify the subject matter jurisdiction of federal district courts. The most notable change under the Act is the jurisdictional grant under section 2(a) which adds new section 1330 to Title 28 of the United States Code. Section 1330 reads in pertinent part as follows:

(a) The district courts shall have original jurisdiction without regard to amount in controversy of any nonjury civil action against a foreign state as defined in section 1603(a) of this title as to any claim for relief in personam with respect to which the foreign state is not entitled to immunity either under sections 1605-1607 of this title or under any applicable international agreement.

The legislative rationale for this jurisdictional change is stated in the House Report:

Section 1330 provides a comprehensive jurisdictional scheme in cases involving foreign states. Such broad jurisdiction in the Federal courts should be conducive to uniformity in decision, which is desirable...

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