Court Opinion

ID: 7851175
Source: CourtListenerOpinion
Date Created: 2022-09-08 17:32:12.079651+00
Date Added: 2024-06-11T16:29:10.822444
License: Public Domain

WALD, Circuit Judge,
concurring in part and concurring in the judgment:
I join the opinion of the panel except for Part II.B. I agree with the majority's con*215elusion in that Part that the Somali Democratic Republic (SDR) may not claim sovereign immunity in No. 84-5542, but I rely on a different ground. In my view, the SDR has implicitly waived immunity against the claims at issue here. In light of the majority’s ruling, I state the reasons for my conclusion very briefly.
The Foreign Sovereign Immunities Act of 1976 (FSIA) provides that:
A foreign state shall not be immune from the jurisdiction of courts of the United States ... in any case—
(1) in which the foreign state has waived its immunity either explicitly or by implication, notwithstanding any withdrawal of the waiver which the foreign state may purport to effect except in accordance with the terms of the waiver____
28 U.S.C. § 1605(a). The legislative history notes that:
With respect to implicit waiver, the courts have found such waivers in cases where a foreign state has agreed to arbitration in another country or where a foreign state has agreed that the law of a particular country should govern a contract.
H.R.Rep. No. 1487, 94th Cong., 2d Sess. 18 (1976) (emphasis added), reprinted in 1976 U.S.Code Cong. & Ad.News at 6617; see also S.Rep. No. 1310, 94th Cong., 2d Sess. 18 (1976).
As the majority explains, the SDR and the Department of Agriculture agreed upon the terms of the AID shipment involved in this case in a document called the Transfer Authorization Agreement. That agreement contains the following passage:
The assistance described in this authorization is hereby requested and the terms and conditions of this agreement and of AID Regulation 11, 41 F.R. 47919-47927 [sic], November 1, 1976 (attached and incorporated herein by reference), except as otherwise specifically provided herein are hereby accepted.
Record Excerpts (R.E.) at 47. Regulation 11, in turn, provides that with exceptions not relevant here, the “cooperating sponsor” — in this case, the SDR — “shall be responsible for all costs ... for demurrage, detention, and overtime.” Regulation 11 § 211.7(a), 41 Fed.Reg. 47,919, 47,923 (1976) (codified at 22 C.F.R. § 211.7(a) (1984)). The regulation also states that “[cjommodities shall be admitted duty free and exempt from all taxes.” Id. § 211.7(b) (codified at 22 C.F.R. § 211.7(b) (1984)).
The question, then, is whether the SDR’s contractual agreement to be bound by regulation 11, but not by the law of the United States generally, waives sovereign immunity in an action for damages allegedly caused by the SDR’s violation of regulation 11. I believe that in the circumstances of this case the SDR has indeed waived immunity.
The House Report expressly relied on existing case law in support of the proposition that by submitting to the law of a particular state, a foreign country waives its immunity. In fact, however, the case law at the time did not unambiguously establish that principle.* Most of the relevant waiver cases decided before enactment of the FSIA focused on the effect of a foreign country’s agreement to arbitrate disputes. “A key reason why [those] cases found that an agreement to arbitrate in the United States waived immunity from suit was that such agreements could only be effective if deemed to contemplate a role for United States courts in compelling arbitration that stalled along the way.” In re Arbitration Between Maritime Int’l Nominees Establishment v. Republic of Guinea, 693 F.2d 1094, 1103 (D.C.Cir.1982) (citations omitted), cert. denied, 464 U.S. 815, 104 S.Ct. 71, 78 L.Ed.2d 84 (1983); see also Restatement (Revised) of Foreign Relations Law of the United States § 456(b) & com*216ment b & reporter’s note 2 (Tent. Draft No. 2,1981). Courts were reluctant to permit a foreign country, after explicitly promising that it would resolve disputes before a designated tribunal in the United States, suddenly to assert after the fact that it could be held responsible for its actions, if at all, only in its own courts.
Congress obviously thought that similar reasoning supports finding a waiver of sovereign immunity when a foreign country agrees to the application of United States law. Congress evidently believed that after making such a promise, the foreign country could not equitably deny that voluntarily assumed obligations under United States law were enforceable against it. Of course, a foreign country’s duties under United States law might theoretically be enforced in the foreign country’s own courts. But Congress could reasonably have been skeptical that, in general, a foreign country resisting application of United States law in United States courts would be likely to yield to relief in its own courts. The courts of this country are clearly best able to interpret and apply the laws of this country.
In my view, these principles suggest that when a foreign government agrees to the application of a particular provision of federal law, that government has waived immunity in actions for violation of the law in question. By agreeing to observe regulation 11, the SDR assumed duties significantly different from those it would have undertaken if the text of regulation 11 had simply been written into the Transfer Authorization Agreement without any reference to any particular law. Had the regulation merely been written into the contract, the interpretation of its text would present an ordinary problem of contract law. But by expressly agreeing to the “terms and conditions ... of AID Regulation 11,” R.E. at 47, the SDR implicitly I acknowledged that regulation 11 would apply as that regulation is understood in the law of the United States. In the House Report, Congress declared that a foreign government may not assume duties generally under United States law, only to disclaim them by invoking immunity in United States courts when a controversy arises. I believe that when a foreign government assumes specific duties under United States law, it is similarly barred from denying vulnerability to suit under the provisions of law agreed to.
The district court was concerned that regulation 11 does not state to whom the SDR is liable if it violates the regulation. See Transamerican S.S. Corp. v. Somali Democratic Republic, 590 F.Supp. 962, 973 (D.D.C.1984). In a related argument, the SDR states that because the Transamerican Steamship Corporation was not a party to the Transfer Authorization Agreement, the SDR has not waived immunity in a suit brought by Transamerican. I believe that regulation 11, fairly understood, creates liability to the persons who normally sustain losses when illegal import duties are charged or demurrage costs are wrongfully imposed. Because the shipper is among those deliberately protected by regulation 11 and foreseeably harmed by any breach, Transamerican is, in effect, a third-party beneficiary of the relevant provisions in the Transfer Authorization Agreement. The district court was also concerned that regulation 11 does not state what country’s laws would govern any demurrage claim. See id. at 973-74. At most, that question poses a conflict of laws problem within a framework provided by United States law; it does not change the straightforward facts that the agreement said regulation 11 applies, and regulation 11 is part of the law of the United States.
Finally, the district court relied on a passage in the House Report commenting that “a foreign state’s mere participation in a foreign assistance program administered by the Agency for International Development (AID) is an activity whose essential nature is public or governmental, and it would not constitute a commercial activity.” H.R.Rep. No. 1487, 97th Cong., 2d Sess. 16 (1976), reprinted in 1976 U.S.Code Cong. & Ad.News at 6615; see Transamerican S.S. Corp., 590 F.Supp. at 973. As the district court recognized, this sentence *217explicitly addresses only the scope of the “commercial activities” exception to immunity. I do not believe the House Report suggests that a different standard for implicit waiver should apply to contracts connected with AID shipments than to other contracts. Moreover, I do not claim that the SDR waived its immunity with respect to causes of action arising from any aspect of the AID shipment; the implicit waiver extends only to causes of action arising from breach of regulation 11.
For these reasons, I agree that the SDR is not entitled to sovereign immunity against Transamerican’s claim.

The SDR suggests that because Congress arguably took too broad a view of the cases when it passed the FSIA, we should disregard the statement from the legislative history discussed in text. However, "the relevant inquiry is not whether Congress correctly perceived the then state of the law, but rather what its perception of the state of the law was.” Brown v. General Servs. Admin., 425 U.S. 820, 828, 96 S.Ct. 1961, 1966, 48 L.Ed.2d 402 (1976) (footnote omitted).