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Velidor v. Benghazi

decided: June 30, 1981.

KOSUTIC VELIDOR, PALIHNIC ROKO, DOZIC DRAGAN, POPIC ANTE, RAGANOVIC ZARKO, MOHORIC DARKO, SOSIC MOMIR, BRKANOVIC ROKO, KRSUL NEVENKO, BOBIC JURE AND JURCEVIC RUDOLF
v.
L/P/G BENGHAZI, HER ENGINES, BOILERS, TACKLE, APPURTENANCES, ETC. AND COMPAGNIE ALGERO-LIBYENNE DE TRANSPORT MARITIME LA COMPAGNIE ALGERO-LIBYENE DE TRANSPORT MARITIME, APPELLANT



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (C.A. No. 80-00726)

Before Adams and Garth, Circuit Judges, and Dumbauld, District Judge.*fn*

Author: Adams

Opinion OF THE COURT

This appeal presents two questions, certified for interlocutory resolution under 28 U.S.C. § 1292(b), which require us to accommodate the procedures fashioned by admiralty law for the protection of seamen with the modern format for prosecuting claims against foreign states set forth in the Foreign Sovereign Immunities Act of 1976 (FSIA).*fn1 We must also reconcile some apparent tensions between two of the FSIA provisions that govern subject matter and personal jurisdiction over foreign sovereign entities. This tension comes about because seamen who wish to press a wage claim against the owner of the vessel upon which they were employed failed to comply with the FSIA section controlling maritime liens. 28 U.S.C. § 1605(b). Nevertheless, the seamen seek to base jurisdiction on the more general long-arm aspect of the Act, which rests jurisdiction on commercial activity affecting the United States. 28 U.S.C. § 1605(a)(2). We agree with the district court that it has in personam jurisdiction over the shipowner by virtue of the owner's commercial activity in this country, 28 U.S.C. § 1605(a)(2). In addition, we resolve the second question on appeal, dealing with the propriety of service of process on the defendant, in accordance with the district court's decision.

I.

The plaintiffs are Yugoslavian seamen who worked aboard the L/P/G Benghazi, a vessel flying the flag of Algeria. The Benghazi is owned by defendant-appellant Compagnie Algero-Libyenne De Transport Maritime (CALTRAM), an instrumentality of the governments of Algeria and Libya.

During a voyage in early 1980, from England to the United States, the seamen became dissatisfied with the provisions for paying their wages and traveling expenses. CALTRAM allegedly had never repaid the seamen the expenses they incurred in traveling to join the vessel, nor their wages since the voyage started. On March 3, 1980, while on the high seas, the seamen radioed CALTRAM and requested that advance wage payments be made upon the ship's arrival in Camden, New Jersey. CALTRAM responded that it would make deposits to plaintiffs' Yugoslavian banks, as specified in the employment contracts. Then, on March 8, 1980, the crew members advised CALTRAM that they wished to be relieved of duty, and paid all wages due in cash, when the ship docked at the New Jersey port.

The Benghazi reached Camden on March 11, 1980. The crew members immediately demanded that the ship's master pay them the portion of outstanding wages to which they were entitled under the Seaman's Wage Act, 46 U.S.C. §§ 596-597. When no wages were forthcoming, on March 14 the seamen instituted a complaint in admiralty against CALTRAM and the vessel in the United States District Court for the District of New Jersey. The complaint alleged breach of the employment contracts as well as violations of the Seaman's Wage Act. The plaintiffs requested that the vessel be seized to prevent it from leaving the port. The district court granted this request, and on March 14, 1980, ordered the Benghazi arrested. In admiralty law, arrest is the traditional device to secure in rem jurisdiction over a ship.

The next business day, CALTRAM appeared before the district court and moved to vacate the arrest on the ground that it was an instrumentality of the Algerian government. The FSIA renders ships owned by foreign governments immune from arrest, and any arrest must be lifted immediately upon ascertaining the sovereign ownership of a vessel. 28 U.S.C. §§ 1605(b), 1609. To establish the Benghazi's immunity, CALTRAM submitted a deposition from a consular official of the Algerian Embassy certifying that the shipping company was the sole owner of the Benghazi, and that it was an entity of the Algerian government, incorporated under the laws of Algeria, and operated by the state. The Deputy Chief of Protocol and the Secretary of State supported this deposition with documents which verified that the consular official was registered to speak on behalf of Algeria. When met with this proof, the district court held that CALTRAM had established its status as an instrumentality of Algeria entitled to the protections of the FSIA.*fn2 Consequently, on March 17, 1980, the court lifted the order of arrest on the Benghazi.

At the same hearing, however, after considering plaintiffs' contentions that they were unaware of CALTRAM's association with the Algerian government,*fn3 the district court ruled that, despite the arrest, it had in personam jurisdiction over CALTRAM by virtue of § 1605(b), the admiralty provision of the Immunities Act.*fn4

Section 1605(b) is designed to avoid the arrest of vessels owned by foreign sovereigns, since such seizures frequently touch sensitive diplomatic nerves. H.R.Rep.1487, 94th Cong., 2d Sess. 21-22 (1976), reprinted in 1976 U.S.Code Cong. & Ad.News 6604, 6620-21. This section renders arrest unnecessary by extending to plaintiffs an in personam remedy, limited to the value of the vessel or cargo. In furtherance of the objective to prevent arrests, § 1605(b) provides that a party who initiates the seizure of a foreign sovereign's vessel will lose the right to proceed in personam, unless the party is unaware of the shipowner's identity.

On April 3, 1980, CALTRAM moved the court to vacate the order of March 17 insofar as it found personal jurisdiction under § 1605(b), and to dismiss the complaint, on the ground that the plaintiffs had not fulfilled the requirements for proper service of process set forth in § 1605(b).*fn5 Plaintiffs delivered a copy of the complaint only to the master of Benghazi. Section 1605(b)(2), however, provides that service on the master is not sufficient, and conditions the right to convert an in rem admiralty claim into an in personam action upon compliance with § 1608(b) within ten days of serving the master. The notice provision of § 1608(b) relevant to this case requires delivery of a copy of the summons and complaint to an officer, managing, or general agent of the instrumentality of the foreign sovereign. 28 U.S.C. § 1608(b)(2).

At the hearing to consider the motion to dismiss, the crewmen admitted that they had failed to comply with § 1605(b)(2), because they had never served a copy of the complaint on anyone other than the ship's master. They argued, however, that this failure did not warrant dismissal of the entire complaint, because they had originally asserted in personam claims against CALTRAM in addition to the in rem maritime lien levied against the Benghazi. Section 1605(b) governs only the latter claim, they contended. Jurisdiction over CALTRAM for purposes of the in personam claims could be obtained under the general long-arm provisions of the FSIA set forth in § 1605(a)(2). Thus, the seamen asserted, they should not be penalized for failure to satisfy the alternative jurisdictional basis of the maritime lien standards in § 1605(b).

The district judge found this argument persuasive, and issued an order denying the motion to dismiss and declaring in personam jurisdiction to exist on the basis of § 1605(a)(2). In addition, he found that service of process on the master satisfied § 1608 insofar as that section applies to § 1605(a)(2) actions. Recognizing that the issues raised by the interplay between § 1605(b), § 1605(a)(2), and § 1608 were novel and controlled the course of the litigation, the district judge certified his ruling for immediate appeal under 28 U.S.C. § 1292(b). Specifically, we must resolve whether (1) the district court has in personam jurisdiction over CALTRAM under § 1605(a)(2) of the FSIA, and (2) if so, whether service of process on the ship's master is sufficient to fulfill the requirements of § 1608(b) for serving the instrumentality of a foreign sovereign.

II.

To place the questions before us in clearer perspective, it is necessary to survey the ...


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