Castro v. Saudi Arabia

510 F. Supp. 309, 1980 U.S. Dist. LEXIS 16711
CourtDistrict Court, W.D. Texas
DecidedJune 12, 1980
DocketDR-79-CA-05
StatusPublished
Cited by15 cases

This text of 510 F. Supp. 309 (Castro v. Saudi Arabia) is published on Counsel Stack Legal Research, covering District Court, W.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Castro v. Saudi Arabia, 510 F. Supp. 309, 1980 U.S. Dist. LEXIS 16711 (W.D. Tex. 1980).

Opinion

*311 ORDER DECLARING DEFAULT JUDGMENT VOID FOR LACK OF JURISDICTION AND DISMISSING ACTION

SUTTLE, Senior District Judge.

Only the plaintiffs were represented at the evidentiary hearing on the plaintiffs’ motion for default judgment. Because the plaintiffs’ evidence indicated that Saudi Arabia’s failure to answer was wilful, and because the court hesitated to vigorously engage in the role of adversary on behalf of a wilfully defaulting defendant, the court was satisfied with a minimum of evidence in support of the plaintiffs’ claims. 28 U.S.C. § 1608(e). Even so, the court entered the default judgment with some measure of misgiving. Transcript I at 89-92, 109. 1 The default judgment was signed on November 8, 1979, in San Antonio, but not filed until the clerk in Del Rio received it on November 10, 1979. Meanwhile, on November 9, the defendant filed its answer, specifically pleading the defense of sovereign immunity.

On April 22-23, 1980, this court held a second evidentiary hearing, this time with both plaintiffs and the defendant present. The court received evidence and entertained oral argument on the defendant’s motion to have the default judgment declared void for lack of jurisdiction and on the defendant’s motion for new trial. After making a full inquiry into the jurisdictional issue, and after carefully considering the oral argument offered at the adversary proceeding and the written briefs and memorandum submitted by both sides, the court concludes that it does not have subject matter or personal jurisdiction of the action. Consequently, the default judgment must be set aside as void and the action dismissed. In the alternative, the court finds from the record and from the evidence presented at the proceeding that the defendant’s motion for new trial should be granted.

Even though the court has previously entered a default judgment against Saudi Arabia, it now reexamines the issue of subject matter jurisdiction, for without subject matter jurisdiction the default judgment is a nullity. Nishimatsu Construction Co. v. Houston Nat. Bank, 515 F.2d 1200, 1205 (5th Cir. 1975); Wright & Miller, FEDERAL PRACTICE & PROCEDURE § 2695 p. 326.

The statute conferring jurisdiction on this court makes the absence of sovereign immunity a prerequisite to both subject matter and personal jurisdiction. 28 U.S.C. § 1330. Consequently, the court made a thorough inquiry at the evidentiary hearing into the question of jurisdiction, fully developing all facts pertaining to sovereign immunity. See Transcript II at 151. Upton v. Empire of Iran, 459 F.Supp. 264, 265 (D.D.C.1978); Bickham v. Miller, 584 F.2d 736, 737 (5th Cir. 1978).

The Foreign Sovereign Immunities Act, [FSIA], prpvides a comprehensive procedure for the maintenance of suits in personam against foreign states and their agencies. National American Corporation v. Federal Republic of Nigeria, 448 F.Supp. 622, 638 (S.D.N.Y.1978). 2 The FSIA states generally that a foreign state shall be immune from the jurisdiction of the courts of the United States, except as specifically provided in §§ 1605-1607. The plaintiffs attempt to fit the facts of this case within the following exceptions:

1. Waiver § 1605(a)(1)

The court finds that Saudi Arabia did not waive the sovereign immunity de *312 fense by failing to timely answer. See, International Association of Machinists and Aerospace Workers v. Organization of Petroleum Exporting Countries, 477 F.Supp. 553, 575 (C.D.Cal.1979) [the OPEC case], (wherein the question of waiver was specifically raised to the court — see paragraph 14 on page 579 — yet the court found no waiver of sovereign immunity from the defendant’s failure to answer). Compare Flota Maritima Browning de Cuba v. Motor Vessel Cuidad, 335 F.2d 619 (4th Cir. 1964) (wherein the Republic of Cuba waived the defense of sovereign immunity by filing a general appearance and waiting three years to raise the defense of sovereign immunity).

A foreign state does not waive its sovereign immunity by merely entering into a contract with another nation. There must be an intentional and knowing relinquishment of the legal right. Mitchell v. Aetna Casualty & Surety Co., 579 F.2d 342, 347 (5th Cir. 1978). Saudi Arabia’s agreement to indemnify and hold harmless the United States government from loss and liability that the United States might incur in connection with the agreement, and Saudi Arabia’s agreement to be responsible for all student transportation, simply do not approximate the type of implicit waiver Congress contemplated in § 1605(a)(1). The legislative history cites actions more emphatically implying a waiver of immunity, such as, an agreement to arbitrate in another country, an agreement that the law of another country will govern the contract, or the filing of a responsive pleading in an action without raising the defense of sovereign immunity. 1976 U.S. Code Cong. & Admin.News at 6617. See, e. g., Ipitrade International v. Federal Republic of Nigeria, 465 F.Supp. 824, 826 (D.D.C.1978); Flota Maritima Browning de Cuba v. Motor Vessel Cuidad, 335 F.2d 619, 625 (4th Cir. 1964).

2. Commercial Activity, § 1605(a)(2)

The plaintiffs also claim an exception to immunity under the section providing that a foreign state is not immune in any case “in which the action is based on a commercial activity carried on in the United States by the foreign state.” 28 U.S.C. § 1605(a)(2). The statute explicitly directs that the character of an activity shall be determined by reference to the nature of the course of conduct or particular act, and not by reference to its purpose. 28 U.S.C. § 1603(d). The legislative history is helpful, but not determinative. The fact that “services to be procured through a contract are to be used for a public purpose is irrelevant; it is the essentially commercial nature of an activity or transaction that is critical.” 1976 U.S.Code Cong. & Admin.News at 6615. The transaction at issue here could be broadly defined as the “sale of services” and so be deemed “commercial.” But the activity could also be narrowly viewed as a non-profit agreement between two governments for the training of military personnel. So viewed, the transaction would be public or governmental, and protected by sovereign immunity.

At the adversary proceeding, counsel for Saudi Arabia directed the court’s attention to the recent OPEC case,

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Bluebook (online)
510 F. Supp. 309, 1980 U.S. Dist. LEXIS 16711, Counsel Stack Legal Research, https://law.counselstack.com/opinion/castro-v-saudi-arabia-txwd-1980.