IN THE UNITED STATES COURT
FOR THE ELEVENTH CIRCUIT
D. C. Docket No. 98-00070-CV-P-C
VENUS LINES AGENCY,
CVG INDUSTRIA VENEZOLANA
DE ALUMINIO, C.A.,
* * * *
D. C. Docket No. 98-00070-CV-P-C
VENUS LINES AGENCY,
CVG INDUSTRIA VENEZOLANA DE ALUMINIO,
Appeals from the United
States District Court
for the Southern District of Alabama
(April 25, 2000)
Before BLACKand WILSON, Circuit Judges, and RONEY,
Senior Circuit Judge.
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
[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
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
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
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
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 States, however, is not enough
to satisfy this condition for a waiver of sovereign immunity.
Venus Lines contends that there
was in fact a commercial use of the property in the United States.
According to the affidavit of Venus Lines' president, Michael
Kobiakov, Venus Lines released the Mobile cargo only after Venalum
agreed to allow Venus Lines to attach the Mexico cargo in its
place. In effect, Venus claims that the Mexico cargo was used
for the commercial activity of facilitating Venalum's sale of
the Mobile cargo. If true, the Mexico cargo would indeed have
been "used for a commercial activity in the United States."
In a counter-affidavit, however, Venalum's vice-president and
legal counsel, Gustavo N. Rondon Fragachan, denies that such
an agreement was reached. The determination whether the commercial
activity prong has been satisfied and the answer to the ultimate
question whether Venalum's property is entitled to immunity under
the FSIA are contingent upon resolution of this disputed issue.
Accordingly, we remand this issue of fact to the district court.
II. Bond and Stay (Appeal No.
Pursuant to Rule 62(d) of the Federal
Rules of Civil Procedure, the district court ordered the execution
of its judgment stayed upon the posting of a supersedeas bond
by Venus Lines in the amount of $286,000 and ordered Venalum
to post a bond in the amount of $4,200,000. Venalum challenges
both the imposition of the stay pending appeal and the order
requiring it to post bond.
Rule 62(d) states:
(d) Stay Upon Appeal. When an appeal is taken the appellant by
giving a supersedeas bond may obtain a stay subject to the exceptions
contained in subdivision (a) of the rule. The bond may be given
at or after the time of filing the notice of appeal or of procuring
the order allowing the appeal, as the case may be. The stay is
effective when the supersedeas bond is approved by the court.
In the case of a non-money judgment,
whether a stay is warranted under Rule 62(d) depends upon:
(1) whether the stay applicant has
made a strong showing that [it] is likely to succeed on the merits;
(2) whether the applicant will be irreparably injured absent
a stay; (3) whether the issuance of a stay will substantially
injure the other parties interested in the proceeding; and (4)
where the public interest lies.
United States v. United States
Fishing Vessel MAYLIN, 130
F.R.D. 684,686 (S.D. Fla. 1990), quoting Hilton v.
Braunskill, 481 U.S.770,776 (1987).
Although Venalum correctly observes
that the district court did not quote the four-factor test in
its opinion, the court did conduct a comparable inquiry in which
it assessed the equities of imposing a stay. We find no error
in the court's ordering of a stay under Rule 62(d).
Venalum also argues that the court
was without authority to require Venalum to post a bond to gain
the release of the Mexico cargo. While the bond imposed on Venus
Lines falls squarely within Rule 62(d), we agree that the district
court erred in analyzing the bond required of Venalum as a "supersedeas
bond" under that rule. By its plain language, Rule 62(d)
only applies to appeal bonds, not to a release bond used as a
substitute for attached property. Nevertheless, we affirm the
district court's decision on other grounds. See Watkins v.
Bowden, 105 F.3d 1344, 1354 n.17 (11th Cir. 1997) (appellate
court may affirm district court on any ground, even one not considered).
The court's action was authorized
by Rule (E)(5)(a) of the Supplemental Rules for Certain Admiralty
and Maritime Claims, which provides in pertinent part that "whenever
process of maritime attachment and garnishment . . . is issued
the execution of such process shall be stayed, or the property
released, on the giving of security, to be approved by the court
or clerk." Arguably, this provision is inapplicable because
it only applies by its terms where "process of maritime
attachment and garnishment . . . is issued." In this
case, the district court vacated, rather than issued,
the attachment. Nevertheless, we conclude that Rule (E)(5)(a)
applies because the district court stayed its vacation of the
writ of attachment, meaning that the "process of maritime
attachment and garnishment . . . issued" by the magistrate
judge remained in effect.
Venalum argues the district court
exceeded its authority under Rule E(5) by compelling Venalum
to post bond, relying on Seguros Banvanez, S.A. v. S/S Oliver
Drescher, 761 F.2d 855, (2d Cir. 1985), which is factually
inapposite. In Seguros, the party that had to furnish
the bond was not the shipowner, but the charterer. The
Seguros court was concerned about making the charterer
pay security when it did not get the quid pro quo of the release
of the ship:
[a] shipowner is not compelled to
furnish a bond to the person who has arrested its ship. Its quid
pro quo for voluntarily furnishing security is the release of
its ship. Depriving [the charterer] of its property by compelling
it to furnish a bond to [the owner] without any similar quid
pro quo, without any valid prior finding as to the parties' respective
rights, and without any provision for protection of [the charterer's]
interests and expenses, smacks of a violation of due process.
See Seguros, 761 F.2d at 863-64.
In this case, it was not the ship,
but the cargo that was attached. When Venalum posted bond, it
got its quid pro quo -- the release of the Mexico cargo. Because
the terms of Rule E(5)(a) were met, the district court was authorized
to require Venalum to post bond to gain the release of the Mexico
cargo pending appeal.
Appeal no. 98-6223: We AFFIRM the
district court's orders granting a stay and requiring Venalum
to post a bond for release of the Mexico cargo.
Appeal no. 98-6562: We REVERSE the
district court's order vacating the writ of foreign attachment
and REMAND for further proceedings consistent with this opinion.
1. The court
sua sponte raised the question whether it had jurisdiction
over Venalum's appeal. Having reviewed the parties' briefs, the
court is satisfied that Venalum adequately identified the orders
from which it appeals in its notice of appeal, and the appeal
is properly brought under the collateral order doctrine. See
Swift & Co. Packers v. Compania Colombiana del Caribe, S.A.,
339 U.S. 684,688-89 (1950)(28 U.S.C. § 1291 did not bar
jurisdiction over appeal from order dissolving attachment: "Appellate
review of the order dissolving the attachment at a later date
would be an empty rite after the vessel had been released and
the restoration of the attachment only theoretically possible.").