Summary
noting that "scope of immunity for the UN and its subsidiary bodies derives" from the "UN Charter" and "CPIUN"
Summary of this case from Laventure v. United NationsOpinion
11 Civ. 0294 (PKC)
10-14-2011
KAHRAMAN SADIKOĞLU, Plaintiff, v. UNITED NATIONS DEVELOPMENT PROGRAMME, Defendant.
MEMORANDUM AND ORDER
:
Plaintiff Kahraman Sadikoğlu brings this action for breach of contract against the United Nations Development Programme ("UNDP"). Specifically, plaintiff alleges that the UNDP has refused to pay Tuzla Tersanecilik Anorum Sirjeti ("Tuzla Shipyard" or "Tuzla"), a Turkish corporation of which plaintiff owned a majority stake, for salvage work that Tuzla Shipyard performed in Iraq. Plaintiff sues on behalf of Tuzla, seeking $125,000,000 in damages as a result of UNDP's alleged failure to compensate Tuzla for this work.
In subsequently transferring his ownership stake in Tuzla, plaintiff received the right to pursue any and all claims against UNDP for disputes arising out of Tuzla's purported agreement with UNDP. (Complaint ¶ 1.)
Now before this Court is the issue of whether the UNDP, an international organization and subsidiary body of the United Nations ("UN"), enjoys immunity from plaintiff's suit. Through a Statement of Interest filed with the Court, the United States asserts that the UNDP is absolutely immune from plaintiff's claim and that this Court therefore lacks subject matter jurisdiction over this case. For the reasons explained, this Court concludes that the UNDP is immune from this lawsuit. Accordingly, plaintiff's case is dismissed for lack of subject matter jurisdiction. Rule 12(b)(1), FED. R. CIV. P. BACKGROUND
Tuzla Shipyard is a Turkish corporation that specializes in the building, repair, and salvaging of heavy ships. Tuzla's salvaging work includes the removal of ship wreckage from under water. Tuzla provides these services to various types of customers, including governments and private parties. (Pl.'s Apr. 18, 2011 Mem. ("Apr. 18 Mem.") at 1-2.) Plaintiff is a Turkish citizen who was the majority owner of Tuzla Shipyard during all times relevant to this action. (Complaint ¶¶ 1, 3.)
The UNDP is a subsidiary program of the United Nations. UNDP was established in 1965 by the General Assembly, which is one of the UN's "six principal organs" and its primary policymaking and representative body. (Statement of Interest of the United States of America ("Statement of Interest") at 3.) UNDP reports directly to the General Assembly on its ongoing projects.
Although not material to the disposition of this motion, the stated mission of UNDP is to coordinate the UN's "global development" efforts and assist countries in "attracting and us[ing] aid effectively." See Frequently Asked Questions, UNITED NATIONS DEVELOPMENT PROGRAMME, http://www.beta.undp.org/ (last visited Oct. 14, 2011).
The present dispute arises out of a contractual agreement Tuzla Shipyard initially entered into with the Iraqi Government under the leadership of Saddam Hussein. In January 2001, the Iraqi Government contracted with Tuzla to remove the remains of sunken vessels from the sea bed of the Umm-Qasr Port in Iraq. (Complaint ¶¶ 1, 20.) The wreckage Tuzla Shipyard agreed to remove from the port consisted of the remains of vessels sunk during the Iran-Iraq War and the Persian Gulf War. (Id. ¶ 19.) Tuzla performed its obligations under the 2001 contract until March 2003, when all removal work was suspended due to the initiation of the Iraq War. (Id. ¶¶ 20-21.) Thereafter, UNDP assumed control of the Umm-Qasr Port. UNDP requested Tuzla Shipyard to continue its ship removal work under its contract with the former government of Iraq. (Id. ¶¶ 4, 22-24.) UNDP also requested Tuzla to perform certain additional services related to wrecked vessels found in the port; these additional services were not included in the original contract with the Iraqi Government, (Id. ¶¶ 24-25.) Tuzla performed the ship removal work under its initial 2001 contract with the Iraqi Government as well as the additional services requested by the UNDP, (Id. ¶¶ 35-41.)
Plaintiff now brings this action as assignee of Tuzla against UNDP for breach of contract. Specifically, plaintiff alleges that UNDP acknowledged in writing that Tuzla performed the work UNDP and the Iraqi Government each requested of it and that UNDP has raised each of the following defenses for its nonpayment: (1) UNDP lacks legal authority to make payments to Tuzla (id. ¶¶ 42-43); (2) there never existed an enforceable agreement between Tuzla and UNDP (id. ¶¶ 45-49); (3) Tuzla is owed payment from the Coalition Provisional Authority, not UNDP (id. ¶ 50); and (4) regardless of any contractual agreement, UNDP is immune from plaintiff's suit. (Id. ¶ 53.) Plaintiff seeks $125,000,000 in damages, which includes $11,000,000 in direct compensation UNDP allegedly owes Tuzla for work it performed at UNDP's direction. (Id. ¶¶ 58, 60.)
This Court ordered plaintiff to address whether UNDP enjoys immunity from this lawsuit (Docket #7), to which plaintiff submitted a memorandum on April 18, 2011 (Docket #16). In response to this Court's request to the United States Department of State, the United States filed a Statement of Interest in support of UNDP's immunity from suit (Docket #40). Plaintiff filed a memorandum in opposition to the United States' Statement of Interest on July 29, 2011 (Docket #45). Plaintiff and the United States disagree about the applicability and construction of certain multilateral treaties, international agreements, and federal statutes and case law that potentially address the scope of UNDP's immunity.
28 U.S.C. § 517 provides that "[t]he Solicitor General, or any officer of the Department of Justice, may be sent by the Attorney General to any State or district in the United States to attend to the interest of the United States in a suit pending in a court of the United States." Id.
This Court now addresses the question of UNDP's immunity from suit to determine whether it may retain subject matter jurisdiction over the present matter. Rule 12(b)(1), FED. R. CIV. P. DISCUSSION
I. Legal Standard
The issue of UNDP's immunity from suit implicates this Court's subject matter jurisdiction and is properly addressed under the standards governing a Rule 12(b)(1) motion. A motion to dismiss under Rule 12(b)(1) is decided under the same standards as a motion to dismiss for failure to state a claim under Rule 12(b)(6). See Lerner v. Fleet Bank, N.A., 318 F.3d 113, 128 (2d Cir. 2003) (Sotomayor, J.). However, in ruling on UNDP's immunity from the present suit, this Court "may consider evidence outside the pleadings" in resolving its jurisdiction. See Morrison v. Nat'l Australia Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008). Additionally, in opposing a Rule 12(b)(1) motion, "[t]he plaintiff bears the burden of proving subject matter jurisdiction by a preponderance of the evidence." Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635, 638 (2d Cir. 2005). Though typically raised by party motion, this Court may dismiss this action for lack of jurisdiction sua sponte without motion by either party. See, e.g., See McGehee v. Albright, 210 F. Supp. 2d 210, 218 (S.D.N.Y. 1999) (dismissing sua sponte private tort claim against United Nations Secretary-General Kofi Annan under Rule 12(b)(1) on the ground of immunity from suit).
II. Immunity from Suit of the United Nations Development Programme
The scope of immunity for the UN and its subsidiary bodies derives primarily from two multilateral agreements to which the United States is a party: the Charter of the United Nations ("UN Charter") and the Convention on Privileges and Immunities of the United Nations ("CPIUN"). Article 105 of the UN Charter states that the UN "shall enjoy such privileges and immunities as are necessary for the fulfillment of its purposes." UN Charter art. 105, para. 1, 59 Stat. 131 (June 26, 1945). Paragraph 2 extends this immunity to "[r]epresentatives of the Members of the United Nations and officials of the [UN]." Id. para. 2. Moreover, the UN Charter affords the General Assembly, the UN's primary policymaking body and the entity to which UNDP reports, the power to "make recommendations with a view to determining the details of the UN's immunity. Id. para. 3.
The CPIUN, adopted less than a year after the UN charter, more fully articulates the contours of the UN's privileges and immunities. The CPIUN provides that "[t]he United Nations, its property and assets wherever located and by whomsoever held, shall enjoy immunity from every form of legal process except insofar as in any particular case it has expressly waived its immunity." CPIUN art. II, § 2, 21 U.S.T. 1418 (Feb. 13, 1946). The CPIUN does not otherwise restrict or limit this grant of immunity for contractual or commercial disputes other than to require the UN to "make provisions for appropriate modes of settlement of disputes arising out of contracts or other disputes of a private law character to which the United Nations is a party." See id. art. 8, § 29. The United States ratified and acceded to the CPIUN in 1970. See Brzak v. United Nations, 597 F.3d 107, 111 (2d Cir. 2010) (holding that the CPIUN is self-executing and thus "applies in American courts without implementing legislation"). Accordingly, it is "binding on the United States as a matter of international law." Id.
The CPIUN requires the present case against UNDP be dismissed pursuant to Rule 12(b)(1). "As the CPIUN makes clear, the United Nations enjoys absolute immunity from suit unless 'it has expressly waived its immunity.'" Brzak v. United Nations, 597 F.3d 107, 112 (2d Cir. 2010) (quoting CPIUN art. II, § 2). Neither party contends that UNDP effected a waiver of its immunity from suit in its dealings with Tuzla, expressly or otherwise. The plain and unambiguous text of the CPIUN grants the UN absolute immunity "from every form of legal process" unless it has so waived. CPIUN art. II., § 2. Accordingly, because UNDP—as a subsidiary program of the UN that reports directly to the General Assembly—has not waived its immunity, "the [CPIUN] mandates dismissal of Plaintiff['s] claims against the United Nations for lack of subject matter jurisdiction." Brzak v. United Nations, 551 F. Supp. 2d 313, 318 (S.D.N.Y. 2008), aff'd, 597 F.3d 107 (2d Cir. 2010).
Plaintiff seeks to avoid the foregoing result by reliance upon two later-enacted federal statutes that, when read together, narrows the immunity of international organizations in certain cases involving private commercial activity. (Apr. 18 Mem. at 10-14.) The first such statute is the International Organizations Immunities Act of 1945 ("IOIA"), 22 U.S.C. § 288 et seq. The IOIA generally equates the privileges and immunities of international organizations to those enjoyed by foreign governments. IOIA provides that entities expressly designated by the President of the United States as "international organizations" are to "enjoy the same immunity from suit and every form of judicial process as is enjoyed by foreign governments" unless the organization expressly waives it. 22 U.S.C. § 288a(b). President Harry Truman designated the UN as an international organization subject to the IOIA shortly following the statute's enactment. See Exec. Order No. 9698, 11 Fed. Reg. 1809 (Feb. 19, 1946).
The second is the Foreign Sovereign Immunity Act of 1976 ("FSIA"), 28 U.S.C. § 1130, 1602, et seq. The FSIA expressly defines the privileges and immunities of foreign governments facing suit in U.S. court. FSIA provides that a foreign government is not immune where "the action is based upon . . . an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States." 28 U.S.C. § 1605(a)(2). An effect is direct under § 1605(a)(2) if it follows "as an immediate consequence of the defendant's . . . activity." Guirlando v. T.C. Ziraat Bankasi A.S., 602 F.3d 69, 74 (2d Cir. 2010) (quoting Republic of Argentina v. Weltover, 504 U.S. 607, 618 (1992)). This requirement is satisfied where the United States is the place of performance for a foreign government's contractual obligations to a "foreign corporation[] with no other connections to the United States." Weltover, 504 U.S. at 619. Although the mere transfer of money by the plaintiff from the United States to a foreign location is not itself sufficient to invoke jurisdiction under § 1605(a)(2), Guirlando, 602 F.3d at 80-81, the effect is sufficiently direct where the foreign sovereign's contractual obligations required the collection of funds and payment from a U.S. financial institution. See, e.g., Hilaturas Miel, S.L. v. Republic of Iraq, 573 F. Supp. 2d 781, 794-96 (S.D.N.Y. 2008) (citing Weltover, 504 U.S. at 618-19).
The FSIA thus denies judicial immunity to foreign governments for certain commercial and contractual disputes. The IOIA—which predates FSIA by nearly three decades—generally equates the immunity of international organizations with that of foreign governments. It is an open question in this Circuit whether the IOIA incorporates FSIA's narrower scope of immunity as against international organizations such as the UN. See Brzak v. United Nations, 597 F.3d 107, 112 (2d Cir. 2010) ("[W]e need not resolve whether plaintiffs' argument [that FISA's definition of immunity applies to international organizations] is correct . . . .").
Two circuits have drawn opposite conclusions as to whether FSIA's more restrictive definition of immunity for foreign governments applies to international organizations under IOIA. Compare OSS Nokalva, Inc. v. European Space Agency, 617 F.3d 756, 762 (3d Cir. 2010), with Atkinson v. Inter-American Dev. Bank, 156 F.3d 1335, 1340-42 (D.C. Cir. 1998).
But UNDP enjoys absolute immunity from the present suit notwithstanding plaintiff's contention that FSIA, as applied to international organizations through the IOIA, denies UNDP immunity for disputes arising out of private commercial transactions. "[W]hatever immunities are possessed by other organizations, the CPIUN unequivocally grants the United Nations absolute immunity without exception." Brzak, 597 F.3d at 112 (emphasis added). Indeed, in Brzak the plaintiffs unsuccessfully argued the identical contention. Regardless of whether plaintiff is correct that FSIA proscribes the immunity of international organizations so defined under the IOIA, the UN and its subsidiary programs "would still be immune from suit." See id. at 113 (emphasis added).
Plaintiff relies heavily on OSS Nokalva, Inc. v. European Space Agency, 617 F.3d 756 (3d Cir. 2010). There, the Third Circuit allowed an action for breach of contract to proceed against the European Space Agency ("ESA"), an international research organization comprised of eighteen European countries. Id. at 758. The Third Circuit denied ESA's Rule 12(b)(1) motion premised on its claim of immunity, holding that FSIA's "exception for suits arising out of a government's commercial transactions from [its otherwise broad immunity] is equally applicable to international organizations." Id. at 766. Although supportive of plaintiff's proffered interpretation of the IOIA, this is not the law of this Circuit. To the contrary: the Second Circuit has stated that "whatever immunities are possessed by other organizations" under plaintiff's reading of the FSIA, the CPIUN "unequivocally grants the United Nations absolute immunity without exception." Brzak, 597 F.3d at 112.
Moreover, at least one other circuit has rejected this interpretation. The Court of Appeals for the District of Columbia has held that the IOIA does not incorporate subsequent changes to the law of foreign sovereign immunity as against international organizations and that, accordingly, international organizations enjoy the same "absolute" immunity that foreign governments did at the time IOIA was enacted. See Atkinson, 156 F.3d at 1340-43.
As such, this Court need not rule on whether FSIA's restrictive immunity applies to international organizations already in existence at the time of IOIA's enactment, such as the UN or its component programs. Even were this Court to entertain FSIA's application to UNDP, to the extent there exists any conflict between the CPIUN and the FSIA as it relates to UNDP's immunity, the CPIUN would control. See Weinstein v. Islamic Republic of Iran, 609 F.3d 43, 53 (2d Cir. 2010) ("[A] 'treaty will not be deemed to have been abrogated or modified by a later statute unless such purpose on the part of Congress has been clearly expressed.'" (quoting Trans World Airlines. Inc. v. Franklin Mint Corp., 466 U.S. 243, 251-52 (1984))). Indeed, the Supreme Court has recognized a "firm and obviously sound canon of construction against finding implicit repeal of a treaty in ambiguous congressional action." Trans World Airlines, 466 U.S. at 252.
Neither the nature of the suit nor the action or inaction of the UNDP deprives it of immunity. First, the commercial nature of UNDP's activities with Tuzla does not bar UNDP from exerting the immunity the UN Charter and CPIUN affords it. Article 105 of the UN Charter states that the UN "shall enjoy such privileges and immunities as are necessary for the fulfillment of its purposes." UN Charter art. 105, para. 1, 59 Stat. 131 (June 26, 1945). The CPIUN clarifies the scope of the UN's immunity, stating that it "shall enjoy immunity from every form of legal process except insofar as in any particular case it has expressly waived its immunity." CPIUN art. II, § 2 (emphasis added). Neither the UN Charter nor the CPIUN contain any exceptions, restrictions, or limitations on immunity for contractual obligations to a private entity.
Prior cases in which the UN has successfully exerted its immunity involved UN employment practices or military functions. See, e.g., Brzak v. United Nations, 597 F.3d 107 (2d Cir. 2010); Askir v. Boutros-Ghali, 933 F. Supp. 368, 372-73 (S.D.N.Y. 1996); De Luca v. United Nations Org., 841 F. Supp. 531, 532-35 (S.D.N.Y. 1994); Boimah v. United Nations Gen. Assembly, 664 F. Supp. 69, 70-71 (E.D.N.Y. 1987). That the prior cases happened to arise in a non-commercial context does not shed further light on the issue. --------
Nor does the contested status of the parties' efforts to arbitrate or settle the current dispute strip UNDP of its immunity. The CPIUN merely requires the UN to "make provisions for appropriate modes of settlement of disputes arising out of contracts or other disputes of a private law character to which the United Nations is a party." CPIUN art. 8, § 29. However, nothing in this section or any other portion of the CPIUN refers to or limits the UN's absolute grant of immunity as defined in article II—expressly or otherwise. Furthermore, any purported failure of UNDP to submit to arbitration or settlement proceedings does not constitute a waiver of its immunity under article II, section 2. See Brzak, 597 F.3d at 112 ("Although plaintiff[] argue[s] that purported inadequacies with the United Nations' internal dispute resolution mechanism indicate a waiver of immunity, crediting this argument would read the word 'expressly' out of the CPIUN." (quoting CPIUN art. II, § 2)).
Lastly, because this Court holds that UNDP enjoys absolute immunity from plaintiff's suit by virtue of the CPIUN, it need address whether UNDP—and not the UN—is the proper defendant in this suit. This Court notes that UNDP has appeared as co-plaintiff in at least one prior action in this Circuit. See SCAC Transp. (USA) Inc. v. S.S. Danaos, 845 F.2d 1157 (2d Cir. 1988) (recognizing as co-plaintiff UNDP Office for Projects Execution). Other cases in this Circuit also have allowed actions to proceed against individual officers of the UNDP as well as the General Assembly, the UN body to which UNDP directly reports. See, e.g., De Luca v. United Nations Org., 841 F. Supp. 531, 534-36 (S.D.N.Y. 1994) (granting immunity to Acting Chief of the Internal Audit Section of the UNDP for claims of breach of contract and negligence); Boimah v. United Nations Gen. Assembly, 664 F. Supp. 69, 70-71 (E.D.N.Y. 1987) (noting that the General Assembly "enjoys the[] same immunities" as the UN under the CPIUN). As this Court lacks jurisdiction to entertain plaintiff's claim by virtue of UNDP's absolute immunity, it need not resolve whether UNDP is the proper defendant in this action. CONCLUSION
By virtue of the plain text of the CPIUN and the UN Charter, UNDP enjoys absolute immunity from plaintiff's claim for damages arising out of UNDP's purported agreement with Tuzla. Plaintiff's claim for breach of contract against defendant UNDP is dismissed under Rule 12(b)(1) for lack of subject matter jurisdiction. Accordingly, plaintiff's complaint (Docket #1) is DISMISSED.
SO ORDERED.
/s/_________
P. Kevin Castel
United States District Judge Dated: New York, New York
October 14, 2011