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Breach of Contract Claim Against Honduras Dismissed
In the matter Samco Global Arms, Inc. v. Carlos Arita, Procuraduria General de la Republica, Republic of Honduras, docket numbers 03-15283 & 03-16297, the United States Court of Appeals for the Eleventh Circuit ruled on January 5, 2005 on the claim of the plaintiff arms dealer against the foreign state for breach of contract which the lower court had dismissed without prejudice under the Foreign Sovereign Immunities Act, 28 USC §1602 et seq., and which it also found to be barred by the Act of State doctrine.
Samco had purchased the arms from a foreign dealer which had stored them with the armed forces of Honduras. During a criminal investigation, the arms could not be retrieved; they also became the subject of an attachment for attorneys fees. These factors as well as damage to the arms while in storage caused Samco to claim damages for breach of contract.
The appellate court affirmed, although it determined that the storage contract as a contract for the sale of goods or services constituted a commercial activity excepted from FSIA immunity. The commercial acts of the state did not constitute, however, acts that caused a direct effect in the United States under 28 USC §1605(a)(2). - by Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP in Washington.
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