The opinion of the court was delivered by: FLANNERY
This memorandum is issued pursuant to the Court's Order of July 26, 1974 denying defendant Federative Republic of Brazil's motion to dismiss based on sovereign immunity.
This action arises out of property damage allegedly suffered by plaintiffs as a result of the construction of Brazil's Chancery on property adjacent to that of plaintiffs. In early 1968, the Embassy of Brazil engaged architects to assist in preparing plans for the new Chancery. In April, 1968, the Embassy engaged its prime construction contractor, defendant Humphreys & Harding, Inc., under a contract providing that the contractor would indemnify the Embassy for all claims arising from the construction. Humphreys thereafter engaged various subcontractors and excavation began. In November, 1969, plaintiffs noticed that their land was shifting and settling, allegedly because of the excavation which ran to within several feet of plaintiffs' property. As excavation and building progressed, the settling continued, causing considerable damage to plaintiffs' driveway, garage and house. Plaintiffs sought assurances from defendants that repairs would be made but no agreement was reached. This suit was then commenced in October, 1972.
Defendant Brazil moved to dismiss the complaint on grounds of sovereign immunity on December 14, 1972. That motion was denied without prejudice so that Brazil could seek a suggestion of immunity from the Department of State. On January 30, 1974, the Department of State, after studying briefs and hearing oral argument, advised the Brazilian Ambassador that "the present case is not one where a suggestion of sovereign immunity should be made."
Brazil's motion to dismiss presents two basic issues for this Court's consideration. First, this Court must decide whether the Department of State's unequivocal and definite refusal to suggest immunity is conclusive or whether the Court, notwithstanding such a refusal, still may grant immunity. Second, if this Court concludes that such a refusal is not conclusive, should immunity be granted under the circumstances of this case.
I. Whether the Department of State's refusal to grant immunity is conclusive.
The doctrine of sovereign immunity for foreign nations is invoked "chiefly to avoid possible embarrassment to those responsible for the conduct of the nation's foreign relations." Victory Transport, Inc. v. Comisaria General, 336 F.2d 354, 357 (2d Cir. 1964), cert. denied, 381 U.S. 934, 85 S. Ct. 1763, 14 L. Ed. 2d 698 (1965); accord, National City Bank of New York v. Republic of China, 348 U.S. 356, 361, 99 L. Ed. 389, 75 S. Ct. 423 (1955); Republic of Mexico v. Hoffman, 324 U.S. 30, 34-36, 89 L. Ed. 729, 65 S. Ct. 530 (1945); New York & Cuba Mail Steamship Co. v. Republic of Korea, 132 F. Supp. 684, 686 (S.D.N.Y. 1955). Accordingly, both parties agree that a suggestion of immunity is conclusive and binding on the courts.
In addition the courts have recognized that it may be "equally embarrassing" if the courts recognize a claim of immunity on grounds not sanctioned by the political department of the United States Government. Republic of Mexico v. Hoffman, supra at 36; see Victory Transport Inc. v. Comisaria General, supra at 358. Thus, the Second Circuit, in construing Hoffman, has stated
that courts should deny immunity where the State Department has indicated, either directly or indirectly, that immunity need not be accorded. It makes no sense for the courts to deny a litigant his day in court and to permit the disregard of legal obligations to avoid embarrassing the State Department if that agency indicates it will not be embarrassed. Id.
Accord, Amkor Corp. v. Bank of Korea, 298 F. Supp. 143, 144 (S.D.N.Y. 1969) ("Department of State's determination that immunity need not be extended is binding on this Court"); French v. Banco Nacional de Cuba, 23 N.Y.2d 46, 295 N.Y.S. 2d 433, 439, 242 N.E.2d 704 (1969) (State Department's refusal to grant immunity is binding).
"[The] degree to which granting or denying a claim of immunity may be important to foreign policy is a question on which the judiciary is particularly ill-equipped to second-guess the executive. The executive's institutional resources and expertise in foreign affairs far outstrip those of the judiciary. . . . Perhaps more importantly, in the chess game that is diplomacy only the executive has a view of the entire board and an understanding of the relationship between isolated moves. Will granting immunity serve as a bargaining counter in complex diplomatic negotiations? . . . Will it preclude a significant diplomatic advance; perhaps a detente between this country and one with whom we are not on the best speaking terms? These are questions for the executive, not the judiciary." Id.
Given these complex factors which undoubtedly do contribute to a decision whether or not to suggest immunity, this Court concludes that it should show the same deference to a Department of State recommendation, regardless of whether it suggests or declines to suggest immunity. This Court agrees that it is ill-equipped to determine whether the Department of State's determination not to suggest immunity is correct. That determination reflects the Department's conclusion that lack of immunity will not cause embarrassment to this country in the conduct of its foreign relations. Since the Department has concluded that the rationale permitting immunity does not exist ...