Amongst the “Waives”: Whether Sovereign Immunity for Contractual Damages Is Waived under the Public Vessels Act or the Suits in Admiralty Act
The MV Orient, a newly refurbished fishing vessel, set out from California on its maiden voyage on December 1, 1969. The Orient, owned by Continental Tuna, was bound for the Philippines. Its owners, 99.5 percent of whom were Americans, hoped to do business in Philippine waters. Thus, Continental Tuna incorporated under Philippine law. Several unfortunate events then occurred. When the Orient was only seventy miles from the California coast, a US Navy missile frigate, the USS Parsons, drew too close to the Orient. The two vessels collided, and the collision ruptured the Orient’s hull, causing the Orient to sink within minutes. As a result, Continental Tuna realized losses of approximately $1 million, but when it brought suit against the US government, the court refused to hear the case because the United States had not waived its sovereign immunity.
The law that mandates this result is the Public Vessels Act (PVA). The PVA waives sovereign immunity for “damages caused by a public vessel,” but the Act does not waive immunity for foreign plaintiffs whose governments have not waived immunity to be sued by American plaintiffs in like cases. That is what happened in United States v United Continental Tuna Corp. Since the Philippine government would not have allowed American plaintiffs to sue its public vessels in a similar situation, the Philippine plaintiff could not recover tort damages against a US public vessel.
This story would have been different if the USS Parsons had been a merchant vessel, rather than a public vessel, when it collided with the Orient. If the USS Parsons had been hauling cargo for the United States (characterizing it as a merchant vessel) instead of acting as a Navy missile frigate, Continental Tuna would have been able to recover any damages suffered as a result of the government’s negligence. The stark contrast between these two cases stems from the application of different statutes. That is, the Suits in Admiralty Act (SAA), not the PVA, governs cases brought against US merchant vessels. Under the SAA, the US government allows suits against its vessels by foreign plaintiffs.
Although courts agree on the disposition of tort cases against public vessels, such as Continental Tuna, courts disagree about whether the result should be the same if the suit were for contractual damages instead of tort damages. Envision this contract scenario: The Orient (a Philippine ship) contracts with the USS Parsons (a public vessel) to provide the Parsons with a month’s supply of fuel. The USS Parsons then breaches the contract by refusing to pay the Orient for the fuel it delivered. Is there still no recovery for the Orient in this contract case? Courts are split on the matter. Some courts would allow the Orient to recover damages for breach of contract; others would not.
The courts’ disagreement arises from different interpretations of the waiver of sovereign immunity in the PVA, which states,
A civil action in personam in admiralty may be brought, or an impleader filed, against the United States for—
(1) damages caused by a public vessel of the United States; or
(2) compensation for towage and salvage services, including contract salvage, rendered to a public vessel of the United States.
Some courts believe that “damages caused by a public vessel” includes damages for a vessel’s breaches of contract. Other courts believe that the phrase only refers to tort damages: collision damages and damages stemming from torts that occur aboard a vessel for which the vessel is liable. If the phrase does not include contractual damages, then any contractual damages suit must be brought under the SAA. The waiver of immunity provision in the SAA states,
In a case in which, if a vessel were privately owned or operated, or if cargo were privately owned or possessed, or if a private person or property were involved, a civil action in admiralty could be maintained, a civil action in admiralty in personam may be brought against the United States or a federally-owned corporation.
The SAA is widely acknowledged as more plaintiff friendly than the PVA. This is not because of the actual waivers of sovereign immunity but rather because of four other provisions in the PVA, which do not exist under the SAA, that limit or prohibit recovery. The four limitations in the PVA are: (1) a bar on the recovery of prejudgment interest, (2) a subpoena restriction, (3) the ability to stay court proceedings during wartime, and (4) reciprocity. Continental Tuna exemplifies the most stringent of these limitations: the Reciprocity Provision, which states,
A national of a foreign country may not maintain a civil action under this chapter unless it appears to the satisfaction of the court in which the action is brought that the government of that country, in similar circumstances, allows nationals of the United States to sue in its courts.
The Reciprocity Provision is the most stringent limitation in the PVA because it bars all suits by certain foreign nationals. Meanwhile, the other PVA limitations apply or potentially apply in every case, regardless of a plaintiff’s nationality. Because the PVA and SAA apply different rules, it is important to know which Act governs a given admiralty case. Thus, this Comment seeks to resolve two questions about admiralty suits: First, are suits for contract damages caused by a public vessel allowed under the PVA, or must they be brought under the SAA? Second, if the PVA governs admiralty suits for contract damages, which contractual damages can be “caused by” a public vessel?
Few courts have offered perspectives on the second question because there is a split regarding the first question: whether contract damages fall under the PVA at all. The first question exists because there is an ambiguity, or perceived ambiguity, in the term “damages” in the PVA’s phrase “damages caused by a public vessel.” Statutory interpretation is further complicated in this instance by the fact that courts apply unique canons of construction to waivers of sovereign immunity. When courts discuss whether the scope of the PVA includes contracts, some focus on sovereign immunity’s canons of statutory construction. Other courts rely on more general canons of construction or delve into legislative history to determine the purpose of the PVA. Results among courts have been mixed. In the 1950s, the Court of Federal Claims and the Ninth Circuit held that contract damages do count as damages for the purposes of the PVA. During the same decade, the First Circuit and another panel of the Court of Federal Claims came to the opposite conclusion. The issue lay dormant until the Eleventh Circuit entertained the issue in 1996 and held that the PVA did not include contract damages. In 2011, the Ninth Circuit asserted, albeit in dicta, that it would continue to abide by its prior holding that the PVA allows contract damages. Though the Supreme Court has recognized the disagreement among courts, it has not resolved it.
This Comment endeavors to resolve the split. First, this Comment argues that courts should hold that contract damages, if caused by a public vessel, fall under the PVA. In coming to this conclusion, this Comment relies on the close relationship between the SAA and PVA. The tie between the two Acts arises from the PVA’s Default Provision. The Default Provision requires that the PVA adopt all SAA provisions unless the SAA’s provisions are inconsistent with the PVA’s text. Since it is uncontroverted that the SAA has always allowed suits for breach of contract against vessels, and since the PVA’s language does not preclude contractual damages, the PVA must allow suits against public vessels for breaches of contract resulting in damages.
Second, this Comment argues that damages are “caused by” a public vessel if a suit could have been brought against the vessel in rem for a breach of contract had the vessel not belonged to the government. Because these types of contractual damages do not conflict with the plain language of the PVA, suits for contractual damages against public vessels should be subject to the PVA’s stricter limitations on suits.
The Comment’s structure is as follows. Part I introduces admiralty law and the rules of statutory construction that govern sovereign immunity waivers. It also describes the history of sovereign immunity waivers in admiralty, including the reasons for which Congress passed the SAA and the PVA. Part II details the state of the circuit split and why courts have come to divergent conclusions. Part III suggests that the ambiguity in the term “damages” is merely a perceived ambiguity because all courts, even those with which this Comment agrees, have been using a “claims framework” rather than a “remedies framework.” The claims framework asks what claims the PVA allows. This Comment instead advocates a remedies framework, under which courts ask whether the PVA allows certain remedies regardless of the plaintiff’s cause of action.