Plaintiffs’ present application seeks an attachment of Banque’s property within this jurisdiction. The instant action involves the same contracts, equipment and services upon which plaintiffs’ suit against the Republic of Haiti was based. Plaintiffs here allege two causes of action. The first, that the agreements were with the Republic and Banque, and that defendant Banque has failed to make payments due thereunder; the second, that Banque represented it would make the payments required under the agreements and that such representations were false and fraudulent and made with intent to induce plaintiffs to enter into the agreements, which it did in reliance upon such representations. The court, in the consideration of the motion for an attachment of Banque’s funds, in addition to the affidavit submitted in support thereof, takes judicial notice of the record of the proceedings brought by plaintiffs against the Republic of Haiti.2
Equally questionable is plaintiffs’ claim for fraud and deceit. Here the plaintiffs’ president alleges that it was “only after the defendant’s promise to plaintiffs to make the various monthly payments” that the agreements were entered into, and had it not been for said promise plaintiffs would not have executed the agreements. The person who allegedly made the promise (just as the person who allegedly advised the affiant of defendant’s obligation) is not stated, nor is the representation articulated.6 If the claim of fraud is lack of intent to fulfill the promise at the time of its making,7plaintiffs have not offered any evidential support for such a claim. Upon the record as presented, there is sufficient doubt that plaintiffs have prima facie established their claims as to warrant denial, in the exercise of the court’s discretion,8 of the motion for the issuance of the attachment.
Since 1962, when the well-known Tate letter was issued, our government has adhered to a policy under which the rule of absolute sovereign immunity is relaxed in favor of a restrictive theory of sovereign immunity as to private acts or commercial transactions (jure gestionis) and is continued as to a foreign government’s public and governmental functions (jure imperii).5That restrictive policy was more precisely defined, for those cases where the State Department had not passed upon a request for immunity, by our Court of Appeals in Victory Transport, Inc. v. Comisaria General.6 The court there held that among the acts of a foreign state which still continued to enjoy sovereign immunity were those “concerning the armed forces,” and this is the issue presented in the instant case.
In support of its claim of sovereign immunity, the Republic of Haiti contends that the subject matter of the contract sued upon was military procurement for its air, land and naval forces. The written confirmation, dated January 20, 1972, of the oral agreement between the plaintiffs and the Republic was signed on defendant’s behalf by its Minister of Defense and Finance. From this document and the invoices attached to the complaint, it is clear that the goods covered by the contracts, for which plaintiffs seek recovery in this action, include armed patrol boats, armed helicopters, machine guns, rifles, anti-aircraft guns and ammunition. The nature of the material and the function of plaintiffs with respect thereto is underscored by a letter by defendant’s Secretary of Foreign Affairs sent to our Department of State, advising that “Mr. James Byers [plaintiffs’ president] has been selected as exclusive representative of the Haitian Government to the United States of Ameria for any purchase of arms and military equipment.” Additionally, defendant submits a letter signed and sent by plaintiffs’ president to the president of the Republic less than two months before the filing of this lawsuit, when the relationship of the parties was strained and defendant planned to terminate their contractual arrangement. Among other matters, plaintiffs’ president referred to “our contract of January 20, 1972 covering naval patrol vessels and helicopters.” Throughout the letter there are descriptions of material delivered and to be delivered which clearly are for armed forces, including naval patrol boats, weapons, pistols, revolvers, grenades, machine guns, cannons, armored vehicles, rifles and other military equipment. The writer stresses that except for plaintiffs’ efforts, the defendant “at this time would not have any Air Force or Naval Force, nor the brave Leopards8to protect the Duvalier family and the Government”; that the present administration of the Republic of Haiti has permitted plaintiffs “to give you . . . what you require, namely, for the Air Force, the Naval Force, and Leopards . . . .” The letter is replete with other references to “arms and ammunition” relating to the subject matter of plaintiffs’ claim. The defendant has presented such substantial evidence that the subject matter of this suit involves transactions “concerning the armed forces,” that prima facie it is entitled to defeat plaintiffs’ claim upon a plea of sovereign immunity.
In addition, the affidavit alleges that at various times the planes were used to fly foreign executives interested in Haiti’s economy, or foreign diplomats and dignitaries visiting the country, or for flying religious missions for the installation of new bishops or priests. However, this and the other allegations already referred to as to the uses to which the helicopters were put after their delivery into Haiti do not in any way contradict the fact that the contract upon which this suit is based and the goods sold thereunder involved equipment for the armed forces of Haiti. If the contract sued upon and the performance thereunder fall within one of the categories of public or political acts, as set forth in Victory Transport,the contracting nation is entitled to a grant of immunity. Once that fact is established it is largely irrelevant how the equipment was used after its delivery. To pursue the subject matter of the transaction into the foreign country and to inquire whether in fact the materials were being used solely and only for the armed forces would be an unwarranted intrusion into the internal affairs of a foreign government.10
Hartford seeks to have the matter re-referred to the Magistrate on the issue of mitigation of damages. However, were the interest rate substantially reduced (even at six per cent per annum), the undertaking would still be insufficient to meet the interest obligation over and above $13,553, the amount allowed for legal fees. Hartford’s further argument that Haiti was obliged to have effected a discharge of the attachment and thereby mitigated damages by giving an undertaking in an amount equal to the attached funds pursuant to section 6222 of the new York Attachment Law3 is without substance. That section is permissive and not mandatory; moreover, to furnish an undertaking would require the payment of a premium, and in view of the amount of the claim would probably require the posting of a fund equal to the amount attached.
The facts are stated in Judge Weinfeld’s two opinions. See also Aerotrade, Inc. v. Banque Nationale de la Republique d’Haiti, 376 F.Supp. 1286 (S.D.N.Y.1974). The main issue concerns Haiti’s right to include in its damages, resulting from the attachment, payments made by it to Banque Nationale de la Republique d’Haiti, the New York funds of which were attached by Aerotrade on the sworn allegation that Banque is wholly owned by, and the alter ego of, the Republic of Haiti. These payments reimbursed the Banque for interest charges levied against it, by the New York bank in which it kept the attached funds, for overdrafts resulting from the attachment.