GCFTG Loses Case Against S & Davis [Archives:2000/40/Front Page]

S & Davis International, Inc. (AS & Davis) filed suit in the Northern District of Alabama to enforce an arbitration award against the General Corporation for Foreign
Trade and Grains (AGeneral Corporation) of Yemen. The suit arose from a breach of contract dispute.
On May 14, 1996, the General Corporation, a Yemeni corporation, executed a contract with S & Davis, an Alabama corporation, to purchase 300,000 metric tons
of wheat at a price of $274.88 per ton. The contract specified U.S. wheat No. 2 or better with point of origin from the U.S., Canada, Australia, South Africa, or Argentina. The purchase price was to be paid with a letter of
credit issued by the Bank of Yemen with confirmation by a AU.S.A. prime bank.
The contract was negotiated and signed in Yemen. However, the contract contained an arbitration agreement providing that any dispute was to be arbitrated by the Grain and Feed Trade Association (AGAFTA) in London, England.
After additional attempts through various political and diplomatic channels to open a letter of credit, on January 2, 1997, S & Davis declared the General Corporation had breached the contract and initiated GAFTA arbitration in London.
The original GAFTA panel held that the General Corporation breached the contract by failing to open a letter of credit but concluded that S & Davis had not shown entitlement to any damages. It also held that the General Corporation was a
separate entity from that of the Ministry, and, therefore, the Ministry was not liable. The appellate arbitration panel affirmed the finding of a breach of contract but awarded S & Davis approximately $17 million in damages against the General Corporation.
On December 18, 1998, S & Davis filed this suit in federal district court to enforce the arbitration award, in addition to a claim for breach of contract and enforcement of the arbitration award against the Republic of Yemen asserting that theGeneral Corporation is a political subdivision of the Republic, and an alternative claim for tortious interference with contractual relations against the Ministry of Supply & Trade for the amount of the arbitration award.
The Ministry filed a motion to dismiss under Fed.R.Civ.Proc. 12(b)(1), lack of subject matter jurisdiction, 12(b)(2), lack of personal jurisdiction, and 12(b)(5), insufficient service of process. The Ministry claimed immunity under the FSIA (Foreign Sovreignty Immunities Act), as a political subdivision of The Republic of Yemen.
S & Davis asserted that subject matter jurisdiction was allowed under the FSIA and the Convention on the Recognition and Enforcement of Foreign Arbitration Awards, 9 U.S.C. 201 et seq. The district court held an oral hearing and on April 22, 1999, denied the Ministrys motion on all grounds. The Ministry timely filed a notice of appeal.
On the other hand a formal letter was sent to Mr. Richard Firtz the General Sales Manager FAS/USDA by Mr. Philip A. Geddes lawyer on behalf of S & Davis that protested any further aid to the Republic of Yemen under the provisions of Section 416 of the Agricultural Act of 1949. The protest was grounded legally on the requirement that any donations made under section 416 must not displace any sales and must not disrupt prices and patterns of trade.
About this matter Yemen Times contacted the American embassy and was assured that the appellation was true and that S & Davis won all the points mentioned in the case. However, the embassy had had no direct influence on this case for the past one year.
The current situation is still pending as there are efforts to bring together the two sides and reach a peaceful settelment.

——
[archive-e:40-v:2000-y:2000-d:2000-10-02-p:./2000/iss40/front.htm]