## Facts

- China National Chemical Import & Export Corporation owned, and Peoples Insurance Company of China insured, a cargo of chemical fertilizer carried aboard the M/V *Sapporo Olympics* from the United States to China.
- On March 10, 1980, the *Sapporo Olympics* collided in international waters off Panama with the M/V *Lago Hualaihue*, a general cargo vessel owned and operated by Empresa Marítima del Estado, a Chilean state-owned merchant shipping enterprise.
- The *Lago Hualaihue* was transporting a commercial cargo of bulk nitrates from Chile to Pensacola, Florida.
- Plaintiffs alleged the collision was caused by defendants’ negligence and/or the unseaworthiness of the *Lago Hualaihue*, and that plaintiffs’ cargo sustained approximately $1.5 million in damage.
- After discharging in Florida, the *Lago Hualaihue* sailed to Baltimore for repairs related to the collision and a separate allision near Galveston, Texas.
- Plaintiffs filed an admiralty action to enforce a maritime lien against the vessel and its operator under the Foreign Sovereign Immunities Act (FSIA), relying on 28 U.S.C. § 1605(b).
- Plaintiffs delivered process to the vessel’s captain and sent timely notices (in Spanish and English) to Empresa’s president and Chile’s foreign minister in Santiago.

## Issues

1. Whether a collision-based maritime lien against a foreign state’s state-owned merchant vessel is “based upon a commercial activity” under 28 U.S.C. § 1605(b), eliminating FSIA immunity.
2. Whether plaintiffs satisfied the notice requirements of § 1605(b)(1)–(2) and § 1608 so the action could proceed as an in personam claim limited to the vessel’s value.

## Decision

- The court denied defendants’ motion to dismiss for lack of jurisdiction.
- Operating a state-owned merchant vessel carrying commercial cargo constituted “commercial activity” under the FSIA, determined by the nature of the conduct rather than its governmental purpose.
- The asserted maritime lien arising from the collision was “based upon” that commercial activity for purposes of § 1605(b).
- Plaintiffs’ delivery of notice to the captain and timely notice to appropriate Chilean officials satisfied the statutory notice requirements.
- The action could proceed against the foreign state instrumentality, with any eventual judgment capped at the vessel’s value as of the time statutory notice was served.

## Legal Principles

- Under FSIA § 1603(d), “commercial activity” is defined by the nature of the act or transaction, not its purpose.
- FSIA § 1605(b) removes immunity in an admiralty suit enforcing a maritime lien against a foreign state’s vessel or cargo when the lien is based on the foreign state’s commercial activity and statutory notice requirements are met.
- When § 1605(b) applies and notice is properly served, the maritime lien is treated as an in personam claim against the foreign state, and recovery is limited to the value of the vessel or cargo at the time notice is served.

## Conclusion

The court held that a collision claim against a state-owned merchant vessel transporting commercial cargo fell within FSIA § 1605(b)’s maritime-lien exception to sovereign immunity and that proper notice was given, allowing the suit to proceed subject to a statutory cap tied to the vessel’s value.


China Nat’l Chem. Imp. & Exp. Corp. v. M/V Lago Hualaihue, 504 F. Supp. 684 (D. Md. 1981)