## Facts

- Colombia adopted cargo reservation laws requiring that a specified share of certain imports, including liquid bulk cargo (LBC), be carried on Colombian-owned vessels or vessels chartered by Colombian companies.
- O.N.E. Shipping Ltd., a Bermuda carrier moving LBC from U.S. Gulf ports to Latin America, sought to participate in the Colombia-bound LBC trade.
- O.N.E. alleged that Flota Mercante Grancolombiana, S.A., and other defendants, in concert with Colombian governmental policy and approvals, structured shipping arrangements that excluded O.N.E. and effectively allocated the Colombia LBC trade to favored carriers.
- O.N.E. sued under Sherman Act §§ 1–2 seeking damages and injunctive relief, claiming unlawful restraint, monopolization, and foreclosure of competition.
- The district court dismissed on act of state grounds and later denied post-judgment motions under Rules 59 and 60, imposing $500 in Rule 11 sanctions on O.N.E. and its counsel.
- O.N.E. appealed both the dismissal and the sanctions.

## Issues

1. Whether the act of state doctrine barred adjudication of Sherman Act claims where liability would require a U.S. court to evaluate the validity and effect of Colombia’s cargo reservation laws and related governmental approvals.
2. Whether, notwithstanding foreign elements and the FTAIA, the alleged conduct could be reached under the Sherman Act based on effects on U.S. commerce.
3. Whether Rule 11 sanctions were proper for O.N.E.’s post-judgment motions under Rules 59 and 60.

## Decision

- The Second Circuit affirmed dismissal of the antitrust action.
- The court held the act of state doctrine precluded adjudication because the challenged conduct was bound up with Colombia’s sovereign cargo reservation regime and official approvals, and resolving the claims would require judging foreign sovereign acts.
- The court reversed the $500 Rule 11 sanctions, concluding the post-judgment motions did not warrant sanctions.

## Legal Principles

- Under the act of state doctrine, U.S. courts generally will not decide cases that require declaring invalid, unlawful, or ineffective the public acts of a foreign sovereign performed within its own territory.
- The doctrine applies where the alleged private anticompetitive conduct is inextricably linked to a foreign government’s legislation and regulatory approvals, such that adjudication would entail passing on the sovereign policy itself.
- Foreign relations and separation-of-powers concerns weigh against judicial involvement when the dispute centers on foreign sovereign economic regulation of its own commerce.
- Rule 11 sanctions require more than an unsuccessful argument; sanctions are inappropriate where post-judgment filings are not frivolous or improper, particularly in legally complex contexts.

## Conclusion

The Second Circuit declined to hear antitrust claims that would have required a U.S. court to assess the legality and operation of Colombia’s cargo reservation laws and related state approvals, holding the act of state doctrine barred the suit, but it vacated the district court’s Rule 11 sanctions as unwarranted.


O.N.E. Shipping Ltd. v. Flota Mercante Grancolombiana, S.A., 830 F.2d 449 (2d Cir. 1987)