Thai Airways Internatinoal Public Company Ltd.

Order 2008-9-15
OST-2008-0031

Issued and Served September 12, 2008

Consent Order

This order concerns the unlawful assertion of sovereign immunity by Thai Airways International Public Company Ltd., a foreign air carrier holding permit and exemption authority to operate to and from the United States, conduct that violated the express terms of its operating authority, 49 U.S.C. § 41301, and constituted an unfair and deceptive practice in violation of 49 U.S.C. § 41712. By engaging in air commerce within the United States after it violated the terms of its authority, Thai Airways also engaged in unlawful foreign air transportation in violation of 49 U.S.C. § 41703. This consent order directs Thai Airways to cease and desist from future violations and assesses the carrier a compromise civil penalty of $15,000.

On August 13, 2000, a ticketed Thai Airways passenger, Subir Gupta, attempting to travel from Bangkok to Los Angeles, was denied boarding by Thai Airways employees who questioned the validity of his United States visa. Mr. Gupta subsequently filed suit against the carrier in Superior Court of the State of California for the County of Los Angeles asserting claims for negligence, intentional infliction of emotional distress, intentional interference with contractual relations, and slander per se.

Thai Airways responded to the complaint with a motion to dismiss for lack of subject matter jurisdiction, asserting that, as a “foreign state” under the Foreign Sovereign Immunities Act (28 U.S.C. § 1602 et seq.), it is immune from suit in state or federal court. Thai Airways argued that, as a corporation whose shares are principally owned by the Ministry of Finance of the Kingdom of Thailand, it is an “agency or instrumentality of a foreign state,” and ipso facto, a “foreign state” within the meaning of the Act. Thai Airways failed to inform the state court that by the terms of its operating authority it had waived sovereign immunity and, instead, affirmatively asserted that it had not waived immunity “explicitly or by implication” within the meaning of 28 U.S.C. § 1605(a)(1). Thai Airways’ Mot. for Relief from Default and to Dismiss, Gupta v. Thai Airways, No. BC252276 (Cal.Super.Ct., Aug. 28, 2003). The California state court dismissed the complaint on October 10, 2003.

Specifically, Thai Airways asserted that its “action in questioning [Mr. Gupta’s] international travel privileges was not ordinary commercial activity exercised by a private citizen; it was the exercise of its police power as a sovereign authority in its country of origin.” We disagree. First, all air carriers engaged in international transportation must ensure that persons destined for the United States are entitled to entry, by confirming the person’s possession of a valid passport and unexpired visa, where required, regardless of whether the carrier is owned or controlled by a foreign sovereign. 8 U.S.C. § 1323(a)(1). Second, it is not the country of origin (Thailand) for which Thai Airways was inspecting Mr. Gupta’s travel documents, but the country of destination (the United States); and with respect to the United States, Thai Airways is unmistakably not an agency or instrumentality.

Throughout these and subsequent related proceedings, Thai Airways maintained its position that the FSIA applied to the claims asserted by Mr. Gupta, and that it was accordingly immune from suit. Importantly, Thai Airways did not acknowledge to any competent tribunal during the course of these proceedings that, as a condition of its right to provide foreign air transportation into and out of the United States, it had agreed to the waiver of sovereign immunity noted above. In fact, Thai Airways states that its counsel in Gupta was unaware that its authority to operate into and out of the United States is conditioned upon a qualified waiver of sovereign immunity.

By: Samuel Podberesky