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A quarter-century after victorious Communist troops entered Saigon, a trio of reinsurance companies themselves became “casualties of war” in a lingering legal tangle over subrogation of a claim for a long-ago-lost cargo of rice bound for the warring land. In a legal echo of the Vietnam War, the Socialist Republic of Vietnam successfully argued before federal Judge Deborah A. Batts of the U.S. District Court for the Southern District of New York that it is the rightful successor to the Republic of Vietnam, the government insurgent Communist forces toppled in 1975, and has sole claim to the $2.8 million that compensates for cargo lost more than 30 years ago. “I’d be very surprised if there were any other cases around like this,” said Patrick J. O’Brien, associate general counsel for Swiss Re America Holding Corp., who represented all three reinsurance firms. “It began as a garden-variety subrogation action: The claim is paid, but before the money can leave the country, Saigon falls and everything is frozen. You are not going to see that happen again,” O’Brien said. The case originated on Dec. 6, 1970, when the freighter Sian Yung ran aground in the Panama Canal. The ship, bearing a cargo of rice, had been chartered by the Republic of Vietnam and insured by an insurance corporation operated by the Vietnamese government. Three years after the mishap, in which the cargo of rice was lost, the Vietnamese government and its insurance corporation began a subrogation action. On April 17, 1975, the Panama Canal Company issued a check in the amount of $548,364 to the law firm of Lord, Day & Lord, attorneys for the Republic of Vietnam. On April 30, 1975, North Vietnamese forces entered Saigon, the Republic of Vietnam ceased to exist, and the United States froze all the assets of Vietnam under its jurisdiction. ALL BUT FORGOTTEN The funds, which since have grown to $2.8 million, were frozen in the former government’s account at First National City Bank in New York where Lord Day had deposited the check. There the money remained, all but forgotten until April 1995, when the United States and Vietnam normalized diplomatic relations. “The legal issues were resolved under the Foreign Sovereign Immunity Act,” said Christopher M. Curran, a partner at New York’s White & Case, which represented Vietnam. “It is a remarkable statement about our legal system,” said Curran. “Since the case originated, the Panama Canal changed hands, Vietnam became a different country, Lord Day went out of business, but the legal system was still charged with determining who owns the money.” Despite the historical twists to the case, its resolution came down simply to a statute-of-limitations ruling, said both attorneys. Both sides agreed that New York’s six-year statute of limitations applied, but disagreed as to when the clock began running. The reinsurers argued the statute ought to have been tolled under the Trading With the Enemy Act until March 6, 1995, when the two countries normalized relationships. Judge Batts ruled instead that the statute of limitations applied from April 1975, when actual hostilities ceased. The judge noted that the insurers took no action, either in the United States by petitioning to unblock the funds, or in their home countries, that would have kept the claim alive for when the statute of limitations expired. “The Reinsurers have not demonstrated any diligent efforts to press their claim over a twenty-year period,” she wrote, adding that the insurers’ losses are “perhaps best viewed as a causality of war.” O’Brien said the reinsurers had never taken any action because they believed there was no realistic chance of the claim being paid until diplomatic relations were normalized. “Essentially it comes down to being a statute-of-limitations matter,” he said. “The message from the court is we should have taken action earlier to protect our rights. That is difficult to accept because the insurers had no realistic course for recovery.” Curran, noting that assets from several nations remain frozen in the United States, said the judge’s opinion is a warning to any others with claims against those assets. “One legal principle coming out of this is that even if you face some obstacles, you better do what you can or you risk losing all your rights,” Curran said. Lord, Day & Lord, Barret Smith, v. Socialist Republic of Vietnam, Swiss Reinsurance Company, Assurance Generales de France, and Groupe des Mutuelles Alsaciennes, No. 96-CV-5755 (S.D.N.Y. 1996).

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