Case of the Day: In re Kuwait Airways Co.

The case of the day is the Department of Transportation’s investigation of Kuwait Airways Company. The DOT undertook the investigation at the request of Eldad Gatt, an Israeli national who was seeking to travel from New York to London by air. Kuwait Airways (which according to Gatt was offering the lowest fare on the day he tried to travel) refused to sell him a ticket because he was traveling on an Israeli passport. Gatt asserted that the airline discriminated against him on the basis of national origin, in violation of 49 U.S.C. § 40127(a), which provides:

An air carrier or foreign air carrier may not subject a person in air transportation to discrimination on the basis of race, color, national origin, religion, sex, or ancestry.


The DOT at first rejected Gatt’s complaint without giving any reasons. When Gatt demanded an explanation, the DOT sent a second response, which justified its rejection of Gatt’s complaint on the grounds that a Kuwaiti law provided that

every natural or legal person is prohibited to enter into an agreement, personally or indirectly, with entities or persons residing in Israel, or Israeli citizenship, or working for or in the interest of Israel, regardless of their domicile, whenever the object of the agreement is to conduct commercial deals, financial transactions or any other dealings, regardless of nature.

The threat of sanctions in Kuwait, according to Kuwait Airways, justified the airline in discriminating against Gatt. Kuwait Airways is the Christopher X of the airline industry. 1

Gatt sought judicial review in the Court of Appeals for the DC Circuit. Senator Charles E. Schumer weighed in with a letter to the Secretary of Transportation blasting the decision. At that point, the DOT had second thoughts. It decided, sua sponte, to reconsider its decision, and Gatt and the DOT jointly asked the court to hold the appeal in abeyance pending the reconsideration. 2

On September 30, 2015, the DOT reversed course, determining that Kuwait Airways’s practice violated US law. Curiously, the Department did not revisit its conclusion that the airline had not violated § 40127(a). Instead, it found that the airline had violated 49 U.S.C. § 41310(a), which provides:

An air carrier or foreign air carrier may not subject a person, place, port, or type of traffic in foreign air transportation to unreasonable discrimination

The Department held that the proffered excuse for the discrimination, namely the Kuwaiti statute, did not make the discrimination reasonable. It noted that Gatt was not seeking to travel to Kuwait (where, as an Israeli, he could not obtain a visa), but rather to the UK. It rejected the notion that a foreign statute mandating discrimination could justify the airline’s position, as the statutory scheme itself was improperly discriminatory. The US interest in enforcement of its antidiscrimination laws for common carriers outweighed whatever interest Kuwait had in application of its statute within the United States. Last, Kuwait’s refusal to deal with Israelis might violate US anti-boycott laws and regulations.

The DOT informed the airline that in order to avoid enforcement action, it would have to sell tickets to Israeli citizens seeking to travel between the United States and countries where they are allowed to disembark. Of course, at some point the airline haswill have a right to seek judicial review; it’s not clear if that will happen.

A last note on the legal ethics of the case. I’m sure that Eckert Seamans, counsel to the airline, acted in the highest traditions of our profession by advocating for the legal interests of its client, despite the ethical and moral flaws with the Kuwaiti position. But I trust that behind closed doors, the lawyers remonstrated with their client. As Rule 2.1 of the Model Rules of Professional Conduct provides:

In rendering advice, a lawyer may refer not only to law but to other considerations such as moral, economic, social and political factors, that may be relevant to the client’s situation.

Notes:

  1. Christopher X was the Frenchman sanctioned for violating the French blocking statute, and his case was cited many times in US cases where French firms sought protection from US pretrial discovery requests, but in general US courts were skeptical of claims of criminal sanctions in France. The similarity to the claimed conflict of laws in the blocking statute context, by the way, is the Letters Blogatory justification for covering Gatt’s case.
  2. There was some later procedural squabbling in the Court of Appeals that I don’t consider.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

Leave a Reply

Your email address will not be published. Required fields are marked *