U.S.-Iceland shipping dispute sidestepped by Supreme Court
By Richard Carelli, Associated Press, 05/15/00
WASHINGTON - The Supreme Court today steered clear of a shipping dispute between a company in Iceland and the U.S. government.
The court, without comment, turned away the company's argument that contracts awarded in 1998 for shipping military cargo to a U.S. base in Iceland violated a 14-year-old treaty between Iceland and the United States.
The Clinton administration waived its right to file a response to the appeal, and the justices did not request one as they do in some cases.
The appeal had been filed by the Iceland Steamship Co. Ltd.-Eimskip. The Republic of Iceland government had supported the company as a "friend of the court" when the case was in the appeals court but did not file a similar brief in the Supreme Court.
Military supplies for the U.S.-operated North Atlantic Treaty Organization base at Keflavik, Iceland, were carried exclusively by Icelandic-owned and operated shipping companies from the late 1960s to 1984, the year a U.S.-flag carrier was created to serve the same route.
Under U.S. law, that company was entitled to carry 100 percent of the military cargo shipped to the base, which caused a diplomatic rift between the two countries.
The dispute was resolved in 1986 when the two signed a treaty to ensure "that both United States flag carriers and Icelandic shipping companies are able to maintain a viable presence in the trade."
Under the treaty's terms, Icelandic and U.S. companies compete periodically for the military cargo shipping contracts. The lower bidder is awarded 65 percent of the cargo-shipping contracts; the remaining 35 percent is awarded to the next lowest bidder of the other country.
That system worked without controversy for 12 years, until in 1998 the two companies awarded contracts were TransAtlantic Lines-Iceland EHF and U.S.-based TransAtlantic Lines LLC.
One person, Gudmundur Kjarnested, effectively managed both firms. A citizen of Iceland who is a U.S. resident alien, he was president of one of the firms and vice president of the other and signed both companies' bids.
After the U.S. Department of the Army made those awards, Iceland's government sent a diplomatic note to the U.S. State Department. It said the contracts violated the 1986 treaty.
Iceland Steamship sued the Army in 1998, and a federal judge in the District of Columbia ruled that the 1986 treaty had been violated.
The U.S. Circuit Court of Appeals for the District of Columbia reversed that ruling, however.
"TLI and TLL are separate entities and are entitled to be treated as such," the appeals court ruled.
In the appeal acted on today, lawyers for Iceland Steamship said the appeals court wrongly deferred to the State Department's interpretation of the treaty while ignoring the Iceland government's conflicting interpretation.
The case is The Iceland Steamship Co. Ltd.-Eimskip vs. U.S. Department of the Army, 99-1631.