damage claim against the tortfeasor personally, and denying the injured party the opportunity to reach directly any proceeds under a contract of indemnity or insurance which the tort feasor may have with a third party. Indeed, at common law, the mere mention of "insurance" at trial could lead to a mistrial.

The enactment of a Federal "direct action" statute applicable to insurance policies issued to persons who enjoy personal immunity from suit as a matter of Federal (treaty [e.g., the Vienna Convention on Diplomatic Relations which was done on April 18, 1961 (TIAS 7502; 23 UST 3227; 500 UNTS 95; entered into force for the United States on December 13, 1972)]) law would, in our view, go a long way in remedying that deficiency. The idea of a direct action statute is certainly not new. Numerous States of the Union have had on their books for several decades statutes permitting direct actions against insurers under a variety of circumstances. . .

In at least one instance that we are aware of, the right to proceed directly against an insurer was created by the courts. In Shingleton v. Bussey, 223 So.2d 713 (1969), the Supreme Court of Florida held that under Florida law an injured party was a thirdparty beneficiary of a motor vehicle liability policy and had a direct cause of action against the insurer (overruling earlier case law which had denied such right). The following language of the Supreme Court of Florida is most apposite to H.R. 7679:

"It cannot be disputed that securance of liability insurance coverage protection for the operation of a motor vehicle, regardless of whether the policy is secured to meet the requirements of Ch. 324, F.S., is an act undertaken by the insured with the intent of providing a ready means of discharging his obligations that may accrue to a member or members of the public as a result of his negligent operation of a motor vehicle on the public streets and highways of this State.

"Viewed in this light, we think there exists sufficient reason to raise by operation of law the intent to benefit injured third parties and thus to render motor vehicle liability insurance amenable to the third-party beneficiary doctrine.

"Once it is established that a person injured by the act of an insured while operating a motor vehicle is a party entitled to maintain a cause of action directly against the liability insurer of the tort-feasor, the question then presented is when may the injured party exercise his right to bring suit on the cause of action vested in him. Resolution of this question entails the effect to be attributed to rules of civil procedure and provisions of the policy as well as the process of weighing and measuring certain countervailing public policies.

*

"In reaching the foregoing conclusion, we are cognizant that the primary reason advanced in those jurisdictions which have sustained "no joinder clauses" in the area of liability insurance is that such a clause serves to prevent prejudice to the insurer through the prophylactic effect of isolating from the jury's consideration any knowledge that coverage for the insured exists. Such a result is deemed desirable because of the notion that a jury is prone to find

negligence or to augment damages, if it thinks that an affluent institution such as an insurance company will bear the loss. See Appleman, 8 Insurance Law and Practice, 4861. While we will not go so far as to assert that the above proposition has been all but obliterated by the more recent indications to the effect that the injection of insurance does not operate to increase the size of jury verdicts, we do think the stage has now been reached where juries are more mature. Accordingly, a candid admission at trial of the existence of insurance coverage, the policy limits of same, and an otherwise aboveboard revelation of the interest of an insurer in the outcome of the recovery action against insured should be more beneficial to insurers in terms of diminishing their overall policy judgment payments to litigating beneficiaries than the questionable "ostrich head in the sand" approach which may often mislead juries to think insurance coverage is greater than it is. [223 So.2d at 716, 718.]"

None of the jurisdictions in which the problem of traffic accidents caused by foreign diplomats is most pronounced-the District of Columbia, Virginia, Maryland and New York-has a direct action statute. A Federal direct action statute would create a Federal substantive right, enforceable in Federal or State courts, to proceed for damages directly against the insurers of foreign diplomats.

We have done some comparative research to determine how other countries cope with the problem of damage claims against foreign diplomats involved in traffic accidents. As an example,... the "European Convention on Compulsory Insurance against Civil Liability in Respect of Motor Vehicles" of April 20, 1959, 720 U.N.T.S. 119 (1970),... is now in force in most countries of Western Europe. That multilateral convention requires each signatory state to enact domestic legislation providing for mandatory insurance and a right in the injured party to proceed directly against insurers. As a result, American diplomats stationed in these countries have for many years been required to carry liability insurance on their privately owned vehicles, and the direct action feature of the legislation enacted in the countries of the European Community allows individuals who are injured by our diplomats to recover compensation directly from the insurers of our diplomats. As you can see, the European Community is well ahead of us in remedying the problems created by diplomatic traffic accidents. Indeed, it is safe to say that the problems of diplomatic immunity which continue to vex the Congress and the executive branch are wholly unknown in Europe. I believe we should learn from the continental experience; it is my understanding that the direct action statute scheme has worked extremely well in Europe.

It may also be profitable for me to point out that when the States of our Union first began enacting direct action statutes, the statutes were subjected to close judicial scrutiny. In the landmark case of Watson v. Employers Liability Corp., 348 U.S. 66 (1954) the Louisiana direct action statute was challenged on every conceivable constitutional ground. A unanimous Supreme Court rejected all challenges and held:

a) The statute is constitutional even when applied to a policy written and delivered in another state which recognizes as binding

and enforceable a provision of the policy forbidding such direct actions;

b) The statute does not violate the Equal Protection Clause of the Constitution since its provisions fall with equal force upon all liability insurance companies, foreign and domestic, and there is no evidence of any discriminatory application of them;

c) The statute does not violate the Contract Clause of Art. I, § 10, of the Constitution, since the direct action provisions became effective before the insurance contract sued on was made;

d) The statute does not violate the Due Process Clause of the Constitution, since Louisiana has a legitimate interest in safeguarding the rights of persons injured there;

e) The Full Faith and Credit Clause of the Constitution does not compel Louisiana to subordinate its direct action provisions to the contract laws of a sister State, where the insurance policy was issued.

There can be no question that Congress is fully authorized to enact a limited Federal direct action statute as envisaged by H.R. 7679. Although under the Commerce Clause of the Constitution Congress could undoubtedly enact a general Federal direct action statute, H.R. 7679 is less ambitious; it draws on Congress' power over international affairs. Since the immunity of foreign diplomats from suit is a privilege accorded by Federal law, Congress has a legitimate interest in protecting the rights of persons injured in the United States by those who enjoy a Federal immunity from suit. If Congress has the power to require that foreign diplomats obtain liability insurance as a condition to driving in the United States... Congress can, by parity of reasoning, also ensure that the insurance affords effective redress to the injured person by allowing determination of the person's claim in the courts, and not leaving the injured person at the mercy of an insurance adjustor.

[T]he Department of Justice wholeheartedly and without qualification supports H.R. 7679.

Dept. of Justice release (Aug. 1, 1977). (Appendices omitted.)

The text of H.R. 7679, 95th Cong., 1st Sess., appears below:

A BILL

To amend title 28, United States Code, to provide for actions against insurers on claims against persons entitled to diplomatic immunity.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) chapter 85 of title 28, United States Code, is amended by the addition of the following new section: "1364. Actions against insurers involving claims against members of missions and their family members

"(a) Any person having a claim arising in the United States against an individual who is a member of a mission or is a member of the family of a member of a mission as defined in the Vienna Convention on Diplomatic Relations may bring an action on such claim, regardless of the amount in controversy, in any district court against any person who by contract has insured such individual against liability with respect to such a claim, within the terms and limits of such contract.

"(b) In any action brought under subsection (a), it shall not be a valid defense that the insured is immune from suit, that the insured is an indispensable party, or, in the absence of fraud or collusion, that the insured has

violated a term of the contract, unless the contract was cancelled before the claim arose."

(b) The chapter analysis of chapter 85 of title 28, United States Code, is amended by the addition of the following item:

"1364. Actions against insurers involving claims against members of missions and their family members."

For further information on the proposed diplomatic immunities legislation, see ante, Ch. 4, § 1, pp. 264–276.

In response to questions posed by the Subcommittee on International Operations of the Committee on International Relations of the House of Representatives, the Dept. of State answered a series of questions dealing with automobile insurance for U.S. personnel abroad and for cars registered by embassies, permanent missions to the United Nations, and U.N. officials in New York. These questions and answers on the topic of insurance, which appear in Diplomatic Privileges and Immunities, Hearings and Markup before the Subcommittee on International Operations of the Committee on International Relations of the House of Representatives, 95th Cong., 1st Sess., pp. 214, 217, and 218, appear below:

Question 7. Do all categories of U.S. personnel in foreign countries have to have automobile insurance?

(a) If not, in which countries are they exempted? (b) Which categories of personnel are exempted?

Answer. (a) We know of no countries in which Foreign Service personnel are posted where all those who own and operate automobiles do not comply with the local law or standard embassy requirement that their cars be adequately insured.

(b) As indicated in (a) above, we know of no categories of Foreign Service personnel exempted from the requirement to insure one's automobile(s) against public liability.

MOTOR VEHICLE LIABILITY INSURANCE AND TRAFFIC VIOLATIONS

Question 10. How many countries require automobile liability insurance as a condition of entering the country?

Answer. The Department of State does not have current data on the number of countries requiring automobile insurance as a condition of permitting a car to enter the country. All European countries require evidence, in the form of the so-called "Green Card," of insurance coverage before a car can cross the border to enter one of these countries. An official hearing transcript also shows that Representative Sam M. Gibbons, in his opening statement at the hearing on compulsory foreign nonresident automobile insurance and registration held by the Subcommittee on Trade of the Committee on Ways and Means on September 20, 1976, stated that "the United States is the only major country in the world not requiring automobiles to carry liability insurance as a condition of their entering the country."

Question 16. How many diplomatic cars are insured in the United States? Answer. All cars registered by diplomats, permanent missions to the United Nations, and top U.N. officials in New York are insured because of local mandatory insurance laws. We have no accurate means of approximating the number of diplomatic cars in the Washington area that are insured, since the District of Columbia and Virginia do not require evidence of insurance coverage as a prerequisite to automobile registration.

Question 17. Do our diplomats overseas carry motor vehicle liability insurance?

Answer. We know of no countries in which U.S. Foreign Service personnel are posted where all those who own and operate automobiles do not comply with the local law or the standard embassy requirement that their cars be adequately insured.

Question 18. How many lawsuits per year would you estimate are frustrated due to lack of insurance? Are any of these cases covered by State laws which provide uninsured motorist coverage?

Answer. We would estimate that not more than half a dozen cases per year are frustrated due to lack of insurance. Some of these would likely be covered by State laws that provide uninsured motorist coverage; for example, uninsured motorist coverage did operate to provide the Rosenbaums a modest indemnity for Dr. Halla Brown's tragic injuries.

Rights and Duties of Diplomatic Officers

Receipt and Disposition of Foreign Gifts and Decorations

Section 515 of the Foreign Relations Authorization Act, Fiscal Year 1978 (“the 1978 Act"), Public Law 95-105, 91 Stat. 862-866, approved on August 17, 1977, contains a comprehensive amendment to the 1966 Foreign Gifts and Decorations Act ("the 1966 Act"). Section 515 of the 1978 Act deals with the receipt and disposition by employees of the U.S. Government of gifts and decorations from a foreign government. The section requires, inter alia, the President to direct all Chiefs of U.S. Diplomatic Missions "to inform their host governments that it is a general policy of the United States Government to prohibit United States Government employees from receiving gifts or decorations of more than minimal value." With certain exceptions the term "minimal value" is defined as "a retail value in the United States at the time of acceptance of $100 or less...."

The Senate Report concerning the 1978 Act submitted by Senator John J. Sparkman as Chairman of the Committee on Foreign Relations credited Senator Joseph R. Biden, Jr., with initiating this amendment and provided the following background information concerning the 1966 Act:

The U.S. Constitution does not prohibit the acceptance of gifts and decorations under all circumstances but does require that Congress consent to their acceptance. In the Act of 1966, Congress consented to U.S. Government employees retaining foreign gifts of minimal value and also decorations for outstanding and meritorious service. Concerning a gift of more than minimal value, however, the Act made acceptance permissible only if refusal would likely cause embarrassment or adversely affect the foreign relations of the United States. Such gifts, according to the Act, are to be considered the property of the United States and to be used or disposed of according to regulations issued by the President.

In 1974 the Foreign Relations Committee requested the General Accounting Office to review the administration of the 1966 Act, and after a year-long study the GAO issued a report pointing out a number of deficiencies in the Act . . . .

S. Rep. No. 95-194, 95th Cong., 1st Sess. 29 (1977).

Par. 8 of sec. 9 of art. 1 of the Constitution of the United States reads as follows:

No title of nobility shall be granted by the United States; and no person holding any office of profit or trust under them, shall, without the consent of the Congress, accept of any present, emolument, office, or title, of any kind whatever from any King, Prince, or foreign State.

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