WOLIN, District Judge
This is an insurance coverage case.
It involves the interpretation of the wreck removal provision of a marine insurance policy. The critical inquiry is whether the wreck removal was compulsory by law. Subsumed within that inquiry are a panoply of Mexican laws whose interpretation impact on the application of this policy provision. In a prior opinion, the Court held, after a bench trial, that the removal was not compulsory by law. Grupo Protexa, S.A. v. All American Marine Slip, 753 F. Supp. 1217, 1236 (D.N.J. 1990). On appeal, the United States Court of Appeals for the Third Circuit rejected the analytical framework of the court and adopted the rationale set forth in Seaboard Shipping Corp. v. Jocharanne Tug Boat Corp., 461 F.2d 500 (2d Cir. 1972). In Seaboard Shipping, the Court held that "'compulsory removal' is a term of art referring to a situation in which a hull . . . pursuant to government order . . . must be removed from navigable waters." Id. Likewise, the Third Circuit has stated that removal is "compulsory by law" if it is directed by governmental order. Grupo Protexa, S.A. v. All American Marine Slip, 954 F.2d 130, 138 (3d Cir. 1992) ("Grupo I").
To determine whether the removal in this case was compulsory by law, the Court must examine a document authored by the Port Captain for Cuidad del Carmen on December 17, 1985. While this writing is generically referred to as the Port Captain's Order, the parties vehemently disagree as to its status. Grupo Protexa, S.A. (Grupo) contends that it is an order that required immediate removal of the wreck. All American Marine Slip (AAMS) submits that the document amounted to nothing more than a notice to post a bond. AAMS advances several reasons why the writing is not an order and further asserts that, even if the Court were to construe it as an order, it is not a valid order in accord with statutory and constitutional precepts of the Republic of Mexico.
In the Court's original opinion, it did not decide whether the Port Captain's order was in fact a valid order of removal. Rather, the Court assumed, without deciding, that the Port Captain's removal order was valid. Grupo, 753 F. Supp. at 1228. Because the Court adopted the Fifth Circuit's cost-benefit analysis, it did not view a direct government order as an alternative basis to provide insurance coverage under the phrase "compulsory by law. " See Progress Marine, Inc. v. Foremost Insurance Co., 642 F.2d 816 (5th Cir.), cert. denied, 454 U.S. 860, 102 S. Ct. 315, 70 L. Ed. 2d 158 (1981); Continental Oil Co. v. Bonanza Corp., 706 F.2d 1365 (5th Cir. 1983). However, because the Third Circuit now interprets "compulsory by law" to include wreck removal by direct government order, the Court must determine if the Port Captain's order in this case was a valid removal order. Grupo I, 954 F.2d at 138. If the Port Captain's order was valid, then Protexa was entitled to recover under the policy provision in question. Id.
On remand and at the further proceedings anticipated by the Court of Appeals, each of the parties produced witnesses who had not previously given testimony on the status of the Port Captain's order. These witnesses were Miguel Angel Rebolledo, the Port Captain; Ignacio Melo, an expert in Mexican maritime law; Bernard Oxman, an expert in international law and the United Nations Convention on the Law of Sea (UNCLOS); Albert Szekely, an expert in Mexican law of the sea and UNCLOS; Francisco Alva Rosas, an acting Port Captain; and David Pockett, an expert in wreck removal and salvage operations.
Depositions of Pockett and Robert Umbdenstock were also read into the record. Thus, the case on remand and retrial appeared nothing like the initial hearing. The latter proceeding's central focus was the Port Captain's writing, commonly called the "Port Captain's order."
While it may seem that the Court of Appeals' mandate requires little more than a rereading of the Port Captain's order, such is not the case. The Third Circuit noted, "The meaning of the Port Captain's order under Mexican law cannot be determined solely on a literal reading of the English translation. . . ." Grupo I, 954 F.2d at 138. In the following analysis, the Court relies upon the relevant testimony of the witnesses, their interpretation of the Port Captain's order and their interpretation of the Mexican Constitution and the relevant statutes that regulate Mexico's coastal and international waters. Moreover, the Court incorporates by reference its prior findings of fact as set forth in Grupo, 753 F. Supp. 1217. Because the physical contours of this remand proceeding are markedly different from the first hearing, any factual discrepancy will be controlled by this Opinion.
Overarching the validity of the Port Captain's order is whether the Port Captain, as a representative of the Mexican government, possesses the authority to order a private citizen to raise and remove a wreck beyond Mexico's territorial sea without specific statutory authority enabling him to do so. Because Protexa was a private citizen when its vessel, the Huichol II (Huichol), sank and the sinking occurred outside of Mexico's territorial waters, this inquiry is especially appropriate.
Given that the Republic of Mexico models its Constitution after that of the United States, the due process inquiry is as relevant under the Mexican Constitution as it would be under the United States Constitution.
The answer to the inquiry centers on the interplay between Mexico's exercise of its sovereign power in relation to the due process rights of its citizens. If the sovereign's exercise of power is unbridled or authorized by law, then the Port Captain's order is valid. If the Port Captain's order is in fact unauthorized by law or is proscribed in the constitutional sense, then the order is invalid.
I. DOCUMENTARY EVIDENCE
A. The Port Captain's Order
On December 17, 1985, the Port Captain of Cuidad del Carmen issued a written order. Its English translation was received in evidence as Exhibit 8. Because it still represents the ignition that sparks the engine of this litigation, the Court reproduces its text at length:
SUBSECRETARIAT OF OPERATION