Supreme Court vacated judgment of court of appeals and remanded case for further proceedings consistent with its opinion that non-frivolous argument is not sufficient for expropriation exception to apply, which matter must be decided as close to outset as possible

Since the mid-1970’s a wholly owned Venezuela-incorporated subsidiary (Subsidiary) of an American company (Parent) supplied oil rigs to oil development entities that were part of the Venezuelan Government. In 2011 the American Parent company and its Venezuelan Subsidiary brought a lawsuit in federal court against those foreign government entities claiming that the Venezuelan Government had unlawfully expropriated the Subsidiary’s oil rigs by nationalizing them and sought compensation. Venezuela moved to dismiss the case on the ground that its sovereign immunity deprived the District Court of jurisdiction.

A wholly owned Venezuelan subsidiary (Subsidiary) of an American company (Parent) has long supplied oil rigs to oil development entities that were part of the Venezuelan Government. The American Parent and its Venezuelan Subsidiary (plaintiffs) filed suit in federal court against those entities, claiming that Venezuela had unlawfully expropriated the Subsidiary’s rigs by nationalizing them. Venezuela moved to dismiss the case on the ground that its sovereign immunity deprived the District Court of jurisdiction. The District Court agreed as to the Subsidiary, dismissing its claim on jurisdictional grounds. But it rejected the claim that the Parent had no rights in the Subsidiary’s property. The District of Columbia Circuit reversed in part and affirmed in part, finding that both claims fell within the exception. With respect to the Subsidiary’s claim, it concluded that a sovereign’s taking of its own nationals’ property would violate international law if the expropriation unreasonably discriminated based on a company’s shareholders’ nationality. With respect to the Parent’s claim, it held that the exception applied because the Parent had raised its rights in a non-frivolous way.

Venezuela filed a petition for certiorari asking Supreme Court to decide whether the Court of Appeals had applied the correct standard in deciding that the companies had met the expropriation exception’s requirements.

The Supreme Court, in vacating the judgment, concluded that the non frivolous-argument standard is not consistent with the statute. Where, as here, the facts are not in dispute, those facts bring the case within the scope of the expropriation exception only if they do show (and not just arguably show) a taking of property in violation of international law. Simply making a non-frivolous argument to that effect is not sufficient. It is further held that a court should decide the foreign sovereign’s immunity defense “at the threshold” of the action.

“Foreign sovereign immunity is jurisdictional in this case because explicit statutory language makes it so. See § 1604 (“[A] foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided” by the FSIA’s exceptions); § 1605(a) (“A foreign state shall not be immune from the jurisdiction” of federal and state courts if the exception at issue here is satisfied).”

“To be sure, there are fair arguments to be made that a sovereign’s taking of its own nationals’ property sometimes amounts to an expropriation that violates international law, and the expropriation exception provides that the general principle of immunity for these otherwise public acts should give way. But such arguments are about whether such an expropriation does violate international law. To find jurisdiction only where a taking does violate international law is thus consistent with basic international law and the related statutory objectives and principles that we have mentioned. But to find jurisdiction where a taking does not violate international law (e.g., where there is a non frivolous but ultimately incorrect argument that the taking violates international law) is inconsistent with those objectives. And it is difficult to understand why Congress would have wanted that result.”

“We can understand why the Circuit has departed from its non frivolous-argument standard in these latter cases. For, unless it did so, how could a foreign nation ever obtain a decision on the merits of the non frivolous argument that a plaintiff has advanced? But what in the statutory provision suggests that sometimes courts should, but sometimes they should not, simply look to the existence of a non frivolous argument when they decide whether the requirements of the expropriation exception are satisfied? It is difficult, if not impossible, to reconcile this bifurcated approach with the statute’s language. It receives little, if any, support from the statute’s history or purpose. And, it creates added complexity, making it more difficult for judges and lawyers, domestic and foreign, to understand the intricacies of the law.”

Consequently, the judgment of the Court of Appeals was vacated, and the case was remanded for further proceedings.

CITATION: Bolivarian Republic of Venezuela v. Helmerich & Payne International Drilling Co. (S. Ct. 2017), No. 15-423.

**** Mike Meier is an experienced business consultant. Fluent in German and Spanish, French and Japanese. Juris Doctor (1993) & Master of Laws with distinction (1997), Georgetown University; Master's Degree in Political Science (1988), University of Berlin (Germany), Yale Law School. - Attorney Website at https://mikemeierattorney.com/ - Attorney Profile at: https://solomonlawguild.com/mike-meier# - Attorney News at: https://attorneygazette.com/mike-meier%2C-consultant#

Second Circuit reverses district court’s order citing lack of subject matter jurisdiction to enter judgment against Cuba under the FSIA, quashes information subpoena served on bank

Aldo Vera, Jr. (“Vera”) filed a case because of the extra judicial killing of his father in 1976 in Cuba. Cuba was declared as a state sponsoring terrorism in 1982. In 2008, Vera obtained a default judgment against Cuba in Florida State Court by relying on the “terrorism exception” to sovereign immunity, 28 U.S.C. § 1605A(a)(1). Vera then obtained a default judgment in United States District Court for the Southern District of New York which granted full faith and credit to the Florida Judgment. Vera, thereafter, served information subpoenas on the New York branches of various foreign banks including Banco Bilbao Vizcaya Argentaria, S.A. (“BBVA”). BBVA refused to comply with the subpoena’s request for information pertaining to Cuban assets located outside the United States. BBVA moved to quash this subpoena contending that the United States District Court was not having subject matter jurisdiction under the Foreign Sovereign Immunities Act, 1976 (the “FSIA”), as amended, 28 U.S.C. §§ 1602 et seq. District Court rejected the jurisdictional challenge and ordered complete disclosure. BBVA appealed against the order of District Court in the Second Circuit.

The U.S. Court of Appeals for the Second Circuit reverses the decision and remands the case back to the District Court with the observation that it lacked subject matter jurisdiction over Vera’s action against Cuba. The FSIA’s terrorism exception to sovereign immunity—the only potential basis for subject matter jurisdiction in this case—did not apply. Cuba was immune from Vera’s action.

Two principles of federal jurisdiction guided Second Circuit’s analysis. First, subject matter jurisdiction “functions as a restriction on federal power.” Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982). Federal courts may not proceed at all in any case without it. See Sinochem, 549 U.S. at 430-31, 127 S.Ct. 1184. Second, “the subpoena power of a court cannot be more extensive than its jurisdiction.” U.S. Catholic Conference v. Abortion Rights Mobilization, Inc., 487 U.S. 72, 76, 108 S.Ct. 2268, 101 L.Ed.2d 69 (1988).

“A district court must therefore determine whether it has jurisdiction, no matter how a case comes before it. If the court lacks jurisdiction over the proceeding and issues a subpoena that does not aid in determining jurisdiction, the subpoena is void and unenforceable. See id. at 80, 108 S.Ct. 2268.” (Page 316)

The subpoena at issue in this appeal was served on BBVA in an effort to enforce Vera’s Federal Default Judgment. The legitimacy of the subpoena was tied to the District Court’s jurisdiction to enter judgment against Cuba under one of the exceptions to sovereign immunity in the FSIA. In order to invoke the terrorism exception to sovereign immunity of the FSIA, Vera had the burden to establish that Cuba was designated a state sponsor of terrorism in 1982 as a result of his father’s death. The record suggested on the contrary that the State Department designated Cuba a state sponsor of terrorism generally because of its “support for revolutionary violence and groups [that] use terrorism as a policy instrument.”

“We reverse. The District Court lacked subject matter jurisdiction over Vera’s action against Cuba because Cuba was not designated a state sponsor of terrorism at the time Vera’s father was killed, and Vera failed to establish that Cuba was later designated a state sponsor of terrorism as a result of his father’s death. Accordingly, the FSIA’s terrorism exception to sovereign immunity—the only potential basis for subject matter jurisdiction in this case—does not apply. Cuba was immune from Vera’s action, the District Court lacked subject matter jurisdiction to enter judgment against it, and the information subpoena to enforce that judgment is void.” (Page 312-313).

Consequently, the Judgment against Cuba and the information subpoena to enforce that Judgment were held to be void.

CITATION: Vera v. Republic of Cuba, 867 F.3d 310, 320 (2d Cir. 2017).

**** Mike Meier is an experienced business consultant. Fluent in German and Spanish, French and Japanese. Juris Doctor (1993) & Master of Laws with distinction (1997), Georgetown University; Master's Degree in Political Science (1988), University of Berlin (Germany), Yale Law School. - Attorney Website at https://mikemeierattorney.com/ - Attorney Profile at: https://solomonlawguild.com/mike-meier# - Attorney News at: https://attorneygazette.com/mike-meier%2C-consultant#

Federal Rule of Civil Procedure 4(k)(2) and Fifth Amendment. United States Court of Appeals, District of Columbia Circuit affirms the order of the United States District Court for the District of Columbia denying jurisdictional discovery and granting Palestinian Authority’s Motion to Dismiss for lack of personal jurisdiction

In 2011, Jewish worshippers were shot by armed gunmen at Joseph’s Tomb, a holy site in the West Bank believed by many to be the burial place of the biblical patriarch. Among the victims were Ben-Yosef Livnat, who was killed, and U.S. citizens Yitzhak Safra and Natan Safra, who were wounded in the gunfire. According to the Livnats and Safras, the perpetrators of the attack were the security guards hired to protect Joseph’s Tomb by the Palestinian Authority. The Palestinian Authority is a government headquartered in the West Bank city of Ramallah. The Palestinian Authority has non-member observer status in the United Nations and receives foreign aid from the United States, the European Union, and other sources. The United States does not recognize the Palestinian Authority as a government of a sovereign state. The Livnat and Safra families brought suit in federal district court seeking to hold the Palestinian Authority vicariously liable for the attack, bringing claims under both the Antiterrorism Act, 18 U.S.C. § 2333, and common-law tort. The families alleged that the guards who perpetrated the attack at Joseph’s Tomb were acting within the scope of their employment by the Palestinian Authority, which knew that the commander of the guards had served time in Israeli prison on terrorism-related charges. *47

The district court addressed the issue of personal jurisdiction under Federal Rule of Civil Procedure 4(k)(2), concluding that the Livnats and Safras had forfeited all other statutory bases for personal jurisdiction. Applying the Due Process Clause of the Fifth Amendment, the court found that the Palestinian Authority was not “at home” in the United States and that the attack was not sufficiently directed at the United States. The Livnats and Safras timely appealed. *48

The Fifth Amendment’s Due Process Clause protects defendants from “being subject to the binding judgments of a forum with which they have established no meaningful contacts, ties, or relations,” and requires “fair warning that a particular activity may subject them to the jurisdiction of a foreign sovereign.” Mwani v. bin Laden, 417 F.3d 1, 11 (D.C. Cir. 2005) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)).

Constitutional limits on the personal jurisdiction of the courts do not protect entities that are not covered by the Due Process Clause, and the language of the Clause speaks only of “persons.” U.S. CONST. amend. V (“No person shall ... be deprived of life, liberty, or property, without due process of law....”). In Price v. Socialist People’s Libyan Arab Jamahiriya, 294 F.3d 82 (D.C. Cir. 2002), it was held that foreign states are not persons and are not covered by the Due Process Clause. Id. at 96.

The rule in Price—that foreign states are not “persons” under the Due Process Clause—applied only to sovereign foreign states. Nothing in Price, other precedent, or the appellants’ arguments compelled the court to extend the rule in Price to all foreign government entities. And no party argued that the Palestinian Authority was a sovereign foreign state. *49

The appellants contended that Price’s reasoning applied equally in this case. But in Price, the court had a particular type of entity in mind. When addressing whether the Due Process Clause applied to “foreign states,” the court used that term interchangeably with foreign “nations,” “governments,” and “sovereigns.” See id. at 95-100. Libya was a “sovereign nation” fairly described by all of those terms. Id. at 98. This case was different. Both parties acknowledged that the Palestinian Authority was not recognized by the United States as a government of a sovereign state. And the appellants—even though they sought to apply Price’s holding here—conceded that the Palestinian Authority was not sovereign in “law” or “fact,” apparently referring to the Palestinian Authority’s limited powers and incomplete independence from Israel. Appellants’ Br. 17 & n.3 (citing Ungar v. Palestine Liberation Org., 402 F.3d 274 (1st Cir. 2005), which held that the “reserved powers” that Israel retained under the Oslo Accords “are incompatible with the notion that the [Palestinian Authority] had independent governmental control over the defined territory,” and therefore the Palestinian Authority was not a foreign “state” entitled to sovereign immunity, id. at 291). The question, then, was whether Price’s rationales depended on the fact that Libya was sovereign, or whether they extended to any foreign government entity, even if not recognized as sovereign by the United States and potentially lacking ultimate, independent governing authority in key respects. *50

The court thought the former was correct: Price’s primary rationales hinged on sovereignty. *50

Ignoring the underlying premise that States of the Union and foreign states are both sovereigns, the appellants instead focused on a different aspect of Price’s comparison of the two. They noted that Price described foreign states, unlike States of the Union, as “alien to our constitutional system,” 294 F.3d at 96, and argued that Price’s rule for foreign states must also apply to non-sovereign foreign governments because they were also “alien.” That was wrong several times over. *51

Moreover, further underscoring that Price’s rationale depends on sovereignty, the United States recognizes special privileges, based on comity and international-law principles, for sovereigns alone. See, e.g., Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 408-09, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964) (“Under principles of comity governing this country’s relations with other nations, sovereign states are allowed to sue in the courts of the United States.”); id. at 401, 84 S.Ct. 923 (describing the “act of state doctrine,” which “precludes the courts of this country from inquiring into the validity of the public acts a recognized foreign sovereign power committed within its own territory”); F. Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 164, 124 S.Ct. 2359, 159 L.Ed.2d 226 (2004) (“[T]his Court ordinarily construes ambiguous statutes to avoid unreasonable interference with the sovereign authority of other nations.”); cf. Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1602 et seq. Because they lack the full range of rights and obligations that sovereigns have under international law, non-sovereigns—unlike the defendant in Price—cannot rely on comity and international-law protections to the exclusion of domestic law. *51

Finally, Price’s concern that recognizing due-process rights might pose “practical problems,” 294 F.3d at 99, did not change their conclusion that Price’s holding applied to sovereigns alone. *52

In Toumazou v. Turkish Republic of Northern Cyprus, No. 14-7170 (D.C. Cir. Jan. 15, 2016), an unpublished judgment, plaintiffs invoked Rule 4(k)(2) to establish personal jurisdiction over the Turkish Republic of Northern Cyprus (TRNC), a self-declared state that the United States does not recognize as sovereign, see U.S. Relations with Cyprus, U.S. DEP’T OF STATE (Sept. 29, 2016), http://www.state.gov/r/pa/ei/bgn/5376.htm. The court did not apply the rule from Price. Instead, the court conducted the usual due-process inquiry, examining “the defendant’s contacts with the forum,” and ultimately concluding that personal jurisdiction was inconsistent with due process. Toumazou, slip op. at 2 (citing Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 131 S.Ct. 2846, 2851, 180 L.Ed.2d 796 (2011)).

The Second Circuit likewise applied due-process standards for personal jurisdiction when the defendant was a non-sovereign foreign government. In Waldman v. Palestine Liberation Organization, 835 F.3d 317 (2d Cir. 2016), a case substantially similar to the case before the court, the Second Circuit held that the Palestinian Authority and the Palestine Liberation Organization were both “persons” under the Fifth Amendment’s Due Process Clause. Id. at 329. The Second Circuit explained that only “separate sovereigns, recognized by the United States government as sovereigns,” are foreign states left unprotected by the Due Process Clause. Id. Both the Palestinian Authority and the Palestine Liberation Organization remain protected by the Due Process Clause under that rule, because neither is so recognized. Id. The court agreed, at least to the extent that only sovereign entities are excluded from due-process protection as foreign states. *52

The appellants offered several other arguments why non-sovereign governments like the Palestinian Authority were not entitled to due-process protection. None was persuasive. They argued that the Court’s decisions in TMR Energy Ltd. v. State Property Fund of Ukraine, 411 F.3d 296 (D.C. Cir. 2005), and GSS Group Ltd v. National Port Authority, 680 F.3d 805 (D.C. Cir. 2012), supported their position. That was a non sequitur. Whether government instrumentalities received the same due-process protection as their government (the question in TMR and GSS) had nothing to do with whether a government received due-process protection in the first place (the question here). Next, the appellants suggested that other non-sovereign government entities, such as municipalities, did not receive due-process protections, demonstrating a general principle that governments cannot be “persons” under the Due Process Clause. But the only appellate decision they cited, City of East St. Louis v. Circuit Court, 986 F.2d 1142 (7th Cir. 1993), was inapposite. Finally, the appellants argued that applying due-process protections to limit personal jurisdiction in Antiterrorism Act cases would thwart Congress’s intent to provide redress in U.S. courts for terrorism abroad. But there was no indication that Congress thought ordinary due-process requirements would not apply here. And regardless, Congress cannot wish away a constitutional provision. *53

According to the Livnats, Safras, and amici, the Fifth Amendment’s Due Process Clause imposed personal-jurisdiction restrictions that were less protective of defendants than those imposed by the Fourteenth Amendment. Because strong justifications for personal-jurisdiction limits apply equally in Fifth Amendment cases, the court declined to devise new standards for those cases that were less stringent than those under the Fourteenth Amendment. *55

Applying consistent personal-jurisdiction standards under the Fifth and Fourteenth Amendments was also easier to administer. Jurisdictional rules should be "’[s]imple,’” “easily ascertainable,” and "’predictab[le].’” Daimler, 134 S.Ct. at 760 (quoting Hertz Corp. v. Friend, 559 U.S. 77, 94, 130 S.Ct. 1181, 175 L.Ed.2d 1029 (2010)). Without any compelling justification for developing a new personal-jurisdiction doctrine, the Court declined to send courts and litigants on that journey. Finally, the Court disagreed that applying the usual personal-jurisdiction doctrine in Fifth Amendment cases will, as the Livnats, Safras, and amici suggest, threaten extraterritorial law enforcement. *56

The appellants did not argue that the Palestinian Authority may be “fairly regarded as at home” in the United States, and for good reason. Its headquarters, officials, and primary activities are all in the West Bank. The Palestinian Authority is therefore not subject to general jurisdiction in the United States. The appellants failed in their burden to show specific personal jurisdiction. Finally, the appellants argued in the alternative that the district court should have permitted jurisdictional discovery. The district court did not abuse its discretion here, because the additional discovery requested by the appellants would not change the court’s analysis. The appellate court therefore affirmed both the district court’s denial of the Livnats’ and Safras’ motions for jurisdictional discovery and its grant of the Palestinian Authority’s motions to dismiss for lack of personal jurisdiction. *58

CITATION: Livnat v. Palestinian Authority, 851 F. 3d 45—Court of Appeals, Dist. of Columbia Circuit 2017.

**** Mike Meier is an experienced business consultant. Fluent in German and Spanish, French and Japanese. Juris Doctor (1993) & Master of Laws with distinction (1997), Georgetown University; Master's Degree in Political Science (1988), University of Berlin (Germany), Yale Law School. - Attorney Website at https://mikemeierattorney.com/ - Attorney Profile at: https://solomonlawguild.com/mike-meier# - Attorney News at: https://attorneygazette.com/mike-meier%2C-consultant#

Extradition Treaty between the United States and Belgium; District of Columbia Circuit affirms order which denied Extraditee’s motion to dismiss the indictment

Nizar Trabelsi was a Tunisian national convicted in Belgium for a variety of crimes, including attempting to destroy a military base. *1183

On April 7, 2006, while Trabelsi was serving his sentence in Belgium, a grand jury in the United States indicted him for various offenses. The indictment charged Trabelsi with four Counts: Count 1—conspiracy to kill United States nationals outside of the United States in violation of 18 U.S.C. §§ 2332(b)(2) and 1111(a); Count 2—conspiracy and attempt to use weapons of mass destruction against nationals of the United States while such nationals were outside of the United States, and against property used by the United States and a department and agency of the United States in violation of 18 U.S.C. §§ 2332a and 2; Count 3—conspiracy to provide material support and resources to a foreign terrorist organization, specifically al Qaeda, in violation of 18 U.S.C. § 2339B; and Court 4—providing material support and resources to a foreign terrorist organization, specifically al Qaeda, in violation of 18 U.S.C. §§ 2339B and 2.

The United States requested that Belgium extradite Trabelsi on April 4, 2008, attaching an affidavit from the Department of Justice describing the offenses, and their elements, for which the United States sought to prosecute him. Trabelsi challenged the extradition request in Belgium, arguing that his extradition would violate certain provisions of the Extradition Treaty. On November 19, 2008, the Court Chamber of the Court of First Instance of Nivelles held that the United States arrest warrant was enforceable, except as to the overt acts labeled numbers 23, 24, 25, and 26 in the indictment. The Court of Appeals of Brussels affirmed this decision on February 19, 2009. On June 24, 2009, the Belgian Court of Cassation affirmed the Court of Appeals. *1184

The District Court concluded that Trabelsi had standing to challenge his extradition and that it had jurisdiction to review his extradition. Using the analysis articulated in Blockburger, 284 U.S. 299, 52 S.Ct. 180, the District Court determined that Trabelsi was not charged with the same offenses in the indictment for which he was tried and convicted in Belgium. By application, Trabelsi appealed the Minister’s decision to the Belgian Council of State, which also concluded that the United States offenses are different and that "’overt acts’ constitute elements to determine whether [Trabelsi] is guilty or not guilty,” and rejected his application on September 23, 2013. Belgium extradited Trabelsi to the United States on October 3, 2013. He was arraigned the same day.

On September 15, 2014, Trabelsi moved to dismiss the indictment for violating the Extradition Treaty. He argued that his extradition violated Article 5 of the Treaty because Belgium had already tried and convicted him “for the offense for which extradition was requested.” Using the analysis articulated in Blockburger, 284 U.S. 299, 52 S.Ct. 180, the District Court determined that Trabelsi was not charged with the same offenses in the indictment for which he was tried and convicted in Belgium, J.A. 754-64. Trabelsi appealed the decision. *1185

The United States Court of Appeals held that the District Court’s order denying Trabelsi’s motion to dismiss the indictment fits within the collateral-order exception, and it had jurisdiction to consider Trabelsi’s appeal. See Duarte-Acero, 208 F.3d at 1284 (applying Abney to a motion to dismiss an indictment based on a double-jeopardy provision included in a treaty).

The Government contended that the Appeals Court lacked jurisdiction to review Trabelsi’s extradition because it must defer to Belgium’s decision that the offenses charged in the indictment did not violate Article 5 of the Treaty. Trabelsi submitted that the Appeals Court had jurisdiction to review his extradition and owed no deference to Belgium’s decision. The Court held that it did have jurisdiction to review Belgium’s decision, but that the review was highly deferential. *1186

It was for Belgium, as the requested party, to determine whether to grant extradition, see Treaty, Art. 11, S. TREATY DOC. NO. 104-7, if Trabelsi “ha[d] [not] been found guilty, convicted, or acquitted in [Belgium] for the offense for which extradition [was] requested,” Treaty, Art. 5, S. TREATY DOC. NO. 104-7. The Belgian Minister determined that Trabelsi’s extradition would not violate the Treaty, and the Court of Appeals will not “second-guess [Belgium’s] grant of extradition.” Campbell, 300 F.3d at 209.

The deferential approach meant that “we will presume that if [Belgium] does not indicate that an offense specified in the request is excluded from the extradition grant, [Belgium] considers the offense to be a crime for which extradition is permissible.” Campbell, 300 F.3d at 209. The extradition grant did not exclude any of the offenses included in the request for extradition. As a result, the Court presumed that Belgium has determined that none of the offenses in the indictment violated Article 5 of the Treaty. This presumption was not irrebuttable, however. Evidence that might rebut the presumption would include misconduct on the part of the United States in procuring an extradition, see Casey, 980 F.2d at 1475, or the absence of review of the extradition request by the requested party. Trabelsi, however, offered no such evidence. *1189

The legislative history surrounding the Extradition Treaty’s ratification also supported interpreting the Treaty to apply to offenses, not conduct. The Senate Committee on Foreign Relations issued an Executive Report at the time the Treaty was ratified in 1996. The report explains that “[t]his paragraph permits extradition... if the person sought is charged in each Contracting State with different offenses arising out of the same basic transaction.” Id. (emphasis added). The Court deferred to the decision of the Belgian courts and Minister of Justice that, based on an offense-based analysis, Trabelsi’s extradition comported with Article 5 of the Treaty, since Trabelsi had offered nothing of merit to rebut the presumption. Because Trabelsi’s challenges failed, the Court was not needed to decide whether the charges in the U.S. indictment and the crimes for which Belgium convicted Trabelsi were identical under Blockburger. *1190

The concurring colleague stated that Belgian courts should be not be accorded this measure of deference and that, instead, the Court should test the indictment under Blockburger. The other judges could not agree for three principal reasons: First, Blockburger applies when a defendant raises a challenge under the Double Jeopardy Clause of the U.S. Constitution, but Trabelsi did not and could not present such a challenge in this matter; Second, given the historical context of the Treaty, it is implausible that Article 5 mandates a Blockburger analysis as in 1987, when the Treaty was ratified, the law of double jeopardy under the U.S. Constitution was not settled;  Third, the deferential approach protected each party’s prerogatives under the Treaty. Belgian authorities repeatedly construed Belgian criminal law, and stacked those constructions up against the proffered description of U.S. criminal law. These analyses showed that Belgium had a reasoned basis for concluding that Trabelsi could be extradited, and that conclusion—based in substantial measure on Belgium’s construction of its own law—is entitled to considerable deference. *1192

Even outside the context of specialty and dual criminality, U.S. courts will defer to the judgment of foreign courts construing their own laws. See, e.g., United States ex rel. Saroop v. Garcia, 109 F.3d 165, 168-69 (3d Cir. 1997) (affirming an extradition after “defer[ring] to the judgment of the High Court of Justice for Trinidad and Tobago on the validity of the [operative] extradition treaty and its continuing vitality at the time of ... extradition”).

International comity remains important in this context. The deference here is customary, rather than “excessive” or “extraordinary,” as the concurring colleague claimed. *1193

The concurring colleague casts doubt on the Belgian proceedings because, purportedly, “Belgium has fulfilled its interest in this case.” Concurring Op. at 1195. But the Judges had no reason to suppose that because Trabelsi served his Belgian sentence, Belgian authorities subjected the extradition request to lighter scrutiny than was warranted; the double-jeopardy principle itself is worth protecting. See RESTATEMENT (THIRD) OF THE FOREIGN RELATIONS LAW OF THE UNITED STATES § 476 cmt. c (AM LAW INST. 1987) (“The principle that a person should not be subject to double jeopardy is common to legal systems generally, and in many countries is constitutionally mandated.”). The record contains nothing to support the concurrence’s speculation.

The Court of Appeals affirmed the order denying Trabelsi’s motion to dismiss the indictment.

CITATION: US v. Trabelsi, 845 F. 3d 1181—Court of Appeals, Dist. of Columbia Circuit 2017.

**** Mike Meier is an experienced business consultant. Fluent in German and Spanish, French and Japanese. Juris Doctor (1993) & Master of Laws with distinction (1997), Georgetown University; Master's Degree in Political Science (1988), University of Berlin (Germany), Yale Law School. - Attorney Website at https://mikemeierattorney.com/ - Attorney Profile at: https://solomonlawguild.com/mike-meier# - Attorney News at: https://attorneygazette.com/mike-meier%2C-consultant#

China’s attempt to control vitamin C market leads to multi-national legal discussion

Plaintiffs-Appellees, Animal Science Products, Inc. and The Ranis Company, Inc., and various U.S. vitamin C purchasers, brought a multi-district antitrust class action against Defendants-Appellants Hebei Welcome Pharmaceutical and North China Pharmaceutical Group Corporation, entities incorporated under the laws of China. In their complaint, Plaintiffs alleged that Defendants conspired to fix the price and supply of vitamin C sold to U.S. companies on the international market in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 4, 1.

Beginning in the 1970s, China, as the leading producer and exporter of vitamin C, started implementing various export controls in order to retain a competitive edge over other producers of vitamin C on the world market. In 1990s, as a result of a reduction in vitamin C prices, the Government facilitated industry-wide consolidation and implemented regulations to control the prices of vitamin C exports. In 2001, China supplied 60% of the worldwide vitamin C market.

In 2005, various vitamin C purchasers in the United States, including Plaintiffs-Appellees, filed numerous suits against Defendants-Appellants. The Plaintiffs alleged, that in December 2001 Defendants colluded with an entity referred to as both, the Western Medicine Department of the Association of Importers and Exporters of Medicines and Health Products of China and the China Chamber of Commerce of Medicines & Health Products Importers & Exporters, (the “Chamber”), and agreed to restrict their exports of Vitamin C in order to create a shortage of supply in the international market, all with the purpose and effect of fixing prices.

Defendants moved to dismiss the complaint on the basis that they acted pursuant to Chinese regulations regarding vitamin C export pricing. Furthermore, they argued that they were required by the Chinese Government to coordinate prices and create supply shortage. Moreover, they argued that the district court should dismiss the complaint pursuant to the act of state doctrine, the doctrine of foreign sovereign compulsion, and/or principles of international comity.

In support of Defendants’ motion to dismiss, the Ministry of Commerce of the People’s Republic of China (the “Ministry’) filed an amicus curiae brief representing that it is the highest authority within the Chinese Government authorized to regulate foreign trade; and that the Chamber is a Ministry-supervised entity authorized by the Ministry to regulate vitamin C export prices and output levels. As presented, the Chamber was an instrumentality of the State that was required to implement the Ministry’s administrative rules and regulations with respect to vitamin C trade. The Ministry also presented evidence that the Chamber created a vitamin C Subcommittee (the “Subcommittee”) in 1997, and a “price verification and chop” policy (“PVC”) implemented in 2002, all with the aim to regulate the vitamin C industry. As explained, before 2002, only companies that were members of the Subcommittee were allowed to export vitamin C, and were granted an “export quota license” if its export price and volume was in compliance with the Subcommittee’s coordinated export price and export quota.

The Ministry also represented that in 2002, the Chamber implemented the PVC system, which was in place during the time of the antitrust violations alleged in this case. The implementation of the PVC system was announced by an official notice (“the 2002 Notice”). The 2002 Notice gave the right to the Chamber “to coordinate export prices and industry self-discipline.” Under this system, vitamin C manufacturers were required to submit documentation to the Chamber indicating both the amount and price of vitamin C it intended to export. The Chamber affixed a “chop” to the contract signalizing that the contract had been reviewed and approved by the Chamber only if the price of the contract was at or above the minimum acceptable price set by coordination through the Chamber.

The district court denied Defendants’ motion to dismiss in order to allow for further discovery with respect with whether Defendants’ assertion that the actions constituting the basis of the antitrust violations were compelled by the Chinese Government.

After further discovery, Defendants moved for summary judgment. The district court denied Defendants’ motion for summary judgment. The district court determined that “Chinese law did not compel Defendants’ anticompetitive conduct” in any of the relevant time periods.

In March 2013, after a jury trial, the jury found Defendants liable for violations of Section 1 of the Sherman Act. The district court then awarded Plaintiffs approximately $147 million in damages and issued a permanent injunction barring Defendants from further violating the Sherman Act. Defendants appealed.

The United States Court of Appeals for the Second Circuit vacates the judgment, reverses based on international comity the district court’s denial of Defendants’ motion to dismiss, and remands with instructions to dismiss Plaintiffs’ complaint with prejudice.

The Court addressed the question of what laws and standards control when U.S. antitrust laws are violated by foreign companies that claim to be acting at the express direction or mandate of a foreign government.

“The central issue that we address is whether principles of international comity required the district court to dismiss the suit. As part of our comity analysis we must determine whether Chinese law required Defendants to engage in anticompetitive conduct that violated U.S. antitrust laws. Within that inquiry, we examine the appropriate level of deference to be afforded a foreign sovereign’s interpretation of its own laws. […]”

“We review for abuse of discretion a district court’s denial of a motion to dismiss on international comity grounds. JP Morgan Chase Bank v. Altos Hornos de Mexico, 412 F.3d 418, 422 (2d Cir. 2005). An abuse of discretion ‘occurs when (1) the court’s decision rests on an error of law or clearly erroneous factual finding, or (2) its decision cannot be located within the range of permissible decisions.’ CBS Broad. Inc. v. FilmOn.com, Inc., 814 F.3d 91, 104 (2d Cir. 2016) (alterations and internal quotation omitted). The determination of foreign law is ‘a question of law, which is subject to de novo review.’ Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (‘Pertamina’), 313 F.3d 70, 80 (2d Cir. 2002) (internal quotation omitted). In determining foreign law, “we may consider any ‘relevant material or source, including the legal authorities supplied by the parties on appeal as well as those authorities presented to the district court below.’ Carlisle Ventures, Inc. v. Banco Espanol de Credito, S.A., 176 F.3d 601, 604 (2d Cir. 1999); see Fed. R. Civ. P. 44.1.”

“[…] Comity is both a principle guiding relations between foreign governments and a legal doctrine by which U.S. courts recognize an individual’s acts under foreign law. See In re Maxwell Commc’n Corp., 93 F.3d 1036, 1046 (2d Cir. 1996). ‘Comity, in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other.’ Hilton v. Guyot, 159 U.S. 113, 163-64 (1895) (internal quotations omitted). ‘[I]t is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws.’ Id. This doctrine ‘is not just a vague political concern favoring international cooperation when it is in our interest to do so [but r]ather it is a principle under which judicial decisions reflect the systemic value of reciprocal tolerance and goodwill.’ Societe Nationale Industrielle Aerospatiale v. U.S. Dist. Court of S. Dist. of Iowa, 482 U.S. 522, 555 (1987). […]”

“The principles of comity implicate a federal court’s exercise of jurisdiction. O.N.E. Shipping Ltd. v. Flota Mercante Grancolombiana, S.A., 830 F.2d 449, 452 (2d Cir. 1987). Defendants do not dispute that the district court had subject matter jurisdiction over Plaintiffs’ claims, see Hartford Fire Ins. Co. v. California, 509 U.S. 764, 796 (1993) (collecting cases) (’[I]t is well established by now that the Sherman Act applies to foreign conduct that was meant to produce and did in fact produce some substantial effect in the United States.’); rather, Defendants argue that principles of international comity required the district court to abstain from exercising that jurisdiction here, see O.N.E. Shipping Ltd., 830 F.2d at 452. […]”

To determine whether to abstain from asserting jurisdiction on comity grounds the Court applies the multi-factor balancing test set out in Timberlane Lumber Co. v. Bank of Am., N.T. & S.A., 549 F.2d 597, 614-15 (9th Cir. 1976) and Mannington Mills, Inc. v. Congoleum Corp., 595 F.2d 1287, 1297-98 (3d Cir. 1979).

“Combined and summarized here, the enumerated factors from Timberlane Lumber and Mannington Mills (collectively the ‘comity balancing test’) guiding our analysis of whether to dismiss on international comity grounds include: (1) Degree of conflict with foreign law or policy; (2) Nationality of the parties, locations or principal places of business of corporations; (3) Relative importance of the alleged violation of conduct here as compared with conduct abroad; (4) The extent to which enforcement by either state can be expected to achieve compliance, the availability of a remedy abroad and the pendency of litigation there; (5) Existence of intent to harm or affect American commerce and its foreseeability; (6) Possible effect upon foreign relations if the court exercises jurisdiction and grants relief; (7) If relief is granted, whether a party will be placed in the position of being forced to perform an act illegal in either country or be under conflicting requirements by both countries; (8) Whether the court can make its order effective; (9) Whether an order for relief would be acceptable in this country if made by the foreign nation under similar circumstances; and (10) Whether a treaty with the affected nations has addressed the issue. Mannington Mills, Inc., 595 F.2d at 1297-98; Timberlane Lumber Co., 549 F.2d at 614.”

The Court then applies the ten factors to this case.

“Since our adoption of the comity balancing test, the Supreme Court, in determining whether international comity cautioned against exercising jurisdiction over antitrust claims premised entirely on foreign conduct, relied solely upon the first factor—the degree of conflict between U.S. and foreign law—to decide that abstention was inappropriate. Hartford Fire, 509 U.S. at 798 (’The only substantial question in this litigation is whether there is in fact a true conflict between domestic and foreign law.’ (internal quotation omitted)). The Court explained that just because ‘conduct is lawful in the state in which it took place will not, of itself, bar application of the United States antitrust laws.’ Id. Thus, in that case, the degree of conflict between the laws of the two states had to rise to the level of a true conflict, i.e. ‘compliance with the laws of both countries [must have been] impossible,’ to justify the Court’s abstention on comity grounds. Id. at 799. In other words, ‘[n]o conflict exists . . . ‘where a person subject to regulation by two states can comply with the laws of both.’ Id. (quoting Restatement (Third) of Foreign Relations Law § 403, cmt. e). After determining that there was not a true conflict, the Court reflected that there was ‘no need in this litigation to address other considerations that might inform a decision to refrain from the exercise of jurisdiction on the ground of international comity.’ Id.”

“We read Hartford Fire narrowly and interpret the modifying phrase ‘in this litigation’ in reference to the ‘other considerations that might inform a decision’ as suggesting that the remaining factors in the comity balancing test are still relevant to an abstention analysis. Id.; see Mujica v. AirScan Inc., 771 F.3d 580, 600 (9th Cir. 2014). […] That a true conflict was lacking in Hartford Fire does not, in the inverse, lead us to conclude that the presence of such a conflict alone is sufficient to require dismissal and thereby vitiate the need to consider the remaining factors.”

In order to determine whether a “true conflict” exists, the Court had first to determine what the law of each country requires.

“The Sherman Act prohibits ‘[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce.’ 15 U.S.C. § 1. While this language has been interpreted to outlaw only unreasonable restraints in trade, see, e.g., State Oil Co. v. Khan, 522 U.S. 3, 10 (1997), certain types of anticompetitive conduct are ‘so plainly anticompetitive that no elaborate study of the industry is needed to establish their illegality,’ Nat. Soc. of Prof’l Eng’rs v. United States, 435 U.S. 679, 692 (1978). ‘Price-fixing agreements between two or more competitors, otherwise known as horizontal price-fixing agreements, fall into the category of arrangements that are per se unlawful.’ Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006). Thus, if Chinese law required Defendants to enter into horizontal price-fixing agreements, ‘compliance with the laws of both countries is [] impossible,’ Hartford Fire, 509 U.S. at 799, and there is a true conflict.”

Court’s interpretation of the record as to Chinese law hinges on the amount of deference that the Court extended to the Chinese Government’s explanation of its own laws.

“There is competing authority on the level of deference owed by U.S. courts to a foreign

government’s official statement regarding its own laws and regulations. In the seminal case United States v. Pink, 315 U.S. 203 (1942), the Supreme Court considered, inter alia, the extraterritorial reach of a 1918 decree nationalizing Russia’s insurance business. The record before the Pink Court included expert testimony and ‘voluminous’ other evidence bearing on the proper interpretation of the 1918 decree and its extraterritorial effect. Id. at 218. This evidence included an official declaration of the Russian Government explaining the intended extraterritorial effect of the decree. See id. at 219-20. The Court ‘d[id] not stop to review’ the whole body of evidence, however, id. at 218, because it determined that the official declaration was ‘conclusive’ as to the extraterritorial effect of the decree, id. at 220.

Since 1942, several courts have cited Pink for the proposition that an official statement or declaration from a foreign government clarifying its laws must be accepted as conclusive, while others intimated that while the official statements of a foreign government interpreting its laws are entitled to deference, U.S. courts need not accept such statements as conclusive. In the present case, however, the district court “[…] relied on three authorities—Rule 44.1, Villegas Duran v. Arribada Beaumont, 534 F.3d 142 (2d Cir. 2008), and Karaha Bodas, 313 F.3d 70—for the proposition that the Second Circuit, in particular, has ‘adopted a softer view toward the submissions of foreign governments.’ In re Vitamin C Antitrust Litig., 584 F. Supp. 2d at 557.”

The Court disagreed.

“Contrary to the district court’s reasoning, we find no support for the argument that Rule 44.1, adopted in 1966 long after Pink was decided, modified the level of deference that a U.S. court must extend to a foreign government’s interpretation of its own laws. Rule 44.1 provides that, when determining foreign law, a court ‘may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence.’ Fed. R. Civ. P. 44.1. According to the advisory committee notes, the rule has two purposes: (1) to make a court’s determination of foreign law a matter of law rather than fact, and (2) to relax the evidentiary standard and to create a uniform procedure for interpreting foreign law. Fed. R. Civ. P. 44.1 advisory committee’s notes to 1966 adoption. The advisory committee notes suggest that Rule 44.1 was meant to address some of the challenges facing litigants whose claims and defenses depended upon foreign law and to provide courts with a greater array of tools for understanding and interpreting those laws. Id. Rule 44.1 explicitly focuses on what a court may consider when determining foreign law, but it is silent as to how a court should analyze the relevant material or sources. Thus, courts must still evaluate the relevant source material within the context of each case. See, e.g., Curley v. AMR Corp., 153 F.3d 5, 14-15 (2d Cir. 1998) (explaining that because ‘Mexican law is much different’ than New York state law and ‘its sources do not lie in precedent cases’ the court must ‘consider the text of the constitution, civil code and statutory provisions . . . and give them preponderant consideration’ when analyzing Mexican law). Finding no authority to the contrary, we conclude that Rule 44.1 does not alter the legal standards by which courts analyze foreign law, and thus, the rule does not abrogate or ‘soften’ the level of deference owed by U.S. courts to statements of foreign governments appearing in U.S. courts.”

The Court also disagreed with district court’s adoption of the decision in Vilegas Duran to bolster its conclusion that this court has adopted a softer view toward submissions of foreign governments.

“[…] We consider Villegas Duran inapplicable to the present case for two reasons. First, because the Chilean Government did not appear before the court in that case, either as a party or as an amicus, the level of deference the court afforded the Chilean affidavit does not guide our application here. Second, Villegas Duran was overturned by the Supreme Court, Duran v. Beaumont, 560 U.S. 921 (2010), in light of Abbott v. Abbott, 560 U.S. 1 (2010). […]”

And it also disagreed with district court’s reliance on the decision in Karaha Bodas, 313 F.3d 70.

“[…] In that case, a judgment creditor of an oil and gas company owned and controlled by the Republic of Indonesia sought to execute upon funds held in New York trust accounts. Id. at 71. The Republic of Indonesia joined the appeal as a party with an affected interest, and in so doing, sought to clarify the applicable Indonesian law as well as the Indonesian Government’s relationship with the gas company. Id. Citing to our sister circuits in Amoco Cadiz and Access Telecom, we credited the Republic of Indonesia’s interpretation and explained that ‘a foreign sovereign’s views regarding its own laws merit—although they do not command—some degree of deference.’ Id. at 92. We clarified that, ‘where a choice between two interpretations of ambiguous foreign law rests finely balanced, the support of a foreign sovereign for one interpretation furnishes legitimate assistance in the resolution of interpretive dilemmas.’ Id.”

“It is noteworthy that, while we suggested in Karaha Bodas that deference to a foreign sovereign’s interpretation need not be ‘conclusive’ in every case, we ultimately adopted the Republic of Indonesia’s interpretation of its own regulation. […]”

“Consistent with our holding in Karaha Bodas and the Supreme Court’s pronouncements in Pink, we reaffirm the principle that when a foreign government, acting through counsel or otherwise, directly participates in U.S. court proceedings by providing a sworn evidentiary proffer regarding the construction and effect of its laws and regulations, which is reasonable under the circumstances presented, a U.S. court is bound to defer to those statements. If deference by any measure is to mean anything, it must mean that a U.S. court not embark on a challenge to a foreign government’s official representation to the court regarding its laws or regulations, even if that representation is inconsistent with how those laws might be interpreted under the principles of our legal system. Cf. Abbott, 560 U.S. at 20. […] Not extending deference in these circumstances disregards and unravels the tradition of according respect to a foreign government’s explication of its own laws, the same respect and treatment that we would expect our government to receive in comparable matters before a foreign court. Cf. Hilton v. Guyot, 159 U.S. 113, 191 (1895). […]”

The Court takes into consideration the official statements of the Ministry, and concludes that “[…] Chinese law required Defendants to engage in activities in China that constituted antitrust violations here in the United States.”

“[…] [W]e find it reasonable to view the entire PVC regime as a decentralized means by which the Ministry, through the Chamber, regulated the export of vitamin C by deferring to the manufacturers and adopting their agreed upon price as the minimum export price. In short, by directing vitamin C manufacturers to coordinate export prices and quantities and adopting those standards into the regulatory regime, the Chinese Government required Defendants to violate the Sherman Act. See United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 224 n.59 (1940) (’[I]t is [] well settled that conspiracies under the Sherman Act are not dependent on any overt act other than the act of conspiring.’).”

Disagreeing with district court’s finding problematic the possibility that the “defendants [made] their own choices and then ask[ed] for the government’s imprimatur,” the Court states,

“Whether Defendants had a hand in the Chinese government’s decision to mandate some level of price-fixing is irrelevant to whether Chinese law actually required Defendants to act in a way that violated U.S antitrust laws. Moreover, inquiring into the motives behind the Chinese Government’s decision to regulate the vitamin C market in the way it did is barred by the act of state doctrine. ‘In essence, the act of state doctrine is a principle of law designed primarily to avoid judicial inquiry into the acts and conduct of the officials of the foreign state, its affairs and its policies and the underlying reasons and motivations for the actions of the foreign government.’ O.N.E. Shipping Ltd., 830 F.2d at 452. The act of state doctrine precludes us from discrediting the Subcommittee or the PVC process as ad hoc protectionist regimes that were intended to provide governmental sanction to an otherwise privately formed cartel. By focusing on the Defendants’ role in the regulatory regime, as opposed to the regime itself, the district court erroneously required Defendants to show that the government essentially forced Defendants to price-fix against their will in order to show that there was a true conflict between U.S. antitrust law and Chinese law. This demands too much. It is enough that Chinese law actually mandated such action, regardless of whether Defendants benefited from, complied with, or orchestrated the mandate. Thus, we decline to analyze why China regulated vitamin C in the manner it did and instead focus on what Chinese law required. See id. at 453.”

The Court concluded that “Because we hold that Defendants could not comply with both U.S. antitrust laws and Chinese law regulating the foreign export of vitamin C, a true conflict exists between the applicable laws of China and those of the United States.”

Having determined that Chinese law required Defendants to violate U.S. antitrust law, the Court turns to analyze whether the remaining factors weigh in favor of dismissal based on principles of international comity. The Court held that the remaining factors in the comity balancing test decidedly weight in favor of dismissal and counsel against exercising jurisdiction in the instant case.

“All Defendants are Chinese vitamin C manufacturers with their principal places of business in China, and all the relevant conduct at issue took place entirely in China. Although Plaintiffs may be unable to obtain a remedy for Sherman Act violations in another forum, complaints as to China’s export policies can adequately be addressed through diplomatic channels and the World Trade Organization’s processes. […] Moreover, there is no evidence that Defendants acted with the express purpose or intent to affect U.S. commerce or harm U.S. businesses in particular. […]” And concluded that “[w]hile it was reasonably foreseeable that China’s vitamin C policies would generally have a negative effect on Plaintiffs as participants in the international market for vitamin C, as noted above, there is no evidence that Defendants’ antitrust activities were specifically directed at Plaintiffs or other U.S. companies.”

“Furthermore, according to the Ministry, the exercise of jurisdiction by the district court has already negatively affected U.S.-China relations. […] The Chinese Government has repeatedly made known to the federal courts, as well as to the United States Department of State in an official diplomatic communication relating to this case, that it considers the lack of deference it received in our courts, and the exercise of jurisdiction over this suit, to be disrespectful and that it ‘has attached great importance to this case.’ Doc. No. 111, Diplomatic Correspondence between Embassy for the People’s Republic of China and the United States Department of State, April 9, 2014; cf. Société Nationale Industrielle Aérospatiale, 482 U.S. at 546. […]”

“Currently, the district court’s judgment orders Defendants to comply with conflicting legal requirements. This is an untenable outcome. It is unlikely, moreover, that the injunctive relief the Plaintiffs obtained would be enforceable in China. If a similar injunction were issued in China against a U.S. company, prohibiting that company from abiding by U.S. economic regulations, we would undoubtedly decline to enforce that order. See Corporacion Mexicana De Mantenimiento Integral, S. De R.L. De C.V. v. Pemex-Exploracion Y Produccion,No. 13-4022, 2016 WL 4087215 (2d Cir. Aug. 2, 2016). […]”

“Simply put, the factors weigh in favor of abstention. Recognizing China’s strong interest in its protectionist economic policies and given the direct conflict between Chinese policy and our antitrust laws, we conclude that China’s ‘interests outweigh whatever antitrust enforcement interests the United States may have in this case as a matter of law.’ O.N.E. Shipping Ltd., 830 F.2d at 450. Accordingly, we hold that the district court abused its discretion by failing to abstain on international comity grounds from asserting jurisdiction, and we reverse the district court’s order denying Defendants’ motion to dismiss.”

The Court thus concluded that “[a]ccording appropriate deference to the Ministry’s official statements to the district court and to this Court on appeal, we hold that Defendants were required by Chinese law to set prices and reduce quantities of vitamin C sold abroad and doing so posed a true conflict between China’s regulatory scheme and U.S. antitrust laws such that this conflict in Defendants’ legal obligations, balanced with other factors, mandates dismissal of Plaintiffs’ suit on international comity grounds.”

The Court reversed the district court’s order denying Defendants’ motion to dismiss, and remanded with instructions to dismiss Plaintiffs’ complaint with prejudice.

CITATION: In Re Vitamin C Antitrust Litigation, 837 F.3d 175 (2nd Cir. 2016)

**** Mike Meier is an experienced business consultant. Fluent in German and Spanish, French and Japanese. Juris Doctor (1993) & Master of Laws with distinction (1997), Georgetown University; Master's Degree in Political Science (1988), University of Berlin (Germany), Yale Law School. - Attorney Website at https://mikemeierattorney.com/ - Attorney Profile at: https://solomonlawguild.com/mike-meier# - Attorney News at: https://attorneygazette.com/mike-meier%2C-consultant#

New York convention article v(2)(b). United States Court of Appeals, District of Columbia Circuit upholds decision of United States District Court for the District of Columbia regarding enforcement of foreign arbitral tribunal award

On December 9, 2004, Said Musa, the Prime Minister of Belize, signed a confidential agreement under which Belize agreed to serve as the guarantor of a loan made to a Belizean health services provider by the Bank. By 2007, that health services provider was in default, making Belize liable for the outstanding loan balance. Pursuant to a March 23, 2007 settlement agreement, Belize agreed to pay the debt in full but under pressure from public protests, Belize refused to make any payment pursuant to the settlement agreement with the Bank.

Following Belize’s default, the Bank—in accordance with a dispute resolution clause included in the settlement agreement—began arbitration proceedings against Belize in London, England, under the Rules of the London Court of International Arbitration (LCIA). Because Belize largely declined to participate in the early stages of the arbitration, however, the LCIA had to step in and appoint Belize’s arbitrator in Belize’s stead. The LCIA nominated Zachary Douglas as Belize’s member of the arbitral tribunal. *1109

In March 2012, five years after Douglas’s initial appointment, Belize challenged Douglas’s continued service on the arbitral tribunal.

Belize questioned Douglas’s impartiality as a member of the arbitral tribunal. The LCIA then created a three-member “Division” to consider Belize’s challenges. Belize Bank Ltd. v. Gov’t of Belize, Case No. 81116 (London Ct. Int’l Arb. 2012). The Division rejected both of Belize’s alternatives. Id. at 11-18. Belize did not take the Division’s adverse decision well, withdrawing from the arbitration proceedings and refusing to participate thereafter. Nonetheless, the proceedings continued.

“On appeal, Belize raises multiple challenges to the district court’s judgment. We have accorded each of Belize’s arguments “full consideration after careful examination of the record,” Bartko v. SEC, 845 F.3d 1217, 1219 (D.C. Cir. 2017) (quoting Ozburn-Hessey Logistics, LLC v. NLRB, 833 F.3d 210, 213 (D.C. Cir. 2016)), but find them either largely asked and answered by Circuit precedent, see BCB Holdings Ltd. v. Gov’t of Belize, 650 Fed. Appx. 17 (D.C. Cir. 2016) (per curiam); Belize Soc. Dev. Ltd. v. Gov’t of Belize, 794 F.3d 99 (D.C. Cir. 2015); Belize Soc. Dev. Ltd. v. Gov’t of Belize, 668 F.3d 724 (D.C. Cir. 2012), or otherwise properly resolved by the district court. Only one issue raised by Belize warrants further discussion—whether the district court’s enforcement of the arbitral award violated the New York Convention because it was “contrary to the public policy of the United States. Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958 (“New York Convention”), art. V(2)(b), 21 U.S.T. 2517, T.I.A.S. 2517, T.I.A.S. No. 6997, 330 U.N.T.S. 3 (1970); 9 U.S.C. § 207. *1109

On April 18, 2014, the Bank filed a Petition to Confirm Foreign Arbitration Award and to Enter Judgment in district court. The district court granted the petition, concluding, inter alia, that enforcement of the award in the United States was not contrary to United States public policy under New York Convention art. V(2)(b). Belize Bank Ltd., 191 F.Supp.3d at 38. *1110

“In order to set aside an award under the FAA’s ‘evident partiality’ standard, the party challenging the award must ‘establish[] specific facts that indicate improper motives on the part of the arbitrator.’ Al-Harbi v. Citibank, N.A., 85 F.3d 680, 683 (D.C. Cir. 1996). We believe an allegation that an arbitral tribunal member is a member of the same chambers as another barrister who, in proceedings unrelated in fact and time, represented a conflicting interest, is insufficient to meet that burden, let alone to demonstrate that enforcement would violate the United States’ “most basic notions of morality and justice” as required to set aside an award under the New York Convention. Termo-Rio, 487 F.3d at 938. First, “barristers are all self-employed ... precisely in order to maintain the position where they can appear against or in front of one another.” Laker Airways, [1999] QB 45 at 52; accord Stephan Landsman, The Servants, 83 MICH. L. REV. 1105, 1106-07 (1985) (“Although barristers must join a set of chambers, each is considered a sole practitioner and is prohibited from entering into any partnership arrangements. Each must develop and sustain his or her own practice.” (footnote omitted)). Because the chambers model is designed to protect a barrister’s independence—a fact acknowledged by English courts, see Laker Airways, [1999] QB at 52 (rule “prevent[ing] barristers at the same chambers from appearing against one another ... has never been recognized, and the contrary practice is an every day occurrence in the [English] Courts”), and scholars, see Landsman, supra at 1106-07—we are aware of no ethical rule that would require conflict imputation in these circumstances. Without more, a perceived conflict arising from another barrister’s practice does not give rise to the Commonwealth Coatings duty to disclose or otherwise create an appearance of impropriety. See 393 U.S. at 151-52, 89 S.Ct. 337 (White, J., concurring).” *1113

Secondly, Court stated they cannot say that Douglas’s membership in Matrix Chambers threatened the arbitration process’s amicable and trusting atmosphere. However, Court expressed that “insistence on the appearance of neutrality” is vital to “ensuring the reality of fair adjudication.” At the same time, however, questions about appearance are resolved from the perspective of the parties. See Matter of Andros Compania Maritima, S.A. (Marc Rich & Co., A.G.), 579 F.2d 691, 700 (2d Cir. 1978).

Considered together, these factors demonstrate that enforcement of the LCIA arbitral award would not violate the United States’ most basic notions of morality and justice. For the foregoing reasons, the United States Appeal Court affirmed judgment of the district court. TermoRio, 487 F.3d at 938. *1114

CITATION: Belize Bank Ltd. v. GOVERNMENT OF BELIZE, 852 F. 3d 1107—Court of Appeals, Dist. of Columbia Circuit 2017.

**** Mike Meier is an experienced business consultant. Fluent in German and Spanish, French and Japanese. Juris Doctor (1993) & Master of Laws with distinction (1997), Georgetown University; Master's Degree in Political Science (1988), University of Berlin (Germany), Yale Law School. - Attorney Website at https://mikemeierattorney.com/ - Attorney Profile at: https://solomonlawguild.com/mike-meier# - Attorney News at: https://attorneygazette.com/mike-meier%2C-consultant#