2003 International Law Update, Volume 9, Number 8 (August)

2003 International Law Update, Volume 9, Number 8 (August)

Legal Analyses published by Mike Meier, Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com. 

CONTRACTS

In erstwhile boyfriend’s suit to collect loan made to former girlfriend, British Columbia Court of Appeal declines to extend Canadian doctrine of promissory estoppel to scope recognized in United States as formulated in ALI’s Restatement Second, Contracts

Ms. A. (defendant) left her secure bank job and her home in England and moved to Vancouver in July 1993 to live with her boyfriend Mr. M. (plaintiff) because plaintiff had promised to pay down the mortgage on her home in England if she moved into his home. The relationship was stormy, partly because plaintiff did not pay off defendant’s mortgage debt of $73,048.53.

On the other hand, he did lend her $100,000 on a promissory note dated 6 April 1994, and she applied those funds to her mortgage debt. Plaintiff soon evicted her, however, and, since then, defendant has been unable to find a permanent job either in England or in Vancouver.

Plaintiff sued defendant in the British Columbia courts to collect the loan. He alleged that their relationship was ephemeral and that he intended that defendant would have to pay off his loan. In response, defendant relied on several theories. One was that the money was a gift, and another was that the court should estop plaintiff from collecting the “loan” because he had made a promise upon which defendant had relied to her detriment. Defendant also counterclaimed to have plaintiff pay down the remainder of the mortgage.

The trial judge refused to order plaintiff to pay down the remainder of the mortgage. He reasoned that the defendant had failed to establish the existence of a legal relationship between the two parties at the time of the promise. Defendant appealed, arguing that the trial judge erred in requiring proof of an existing legal relationship as a necessary element of promissory estoppel. The British Columbia Court of Appeal, however, dismisses her appeal.

The Court first points out that “[t]he only issue on this appeal is whether the trial judge erred in refusing to enforce the promise on which Ms. A. relied to her detriment.” [¶ 3] Defendant’s counsel asked the court “to follow the path already well trod by the courts of New Zealand, Australia, and the United States, and being opened in England to an equitable remedy for injurious reliance on a promise intended to bind its maker and to be acted upon by the promisee to the knowledge of the promisor.” [¶ 4]

Although the Court agrees that the trial judge may have erred in requiring proof of an existing legal relationship at the time of the promise, it declines to extend the doctrine of promissory estoppel to right a wrong done to Ms. A.

Defendant relied on developments in the American law of promissory estoppel and the concept of injurious reliance. For instance, the relevant part of the American Law Institute’s Restatement of the Law Second, Contracts, states: “Section 90. Promise Reasonably Inducing Action or Forbearance. (1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.”

The B.C. Court, however, finds merit in plaintiff’s arguments that U. S. law goes well beyond the Canadian precedents. “The [plaintiff] says this Court should not make such a revolutionary change to the law in circumstances where the unfulfilled promise was made at the outset of a romantic relationship that by its nature involves risk-taking, and, he might have said, many promises. This is particularly so, he submits, because Parliament and the Legislature have provided statutory remedies for losses suffered on the breakdown of romantic or marriage-like relationships, among which they have not chosen to include the enforcement of an unfulfilled promise.”

“Finally, he asks, what better test is there for the enforcement of a promise than that [which] the common law (as understood in British Columbia) provides: did the parties intend to affect their legal relations? Here, he points out, there is no evidence either party thought a legal relationship had been created by the promise, that their legal relations had been affected, or that the promise was legally binding.” [¶ 10]

In conclusion, the Court decides that this case does not merit extending the Canadian law on promissory estoppel. “Counsel could not point to any evidence supporting a finding that Mr. M. intended his voluntary promise to pay the balance outstanding on Ms. A.’s mortgage to have binding effect. Nor did they suggest [that] Ms. A. was of the view his promise was binding. She believed he would follow through on his promise, and took the risk of his not doing so.” [¶ 19]

“The absence of any evidence as to what interest, if any, Mr. M. might acquire in her home, significant references in their correspondence to a future equal partnership and to joint plans for the English house to produce income for them jointly, and the lack of any reference to when the promise was to or could be fulfilled, suggest [that] the promise was made in the context of a relationship both of them thought would be permanent, and result in marriage, at which point they would be life partners, not that it would be fulfilled to compensate Ms. A. for the detriment she would suffer from leaving her job and home. There was also a lack of mutuality, in that Ms. A. could be under no enforceable obligation to stay with Mr. M. if he fulfilled the promise.” [¶ 20]

Citation: M.(N.) v. A. (A.T.), 122 A.C.W.S. (3d) 249 (B.C.C.A. 2003).

INTERNATIONAL CHILD ABDUCTION

In divided en banc ruling, Eighth Circuit concludes that courts must determine child’s “habitual residence” under Child Abduction Convention as of abduction date which, in this case, was Israel

Robert Silverman and Julie Hechter met in Israel in 1988 and married in Seattle, Washington, in 1989. They next moved to the U.S. where their two children, Samuel and Jacob, were born. In 1999, the family moved back to Israel. Julie intermittently returned to the U.S. to attend bankruptcy proceedings. The spouses filed a joint U.S. tax return giving a Minnesota address. In June 2000, Julie and the children returned to the U.S. for a summer trip. During that visit, she sued in state court for a legal separation from Robert and for custody of the two children.

Meanwhile in Israel, Robert filed a “Request for Return of Abducted Children” with the National Center for Missing and Exploited Children (NCMEC). He invoked the Hague Convention on the Civil Aspects of International Child Abduction [T.I.A.S. 11670, 19 I.L.M. 1501 (1980)], as implemented in the U.S. by the International Child Abduction Remedies Act (ICARA) [42 U.S.C. Section 11601].

Robert also lodged a Hague Convention petition in a Minnesota federal court. While the state and federal matters were pending, an Israeli court ruled that Israel was the children’s “habitual residence” under the Hague Convention. A few months later, the Minnesota state court awarded custody to Julie.

In May 2002, the district court ruled in Julie’s favor on Robert’s Hague Convention claim, finding that Minnesota was the children’s “habitual residence” as defined by Minnesota law. Alternatively, even if Israel were their habitual residence, the gravity of the risk in returning them to Israel brought the matter within the Convention Article 13(b) exception.

Robert duly noted an appeal. The U.S. Court of Appeals for the Eighth Circuit, in an en banc opinion, reverses and remands.

In an increasingly international world, according to the Court, parents must be able to determine habitual residence while traveling or visiting other countries. The Court opines not only that habitual residence is a legal determination subject to de novo review, but also that that is the correct policy conclusion under the Convention and ICARA. Article 1 sets forth the goals of the Convention. They are (1) to secure the prompt return of children wrongfully removed to, or retained in, a Contracting State, and (2) to make sure that each Contracting State respects the laws of custody and the access rights of the other state parties. Here, the district court agreed with Julie that she had not taken the children from their “habitual residence” (the U.S.) and that the Convention thus does not apply.

“‘Habitual residence’ is not defined in the language of the Hague Convention or by ICARA. However, the text of the Convention directs courts to only [one] point in time in determining habitual residence: ... ‘immediately before the removal or retention.’ Art. 3. Additionally, the text of the Convention points to the child’s, not the parents’, habitual residence. Id. A person may have only one habitual residence, and it should not be confused with domicile. ... ‘The court must focus on the child, not the parents, and examine past experience, not future intentions.’ ... Habitual residence may only be altered by a change in geography and passage of time. ...”

“Federal courts are agreed that ‘habitual residence’ must involve some form of ‘settled purpose.’ ... This settled purpose need not be to stay in the location forever, but the family must have a ‘sufficient degree of continuity to be properly described as settled.’ ... Additionally, the settled purpose must be from the child’s perspective, although parental intent is also taken into account.” [Slip op. 29-30]

Thus, the district court should have looked at the habitual residence of the children as of the time Julie had taken them from Israel. Moreover, it should have taken into account factors such as the degree of settled purpose from the children’s perspective, the passage of time, the family’s abandonment of its prior U.S. residence, selling the house in the U.S., the family’s application for immigrant benefits in Israel, the children’s enrollment in an Israeli school and, to some degree, both parents’ intentions at the time of the move to Israel. Considering these factors, the children had clearly become habitual residents of Israel. Robert has thus met his burden of a prima facie case under the Convention.

The Court then turns to a possible defense. The “grave risk of physical or psychological harm” defense under Article 13(b) of the Convention is an affirmative defense that Julie must prove with clear and convincing evidence. Precedents have referred to “a zone of war, famine or disease” or serious abuse or neglect as conditions that qualify for this exception. Even though some courts in the past had considered Israel a “zone of war,” the Court could find no recent case that found Israel unduly dangerous. Therefore, Israel is not a “zone of war” for purposes of the Convention. Since Israel is the proper forum to determine custody, it remands for entry of an order that the children be returned to Israel.

Citation: Silverman v. Silverman, 2003 WL 21788087, No. 02-2496 (8th Cir. August 5, 2003).

JUDICIAL ASSISTANCE

In aid of complex New York federal court proceedings brought by Motorola charging Turkish defendants with fraud, English Court of Appeal (Civil Division) approves issuance of global freeze order against defendants’ assets

The claimant, Motorola Credit Corp., is a large multinational U. S. company that, with its affiliates, is active inter alia in the global sale of cellular telephone equipment. The defendants are four members of a wealthy and powerful Turkish family who (among other substantial business interests) own a telecommunications company, Telsim Mobil Telekomunikayson Hizmetleri A.S. (Telsim). It is the second largest supplier of mobile telephone services in Turkey. Defendant #2 (D2) is the patriarch of the family while D1 and D3 are his sons, and D4 his daughter.

In January 2002, claimant (and Nokia, another international telecommunications company) sued Telsim in a New York federal court (the U.S. Action). Claimant alleged that D1-D4 conspired to fraudulently persuade claimant to agree to various forms of financing Telsim. Under these arrangements, claimant advanced very large sums of money to make it possible for Telsim (1) to buy cellular infrastructure telephone equipment from companies within the Motorola group of companies and (2) to obtain a license to operate Telsim’s cellular telephone system in Turkey. The claimant alleged, inter alia, that each of the defendants borrowed large sums with no intention of repaying the loans and that each is personally liable for the whole outstanding amount. Claimant also brought similar suits against Telsim in the courts of England, Germany, France, Bermuda and the Channel Islands.

In April 2002, District Judge Jed Rakoff held a 6‑day inter partes hearing involving oral testimony (though not from the defendants personally) upon the claimant’s and Nokia’s application in the U.S. Action for a preliminary injunction and attachment order. Judge Rakoff granted that relief on May 9, 2002, ordering, inter alia, that defendants deposit with the court many shares of Telsim as collateral.

He found that: “The plaintiffs have clearly demonstrated that they are substantially likely to succeed on the merits of their claims, and have further demonstrated that very serious damage is likely to result if the requested relief is not granted.” [¶ 12] Defendants failed to comply with any of the New York court’s orders.

In the English Commercial Court, claimant, on May 30, obtained the instant worldwide freezing order against the global assets of the four Turkish defendants in aid of the U.S. Action. The order contained the customary provisions ordering the defendants to provide asset information. The first instance judge dismissed the defendants’ applications to revoke the freezing orders because they had enabled the Turkish courts to effectively bar the transfer of Telsim shares outside of Turkey.

In time, the English judge ordered all four defendants to submit themselves to cross‑examination on the nature, extent and location of their assets. The defendants, however, all failed to turn up for cross‑examination. As a result, the judge held all of them contempt of court, and sentenced them to varying terms in prison.

On appeal, defendants first challenged the global freezing orders. They mainly relied on Section 25 of the Civil Jurisdiction and Judgments Act of 1982 which generally allows the English courts to grant interim relief in aid of foreign courts. Specifically, they argued that, since the Commercial Court admittedly lacked independent jurisdiction over the subject matter involved in the U.S. Action, it was “inexpedient” under the Act for the English Court to authorize interim relief. Defendants also objected to the related orders requiring them to attend court to be cross-examined about their assets and to their committals for contempt of court.

In addition to supporting the propriety of the freezing orders, the claimant pointed out that, should the defendants lose their appeal, they concededly intended to flout whatever orders the Court may issue. Consequently, it urged, the appellate court would be wasting its time and resources even to hear them. All the defendants are currently believed to be in Turkey although it is conceded that the Court has acquired personal jurisdiction over them.

The English Court of Appeal (Civil Division) allows the appeals in part. It discharges the imprisonments for contempt against D2 and D3 but retains those against D1 and D4.

The Appellate Court first refuses to deny defendants a hearing. “... [W]e bear in mind that the defendants’ appeals are essentially defensive in nature. Their stance in this jurisdiction has been one of resistance to a series of restrictive and intrusive orders sought by the claimant in foreign proceedings, rather than a voluntary invocation of the powers of the English court for their own benefit. This seems to us to bear on the proportionality of precluding them, as parties in contempt, from what would otherwise be their right of appeal against the freezing orders to which the orders for cross‑examination were ancillary. In all the circumstances, we take the view that the defendants should be heard upon, and their arguments treated as addressed to, all of their appeals and applications now before us.” [¶ 55]

The Court then lists the five basic questions that bear on the expediency vel non of issuing global freeze orders under English law. “First, whether the making of the order will interfere with the management of the case in the primary court, e.g., where the order is inconsistent with an order in the primary court or overlaps with it. That consideration does not arise in the present case. Second, whether it is the policy in the primary jurisdiction not itself to make worldwide freezing [and] disclosure orders.”

“Third, whether there is a danger that the orders made will give rise to disharmony or confusion and/or risk of conflicting inconsistent or overlapping orders in other jurisdictions, in particular the courts of the state where the person enjoined resides or where the assets affected are located. If so, then respect for the territorial jurisdiction of that state should discourage the English court from using its unusually wide powers against a foreign defendant. Fourth, whether at the time the order is sought there is likely to be a potential conflict as to jurisdiction rendering it inappropriate and inexpedient to make a worldwide order. Fifth, whether, in a case where jurisdiction is resisted and disobedience to be expected, the court will be making an order which it cannot enforce.” [¶ 115]

On the issue of whether the New York federal court can issue global freeze orders, the Court notes that, in Grupo Mexicano de Desarrollo S.A. v. Alliance Bond Fund Inc., 527 U.S. 308 (1999), the U.S. Supreme Court held that the general equitable powers of the Federal Court did not include the broad power to issue pre‑judgment Mareva‑type relief, as granted and developed in the United Kingdom since 1975.

Under the procedure rules governing federal courts, however, Civil Rule 64 empowers a federal court to attach or seize specific property prior to judgment where the law of the state where the federal court sits allows it. In this case, New York state law does permit temporary restraining orders of a kind roughly equivalent to freezing orders in England. This extends to assets within the jurisdiction of the New York courts, but not to assets outside that jurisdiction.

Treating each defendant separately, the Court of Appeal then addresses the propriety of the ancillary disclosure orders. Under the authorities, the question is whether, under all the circumstances, it would be “just and convenient” to compel defendants to reveal details of their assets. “The purpose of disclosure is to make the freezing order effective. In the ordinary way, a defendant is required to disclose all his assets above a certain value. This is because, if he can choose which assets to disclose he is likely to choose those which are the least available or accessible to the claimant for the purposes of execution.”

“That is what the claimant says the defendants have done in this case. If there are assets which are more readily available, a claimant is entitled to be told what they are. In such circumstances a freezing order may be varied, so that particular assets are attached and others are released and, in this way, the order may be made more effective.” [¶ 146]

[Editorial Note: On July 31, 2003, U.S. District Judge Rakoff after a lengthy opinion ordered Turkey’s Uzan family, which owns Telsim, Turkey’s No. 2 wireless carrier, to pay MotorolaCredit Corp. more than $4.26 billion plus post-judgment interest in a civil fraud and racketeering case against the Uzans. He also ordered the family to transfer to the court shares in Telsim that together amounted to 73.5 percent of the ownership and control of Telsim. Plaintiffs were Motorola Credit Corp., a unit of Motorola, the world’s number two cell-phone maker, and Nokia, its larger rival.]

Citation: Motorola Credit Corp. v. Uzan et al., [2003] E.W.C.A. Civ. 752, [2003] All E.R. (D) 150 (June 12); New York Times Online (by Reuters), filed Thursday, July 31, at 10:49 a.m. ET [see also 2003 WL 21757706 (S.D.N.Y. 2003)].

JUDICIAL ASSISTANCE

Under English Criminal Justice Act, Court of Appeal (Civil Division) dismisses appeal by former wife of convicted U. S. citizen who objected to registry in England of confiscation order from U.S. federal court designed to help uncover assets owed to U.S. government as fines for husband’s fraudulent activity

In November 1995, a Florida federal court entered a [revised] confiscation order against Kathleen Conway Montgomery (respondent) and her former husband, Larry Barnette. The order arose out of Barnette’s failure to fully comply with an October 1984 order based on his convictions for fraud and related offenses, including offenses under the RICO Act. Barnette controlled two laundry companies which carried out contracts in Germany on behalf of the U. S. Government. The government alleged that Barnette had defrauded it of about $15 million in connection with those contracts and had shunted part of the proceeds to Old Dominion S.A.(ODSA), a Panamanian company he controlled.

Shortly before a grand jury indicted him for fraud, Barnette transferred 800 of the 900 shares he held in ODSA to respondent, Mrs. Montgomery. An October 1984 order required him to forfeit his interests in the shares and to pay the Government US $7 million or the market value of the shares, whichever was greater. Barnette paid the US $7,000,000, but failed to comply with an order to provide information about the market value of the shares.

In December 1992, the federal district court made an order for discovery against Mrs. Montgomery who had left Mr. Barnette in 1983 and was living in England. She failed to comply with it. The district court entered a confiscation order against Barnette’s assets in November 1995. Mrs. Montgomery and Barnette had appealed this order to the U.S. Court of Appeals for the Eleventh Circuit. That court, however, had dismissed the appeal without a hearing under the “fugitive disentitlement” doctrine.

In June 2002, the English High Court granted an application by the United States to register the order as an external confiscation order under Section 97 of the Criminal Justice Act of 1988 (CJA). Respondent then filed this appeal, claiming that the confiscation order would implicate Articles 6 of the European Convention on Human Rights and Fundamental Freedoms (ECHR) and Article 1 of the First Protocol thereto. If the Convention applied to the United States, respondent urged, then the English courts would be violating Section 6 of the English Human Rights Act of 1998 by registering the order. The Court of Appeal (Civil Division), however, is not persuaded and dismisses respondent’s appeal.

In the Court’s view, a central issue on appeal is whether the High Court judge, as a matter of law, was entitled to register the confiscation order under CJA Section 97. The order involved the sum of US$ 7,876,207.60.

The appellate court accepts that the U.S. has met most of the requirements of CJA Section 97. It points out that the U.S.A. is a “designated country” under the CJA as amended and that the U. S. order is indisputably in force and not subject to further appeal. “In addition it is not contended before us that Mrs. Montgomery did not have due notice of the proceedings.”

“What is in dispute is whether it would be contrary to the interests of justice to register the order. [The High Court judge] decided it would not be contrary to the interests of justice to register the order, even though he accepted that the order would have been made in breach of the requirements of article 6 of the ECHR if article 6 had applied to the making of that order (which of course it did not as it was made in the U.S.A.).”

“The Judge also came to the conclusion that the proceedings in the United States should be classified as criminal for the purposes of article 6. He decided that article 6.3, and in particular paragraph 6.3(c), would have been contravened by the proceedings in the U.S.A. if they had taken place in a country that was a party to the ECHR.” [¶ 4]

After a briefly discussing the facts, the Court quotes the following explanation of events from a speech in the House of Lords in an earlier phase of this case (see 2001 International Law Update 37):

“8. In a judgment dated 18 August 1995, the court found that the value of the ODSA shares as at 15 October 1984 was $11,217, 833.01. That meant that, after giving credit for the $7 million already paid, Mr Barnette owed the United States $4,217,833.01. The court held that Mr and Mrs Barnette were both in contempt and made an order against both of them for payment of the $4,217,833.01. This is the second of the confiscation orders upon which the U.S. government now relies.”

“9. Neither side was satisfied with this order and they both invited the court to revise it. Mr. Barnette wanted credit for the $3,758,127.93 which the government had seized in Liechtenstein. In addition, the $7,000,000 paid into court had earned $459,705.08 interest. If credit was given for both these sums, the debt to the government would be extinguished. The government, on the other hand, said that the sum of $4,217,833.01 reflected only what should have been paid in 1984. That sum should be increased to reflect the value to Mr. and Mrs. Barnette of having retained this forfeited property for over 10 years. In addition, the Barnettes should pay the government’s legal, investigative and expert fees.”

“10. In an order dated 15 November 1995, the court made an order giving effect to all these adjustments. Mr. Barnette was allowed credit for the Liechtenstein money and the interest. On the other hand, the sum to be forfeited was increased from $4,217,835.01 to $11,767,754 by applying U.S. Treasury interest rates from January 1985 to June 1995.” [¶ 10]

The English Court of Appeal then turns to the legal arguments on the appeal before it. Counsel for defendant argued that registering the order would contravene section 6 of the Human Rights Act of 1998. “He submits the act of registration will directly expose a claimant to enforcement of an order which was made in breach of article 6 and in direct violation of article 1 of Protocol 1 assuming the orders of the U.S. court are subjected to the standards of justice required by article 6 and article 1 of Protocol 1.” [¶ 22]

The Court of Appeal disagrees. “Here it cannot be said, even if the conduct of the District Court and the Courts of Appeal in the United States has been inconsistent with the standards of conduct required by article 6 or article 1 of the First Protocol, that the decision to register under the 1988 [CJA] gives rise to any breach of article 6 of the Convention [by the English Court]. This is for the simple reason that any conduct which could be a breach of the Convention in the United States had already taken place prior to the English proceedings.” [¶ 25]

The Court of Appeal next decides whether the trial judge had acted “in the interests of justice” when he registered the U.S. confiscation order. “I do not suggest that the jurisprudence under article 6 is necessarily irrelevant. It may throw light on what is to be regarded as in the interests of justice. However, in the majority of cases, I suggest it will be unnecessary to refer in detail to the ECHR jurisprudence. In most cases, whether or not it is in the interests of justice to register, will be answered by examining the facts of what occurred in the foreign jurisdiction in which the judgment which is intended to be registered was given.” [¶ 29]

“However, looking at the situation as a whole, I agree entirely with [the trial judge’s] view that it is in the interests of justice to register the confiscation order. There is no dispute that the confiscation order which was made was an order falling within [CJA] Section 97. In addition the order was no longer subject to appeal. As to receipt of notice of the proceedings, that is again not in dispute.”

“... [W]here the court has a discretion as to whether to do so, the normal course is for our courts to register an external confiscation order that satisfies the conditions of Section 97. This is for reasons of comity and because the order is by definition aimed at recovering money or other property obtained as a result of, or in connection with, crime. It is usually in the interests of justice that the courts in different jurisdictions should assist each other in the fight against crime.” [¶ 32]

The Court also notes that, in Mrs Montgomery’s case, the basis for applying the disentitlement doctrine by the American court was because that court thought it was the only available sanction which could achieve obedience to its orders.

“In our courts, if a party flagrantly disobeys an order of the court, the court can dismiss his claim or give judgment for the other party or stay the proceedings. Here Mrs. Montgomery was not deprived of being represented. The merits of her contentions had been fully considered at first instance. On appeal some of her contentions had been considered. She was, on the findings of the first instance court, undoubtedly assisting her former husband to place beyond the reaches of the court, the profits of his fraudulent conduct.”

“There will be many situations where there will be alternatives open to a court which make it unnecessary to adopt the approach of the U.S. Courts of Appeal. In such cases it may be unjust to register the order. The answer depends on the facts. Here in the circumstances of this case, judged against the background of the standards of justice required by article 6, [the lower court] was right to register the order.” [¶¶ 35‑37]

Citation: Government of the United States v. Montgomery, [2003] E.W.C.A. Civ. 392, [2003] All E.R. (D) 351 (Ct. App. Civ. Div.).

LAWS OF WAR

In context of struggles against al Qaida terrorism network, Fourth Circuit discusses the rights of captured “enemy combatants”

Yaser Esam Hamdi was born in the U.S. but moved to Saudi Arabia as a child. He was captured during the U.S. military operations in Afghanistan in the aftermath of the September 11, 2001, terrorist attacks. Designated as an “enemy combatant,” the U.S. is currently holding him in Norfolk, Virginia, because he may have retained his American citizenship.

Hamdi’s father then petitioned for a writ of habeas corpus under 28 U.S.C. Section 2241, alleging that his confinement was violating federal law. The district court required the Government to produce materials regarding Hamdi’s enemy combatant status. In response, the Government submitted the “declaration” of a “special advisor.” The district court then certified for interlocutory appeal the question of whether a Defense Department special advisor’s declaration setting forth the Government’s view of the capture was enough by itself to justify the detention.

On January 8, 2003, a panel of the U.S. Court of Appeals for the Fourth Circuit reversed the district court and remanded with directions to dismiss the petition. Hamdi v. Rumsfeld, 316 F.3d 450 (4th Cir. 2003). The Court held that the parties are at odds on whether U. S. forces had captured Hamdi in a zone of active combat in a foreign theater. Hence, the advisor’s declaration is enough of a basis to conclude, the panel thought, that the government was constitutionally detaining Hamdi pursuant to the war powers entrusted to the President as Commander-in-Chief. Five months later, the Fourth Circuit denies a panel rehearing or a rehearing en banc. [Nevertheless, the decision includes a variety of different voices and comments, as well as a long dissent.]

One concurring judge states the issue as “whether the U.S. can capture and detain prisoners of war without subjecting the factual circumstances surrounding foreign battlefield seizures to extensive in-court review.” The answer to this question, in this case as well as traditionally under Articles I and II of the Constitution, is “yes.” To give prisoners of war the right to litigate their detentions in U.S. courts would restrict the executive branch of the Government more than had been the case before September 11 and would exceed the powers of the judicial branch. Also, for purposes of this case, the concurring judge considers the distinction between “prisoner of war” and “unlawful combatant” irrelevant as the decision to detain such individuals is an executive one.

Another concurring judge, points out that a dissenter faults the Court for not adopting a global standard for review of all Executive detentions undertaken in the “war against terror.” Thus, the dissenter focuses on the fact that the Court denied habeas corpus solely because the government had seized Hamdi in Afghanistan.

“The impropriety of reaching beyond this case to decide another is, in my view, quite obvious. [Judge Luttig] opines that he would probably adopt the ‘some evidence’ standard advanced by the government and hold that the [advisor’s] Declaration would be sufficient even in the face of a factual dispute as to whether Hamdi was in Afghanistan. That question, however, does not merely raise a single difficult issue, as posited by Judge Luttig, as to what the global standard should be for this and other cases. Rather, it raises many difficult issues related to the President’s Article II wartime powers and how they will ultimately be interpreted in an age of terror. And, no matter how interesting such questions may be, they are simply not before us.”

“We are not dealing with the President’s designation of Hamdi as an enemy combatant because he is a terrorist in the ‘war against terror’ declared after the tragic events of September 11, 2001. Had Hamdi’s petition been grounded in an allegation that he was seized in France under the auspices of the ‘war against terror,’ and had the military agreed to that allegation and designated him an enemy combatant, then we would have a much different case. Had Hamdi’s petition been grounded in an allegation that he was seized in the United States under the auspices of the ‘war against terror,’ and the government agreed, then we would have a case not unlike Padilla v. Bush [243 F.Supp. 2d 42 (S.D.N.Y. 2003)].”

“In both hypothetical situations, we might well be called upon to weigh other important national security interests. Whereas we would not likely face the dilemma of pulling military commanders out of the theater of war to testify in a court of law, for example, we would likely encounter such issues as to whether France or the United States is a ‘zone of active military operations’ and, if not, whether such seizures in a noncombatant country can be a valid exercise of the Executive’s Article II war powers.” [Slip op. 48-49]

One dissenting judge notes that the circumstances of Hamdi’s capture are far from clear as he has not been allowed to speak for himself. “On the central question presented in this case, it is evident that the panel found itself unwilling to allow petitioner Hamdi to challenge the facts supporting his designation by the Executive as an enemy combatant, under any standard of review urged by those who appeared on behalf of Hamdi. However, the panel was equally unwilling either to adopt the ‘some evidence’ standard and accept as sufficient under that standard the facts offered by the government as justification for Hamdi’s seizure or to hold that the Judiciary is without all authority to review the President’s” designation of an individual as an enemy combatant, an alternative urged by the government.

“Faced with this decisional paralysis, the panel retreated to ground that not only neither party attempted to defend, but that is transparently indefensible – holding that Hamdi cannot challenge, and the court cannot question, the facts proffered by the government in support of Hamdi’s particular seizure and detention as an enemy combatant, for the asserted reason that Hamdi has conceded that he was seized in a foreign combat zone.” [Slip op. 52-53]

The panel failed to confront the difficult issue presented here. That is, determining the standard of review required by the Constitution and resolving the issue by applying that standard to the facts proffered by the government in justifying Hamdi’s designation as an enemy combatant. In this way, the panel neither enforced the Bill of Rights nor the Executive’s powers under Article II of the Constitution.

The other dissenting judge, focuses on the contention that Hamdi probably is a U.S. citizen and that there is not enough evidence to show that he is in fact an enemy combatant.

“Precedent dictates that we must tolerate some abrogation of constitutional rights if Hamdi is, in fact, an enemy combatant. However, a panel of this court has held that a short hearsay declaration by ... an unelected, otherwise unknown, government ‘advisor,’ – ‘standing alone’ (subject to no challenge by Hamdi or court-ordered verification) is ‘sufficient as a matter of law to allow meaningful judicial review’ and approval of the Executive’s designation of Hamdi as an enemy combatant. ... I cannot agree.”

“To justify forfeiture of a citizen’s constitutional rights, the Executive must establish enemy combatant status with more than hearsay. In holding to the contrary, the panel allows appropriate deference to the Executive’s authority in matters of war to eradicate the Judiciary’s own Constitutional role: protection of the individual freedoms guaranteed all citizens. With respect, I believe the panel has seriously erred, and I dissent from the court’s refusal to rehear this case en banc.” [Slip op. 84-85]

Citation: Hamdi v. Rumsfeld, 2003 WL 21540768, No. 02-7338 (4th Cir. July 9, 2003).

TRADEMARKS

In dispute over use of city name “Barcelona” as internet domain name, Fourth Circuit reverses district court for applying Spanish law rather than Lanham Act because Anticybersquatting Consumer Protection Act (ACPA) requires application of U.S. law

Barcelona.com, Inc. (hereinafter Bcom, Inc.), is a Delaware corporation established in 1999 by Mr. Joan Nogueras Cobo (a Spanish citizen) and Mr. Shahab Hanif (a British citizen) to use the internet domain name barcelona.com as an internet-based tourist portal for the city of Barcelona, Spain. To register the domain name, Nogueras used Network Solutions, Inc., of Virginia. It has a provision in all its contracts that require the resolution of disputes through the Uniform Domain Name Dispute Resolution Policy (UDRP) put out by the Internet Corporation for Assigned Names and Numbers (ICANN) (see www.icann.org). While Bcom, Inc., maintains a New York mailing address, it does not have any employees nor does it take part in business activities in the U.S.

Nogueras was unable to obtain enough capital to develop the website, so he offered to sell the domain name to the City Council of Barcelona, Spain. Eventually, Barcelona did become interested in the domain name. Under the UDRP, it sued Nogueras before the World Intellectual Property Organization (WIPO), an ICANN-authorized dispute-resolution provider located in Switzerland.

In August 2000, WIPO ruled in favor of the City Council. It found that barcelona.com was confusingly similar to the City Council’s Spanish trademarks and that Bcom, Inc., had no legitimate interest in barcelona.com. Therefore, it ordered Nogueras to assign the domain name to the City Council.

Barcelona.com then sued the City Council in a Virginia federal court under the Anticybersquatting Consumer Protection Act (ACPA) [Pub.L. No. 106-113, 113 Stat. 1501A-545]. It asked for a declaratory judgment that Bcom, Inc.’s internet domain name “barcelona.com” does not violate the Lanham Trademark Act of 1946 (15 U.S.C. Chapter 22) and sought injunctive relief. Note that, in 1999, Congress had amended the Lanham Act with the ACPA to protect trademark owners against cyberpiracy. Section 1114(2)(D)(v) of the ACPA protects domain-name registrants against overreaching by trademark owners and also provides for injunctive relief.

Applying Spanish law, the district court found that Bcom, Inc.’s use of barcelona.com was confusingly similar to Spanish trademarks owned by the Barcelona City Council that include the name “Barcelona.” The district court noted that the City Council did not have a registered trademark in the name “Barcelona” by itself. Under Spanish law, however, when a trademark consists of two or more words and one word predominates, that word is decisive. The City Council owns several trademarks with two or more words that include the name “Barcelona” and thus, in the district court’s opinion, had a valid Spanish trademark in that name.

The district court therefore ordered Bcom, Inc. to transfer the domain name to the City Council. Bcom, Inc., duly noted its appeal. The U.S. Court of Appeals for the Fourth Circuit reverses and remands. It reads the ACPA to expressly require the application of the Lanham Act, not foreign law.

To obtain relief against an “overreaching trademark owner,” a plaintiff must establish four propositions under 15 U.S.C. Section 1114 (2) (D) (v),. The first is that he or she is the domain name registrant. Second, plaintiff must show that the domain name was suspended, disabled, or transferred under a policy implemented by a registrar as described in 15 U.S.C. Section 1114 (2) (D) (ii) (II). Third, the complaint must establish that the owner of the mark has gotten notice of the action by service or otherwise. Finally, the plaintiff’s registration or use of the domain name must not breach the Lanham Act.

This dispute centers on the fourth element. Bcom, Inc. argued that the district court erred in applying Spanish law instead of the Lanham Act. “It requires little discussion to demonstrate that this use of Spanish law by the district court was erroneous under the plain terms of the statute. The text of the ACPA explicitly requires application of the Lanham Act, not foreign law, to resolve an action brought under 15 U.S.C. Section 1114(2)(D)(v). Specifically, it authorizes an aggrieved domain name registrant to ‘file a civil action to establish that the registration or use of the domain name by such registrant is not unlawful under this chapter.’ ...”

“It is thus readily apparent that the cause of action created by Congress in this portion of the ACPA requires the court adjudicating such an action to determine whether the registration or use of the domain name violates the Lanham Act. Because the statutory language has a plain and unambiguous meaning that is consistent with the statutory context and application of this language in accordance with its plain meaning provides a component of a coherent statutory scheme, our statutory analysis need proceed no further. ...”

“By requiring application of the United States trademark law to this action brought in a United States court by a United States corporation involving a domain name administered by a United States registrar, 15 U.S.C. Section 1114 (2) (D) (v) is consistent with the fundamental doctrine of territoriality upon which our trademark law is presently based. Additionally, both the United States and Spain have long adhered to applicable multilateral agreements. See Convention for the Protection of Industrial Property of 1883 (the ‘Paris Convention’), opened for signature Mar. 20, 1883, 25 Stat. 1372, as revised in 1967, 21 U.S.T. 1583, 24 U.S.T. 2140, T.I.A.S. 6923, 7727... Section 44 of the Lanham Act, 15 U.S.C. Section 1126, incorporates the Paris Convention into U.S. law, but only ‘to provide foreign nationals with rights under United States law which are coextensive with the substantive provisions of the treaty involved.’ ...”

“The relevant substantive provision in this case is Article 6 (3) of the Paris Convention, which implements the doctrine of territoriality by providing that ‘[a] mark duly registered in a country of the [Paris] Union shall be regarded as independent of marks registered in other countries of the Union, including the country of origin.’ ... As one distinguished commentary explains, ‘the Paris Convention creates nothing that even remotely resembles a ‘world mark’ or an ‘international registration.’ Rather, it recognizes the principle of the territoriality of trademarks [in the sense that] a mark exists only under the laws of each sovereign nation.’ ...” [Slip op. 26-29]

As a result, U.S. courts traditionally decline to entertain actions to enforce trademark rights that exist only under foreign law. The district court, however, did apply foreign law and failed to apply U.S. law.

Bcom, Inc.’s registration is actually lawful under the Lanham Act which does not permit a trademark interest in a purely descriptive geographical designation that refers only to the city of Barcelona. See 15 U.S.C. Section 1052(e)(2). Apparently, that is also the case for Spanish law. See Spanish Trademark Law of 1988, Art. 11(1)(c) [prohibiting marks that consist exclusively of a “geographical origin”].

Under U.S. trademark law, the geographical term “Barcelona” is not entitled to protection. Thus, there is nothing unlawful about Bcom, Inc.’s domain name barcelona.com or Bcom, Inc.’s use of it. As a result, Bcom, Inc., is entitled to relief under 15 U.S.C. Section 1114 (2) (D) (v).

Citation: Barcelona.com, Inc. v. Excelentisimo Ayuntamiento de Barcelona, 330 F.3d 617 (4th Cir. 2003).

European Commission approves ADM’s purchase of London company. On Friday, August 1, 2003, the EC Commission gave the green light to the plans of Illinois-based Archer Daniels Midland Co. (ADM) to buy London-based Van den Bergh, the edible oils refining subsidiary of major food producer, Unilever NV of the Netherlands. Unilever owns brands such as Knorr, Bertolli, Ben & Jerry's, Magnum, Cornetto and Lipton’s, as well as personal care products such as Dove, Snuggle, Axe, Pond’s and Sunsilk. On the other hand, ADM is one of the world's major processors of soybeans, corn, wheat and cocoa. It has 24,000 employees in more than 260 processing plants, reporting net sales of $22.6 billion for 2002. “The transaction broadens ADM’s activities on the seed oil and bakery fat markets, but no competition concerns arise,” the Commission said in a statement. Citation: The Associated Press, Brussels, August 1, 2003; filed 10:02 a.m. ET (from New York Times online)

In dispute over internet domain name, German High Court gives priority to name bearer. In a recent case involving a disputed internet domain name, the German High Court (Bundesgerichtshof, BGH) has given priority to the name bearer. The plaintiff in this case was a lawyer with the name of Werner Maxem who wanted to use his name as the internet domain of his law office. The defendant had been using the name “Maxem” (www.maxem.de) since 1990 to market his network communication services through the internet. The district court and later the State Supreme Court in Cologne dismissed the claim because there was no confusion between the parties’ use of Maxem. Further, the defendant has acquired certain rights to the name Maxem by using it to promote his services. The German High Court, however, disagrees. It rules that defendant’s use of Maxem in his internet domain was an unauthorized use of the name which the true name-bearer can enjoin. An alias is generally protected only if its user has become commonly known under that name. In this case, defendant breached the rights of the name bearer to the extent that it formally registered the internet domain www.maxem.de. Defendant’s action would prevent the name-bearer himself from registering such an internet domain. The defendant may, however, continue to use Maxem as his alias to promote his services. Citation: Press release of June 27, 2003 of German High Court (BGH); [German] Bundesgerichtshof, Urteil vom 26. Juni 2003 - I ZR 296/00.

For criminal proceedings, EU issues Decision on cross-border freezing of property among Member States. The Council Decision lays down the rules under which a Member State must domestically provide that its courts will recognize and immediately execute a freezing order issued by a judicial authority of another Member State in the course of a criminal proceeding (Articles 1 & 5). Offenses punishable by less than three years imprisonment have to meet the “dual criminality” requirement (Article 3). With each freezing order, the issuing judicial authority of one Member State must submit a standard certification directly to the executing judicial authority of the other Member State (Article 4). The Decision demands no further formalities The Member States have until August 2, 2004 to carry out the Decision. Citation: Council Framework Decision 2003/577/JHA, 2003 O.J. of European Union (L 196) 45, 2 August 2003.

Cyprus votes to join European Union. On July 14, the parliament of Cyprus voted without dissent to authorize its accession to the European Union. Divided Cyprus, along with the following nine countries: the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia, are due to join the fifteen‑member EU in May 2004. According to the AP, “[t]he EU accepted the whole of Cyprus as a member in April, but with the provision that EU laws and benefits from membership ‑‑ which apply to the Greek Cypriot south ‑‑ will not be extended to the Turkish‑controlled north until after reunification.” Citation: The New York Times (online) by Associated Press, Monday, July 14, 2003; filed at 5:53 a.m., ET.

Both U.S. and EU ease Iraq sanctions. The U.S. Department of Treasury, Office of Foreign Assets Control (OFAC), has issued an interim final rule to authorize Iraq to take part in certain new transactions (31 C.F.R. Part 575). The Iraqi Sanctions Regulation now includes a general license which authorizes specified commercial activity based on U. N. Security Council Resolution (UNSCR) 1483. Resolution 1483, with certain exceptions, substantially lifted the multilateral economic sanctions imposed on Iraq. The EU Council has recently issued a Common Position (2003/495/CFSP) similar to the OFAC rule and is also based on UNSCR 1483, with certain exceptions. For instance, sales of weapons and related materials remain banned. Moreover, all Iraqi assets are to be frozen and transferred to the Development Fund for Iraq. – A related EU Council Regulation (1210/2003) restricts some economic and financial relations with Iraq. It reflects the Common Position and the conditions laid down in UNSCR 1483. The EU Regulation bars any dealings in Iraqi cultural property unless they were exported from Iraq before August 6, 1990, or are in the process of being sent back to Iraq. Citation: 68 Federal Register 38188 (June 27, 2003); 2003 O.J. of European Union (L 169) 72, 7 August 2003 [Common Position 2003/495/CFSP] & (L 169) 6 [Council Regulation].

U.S. Senate approves Chile and Singapore Free Trade Agreements. During July, the U.S. Senate approved the Chile and Singapore Free Trade Agreements (FTAs) by identical votes of 66 to 31. A small city‑state, Singapore nevertheless is the U.S.’s twelfth‑largest trading partner with a trade volume of $33.4 billion last year. Both agreements get rid of, or minimize, mutual tariffs, reduce non-tariff barriers, open service markets, and increase protections for intellectual property. The FTAs also contain certain immigration provisions that make it easier to obtain visas to work in the other Contracting State. The approvals came through the “fast track” procedure which limits legislative actions to either approval in toto or rejection. Both pacts are expected to enter into force on January 1, 2004. – The U.S. already has similar agreements in place with Canada, Mexico, Israel and Jordan, and is negotiating with several other countries. Citation: U.S. Trade Representative press releases of July 23 & July 31, 2003.

European Union tightens controls on arms trade. The EU Council has agreed on a Common Position (CP) to improve controls on international arms brokering. It aims to thwart weapons traders from bypassing UN, EU, or OSCE embargoes on arms exports. Another goal is greater compliance with Article I of the European Union Code of Conduct on Arms Exports (CCAE). Member States are to set up legal frameworks to regulate such activities within their borders. Under Article 2 of CCAE, these national controls may include restricting arms exports from one Member State to another. Further, the Member States have to compile and issue a system of written authorizations for arms deals and a register of arms brokers. Citation: Common Position 2003/468/CFSP), 2003 O.J. of European Communities (L 156) 79, 25 June 2003.

Russia enacts new Customs Code. On May 28, 2003, President Putin of the Russian Federation has signed into law the new Customs Code. It codifies several regulatory acts previously issued by the Russian Government and the State Customs Committee that are already being applied. Among the changes in the new code are: (1) customs-related activities will no longer require a license but customs-related companies, such as carriers and customs brokers, will be included in a special register; (2) customs procedures are streamlined and processing will be reduced to three days; (3) goods must generally be declared by Russian parties; (4) duties and taxes may be paid in Russian Rubles or foreign currency; (4) additional intellectual property protections are included. The Code will enter into force on January 1, 2004. Citation: Report of the BISNIS section of the U.S. Department of Commerce, available on website “www.bisnis.doc.gov.” The Report refers to report of June 21, 2003 of the Russia office of the law firm Baker & McKenzie.