2004 International Law Update, Volume 10, Number 2 (February)

2004 International Law Update, Volume 10, Number 2 (February)

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

ARBITRATION

Eleventh Circuit affirms district court’s refusal to confirm English arbitration award for lack of subject matter jurisdiction under Federal Arbitration Act because plaintiff failed to prove existence of prior written arbitration agreement

Czarina, LLC, is the assignee of Halvanon Insurance Co. Ltd. Halvanon, an Israeli company, entered into a 1984 agreement with the Florida reinsurance company W.F. Poe Syndicate (Poe). According to industry custom, before they had worked out all the details, the companies agreed that Poe would reinsure Halvanon, and that their underwriters would get together later to draft a written agreement. They never did. The following year, Halvanon became insolvent and was liquidated. Czarina bought some of Halvanon’s accounts receivable, including the Poe account.

None of the communications exchanged between Poe and Czarina had mentioned arbitration. Halvanon’s 1982 Sample Wording form for similar agreements did include a clause specifying arbitration in London before a two-member panel. Neither party here, however, had signed any such form.

When Poe refused to pay, Czarina filed for arbitration in London to collect the alleged indebtedness. The only part Poe took in the arbitration was to send the panel two short letters declaring that it had never agreed to arbitrate this dispute and that the merits weighed heavily on Poe’s side. The panel nevertheless awarded Czarina over 150,000 British Pounds.

Czarina then sued Poe in a Florida federal court under Article II of the Federal Arbitration Act (FAA) [9 U.S.C. Sections 201-208] to confirm the foreign arbitral award. After a three-day bench trial, the court ruled that there had never been an agreement to arbitrate. Thus, lacking subject matter jurisdiction to confirm the award, it dismissed Czarina’s case.

Czarina appealed. The U.S. Court of Appeals for the Eleventh Circuit, however, affirms.

Czarina argued that the district court erred in holding that the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards [21 U.S.T. 2517; T.I.A.S. 6997; 330 U.N.T.S. 3] (the Convention) required that there can be no valid arbitration award without a written arbitration agreement.

Incorporating the terms of the Convention, the FAA provides that federal district courts have original jurisdiction over two types of actions coming within the Convention. The first is an action under FAA Section 206 to compel a future arbitration proceeding pursuant to a valid written agreement to arbitrate.

Secondly, pursuant to Section 207, a federal court may entertain a suit like this one to confirm a past foreign arbitration award based on a valid contract to arbitrate. Under Convention Articles II and IV, the plaintiff has the burden of proving a written arbitration agreement between the parties. In the appellate court’s view, Czarina was unable to do so here.

“Where a party has failed to satisfy the agreement-in-writing prerequisite, courts have dismissed the action for lack of jurisdiction. ... And, when enforcing an agreement or confirming an award, courts first assure themselves of their jurisdiction by deciding whether the agreement-in-writing requirement has been met. ...”

“The FAA provides in Section 207 that: ‘Any party to the arbitration may apply to any court having jurisdiction under this chapter for an order confirming the award [falling under the Convention] as against any other party to the arbitration. The court shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention.’”

“... The failure of a party to satisfy Article IV’s requirements qualifies as one of the ‘grounds for refusal or deferral ... specified in the said Convention.’ ..., [T]he Convention uses mandatory language in establishing the prerequisites: ‘to obtain the recognition and enforcement mentioned in the preceding article, the party applying for recognition and enforcement shall, at the time of the application, supply’ a copy of the award and the arbitration agreement, Convention, ... Art. IV, sec. 1, 9 U.S.C. Section 201 (historical and statutory notes) ... This mandatory language also indicates that, without these requirements being satisfied, the court is without power to confirm an award.” [Slip op. 9-12]

Citation: Czarina, L.L.C. v. W.F. Poe Syndicate, 2004 WL 205611, No. 03-10518 (11th Cir. February 4).

CHILD ABDUCTION

As matter of first impression in First Circuit, Court holds that abducting parent can be convicted under federal International Parental Kidnapping Crime Act (IPKCA) for conduct that is not considered criminal under state family law

Fazal Raheman, then living in the U.S., and Saihba Ali married in India in May 1990. They moved to Massachusetts where their daughter was born in 1992. Four years later, a son arrived. The marriage was not going well, though. In 1997, Ali and the children moved into a separate apartment.

Raheman secretly installed a video camera in Ali’s bedroom, had a private investigator follow her around, asked his nephew to move into Ali’s apartment building to spy on her, and tapped Ali’s telephone. In November 1997, he traveled to his former home in Nagpur, India, enrolled his daughter in school there and filed a custody petition in the Nagpur Family Court.

Later he went back to the U.S. Under the pretext of taking the children to a museum, Raheman took them back to India. Ali contacted the police and obtained an emergency custody order in a Massachusetts court. Raheman obtained his own custody order from the Nagpur Family Court.

In July 2001, a federal grand jury indicted Raheman under the International Parental Kidnapping Crime Act (IPKCA), 18 U.S.C. Section 1204. It provides in part that “(a) Whoever removes a child from the United States, or attempts to do so, or retains a child (who has been in the United States) outside the United States with the intent to obstruct the lawful exercise of parental rights shall be fined under this title or imprisoned not more than 3 years, or both.”

Federal authorities arrested Raheman in the U.S. and convicted him of kidnapping. Raheman noted an appeal. The U.S. Court of Appeals for the First Circuit affirms in part, vacates in part and remands for resentencing.

On appeal, Raheman argued, inter alia, that the evidence failed to show a crime under the IPKCA because the alleged conduct was not criminal under Massachusetts law. Disagreeing, the Court finds that such a prosecution comports with the language and intent of the statute. Massachusetts law does not criminalize any of Raheman’s actions because no proceedings had been pending at that time. This, however, does not prevent Congress from acting on its own basis.

“In 1993, by virtue of its commerce power ..., and to ‘deter the removal of children from the United States to foreign countries in order to obstruct parental rights,’ Congress passed the International Parental Kidnapping Crime Act to create a new ‘federal felony offense ....’ H.R. Rep. No. 103-390, at 1 (1993) ... The legislative history explains that IPKCA was enacted as a domestic response to issues left unaddressed by international law:”

“‘There is an international civil mechanism relating to these cases, the Hague Convention on International Parental Child Kidnapping* for which Congress passed implementing legislation in 1988. ... However, most countries (including India) are not signatories to the Convention, thus leaving individual countries to take whatever legal unilateral action they can to obtain the return of abducted children. Creating a federal felony offense responds to these problems ...’” [Slip op. 9-10]

The Court then turns to the issue of first impression in the First Circuit: whether IPKCA authorizes the conviction of a parent for conduct that is not criminal under State law. “That IPKCA looks to state family law for purposes of defining ‘parental rights,’ ... does not in any way suggest that the statute depends upon state criminal law to delineate the realm of circumstances through which such rights are transgressed. By prohibiting those situations in which a parent ‘removes a child from the United States ... with intent to obstruct the lawful exercise of parental rights,’ ... Congress went further than Massachusetts, which does not criminalize such conduct absent a prior court proceeding.”

“Nowhere in the text of the statute or the legislative history does Congress limit the criminal prohibition in 18 U.S.C. Section 1204(a) to only those acts that are criminal under state law. ... Congress could have provided for the imprisonment of any person who, in violation of State law, removes a child from the United States. It did not do so, and this court will not infer such a limitation where the statutory language does not support it. ...” [Slip op. 12-14]

*[Editorial Note: The legislative history is presumably referring to the Hague Convention on the Civil Aspects of International Child Abduction [T.I.A.S. 11670, in force for U. S. on July 1, 1988].

Citation: United States v. Fazal-ur-Raheman-Fazal, 355 F.3d 40 (1st Cir. 2004).

INDIGENOUS PEOPLES

Supreme Court of Denmark rejects claim by Thule Tribe that 1951 U.S.-Danish agreement for U.S. Airbase in Thule, Greenland that limited its hunting grounds and led to relocation of Tribe contravened the Danish constitution

The U.S. established an airbase in Thule, Greenland (then a Danish colony) in 1951 near the Uummannaq settlement of about 100 polar Eskimos. The airbase limited their hunting grounds. Two years later, the Danish government relocated the Eskimo settlement of 132 people and its facilities to Qaanaaq, about 90 miles to the North. Denmark later admitted that the resettlement had been wrongful.

In the meantime, Greenland has achieved a greater measure of sovereignty. Thus, the Danish Home Rule Act (No. 577 of 29 November 1978) provides that “1.(1) Greenland is a distinct community within the Kingdom of Denmark. ... [T]he Greenland Home Rule authorities shall conduct Greenland affairs in accordance with the provisions laid down in this Act. ...”

Representatives of the “Thule Tribe” brought a lawsuit in 1996 against the Danish government in the High Court in Copenhagen. They claimed that the tribe was an “indigenous tribal people” under the International Labor Organization (ILO) Convention No. 169 Concerning Indigenous and Tribal Peoples in Independent Countries [June 27, 1989, 28 I.L.M. 1382 (1982), in force for Denmark, Feb. 22, 1997].

The suit challenged both the 1953 relocation and the 1951 U.S.-Denmark Agreement Concerning the Defense of Greenland [2 U.S.T. 1485; T.I.A.S. 2292; 94 U.N.T.S. 35; April 27, 1951] which allowed the U.S. to set up military bases on Greenland.

In 1999, SIK, the Greenlandic trade union, brought a complaint before the ILO. It argued that Denmark had contravened the ILO Convention because of the resettlement of the Thule Tribe and the consequential loss of their hunting and trapping opportunities. The ILO dismissed that complaint, stating that it cannot resolve individual land disputes under the Convention.

Traditionally, Greenlanders do not recognize individual land rights. Since the tribal members at issue now live in different parts of Greenland, designating the former settlement as their property would seemingly fail to comport with the Greenlandic system of collective land rights. The ILO Convention requires governments to establish procedures for resolving such land disputes, and such do exist in this case. Thereafter, Denmark complied with Article 14(3) of the Convention. The ILO Governing Body adopted the Report in March 2001, thus disposing of SIK’s case.

In August 1999, the Danish High Court, 3rd Division, awarded the tribe compensation of DKK 500,000 [about U.S. $85,000]. The tribe appealed, demanding damages of DKK 235 million [about U.S. $40 million] for lost living space and hunting grounds. The claimant tribe had arrived at that amount of damages based on Denmark’s compensation for the Thule weather station, established in 1946, for which Denmark had been paying DKK 200 per year. Since the base is 26,183.81 times larger than the weather station, they multiplied DKK 200 by 26,183.81 and then by 45 for the number of years between 1951 and the filing of the action in 1996.

The Danish Supreme Court affirms the High Court’s award. First, the Court rejects the claimants’ arguments that the ILO Convention applies to this case because the Tribe is a people distinct from the rest of the Greenlandic population. “The assessment of whether or not the Thule Tribe is a distinct indigenous people in the sense of the ILO Convention should be based on current conditions. In Greenland, regional variations still exist in terms of language, business conditions and rules of law deriving in part from the country’s size, communication and transport structure, and local natural conditions.”

“Based on an overall assessment of the available evidence, the Supreme Court finds that, for all practical purposes, the population of the Thule district shares the same conditions as the rest of the Greenlandic people and does not differ from it in any other relevant respects. The difference between the languages spoken in Qaanaaq and in West Greenland and the Thule Tribe’s perception of itself as a distinct indigenous people cannot lead to any other conclusion. The Supreme Court therefore finds that the Thule Tribe does not ‘retain some of or all their own social, economic, cultural and political institutions’ and, therefore, the Thule Tribe is not a distinct indigenous people, cf. Article 1(1)(b) of the ILO Convention.” [English Translation of opinion by Birte-Marie Jorgensen, page 19]

Furthermore, the Court notes that the Danish government declared upon ratification of the ILO Convention (and the Greenland Home Rule Government agreed) that Denmark has “only one indigenous people” within the meaning of the Convention - the indigenous population of Greenland or Inuit. Therefore, the Thule Tribe does not have any separate rights under the ILO Convention.

Second, the Court spurns the Thule Tribe’s claim that the U.S.-Denmark Agreement is void under both constitutional and international law. The Danish Parliament validly approved the Agreement and no expropriation took place. Finally, the property guarantees of section 80 of the Danish Constitution in force at that time did not extend to Greenland.

Third, the Court rejects the Thule Tribe’s calculation of damages. “These calculations use factors that, to a large extent, must be considered arbitrary, while various matters that ought to have been included in the assessment are disregarded. The calculations are not based on developments in the size of catches. The primary claim for just over DKK 235 million is calculated on the basis of the size of the confiscated land without clarifying the correlation between area size and catch potential.”

“The calculation comprises 45 years without taking into account the substantial reduction in the base area in 1986 and general limitation of the indemnity period. These calculation factors are related to an annual compensation of DKK 200 granted on the establishment of the Thule weather station in 1946, the specific basis of which remains undisclosed. ... The number of hunters included - approximately half the number of original plaintiffs - has no connection with the number of hunters affected by the interventions.”

“The Supreme Court concurs, on the whole, in the High Court’s assessment of the facts to be considered when fixing compensation, including the character of the confiscated hunting grounds, distances to the most important hunting grounds, general catch pattern developments - in particular the decreasing importance of fox and increasing importance of narwhal - and limitation of the period to be included in the calculation. The Supreme Court finds no grounds for increasing the compensation of DKK 500,000 fixed by the High Court.” [English Translation, pages 23-24]

Citation: Supreme Court of Denmark, Decision of November 28, 2003, in cases 489/1999 and 490/1999, Hingitaq 53 v. The Danish Prime Minister’s Office. [This decision and summary was provided by Attorney Karsten Hagel-Sorensen of the firm Poul Schmith, Copenhagen, Denmark, who argued on behalf of Danish Government; See also The Independent (London), November 29, 2003, page 16].

PUBLIC HEALTH

EU Court of First Instance holds that prominent Canadian researcher who discovered low efficacy and serious side effects of drug to treat thalassamia major during three clinical trials required by U. S. Food and Drug Administration and reported adverse data to EU agencies about to approve drug, has insufficient public health interest to annul EC Commission’s decision to approve drug since her reports had led EU agencies to reconsider and qualify drug approval and since any injury to her reputation was not available ground for annulment

Dr. Nancy Fern Olivieri (applicant) is a Canadian physician and an internationally recognized specialist in the disease of thalassemia major (TM) (also known as Cooley’s syndrome). [Editorial Note: Thalassemia is an inherited form of anemia caused by faulty synthesis of part of the hemoglobin molecule. It is difficult to treat.] The disease may affect as many as 20,000 EU citizens. Starting in 1989, the applicant undertook to run a pilot study to test the effectiveness of deferiprone. This is an oral medication used to counter the iron overload that results from the frequent blood transfusions needed to treat TM.

Based on the results of that trial, the applicant got in touch with the U.S. Food and Drug Administration (FDA) about the requirements for getting deferiprone approved in the United States. Under the FDA’s guidance, the applicant helped to draw up protocols for each of the required three clinical trials. The applicant was the principal investigator for two of the trials and co-chairman of the steering committee for the third trial. Apotex Research Inc., a Canadian firm, financed all three clinical trials, which began in April 1993.

At some point during the tests, Dr. Olivieri reached the preliminary conclusion that deferiprone was ineffective in nearly half of the patients treated. She reported her concerns to the Review Ethics Board of her employer, the Toronto Hospital for Sick Children, and to the relevant authorities. In May 1996, Apotex decided to end the applicant’s involvement in the three clinical trials and to abort two of the trials.

The applicant then did a later study without the financial support of Apotex. She found evidence that deferiprone was toxic to the heart and liver and that its use increased the risks of premature death from cardiac disease or hepatic fibrosis. The applicant, therefore, immediately stopped using deferiprone on humans. She and others presented those findings in an article at 339 New England Journal of Medicine 417 (Aug. 1998).

In February 1998, Apotex applied to the European Agency for the Evaluation of Medicinal Products (EMEA) for an EU marketing authorization under Article 4(1) of Regulation No. 2309/93 for Ferriprox, the active ingredient of which is deferiprone. Apotex also sent the reports from the three clinical trials of deferiprone, but the documents lacked Dr. Olivieri’s signature.

The EU Committee for Proprietary Medicinal Products (CPMP) formulates the opinions of the EMEA. In January 1999, the CPMP put out an opinion that favored the grant of marketing authorization for deferiprone.

The EMEA sent this opinion to the Commission of the European Communities. Four months later, the Standing Committee on Medicinal Products for Human Use unanimously supported the Commission’s draft decision.

On hearing about the CPMP’s favorable opinion, Dr. Olivieri sent several letters and reports to both the EMEA and the CPMP. She told them about her observations on the low curativeness of deferiprone plus the substantial cardiac and hepatic risks linked to it. In June 1999, the Commission held up the pending authorization process to get further scientific clarification of the applicant’s report. An ad hoc Expert Working Group (EWG) met to discuss the new information about the dangers of deferiprone.

The EWG determined, however, that the new data was inconclusive as to the relationship between deferiprone and hepatic fibrosis. Accordingly, it opined that there was no need to rethink the pending favorable recommendation for marketing authorization. The CPMP, therefore, decided to stick with its endorsement.

In November 1999, Dr. Olivieri filed the present suit at the Registry of the Court of First Instance (CFI) in Luxembourg. It sought to annul (1) the revised opinion and (2) the Commission decision Three months later, the CFI’s Fifth Chamber granted Apotex leave to intervene. In March 2000, the Commission and the EMEA asserted a plea of inadmissibility under Article 230 EC.

The CFI decides to rule on this plea. The Court first finds Dr. Olivieri’s application to annul the revised opinion inadmissible because the revised opinion qualifies as a mere preparatory or nonfinal measure not open to challenge under Article 230 EC.

Article 230 EC (ex Article 173) provides in pertinent part as follows: “The Court of Justice shall review the legality of acts ... of the Commission ... other than recommendations and opinions, ... intended to produce legal effects vis‑a‑vis third parties. ... Any natural or legal person may ... institute proceedings against a decision addressed to that person or against a decision which, although in the form of a regulation or a decision addressed to another person, is of direct and individual concern to the former.”

The Commission and the EMEA, supported by Apotex, argued that the application is inadmissible by reason of lack of interest in bringing proceedings. The applicant countered that she has an interest in bringing the proceedings because she is seeking both to protect public health and the health of thalassemia patients and to defend her professional reputation.

The Court first examines the applicant’s public health claim. The Court first points out “that none of the provisions of the applicable Community rules prohibits the Commission, prior to granting a marketing authorisation, from following a procedure during which persons other than the applicant for marketing authorisation are able to submit their observations so as to enable it to fulfil its duty to check, in the interest of public health, that all the information relating to the scientific evaluation of the product in question, whether it be favourable or unfavourable to the product, has indeed been made available to it.” [¶ 73]

The Court notes that the applicant’s function in the administrative procedure plays a role in determining whether she has an interest in bringing the action. The Court notes that “the Commission suspended the marketing authorisation procedure on its own initiative and requested the CPMP to obtain additional scientific clarification.”

“Such a step is justified by the fundamental aim of safeguarding public health, which constitutes the framework for the Commission’s work. ... [T]he Community rules require the Commission to confirm that the particulars and documents provided by the applicant for marketing authorisation are correct in order that it may assess the quality, safety and efficacy of that product and authorise its marketing.”

“At that stage of the assessment procedure, the applicant could thus rely on the interest of protecting public health when she communicated to the CPMP additional information which might call in question the initial scientific assessment, given that the information provided by Apotex with its application for marketing authorisation or during the assessment procedure had been incomplete.” [¶¶ 78-79]

Although the Court concludes that Dr. Olivieri indeed played a leading part in deferiprone research, it finds that the Commission decision was not “of concern” to the applicant here. ... “[A] Commission decision addressed to the applicant would have been of concern to her if it had refused to examine the information provided by her in the course of the procedure for the scientific assessment of deferiprone or there had been an implicit decision to reject that information, which would have been the case if the Commission had adopted the decision to grant marketing authorisation without having examined that information. She would have been entitled to contest the legality of either of those decisions before the Court of First Instance.”

“However, following Dr Olivieri’s involvement, the suspension of the marketing authorisation procedure and the Commission’s decision to request a further examination, the initial scientific assessment of deferiprone was amended and supplemented by the CPMP. In the light of the contested decision and the opinions and reports on which it is based, none of the arguments submitted by the applicant in the course of the present proceedings supports the claim that the Commission failed to take into account the information directly communicated by the applicant in the course of the assessment procedure.” [¶¶ 81-82]

In response to the applicant’s claim that she has an interest in defending her professional reputation, the Court notes that her fine reputation played a major role in the reopening of the case. “Moreover, ... even if the applicant’s professional reputation were to have been called into question in the contested decision, that would not have given her an interest in bringing proceedings to contest that decision, because Article 68 of Regulation No 2309/93 does not permit the Commission to take into account such matters in a decision to grant marketing authorization. [Cite]”

“It follows from the foregoing that the applicant has not established an interest in bringing proceedings in order to protect public health or in order to defend her professional reputation. Consequently, ... her application must be declared inadmissible.” [¶¶ 98-100]

“Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, she must be ordered to bear her own costs and to pay those incurred by the Commission and the EMEA, including the costs relating to the interim proceedings.” [¶ 101]

Citation: Nancy Fern Olivieri v EC Commission, EU: Case T‑326/99; Celex No. 699A0326 (Court of First Instance, Fifth Chamber, 2003).

SOVEREIGN IMMUNITY

In tort case against Iran by former Hizbollah hostage, D.C. Circuit holds that neither Foreign Sovereign Immunities Act nor Flatow Amendment thereto creates private right of action against foreign government as such but only against its individual officials, employees, or agents for terrorist acts done in course of their government employment

In 1986, Hizbollah, the Islamic terrorist organization, abducted Joseph Cicippio, then the comptroller of the American University in Beirut. Iran allegedly supports Hizbollah’s activities. His captors held Mr. Cicippio under inhumane conditions until his release in 1991. He brought an action against Iran under the “terrorism exception” of the Foreign Sovereign Immunities Act (FSIA) [28 U.S.C. Sections 1330, 1602-1611 (2000)], Section 1605(a)(7), and the Flatow Amendment, Section 1605 note. Iran failed to respond. In August 1998, the U.S. District Court for the District of Columbia entered a $30 million default judgment against Iran in favor of Mr. and Mrs. Cicippio. [See Cicippio v. Islamic Republic of Iran, 18 F.Supp. 2d 62 (D.D.C. 1998).]

Mr. Cicippio’s seven children and seven siblings (plaintiffs) sued Iran In 2001 for intentionally inflicting the emotional distress and the loss of consortium which they suffered as a result of Mr. Cicippio’s lengthy captivity. Their action rested on FSIA Section 1605(a)(7) and the Flatow Amendment. Again, Iran failed to answer the complaint. The district court, however, dismissed the case sua sponte because the FSIA does not confer subject matter jurisdiction for claims of emotional distress and solatium under these circumstances. Plaintiffs noted their appeal. The U.S. Court of Appeals for the District of Columbia Circuit affirms and remands.

The Court points out that a foreign state is immune from the jurisdiction of U.S. courts except as provided in FSIA Sections 1605 and 1607 of the FSIA. As part of the comprehensive Antiterrorism and Effective Death Penalty Act (AEDPA) [Pub.L. 104‑ 132, Apr. 24, 1996, 110 Stat. 1214], Congress amended the FSIA to add the so-called “terrorism exception.” It lifts the immunity of a foreign state and its agents in a case “in which money damages are sought against a foreign state for personal injury or death that was caused by an act of torture, extrajudicial killing, aircraft sabotage, hostage taking, or the provision of material support or resources ... for such an act if such act or provision of material support is engaged in by an official, employee, or agent of such foreign state while acting within the scope of his or her office, employment, or agency.” 28 U.S.C. Section 1605(a)(7).

The new exception applies, however, only to a foreign state that the U.S. Department of State has designated as a “state sponsor of terrorism.” 28 U.S.C. Section 1605(a)(7)(A). In addition, the claimant or a victim must be a U.S. national and has to afford the foreign state a reasonable opportunity to arbitrate the claim.

Shortly after passing the AEDPA, Congress enacted the Flatow Amendment [See Omnibus Consolidated Appropriations Act of 1997, Pub.L. No. 104-208, Div. A, Title I, Section 101( c), 110 Stat. 3009-172, 28 U.S.C. Section 1605 note]. It provides that “[a]n official, employee, or agent of a foreign state designated as a state sponsor of terrorism ... while acting within the scope of his or her office, employment, or agency shall be liable to a United States national or the national’s legal representative for personal injury or death caused by acts of that official, employee, or agent ... for money damages which may include economic damages, solatium, pain and suffering, and punitive damages if the acts were among those described in section 1605(a)(7) ...”

The Flatow Amendment clearly provides for a private right of action for terrorism against officials, employees and agents of designated foreign states. The issue in this case is whether Section 1605(a)(7) and the Flatow Amendment also provide a cause of action against the foreign state itself.

“We now hold that neither 28 U.S.C. Section 1605(a)(7) nor the Flatow Amendment, nor the two considered in tandem, creates a private right of action against a foreign government. Section 1605(a)(7) merely waives the immunity of a foreign state without creating a cause of action against it, and the Flatow Amendment only provides a private right of action against officials, employees, and agents of a foreign state, not against the foreign state itself. Because we hold that there is no statutory cause of action against Iran under these provisions, we affirm the District Court’s judgment without deciding whether the evidence presented by the plaintiffs is sufficient to recover for intentional infliction of emotional distress or loss of solatium.” [Slip op. 21-22]

The Court remands the case to give the plaintiffs a chance to amend their complaint to state a cause of action under some other source of law.

Citation: Cicippio-Puleo v. Islamic Republic of Iran,353 F.3d 1024 (D.C. Cir. 2004); [See also The Washington Post, January 17, 2004, page A8].

TRADEMARKS

Responding to reference from Austrian court, ECJ interprets pertinent EC law as not preventing Member State court from domestically enforcing its pre-accession trademark agreement with non-member state where domestic marketing by Austrian company of Anheuser-Busch’s import “American Bud” may cause confusion with non-member state’s marks protected in Member State by such agreement

Budejovicky, Budvar, narodni podnik (Budvar or plaintiff), is a brewery headquartered in the town of Ceske Budejovice in the Czech Republic. Budvar markets beer, specifically under the names “Budejovicky,” “Budvar,” and “Budweiser Budvar,” the last of which it exports to nearby Austria.

Rudolf Ammersin GmbH (Ammersin or defendant) is a company established in Vienna, Austria. Ammersin markets, inter alia, an imported beer called “American Bud.” Anheuser ‑ Busch, Inc. (ABI), located in the United States, produces this beer. Ammersin buys American Bud from Josef Sigl KG (Josef Sigl), a company established in Obertrum (Austria), and is the sole Austrian importer of that beer. In July 1999, plaintiff filed proceedings in the Handelsgericht Wien (Commercial Court, Vienna) seeking to enjoin defendant from buying and selling ABI’s beer within Austria under the “American Bud” name.

Two main theories underlay the plaintiff’s case in the Austrian court. First, plaintiff contended that the name “American Bud,” ABI’s registered Austrian trade mark, bears enough of a likeness to its three Austrian trade marks to cause confusion under Austrian unfair competition laws.

Second, plaintiff claimed that the use of the designation “American Bud” for a beer from a State other than the Czech Republic conflicts with the 1976 Czech-Austria Bilateral Convention between (then) Czechoslovakia and Austria. According to Article 6 of the Convention, the term “Bud” is a protected designation in Austria set aside only for Czech beers.

On May 25, 2002, the European Court of Justice received a reference from the Handelsgericht pursuant to Article 234 EC (ex Article 177). The Austrian court sought a preliminary legal ruling on several questions dealing with the interpretation of Articles 28 EC, 30 EC and 307 EC and the 1992 Council Regulation (EEC) No. 2081/92 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs as amended by Council Regulation (EC) No 535/97 of 17 March 1997 (collectively, Regulation No. 2081/92).

As of January 1, 1993, the former Czechoslovakia split into two states: the Czech Republic and Slovakia. As to the impact of international law on the continued applicability of the Bilateral Convention as between Austria and the new Czech Republic, Article 34(1) of the 1978 Vienna Convention on Succession of States in respect of Treaties [17 I.L.M. 1488] is relevant. It provides in part that: “When a part or parts of the territory of a State separate to form one or more States, whether or not the predecessor State continues to exist: (a) any treaty in force at the date of the succession of States in respect of the entire territory of the predecessor State continues in force in respect of each successor State so formed.”

The following measures of EC law also pertain to this reference. Article 28 EC provides: “Quantitative restrictions on imports and all measures having equivalent effect, shall be prohibited between Member States.” Under Article 30 EC, however, it is declared in part that: “The provisions of Articles 28 and 29 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of ... the protection of industrial and commercial property. ...” As defined in Article 2(1) and (2) of Regulation No 2081/92, a designation of origin or geographical indication: “means the name of a region, a specific place or, in exceptional cases, a country, used to describe an agricultural product or a foodstuff.”

On January 1, 1995, Austria acceded to the European Union while the Czech Republic has not yet become a Member State. The first and second paragraphs of Article 307 EC state that: [1] “The rights and obligations arising from agreements concluded before 1 January 1958 or, for acceding States, before the date of their accession, between one or more Member States on the one hand, and one or more third countries on the other, shall not be affected by the provisions of this Treaty. [2] To the extent that such agreements are not compatible with this Treaty, the Member State or States concerned shall take all appropriate steps to eliminate the incompatibilities established.” [emphasis supplied]

The Court of Justice, after weighing the submissions of the parties and the written observations of the Governments of Austria, Germany, and France as well as from the EC Commission, gives the following response to the questions about EU law referred to it by the Austrian court.

“Article 28 EC and Council Regulation (EEC) No 2081/92 of 14 July 1992 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs, as amended by Council Regulation (EC) No 535/97 of 17 March 1997, do not preclude the application of a provision of a bilateral agreement between a Member State and a non‑member country under which a simple and indirect indication of geographical origin from that non‑member country is accorded protection in the importing Member State, whether or not [1] there is any risk of consumers being misled, and [2] the import of a product lawfully marketed in another Member State may be prevented.”

“Article 28 EC [does preclude] the application of a provision of a bilateral agreement between a Member State and a non‑member country under which a name, which in that country does not directly or indirectly refer to the geographical source of the product that it designates, is accorded protection in the importing Member State, whether or not [1] there is any risk of consumers being misled, and [2] the import of a product lawfully marketed in another Member State may be prevented.”

“The first paragraph of Article 307 EC is to be interpreted as permitting a court of a Member State, subject to the findings to be made by that court having regard, inter alia, to the criteria set out in this judgment, to apply the provisions of bilateral agreements such as those at issue in the main proceedings, concluded between that State and a non‑member country and according protection to a name from the non‑member country, even where those provisions prove to be contrary to the EC Treaty rules, on the ground that they concern an obligation resulting from agreements concluded before the date of the accession of the Member State concerned [Austria] to the European Union.”

“Pending the success of one of the methods referred to in the second paragraph of Article 307 EC in eliminating any incompatibilities between an agreement predating that accession and the Treaty, the first paragraph of that article permits that State to continue to apply such an agreement in so far as it contains obligations which remain binding on that State under international law.” [¶ 174]

Citation: Budejovicky v. Rudolf Ammersin GmbH, EU: Case C‑216/01, Celex No. 601J0216 (Eur. Ct. Just. 2003).

WORLD TRADE ORGANIZATION

In dispute between Canada and United States on its imposition of countervailing duties on imported Canadian softwood lumber, WTO Appellate Body concludes that U.S. Department of Commerce (DOC)’s failure to conduct pass-through analysis as to upstream lumber transactions did not comport with either SCM Agreement or GATT 1994; whereas neither DOC’s finding that provincial stumpage programs amounted to financial contribution nor its determination of amount of benefits involved clashed with SCM Agreement

On May 22, 2002, the U.S. Department of Commerce (DOC) published a countervailing duty order regarding softwood lumber from Canada. The DOC had determined that Canadian softwood benefited from countervailable subsidies as a result of certain government support programs.

According to the DOC, by conferring rights to harvest timber through “stumpage” [i.e., the value of standing timber] programs, certain provincial governments provided goods to lumber producers at less than adequate recompense and thus conferred a benefit. Also, these subsidies were specific to an industry or group of industries (namely the Canadian lumber industry).

Canada brought a complaint against the United States before the World Trade Organization (WTO). It contended that the DOC’s final countervailing duty determination was inconsistent with U.S. obligations under the Agreement on Subsidies and Countervailing Measures (SCM Agreement), and Article VI:3 of the General Agreement on Tariffs and Trade 1994 (GATT 1994).

In the Report of August 29, 2003 (WT/DS257/R), the Dispute Settlement Panel concluded that the DOC’s determination that stumpage constituted a financial contribution in the form of goods was not inconsistent with the SCM Agreement. On the other hand, the determination of the amount of benefit to the Canadian lumber industry did conflict with the SCM Agreement. Also, the DOC should have conducted a “pass-through” analysis regarding upstream transactions for log and lumber products among unrelated entities. See 2002 International Law Update 173. Both the U.S. and Canada appealed.

The Appellate Body upholds the Panel’s finding that DOC’s “[d]etermination that the Canadian provinces are providing a financial contribution in the form of ... timber to the timber harvesters through the stumpage programmes” is not inconsistent with Article 1.1(a)(1)(iii) of the SCM Agreement. In contrast, it reverses the Panel’s finding regarding the interpretation of Article 14(d) of the SCM Agreement. Instead it finds that an investigating authority may use benchmarks other than private prices in the country of provision if the investigating authority (a) has established that private prices are distorted, and (b) ensures that the alternative benchmark relates or refers to, or is connected with, prevailing market conditions in the country of provision (such as price, quality, availability, marketability).

In addition, the Body Reverses the Panel’s finding that the U.S. had acted inconsistently with Articles 10, 14, 14(d) and 32.1 of the SCM Agreement with respect to the DOC’s determination of the existence and amount of benefit in the underlying countervailing duty investigation. In the Appellate Body’s view, there is an insufficient basis to determine whether Article 14(d) of the SCM Agreement justified the DOC in using a benchmark other than private prices in Canada, and whether such benchmarks relate or refer to, or are connected with, prevailing market conditions in Canada. Thus, the Appellate Body does not decide these issues.

Finally, the Appellate Body upholds the Panel’s finding that the DOC’s failure to conduct a pass-through analysis as to arms-length sales of logs by harvesters/sawmills to unrelated parties is inconsistent with Articles 10 and 32.1 of the SCM Agreement and Article VI:3 of GATT 1994. It concludes that the DOC should have undertaken such an analysis. Therefore, the Appellate Body recommends that the U.S. bring its inconsistent measures into compliance with the SCM Agreement and GATT 1994.

[Editorial Note: In a related matter, a NAFTA panel recently examined the same U.S. countervailing duty order and decided that the U.S. must reconsider it. See 2003 International Law Update 143.]

Citation: United States - Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada (AB-2003-6, WT/DS257/AB/R) (19 January 2004); U.S. Trade Representative press release (January 19, 2004). [WTO Appellate Body report is available on its website “www.wto.org.]”

U.S. Supreme Court upholds EPA’s rejection of Alaska’s emissions permit to Canadian company. Teck-Cominco Ltd. (TCL) of Canada, the world’s leading supplier of zinc, mines much of it in northern Alaska. In 1999, it applied to the Alaskan environmental authorities for a permit to build a diesel-fired generator at its Red Dog Mine. Despite objections from the U.S. Environmental Protection Agency (EPA), the state granted the permit. The EPA then substantially annulled the Alaskan permit, inter alia, because it allowed TCL to adopt a cheaper -- but less effective -- system to reduce emissions. TCL and Alaska challenged the orders in federal court, the case eventually reaching the Supreme Court. In a 5 to 4 split, that Court upholds the EPA’s power to halt the building of the generator. The majority agrees with the EPA that Alaska’s decision as to TCL’s proposed emissions controls had been “unreasonable.” Citation: Reuters News Service (online), Washington, D.C., Wednesday, Jan. 21, 2004 (byline of James Vicini). [Alaska Dept. of Environmental Conservation, v. U.S. Environmental Protection Agency, 124 S. Ct. 983, 72 U.S.L.W. 4133 (U.S.S.C. 2004)].

ICSID tribunal rejects U.S. company’s $9 billion claim against Ukraine. On September 16, 2003, the Arbitration Tribunal of the International Centre for the Settlement of Investment Disputes (ICSID) at the World Bank issued a unanimous decision in favor of the Ukraine in the case of Generation Ukraine, Inc.(GUI) v. Ukraine. GUI is a U.S. company. The dispute arose over the design of an office building in Kiev [Kyiv] and the alleged expropriation of GUI’s investment. The tribunal rejected the company’s claim for damages, and also ordered GUI to pay Ukraine’s arbitration costs of $365,000. Citation: ICSID, Generation Ukraine, Inc. v. Ukraine (Case No. AB/00/9) (September 16, 2003); Ukraine Business Report (September 24, 2003); [Information and summary submitted by attorneys: Sergei Voitovich, Dmitry Grischenko of law firm Grischenko & Partners, as well as Andriy Alexeyev and Oleg Shevchuk of Proxen law firm, Kiev, Ukraine.]

U.S. computerizes defense export licensing. On February 18, 2004, the U. S. Department of State formally announced “D-Trade,” its new electronic licensing system for defense exports. The system will greatly heighten the ability of the Directorate of Defense Trade Controls, a part of the Bureau of Political‑Military Affairs, to control the export of defense articles and services pursuant to the Arms Export Control Act (Foreign Military Sales Act) [Pub.L. 90‑629, Oct. 22, 1968, 82 Stat. 1320; 22 U.S.C.A. Sections 2751-- 2799aa-2]. Each year, the Directorate of Defense Trade Controls processes more than 56,000 export license applications for U.S. industry leading to about $25 billion in actual exports. D‑Trade will make coordination of the export licensing process with the Defense Department and other agencies more efficient and effective. It will not only simplify compliance but also enhance law enforcement efforts against violators of U.S. export control laws and regulations. Citation: Media Note #2004/177, Office of Spokesman, U. S. Department of State, Washington, D. C., February 18, 2004.

Washington and Brussels permit Air France takeover of Dutch KLM. On February 11, 2004, regulators in Washington and Brussels cleared Air France’s takeover of Dutch KLM. The plan is to combine the two carriers under a united holding company called “Air France‑KLM.” The first major airline merger in Europe will result in the world’s largest airline group by revenue, replacing Japan Airlines System Corp. Based on passenger traffic, the new group will rank third behind AMR’s American Airlines and UAL Corp’s United Airlines. On the edge of bankruptcy ten years ago, Air France is leading an anticipated industry movement toward airline consolidation on the eve of the EU’s expansion from 15 to 25 Member States in May 2004. To accommodate anti-trust concerns, the new carrier will have to give up almost one hundred single slots daily. It may also have to surrender some frequencies (number of flights) between airports. In addition to several routes between European cities, the lost slots include international routes between Amsterdam and New York, between Paris and Detroit and between Amsterdam and Atlanta. Citation: Reuters (online), Brussels, Wednesday, February 11, 2004 (byline of David Lawsky) (Additional reporting by Jason Neely in London, Caroline Jacobs in Paris, Peter Kaplan in Washington and Yves Clarisse in Brussels).

Japan and U.S. sign social security agreement. On February 19, 2004, the United States and Japan signed a “totalization agreement” to harmonize the U.S. Social Security program with the comparable program in Japan. The agreement will get rid of dual social security taxation for those who work in both countries. It will also help to fill in gaps in benefits protection for those who have not worked long enough in one or both countries to qualify for Social Security Benefits. Citation: Media Note #2004/174, Office of Spokesman, U.S. Department of State, released Wednesday, February 18, 2004.

Pakistani President pardons exporter of nuclear technology. On February 5, 2004, President Musharraf of Pakistan issued a pardon to Dr. Abdul Qadeer Khan, the nation’s leading nuclear scientist. He had admitted to privately leaking nuclear weapons technology to “rogue” states such as Iran, Libya and North Korea over at least ten years beginning in the late 1980s. Though Pakistan is not a party to the 1970 Nuclear Nonproliferation Treaty (NNT) [21 U.S.T. 483; T.I.A.S. 6839; 729 U.N.T.S. 161], Mr. Musharraf has reportedly assured the U. S. and Britain that his government has not been exporting nuclear weapons technology. [Editorial Note: As of January 1, 2003, the U.S. State Department’s Treaties in Force listed 189 parties to the NNT, including Iran, Libya and North Korea.] Many of Pakistan’s 150 million people look upon European-trained Dr. Khan as a national hero. He directed a program that, by 1998, had enabled Pakistan to become a nuclear power. Citation: The Associated Press (online), Islamabad, Thursday, February 5, 2004, at 02:57:56 GMT (byline of Matthew Pennington).

Tokyo court awards record sum to individual inventor. On January 30, 2004, the Tokyo District Court ordered Nichia Corporation to pay Shuji Nakamura $189 million for developing the blue light-emitting diode or LED during his two decades of employment at Nichia. The award reportedly is the largest ever given to an individual in a Japanese patent case. LED has many uses, e. g., in traffic signals, mobile phones, and interior lighting, making its sales very profitable for the company. In plaintiff’s opinion, however, the company did little to advance his LED work. Although Nichia has already appealed the monetary award, it is not clear whether Nakamura will try to contest the court’s prior ruling that Nichia owned the LED patent. Often mentioned for a Nobel prize, Nakamura is now a professor at the University of California at Santa Barbara. Citation: The Associated Press (online), Tokyo, Friday, January 30, 2004, at 13:33:54 GMT (byline of Yuri Kageyama).

Liberia and U.S. sign ship-boarding agreement. On February 11, 2004, the United States and Liberia, which has the world’s second largest registry of merchant ships, signed an important agreement on ship boarding. This action follows from the U.S. President’s announcement in May 2003 of a “Proliferation Security Initiative.” The Liberian agreement authorizes, on a bilateral basis, the boarding and inspection of Liberian ocean-going vessels suspected of illicitly carrying shipments of weapons of mass destruction, their delivery systems or related materials. The parties have modeled the new agreement after existing arrangements in the counter-narcotics campaign. Citation: Press Statement #2004/153, U.S. Department of State, Richard Boucher, Spokesman, Washington, D.C., Thursday, February 12, 2004.

U.S. and Costa Rica agree on Free Trade. On January 25, 2004, the U.S. and Costa Rica concluded their negotiations for Costa Rica’s participation in the U.S.-Central America Free Trade Agreement (CAFTA). The U.S. and four Central American countries (El Salvador, Guatemala, Honduras and Nicaragua) had already agreed on CAFTA in December 2003. See 2004 International Law Update 14. CAFTA provides for duty-free trade. Most tariffs will be terminated immediately, and the remainder will be phased out over the next 10 to 15 years. Costa Rica made specific commitments, for example, to gradually open its telecommunications market in the areas of private network services, internet services, and wireless services. The U.S. is currently negotiating with the Dominican Republic for its CAFTA accession. Citation: U.S. Trade Representative press release 04-03 (January 25, 2004). A fact sheet and outline of CAFTA is available at “www.ustr.gov.”