2005 International Law Update, Volume 11, Number 8 (August)

2005 International Law Update, Volume 11, Number 8 (August)

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

INTERNATIONAL AGREEMENTS

First Circuit holds that U.S. Constitution’s failure to grant Puerto Rico voting rights in U.S. presidential elections does not violate U.S. treaty obligations

Several U.S. citizens residing in Puerto Rico sued the U.S., challenging their inability to vote in U.S. presidential elections on constitutional and international law grounds. For example, they cited Article 25 of the International Covenant on Civil and Political Rights (ICCPR) (G.A. res. 2200A (XXI), 21 U.N. GAOR Supp. (No. 16) at 52, U.N. Doc. A/6316 (1966), 999 U.N.T.S. 171, entered into force Mar. 23, 1976) that provides for a right of citizens to take part in public affairs, including elections.

The district court, however, dismissed the case, and plaintiffs appealed. A divided panel of the U.S. Court of Appeals for the First Circuit affirms. Upon rehearing en banc, a divided Court again affirms. The Court holds, in essence, that customary international law does not require the U.S. to enable Puerto Rican residents to vote in U.S. presidential elections.

The Court quickly disposes of the constitutional claim. According to the U.S. Constitution, art. II, Section 1, cl. 2, the “Electors” are appointed by each “State.” Puerto Rico, like the District of Columbia, the Virgin Islands and Guam, is not a “State” within the meaning of the Constitution.

The international law claim, however, is more complicated. “No treaty claim, even if entertained, would permit a court to order that the electoral college be enlarged or reapportioned. Treaties – sometimes – have the force of domestic law, just like legislation; but the Constitution is the supreme law of the land, and neither a statute nor a treaty can override the Constitution. Reid v. Covert, 354 U.S. 1, 16-18 (1957). ... [...]”

“The treaties in question here do not adopt any legal obligations binding as a matter of domestic law. The UN’s 1948 Universal Declaration of Human Rights is precatory: that is, it creates aspirational goals but not legal obligations, even as between states. ... This is also true of the Inter-American Democratic Charter [available on the website of the Organization of American States, www.oas.org - The Editors]. The final instrument, the ICCPR, is a ratified treaty but was submitted and ratified on the [Senate’s] express condition that it would be ‘not self-executing.’” [Slip op. 3-4]

“The case for giving Puerto Rico the right to vote in presidential elections is fundamentally a political one and must be made through political means. But the right claimed cannot be implemented by courts unless Puerto Rico becomes a state or until the Constitution is changed (as it has been, at least five times, to broaden the franchise). ... It certainly should not be ‘declared’ by a federal court on the basis of treaties none of which was [sic] designed to alter domestic law – and none of which could override the Constitution.” [Slip op. 5]

One dissenting Judge contends that the district court should not have dismissed for failure to state a claim without further developing the record as to the ICCPR claim. “Given the broad judicial inquiry required to determine if a treaty establishes individually enforceable rights and the non-binding nature of the Senate’s non-self-execution declaration, I do not think it proper to affirm the dismissal under Fed.R.Civ.P. 12(b)(6). ...”

“We do not have before us sufficient information concerning the negotiation history of the ICCPR or the way in which the other signatories have enforced it. Without such information, we lack the full spectrum of sources necessary to evaluate the extent to which, if at all, the plaintiffs may possess one or more enforceable rights under the Treaty.”

“... When looked at the way I see it, this suit presents a novel claim concerning the right to vote – a right which ... has special significance. ... Given the sensitive nature of the dispute and its implications, I would permit the parties to develop a record concerning the ICCPR.” [Slip op. 38]

Citation: Igartua-De La Rosa v. United States, No. 04-2186 (1st Cir. August 3, 2005).

INTERNATIONAL SALES

In breach of sales contract action between U.S. and Canadian meat wholesalers, Seventh Circuit rules (1) that U. N. Convention on Contracts for the International Sale of Goods placed burden on defendant-buyer to prove that meat shipment did not spoil until after its transfer to defendant and (2) that defendant failed to meet that burden

Chicago Prime Packers, Inc., a Colorado corporation (plaintiff), and Northam Food Trading Co., a partnership formed under the laws of Ontario, Canada (defendant), are both wholesalers of meat products. On March 30, 2001, plaintiff contracted to sell defendant 1,350 boxes (40,500 pounds) of pork back ribs. Defendant agreed to pay $178,200.00 for the ribs, payment being due within seven days of receipt. The contract also specified the ribs, the price, and the date and location for pick‑up.

Plaintiff then bought the ribs described in the contract from meat processor Brookfield Farms (Brookfield). When Brookfield processes a pork loin, it breaks it into various segments, one of which is the back rib. After processing, Brookfield packages back ribs horizontally, layer by layer, in 30‑pound boxes. It first places the ribs in a blast freezer and then generally keeps them in an outside freezer until shipped.

Brookfield stored the ribs at issue here with two independent cold storage facilities: B & B Pullman Cold Storage (B&B), and Fulton Market Cold Storage (Fulton). According to Brookfield’s temperature logs and quality control records for its own facilities, it kept the ribs at acceptable temperatures; it also processed and maintained them in accordance with Brookfield’s procedures. Records introduced at trial, however, showed that B&B had stored the ribs at, or below, proper temperatures during the entire time they were in its custody.

On April 24, 2001, Brown Brother’s Trucking Company (Brown), acting on behalf of defendant, picked up 40,500 pounds of ribs from B&B. Plaintiff, the seller, never possessed the ribs. When Brown accepted the shipment, it signed a bill of lading, thereby acknowledging that the goods were “in apparent good order”. The bill of lading also noted however, that the “contents and condition of contents of packages [were] unknown.”

The next day, Brown delivered the ribs to defendant’s customer, Beacon Premium Meats (Beacon). Like plaintiff, the defendant never had the ribs in its possession. Upon delivery, Beacon signed a second bill of lading admitting that it had gotten the shipment “in apparent good order.”

Under the contract, defendant was to pay plaintiff by May 1, 2001. Sandra Burdon, who had negotiated the contract on defendant’s behalf, testified that, on that date, defendant had no grounds for withholding payment. ... On May 2, 2001, plaintiff, not having heard from defendant, demanded payment.

On May 4, 2001, Beacon began “processing” a shipment of ribs and noticed that the product appeared to be in an “off condition.” Beacon asked Inspector Ken Ward of the U.S. Department of Agriculture (USDA) to take a look at the product. Ward found that the meat “did not look good,” and ordered Beacon to stop processing it. That same day, defendant and plaintiff found out about the potential problem with the ribs.

Inspector Ward came back to Beacon on May 7 and 8, 2001 and examined both frozen and thawed samples of the product. On May 23, 2001, Dr. John Maltby, Ward’s supervisor, also conducted an on‑site inspection of the ribs. Dr. Maltby reviewed Beacon’s relevant shipping records and temperature logs and saw no “anomalies” or “gaps.” In addition, he examined about 20 cases of ribs and wrote a report.

Examining samples of the thawed, reworked product, Dr. Maltby found putrid, green, slimy ribs, but no sign of temperature abuse. Dr. Maltby also concluded that there was no chance of salvage and condemned all of the product. The same day, the USDA condemned the entire shipment of 1,350 boxes of ribs. After defendant told plaintiff of the results of Dr. Maltby’s inspection, plaintiff persisted in demanding payment and eventually filed the present diversity suit in an Illinois federal court. The district court ruled that defendant had failed to prove that the ribs were spoiled, or nonconforming, at the time of transfer. Although defendant took an appeal, the U.S. Court of Appeals for the Seventh Circuit affirms.

The Court first reviews the underlying legal principles. “The district court held, and the parties do not dispute, that the contract at issue is governed by the 1988 United Nations Convention on Contracts for the International Sale of Goods (CISG), 1489 U.N.T.S. 3, reprinted at 15 U.S.C.A. Appendix (West 1997), a self‑executing agreement between the United States and over 60 other nations, including Canada.

Under the CISG, ‘[t]he seller must deliver goods which are of the quantity, quality and description required by the contract,’ and ‘the goods do not conform with the contract unless they ... [a]re fit for the purposes for which goods of the same description would ordinarily be used.’ CISG Art. 35(1)‑(2). The risk of loss passes from the seller to the buyer when the goods are transferred to the buyer’s carrier. CISG Art. 67(1). In other words, the plaintiff here is responsible for the loss if the ribs were spoiled (nonconforming) at the time defendant’s agent, Brown, received them from plaintiff’s agent, Brookfield, while defendant is responsible if they did not become spoiled until after the transfer.” [897]

The parties agree that the main factual issue before the district court was whether the ribs were spoiled at the time of transfer. On appeal, defendant made two arguments: (1) that the district court erred in placing upon defendant the burden of proving that the ribs were spoiled at the time of transfer, and (2) that the evidence presented at trial does not support the district court’s finding that the ribs became spoiled after Brown received them from Brookfield.

Defendant argued that plaintiff should have borne the burden of proof that the ribs were in acceptable condition at transfer time. “The CISG does not state expressly whether the seller or buyer bears the burden of proof as to the product’s conformity with the contract. Because there is little case law under the CISG, we interpret its provisions by looking to its language and to ‘the general principles’ upon which it is based. See CISG Art. 7(2); see also Delhi Carrier S.p.a. v. Raptures Corp., 71 F.3d 1024, 1027‑28 (2nd Cir. 1995).”

“The CISG is the international analogue to Article 2 of the Uniform Commercial Code (UCC). Many provisions of the UCC and the CISG are the same or similar, and ‘[case law interpreting analogous provisions of Article 2 of the [UCC], may ... inform a court where the language of the relevant CISG provision tracks that of the UCC.’ Delhi Carrier Spa, above, at 1028.” Of course, UCC caselaw is not applicable ex proprio vigore in a Convention case.

“Mirroring the structure and content of [the UCC Section 2-314], Article 35(2) of the CISG provides that unless the contract states otherwise, ‘goods do not conform with the contract unless they ... [a]re fit for the purposes for which goods of the same description would ordinarily be used.’ [Cite] Accordingly, just as a buyer‑defendant bears the burden of proving breach of the implied warranty of fitness for ordinary purpose under the UCC, under the CISG, the buyer‑defendant bears the burden of proving nonconformity at the time of transfer. [Cites]” [898]

“First, the [lower] court found that other evidence undermined Dr. Maltby’s testimony that the ribs were rotten when they arrived at Beacon. Most significantly, neither Dr. Maltby nor anyone else could confirm that the meat Dr. Maltby inspected was in fact the product that was sold to Northam by Chicago Prime, and evidence was produced at trial to suggest that they were not the same ribs. Even though the rib boxes were labeled with Brookfield establishment numbers, the evidence showed that Beacon had purchased and received other loads of ribs originating from Brookfield prior to April 25, 2001.”

“Furthermore, some of the ribs examined by Dr. Maltby ... were stacked both horizontally and vertically. Brookfield packages its loin back ribs only horizontally. Dr. Maltby had no personal knowledge of how or where the meat was stored from April 25, 2001 to May 23, 2001, and the first time any government inspector viewed the meat was on May 4, 2001. According to Dr. Maltby, loin back ribs, if kept at room temperature, could spoil in five to seven days.”

“Next, the district court found that three witnesses had credibly testified that ‘the ribs delivered by Brookfield were processed and stored in acceptable conditions and temperatures from the time they were processed until they were transferred to Northam on April 24, 2001.’ ... the district court found ‘nothing in the evidence demonstrating that Brookfield, B&B or Fulton did anything improper with respect to the ribs or that the ribs were spoiled prior to being transferred to Northam.’ Id. Based on these factual findings, the district court concluded that Northam had not met its burden of demonstrating that the ribs were spoiled at the time of transfer.”

“On appeal from a bench trial, we will not set aside the factual conclusions of the district court ‘unless clearly erroneous.’ Fed.R.Civ.P. 52(a). ‘Under this standard, one who contends that a finding is clearly erroneous has an exceptionally heavy burden to carry on appeal.’ Spurgin‑Dienst v. United States, 359 F.3d. 451, 453 (7th Cir. 2004). This is especially true when the appellant argues that the district court erred in crediting or discrediting a witness’s testimony.”

“Northam argues that the district court erred in discrediting Dr. Maltby’s testimony, and contends that Dr. Maltby’s conclusion that the ribs were rotten before the transfer should be determinative. Even if the district court could have given Dr. Maltby’s conclusion more weight, however, Northam has not shown that the court clearly erred in finding the evidence undermining his conclusion to be more persuasive.”

“The evidence supporting Northam’s position was not so overwhelming that it was clear error to find in favor of Chicago Prime. Northam offered no credited evidence showing that the ribs were spoiled at the time of transfer or excluding the possibility that the ribs became spoiled after the transfer. In addition, it presented no evidence that Brookfield stored the ribs in unacceptable conditions that could have caused them to become spoiled before the transfer.”

“Finally, Northam did not present a witness from Beacon to respond to the evidence suggesting that the ribs examined by Dr. Maltby were not those sold to Northam by Chicago Prime. Upon this record, the district court did not clearly err in finding that Northam did not meet its burden of proof as to its affirmative defense of nonconformity.” [899-900]

Citation: Chicago Prime Packers, Inc. v. Northam Food Trading Co., 408 F.3d 894 (7th Cir. 2005).

JUDGMENTS

In case seeking enforcement of New York District Court judgment, British Columbia Court of Appeal holds that defense may not raise plea of fraud to overcome enforcement of foreign judgment unless it shows that fraud claim is based on new and material facts which defendant could not have discovered by exercise of due diligence prior to date of foreign judgment

Defendant, Rene Hamouth, a Vancouver, British Columbia, businessman, borrowed $300,000 from plaintiff Lev Zaidenberg, a New York citizen. The loan was secured by a way of a promissory note, the terms of which required repayment by June 2, 2001. Plaintiff sued for payment in New York federal court. When defendant failed to defend the New York action, the court entered default judgment in favor of plaintiff for $316,588. (A-1).

Plaintiff then sought recognition and enforcement of the A-1 judgment in a British Columbia (B.C.) court (A-2); defendant responded by alleging that plaintiff had fraudulently induced him to enter into an oral loan agreement with plaintiff. Defendant argued that, in A-1, neither side had disclosed the fraudulent conduct to the New York court and that a plea of fraud prevented the B.C. courts from enforcing the A-1 judgment. The trial court rejected defendant’s claims, ruling that the type of alleged fraud was no defense to the enforcement of the foreign judgment in British Columbia. Defendant appealed but the British Columbia Court of Appeal (B.C.C.A.) affirms.

The B.C.C.A. holds that the New York court had jurisdiction over A-1. The promissory note stated that New York law shall control and that all disputes shall go exclusively to the New York state or federal courts. The Court observes that “parties to an action continue to be free to select or accept the jurisdiction in which their dispute is to be resolved by upturning or agreeing to the jurisdiction of a foreign court.” [¶ 19]

The Court notes that several Canadian Courts of Appeal differ as to whether a plea of fraud can defeat the enforcement of a foreign judgment. For instance, the positions of the appellate courts of British Columbia and Ontario hinged on the distinction between “intrinsic fraud” or “fraud which goes to the merits of the case and to the existence of a cause of action” and “extrinsic fraud” or “fraud going to the jurisdiction of the issuing court or the kind of fraud that misleads the court, foreign or domestic, into believing that it has jurisdiction over the cause of action.” [¶ 24]

As the B.C.C.A. explains: “The courts in British Columbia have maintained a strict approach to the defense of fraud, holding that only extrinsic fraud can be raised as a defense in defense of the enforcement of a foreign judgment. The trial judges below followed this Court’s decision to that effect in Reglaze Consultant Inc. v. Kennedy, Lock and Kennedy (1984), 65 B.K.L.R. 393. In Jacobs v. Beaver (1908), 17 O.L.R. 496, the Ontario Court of Appeal developed a modification to the strict approach by permitting a defence based on intrinsic fraud on proof of new and material facts not before the foreign court.” [¶ 25]

In Beals v. Sadlanha (2003), 3 S.C.R. 416, the Canadian Supreme Court adopted the Ontario court’s reasoning and found that the Jacobs approach effectively balances the need to guard against fraudulently obtained judgments with the need to treat foreign judgments as final. Here, the Court thus holds that, while the lower court ruled correctly, it misapplied the law as clarified by Beals.

“The historic description of, and the distinction between, intrinsic and extrinsic fraud are of no apparent value and, because of their ability to both complicate and confuse, should be discontinued. It is simpler to say that fraud going to jurisdiction can always be raised before a domestic court to challenge the judgment. On the other hand, the merits of a foreign judgment can be challenged for fraud only where the allegations are new and not the subject of prior adjudication. Where material facts not previously discoverable arise that potentially challenge the evidence that was before the foreign court, the domestic court can decline recognition of the judgment.” [¶ 26]

On the other hand, the party raising the fraud defense has the burden of demonstrating that the A-2 defendant could not have discovered the evidence of fraud by the exercise of due diligence prior to the entry of the foreign judgment. Here, the defendant failed to meet that burden. Having failed to defend the A-1 action, the A-2 Court found that the facts alleged by the defendant were neither new nor newly discovered. Hence, the Court dismisses defendant’s appeal and orders the enforcement of the New York judgment.

Citation: Zaidenberg v. Hamouth (2005) B.C.J. No. 1431, 2005 B.C.C.A. 356 (June 28).

PRIVACY

In suit for damages against English magazine that published photos secretly taken by paparazzo at movie stars’ invitation-only New York wedding reception, English Court of Appeal (Civil Division) (1) approves Couples’ damages judgment for invasion of their private event and (2) upholds damages awarded to publication with which Couple had contracted as exclusive publisher of authorized photographs

This litigation arose out of the publication by Hello! magazine of unauthorized photographs of the November 2000 wedding between movie stars, Michael Douglas and Catherine Zeta‑Jones (the Couple), at the Plaza Hotel in New York City.

After the Couple had negotiated with several U.K. publications, they chose the third plaintiff, OK! magazine. It then signed a contract with the Couple for the exclusive right to publish photographs of their wedding reception for 9 months thereafter. In return, the magazine was to pay each plaintiff £500,000. California law was to govern the contract.

Although the event seemingly went off very well, a paparazzo named Rupert Thorpe had somehow penetrated the reception’s tight security, and had secretly taken photographs, including some of the Couple. He and another sold the photos to Hello! magazine. The two named magazines are “plainly keen rivals in the same market”, and they each had an average weekly circulation in the U. K. of just over 450,000 copies.

The judge ruled that the Couple was entitled to damages and a perpetual injunction against Hello! because publishing the unauthorized photographs in England amounted to a breach of confidence, mainly because the reception was a private, invitation-only event. He also awarded damages. The judge also held that OK! had a right to damages from Hello! on substantially similar grounds. On the other hand, the judge found that OK!'s case against Hello! lacked merit to the extent that it rested on economic torts, such as intentionally interfering with OK!’s business or conspiring to injure it.

At a later hearing on damages, the judge spurned the Couple’s contention that they were entitled to damages computed based on a hypothetical license fee. Instead, he assigned £3,750 to each for the chagrin caused by the publication of the unauthorized photographs; £7,000 to them as a couple for the cost and annoyance of having to rush the choice of the authorized photos to get them published in OK! no later than the unsanctioned photos in Hello!.

On the other hand, the judge awarded plaintiff OK! £1,026,706 for the loss of profits from its inability to fully capitalize on the authorized photographs resulting from the publication of the unauthorized ones. All the parties appealed. The Couple and OK! contingently cross‑appealed; the issues they raised pertain to the liability, if any, of Hello! Ltd. to OK!, and the quantum of damages awarded to the Couple.

Hello! made two main points to the appellate court. First it argued that the judge had erred in ruling that the Couple were entitled to any relief at all. Secondly, it urged that he had mistakenly held that OK! had a cause of action, based on confidence, stemming from the publication of the unauthorized photographs. The English Court of Appeal (Civil Division) generally rules in favor of the Couple and OK!.

The issues in relation to the Couple’s claim are as follows: (1) (precinding from any effect of the OK! contract) did the law of confidence protect information about the wedding as being private information? (2) If so, did the OK! contract destroy that protection? (3) did the law of confidence protect the Couple’s commercial interest in the information about their wedding?

On the first point, the Court summarizes several key opinions from the European Court of Human Rights (ECHR) applying the European Convention for the Protection of Human Rights and Fundamental Freedoms [Council of Europe, 4 November 1950, E.T.S. 5, as amended]. “It follows that the ECHR has recognised an obligation on member states to protect one individual from an unjustified invasion of private life by another individual and an obligation on the courts of a Member State to interpret legislation in a way which will achieve that result.” [¶ 49]

“We conclude that, in so far as private information is concerned, we are required to adopt, as the vehicle for performing such duty as falls on the courts in relation to Convention rights, the cause of action formerly described as breach of confidence. As to the nature of that duty, it seems to us that the [U.K.] Human Rights Act of 1998 [1998 Chapter 42, available at www.opsi.gov.uk - The Editors] points in the same direction.”

“The court should, insofar as it can, develop the action for breach of confidence in such a manner as will give effect to both Article 8 and Article 10 rights. In considering the nature of those rights, account should be taken of the Strasbourg jurisprudence. In particular, when considering what information should be protected as private pursuant to Article 8, it is right to have regard to the decisions of the ECHR.” [¶ 53]

“The most recent and authoritative consideration that has been given to this area of the law is to be found in the speeches of the House of Lords in Campbell v. M.G.N., Ltd., [2004] U.K.H.L. 22, [2004] All E.R. (D) 67, [2004] 2 W.L.R. 1232 (House of Lords, May 6); [see 2004 International Law Update 67].”

“Ms. Naomi Campbell [a celebrated model] brought proceedings for breach of confidence in respect of an article in the Mirror newspaper which disclosed that she was a drug addict, and was attending meetings of Narcotics Anonymous. Details were given as to the frequency of these meetings and the article was illustrated by photographs of her on the doorstep of a building where such a meeting had just taken place. The photographs had been taken covertly from a car by a freelance photographer who had been employed by the newspaper for this purpose.” [¶ 74] The Lords of Appeal ruled in her favor.

This Court notes that Campbell and related cases set up two requirements for the creation of a duty of confidence. “The first was that the information should be confidential in nature and the second was that it should have been imparted in circumstances importing a duty of confidence. As we have seen, it is now recognised that the second requirement is not necessary if it is plain that the information is confidential, and for the adjective ‘confidential’' one can substitute the word ‘private’.”

“What is the nature of ‘private information?’ It seems to us that it must include information that is personal to the person who possesses it and that he does not intend shall be imparted to the general public. The nature of the information, or the form in which it is kept, may suffice to make it plain that the information satisfies these criteria.” [¶ 83]

Moreover, the Court stresses, this is no mere verbal description of the Couples’ wedding reception. “This action is about photographs. Special considerations attach to photographs in the field of privacy. They are not merely a method of conveying information that is an alternative to verbal description. They enable the person viewing the photograph to act as a spectator (in some circumstances voyeur would be the more appropriate noun) of whatever it is that the photograph depicts.”

“As a means of invading privacy, a photograph is particularly intrusive. This is quite apart from the fact that the camera, and the telephoto lens, can give access to the viewer of the photograph to scenes where those photographed could reasonably expect that their appearances or actions would not be brought to the notice of the public.” [¶ 84]

“The intrusive nature of photography is reflected ... by the authorities. In Theakston v. M.G.N., Ltd., [2002] E.W.H.C. 137 [the judge] refused an injunction restraining publication of a verbal depiction of the claimant’s activities in a brothel. He granted, however, an injunction restraining the publication of photographs taken of these activities.”

The Theakston opinion declared that “‘This protection [of privacy] extended to photographs, taken without their consent, of people who exploited the commercial value of their own image in similar photographs, and to photographs taken with the consent of people but who had not consented to that particular form of commercial exploitation, as well as to photographs taken in public or from a public place of what could be seen, if not with a naked eye, then at least with the aid of powerful binoculars.” [¶ 85]

“Had the wedding taken place in England, and putting on one side the effect of the OK! contract, only an affirmative answer could be given to the question of whether those acting for Hello! knew that the information depicted by the unauthorised photographs was fairly and reasonably to be regarded as confidential or private. Applying the test propounded by the House of Lords in Campbell v. M.G.N., Ltd., photographs of the wedding plainly portrayed aspects of the Douglases’ private life and fell within the protection of the law of confidentiality, as extended to cover private or personal information.” [¶¶ 94-95]

“Does it make any difference that the wedding took place in New York? The judge’s finding that Mr. Thorpe must at least have been a trespasser under the law of New York was not challenged. Hello!’s argument ... was as follows. The information in the unauthorised photographs can only have attracted the protection of the law of confidence (1) as a consequence of the subject matter of the photographs or (2) as a result of the circumstances in which they were taken.”

Since a New York wedding reception is not a shameful event, “[i]t followed that ... the Douglases had to rely upon the circumstances in which the information was published. ... Under the law of New York, there would have been no inhibition upon Mr. Thorpe publishing the photographs which he had taken. Hello!, having derived the photographs from Mr. Thorpe, could be no worse off.” [¶ 99]

“The law of New York clearly entitled the Douglases to arrange for their wedding to take place in circumstances designed to ensure that events at the wedding remained private, at least so far as photographic detail was concerned. The fact that photographs taken in violation of that privacy might have been published with impunity in New York has no direct bearing on whether the information fell to be treated as private and confidential in England.” [¶ 101]

“To summarise our conclusion at this stage: disregarding the effect of the OK! contract, we are satisfied that the Douglases’ claim for invasion of their privacy falls to be determined according to the English law of confidence. That law, as extended to cover private and personal information, protected information about the Douglases’ wedding.” [¶ 102]

The question remains whether New York law applies to the Couple’s claim for injury to their commercial interests in England by publication of the unauthorized photos. “We have concluded that it does not. ... The Douglases had taken steps, permitted under the law of New York, which were intended to ensure that their wedding was a private occasion and that no unauthorised photographs were taken or published. Hello! knew this. Hello! also knew that the Douglases expected commercially to exploit their private wedding by the publication of authorised photographs. Hello! deliberately obtained photographs that they knew were unauthorised and published them to the detriment of the Douglases. This renders them liable for breach of confidence under English law.” [¶ 120]

The Court then addresses the validity vel non of OK!’s claim for violation of confidence as against Hello! “We have recognised that the Douglases retained a residual right of privacy, or confidentiality, in those details of their wedding which were not portrayed by those of the official photographs which they released. It was in the interests of OK! that the Douglases should protect that right, so that OK! would be in a position to publish, or to authorise the publication of, the only photographs that the public would be able to see of the wedding. On analysis, OK!’s complaint is not that Hello! published images which they had been given the exclusive right to publish, but that Hello! published other images, which no one with knowledge of their confidentiality had any right to publish.”

“The [Couple] themselves argued that ‘the unauthorised photographs were taken at different moments to the authorised ones, showed different and informal incidents at the reception, and were naturally much less posed’. These photographs invaded the area of privacy which the Douglases had chosen to retain. It was the Douglases, not OK!, who had the right to protect this area of privacy or confidentiality. Clause 10 of the OK! contract expressly provided that any rights not expressly granted to OK! were retained by the Douglases.

“The claim successfully advanced by the Douglases in this litigation is at odds with OK!’s claim. For these reasons we conclude that the judge was wrong to hold that OK! was in a position to invoke against Hello! any right to commercial confidence in relation to the details of the wedding or the photographic images portraying these.” [ ¶¶ 136-37]

The Court of Appeal notes a further point. “This case involves a conflict between the Article 8 right of respect for private and family life and the Article 10 right of freedom of expression. The Convention only permits restrictions of either right where ‘prescribed by law’.” [¶ 148]

“If one postulates that, at the time of the publication by Hello! of the unauthorised photographs, English law was insufficiently clear to satisfy the requirements of providing protection to privacy in a manner ‘prescribed by law’, the court was on the horns of a dilemma. If it gave a decision which developed the law so as to provide a protection to respect for privacy ‘prescribed by law’, it risked infringing Hello!’s Article 10 rights.”

“If, however, it ruled that the law was insufficiently clear to provide a remedy, it perpetuated the infringement of the Douglases’ Article 8 rights. It seems to us that in this situation the proper course was for the court to attempt to bring English law into compliance with the Convention, even if this was at the cost of a restriction, in the instant case, of Hello!’s Article 10 rights by findings which, up to that moment, could not be said to have been ‘prescribed by law’.”

“For all these reasons, we dismiss Hello!’s attack on the judgment below on the ground that it imposed a restriction on Hello!’s right to freedom of expression that was not prescribed by law of sufficient certainty.” [¶¶ 150-51]

Citation: Douglas v. Hello! Ltd., [2005] E.W.C.A. CIV. 595, [2005] All E.R. (D) 280 (Ct. App. Civ. Div., May 18) (approved judgment).

SOVEREIGN IMMUNITY

In suit by U.S. citizens against Libya for alleged torture and hostage taking, D. C. trial court sets forth requirements for entry of defaults against foreign sovereign and enters default judgment based on applicable state laws of plaintiffs’ residences

While working in Libya in 1980, police arrested Michael H. Price and Roger K. Frey for allegedly taking illegal photographs around the capital of Tripoli. After their release, they sued Libya in the District of Columbia federal court. See 2002 International Law Update 101. The district court denied Libya’s motion to dismiss on sovereign immunity grounds, and the U.S. Court of Appeals for the D.C. Circuit affirmed. See 2004 International Law Update 189. Thereafter, Libya stopped taking part in the court action. The district court for the District of Columbia now enters a default judgment against Libya.

In the opinion, the judge recounts in detail some of the alleged torture suffered by plaintiffs. Throughout plaintiffs’ three months of incarceration, Libyan agents continuously and systematically beat, clubbed and kicked plaintiffs. Plaintiffs suffered repeated blows to their heads, torsos, hands, and feet with truncheons and had to watch the torture of other prisoners. Each plaintiff sustained significant, permanent injuries from such beatings.

The Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. Section 1608(e), provides that “[n]o judgment by default shall be entered ... against a foreign state ... unless the claimant establishes his claim or right to relief by evidence satisfactory to the court.” The court may accept as true the plaintiff’s uncontroverted evidence.

Jurisdiction is proper in this case based on the FSIA “state-sponsored terrorism” exception, which removes sovereign immunity in U.S. courts where “money damages are sought against a foreign state for personal injury or death that was caused by an act of torture, .... or the provision of material support or resources ... for such act ...” 28 U.S.C. Section 1605(a)(7).

“To subject a foreign sovereign to suit under Section 1605(a)(7), a plaintiff must demonstrate: (1) that the foreign sovereign was designated by the State Department as a ‘state sponsor of terrorism;’ (2) that the foreign sovereign was afforded a reasonable opportunity to arbitrate any claims based on acts that occurred within that state; (3) that the victim was a U.S. national at the time the acts took place; and (4) that the foreign sovereign engaged in conduct that falls within the ambit of the statute, in this case, torture.”

“Plaintiffs have satisfied each of the requirements set forth above. Libya has been designated a state sponsor of terrorism. ... Libya was provided an opportunity to arbitrate the claims at issue here ... Both plaintiffs were American citizens at the time of their incarceration ... The severe, coercive mistreatment to which they were subjected during their incarceration falls squarely within the definition of torture ... Accordingly, the Court has subject matter jurisdiction over this action.” [Slip op. 10]

The court then turns to Libya’s substantive liability. Under Section 1606, “the foreign state shall be liable in the same manner and to the same extent as a private individual under like circumstances.” In particular, “Section 1606 acts as a ‘pass through’ to substantive cases of actions against private individuals that may exist in federal, state, or international law. ... Our Court of Appeals has never had the opportunity to explicitly sanction any particular cause of action as a basis of liability for a state that has lost immunity under 1605(a)(7). ...”

“However, the Supreme Court makes clear that state law can provide the basis for liability. When a state is not immune from suit, and ‘state law provides a rule of liability governing private individuals, the FSIA requires the application of that rule to foreign states in like circumstances.’ First Nat. City Bank v. Banco Para El Comercio Exterior De Cuba, 462 U.S. 611 (1983) ... Recent opinions of this district court hold foreign states liable for terrorist activity on state law grounds.” [Slip op. 10-11]

Since one plaintiff resides in Texas and the other in California, the law of each state applies to its resident and state law in fact does provide a substantive basis for Libya’s liability. The plaintiffs have shown liability and damages for the claims of assault and battery, intentional infliction of emotional distress, damages, pain and suffering during and after captivity, medical expenses, as well as lost wages. Therefore, the district court enters a default judgment consistent with these findings in favor of plaintiffs and against defendant in the amount of $17,786,221.85, allocating $8,486,221.85 to Mr. Price and $9,300,000.00 to Mr. Frey.

Citation: Price v. Socialist People’s Libyan Arab Jamahiriya, 2005 WL 1744551, No. 97-975 (RCL) (D.C. D.C., July 26, 2005).

TERRORISM

Colombia passes controversial “Justice and Peace” law for demobilization of right-wing para-military forces

Under the guidance of President Alvaro Uribe Venez., the Colombian legislature has approved a controversial “amnesty” law, dubbed the “Justice and Peace Law,” that aims to facilitate the demobilization of para-military forces. It grants "demobilized" members of these armed groups political status and significantly reduces punishment. For the next 60 days, a group of 20 prosecutors will investigate the crimes alleged against the approximately 10,000 paramilitaries. Other sources estimate that the Revolutionary Armed Forces of Colombia (FAR) and the Autonomous Defence Forces have approximately 30,000 members.

While the government hailed the law as an important step toward reconciliation, critics argue that the law fosters impunity and is tainted by collusion between the government and the paramilitaries. There are allegations that the Uribe family itself has been involved in paramilitary activities.

In particular, the Law provides: The purpose is to re-integrate marginal members of armed groups while ensuring the rights of victims, justice and reparation (Article 1). Certain punishments imposed may be substituted with “alternative” punishments that serve national peace, cooperation with the system of justice, compensation of victims, and proper re-socialization (Article 3 & Chapter V). Paramilitaries convicted of egregious human rights violations will receive limited prison sentences of only five to eight years (Article 29). The sentences may be executed abroad (Article 30). The Law establishes a restitution fund for the victims (Article 54).

Some critics argue that the Law could obstruct the extradition of paramilitaries to the United States for their role in drug trafficking. According to Amnesty International, in the past 20 years alone, the internal armed conflict with the paramilitaries has killed more than 70,000 people, and internally displaced more than 3 million.

Citation: Ley No. 975 por la cual se dictan disposiciones para la reincorporación de miembros de grupos armados organizados al margen de la ley .... (July 25, 2005); News report from Weekly News Update on the Americas on www.ww4report.com; Amnesty International press release of 07/13/2005 “Colombia: President Uribe must not ratify impunity law”; Press Release of Colombian Presidency of July 11, 2005, “President Uribe asks to compare Justice and Peace Law with other Processes in the World,” available on Colombian Presidency’s website “www. presidencia.gov.co”.

TERRORISM

D.C. Circuit rules that Geneva Convention of 1949 does not confer upon enemy combatant alleged to have fought for al-Qaeda any right to enforce its provisions in federal court

In November 2001, Afghani military forces captured Salim Ahmed Hamdan and turned him over to the American military, which sent him to the Guantanamo Bay Naval Base in Cuba. On July 3, 2003, President George W. Bush opined that “there is reason to believe that [Hamdan] was a member of al Qaeda or was otherwise involved in terrorism directed against the United States.” Accordingly, he was set down for trial before a military commission.

Hamdan filed his petition for habeas corpus in April 2004. While his petition was pending, the U.S. government formally charged petitioner with conspiracy to commit attacks on civilians and civilian objects, murder and destruction of property by an unprivileged belligerent, and terrorism. The specifications alleged that petitioner was Osama bin Laden’s personal driver in Afghanistan and that he also served as bin Laden’s personal bodyguard.

In accordance with the Supreme Court’s decision in Hamdi v. Rumsfeld, 542 U.S. 507 (2004), 2004 International Law Update 101, petitioner received a formal hearing before a Combatant Status Review Tribunal. The Tribunal affirmed his status as an enemy combatant who was either a member of, or affiliated with, the al Qaeda terrorists.

On November 8, 2004, the district court partially granted relief to petitioner. The court held, inter alia, that a military commission could not try petitioner unless a competent tribunal determined that he was not covered by the 1949 Geneva Convention on the rights guaranteed to prisoners of war. The court therefore enjoined the Secretary of Defense from conducting any further military commission proceedings against Hamdan. This appeal followed.

The U.S. Court of Appeals for the D.C. Circuit reverses, holding that the lower court’s conclusion disregarded the long-established principles of U.S. laws as well as the tenets of the 1949 Geneva Convention. On the other hand, the Court does note that the U.S. has traditionally negotiated treaties with the understanding that they do not create judicially enforceable individual rights. A treaty is primarily a compact between independent nations, and depends for the enforcement of its provisions on the interests and honor of the governments which have ratified it. Thus, treaty breaches become the subject of international negotiations and claims -- not the subject of a lawsuit.

“In Eisentrager [339 U.S. 763 (1950)], German nationals, convicted by a military commission in China of violating the laws of war and imprisoned in Germany, sought writs of habeas corpus on the ground that the military commission had violated their rights under the U.S. Constitution and under the 1929 Geneva Convention. [339 U.S. at 767.] The Supreme Court, speaking through Justice Robert Jackson, wrote, in an alternative holding, that the Convention was not judicially enforceable: the Convention specifies rights of prisoners of war, but ‘responsibility for observance and enforcement of these rights is upon political and military authorities.’[...] This aspect of Eisentrager is still good law and demands our adherence.” [Slip op. 6-7] That interpretation leads to the conclusion that U.S. domestic courts likewise cannot enforce the analogous 1949 Geneva Convention [6 U.S.T. 3316; T.I.A.S. 3364; 75 U.S.N.T.S. 13; in effect for U.S., Feb. 2, 1956].

Petitioner contended that the differences between the 1929 Convention and the 1949 Convention are so great that they render Eisentrager’s conclusions inapplicable to the 1949 Convention. The Court rejects this argument. Even though there are dissimilarities, none of them render Eisentrager’s conclusions inapplicable to the 1949 Convention.

Citation: Hamdan v. Rumsfeld, No. 04-5393 (D. C. Cir. July 15, 2005).

TRADEMARKS

First Circuit specifies, as matter of first impression, circumstances under which Lanham Act grants subject matter jurisdiction over extraterritorial conduct by foreign defendants under effects test

Cecil McBee is an American Jazz musician. A Japanese company, Delica Co., Ltd. (Delica) chose that name for its adolescent female clothing products beginning in 1984. Delica maintains an internet website for its products, and sales exceed $100 million per year. The company, however, also has a policy not to sell “Cecil McBee” products in the U.S. McBee was able to buy $2,500 worth of “Cecil McBee” products in Japan through investigators, and had them shipped to the U.S. He then sued Delica for false endorsement and dilution pursuant to the Lanham Act, 15 U.S.C. Section 1051. The district court dismissed the Lanham Act claims for lack of subject matter jurisdiction.

The U.S. Court of Appeals for the First Circuit affirms, and develops a test for the extraterritorial application of the Lanham Act. As a matter of first impression, the Court holds that the Act grants subject matter jurisdiction over extraterritorial conduct by foreign defendants only when such conduct has a substantial effect on U.S. commerce.

The Court expressly disagrees with the approaches of the Second and Ninth Circuits, and formulates the following test: “Our framework asks first whether the defendant is an American citizen; that inquiry is different because a separate constitutional basis for jurisdiction exists for control of activities, even foreign activities, of an American citizen. Further, when the Lanham Act plaintiff seeks to enjoin sales in the United States, there is no question of extraterritorial application; the court has subject matter jurisdiction.”

“In order for a plaintiff to reach foreign activities of foreign defendants in American courts, however, we adopt a separate test. We hold that subject matter jurisdiction under the Lanham Act is proper only if the complained-of activities have a substantial effect on United States commerce, viewed in light of the purposes of the Lanham Act. If this ‘substantial effects’ question is answered in the negative, then the court lacks jurisdiction over the defendant’s extraterritorial acts; if it is answered in the affirmative, then the court possesses subject matter jurisdiction.”

“We reject the notion that a comity analysis is part of subject matter jurisdiction. Comity considerations, including potential conflicts with foreign trademark law, are properly treated as questions of whether a court should, in its discretion, decline to exercise subject matter jurisdiction that it already possesses. Our approach to each of these issues is in harmony with the analogous rules for extraterritorial application of the antitrust laws.” [Slip op. 1]

Applying this framework to the case at hand, the Court finds subject matter jurisdiction over McBee’s petition for an injunction barring Delica’s U.S. sales. Since those sales are domestic acts, McBee need not satisfy the substantial-effects-on-U.S.-commerce test.

On the other hand, McBee’s request for an injunction barring access to Delica’s website fails; it would require an extraterritorial application of the Lanham Act and he failed to show a substantial effect from the website. Finally, McBee’s claim for damages based on Delica’s sales in Japan fails because he did not show a substantial effect of those sales on U.S. commerce.

Citation: McBee v. Delica Co., Ltd., No. 04-2733 (1st Cir. August 2, 2005).

WORLD TRADE ORGANIZATION

Agreeing with U.S. positions, WTO panel finds that Mexico’s antidumping duties on rice and various other provisions of its antidumping and countervailing duty laws are contrary to WTO rules

In a report released on June 7, 2005, a WTO panel sides with the United States in an agricultural dispute involving Mexican antidumping duties on U.S. long-grain white rice. Mexico had also amended its antidumping and countervailing duty laws in 2002 in response to an investigation conducted by the Mexican Ministry of Economy (Economia) at the behest of the Mexican Rice Council.

The U.S. requested a WTO dispute settlement panel pursuant to Article 6 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). The panel was set up in November 2003. The U.S. challenged numerous apparent violations of Mexico’s obligations under the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (“Antidumping Agreement”), the Agreement on Subsidies and Countervailing Measures (“SCM Agreement”), and the General Agreement on Tariffs and Trade 1994 (“GATT 1994”).

The alleged violations related to various procedures and methodologies Mexican authorities had used in the rice investigation, as well as to the requirements of the Mexican legislation.

The WTO panel concluded that Mexico acted improperly for four principal reasons: (1) Mexico improperly based its injury analysis on outdated information and failed to examine half of the injury data it had collected; (2) Mexico improperly applied its antidumping measure to two U.S. exporters that were not dumping; (3) Mexico improperly applied an adverse “facts available” margin to a U.S. exporter which had no shipments during the period of investigation and improperly applied “facts available” margins to U.S. exporters and producers that it did not even investigate; and (4) six provisions of Mexico’s antidumping and countervailing duty law are inconsistent “as such” with the WTO Antidumping Agreement and the SCM Agreement.

On the U.S. contention that Mexico’s use of a period of investigation that ended fifteen months prior to Economia’s dumping determination, the panel writes, “While we do not need to decide in the abstract whether the period of investigation always has to end as close as practicable to the date of initiation of the investigation, we are of the view that there is necessarily an inherent real-time link between the investigation leading to the imposition of measures and the data on which the investigation is based.” Panel Report at 110. As such, Mexico acted inconsistently with Articles 3.1, 3.2, 3.4, and 3.5 of the Antidumping Agreement.

With respect to Economia’s methodology for assessing data in finding out whether U.S. producers were dumping, the panel found that “the volume analysis is not based on facts, but on assumption after assumption. The methodology of the applicant which the authority decided to use is based on the unsubstantiated assumption that rice sold below a certain price level must be long-grain white rice. Although the authority itself concludes that this was a flawed assumption, it decided to use this methodology.” Panel Report at 126. As such, contrary to its requirements under the Antidumping Agreements, Mexico failed to base its dumping determination on information that is “affirmative, objective, verifiable and credible.” [Cite].

As a result of Economia’s procedural and methodological flaws, the panel recommended that the DSU request Mexico to carry out its duties under the Antidumping Agreement and the SCM Agreement. The panel concludes, “Under Article 3.8 of the DSU, in cases where there is infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment of benefits under that agreement. Accordingly, we conclude that, to the extent Mexico has acted inconsistently with the provisions of the [Antidumping] Agreement and the SCM Agreement, it has nullified or impaired benefits accruing to the United States under those Agreements.” Panel Report at 182.

Citation: Panel Report, Mexico – Definitive Anti-Dumping Measures on Beef and Rice (WT/DS295/R) (06 June 2005) available at http://www.wto.org; U.S. Trade Representative press release of June 7, 2005.