2006 International Law Update, Volume 12, Number 1 (January)

2006 International Law Update, Volume 12, Number 1 (January)

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

CHILD ABDUCTION

New Zealand Court of Appeal denies U.S. father’s petition under Hague Abduction Convention to have child returned to his former habitual residence in Illinois since child had lived long enough away from Illinois to have lost his habitual residence there and to have acquired new habitual residence in New Zealand

Mr. SK (plaintiff), a United States citizen residing in Chicago, Illinois where he has a successful law practice, and Ms. KP (defendant), a New Zealand citizen, met in the U.S. in 1993. Five years later, they were married in Scotland, and returned to live in Illinois. The defendant became pregnant with S in late 1999.

Due to difficulties in her pregnancy, the defendant traveled to New Zealand where her family could provide support. Later on, the defendant went back to Illinois to give birth to S.

In December 2000, with the plaintiff’s consent, the defendant returned to New Zealand where she spent six months; during this period, the plaintiff visited her twice. After the defendant and S had returned to Illinois in May 2001, the former became pregnant with L. Because the couple was experiencing difficulties in their marriage, the defendant initially agreed to have an abortion.

She later changed her mind, however, and once again obtained plaintiff’s consent to spend time with her family in New Zealand; there she gave birth to L by caesarean section in April 2002. Recognizing that the defendant would need enough time to recover from her surgery, the plaintiff refrained from pressing her to return. Instead, he visited her three times during her convalescence.

By September 2002, plaintiff began to realize that the defendant intended to remain with the children in New Zealand permanently. He filed proceedings in a New Zealand court to obtain an order for the return of the children and separate proceedings in the U.S. relating to the dissolution of the marriage and child custody.

The New Zealand Family Court held that, although the plaintiff had not consented to the continued residence of S in New Zealand, the actions or inactions of the parents over the relevant time period had caused S to lose his habitual residence in Illinois. At all relevant times, both the U.S. and New Zealand were parties to the Hague Convention on the Civil Aspects of International Child Abduction [ T.I.A.S. 11670; in force for U.S. July 1, 1988].

The plaintiff next appealed the decision to the High Court. It affirmed the Family Court’s ruling, finding that returning S to the United States would take him out of the family and social environment in which he had developed. The plaintiff then brought the current appeal.

In a 2 to 1 split, the New Zealand Court of Appeal dismisses plaintiff’s appeal. The Court first stresses its duty to construe the provisions of the Guardianship Amendment Act of 1991 (the 1991 Act), consistently with the Hague Convention (which it implements) with its emphasis on the prompt return of children wrongfully removed from, or retained away from, the state of their habitual residence.

Although local law does not substantively define the critical term, “habitual residence”, the Convention appears to treat it as a factual concept. Under this approach, Member State courts have looked to factors such as the settled purpose of the parents, actual residence for an appreciable period, the strength of the child’s ties to the existing state, the continuity of residence, and whether the stay in New Zealand was for a limited time.

“In a case such as the present, where the parents both intended at the outset of the child’s visit to New Zealand that the child would remain for a limited period and then return to the existing place of habitual residence, the circumstances do not indicate a shared parental intent beyond a limited stay. Giving that factor due consideration, there can in general, in such circumstances as the present, only be a loss of habitual residence as a result of the gradual weakening of connections with the former state through the process of the developing orientation of the child in the new state to the point that the original links have disappeared.” [¶ 19]

The Court then emphasizes two premises related to its discussion of the gradual loss of habitual residency in the former state.

“To my mind, in this context, a principle of particular importance is that the Court having jurisdiction should be slow to infer that there has been a loss of habitual residence arising from the prolonging of a child’s stay in a new state beyond original expectations without protest or countering action because of the desire to achieve a reconciliation or reach an agreement between parents on arrangements for custody. Otherwise there will be disincentives to parents consenting to children travelling to stay with family members in other states, and correlative incentives on parents to take precipitate action when stays are extended, or sought to be extended, in circumstances such as the present.”

“There is also support for the proposition that the Court should be slow to infer a change in habitual residence in the absence of [a] shared parental attempt to bring it about, this reflecting the weight attached to parental intention under the Convention. The decision of the Court on habitual residence must, however, in the end always reflect the underlying reality of the connection between the child and the particular state. Obviously there will be circumstances in which, having been considered, the facts indicate to the Court that all the circumstances of the case rather indicate this underlying reality.” [¶¶ 20, 22].

Although the Court expresses some reservations about the general principles upon which the lower courts based their decisions, the Court of Appeal does conclude that they not only reached the proper conclusion but also used valid reasoning.

“Nevertheless, the circumstances that each Judge relied on in reaching the conclusion that habitual residence in Illinois had been lost in this case provided substantial support for their conclusions. Having spent much of his life in New Zealand, even prior to his visit in November 2001, the child’s connections with Illinois had clearly gradually and substantially been weakened.”

“These visits were not simply in the nature of holidays which would not in themselves normally change habitual residence. They were rather for reasons of management of a difficult pregnancy and avoiding the Chicago winter. In that context, the child’s life in New Zealand amongst his extended family was likely to lead to attachments over time which decreased his connection with Illinois.”

“What persuaded the Judges in the end that habitual residence in that state was lost by September 2002 was that, by then, a very young child had spent a very substantial proportion of his life in New Zealand. I am satisfied that each Judge did have regard to the appellant’s purpose of attempted reconciliation, and his lack of any agreement that the child should remain indefinitely in New Zealand and that their judgments concerning habitual residence were in accordance with all the underlying principles of habitual residence.”

“On this basis the Judges were entitled to view the relatively short period in New Zealand as sufficient to bring about a change in the child’s habitual residence in Illinois. This being the reality of what had happened, it was open to the Judges to reach their finding that habitual residence in Illinois had been lost – even though the crucial events occurred during a period of attempted reconciliation. For these reasons I conclude that there was no error of law concerning the finding of loss of habitual residence in the judgment of the High Court, which affirmed that of the Family Court. I would accordingly dismiss the appeal.” [¶¶ 24-26]

Citation: S. K. v. K. P., [2005] 3 N.Z.L.R. 590 (N. Z. C. A. 2005).

CHOICE OF LAW

In response to motions by administrators of financially challenged makers of asbestos products, English Chancery Court provides preliminary guidance on whether U.S. or English law, in either common or statutory regimes may apply to asbestos injury claims against U. K. companies which arose in U.S.

For many years, T&N and its subsidiaries were making and selling asbestos-based products. Federal Mogul Corporation (FMC) took them over in 1998 and since then the T&N group has been part of the FMC group. T&N and its subsidiaries have other viable businesses, mainly in making automotive parts.

In October 2001, confronted by a storm of asbestos-related claims, T&N and 132 subsidiaries applied to the English Court of Chancery for administration orders. On the same day, those companies together with FMC and 22 U.S. affiliates filed in U.S. federal court for Chapter 11 relief under the U.S. Bankruptcy Code.

In asbestos-related diseases, a substantial time passes between an individual’s exposure to asbestos and the onset of any disease. The mean latency period for mesothelioma, for example, is 40 years and the first damage, which is the development of the first malignant cell, takes place about 10 years before the first appearance of symptoms.

Thus, under English law, no cause of action in negligence may accrue until many years after both the exposure to asbestos and any causative acts or omissions of T&N. In the great majority of cases of exposure to asbestos, no ailment of any sort develops.

T&N is vulnerable to a substantial number of personal injury claims in the United Kingdom. Thus, U.K. claims pending on 1 October 2001 have a value of £ 14 million and estimated future claims, have a current discounted value of about £ 229 million. On the other hand, the U.S. District Court, after a contested hearing involving expert evidence, has put the current discounted value of all pending and future claims before it at $9 billion.

Many claims in the U.K. are by former employees, whereas almost all the U.S. claims are, or will be, product liability tort claims. The legal basis upon which successful U.S. claims have rested turned on a failure to warn, either under strict products liability law or under the law of negligence.

The administrators have filed the present application on the assumption that there are, or may be, material differences in the substantive tort laws of England and the U.S. applicable to the U.S. Asbestos Claims (USACs).

The administrators’ application seeks to have this court rule on four issues of conflicts of law, as they would apply to asbestos-related personal injury claims against T&N with respect to USACs.

The first point assumes that the relevant act or omission giving rise to a particular USAC took place before May 1, 1996 but that the resulting damage did not come about until after that date. The issue that arises first is: will the choice of law applicable to the claims in England be governed by the common law or by the Private International Law (Miscellaneous Provisions) Act (the 1995 Act). The answer depends on the meaning of section 14 of the Act. One of the main purposes of the Act was to do away with the English law of “double actionability.”

The second issue postulates that the common law would control the choice of law applicable to a claim. The question then arises as to whether the court should apply English law to the claim, unless and to the extent that U.S. law was applied by way of the exception confirmed by the Privy Council in Red Sea Insurance Ltd v Bouygues SA [1995] 1 AC 190.

Thirdly, if by way of the Red Sea exception, the court should apply only U.S. law to the claim, should this court regard the quantification of damages as a matter of “procedure” and therefore governed by English law as the lex fori? Finally, the same question comes up on the assumption that the 1995 Act should govern the choice of law applicable to the USACs.

The Chancery justice first points out that, in any event, “[T]he law of torts in the United States relevant to the [USACs] would not be federal law, but the laws of individual States. For the sake of convenience only, I refer in this judgment to U.S. law.” [¶ 17].

The Court then addresses the questions of timing bound up in the first issue. “The principal assumption on which this issue arises is that the claimants’ exposure to asbestos occurred before 1 May 1996, but the damage, i.e. any injury or loss recognised as being capable of compensation by an award of damages, occurred after that date.”

“It follows inevitably that the acts or omissions of T&N or its subsidiaries alleged to give rise to the claims would also have occurred before 1 May 1996. In view of the extended latency period for asbestos-related conditions, it is highly likely that there are, and will be, a significant number of claims in this category.”

“The issue turns on the construction of section 14(1) [of the Act, which provides: ‘Nothing in this Part applies to acts or omissions giving rise to a claim which occur before the commencement of this Part.’ The commencement date was 1 May 1996.” [¶¶ 25-26].

“In my judgment it is clear that section 14(1) is directed at the acts and omissions of the defendant, not the damage resulting from them.... Part III of the 1995 Act made a very substantial change in this part of English law and one would not expect it to have the effect of making actionable in England acts or omissions abroad which were not actionable in England or under English law when they occurred. ... [T]he difficulty of pinpointing the date of damages provides a sound basis for the administrators’ construction.” [¶ 28]

“I therefore conclude that, provided the acts or omissions of the defendant occurred before 1 May 1996, the 1995 Act will not apply, irrespective of the date of the resulting damage. Accordingly, the choice of law will be governed by the common law, not by the 1995 Act.” [¶ 31]

“The issue, in effect, in Red Sea Insurance v Bouygues SA was whether the reformulated rule in Dicey & Morris is a correct statement of English [common] law.”

“The treatise version reads as follows: ‘(1) As a general rule, an act done in a foreign country is a tort and actionable as such in England, only if it is both (a) actionable as a tort according to English law, or in other words is an act which, if done in England, would be a tort; and (b) actionable according to the law of the foreign country where it was done. (2) But a particular issue between the parties may be governed by the law of the country which, with respect to that issue, has the most significant relationship with the occurrence and the parties.’”

“The Privy Council held that it was. The only refinement was that under paragraph 2 it was open, in an appropriate case, to apply the foreign law to the whole case, rather than to a particular issue only.”

“Although Red Sea Insurance v. Bouygues was a decision of the Privy Council on appeal from Hong Kong, English law applied in Hong Kong to the issues raised and I take it as an authoritative statement of English law.”

“In view of the position established by Red Sea Insurance v Bouygues SA, I questioned [counsel] as to the purpose of the determination sought in paragraphs 4(1) and (2) of the application. [Counsel] accepted that, without descending into facts, it was difficult to point to particular matters on which the direction or declaration would assist, but it was important to establish the foundation of the approach taken by a liquidator or the court when dealing with the claims.”

“I am unable to see any advantage in making a declaration, at a very high level of generality, that the court would be applying the substantive law of England or of the United States or of both.”

“In my view, it is a question to be answered, if at all, in the context of a real issue whose resolution makes it necessary or desirable. [Counsel] agreed that, on each claim to which the double actionability rule applied, a liquidator would have to be satisfied on the facts of the claim that it would succeed in England and in the United States. At present I do not see that the administrators need any further guidance than that.”

“As regards the exception established or confirmed by the Privy Council in Red Sea Insurance v Bouygues SA, the liquidator or the court would have to decide whether the circumstances of a particular case made it appropriate, either as regards the whole case or as regards any particular issue or issues, to apply English law to the exclusion of U.S. law or vice versa.”

“Unless it was appropriate to apply the exception, the double actionability rule would apply. That, as it seems to me, is clear from the authorities and I hardly see the need for a declaration to that effect. I have therefore concluded that at present it is neither useful nor necessary to make declarations under paragraph 4(1) or (2) of the application.” [¶¶ 38-43]

“Equally, however, the 1995 Act does not provide, nor in my view was it intended to produce the result, that there could be no development in the common law on these issues after 1 May 1996. The common law is by its nature dynamic, and I see no hint in the 1995 Act that it set in stone the common law as understood at that time. The effect of the 1995 Act, in my view, is that these issues are left to be governed by the common law, as developed from time to time.”

“Development of the common law does not take place in a vacuum. Account can properly be taken of other developments, for example legislative changes. There is no reason why regard should not be had to the changes made by the 1995 Act, [cites]. I would, however, with respect, doubt whether it is right to look closely at the precise drafting of section 14(3), if the issue is not one of statutory construction.” [¶¶ 71-72].

“No specific issue of U.S. law has been put before me. As mentioned above, [counsel] gave as an example that there might be a range of damages with a fixed minimum and maximum for, say, pain and suffering established by authoritative decisions of the U.S. courts. This was put forward on a hypothetical basis only. ...”

“Moreover, treating as substantive a foreign law rule requiring a minimum level of awards raises serious issues which have not yet been considered by the courts. One issue is what does the court do if the minimum under the foreign law exceeds the amount which, on its own assessment, would be awarded by the English court? The mechanistic answer would be to award the minimum set by the foreign law but that may involve a result which is unjust according to both systems of law: too much by the standards of one and too little by the standards of the other.”

“More important perhaps is the issue which would arise if T&N were in liquidation and proofs of debt for general damages were submitted. It can be assumed that proofs would be submitted by claimants from a number of jurisdictions, including the United Kingdom and the United States. The claimants would be suffering from the same conditions - asbestosis, lung cancer, mesothelioma and so on. Their pain and suffering will, subject to individual variations, be the same, or at any rate it will not differ on grounds of nationality or residence. If [counsel] is right, these claimants may be admitted to proof in substantially different amounts for substantially the same loss. It would be seen by many as an unjust result. At common law, this result could perhaps be avoided by not displacing the double actionability rule as regards damages or this aspect of damages.”

“Under the 1995 Act, if the applicable law under section 11 was U.S. law, it could not be displaced under section 12 in favour of English law on this issue. ... In valuing proofs, the liquidator must apply English law, but that includes English choice-of-law rules, resulting in the application of foreign law in appropriate cases: [cites].”

“In the result therefore, I decline to make a declaration in the terms proposed by the administrators, which would treat all issues as to the quantification of damages in relation to USACs as governed by English law. Equally, however, I do not accept [opposing counsel’s] alternative formulations.” [¶¶ 78-81]

“It follows that, leaving aside questions concerning any specific non-discretionary U.S. rules (such as minimum or maximum amounts), the liquidator or the court, in assessing [USACs,] would not be concerned to assess the level of damages which might be awarded in the United States, but would be exercising their own judgment in accordance with English law.”

“Paragraphs 5(1) and (2) of the application notice raise issues, on the assumption that the 1995 Act applied to any [USACs]. Paragraph 5(1) raises as an issue whether, on a true construction of section 11, the substantive law to be applied would be the law of the state in the United States in which the claimant was when he sustained the injury for which he claims. In view of the agreed construction of ‘country’ in section 11 as meaning, in a federal system, the relevant individual state, the answer to paragraphs 5(1) is clearly affirmative, as all parties agree.”

“Paragraph 5(2) raises the issue as to whether the quantification of damages would be governed by English law, if the 1995 Act applied to the claim and U.S. law was the applicable law for substantive issues. For the reasons already given, I do not consider that the 1995 Act gives to the word ‘procedure’ in section 14(3) any different meaning from its meaning at common law; it follows that I would answer the issue raised in paragraph 5(2) in the same way as the issue at paragraph 4(3).”

“However, it is right to note that, as [counsel] informed me, the administrators envisage that the overwhelming majority of [USACs] will result from the alleged acts or omissions of T&N prior to 1 May 1996 and will therefore be claims to which the 1995 Act does not apply.” [¶¶ 84-87]

Citation: Re T & N and other companies, [2005] EWHC 2990 (Ch), [2005] All ER (D) 338 (Dec), (Approved judgment)(Chanc. Div. December 21).

FOREIGN COMMERCE CLAUSE

As matter of first impression, Ninth Circuit determines that Congress’ exercise of power under the Foreign Commerce Clause supports criminal jurisdiction over U.S. citizen’s commercial pedophilia in Cambodia

Cambodian police arrested Michael Lewis Clark (defendant), a U.S. citizen, while he was engaging in sex with two young boys. Street children had earlier reported that Clark was frequently molesting young boys, and the organization Action Pour Les Enfants had notified the Cambodian police. The Cambodian Government later granted the U.S.’s extradition request.

The statute in question is Section  18 U.S.C. Section  2423(c), a part of the Prosecutorial Remedies and Other Tools to End the Exploitation of Children Today Act of 2003 (PROTECT Act), Pub.L. No. 108-21, 117 Stat. 650 (2003). Section (c) provides in part that: “(c) Engaging in illicit sexual conduct in foreign places. Any United States citizen or alien admitted for permanent residence who travels in foreign commerce, and engages in any illicit sexual conduct with another person shall be fined under this title or imprisoned not more than 30 years, or both.” A federal grand jury indicted defendant under the Act.

The precise issue in this case is whether Congress exceeded its authority under Article I, Section 8, Clause [3] “to regulate Commerce with foreign Nations” when it made it a felony for U.S. citizens to engage in illegal commercial sex with a minor outside U.S. territory. Reserving his right to appeal on legal issues, defendant pled guilty to two counts under 18 U.S.C. Section  2423(c) and (e).

The U.S. Court of Appeals for the Ninth Circuit upholds the conviction, concluding that Congress’ enactment of the PROTECT Act lay within the bounds of its constitutional authority.

First, the Court analyzes Section  2423(c) in light of international law. “ ... The legal presumption that Congress ordinarily intends federal statutes to have only domestic application ... is easily overcome in Clark’s case because the text of Section  2423(c) is explicit as to its application outside the United States. See 18 U.S.C. Section  2423(c) (titled ‘Engaging in illicit sexual conduct in foreign places’ and reaching people ‘who travel[ ] in foreign commerce’) ... By its terms, the provision is exclusively targeted at extraterritorial conduct.”

“... [W]e [next] ask whether the exercise of extraterritorial jurisdiction in this case comports with principles of international law. See United States v. Vasquez-Velasco, 15 F.3d 833, 839 (9th Cir. 1994) (‘In determining whether a statute applies extraterritorially, we also presume that Congress does not intend to violate principles of international law.’) ... Of the five general principles that permit extraterritorial criminal jurisdiction, the nationality principle most clearly applies to Clark’s case. The nationality principle ‘permits a country to apply its statutes to extraterritorial acts of its own nationals.’ ... Jurisdiction based solely on the defendant’s status as a U.S. citizen is firmly established by our precedent. ... Clark’s U.S. citizenship is uncontested. Accordingly, extraterritorial application of Section  2423(c) to Clark’s conduct is proper based on the nationality principle.” [Slip op. 8]

Defendant also claimed that Section  2423(c) requires that the alleged conduct take place while a defendant is still traveling, but the Court is unable to uncover any such requirement in the statute. Moreover, such a reading would disembowel the statute by limiting its application to citizens who commit sex crimes while still on a plane, train, ship, bus, car or other means of transport.

The Court next spurns defendant’s contention that the extraterritorial application of Section  2423(c) violates the Due Process Clause of the Fifth Amendment because there is an insufficient nexus between his conduct and the U.S. The Ninth Circuit has held that the U.S. may exercise jurisdiction over U.S. nationals living abroad, regardless of where the crime is committed. Defendant’s U.S. citizenship is enough of a nexus for its extraterritorial application to conform to Due Process.

Finally, defendant had maintained that the Foreign Commerce Clause limits congressional power to the banning of “commercial” sex acts. The Ninth Circuit disagrees. The U.S. Supreme Court has interpreted Congress’ power over foreign commerce broadly. In fact, the Supreme Court has never voided an act of Congress as exceeding its powers to regulate foreign commerce.

“Title 18 of the U.S. Code broadly declares only that ‘The term 'foreign commerce', as used in this title, includes commerce with a foreign country.’ 18 U.S.C. Section 10. Admittedly, this definition is not particularly helpful given its rearrangement of the words being defined in the definition itself. Courts have understandably taken the broad wording to have an expansive reach. [Cites]. We likewise see no basis on which to impose a constrained reading of ‘foreign commerce’ under Section  2423(c). Defendant got on a plane in the United States and traveled to Cambodia. This act is sufficient to satisfy the ‘travels in foreign commerce’ element of Section  2423(c).” [Slip op. 17]

In sum, “[t]he illicit sexual conduct reached by the statute expressly includes commercial sex acts performed by a U.S. citizen on foreign soil. This conduct might be immoral and criminal, but it is also commercial. Where, as in this appeal, the defendant travels in foreign commerce to a foreign country and offers to pay a child to engage in sex acts, his conduct falls under the broad umbrella of foreign commerce and consequently within congressional authority under the Foreign Commerce Clause.” [Slip op. 4]

Citation: United States v. Clark, No. 04-30249 (9th Cir. January 25, 2006).

HUMAN RIGHTS

In lawsuit against former Haitian military officer for alleged torture and other torts, Eleventh Circuit finds that equitable tolling applies to T.V.P.A. and A.T.C.A. claims, and that onus of proof that Haitian remedies were available to plaintiffs and that they had failed to exhaust them rests on defendant

Lexiuste Cajuste and Marie Jeanne Jean (plaintiffs), Haitian citizens, filed a lawsuit in Florida against Carl Dorelien (defendant), a former Colonel of the Haitian Armed Forces. The U.S. Immigration Service had arrested defendant and had sent him back to Haiti in January 2003. (In a curious development, Dorelien came back to the U.S. and won $3.2 million in the Florida State Lottery.)

In the complaint, one plaintiff alleged his subjection to torture, arbitrary detention, as well as to inhuman and degrading treatment by defendant. The other alleged that defendant was responsible for the extra-judicial killing of her husband. Plaintiffs based their claims, inter alia, on the Alien Tort Claims Act (ATCA), 28 U.S.C. Section  1350, the Torture Victim Protection Act (TVPA), 28 U.S.C. Section  1350 note, Pub.L. No. 102-256 (1992).

The district court granted defendant’s motions to dismiss. In particular, the court dismissed Cajuste’s claims for failure to file suit within the 10-year statute of limitation, and dismissed Jean’s claims for failure to exhaust her remedies in Haiti. This appeal followed.

The U.S. Court of Appeals for the Eleventh Circuit vacates the district court orders and remands for further proceedings.

The Court first turns to the dismissal of Cajuste’s claims based on the statute of limitations. Under the TVPA and the ATCA, plaintiffs must file an action within 10 years of the alleged torture, extra-judicial killing or other torts committed in violation of the law of nations or a U.S. treaty. This limitation, however, is subject to equitable tolling.

Cajuste stated in his complaint that he was arrested in April 1993 and severely beaten. He fled Haiti in September 1994. The Court agrees with Cajuste that it has to treat the statute of limitations as equitably tolled because defendant remained in office until 1994 and was not physically present in the U.S. Pursuant to the TVPA, the courts should toll the statute of limitations at least until defendant had entered the U.S. making it possible to serve process upon him.

In the Circuit Court’s view: “... [T]he district court erred in finding that ‘equitable tolling should not be applied in this case.’ The pattern and practice of torture, mass murder, intimidation and reprisals against perceived opponents of the government during the military regime in Haiti from 1991 to 1994 as alleged in Cajuste’s complaint, clearly qualify as extraordinary circumstances to toll the statute of limitations until Dorelien was removed from his position, the repressive security forces were dismantled and the democratically elected government resumed power. Because Cajuste filed his claims on October 23, 2003, he filed within ten years of the statute of limitations being tolled, and his claims as alleged are therefore, timely.” [Slip op. 6]

The Circuit Court then turns to Jean’s claims. The TVPA, 28 U.S.C. Section  1350(2)(b), provides preliminarily that a claimant must show that he or she has exhausted adequate and available Haitian remedies. On this point, the Court disagrees with the court below on several grounds.

“First, the exhaustion requirement does not apply to ATCA. ... Second, the exhaustion requirement pursuant to the TVPA is an affirmative defense, requiring the defendant to bear the burden of proof. ... This burden of proof is substantial. The Senate Report to the TVPA specifically stated: ‘[T]he committee recognizes that in most instances the initiation of litigation under this legislation will be virtually prima facie evidence that the claimant has exhausted his or her remedies ... [...]” [Slip op. 6]

Here, the district court relied only on an affidavit stating that Jean had obtained a judgment in Haiti against Dorelien in November 2000. A Haitian tribunal had found Dorelien liable for the “Raboteau Massacre” in which Jean’s husband died. The district court, however, had erred in disregarding Jean’s allegations that her judgment was ineffectual in Haiti because, in 2004, defendant had gotten out of prison and soon regained a position of power in Haiti. As a result, defendant had failed to meet his burden of proof to show a failure on Jean’s part to exhaust her available remedies.

Citation: Jean v. Dorelien, 431 F.3d 776 (11th Cir. December 1, 2005). [More information on this case is available on website of The Center for Justice and Accountability, www.cja.org, which took an active role in it.]

INTERNATIONAL TRADE

Eighth Circuit affirms district court ruling that 1916 Antidumping Act does not require showing of predatory intent in civil action which alleges that defendants were dumping foreign products on U.S. market at below market prices with intent to injure or destroy U.S. industry

Goss International (plaintiff), a U.S. corporation, sued various foreign manufacturers of large printing press equipment (jointly, defendants), alleging violations of the Antidumping Act of 1916 (1916 Act), 15 U.S.C. Section  72.

The 1916 Act provides in relevant part. “It shall be unlawful for any person importing or assisting in importing any articles from any foreign country ... to import, sell or cause to be imported or sold such articles within the United States at a price substantially less than the actual market value or wholesale price of such articles, ... Provided, That such act or acts be done with the intent of destroying or injuring an industry in the United States, or of preventing the establishment of an industry in the United States, or of restraining or monopolizing any part of trade and commerce in such articles in the United States.”

The industry overall makes about 10 sales of such large-scale printing presses in the U.S. per year, and the company that provided the base system allegedly has a great advantage when it comes to the sale of additions. Plaintiff had evidence that defendants had offered underpriced equipment to outbid plaintiff in several instances. The overall question here is whether the defendants were engaging in normal price competition with the U.S. manufacturers or whether they intended to injure or destroy the U.S. printing press industry through dumping.

Several defendants moved to dismiss the complaint because it failed to allege predatory intent as required, they argued, under U.S. antitrust law. The district court denied the motion, holding that the 1916 Act does not require a showing such intent. All but one of the defendants then settled with the plaintiff.

The remaining defendant was Tokyo Kikai Seisakusho and its U.S. subsidiary (jointly, TKS) and they went to trial. Based on a jury verdict, the district court awarded plaintiff more than $35 million in damages and attorneys’ fees. Though TKS appealed, the U.S. Court of Appeals for the Eighth Circuit affirms.

TKS claimed, inter alia, that the district court had misread the 1916 Act. The Court of Appeals, however, agrees with the district court that the statute does not demand proof of predatory intent.

“The district court in [Geneva Steel Co. v. Ranger Steel Supply Corp., 980 F. Supp. 1209, 1217 (D. Utah 1997)] confronted the same arguments TKS makes in this appeal. We wholeheartedly adopt the Geneva Steel discussion and resolution of the intent requirement under the 1916 Act. See above at 1212-25. ....” [...]

“By the words it chose, Congress protected United States industries from unfair dumping, whether the dumper possessed predatory intent or not. The intent required is the intent to ‘injure’ a domestic United States industry. When the Act states that it is unlawful to sell dumped goods with the specific intent to injure a United States industry, it means precisely that. Defendants want to add the limitation that such injury can only occur if predatory pricing is involved, but the Act simply does not say so.”

“... In the end, the [Geneva Steel] court held ‘the Antidumping Act of 1916 is susceptible of only one clear meaning under the circumstances of the instant case. Plaintiff has adequately plead (sic) its case by alleging that the defendants sold foreign [products] in the United States at prices substantially less than the actual market value or wholesale price of such ... products in the countries of production, all with the specific intent to injure the United States Steel Industry.’ Id. at 1225. [Cite]. We cannot agree more.” [Slip op. 10-12]

Citation: Goss Int’l Corp. v. MAN Roland Druckmaschinen Aktiengesellschaft, No. 04-2604 (8th Cir. January 23, 2006).

JURISDICTION (PERSONAL)

Ninth Circuit decides that smoker may sue R. J. Reynolds Tobacco Company, based in North Carolina, in Washington state for its alleged part in worldwide conspiracy to deny addictive and harmful effects of smoking over defendant’s objections based on lack of personal jurisdiction and forum non conveniens

R.J. Reynolds Tobacco Company (defendant), originally incorporated in New Jersey in 1899, maintains its headquarters in North Carolina. Defendant has been licensed to do business in Washington state since 1940 but has no manufacturing or production facilities in the state.

Since at least 1998, defendant has maintained an office and up to forty full-time employees in Washington. From 1999-2002, defendant sold between 2.5 and 3 million cigarettes to distributors in Washington annually, generating $145-$240 million in net sales each year.

Nilo D. Tuazon (plaintiff) was born and grew up in the Republic of the Philippines. He began smoking cigarettes at age seventeen and has been smoking continually for more than forty years. Plaintiff began experiencing a persistent cough ten to fifteen years ago, and, in 2003, doctors diagnosed him with a chronic lung disorder. Later that year, he immigrated to the United States and settled in Washington state.

Plaintiff is still seeking treatment in Seattle. He alleges that defendant took part in a global conspiracy to suppress information about the effects of cigarettes. Though the conspiracy had originated in the United States, it had moved abroad by the 1970s through affiliates and subsidiaries, such as the Asian Tobacco Council, the Philippines Tobacco Institute, and Fortune Tobacco. This in turn worsened plaintiff’s health problems despite warnings from friends and family.

Defendant moved to dismiss plaintiff’s complaint on grounds of lack of personal jurisdiction and forum non conveniens. The district court denied the motions, and defendant appealed. The U.S. Court of Appeals for the Ninth Circuit affirms.

Since the parties agree that plaintiff’s claim arises from defendant’s conduct outside of Washington, the Court has to decide whether defendant’s contacts with the state suffice to support the exercise of general jurisdiction there. This involve analysis (1) of whether Washington’s jurisdictional statute confers jurisdiction over the nonresident defendant and, if so, (2) whether the exercise of statutory jurisdiction comports with federal due process requirements.

The Washington Supreme Court has no rigid or formulaic test for determining when a company is “doing business” in Washington. Instead, it conducts a fact-intensive, case-by-case analysis. In this case, defendant has long been doing a business in Washington that generates substantial revenue. It has been licensed to operate in Washington for decades, maintaining an office and a staff of permanent employees, advertising in local media, and targeting Washington consumers. The Ninth Circuit agrees that defendant’s activities amount to “doing business” within the Washington long arm statute.

Furthermore, the Court concludes that defendant has enough contacts with Washington that support a reasonable exercise of jurisdiction, thereby meeting the Due Process requirement. “In the context of general jurisdiction, minimum contacts exist where a defendant has substantial or continuous and systematic contacts with the forum state, even if the case is unrelated to those contacts.” [Slip op. 7]

The Court also points out that the nature and extent of the contacts are critical. “Longevity, continuity, volume, economic impact, physical presence, and integration into the state’s regulatory or economic markets are among the indicia of such a presence.” [Slip op. 8]

Defendant’s decades-long presence and its integration into Washington’s markets are more than casual interactions with the state. “The minimum contacts are established by the confluence of Reynolds’ physical, economic, and political presence and the company’s myriad other activities in the state.” [Slip op. 11]

Presumably on the forum non conveniens issue, the Circuit Court states that there was no abuse of discretion in exercising general jurisdiction in this case. These factors support it: (1) there is no specific hardship on the defendant; (2) Washington has an interest in providing a forum for its resident plaintiff; (3) the forum is convenient and effective for the plaintiff; (4) since plaintiff’s claim will require evidence and testimony from far-flung regions that are mutually inconvenient for other forums, it is neither impractical nor unreasonable for Washington to exercise jurisdiction; and (5) from a social policy standpoint, Washington has an interest in its citizen’s suit alleging an injurious cover-up by a tobacco company as to the dangers of smoking.

Citation: Tuazon v. R. J. Reynolds Tobacco Co., No. 04-35618 (9th Cir. January 11, 2006).

PUBLIC HEALTH

In dismissing appeal from judgment of Court of First Instance, European Court of Justice rules that lower court did not properly evaluate inaction of EC Commission with respect to issuing guidelines on veterinary use of progesterone for other than therapeutic or zootechnical purposes but that lapses did not give rise to European Union’s liability for damages to drug company plaintiffs under Article 288 EC

In 1990, the Council of the European Communities established a Community procedure for defining maximum residue limits (MRLs) of veterinary medicinal products in foodstuffs of animal origin. The preamble to Regulation (EEC) No. 2377/90 [R-2377/90] sets forth the protection of public health as one of its goals and stresses the importance of using a single scientific judgment of the highest quality to make decisions about MRLs.

The Regulation classifies pharmacologically active substances that are administered to food-producing animals into four annexes: Annex I includes substances with fixed MRLs; Annex II comprises substances not subject to MRLs; Annex III consists of substances subject to provisional MRLs; and Annex IV includes substances for which no MRL can be established.

Articles 4 and 14 of R-2377/90, as amended by Council Regulation (EC) No. 434/97, are central to the current appeal. Article 4 bars the setting of provisional MRLs unless there is no evidence that the residues of the substance in question at the level proposed present a hazard to the health of EU consumers. Article 14 originally set January 1, 1997 as the effective date of the ban on the giving of substances to food producing animals not listed in Annexes I, II, or II.

Regulation (EC) 464/97 moved the effective date up to January 1, 2000. In April 1996, Council Directive 96/22/EC barred the administration to farm animals of substances such as progesterone that have a gestagenic [aiding in the development and retention of pregnancy] action. Member States, however, may allow the use of such substances for therapeutic purposes.

Pfizer Enterprises Sarl and CEVA Sante Animale SA (plaintiffs) asked the EC Commission in 1993 to come up with an MRL for giving progesterone to cattle and horses. The European Agency for the Evaluation of Medicinal Products (the EMEA) notified plaintiffs in November 1996 that the Committee on Veterinary Medicinal Products (the CVMP) had recommended the inclusion of progesterone in Annex II to R- 2377/90. The EMEA told plaintiffs that it would send the CVMP’s recommendation to the EC Commission for adoption.

In April 1997, however, the EMEA asked the CVMP to reconsider its assessment of progesterone risks in light of new scientific information. Almost two years later, the United Nations’s Joint FAO/WHO Expert Committee on Food Additives (JEFCA) reported that a numerical MRL would not be necessary for progesterone.

The Commission next sent EMEA the April 1999 opinion of the Scientific Committee on Veterinary Measures Relating to Public Health (the SCVPH). It had concluded that scientific uncertainties as to the effects of certain hormones, including progesterone, ruled out the setting of a threshold level or an acceptable daily intake.

The EMEA notified plaintiffs in December 1999, that the CVMP had reconfirmed its earlier recommendation to place progesterone in Annex II. The SCVPH re-evaluated its April 1999 opinion, asserting that recent scientific information failed to provide enough evidence to cause it to revise its previous opinion. In May 2000, the Commission amended Directive 96/22 and required Member States to provisionally block the administration of progesterone to farm animals, except for therapeutic or zootechnical purposes.

In November 2000, Pfizer and CEVA sued the Commission in the EC Court of First Instance (CFI), seeking a declaration that the Commission had failed to meet its obligations under Community law and seeking damages. The Commission then adopted Regulation (EC) No. 1873/2003 amending Annex II to R-2377/90 to allow the use of progesterone for limited purposes. As a result, the CFI held that it did not need to rule on the suits for violating the principle of “failure to act” since the Commission had since established a regulation for progesterone.

On the other hand, the CFI did award damages to the plaintiffs after finding that the inaction of the Commission between January 1, 2000, and July 25, 2001, constituted a breach of the principle of “sound administration” and had injured the plaintiffs. The Commission appealed. The European Court of Justice (the ECJ) allows the appeal.

The ECJ differs with the Commission, however, as to whether the CFI had read Article 14 as imposing an obligation on the Commission to act before January 1, 2000.

“On the merits, it must be noted that the wording of Article 14 of [R-2377/90] is limited to stating that, with effect from the date indicated, the administration to food-producing animals of veterinary medicinal products containing pharmacologically active substances which are not mentioned in Annexes I, II or III is to be prohibited within the Community. That wording does not allow the inference to be drawn, as [the plaintiffs] contend, that that date constituted for the [Commission] a time-limit by which it was obligated to ensure that the substances in question would be included in the corresponding annexes to [R-2377/90].”

“However, the indication of a date with effect from which the administration of veterinary medicinal products containing active substances is to be prohibited unless those substances are included on one of the lists provided for by [R-2377/90] does mean that the absence of a decision on that point must be justified.”

“It does not follow from ... the judgment under appeal that the [CFI] interpreted Article 14 of [R-2377/90] any differently and derived from it, as the Commission contends, an obligation on that institution to have concluded the appraisal and classified the substances concerned before the date indicated. The [CFI] does not state that the Commission was under an obligation to take a formal decision before 1 January 2000 but confines itself to establishing that the absence of a decision after that date was not justified. ... In those circumstances, the ground must be rejected.” [¶¶ 44-47]

On the other hand, the ECJ does uphold the plaintiffs’ claim that the CFI had misconstrued the evidence, or, at least, had given insufficient reasons in that respect. The ECJ agrees with the Commission that the CFI had overlooked significant scientific data.

“In ... the judgment under appeal, the [CFI] referred to the fact that the CVMP entirely confirmed its first opinion, even after taking into consideration the new scientific data presented to it by the Commission and to the fact that the Commission itself had always maintained the view that progesterone should continue to be authorised for therapeutic and zootechnical treatment for the purpose of concluding that the Commission had disregarded the legitimate interests of the then applicants in a clear and serious way by failing to adopt the measures required for the continued use of progesterone, for therapeutic and zootechnical purposes, after 1 January 2000.”

“The [CFI] thus confined itself to referring to the second opinion of the CVMP without explaining why the Commission was obliged to follow that opinion, and disregarded the differing opinions from other sources, which, in accordance with the third recital in the preamble to [R-2377/90], had to be regarded as being relevant, such as the SCVPH, the JECFA or the International Agency for Research on Cancer (IARC) [Ed. - an advisory body to the U. N. World Health Organization].

That sole reference, without any mention of the other opinions available, does not allow the [ECJ] to identify the link which the [CFI] established between the opinion of the CVMP and the consequences in law which it derived from that opinion. It follows that the [CFI] failed to provide adequate reasoning for its judgment on that point.”

”The reference to the fact that the Commission had always taken the view that the use of progesterone had to continue to be authorised for therapeutic or zootechnical purposes cannot remedy that shortcoming. That designation of the Commission’s conduct, in addition to being itself bereft of any indication as to the findings on which it is based, provides no clearer details as to the scope which the [CFI] attributed to the second opinion of the CVMP. It follows that this ground [of error] must be upheld.” [¶¶ 52-55]

Finally, the ECJ upholds the complaint that the CFI had misread and misapplied Article 288 EC. It provides in relevant part that: “In the case of non-contractual liability, the Community shall, in accordance with the general principles common to the laws of the Member States, make good any damage caused by its institutions or by its servants in the performance of their duties...”

The ECJ rules that the CFI had failed to adequately take into account the Commission’s exercise of discretion; the ECJ held that it constitutes the determining factor in deciding whether the Commission had infringed Community law.

“While the question as to the scope of the Commission’s discretion in establishing MRLs had been the subject of discussion between the parties, with the applicants at the time arguing that the Commission did not have any discretion and the Commission, on the contrary, arguing that it had a broad discretion [cite], the [CFI] did not at any point in the judgment under appeal explain in detail the discretion which the Commission enjoys in establishing MRLs. Nor did the [CFI] set out adequately for legal purposes the reasons or circumstances which might exceptionally have explained why such an analysis would serve no purpose. [Cite].”

“It must for those reasons be concluded that the [CFI] erred in law ... without having established the scope of the discretion enjoyed by the Commission, that the Commission’s inaction between 1 January 2000 and 25 July 2001 constituted a clear and serious breach of Community law giving rise to liability on the part of the Community. This ground of appeal must therefore be upheld.” [¶¶ 67-70]

The ECJ then analyzes the scope of the Commission’s discretion and rules on whether it breached the limits imposed on that discretion. The ECJ first notes that the preamble to R-2377/90 sets forth public health, the safety of the substances involved, and high quality scientific assessments as Commission objectives. Based upon these goals, the ECJ rules that the progesterone problem presented complexities significant enough to justify the caution exercised by the Commission, and that the Commission therefore did not breach Community law in a way that would give rise to Community liability for damages. “Regard being had to the extent of the discretion available to the Commission and to all of the factual circumstances, it does not appear that, in taking that decision on the basis of public-health considerations, the Commission disregarded in a clear and serious manner the limits on its discretion.”

“In ... the judgment under appeal, the [CFI] ruled that, even if the scientific and political complexities of the file were such as to prevent the Commission from adopting, shortly after the CVMP had issued its second opinion, a draft regulation conforming to that opinion, the Commission ought none the less to have adopted measures to safeguard the interests of [plaintiffs].”

“With regard to ... the Commission’s adoption of draft measures establishing a provisional MRL on the basis of Article 4 of [R-2377/90], it must be borne in mind that that Article applies only provided that there are no grounds for supposing that residues of the substance concerned at the level proposed present a hazard for the health of the consumer, a condition which precisely was not satisfied in a situation of scientific uncertainty and disquiet in regard to public health.”

“With regard to the second measure referred to by the [CFI] by way of alternative argument, that is to say, a new deferral by the Commission of the time-limit laid down in Article 14 of [R-2377/90], suffice it to point out that the deferral of that time-limit would also not have been an appropriate measure for safeguarding public health.”

“In the light of all those considerations, it therefore does not appear that, in not submitting a draft regulation prior to 25 July 2001, the Commission breached Community law in a sufficiently serious way as to give rise to liability on the part of the Community.”

“Accordingly, without it being necessary to examine the other conditions necessary for the establishment of non-contractual liability on the part of the Community, the actions must be dismissed.” [¶¶ 89-94]

Citation: EC Commission v. CEVA Sante Animale SA., Case C-198/03P, 2005 ECJ CELEX LEXIS 328 (Eur. Ct. Just. 2005).

SARBANES-OXLEY ACT

First Circuit rules that civil whistleblower provision in Sarbanes-Oxley Act does not provide remedy for foreign employee’s discharge resulting from reporting to U.S. parent company dishonest behavior by fellow employees of foreign subsidiaries

Ruben Carnero (plaintiff), an Argentine citizen residing in Brazil, sued Boston Scientific Corporation (BSC or defendant), a Delaware corporation with its headquarters in Massachusetts in the federal court in that state. BSC manufactures medical equipment.

In 1997, the Argentine subsidiary, Boston Scientific Argentina S.A. (BSA) hired plaintiff, and later on he also served as the Country Manager for a Brazilian subsidiary of BSC.

Plaintiff had informed BSC that its Latin American subsidiaries had created false invoices and had inflated sales figures. The complaint alleged that the defendant had fired him in retaliation for his “whistleblowing.”

The district court dismissed plaintiff’s federal and state law claims, holding that the whistleblower protection under Title VIII, Section 806, of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section  1514A (2005), does not apply extraterritorially. As for his state law claims, the court found that plaintiff had no contact at all with defendant in Massachusetts. Plaintiff appealed but the U.S. Court of Appeals for the First Circuit affirms.

The Court first points out that no court has yet addressed the extraterritorial application of a whistleblower claim under 18 U.S.C. Section  1514A. As a threshold matter, the Court determines that plaintiff’s claim would otherwise fit within the whistleblower protection of the statute. Section 1514A applies to employees of publicly traded companies who lawfully “provide information ... or otherwise assist in an investigation regarding any conduct which the employee believes constitutes a violation” of the federal mail, wire, bank, or securities laws and regulations.

“The whistleblower statute ... makes clear that the misconduct it protects against is not only that of the publicly traded company itself, but also that of ‘any officer, employee, contractor, subcontractor, or agent of such company,’ who retaliates or otherwise discriminates against the whistleblowing employee. See 18 U.S.C. Section  1514A(a). Thus, the statute can be read to embrace an agent-subsidiary’s retaliation against a protected employee. As Carnero may be an ‘employee’ of BSC, ... his alleged retaliatory discharge by its subsidiaries for reasons forbidden in the Act could (putting aside any question of extraterritorial application) violate the terms of the whistleblower protection provision of the Sarbanes-Oxley Act.” [Slip op. 7]

The Court concludes, however, that the relevant provisions of The Act do not have an extraterritorial impact. “ ... [W]hile the Sarbanes-Oxley purpose to protect investors and build confidence in U.S. securities markets may be a factor supporting extraterritorial application of the instant whistleblower protection provision, the other pertinent factors run strongly counter to finding an extraterritorial legislative intent. These contrary indicia prevent our determining that Congress has evidenced its ‘clear intent’ for extraterritorial application. Not only is the text of 18 U.S.C. Section  1514A silent as to any intent to apply it abroad, the statute’s legislative history indicates that Congress gave no consideration to either the possibility, or the problems , of overseas application.”

“In sharp contrast with this silence, Congress has provided expressly elsewhere in the Sarbanes-Oxley Act for extraterritorial enforcement of a different, criminal, whistleblower statute. By so providing, Congress demonstrated that it was well able to call for extraterritorial application when it so desired. Also in the Act, Congress has provided expressly for the exterritorial application of certain other unrelated statutes, tailoring these so as to cope with problems of sovereignty and the like -- again demonstrating Congress’s ability to provide for foreign application when it wished.”

“Here, however, while placing the whistleblower provision’s enforcement in the hands of the [Department of Labor (DOL)], a domestic agency, Congress has made no provision for possible problems arising when that agency seeks to regulate employment relationships in foreign nations, nor has Congress provided the DOL with special powers and resources to conduct investigations abroad. Furthermore, judicial venue provisions written into the whistleblower protection statute were made expressly applicable only to whistleblower violations within the United States and to complainants residing here on the date of violation, with no corresponding basis being provided for venue as to foreign complainants claiming violations in foreign countries.” [Slip op. 9-10]

Citation: Carnero v. Boston Scientific Corp., Nos. 04-1801 & 04-2291 (1st Cir. January 5, 2006).

TRADEMARKS

European Court of Human Rights holds that Budweiser could not invoke protection of Protocol No. 1 in suit against Portugal for rejecting its trade mark application since mark had never become its “possession”

Anheuser-Busch Inc. (applicant) is a Missouri corporation that makes and markets its beer products around the world. In 1981, it applied to register “Budweiser” as a trade mark in Portugal but the Portuguese agency delayed its action because Budejovicky Budvar of the Czech Republic had already registered “Budweiser Bier” as a designation of origin. A bilateral treaty between Portugal and the Czech Republic’s predecessor entered into force in 1987 to mutually protect registered designations of origin.

Though applicant fully litigated the validity of Budvar’s registration, Portugal’s highest court ultimately ruled that the Agreement protected Budvar’s designation of origin. In July 2001, the applicant asked the European Court of Human Rights (ECHR) for relief against Portugal. It relied on Protocol No. 1 to the European Convention for the Protection of Human Rights and Fundamental Freedoms [312 U.N.T.S. 221, Nov. 4, 1950, as amended]. Article 1 of Protocol No. 1 [313 U.N.T.S. 262, Mar. 20, 1952] provides in part that “Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.”

In a 5 to 2 decision, a Chamber of the ECHR rules in favor of Portugal. The Court sees the controlling issue as precisely when, if at all, the right to protection of the trade mark became applicant’s “possession” within the meaning of Article 1.

The Court first points out that applying to register a trade mark clearly does implicate applicant’s economic interests in protecting its internationally known brand name. “However, ... Anheuser‑Busch Inc.’s legal position was not sufficiently strong to amount to a ‘legitimate expectation’ that attracted the protection of Article 1 of Protocol No. 1. The applicant company could not be sure of being the holder of the trade mark in question until after it had been definitively registered and then only on condition that no objection was [timely] raised by a third party in that respect.”

“In conclusion, ... while it was clear that a trade mark amounted to a ‘possession’ within the meaning of Article 1 of Protocol No. 1, this was not the case until final registration of the application in question, in accordance with the rules in force in the State concerned. Prior to such registration, applicants did of course have a hope of acquiring such a ‘possession’, but not a legally‑protected legitimate expectation. ... Accordingly, ... Article 1 of Protocol No. 1 was inapplicable to the present case and could not therefore have been infringed.” [Quotes are from ECHR registrar’s summary of French judgment.]

Citation: Anheuser‑Busch Inc. v. Portugal, appl. no. 73049/01; E.C.H.R. 529 (November 10, 2005). [See Court’s judgment in French on its Internet site: http://www.echr.coe.int.]

EU Court of First Instance upholds EC Commission’s veto of GE-Honeywell merger. On December 14, 2005, the European Court of First Instance (CFI) handed down a ruling that generally supported the EC Commission’s 2001 rejection of the proposed $42 billion merger of General Electric and Honeywell. The CFI agreed with the Commission’s finding that the companies “pre‑existing dominant position on the market for jet engines for large regional aircraft would be strengthened.” In the court’s view, a GE and Honeywell combination in engines for corporate jet aircraft and for small marine gas turbines would bring about “dominant positions” in those markets. On the other hand, the CFI criticized aspects of the Commission’s rationale. Specifically, the CFI found that the Commission had not convincingly shown that the merger would create “conglomerate effects,” that is, advantages based on a company’s capacity to bundle many services into one basket, thus offering better deals and undercutting competition. Spokespersons for all three parties -- the Commission (Europe’s top competition authority), General Electric and Honeywell ‑‑ said they had found things to praise in the CFI’s ruling. Citation: The New York Times, Brussels, Wednesday, December 15, 2005, Section C, page 7; 2005 WLNR 20104269 (byline of Paul Meller).

EU steps up controls of cash entering or leaving its territory. The European Union (EU) is tightening its control of cash that is entering or leaving the EU with Regulation 1889/2005. A “regulation” applies directly to the EU Member States from its effective date. The purpose is to provide harmonized rules for the control of cash, including negotiable instruments, promissory notes, money orders, and currency. Any person entering or leaving the EU and carrying EURO 10,000 or more in cash must file a declaration. The EU will collect, process and circulate this information among the Member States. The Regulation will enter into force on June 15, 2007. - Citation: 2005 O. J. of European Union (L 309) 9, 25 November 2005.

EU issues sweeping directive to control money laundering and terrorist financing. The European Union (EU) has issued Directive 2005/60/EC on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing. It requires the EU Member States to prohibit money laundering and terrorist financing through, for example, financial institutions, legal professionals, tax advisors, real estate agents, trading companies, and casinos. The specific provisions include: (1) Financial institutions must not maintain anonymous accounts (Article 6); (2) all covered institutions and individuals must apply customer due diligence when establishing business relationships, including identifying customer identity and scrutinizing transactions (Article 8); (3) Casinos must identify customers who purchase EURO 2,000 or more in gambling chips (Article 10). The EU Member States must implement this directive by December 15, 2007. – A “directive” must be implemented by the EU Member States to be effective. Citation: 2005 O.J. of the European Union (L 309) 15, 25 November 2005.

U.S. and EU agree on compensation for EU enlargement. The U.S. and the European Union (EU) have agreed on compensation for the EU’s May 2004 expansion. On May 1, 2004, Estonia, Latvia, Lithuania, Poland, Slovakia, the Czech Republic, Slovenia, Hungary, Cyprus and Malta joined the EU. These 10 new Member States had to change their tariff schedules to comply with the EU common external tariff schedule, thus increasing tariffs on certain imported products. The tariff increases adversely affected U.S. exports to those countries. The U.S. -EU agreement was signed on November 30, 2005, in Brussels and compensates the U.S. in the form of trade concessions. Also, the agreement reduces some EU tariffs. The provisions include, for example, (1) a permanent EU tariff reduction for protein concentrates, fish, chemicals, and certain metal products; and (2) an expansion of the existing global tariff rate quota for beef, poultry, pork, rice, as well as for other food and animal products. – The agreement was negotiated based on GATT rules. GATT Articles XXIV:6 and XXVIII permit compensation to offset such tariff changes. The agreement must be approved by the EU Member States. – The EU has extended the negotiation period with other countries in this regard for another six months, until August 1, 2006. Citation: U.S. Trade Representative press release 11/30/2005; Information released by the Hong Kong Trade Development Council on January 20, 2006, available at www.tdctrade.com.