2006 International Law Update, Volume 12, Number 3 (March)

2006 International Law Update, Volume 12, Number 3 (March)

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

ANTI-SUIT INJUNCTIONS

Ninth Circuit approves injunction against party from pursuing subsequent parallel action in Brazil where Brazilian party had fully taken part in U.S. proceedings and had brought the Brazilian lawsuit seven months after final judgment in U.S.

Triton Container International Ltd. (Triton), a lessor of ocean cargo containers, brought a breach of contract action in the District Court for the Northern District of California against Di Gregorio Navegacao Ltda. of Brazil and several other parties (jointly Di Gregorio). Eventually, the district court awarded Triton almost $4.5 million.

Di Gregorio did not appeal. About seven months later, however, it sued Triton in Brazil based on the same facts. Triton applied to the District Court to enjoin Di Gregorio from pursuing the Brazilian suit but the district court declined on comity grounds. (Di Gregorio failed to appear in the injunction phase of the U.S. case.) The Brazilian court ended up awarding Di Gregorio about $1.8 million, which Triton appealed. The U.S. Court of Appeals for the Ninth Circuit reverses and remands. It held that the district court erred in failing to grant Triton’s application for a permanent injunction.

The Circuit Court points out that Di Gregorio had fully taken part on the merits in the original district court proceeding, and had filed the Brazilian action seven months after the final judgment. Seattle Totems Hockey Club, Inc. v. National Hockey League, 652 F.2d 852, 855 (9th Cir. 1981) held that a federal district court with jurisdiction over particular parties has the power to enjoin them from proceeding with a foreign action to litigate the same issues. Here, the district court only considered comity, and failed to consider the other Seattle Totems factors. See Seattle Totems Hockey Club, Inc. v. National Hockey League, 652 F.2d 852, 855 (9th Cir. 1981) (federal district court with jurisdiction over particular parties has the power to enjoin them from proceeding with a foreign action to litigate the same issues; factors for the court's consideration include "the convenience to the parties and witnesses, the interest of the courts in promoting the efficient administration of justice, and the potential prejudice to one party or the other.").

Citation: Triton Container Int’l Ltd. v. Di Gregorio Navegacao LTDA, 2006 WL 626165, No 05-15535 (9th Cir. March 15, 2006).

BANKRUPTCY

Fourth Circuit determines that presumption against extraterritoriality does not bar application of U.S. Bankruptcy Code to avoid debtor’s transfer of Bahamian realty

In 1976, Betty Irene French (the debtor), a resident of Maryland, bought a house in the Bahamas. At a Christmas party in 1981 in Maryland, she gave a deed to the property to her children, Randy Lee French and Donna Marie Shaka (the transferees). To avoid high local transfer taxes, however, the transferees did not immediately record the deed in the Bahamas. In the late 1990s, however, the debtor and her husband were running into financial problems; accordingly, in mid-2000, the transferees decided to record the deed in the Bahamas. In October 2000, Mrs. French’s creditors filed an involuntary Chapter 7 bankruptcy petition against her in Maryland. The bankruptcy court entered an Order for Relief in January 2001.

In August 2002, the bankruptcy trustee filed a proceeding against the transferees to avoid the transfer of the Bahamian property and to recover the property or its fair market value for the benefit of the estate. The trustee alleged that the debtor and the transferees had engaged in a constructively fraudulent transfer in breach of the Bankruptcy Code since the debtor had been insolvent at transfer time and had not received a reasonably equivalent value in return. See 11 U.S.C. Section 548(a)(1)(B)(2000).

The transferees moved to dismiss. Relying on the presumption against extraterritoriality, they argued that the court should not apply Section 548 to transfers of foreign property. The bankruptcy court denied the motion. The trustee then moved for summary judgment. The bankruptcy court granted it, and the district court confirmed. On the transferees’ appeal, the U.S. Court of Appeals for the Fourth Circuit affirms.

The Court explains. “It is a longstanding principle of American law ‘that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.’” [Slip op. 3 (quoting EEOC v. Arabian Am. Oil Co., 499 U.S. 244, 248 (1991))]. This presumption applies only when a party seeks to apply a U.S. statute to conduct that took place beyond U.S. territorial boundaries.

The Fourth Circuit opines that, in determining whether a transaction is foreign or domestic, “a court should consider whether the participants’, acts, targets, and effects involved in the transaction at issue are primarily foreign or primarily domestic.” [Slip op. 4] In this case, the perpetrator and most of the victims of the fraudulent transfer have long been located in the U.S. In addition, the conduct constituting the constructive fraud took place in the U.S.

A factor that merits special weight in the balancing test, of course, is the fact that the situs of the real property is the Bahamas.

“The law has long recognized the powerful interest that states and nations have in the real property within their boundaries.” [Slip op. 5] Nevertheless, the Court finds that the language of the Bankruptcy Code clearly intends the “property of the estate” to include both domestic and foreign assets. The Code expressly disallows certain transfers of estate property and empowers the trustee to get it back. In the Code, Congress clearly tried to prevent debtors from improperly disposing of estate property that would otherwise be available to creditors, irrespective of its location. Therefore, the usual presumption against extraterritoriality does not bar the application of Section 548 here.

Citation: In re French, 2006 WL 328392, No. 05-1054 (4th Cir. February 14, 2006).

CHILD ABDUCTION

In proceeding under Hague Convention on Child Abduction, Third Circuit vacates and remands lower court’s order returning child from U.S. to Argentina in light of incomplete fact-finding on key issues

Avans (respondent) is a naturalized U.S. citizen. In 1998, she met Adan (petitioner), a citizen of Argentina, in Argentina, and they began cohabitating shortly thereafter. Respondent testified before the District Court that petitioner began to abuse her almost immediately. For example, he would lock her in his bedroom, beat her, and threaten her with further harm if she ever leaves him. When respondent became pregnant in 1999, she moved to New Jersey. Petitioner followed her in a month and, according to respondent, the abuse resumed. Respondent gave birth to Arianna on June 15, 2000. The parents went on living in New Jersey where respondent filed reports of petitioner’s abuse with the New Jersey police twice in a two-months span.

In September 2000, the parties returned to Argentina and, after receiving more abuse, respondent eventually began living apart from petitioner. At some point, the parties allegedly reached an informal custody agreement as to Arianna. Respondent next alleges that petitioner began sexually abusing Arianna in 2003. The child allegedly told her mother that petitioner took baths with her and that he apparently had put his tongue inside her mouth. Respondent also said that the child described having been sodomized by petitioner. In addition, respondent claimed that petitioner had raped respondent in front of Arianna.

After these incidents, respondent went to a family court in Argentina and secured a 90-day temporary restraining order (TRO) against petitioner. According to respondent, when petitioner violated the order, the local police failed to enforce it. Shortly before the February 2004 return date on the TRO, respondent took her daughter back to New Jersey. Petitioner followed his wife and child to the U.S. In April 2004, respondent obtained a TRO against petitioner from the local court.

Next, petitioner applied to the New Jersey federal court to order Arianna’s return to Argentina pursuant to the Hague Convention on the Civil Aspects of International Child Abduction (the “Hague Convention”) [Oct. 25, 1980, T.I.A.S. No. 11,670, 19 I.L.M. 1501 (1980)]. The International Child Abduction Remedies Act (ICARA), 42 U.S.C. Section 11601 et seq. implements the Hague Convention in the U.S. The court granted the application. It found that respondent had not shown by clear and convincing evidence that Arianna would be subject to physical or psychological harm if returned to Argentina.

With respect to the allegations of sexual abuse, the Judge shrugged off the child’s descriptions of petitioner’s sodomy and other inappropriate sexual behavior as being trivial. Respondent appealed. The U.S. Court of Appeals for the Third Circuit vacates the order and remands for further proceedings.

As the appellate court explains: “The purpose of the Convention is to ‘protect children internationally from the harmful effects of their wrongful removal or retention and to establish procedures to ensure their prompt return to the State of their habitual residence, as well as to secure protection for rights of access.’”

“Under Article 3 of the Convention, removing a child from a country is wrongful when: ‘[a] it is in breach of rights of custody attributed to a person, an institution or any other body, either jointly or alone, under the law of the State in which the child was habitually resident immediately before the removal or retention; and [b] at the time of removal or retention, those rights were actually exercised, either jointly or alone, or would have been so exercised but for the removal or retention.” [Slip op. 7-8]

Article 13(b) may, in effect, “ratify” an initially wrongful removal, however, if there is proof of a grave risk that the child’s return would expose her to physical or psychological harm or otherwise place her in an intolerable situation. A petitioner must show by a preponderance of the evidence that he had, and was exercising, custody rights over the child under the country of origin’s laws and that the country of origin was the child’s “habitual residence.” Upon such a showing, the burden shifts to the other party to show by clear and convincing evidence that the Article 13(b) exception applies.

The Third Circuit reviews cases like this de novo. The issues on appeal are whether (1) Arianna was wrongfully removed from her habitual place of residence; and (2) whether the exception for wrongful removal can be applied to this case.

The Circuit Court concludes that Argentina is Arianna’s country of habitual residence. Though she was born in the U.S., the parents took Arianna to Argentina when she was three months old and lived there until February 2004. Petitioner and respondent clearly had a “settled purpose” and “shared parental intent” to raise their daughter in Argentina. On the other hand, the record is barren of any evidence of the alleged informal agreement between the parties about Arianna’s custody. Nor does it show that the parents had properly memorialized the agreement pursuant to Argentine law.

Moreover, the parties failed to cite, and the District Court did not refer to, any provisions of Argentine law dealing with the creation, terms, or enforceability of custody agreements. These lacunae make it impossible for the federal court to decide whether the alleged agreement had legal effects under Argentine law as the Convention requires.

In light of the lower court’s failure to consider these issues, “we are compelled to vacate its June 7, 2005 order and remand the case for further factfinding to determine: (1) what is the custody law of Argentina; (2) what are the terms of the parties’ agreement regarding custody of Arianna; (3) whether that agreement is enforceable under Argentine law; and (4) under the agreement (or, if the agreement is not enforceable, Argentine family law), whether [petitioner] had custody rights or mere rights of access, and whether he was validly exercising those rights at the time Arianna was removed. Upon the development of a proper factual record, we shall be in a better position to review the District Court’s factual and legal conclusions.” [Slip op. 13].

Citation: In re Application of Adan, 437 F.3d 381 (3rd Cir. 2006).

DENATURALIZATION

Seventh Circuit rules that alien’s failure to mention involuntary conscription to serve as SS guard at Nazi concentration and labor camps in 1956 visa application made his U.S. presence unlawful and thus invalidated his later naturalization

Josias Kumpf, an ethnic German (defendant), was born in Nova Pasova, Yugoslavia in April 1925. He had less than three years of schooling and passed most of his youth working on his father’s farm. Germany invaded Yugoslavia on April 6, 1941. After the invasion, Germany started to conscript local ethnic Germans into its forces. For example, a drummer marched through defendant’s town in October 1942, calling all young men to report for a health exam. After defendant’s examination, German officials instructed him to report to the train station later that month.

Defendant obeyed and was taken to Oranienburg, Germany where he completed basic military training. There the Waffen Schutzstaffel, or armed protection guard, issued him a uniform, a rifle, a blood‑type tattoo, and both the distinctive skull and the SS insignia to wear on his uniform. The Waffen SS was the paramilitary component of the Nazi Party and was separate from the German Army, the Wehrmacht. Although originally intended to serve as Hitler’s bodyguards, by the outbreak of World War II, the SS had assumed responsibility for German state security and for the operation of the Nazi concentration camps.

After his training, defendant was assigned to what later became the SS Death’s Head Guard Battalion Sachsenhausen. Defendant’s duty was to stand armed guard over prisoners at Sachsenhausen Concentration Camp (SSC). As recounted in detail in United States v. Wittje, 422 F.3d 479, 482‑83 (7th Cir. 2005), the SS kept prisoners in hellish conditions, forced them to perform grueling labor, subjected them to medical experimentation, and sent many to execution.

Defendant’s duty was to watch over the prisoners from perimeter guard towers. If anyone tried to escape, defendant was to fire warning shots and, if necessary, to shoot the escaping prisoner. Defendant testified, however, that he had never faced such a situation. During his tenure at the SSC, defendant was paid, got leave to return to his home, and received one promotion.

In October 1943, defendant was one of 150 guards transferred from the SSC to the Trawniki Labor Camp (TLC) in German‑occupied Poland. About 8,000 prisoners at TLC were executed in “Operation Harvest Festival” on November 3, 1943. The parties disagree as to whether defendant arrived at TLC before the massacre, but he admitted having guarded the pits after the executions to prevent any survivors from escaping.

Soon after the slaughter, the SS brought a group of Jews to TLC to sort the victims’ clothing, to recover the dental gold from the bodies, and to burn the corpses. Defendant never forgot the stench of the burning bodies. Although ordered to shoot any escaping victim, he claims that no attempts were made on his shifts.

After getting back from home leave, defendant left TLC in early 1944 for Occupied France. There, inter alia, he guarded a detachment of prisoners from various camps who had to build platforms for launching missiles against Great Britain. After D-Day, defendant’s unit retreated into Germany. Defendant claims that they sent him to the eastern front, where the Soviet Army captured him, and held him as a POW for the rest of the war.

When the war ended, defendant rejoined his family in Austria and later married Elisabeth Eremity. In 1956, defendant applied for a visa to enter the U.S. with his wife and three children. On his application, defendant falsely stated that he had served in the “German Army” and failed to mention his SS service. Defendant received a visa on March 23, 1956. About two months later, he arrived in the U.S. via the port of New York and settled in Chicago.

In February of 1964, defendant applied for naturalization. In response to a question regarding his memberships in military or other organizations, defendant merely asserted that he had been in the “German Army,” again omitting any mention of his SS service. The U.S. granted defendant his citizenship on May 9, 1964.

After coming upon some wartime documents showing that defendant had served in the SS, the government filed a four‑count complaint in a Wisconsin federal court which asked the court to denaturalize defendant. The district court gave summary judgment to the government. It ruled that defendant had unlawfully obtained his U.S. citizenship because he had personally assisted in persecution and had not been eligible, therefore, for a visa under the Refugee Relief Act (the RRA).

Defendant took an appeal. He maintained principally that he had not illegally secured his citizenship, and that the federal courts lacked subject matter jurisdiction over this determination. The U.S. Court of Appeals for the Seventh Circuit, however, affirms in an opinion handed down on February 23, 2006.

The Court explains its reasoning. Where an individual has “illegally procured” citizenship, Congress provided for the revocation of the individual’s naturalization. See 8 U.S.C. Section 1451(a). “To procure citizenship lawfully, an individual must be ‘lawfully admitted for permanent residence’ into the United States, among other requirements. 8 U.S.C. Section 1427(a). Kumpf was admitted for permanent residence based on a visa issued under the RRA. To ascertain whether Kumpf illegally procured citizenship, we must therefore evaluate the validity of his visa.”

“Kumpf first argues that this court lacks subject matter jurisdiction to consider the validity of the visa. Kumpf submits that Congress empowered the consular officers of the United States with exclusive authority ‘relating to the granting or refusal of visas.’ 8 U.S.C. Section 1104(a). Since the consular officer has such exclusive authority, he argues, the federal courts cannot displace the consular function by reviewing the decision to grant a visa. This court previously decided this issue, determining that the federal courts do have jurisdiction ‘to examine visa eligibility.’ United States v. Tittjung, 235 F.3d 330, 338 (7th Cir. 2000).”

“Kumpf [then points out] that his visa was issued under the Refugee Relief Act and not the earlier Displaced Persons Act ... This distinction, however, is immaterial to the jurisdictional argument. The federal courts have jurisdiction to review the visa process, regardless of the statute under which the visa was issued. Kumpf’s jurisdictional argument is without merit.” [788]

If defendant was not lawfully present in the U.S. by reason of his visa’s fraudulent nature, the resulting naturalization process is void. “Because of the ‘precious’ nature of United States citizenship, ‘the Government carries a heavy burden of proof’ in denaturalization cases, and the evidence justifying revocation ‘must be clear, unequivocal, and convincing and not leave the issue in doubt.’ Fedorenko v. United States, 449 U.S. 490, 505 (1981).”

“To evaluate the validity of the visa under this standard, we apply the governing statute at the time Kumpf’s visa was issued, the RRA. Kumpf argues that, because this Act expired by the time of his naturalization, it cannot be used to revoke his citizenship. This argument is without merit: because Kumpf received a visa under the RRA, the court must look to that Act to evaluate whether the visa was issued properly.”

The 1953 RRA provides that a person who ‘personally advocated or assisted’ in persecution is ineligible for a visa. Pub.L. No. 83‑203 Section 14(a), 67 Stat. 400 (1953). Defendant argued that his service in the Waffen SS did not constitute “personal” assistance in persecution, and therefore did not disqualify him from obtaining a visa.

“In this case, ... Kumpf was a guard who was issued a uniform, armed with a rifle, received wages, and took leave to visit home. He admits to standing guard over prisoners at Sachsenhausen, Trawniki, and in Occupied France. He also admits to receiving orders to shoot escaping prisoners, although he claims he never needed to do so.” [789-90]

“Kumpf emphasizes in his brief that he ‘never personally harmed any individual’ and never ‘aimed or discharged his weapon at anyone.’ He argues that his limited conduct cannot constitute personal assistance in persecution. This lack of affirmative acts, however, does not undermine the fact that he fulfilled his role as a guard. The RRA’s parameters are not limited to personally harming or personally shooting individuals; the language instead addresses personal assistance. Kumpf’s personal presence functioned to discourage escape attempts and maintain order over the prisoners.”

“His participation was not through monetary contributions, mere membership, or other indirect actions. Rather, he presided over and witnessed the torture and murder of helpless people. Because no one tried to escape during his watch, he claims he did not have to shoot anyone. Nevertheless, his personal presence as an armed guard clearly assisted in the persecution of the prisoners.” [790]

Defendant’s next point is that his Waffen SS service had been involuntary. “He submits that the involuntariness of his service should be considered in determining his eligibility for a visa under the RRA. Even assuming that Kumpf served involuntarily, the RRA does not require a person to assist voluntarily in persecution. In the context of the Displaced Persons Act, courts have held that the voluntariness of the service is irrelevant. See Fedorenko, 449 U.S. at 513 (‘an individual’s service as a concentration camp armed guard ‑‑ whether voluntary or involuntary ‑‑ made him ineligible for a visa.’); [Cite]. Similarly, the plain language of the RRA lacks a voluntariness requirement.”

“In his sworn deposition taken for this case, Ambassador [Richard] Bloomfield [a former visa officer in 1956] clarified that a watch tower guard at a concentration camp who was compelled into service would not be eligible for a visa. Furthermore, Kumpf himself testified that he did not disclose to the visa officers anything about his service with the Waffen SS. Regardless, the plain language of the RRA does not provide for a consideration of voluntariness in assessing whether an individual personally assisted in persecution. The statute is not ambiguous, and therefore we do not need to address the agency’s construction of the statute.”

“Given Kumpf’s candid recitation of his service, even if such service were compelled, we conclude that through his actions he personally assisted in persecution, and was therefore ineligible for a visa. Accordingly, his visa was invalid, making his admission to this country unlawful and his citizenship illegally procured. The district court therefore properly revoked Kumpf’s citizenship.” [790-91].

Citation: United States v. Kumpf, 438 F.3d 785 (7th Cir. 2006).

FORUM NON CONVENIENS

Responding to its Article 234 referral, European Court of Justice instructs English Court of Appeal that Article 2 of Brussels Convention precludes application of English forum non conveniens principles in lawsuit where plaintiff and one defendant were domiciliaries of Contracting State

Plaintiff Owusu, who was domiciled in the United Kingdom, visited a holiday villa at Mammee Bay in Jamaica which he had rented from a Mr. Jackson (defendant), trading as “Villa Holidays Bal‑Inn Villas”, also a U. K. domiciliary. The agreement granted plaintiff access to a private beach. During the holiday, the plaintiff, while in seawater up to his waist, dove under water. In doing so, his head collided with a hidden sandbank; the impact fractured his fifth cervical vertebra and rendered him a tetraplegic.

Plaintiff sued defendant in the civil division of the English High Court for breach of contract. His theory was that the contract contained an implied term that the beach would be reasonably safe or free from hidden dangers. Plaintiff also brought a tort action in the same court against three Jamaican companies, including the owner of the beach in question and several hotels licensed to use it.

Defendant and the Jamaican companies did not question the English court’s jurisdiction over them. But they did ask the English court to decline to exercise its jurisdiction because, under the English law of forum non conveniens, the courts of Jamaica at the locus delicti were a more just and convenient forum in which to resolve the dispute.

The judge ruled, however, that it was not open to him to stay the action against Jackson since he and plaintiff were both domiciled in a Contracting State of the EC Judgments Convention. See Convention of September 27, 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters. [1978] O.J. L304/36, as amended by the Accession Conventions of October 9, 1978, October 25, 1982 and May 26, 1989, generally called “the Brussels Convention.”

Notwithstanding the links that the action might have with Jamaica, the judge reasoned that there was a danger that the courts of two jurisdictions would end up trying the same factual issues upon the same or similar evidence but reach inconsistent conclusions. He therefore held that the U. K. -- and not Jamaica -- was the appropriate forum.

Convention Art. 2 provides that: “Subject to the provisions of this Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the courts of that State. Persons who are not nationals of the State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that State”.

Art. 5(1) and (3) of that Convention further declare that, in matters relating to a contract, an EU domiciliary may be sued in another Contracting State in the courts of the place set for the performance of the obligation in question, and, in matters relating to tort, delict or quasi‑delict, in the courts for the place where the alleged harmful event had taken place. Moreover, Convention Art. 21, which concerns lis pendens, seeks to forestall conflicting decisions as between courts of two or more Contracting States.

On the other hand, according to the English doctrine of forum non conveniens, a national court may decline to exercise its jurisdiction on the ground that a court in another State, which also has jurisdiction, would objectively be a more appropriate forum for the trial of the action. The search is for a forum in which the case may be tried more cost-effectively in the interests of all the parties and the ends of justice. See the leading House of Lords judgment in Spiliada Maritime Corporation v. Cansulex Ltd., [1987] A.C. 460; [1987] E.C.C. 168.

When an English court decides to invoke the doctrine of forum non conveniens, it stays its own proceedings so that it can resume the provisionally suspended proceedings should it turn out, e.g., that the foreign forum has no jurisdiction to hear the case or that the claimant cannot get effective justice in that forum. Notwithstanding the links that the action brought against the other defendants might have with Jamaica, the judge held that the United Kingdom, and not Jamaica, was the appropriate forum State.

The defendant Jackson and the third, fourth and sixth Jamaican defendants appealed that order. The Court of Appeal (Civil Division), however, decided to stay its proceedings and to refer the following two questions about Community law to the European Court of Justice pursuant to Art. 234 for a preliminary ruling: “1. Is it inconsistent with the Brussels Convention ..., where a claimant contends that jurisdiction is founded on Article 2, for a court of a Contracting State to exercise a discretionary power, available under its national law, to decline to hear proceedings brought against a person domiciled in that State in favour of the courts of a non‑Contracting State: (a) if the jurisdiction of no other Contracting State under the Convention is in issue; (b) if the proceedings have no connecting factors to any other Contracting State?” 2. If the answer to question 1(a) or (b) is yes, is it inconsistent in all circumstances or only in some and if so which?”

A Grand Chamber of the European Court of Justice responds in the negative to the first question. “In order to reply to the first question, it must first be determined whether Art. 2 of the Brussels Convention is applicable in circumstances such as those in the main proceedings, that is to say, where the claimant and one of the defendants are domiciled in the same Contracting State and the case between them before the courts of that State has certain connecting factors with a non‑Contracting State, but not with another Contracting State. Only if it is will the question arise whether, in the circumstances of the case in the main proceedings, the Brussels Convention precludes the application by a court of a Contracting State of the forum non conveniens doctrine where Art. 2 of that convention would permit that court to claim jurisdiction because the defendant is domiciled in that State.” [¶ 23]

“However, the international nature of the legal relationship at issue need not necessarily derive, for the purposes of the application of Art. 2 of the Brussels Convention, from the involvement, either because of the subject‑matter of the proceedings or the respective domiciles of the parties, of a number of Contracting States. The involvement of a Contracting State and a non‑Contracting State, for example, because the claimant and one defendant are domiciled in the first State and the events at issue occurred in the second, would also make the legal relationship at issue ‘international’ in nature. That situation is such as to raise questions in the Contracting State, as it does in the main proceedings, relating to the determination of international jurisdiction, which is precisely one of the objectives of the Brussels Convention ...” [¶ 26]

“Similarly, ... whilst it is clear from their wording that the Brussels Convention rules on lis pendens and related actions or recognition and enforcement of judgments apply to relationships between different Contracting States, provided that they concern proceedings pending before courts of different Contracting States or judgments delivered by courts of a Contracting State with a view to recognition and enforcement thereof in another Contracting State, the fact nevertheless remains that the disputes with which the proceedings or decisions in question are concerned may be international, involving a Contracting State and a non‑Contracting State, and allow recourse, on that ground, to the general rule of jurisdiction laid down by Art.2 of the Brussels Convention.”

“To counter the argument that Art. 2 applies to a legal situation involving a single Contracting State and one or more non‑Contracting States, the defendants in the main proceedings and the United Kingdom Government cited the principle of the relative effect of treaties, which means that the Brussels Convention cannot impose any obligation on States which have not agreed to be bound by it.”

“In that regard, ... the designation of the court of a Contracting State as the court having jurisdiction on the ground of the defendant’s domicile in that State, even in proceedings which are, at least in part, connected, because of their subject‑matter or the claimant’s domicile, with a non‑Contracting State, is not such as to impose an obligation on that State.” [¶¶ 29-31]

“The purpose of the fourth indent of Art. 220 of the EC Treaty (now the fourth indent of Art. 293 EC), on the basis of which the Member States concluded the Brussels Convention, is to facilitate the working of the common market through the adoption of rules of jurisdiction for disputes relating thereto and through the elimination, as far as is possible, of difficulties concerning the recognition and enforcement of judgments in the territory of the Contracting States. In fact it is not disputed that the Brussels Convention helps to ensure the smooth working of the internal market.”

“However, the uniform rules of jurisdiction contained in the Brussels Convention are not intended to apply only to situations in which there is a real and sufficient link with the working of the internal market, by definition involving a number of Member States. Suffice it to observe in that regard that the consolidation as such of the rules on conflict of jurisdiction and on the recognition and enforcement of judgments, effected by the Brussels Convention in respect of cases with an international element, is without doubt intended to eliminate obstacles to the functioning of the internal market which may derive from disparities between national legislations on the subject.” [¶¶ 32-34]

“[Thus] ... Art. 2 of the Brussels Convention applies to circumstances such as those in the main proceedings, involving relationships between the courts of a single Contracting State and those of a non‑Contracting State rather than relationships between the courts of a number of Contracting States. It must therefore be considered whether, in such circumstances, the Brussels Convention precludes a court of a Contracting State from applying the forum non conveniens doctrine and declining to exercise the jurisdiction conferred on it by Art. 2 of that Convention.”

“ ... Art. 2 of the Brussels Convention is mandatory in nature and that, according to its terms, there can be no derogation from the principle it lays down except in the cases expressly provided for by the Convention. It is common ground that no exception on the basis of the forum non conveniens doctrine was provided for by the authors of the Convention, although the question was discussed when the Convention of October 9, 1978 on the Accession of Denmark, Ireland and the United Kingdom was drawn up ...” [¶¶ 35-37].

“Respect for the principle of legal certainty, which is one of the objectives of the Brussels Convention, would not be fully guaranteed if the court having jurisdiction under the Convention had to be allowed to apply the forum non conveniens doctrine. According to its preamble, the Brussels Convention is intended to strengthen in the Community the legal protection of persons established therein, by laying down common rules on jurisdiction to guarantee certainty as to the allocation of jurisdiction among the various national courts before which proceedings in a particular case may be brought.”

“The Court has thus held that the principle of legal certainty requires, in particular, that the jurisdictional rules which derogate from the general rule laid down in Art. 2 of the Brussels Convention should be interpreted in such a way as to enable a normally well‑informed defendant reasonably to foresee before which courts, other than those of the State in which he is domiciled, he may be sued.”

“Application of the forum non conveniens doctrine, which allows the court seised a wide discretion as regards the question whether a foreign court would be a more appropriate forum for the trial of an action, is liable to undermine the predictability of the rules of jurisdiction laid down by the Brussels Convention, in particular that of Art. 2, and consequently to undermine the principle of legal certainty, which is the basis of the Convention.”

“The legal protection of persons established in the Community would also be undermined. First, a defendant, who is generally better placed to conduct his defence before the courts of his domicile, would not be able, in circumstances such as those of the main proceedings, reasonably to foresee before which other court he may be sued. Secondly, where a plea is raised on the basis that a foreign court is a more appropriate forum to try the action, it is for the claimant to establish that he will not be able to obtain justice before that foreign court or, if the court seised decides to allow the plea, that the foreign court has in fact no jurisdiction to try the action or that the claimant does not, in practice, have access to effective justice before that court, irrespective of the cost entailed by the bringing of a fresh action before a court of another State and the prolongation of the procedural time‑limits.”

“Moreover, allowing forum non conveniens in the context of the Brussels Convention would be likely to affect the uniform application of the rules of jurisdiction contained therein in so far as that doctrine is recognised only in a limited number of Contracting States, whereas the objective of the Brussels Convention is precisely to lay down common rules to the exclusion of derogating national rules.”

“The defendants in the main proceedings emphasise the negative consequences which would result in practice from the obligation the English courts would then be under to try this case, inter alia as regards the expense of the proceedings, the possibility of recovering their costs in England if the claimant’s action is dismissed, the logistical difficulties resulting from the geographical distance, the need to assess the merits of the case according to Jamaican standards, the enforceability in Jamaica of a default judgment and the impossibility of enforcing cross‑claims against the other defendants.”

“In that regard, genuine as those difficulties may be, suffice it to observe that such considerations, which are precisely those which may be taken into account when forum non conveniens is considered, are not such as to call into question the mandatory nature of the fundamental rule of jurisdiction contained in Art. 2 of the Brussels Convention, for the reasons set out above.”

“In the light of all the foregoing considerations, the answer to the first question must be that the Brussels Convention precludes a court of a Contracting State from declining the jurisdiction conferred on it by Art. 2 of that Convention on the ground that a court of a non‑Contracting State would be a more appropriate forum for the trial of the action even if the jurisdiction of no other Contracting State is in issue or the proceedings have no connecting factors to any other Contracting State.” [¶¶ 38-46]

As to the second question, the Court is of the view that an answer to it is not necessary to the ultimate resolution of the case before the U. K. courts. This being the limited goal of the Art. 234 reference procedure, no response is called for.

Citations: Owusu v. Jackson, Trading as “Villa Holidays Bal‑Inn Villas” and Others, (EU: Case C‑281/02); [2005] I.L.Pr. 25; [2005] 1 C.L.C. 246; [2005] 2 All E.R. (Comm) 577; 2005 WL 474200 (ECJ).

FORUM NON CONVENIENS

In admiralty case involving parallel court proceedings in China and U.S., Third Circuit determines as matter of first impression that district court should have determined whether it had personal jurisdiction over defendant before dismissing on forum non conveniens grounds

Malaysia International Shipping Corporation (MISC), a Malaysian company, brought a fraudulent misrepresentation action against Sinochem International Company Ltd. (Sinochem), a Chinese company. In 2003, Sinochem contracted with Triorient Trading, Inc. (Triorient), a U.S. company, to buy steel coils. A letter of credit in Triorient’s favor secured the purchase as long as the coils were loaded on or before April 30, 2003. The agreement provided for arbitration of disputes according to Chinese law.

Triorient subchartered MISC’s vessel M/V Handy Roseland (Vessel) to transport the coils to China. Another company loaded the coils onto the Vessel in Philadelphia. Something went wrong, however, with the shipment. In May 2003, Sinochem petitioned a Pennsylvania federal court pursuant to 28 U.S.C. Section 1782 to let it seek evidence about the shipment for use in an “imminent foreign proceeding.” The district court permitted limited discovery.

In June 2003, Sinochem petitioned the Guangzhou Admiralty Court (GAC) to preserve a maritime claim against MISC and for the arrest of the Vessel; it claimed that MISC had fraudulently backdated the bill of lading to April 30, 2003. Chinese authorities arrested the Vessel at the Huangpu Port in China. After MISC posted a $9 million security, the Vessel was released. MISC then filed the present civil action, claiming that Sinochem had negligently misrepresented the Vessel’s fitness and suitability for the cargo.

MISC moved to dismiss the GAC action for lack of jurisdiction. The court denied MISC’s motion, and the Guangdong Higher People’s Court (HPC) affirmed. As to MISC’s argument that the GAC should have dismissed the action because MISC had filed its U.S. action first, the Court opined that the timing had no effect on the GAC’s jurisdiction because China and the U.S. are distinct sovereigns.

Meanwhile, in the U.S. proceeding, the district court found subject matter jurisdiction based on 28 U.S.C. Section 1333 [admiralty and maritime jurisdiction]. As for personal jurisdiction, the district court surmised that, with limited Section 1782 discovery, MISC could probably have identified enough U.S. contacts. The district court, however, dismissed on grounds of forum non conveniens (FNC), reasoning that the Chinese courts provided an adequate alternative forum for MISC’s negligent misrepresentation claim.

MISC appealed the FNC dismissal. The U.S. Court of Appeals for the Third Circuit agrees with the district court that admiralty jurisdiction over this case did exist, but finds that the district court should have determined whether it had personal jurisdiction over defendant before ruling on Sinochem’s FNC motion.

Sinochem first argued that there was no admiralty jurisdiction under 28 U.S.C. Section 1333(1), since the alleged tort failed to satisfy the conditions of both of “location” and “connection” with maritime activity. The Third Circuit disagrees. The “Location Test” requires a federal court to determine (1) whether the tort occurred on navigable waters or (2) whether a vessel on navigable waters caused an injury suffered on land. Here, the tort is Sinochem’s alleged misrepresentation before the GAC that MISC had backdated the bill of lading.

In determining whether the tort took place on navigable waters, the weight of authority is that a tort takes place where the injury occurs. This case meets the test. The injury that Sinochem’s alleged misrepresentation to the GAC occurred on the seizure of MISC’s Vessel on Chinese navigable waters. Thus, MISC’s complaint meets the locality prong.

Secondly, the Court rules that the alleged tort does have the potential to disrupt maritime commerce. Furthermore, Sinochem’s asking the GAC to have MISC’s Vessel arrested is a well-established method of granting an admiralty court power to exercise authority over a ship, and therefore has a substantial relationship to traditional maritime activity.

The Court then turns to the controversial issue of whether the district court should have ruled on personal jurisdiction before it handed down its FNC dismissal. The issue is of first impression in the Third Circuit whereas the other circuits are split on the point.

The Court notes that the FNC doctrine is a non-jurisdictional, non-merits procedural issue. “Should the District Court have determined whether jurisdiction existed before dismissing on [FNC] grounds? We hold yes for two reasons. First, the very nature and definition of [FNC] presumes that the court deciding this issue has valid jurisdiction (both subject matter and personal) and venue. ... Though (sic) [FNC], a district court ‘may decline to exercise its jurisdiction, even though the court has jurisdiction and venue, when it appears that the convenience of the parties and the court and the interests of justice indicate that the action should be tried in another forum.’ ... [...] Second, at least two other Circuit Courts, and the Supreme Court (inferentially), have determined that [FNC] dismissals are invalid if the district court does not have subject matter jurisdiction. ...” [Slip op. 15-16]

“ ... [W]e recognize that this result may not seem to comport with the general interests of judicial economy and may, in this case, ultimately result in a waste of resources if the case is again dismissed before the substance of MISC’s claim is decided. But precedent, logic, and the very terms of the [FNC] doctrine dictate this result.” [Slip op. 19]

Citation: Malaysia Int’l Shipping Corp. v. Sinochem Int’l Co. Ltd., 436 F.3d 349 (3rd Cir. 2006).

PERSONAL INJURY

Queensland Court of Appeal affirms judgment of trial court that plaintiff injured by U.S. car accident followed nine months later by another in Australia failed to present evidence showing that it was Australian accident, more likely than not, that caused plaintiff’s most serious injuries

A rear-end motor vehicle accident in May 2000 in San Diego, California injured the thirty-two year-old plaintiff, Rhonda Gaye Young, then a Navy wife and former model. As a result of that accident, she suffered serious and continuing pain in her back and neck. A U.S. Naval Hospital found that plaintiff had a cervical strain and chest wall contusions. These injuries caused her persistent pain for which she took medications. In December 2000, the plaintiff, who by then was pregnant, told Dr. Bretz, her obstetrician, that her back pain had remained severe since May 2000 despite her use of pain relieving drugs. He referred her to a clinic specializing in pain management.

On February 20, 2001, nine months later, plaintiff experienced a second auto accident in Brisbane, Australia; it is the focus of the present proceedings against Kym Bayliss (defendant 1) and Suncorp Metway Insurance Ltd. (defendant 2). She was admitted to the emergency department of the Royal Brisbane Hospital (RBH) complaining of abdominal and back pain.

When Dr. Sellback examined the plaintiff in the RBH emergency department about three hours after the second accident, she complained of “mild to moderate tenderness in the cervical spine at C2‑3 but had a good painless range of movement”. The plaintiff did not complain of neck pain and the doctor’s examination revealed no neurological symptoms, and no head injury.

A week or so later when seen by Dr. Lindsay at the RBH pain clinic, the plaintiff gave an account of “constant and intense pain beginning May 27, 2000.” At that time, the plaintiff did not complain of any increase, or difference, in pain level caused by the Brisbane accident.

Dr. Day was the only orthopedic surgeon plaintiff called to testify at the trial; he had been her treating surgeon at the RBH’s spine clinic. On January 14, 2002, plaintiff wrote to Dr. Day. In pertinent part, her letter declared: “I am writing to you today in reference to the request for a disability certificate/statement, due to the injuries to my vertebrae bones of T-7 and 2 x T-8, sustained on the 27th May 2000, in San Diego, U.S.A. .... My life has been completely ripped apart because of this accident, that was the fault of an unin[s]ured motorist, and it is now nearly 2 years later and I have to live with pain, and adjust my life, and my future employment aspirations because of this, and I just need to clean up my past, debts and all ...”

On February 19, 2002, Dr. Day wrote to the plaintiff the following report: “Orthopaedic Evaluation: When first seen on 27.8.01, I noted severe right anterior chest pain, possibly from a right T-7 or a T-8 nerve root problem involving radicular pain in the segmental nerve root. Treatment. MRI scan of the thoracic spine was performed on 8.11.01 and failed to demonstrate any disc protrusion or nerve root compression in the thoracic spine. An endplate irregularity at T-8 was noted.”

Dr. Day later opined in his report dated May 7, 2004 that: “A radiological abnormality had been demonstrated in the body of T-8 following the motor vehicle accident in the United States on 27.5.2000. ... The abnormality demonstrated in the body of T-8 has been attributed to an incident which occurred prior to 20.2.2001. ... There is little doubt that a fracture of the 7th thoracic vertebra was sustained in the motor vehicle accident on 20.2.2001.” [¶ 35].

During the trial, Dr. Day was asked: “Q. Assuming very similar forces are applied to the spine, what apparently ‑ or appears to you to have happened in this second accident in relation to that previous fracture?‑ ‑ A. Oh, that’s a good question.” (Objection was then made and after legal argument, Dr. Day said): “A. It’s very difficult to compare what I see on a film in the Royal Brisbane with another radiologist’s report and I think the reason it’s a good question is that it’s really unanswerable.” [¶ 38].

On later cross-examination of Dr. Day by the defense, the following significant exchange took place: “Q. What I am getting at is this. In this case, it is certainly possible that the injuries that we can see at T‑8 and T‑7 may indeed all have been caused in the May 2000 accident? A. That is ‑ yeah, that’s a hypothesis that, it is impossible to say either way, isn’t it.?” [¶ 41] There was no redirect as to the meaning of this important concession by plaintiff’s lone orthopedic expert.

By orders made on June 3, 2005, plaintiff got a judgment against defendant #2 (the insurer) for $31,142.91, considerably less than the $493,622.43 sum sought for her during trial submissions. She duly noted an appeal. Her appeal claims that the trial judge, in essence, found that plaintiff had failed to prove that it was more likely than not that the Brisbane collision in February 2001 was the cause of any injury more than temporary soft tissue aggravation, and in assessing damages accordingly. The Queensland Court of Appeal dismisses.

“[E]ven granting the conclusion in [plaintiff’s] favour of a T‑7 fracture in February 2001 does not alter the position that the defendants did otherwise meet the plaintiff’s case as to damages, by demonstrating that from her own out-of-court descriptions, the consequences of the May 2000 event had continued in her life unabated before and after February 2001. Whether or not the T‑7 was fractured in the February 2001 accident, the conclusion was open that the consequences of the fracture of the T‑8 in May 2000 would have caused [plaintiff] the same degree of ongoing pain and disability she had suffered since 20 February 2001, had there been no collision on that date.” [¶ 24].

“Since Dr. Day resiled from his previous opinion by admitting there were two possible explanations for the condition of the plaintiff’s spine: one favourable to her case and the other not, and since his was the only expert evidence on the cause of the plaintiff’s back condition, it is not possible to be satisfied that it is more probable than not that the collision in February 2001 was the cause of more than a temporary soft‑tissue aggravation which was conceded by the defendants. That aggravation would have been acute for about four weeks and after that would have diminished until after another four weeks she would have been able to resume normal activity, according to ... evidence I accept.” [¶ 20].

“On the one hand, medical records plainly supported the conclusion that the T-7 injury was caused by the second accident. On the other hand, a medical specialist who had considered those records gave the opinion that it was impossible to say either way whether the injuries may have been all caused in the earlier accident. Dr. Day’s concession followed an earlier concession by him that it was very difficult to ‘understand exactly what may have been injured in the May 2000 accident as a consequence of the radiological reports’. He had accepted that the appellant was ‘significantly disabled’ as a result of the first accident at the time of the second and he had said that ‘it is often very difficult even for trained radiologists to get it [i.e., the precise level of a fracture or other injury] right.”

“In those circumstances, the existence of reports which supported a contrary conclusion may have permitted the primary judge to discount/reject Dr. Day’s concession or to regard it as not displacing the effect of other evidence, but he was not obliged to do so. He was entitled to accept the evidence of the only medical practitioner called to give evidence who had examined the appellant and considered the relevant medical reports.”[¶¶ 49-50].

“The evidence just discussed supports the primary judge’s finding that it is not possible to be satisfied that it is more probable than not that the collision in February 2001 was the cause of more than a temporary soft‑tissue aggravation. Even if it were to be accepted that the T-7 injury occurred in the second accident the evidence does not establish that it gave rise to more than temporary additional pain.” [¶ 61].

Citation: Young v. Bayliss, 2005 WL 3220367 (QCA; [2005] Q.C.A. 445.

SOVEREIGN IMMUNITY

On appeal of apparent countersuit against U.S. Federal Trade Commission by Canadian individual and corporations charged with fraudulent “cramming” of U.S. consumers, Ontario Court of Appeal rules that notice of proceeding to serve FTC failed to comply with Canadian State Immunity Act

By way of limited background to the Ontario Court of Appeal’s laconic opinion below, the Update presents excerpts from an FTC press release issued on June 22, 2005. “In July 2004, the Federal Trade Commission charged a group of Canadian defendants, that is Canada Inc., d/b/a Pinacle, Canada Inc, d/b/a M.D.S.C. Publishing and Terrence Croteau, with scamming small businesses and charities in the United States out of millions of dollars by billing them for business directory services they did not order or authorize, in violation of federal law. The FTC charged that the defendants refused consumers’ requests to cancel the services, and used an in-house collections department to harass consumers whose accounts allegedly were past-due.”

“An [Illinois federal court] ... granted the FTC’s request for a Temporary Restraining Order and Preliminary Injunction in the case, barring the illegal practices and freezing the defendants’ assets. ... On May 19, 2005, the Judge ... entered a final judgment in the Commission’s case that permanently bans Croteau and his two companies from the business directory operation, bars deceptive or misleading claims, prohibits the defendants from trying to collect payment for listings in any business directory, bars them from selling or sharing their ‘customer’ lists and orders them to give up $2,931,568 in ill-gotten gains, including $55,083.76 that had previously been deposited into the Court’s Registry.”

Presumably in response to the FTC’s actions, Croteau and his companies applied to an Ontario court of first instance for leave to serve the respondent FTC so as to seek some unspecified remedy. The judge held that applicant’s service of notice of the application against the FTC was proper under the [Canadian] State Immunity Act (SIA ), R.S.C. 1985, c. S-18. The FTC appealed to the Ontario Court of Appeal mainly claiming error in this holding. That Court agrees with the FTC and allows the appeal.

“In our view, even if the letter enclosing the March 15, 2005 certificate delivered by the Department of Foreign Affairs and International Trade (the certificate) was not properly before the court, the certificate itself was admissible in evidence under Section 14 of the SIA. Moreover, assuming that the statement in the certificate that the respondent is an integral part of the government of the United States exceeded the scope of Section 14 of the SIA, we conclude that there was no evidence in the record before the trial judge capable of supporting a finding that the respondent was an ‘agency of a foreign state’ within the meaning of Section 2 of the SIA. Accordingly, a finding that the respondent was properly served in accordance with Section 9(3) of the SIA was not available.”

“In particular, the 90th Anniversary Symposium paper filed by the [applicants] was downloaded from the [applicant’s] internet website and did not meet the requirements of rule 39 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Further, the statement by the [applicant] (in a Request for International Judicial Assistance filed in another proceeding) indicating that the FTC is ‘an independent agency of the United States government that is responsible for consumer protection matters’ is equivocal on the issue of whether the FTC is an ‘agency of a foreign state’ within the meaning of Section 2 of the SIA.”

“Before this court, the [applicants] sought to support the finding that the [FTC] is an agency of a foreign state by pointing out that the [FTC] can sue and be sued in its own name and by filing extracts from four sections of the [FTC’s] constating statute (the ‘FTC statute’) that the [applicants] assert establish the [FTC’s] independence from the United States government.”

“The extract from the section of the FTC statute relating to the [FTC’s] ability to sue establishes only that it can sue and be sued in its own name in certain circumstances. Moreover, it appears that, in some instances, the Attorney General on behalf of the [FTC] may sue or defend. In any event, in our view, the fact that the [FTC] may be able to sue and be sued in its own name is not conclusive on the central issue of whether the [FTC] is a ‘legal entity that is an organ of the foreign state but that is separate from the foreign state’.”

“Finally, we note that the FTC statute is a foreign statute and that no opinion evidence was filed to support the applicants’ interpretation of that act. On our review of the extracts from the sections of the FTC statute relied on by the [applicants], they do not establish that the [FTC] is an agency of a foreign state within the meaning of Section 2 of the SIA. In the result, we are not satisfied that the [applicants] met the onus of proving that the [FTC] was properly served in accordance with Section 9(3) of the SIA . The application judge’s finding that service was proper must therefore be set aside.” [¶¶ 2-6]

Alternatively, the Court of Appeal finds that it must set aside the application because the applicants had moved for judgment without allowing the statutory period of sixty days to pass after service as demanded by Section 10 of the SIA.

Citation: Croteau v. Federal Trade Commission, 2006 A.C.W.S.J. 124; 144 A.C.W.S. (3d) 1099 (Ont. Ct. App. January 19, 2006). Historical material from FTC Press Release derived from U.S. Federal News, HT Media Ltd., Washington, D. C. filed Wednesday, June 22, 2005, at 12:25 AM EST.

SOVEREIGN IMMUNITY

In litigation involving official at Holy See, Fifth Circuit finds that agent’s acts conducted without actual authority of state are insufficient to trigger FSIA’s “commercial activity” exception

In the 1990s, Martin Frankel was defrauding insurance companies by acquiring and looting them. The receivers for various insurance companies (plaintiffs) filed suit against individuals and entities that allegedly conspired to loot the insurance companies. Among the defendants is the Holy See, sued through its agent Emilio Colagiovanni. Colagiovanni is a Roman Catholic monsignor, a former judge of the Tribunal della Rota Romana (one of the Vatican’s three appellate courts), and professor at the graduate program connected to the Rota Romana. Colagiovanni was also the President of the Monitor Ecclesiasticus Foundation (MEF), the publisher of a canon law journal.

In 1998, Frankel passed himself off as the philanthropist “David Rosse” who desired to establish a charitable foundation. Eventually, Frankel created the St. Francis of Assisi Foundation (SFAF) with MEF being the settlor of record. Frankel donated funds to MEF, which in turn transferred funds to SFAF. In reality, Frankel was using SFAF to hide his affiliation with the Mississippi insurance companies. During the investigation by the Mississippi Department of Insurance, Colagiovanni allegedly represented that Vatican-related entities had contributed over $1 billion of Vatican funds to SFAF and also otherwise assisted in hiding Frankel’s involvement in SFAF.

The Holy See moved to dismiss pursuant to Fed.R.Civ.P. 12(b)(1), alleging immunity under the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. Sections 1601-1611. Plaintiffs claimed that the Holy See is not immune because it comes within on the commercial activity exception of 28 U.S.C. Section 1605(a)(2). The district court denied the Holy See’s motion on the grounds that Colagiovanni had been acting on the apparent authority of the Holy See in carrying on commercial activity. The Holy See appealed. The U.S. Court of Appeals for the Fifth Circuit vacates and remands.

The general principle is that a foreign state is immune from jurisdiction in U.S. courts, subject to statutory exceptions. The FSIA commercial activity exception, however, lifts that immunity if the foreign state was engaging in “commercial” activity. The Ninth Circuit has held that because a foreign state can only act through its agents, an agent’s actions that are based on the actual authority of the foreign state constitute actions of that state. If, however, the foreign state has not empowered its agent to act, then the federal courts cannot impute the agent’s unauthorized actions to the foreign state.

Only the Fourth and Ninth Circuits have directly addressed this issue. They reasoned that an agent’s commercial acts conducted with only the apparent authority of the state is not enough to trigger the FSIA’s commercial activity exception. The key inquiry in that context is whether the foreign state is exercising day-to-day control over the agency, not whether a particular type of agency relationship is enough to trigger the commercial activity exception.

Citation: Dale v. Colagiovanni, 2006 WL 649993, No. 04-60928 (5th Cir. March 16, 2006). See also Press Release of Mississippi Commissioner of Insurance of September 9, 2002, available at “www.doi.state.ms.us”.

WTO Appellate Body upholds Panel Report in favor of U.S. in Mexican sweetener case. The U.S. brought Mexico before the World Trade Organization (WTO), claiming that certain Mexican taxes and record-keeping requirements imposed on sweetened soft drinks and other beverages violated international trade law. See 2005 International Law Update 157. Mexico appealed certain issues of law and legal interpretations. The Appellate Body now holds that: (1) the Panel properly exercised jurisdiction over this matter; (2) Mexico’s measures did not “secure compliance with laws or regulations within the meaning of Article XX(d) of GATT 1994; (3) The Panel properly found that Mexico failed to show that its measures contribute to securing compliance in the circumstances of this case; and finally that (4) consequently, the Panel properly held that Mexico failed to establish that the challenged measures are justified under the exemptions in Article XX of GATT 1994 Citation: Mexico - Tax Measures on Soft Drinks and Other Beverages (AB-2005-10) (WT/DS308/AB/R) (6 March 2006).

Russian Federation and U.S. renew S & T agreement. On January 13, 2006, the United States and the Russian Federation exchanged diplomatic notes in Washington, D. C. that will extend for another ten years their bilateral Science and Technology (S & T) Cooperation Agreement. This collaboration has generated valuable basic and applied scientific information, databases, internet-based information-sharing networks and exceptional cooperative relationships for continuing and new activities. Sectors for ongoing and potential future cooperation include, inter alia, vaccine and drug discovery; the ecology of infectious diseases (such as avian flu, tuberculosis and HIV/AIDS); clean energy technologies, e.g., hydrogen; basic research in high energy and nuclear physics; science education; and biodefense and counter-terrorism science and technology in such areas as food safety, border security and support for first responders. Citation: Media Note #2006/42, U.S. Department of State, Office of Spokesman, Washington, D. C., Friday, January 13, 2006 at 5:06 pm.

Mexico’s highest court relaxes limitations on extraditions to U.S. Since 1978, Mexico has refused to extradite to the U.S. any Mexican citizens accused of crimes that carry the death penalty. The Mexican Supreme Court enlarged the extradition ban in October 2001 to include Mexicans facing life in prison; it ruled that this penalty violated the country’s constitution as amounting to cruel and unusual punishment. Since then, U.S. law enforcement officials have complained that scores of Mexicans alleged to have committed crimes in the U.S. have been eluding justice simply by crossing the border and going home. In some instances, U.S. prosecutors have agreed to pursue lower criminal charges, with lighter sentences, to convince Mexican authorities to extradite important suspects. The Los Angeles County District Attorney has estimated that there are about 3,000 Mexican citizens who have committed murders in the U.S. and who have then escaped safely to Mexico. On November 29, 2005, however, the Supreme Court of Mexico voted 6 to 5 to change its view so as to allow the extradition of criminal suspects who face life sentences abroad. This should make it possible for thousands of alleged killers and drug kingpins to stand trial in the United States. In the Fall of 2005, U.S. lawmakers had threatened to cut off millions of dollars in aid to Mexico unless it turned over suspects in a number of high-profile cases. Citation: The Los Angeles Times (Home Edition), Mexico City, Wednesday, November 30, 2005, Foreign Desk, Part A, page 1 (bylines of Sam Enriquez (Mexico City) and Andrew Blankstein (Los Angeles), Times Staff Writers).

I.L.O. overwhelmingly adopts seafarers’ “Bill of Rights.” At its February 2006 conference in Geneva, the U.N.’s International Labor Organization (ILO) approved a comprehensive set of labor standards for the world’s maritime sector by a vote of 314 to 0, with four abstentions. Delegates from over 100 nations attended the conference. In a joint statement, the International Shipping Federation (ISF), representing owners, and the International Transport Federation (ITF), representing unions, applauded the new Convention, referring to it as a “Superconvention” or “Seafarers’ Bill of Rights”. Their joint statement noted that the Convention was the culmination of five years of intensive work to produce a single international social instrument. It should become the fourth “pillar” of the three existing International Maritime Organization pillars, the Safety of Life at Sea Convention (SOLAS), the Marine Pollution Conventions (MARPOLs) and the Convention on the Standards of Training, Certification and Watchkeeping (SCTW). The 2006 Convention merges and updates 68 existing ILO maritime Conventions and recommendations adopted since 1920. Countries that do not ratify the new Convention will remain bound by the previous conventions they have ratified, though those instruments will be closed to further ratification. The EC Commission also issued a press release declaring that it plans to support effective implementation of the Convention in the 25-member European Union and is looking into the possibility of incorporating the Convention’s norms into community law. Citations: The Shipping Times of Singapore (online), 2006 WLNR 3453761, Wednesday, March 1, 2006 and the Gulf News, Financial Times Ltd. (online), 2006 WLNR 3514099, Monday, February 27, 2006 (byline of Frank Kennedy).

EU updates export controls on dual-use devices. The European Union (EU) has updated its legal controls on dual-use items and technologies (i.e., those that can be used for both civil and military purposes). Council Regulation No 394/2006 amends Regulation No 1334/2000 dealing with the export controls on such products. For example, it implements the Wassenaar Arrangement, the Missile Technology Control Regime (MTCR), the Nuclear Suppliers’ Group (NSG), the Australia Group, and the Convention on the Prohibition of the Development, Production, Stockpiling, and Use of Chemical Weapons and their Destruction with Annexes; in force, April 29, 1997. Note that the EU Member States may maintain additional controls on such products. Citation: Regulation No. 394/2006, 2006 O.J. of European Union (L 74) 1, 13 March 2006.