2006 International Law Update, Volume 12, Number 2 (February)

2006 International Law Update, Volume 12, Number 2 (February)

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

AVIATION

In case where multiple plaintiffs sued multiple international air carriers alleging that they contracted deep vein thrombosis during flights, House of Lords holds that limiting term “accident” as used in Warsaw Convention precludes airline liability for such events

In the English courts, 24 passengers sued 18 international air carriers for damages alleging that the plaintiffs had suffered from Deep Vein Thrombosis (DVT) by reason of the cramped seating in their aircraft. The defendants denied that the plaintiffs had endured DVT caused by traveling with them.

The principal question of law in this case, however, arises from the defendants’ alternative legal contention that, even if international trips on defendants’ aircraft did cause the plaintiffs to suffer the specified condition, this did not give rise to an “accident” as required by Article 17 of the Convention for the Unification of Certain Rules relating to International Transportation by Air [49 Stat. 3000; T.S.876; 2 Bevans 983; 137 L.N.T.S. 11; concluded at Warsaw, October 12, 1929, as amended] [the Convention], which Parliament incorporated into English law by the Carriage by Air Act of 1961.

DVT is a condition in which a small blood clot or thrombus forms mainly in the deep veins of the legs. Complications from DVT may take place when a thrombus breaks away from the wall of the vein to which it is attached and is carried along with the flow of the blood as an embolus. The most serious of these may occur in the lungs (a pulmonary embolism); it often gives rise to chest pain and breathing difficulties and, in the worst cases, death from respiratory failure.

According to plaintiffs, defendants required every plaintiff to sit in a cramped seat which discouraged and/or prevented a plaintiff from moving out of his or her seat during most of the flight. Defendants also knew, or ought to have known, that these conditions would increase the risk that the seating might cause a DVT to the plaintiffs.

In an appeal pertaining solely to the legal meaning of the term “accident” in Article 17 of the Convention, the English Court of Appeal (Civil Division) ruled against the plaintiffs. Plaintiffs next secured review in the House of Lords. The Judicial Committee of the House unanimously agrees to dismiss the appeal. It rules that contracting DVT (if it did occur) during plaintiffs’ international air flights with defendants did not constitute an “accident” which the Convention demands as a condition of airline liability.

Article 17 of the Convention provides as follows with respect to international air travel on board aircraft of Member States: “The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking.”

In their concurring opinions, the Lords of Appeal analyze the special meaning of the term “accident” in Article 17. “It is to be noticed that the conditions for the imposition of liability on the carrier do not include any element of fault or blameworthiness or failure to observe a proper standard of care on the part of the carrier. ... The omission from these conditions of any requirement of negligence on the part of the carrier is double-edged so far as an injured passenger is concerned. It is to the passenger’s advantage that negligence on the part of the carrier needs to be neither alleged nor proved.”

“It is to the passenger’s disadvantage, however, that even clear causative negligence on the part of the carrier will not entitle the passenger to a remedy if the Art. 17 conditions cannot be satisfied. It has been authoritatively established that if a remedy for the injury is not available under the Convention, it is not available at all.” See Sidhu v. British Airways plc [1997] A.C. 431 and El Al Israel Airlines Ltd. v. Tsui Yuan Tseng, 525 U.S. 155 (1999). [See also 1999 International Law Update 3].”

“Nonetheless, negligence, or the absence of it, on the part of the carrier may play a part under Art. 20. It provides that: ‘The carrier is not liable if he proves that he and his servants or agents have taken all necessary measures to avoid the damage or that it was impossible for him or them to take such measures.’ Plainly, a carrier who had been negligent could not qualify for an Art. 20 defence.” [¶ 4]

“Contributory fault of the injured person, too, may afford a defence to the carrier. Article 21 provided that: ‘If the carrier proves that the damage was caused by, or contributed to, by the negligence of the injured person, the court may, in accordance with the provisions of its own law, exonerate the carrier wholly or partly from his liability.’”

“[Moreover]... [A]rt 22 ... imposes monetary limits on the extent of the liability of the carrier for Art. 17 damage. It has often been observed that the provisions were designed to strike a balance between the interests of passengers and the interests of the airlines. (See e.g. Morris v KLM Royal Dutch Airlines [2002] A.C. 628).”

The House then contrasts the use in Art. 17 of the term ‘accident’ with the choice of a different term in Art. 18 dealing with baggage or cargo. Article 18 declares that: ‘The carrier is liable for damage sustained in the event of the destruction or loss of, or of damage to, any registered baggage or any cargo, if the occurrence which caused the damage so sustained took place during the carriage by air.’ (emphasis added).”

“The use of the term ‘accident’ in Article 17 but the term ‘occurrence’ in Article 18 must be significant. Both terms impart the idea that something or other has happened. But ‘occurrence’ is entirely general in its natural meaning. It permits no distinction to be drawn between different types of happening. ‘Accident’ on the other hand must have been intended to denote an occurrence of a particular quality, an occurrence having particular characteristics.”

“Since [1976], DVT as an alleged consequence of economy class long distance flights has had increasing attention from the media, from members of the medical professions and from airlines themselves. The hand baggage of most passengers on long distance flights will these days include a pair of tight stockings which, if worn, are believed to provide some protection against the onset of DVT. Many air travellers, however, have suffered the serious consequences of DVT to which I have referred and they, or persons on their behalf, believe the onset of the DVT to have been attributable to the nature of the seating provided for them on the aircraft.” [¶¶ 5-7]

“During the plaintiffs’ international flights to which the Warsaw Convention applied, the following [factual] conditions are the [agreed upon] ‘specimen matrix’ of a claimant on which the House is to base its interpretation of Article 17 in DVT cases: ‘(1) the layout of the passenger cabin, the seating space available to each passenger and the type of passenger seat installed on the aircraft performing the flight were all in accordance with the Defendants’ usual standard for an aircraft of that type flying on the route in question; (2) the flight was operated in accordance with all of the Defendant’s usual procedures and practices; (3) nothing happened in the course of the flight which adversely affected the performance or flight characteristics of the aircraft; (4) throughout the flight, all of the aircraft’s seating and all of its systems affecting the passenger cabin environment were in their normal working order; (5) the aircraft complied with, and the flight was carried out in accordance with, all applicable aviation regulations; and, (6) whether or not the above operation of the aircraft minimized and/or eliminated the risk of passengers suffering from DVT, the defendant took no further or other steps to minimize and/or eliminate such risk.” [¶ 9]

Additional elements of the Specimen include that the plaintiffs suffered DVT from their flights; that defendants are assumed to have known of the special risks posed by DVT on long air flights; and that defendants failed to warn plaintiffs of this risk.

The House also sets down what the parties generally agree are the principles of interpretation which it should apply to Art. 17. “(1) The starting point is to consider the natural meaning of the language of Art. 17, with the French text prevailing in case of any inconsistency with the English text (fortunately there is no relevant inconsistency); (2) the Convention should be considered as a whole and given a purposive interpretation; (3) the language of the Convention should not be interpreted by reference to domestic law principles or domestic rules of interpretation; and (4) assistance can, and should be, sought from relevant decisions of the courts of other Convention countries, but the weight to be given to them will depend upon the standing of the court concerned and the quality of the analysis.”[¶ 11].

Opinions from abroad also warn against changing the balance that the 1929 Convention tried to strike between the neophyte airlines and their passengers. For instance, Justice Antonin Scalia in his dissenting opinion in Hasten v. Olympic Airways, 124 S. Ct. 1221, 1234 (2004) (an opinion with which Justice Sandra Day O’Connor concurred) well states the issue: “‘A legal construction is not fallacious merely because it has harsh results. .... It is a mistake to assume that the Convention must provide relief whenever traditional tort law would do so. To the contrary, a principal object of the Convention was to promote the growth of the fledgling airline industry by limiting the circumstances under which passengers could sue. ... Unless there has been an accident there is no liability, whether the claim is trivial . ... or cries out for redress.’”

The Lords of Appeal then develop their analyses further. “First, for Convention purposes, the ‘loss or hurt’ cannot itself be the ‘accident’. Article 17 distinguishes between the bodily injury on the one hand and the ‘accident’ which was the cause of the bodily injury on the other. It is the cause of the injury that must constitute the ‘accident’. Second, it is important to bear in mind that the ‘unintended and unexpected’ quality of the happening in question must mean ‘unintended and unexpected’ from the viewpoint of the victim of the accident.”

“Article 17 claims based on the airline’s failure to warn passengers of the possibility of, and the need to take precautions against, DVT have been rejected in Australia, Canada, Germany and the United States. Some decisions to the contrary can be found but the bulk of the authority is firmly against the acceptance of Art. 17 DVT claims.”

“The most important DVT authority is the recent decision of the High Court of Australia in Povey v Qantas Airways Ltd [2005] H.C.A. 33. [A majority] gave a judgment rejecting the argument that the onset of DVT brought about by the conditions of passenger travel on the flight could be said to have been caused by an Art. 17 accident. The onset of DVT, i. e., the formation of the blood clots in the veins of the leg, could not be the requisite accident because that onset was the damage, or the first stage of the damage, complained of. And no other event or happening, no occurrence external to the passenger, could be pointed to. ... (¶ 13).” [¶ 20].

“Of more importance for present purposes is that nothing in the Hasten case casts doubt upon the two important requirements of Art. 17 ... namely, that an event or happening which is no more than the normal operation of the aircraft in normal conditions cannot constitute an Art. 17 accident and, second, that the event or happening that has caused the damage of which complaint is made must be something external to the passenger.”

“These two requirements appear to me to rule out Art. 17 recovery in DVT cases where no more can be said than that the cramped seating arrangements in the aircraft were a causative link in the onset of the DVT. The failure by an airline to warn its passengers of the danger of DVT and of the precautions that might be taken to guard against that danger does not, in my opinion, improve the case, at least where there is no established practice of airlines generally or of a defendant airline in particular to issue such warnings.” [¶¶ 23-25].

Another opinion further elaborates on how to interpret Article 17. “It follows from the scheme of the Convention, and indeed from its very nature as an international trade law convention, that the basic concepts it employs to achieve its purpose are autonomous concepts. For present purposes, the compromise agreed at Warsaw involved the imposition of a form of strict liability on carriers in respect of accidents causing death, wounding or bodily injury to passengers in return for the limitations of liability expressed in the Warsaw Convention.”

“The exclusive remedy under Art. 17 is dependent on the fulfilment of three indispensable requirements. First, that a passenger sustained death, wounding or other bodily injury. Secondly, that an accident took place on board the aircraft or in the course of any of the operations of embarking or disembarking. Thirdly, that the death, wounding or bodily injury was caused by the accident. This is the immediate context in which the meaning of ‘accident’ must be determined. This setting makes clear that accident is used with reference to the cause rather than the injury itself.” [¶ 29].

“In order to achieve a more extensive interpretation of the word ‘accident’ in Art. 17, counsel for the Appellants invoked various policy grounds. He submitted that under Art. 17 there is a need to impose liability upon the party best able to develop defensive mechanisms, who has physical control of the aircraft, who is most capable of assessing the risk and insuring against it, and who is best able to spread remedial cost over all the passengers.”

“This is a variant of a ‘deep pocket’ tort law theory which has no place in a trade law treaty such as the Warsaw Convention. On the contrary, Art. 31 of the Vienna Convention on the Law of Treaties [See Carter & Trimble, International Law, Selected Documents 49, at 58 [U.S. is not a party as of January 1, 2005] provides that a treaty shall be interpreted ‘in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.’ ... This approach does not permit the adoption of the economic analysis advocated on behalf of the Appellants. Once this approach is rejected, the argument for treating DVT by itself as an accident can be seen to be fragile.” [¶ 31].

“There is, however, another perspective to be taken into account. In interpretation of a trade law treaty, like the Warsaw Convention, it is of great important (sic) that the courts of treaty states, and particular their higher courts, should strive for uniform interpretations on debatable issues. Such uniformity is not always attainable but it must be the constant aim.” [The opinion then extensively reviews the relevant judicial views of other member states.] [¶ 35].

“It is now established that the remedy provided by Art. 17 is exclusive, in the sense that no other common or civil law remedy (e.g. for want of reasonably (sic) care or negligence) is available to a passenger who sustains bodily injury or dies in the course of international carriage by air, but has no claim against the carrier under Art. 17 (e.g. because the injury or death was not caused by an accident on board or in the course of embarkation or disembarkation).” [¶ 62].

Citation: Deep Vein Thrombosis v. Air Travel Group Litigation, [2005] U.K.H.L. 72 (Transcript) (House of Lords, December 8).

                                

BILATERAL INVESTMENT TREATIES

English Court of Appeal (Civil Division) rules that English principle on nonjusticiability of international agreements does not apply where issue arises out of UNCITRAL arbitration expressly contemplated by investment agreement between U.S. and Ecuador

On May 11, 1997, a Bilateral Investment Treaty (BIT) between the United States and The Republic of Ecuador entered into force. The BIT dealt with “the encouragement and reciprocal protection of investment” in each country by the nationals and companies of the other, and its aim was “to promote greater economic cooperation and investment between the parties.” Article VI of the Treaty provided that, should an “investment dispute” arise, the nationals and companies of one country would have direct dispute resolution rights against the other country. One of the listed options was arbitration subject to the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL).

Occidental Exploration and Production Co. (OEP), a California company, entered into an April 1999 contract with Petroecuador (a state‑owned corporation). It granted OEP the sole right to look for, and to exploit, hydrocarbons in Block 15 of the Ecuadorian Amazon basin. OEP agreed to pay almost all the costs of the enterprise; in return, it was to get a percentage of the oil produced and the right to export it.

OEP also said it would pay any Value Added Taxes (VAT). As an exporter, OEP then asked SRI, the Ecuadorian tax agency, to reimburse it for its VAT payments. SRI, however, declined on the grounds that tax refunds were only available with respect to manufactured products. OEP alleged that SRI’s refusal had breached the terms of the BIT.

On April 4, 2002, OEP notified Ecuador that a dispute had arisen; the parties then agreed to submit it to arbitration under the UNCITRAL rules. Three eminent arbitrators were designated. Since OEP and Ecuador could not fasten upon a site, the arbitrators ruled that arbitration should take place in London, as a neutral forum.

Ecuador raised three jurisdictional objections in September 2003 to any consideration by the arbitrators of OEP’s claims. The first rested on the fact that, after the refusal of VAT reimbursement, OEP had filed proceedings within Ecuador pursuant to its domestic law. Secondly, Ecuador claimed that Article X of the BIT barred the decision of taxation matters except in cases of expropriations, transfers or the observance and enforcement of an investment agreement. Finally, it contended that OEP’s claim that an expropriation had taken place lacked merit.

The arbitrators overruled the first objection and upheld the third. As to the second objection, the arbitrators ruled that the claim did involve enforcing the terms of an investment agreement. Alternatively, it held that there were other BIT grounds upon which taxation issues could support an arbitration.

Turning to OEP’s nonexpropriation claims, the arbitrators by a final award in July 2004, found that OEP was entitled to the refund of all VAT it had paid based on the importation or local acquisition of goods or services used to produce oil for export. The arbitrators awarded OEP $71,533,649 in compensation plus interest amounting to $3,541,280.

Ecuador then tried to contest the award under Section 67 of the English Arbitration Act of 1996 because the arbitrators had lacked jurisdiction over the dispute. OEP replied that an English court could not entertain the application because the principle of “non‑justiciability” barred the English courts from adjudicating rights arising out of transactions between sovereign states.

The first instance judge determined that the doctrine of non‑justiciability did not stop the court from passing on Ecuador’s applications under Section 67 of the 1996 Act. OEP appealed. The Court of Appeal, Civil Division, dismisses the appeal.

The Court first rules that OEP was seeking to enforce its individual rights under the Treaty and not the rights of the United States. It then outlines the general principles of international law prior to BITs. “As summarised by the Permanent International Court of Justice in the Case of the Mavrommatis Palestine Concessions (1924) P.C.I.J. Rep. Series A, No 2: ‘It is an elementary principle of international law that a State is entitled to protect its subjects, when injured by acts contrary to international law committed by another State, from whom they have been unable to obtain satisfaction through the ordinary channels.”

“By taking up the case of one of its subjects and by resorting to diplomatic action or international judicial proceedings on his behalf, a State is in reality asserting its own rights ‑ its right to ensure, in the person of its subjects, respect for the rules of international law. ... Once a State has taken up a case on behalf of one of its subjects before an international tribunal, in the eyes of the latter the State is sole claimant.’”

“One feature of the traditional protection is that it is up to the protecting State of the injured national whether, and how far, to make it available. This was put starkly in the Barcelona Traction, Light and Power Co. Case (Belgium v. Spain) [1970] I.C.J. Rep. 44, paras 78‑79: ‘The State must be viewed as the sole judge to decide whether its protection will be granted, to what extent it is granted, and when it will cease. It retains in this respect a discretionary power the exercise of which may be determined by considerations of a political or other nature, unrelated to the particular claim.’” [¶¶ 14-15]

On the other hand, the arrival of BITs on the scene introduced a new approach. They not only amplified the protection of nationals to cover every kind of investment owned or controlled, directly or indirectly, by nationals or companies of the other party but also BITs gave the investor direct standing to pursue the State of the investment to resolve any investment disputes.

“Under the present Treaty, a dispute may thus arise out of, or relate to, (a) a commercial agreement, (b) an executive authorisation or (c) an alleged breach of a Treaty right. Article VI(3)(a) of the present Treaty provides the investor with various ways in which to pursue an investment dispute ‑ (i) by use of [the] International Centre for the Settlement of Investment Disputes (ICSID), provided the State is a party to the relevant Convention, (ii) by use of the Centre’s Additional Facility, if the Centre is not itself available, (iii) by UNCITRAL arbitration, as here occurred, or (iv) by using any other arbitration institution or rules agreed between the parties to the dispute.”

“Where a dispute arises out of, or relates to, a commercial agreement made with the investor, it would seem to us both artificial and wrong in principle to suggest that the investor is, in reality, pursuing a claim vested in his or its home State, and that the only improvement [brought about by BITS] by comparison with the traditional State protection for investors is procedural. It would potentially undermine the efficacy of the protection held out to individual investors, if such protection was subject to the continuing benevolence and support of their national State.” [¶¶ 16-17]

A BIT dispute could stem from, or pertain to (a) a commercial agreement, (b) an executive authorization or (c) an alleged breach of a Treaty right. Where a dispute arose out of, or related to, a commercial agreement made with the investor, it was both artificial and wrong in principle to suggest that the investor was in reality pursuing a claim vested in his or its home State.

The language of the present Treaty made clear, the Court points out, that injured nationals or companies were to have a direct claim for their own benefit in respect of all three types of claim specified in (a), (b) and (c). The natural conclusion was that investors could seek to enforce all three types of claim in their own right.

Turning to another basic issue, the Court of Appeal decides that the English principle of non‑justiciability did not apply in the present case. In its view, there is no absolute rule that the English courts should refuse to adjudicate upon acts done abroad by virtue of sovereign authority.

“It is axiomatic that municipal courts have not, and cannot have, the competence to adjudicate upon, or to enforce, the rights arising out of transactions entered into by independent sovereign states between themselves on the plane of international law. That was ... succinctly and convincingly expressed in the opinion of the Privy Council ... in Secretary of State in Council of India v. Kamachee Boye Sahaba (1859) 13 Moo. P.C.C. 22, 75: ‘The transactions of independent states between each other are governed by other laws than those which municipal courts administer: such courts have neither the means of deciding what is right, nor the power of enforcing any decision which they may make.’”

“On the domestic plane, the power of the Crown to conclude treaties with other sovereign states is an exercise of the Royal Prerogative, the validity of which cannot be challenged in municipal law: see: Blackburn v Attorney‑General [1971] 1 W.L.R. 1037. The Sovereign acts ‘throughout the making of the treaty and in relation to each and every of its stipulations in her sovereign character, and by her own inherent authority; and, as in making the treaty, so in performing the treaty, she is beyond the control of municipal law, and her acts are not to be examined in her own courts.’ That is the first of the underlying principles.”

“ ... The second is that, as a matter of the constitutional law of the United Kingdom, the Royal Prerogative, whilst it embraces the making of treaties, does not extend to altering the law or conferring rights upon individuals or depriving individuals of rights which they enjoy in domestic law without the intervention of Parliament. [English] Treaties, as it is sometimes expressed, are not self‑executing.”

“Quite simply, a treaty is not part of English law unless and until it has been incorporated into the law by legislation. So far as individuals are concerned, it is res inter alios acta from which they cannot derive rights and by which they cannot be deprived of rights or subjected to obligations; and it is outside the purview of the court not only because it is made in the conduct of foreign relations, which are a prerogative of the Crown, but also because, as a source of rights and obligations, it is irrelevant.” [¶ 27]

“[Various precedents have] identified the principle under discussion as a principle whereby the court has no jurisdiction to declare the true interpretation of an international instrument which has not been incorporated into English domestic law and which it is unnecessary to interpret for the purposes of determining a person’s rights and duties under domestic law. The question arises whether in the present case there is a sufficient foothold of the nature contemplated by these last words.” [¶ 31]

The Court of Appeal further clarifies two points: (1) is the special character of the BIT as noted above; (2) there is the agreement to arbitrate which it aimed to promote. English private international law has not only recognized these agreements and but also has made them subject to the Arbitration Act of 1996. “The Treaty involved a deliberate attempt to ensure for private investors the benefits and protection of consensual arbitration; and this was [the] aim to which national courts should aspire to give effect ...”

“The present Treaty holds out to investors on a standing basis the right ‘to choose to consent in writing to the submission of the dispute for settlement by binding arbitration’ in any one of four specified ways ... ; and, once such consent is given, ‘either party to the dispute may initiate arbitration in accordance with the choice so specified in the consent’.”

“This purpose can only be fulfilled, in a legal system with a dualist approach to international law like the English, if the operation of the mechanism for consensual arbitration in the Treaty does in fact generate an ‘agreement in writing’. The application of the New York Convention depends on such an agreement, and the provisions of the Arbitration Act 1996 (Sections  100‑104) relating to the enforcement of foreign arbitral awards give effect to this requirement in English law. We would not in the circumstances accept ... that the consensual aspect of the arbitration contemplated in article VI of the Treaty is a matter of mere form. It must, as it seems to us, have been intended to give rise to a real consensual agreement to arbitrate, even though by a route prescribed in the Treaty.” [¶ 32]

“Further, as [OEP] accepts, the agreement to arbitrate which results by following the Treaty route is not itself a treaty. It is an agreement between a private investor on the one side and the relevant State on the other. The question may then arise: under what law is that agreement to arbitrate to be regarded as subject, applying the principles of private international law of the English forum?”

“[Ecuador] argues that the arbitration agreement coming into existence between Occidental and Ecuador is subject to Ecuadorian law (with matters of procedure being subject to the law of England as the place of arbitration). [Its] proposition is that Ecuadorian law has the closest and most real connection with any agreement to arbitrate between a U.S. investor and Ecuador, while United States law would have the closest and most real connection with any agreement to arbitrate between an Ecuadorian investor and the USA.” [¶ 33]

The Court treats as the better view that international law governs the arbitration agreement. The agreement to arbitrate was not itself a treaty, but merely an agreement between a private investor on the one hand and the relevant State on the other. English private international law recognizes an agreement to arbitrate substantive issues such as the present according to international law, and, under English private international law principles, the agreement to arbitrate might, in some instances, be subject to international law just as it might be subject to foreign law.

Although the arbitration agreement was a consensual arrangement, it was closely linked to the Treaty which had its making in view, and which defined the arbitrators’ jurisdiction. Moreover, reading the agreement to arbitrate as subject to international law, rather than to the law of the State against which an investor was arbitrating, would better protect the interests of investors as BITs set out to do.

The Court can see no good reason why it should treat any arbitration held pursuant to the Treaty, or any supervisory role which the court of the place of arbitration might have in relation to any such arbitration, as having to do with “transactions between States” so as to invoke the principle of non‑justiciability. If issues regarding jurisdiction were justiciable before the arbitrators, why should an English court look upon them as non‑justiciable? Moreover, the issues of jurisdiction with which the arbitrators were entrusted were, from a technical viewpoint, issues which a court of law would also seem qualified to decide.

The fact that one party to the present arbitration was a State, is not decisive. The fact that the States parties to the Treaty deliberately chose to provide for a mechanism for dispute resolution which invoked consensual arbitration, with its domestic legal connotations, should make the English court hesitate long about subjecting such arbitration proceedings to special English principles of judicial restraint. After all, these principles arose in relation to international transactions or treaties that lacked any foundation or incorporation in English domestic law.

The present BIT explicitly approved the application of the New York Arbitration Convention. Thus, the usual grounds for opposing recognition and enforcement would apply; these would include any grounds based on want or excess of jurisdiction by the arbitrators, to which section 103 of the 1996 Act gave effect. The Court cannot discern that the wider doctrine of non‑justiciability is directed to, or undermines, this point.

Citation: Occidental Exploration and Production Co. v. The Republic of Ecuador, [2005] E.W.C.A. Civ. 1116;[2005] 2 Lloyd’s Rep. 707; 2005 WL 2161965 (CA (Civ Div)).

JURISDICTION (IN REM)

Fourth Circuit vacates lower court’s decision over rights to artifacts recovered from sunken wreck of R.M.S. Titanic for lack of in rem jurisdiction over artifacts

While on its maiden voyage to New York from England, the “unsinkable” R.M.S. Titanic went down in the North Atlantic on April 14, 1912, after striking an iceberg. Of the more than 2,200 persons aboard the 46,000 ton liner, about 1,500 perished, mostly from drowning or from hypothermia.

It was not until 1985 that explorers using robot submersibles found the wreck in international waters at a depth of over 2,000 fathoms. Two years later, a joint American and French expedition began salvage operations. As the result of 32 dives, the expedition recovered about 1,800 artifacts (the 1987 artifacts) and sent them to France for preservation and restoration.

The firm of Titanic Ventures obtained from France’s Administrator of Maritime Affairs (FAMA) an award of title to the 1987 artifacts in the Fall of 1993. Since then, R.M.S. Titanic, Inc. (RMST), the successor to Titanic Ventures, has been acting as exclusive salvor-in-possession of the wreck.

The present action was filed in August 1993. In February 2004, RMST petitioned a Virginia federal court for an order (1) awarding it title to all the artifacts pursuant to the law of finds or, in the alternative, (2) handing down a salvage award of $225 million. RMST did not ask the court to confirm title to the 1987 artifacts -- pointing out that a French administrative agency had already awarded it to them. But it did request that, based on FAMA’s action, the district court declare RMST’s independent ownership of the artifacts.

The District court handed down its ruling on July 2, 2004. The court not only declined to recognize FAMA’s award of title to the 1987 artifacts based on comity, but also rejected RMST’s claim that the court should award it title to the artifacts recovered since 1993 under the maritime law of finds. Moreover, the court held that the principles of international comity did not require it to recognize the FAMA proceeding.

The court concluded (1) that the award had not come about after a full and fair adversary proceeding before a court; (2) that the FAMA “clearly lacked authority to award title to the 1987 artifacts under the provision of the French law he cited”; and (3) that the transfer would be “contrary to United States public policy.” [Slip op. 9].

RMST appealed. The U.S. Court of Appeals for the Fourth Circuit vacates the district court’s order and remands.

Plaintiff first complained that the district court had erred in refusing to grant comity to FAMA’s decision. It argued that the district court’s ruling was “contrary to settled law and that the district court improperly substituted its judgment as to the requirements of French law.” [Slip op. 9] The district court had relied on in rem jurisdiction over the 1987 artifacts for its power to issue a declaratory judgment as to them.

The Fourth Circuit, however, holds that the district court lacked in rem power over the artifacts and had no other source of jurisdiction. By August 1993, when RMST filed the in rem action, the expedition had already severed the 1987 artifacts from the Titanic and transported them to France.

To exercise jurisdiction over a res, the court must have it (or them) within its geographic jurisdiction. The 1987 artifacts, however, were not within the Eastern District of Virginia; nor did plaintiffs name them as the in rem defendants; nor were they otherwise voluntarily subjected to the jurisdiction of the district court.

The Court then looks to the 1993 artifacts. When a court has only part of the res in its custody, some authorities say that it may have “constructive possession” over absent parts of the res. Here, RMST had presented the district court with a wine decanter allegedly recovered from the wreck along with evidence that the other 1993 artifacts were physically present within the District. Relying on the court’s constructive possession of the other artifacts located within the District, the court also purported to arrest the entire wreck and artifacts yet to be removed from it.

The Court of Appeals decides, however, that this did not give the lower court jurisdiction over the 1987 artifacts.

“When a ship lies outside the district court’s territorial jurisdiction, however, we developed a notion of ‘constructive in rem jurisdiction’ for application to particular circumstances of this case. ... [A]s we use the term ‘constructive,’ we mean an ‘imperfect’ or ‘inchoate’ in rem jurisdiction which falls short of giving the court sovereignty over the wreck. It represents rather a ‘shared sovereignty,’ shared with other nations enforcing the same jus gentium. Through this mechanism, internationally recognized rights may be legally declared but not finally enforced. Final enforcement requires the additional steps of bringing either party or persons involved before the district court or before a court of admiralty of another nation.” [Slip op. 12].

The Court rules that constructive in rem jurisdiction does not control personal property located within the sovereign limits of other nations. Since the expedition had already separated the 1987 artifacts from the wreck and had transferred them to France, the district court did not have constructive possession of them. Moreover, it lacked constructive in rem jurisdiction over those artifacts because this type of jurisdiction applies only to the Titanic’s wreck lying in international waters.

“Absent in rem jurisdiction, there is no other jurisdictional basis upon which the court could declare the rights to the 1987 artifacts located in France. Until RMST is able to identify a person or entity against whom to seek a declaratory judgment and obtain personal jurisdiction over that person or entity, no jurisdiction could exist. Indeed, no case or controversy exists. RMST cannot come to a court in the United States and simply assert that the court should declare rights against the world as to property located in a foreign country.” [Slip op. 12]

Therefore, the district court’s order addressing the 1987 artifacts is vacated and remanded.

Citation: R.M.S. Titanic, Inc. v. The Wrecked and Abandoned Vessel,435 F.3d 521 (4th Cir. 2006).

FREEDOM OF INFORMATION ACT

In dispute over law professor’s request for FBI records that may implicate him in terrorist activities, Seventh Circuit declines to narrowly define term “law enforcement activity” as used in Section 552a(e)(7) of Privacy Act, deciding instead that statute does allow FBI to maintain personal information that it can demonstrate to be pertinent to its law enforcement duties

Plaintiff Mahmoud Bassiouni is a law professor at DePaul University, a former president of the Association for Arab-American University Graduates and of the Mid-America Arab Chamber of Commerce. His extensive academic writings focus mainly on the fields of international law and human rights.

In November 1999, Plaintiff requested access to any records about himself or his activities that were in the possession of the FBI’s Central Records System. On March 23, 2001, the FBI released forty-nine pages of redacted records. Although the records referred to a number of groups described as “terrorist,” the FBI conceded that it does not suspect Plaintiff of ties to terrorist groups.

On April 23, 2001, the Plaintiff asked the FBI to amend his records pursuant to the Privacy Act, 5 U.S.C. Section  552a. The FBI denied his request. He then filed an internal appeal which the Bureau also rejected. The Plaintiff then sued for declaratory and injunctive relief pursuant to 5 U.S.C. Section  552a(g)(1) before an Illinois federal court. The parties filed cross-motions for summary judgment. The district court gave the FBI summary judgment. The Plaintiff appealed the district court’s ruling on his Section  552a(e)(7) claim that the FBI is illegally maintaining records concerning his First Amendment activities. The U.S. Court of Appeals for the Seventh Circuit, however, affirms.

Section 552(e)(7) of the Privacy Act prohibits agencies, such as the FBI, from maintaining certain types of information in a system of records, including information “describing how any individual exercises rights guaranteed by the First Amendment.” The ban, however, does not apply when those records are “pertinent to, and within the scope of, an authorized law enforcement activity.” Id. The Circuit Court holds that, while the statute does not define “law enforcement activity,” the circumstances here do not require the courts to limn the precise limits of the phrase.

“In this case, the Bureau, through Special Agent Krupkowski’s declaration, identifies the ways in which [Plaintiff’s] file is related to its law enforcement activities. [T]he FBI notes its ongoing investigations into the threats posed by terrorist groups, specifically those originating in the Middle East. We believe that the purposes identified by the Bureau fall within ‘authorized law enforcement activity’ conducted by the FBI. [T]he realm of national security belongs to the executive branch, and we owe considerable deference to that branch’s assessment in matters of national security.” [Slip op. 17]

“Furthermore, although the Privacy Act certainly does not authorize collection and maintenance of information of private citizens on the ‘off-hand’ chance that such information may someday be useful, it does not require law enforcement agencies to purge, on a continuous basis, properly collected information with respect to individuals that the agency has good reason to believe may be relevant on a continuing basis in the fulfillment of the agency’s statutory responsibilities.” [Id.]

Citation: Bassiouni v. Federal Bureau of Investigation, No. 04-3888 (7th Cir. January 30, 2006).

PATENTS

U.S. Supreme Court declines to review judgment that Canadian company’s BlackBerry wireless communicator infringes U.S. patents of plaintiff though its e-mail computers are located outside U.S.

The U.S. Supreme Court recently denied a petition for certiorari filed by Research in Motion (RIM), a firm based in Waterloo, Ontario. Research in Motion, Ltd. v. NTP, Inc., 126 S.Ct. 1174 (Jan. 23, 2006). The issue that RIM presented was essentially whether an Internet‑based global telecommunications system, such as the BlackBerry wireless e-mail system, is being used “within the United States,” under Section  271(a) of the U.S. Patent Act where components crucial to the system’s operation are located outside the United States. A denial of the writ is not generally regarded as precedential.

The U.S. Court of Appeals for the Federal Circuit had ruled for that RIM’s popular “BlackBerry” wireless hand-held communicator was infringing several U.S. patents owned by NTP, a Virginia company. See 418 F.3d 1282 (Fed. Cir. 2005) [replacing 392 F.3d 1336 (Fed. Cir. 2004)]. NTP won an injunction a year later to halt U.S. sales of the BlackBerry and to shut down the service, although the court stayed the ruling pending appeal.

Since its introduction in 1999, the BlackBerry system has revolutionized e-mail and data communications; it combines Internet and radio frequency (RF) technology in a way that almost instantly transmits data, including, but not limited to, duplicates of incoming e-mail messages, from an individual’s office computer network to his or her mobile BlackBerry wireless handheld device. The BlackBerry system is a two‑way system; it also enables an individual to compose an e-mail message on a BlackBerry handheld device and send it through his or her office computer network to an e-mail recipient anywhere in the world, including to other BlackBerry subscribers.

The fixed Canadian location and operation of the Network Control Center for North America (which serves more than 28 countries in addition to the United States) makes the BlackBerry system transnational in nature. Even more significant, the BlackBerry system has become critical for hundreds of thousands of federal, state, and local government personnel. These include officials responsible for national defense, homeland security, crisis management, and emergency response, and for those in the private sector (e.g., first responders; defense contractors) with whom government officials have to be able to communicate no matter what the circumstances.

The United States government recently stressed in a Statement of Interest filed with the district court, that it is crucial that any injunction entered in this action avoid disrupting governmental use of the BlackBerry system, since all three branches of the Government rely on the system, both for routine and urgent communications. Some 70% of RIM’s revenue comes from the U.S. where millions use the device.

NTP said the Supreme Court decision had “closed the final path for RIM to avoid liability for the infringement” and cleared the way for a lower court to issue the injunction. The two sides had reached a $450m settlement last March, but the deal fell through three months later. While RIM has asked the Federal Circuit to enforce the settlement, NTP has urged the court not only to grant it a permanent injunction, but also to award it lost royalty payments and $126m in damages.

Citation: Guardian Newspapers, Ltd., January 24, 2006, Financial Section, page 21 (byline of David Teather); 2006 WLNR 1255630.

TERRORISM

European Court of First Instance dismisses action by Swedish plaintiffs against EU Council and Commission to annul Regulations that not only restrict travel and exports to Afghanistan but also freeze plaintiffs’ funds

Ahmed Ali Yusuf and Al Barakaat International Foundation (plaintiffs or applicants) are based in Spanga, Sweden, and are allegedly linked to the Taliban in Afghanistan. On December 10, 2001, plaintiffs filed an action in the European Court of First Instance (CFI) against the EU Council and the Commission. The suit asked the CFI to annul two European Union (EU) Regulations enacted by the Council. The first was Regulation No. 467/2001. Based on Articles 60 EC and 301 EC, it barred the export of certain goods and services to Afghanistan, strengthened the flight ban and extended the freeze of funds and other financial resources with respect to the Taliban of Afghanistan (as amended).

The second was Regulation No. 881/2002; adopted based on Articles 60, 301 and 308 EC, it imposed certain specific restrictions directed against certain persons and entities associated with Usama bin Laden, the Al-Qaeda network and the Taliban. It also repealed Regulation No. 467/2001. The Council had adopted these measures following resolutions of the U.N. Security Council about the Taliban’s harboring of terrorists. The regulations had the effect of freezing the plaintiffs’ funds. In particular, the plaintiffs argued that the EU Council lacked the power to adopt the regulations. They relied in part on Article 60 EC which provides that “in cases envisaged in Article 301, ... the Council may, in accordance with the procedure provided for in Article 301, take the necessary urgent measures on the movement of capital and on payments as regards the third countries concerned.” Article 301 EC declares that “where there is a common position or joint action for the Community to interrupt or to reduce, in part or completely, economic relations with one or more third countries, the Council shall take the necessary urgent measures.”

According to plaintiffs, these provisions only authorize the Council to take action against third countries, not against nationals living in a Member State such as Sweden. Moreover, these Regulations are inconsistent with Article 249 EC which says that “EU regulations are directly applicable in Member States.” Finally, the plaintiffs urge that they violate their fundamental rights.

Unpersuaded, the CFI dismisses the case. In its view, nothing prevents the Council from taking measures that directly affect individuals or organizations, within and outside the EU, with the goal of reducing economic relations with one or more third countries. The measures at issue here are known as “smart sanctions” developed within the U.N. in the 1990s. These are more targeted sanctions to replace general trade embargoes to reduce the suffering of everyday civilians in the countries concerned.

The Council urges that Articles 60 EC and 301 EC do permit restrictive measures against entities or person who control parts of a third country (as in the case of sanctions imposed on UNITA in Angola), and against entities and persons who control the government of a third country (as in the case of sanctions imposed on the Federal Republic of Yugoslavia). The Court agrees and finds that Articles 60 EC and 301 EC authorize such measures.

“In fact, just as economic or financial sanctions may legitimately be directed specifically at the rulers of a third country, rather than at the country as such, they may be directed at the persons or entities associated with those rulers or directly or indirectly controlled by them, wherever they may be. As the Commission has rightly pointed out, Articles 60 EC and 301 EC would not provide an efficient means of applying pressure to the rulers with influence over the policy of a third country if the Community could not, on the basis of those provisions, adopt measures against individuals who, although not resident in the third country in question, are sufficiently connected to the regime against which the sanctions are directed.”

“Furthermore, as the Council has emphasised, the fact that some of those individuals so targeted happen to be nationals of a Member State is irrelevant, for, if they are to be effective in the context of the free movement of capital, financial sanctions cannot be confined solely to nationals of the third country concerned.”

“That interpretation, which is not contrary to the letter of Article 60 EC or Article 301 EC, is justified both by considerations of effectiveness and by humanitarian concerns. Furthermore, the Court finds that based on the Taliban’s control of Afghanistan and Usama bin Laden’s close relationship with the Taliban, the sanctions were in fact directed at a third country.” [¶¶ 115-116]

“In so far as the applicants complained that Regulation No 467/2001 was directed at Usama bin Laden and not the Taliban regime, the Council has added that Usama bin Laden was in fact the head and ‘éminence grise’ of the Taliban and that he wielded the real power in Afghanistan. His temporal and spiritual titles of Sheikh' (head) and Emir' (prince, governor or commander) and the rank he held beside the other Taliban religious dignitaries can leave little doubt on that score.” [¶ 118].

Moreover, even before 11 September 2001, Usama bin Laden had sworn an oath of allegiance (Bay’a’) making a formal religious bond between him and the Taliban theocracy. He was thus in a situation comparable to that of Mr. Milosevic and the members of the Yugoslav Government at the time of the economic and financial sanctions taken by the Council against the Federal Republic of Yugoslavia. With regard to Al-Qaeda, the Council has observed that it was common knowledge that it had many military training camps in Afghanistan and that thousands of its members had fought beside the Taliban between October 2001 and January 2002, during the intervention of the international coalition.

“There are no grounds for challenging the validity of those considerations as to which there exists, within the international community, a broad consensus expressed, inter alia, by the several resolutions adopted unanimously by the Security Council and which have not been specifically rebutted or even challenged by the applicants.”

“More particularly, the chief object of the sanctions at issue in this case was to prevent the Taliban regime from obtaining financial support from any source whatsoever, as is apparent from Paragraph 4(b) of Resolution 1287 (1999). The sanctions might have been circumvented if the individuals who were thought to maintain that regime had not been affected by them. As regards the relations between the former Taliban regime and Usama bin Laden, the Security Council considered that the latter, during the period in question, received assistance, at this point crucial, from the regime of which he could be regarded as forming part.”

“Thus it is that, in the 10th recital in the preamble to Resolution 1333 (2000), the Security Council deplored the fact that the Taliban continued to provide safe haven to Usama bin Laden and to allow him and others associated with him to operate a network of terrorist training camps from Taliban-controlled territory and to use Afghanistan as a base from which to sponsor international terrorist operations. Furthermore, in the seventh recital in the preamble to Resolution 1333 (2000), the Security Council reaffirmed its conviction that the suppression of international terrorism was essential for the maintenance of international peace and security.” [¶¶ 119-120].

“Thus, contrary to what the applicants maintained, the measures at issue were indeed intended to interrupt or reduce economic relations with a third country, in connection with the international community's fight against international terrorism and, more specifically, against Usama bin Laden and the Al-Qaeda network.” [¶ 121]. In sum, the Council was in fact competent to adopt Regulation No 467/2001 on the basis of Articles 60 EC and 301 EC.

The CFI then turns to the plaintiffs’ argument from Article 308 EC. It provides that “if action by the Community should prove necessary to attain, in the course of the operation of the common market, one of the objectives of the Community and this Treaty has not provided the necessary powers, the Council shall ... take the appropriate measures.” In the plaintiffs’ view, this does not authorize the Council to impose sanctions on individuals. The Court agrees with plaintiffs that Article 308 EC, without more, is an insufficient basis. Nevertheless, other provisions show that the Regulation was properly implemented.

“In this instance, the fight against international terrorism and its funding is unarguably one of the Union’s objectives ... as they are defined in Article 11 EU, even where it does not apply specifically to third countries or their rulers. Furthermore, it is not disputed that Common Position 2002/402 was adopted by the Council acting unanimously in relation to that fight and that it prescribes the imposition by the Community of economic and financial sanctions in respect of individuals suspected of contributing to the funding of terrorism, where no connection whatsoever has been established with the territory or governing regime of a third country.”

“Against that background, recourse to Article 308 EC, in order to supplement the powers to impose economic and financial sanctions conferred on the Community by Articles 60 EC and 301 EC, is justified by the consideration that, as the world now stands, States can no longer be regarded as the only source of threats to international peace and security. Like the international community, the Union and its Community pillar are not to be prevented from adapting to those new threats by imposing economic and financial sanctions not only on third countries, but also on associated persons, groups, undertakings or entities developing international terrorist activity or in any other way striking a blow at international peace and security.”

“The institutions ... are therefore right to maintain that the Council was competent to adopt the contested regulation which sets in motion the economic and financial sanctions provided for by Common Position 2002/402, on the joint basis of Articles 60 EC, 301 EC and 308 EC.” [¶¶ 167-170].

The Court therefore holds (1) that it does not have to adjudicate the application for annulment of Regulation 467/2001 because Regulation 881/2002 has repealed it; and (2) that it is proper to dismiss the action as to Regulation 881/2002.

Citation: Yusuf and Al Barakaat International Foundation v. Council and Commission (C.F.I. Case T-306-01) (2005/C 281/31).

WORLD TRADE ORGANIZATION

WTO body finds that U.S. continues to violate international trading rules by maintaining prohibited indirect subsidies through Foreign Sales Corporation and Extraterritorial Income Exclusions

The Appellate Body of the World Trade Organization (WTO) has held that the U.S. still has failed to carry out its recommendations regarding Foreign Sales Corporations (FACS) and Extraterritorial Income Exclusions (EGIS). The original Panel decision in United States - Tax Treatment for “Foreign Sales Corporations concluded that the “F.C. measure” (Sections 921 to 927 of the U.S. Internal Revenue Code) and related measures provided special tax treatment, and thus violated the Agreement on Subsidies and Countervailing Measures (the S.M. Agreement).

The Appellate Body upheld the Panel’s finding of inconsistency with the S.M. Agreement, but modified the findings based on the Agreement on Agriculture. In November 2000, the U.S. purportedly complied by enacting the F.C. Repeal and Extraterritorial Income Exclusion Act of 2000 (ETI Act) [Pub.L. No 106-519, 114 Stat. 2423 (2000)].

The European Union (EU) disagreed, claiming that the new Act still fails to comply with the S.M. Agreement, the Agreement on Agriculture, and GATT 1994. Thus, the EU sought recourse to Article 21.5 of the Dispute Settlement Understanding (DSU) for the first time. The Panel concluded that the ETI Act was in fact inconsistent with trading rules, and that by making the F.C. tax benefit available indefinitely for certain transactions under Section 5(c)(1)(B) of the ETI Act, the U.S. “ha[d] not fully withdrawn the F.C. subsidies found to be prohibited export subsidies [in the original proceedings] and ha[d] therefore failed to implement the recommendations and rulings of the [Dispute Settlement Body (DSB)] [in the original proceedings] made pursuant to Article 4.7 [of the] S.M. Agreement. The Appellate Body upheld those findings.

In October 2004, the U.S. implemented the American Jobs Creation Act of 2004 (Jobs Act) [Pub.L. 108-357], which repealed the ETI Act’s tax exclusion. Section 101 of the Jobs Act, called “Repeal of exclusion for extraterritorial income,” purports to repeal ETI. Nevertheless, Section 101(d) does allow for a transition period and does contain a “grandfathering” provision which permits the indefinite use of ETI for certain transactions.

After the U.S. had arguably failed to comply, the EU brought a Second Recourse to Article 21.5 of the DSU, alleging that the Jobs Act does not comply with the WTO recommendations.

In particular, the Appellate Body finds that the Panel below (1)correctly found that Section 5(c)(1)(B) of the F.C. Repeal and Extraterritorial Income Exclusion Act of 2000, grandfathering prohibited F.C. subsidies, was within its terms of reference; and (2) that the Panel correctly held that ‘to the extent that the United States, by enacting Section 101 of the American Jobs Creation Act of 2004, maintains prohibited F.C. and ETI subsidies through [the] transitional and grandfathering measures, it continues to fail to implement fully the operative DSB recommendations and rulings to withdraw the prohibited subsidies and to bring its measures into conformity with its obligations under the relevant covered agreements.” (See¶¶ 7.65 and 8.1 of the Panel Report).

The Washington Post comments that this decision affects the tax benefits to major U.S. corporations, including Caterpillar, Inc., Microsoft Corporation, and Boeing Co., and may result in up to $4 billion per year in EU sanctions on U.S. products.

Citation: United States - Tax Treatment for “Foreign Sales Corporations,” Second Recourse to Article 21.5 of the DSU by the European Communities (WT/DS108/AB/RW2) (AB-2005-9) (13 February 2006). See also 2001 International Law Update 141; 2002 International Law Update 29; 2003 International Law Update 78; 2004 International Law Update 15. The full Report is available on WTO website www.wto.org; CCH Tax Briefing: American Jobs Creation Act of 2004 (Updated October 11, 2004); “Latest U.S. Export Tax Break Illegal, World Trade Organization Rules,” The Washington Post, Tuesday, February 14, 2006 at section D, page 5.

U.S. extends its ban on importing ancient Italian artifacts. On January 19, 2006, the U.S. State Department (USDOS) announced that the U.S. and Italy have agreed to extend their wide-ranging Memorandum of Understanding (MOU) that bars the importation of Etruscan, Greek and Roman artifacts from Italy for five more years. The prohibition is part of a broader agreement between the two nations on protecting Italy’s cultural heritage. It has come under inquiry in recent months, however, as Italy is energetically seeking to get back its antiquities from several major American museums. Archaeologists and cultural property experts praised the original 2001 MOU as a useful device against the plundering of Italian archaeological sites. [See Memorandum of Understanding Concerning the Imposition of Import Restrictions on Categories of Archaeological Material etc, in force January 19, 2001]. In reporting the extension, the USDOS applauded recent Italian moves toward longer-term leases of additional archaeological material to American museums. It also pointed to Italian police reports that archaeological looting in Italy is still “a severe problem” and that many of the plundered artifacts are headed to the U.S. On the other hand, many U.S. art dealers have contended that the ban impedes lawful trading in artifacts which are already well represented in Italian collections. Moreover, some American museum officials complain that Italy has not upgraded its cultural cooperation to the extent called for in the MOU. Citation: The New York Times, Washington, D. C. ; Saturday, January 20, 2006, Section E, page 6; 2006 W.L.N.R. 1080909 (byline of Hugh Eakin, compiled by Lawrence Van Gelder).

Austria to restore five Klimt paintings to California resident. On January 16, 2006, the Austrian government announced that a three-member arbitration court had ruled that Austria should restore five paintings of noted Art Nouveau artist Gustav Klimt (1862-1918) to Maria Altmann, a California resident and the heir of Jewish industrialist, Ferdinand Bloch-Bauer. The panel held that the following paintings: “Adele Bloch‑Bauer I”, “Adele Bloch‑Bauer II”, “Apple Tree”, “Houses in Unterach on Attersee” and “Birch Wood/Beech Wood” met the specifications set forth in the Art Restitution Act of 1998 (ARA). The five paintings have an estimated purchase price of about Euro 200 million. The Nazi regime had confiscated the works and sent them to the Oesterreichische Galerie Belvedere. Austrian Chancellor, Wolfgang Schüssel, declared that his government would enforce the decree. This came about, however, only after fierce legal battles waged over many years between Austria and Ms. Altmann. Mr. Schussel also noted that, in the past, his government had returned 36 works of art to the Altmann family. He also reported that Austria has restored a total of 4,300 works of art to various owners pursuant to the ARA. Citation: News Release from Chancellery of Austria, as reported in U.S. Federal News (HT Syndication), Vienna Austria, Tuesday, January 23, 2006; 2006 W.L.N.R. 2408600; USA Today, February 22, 2006, page 4A.

Romania wins ICSID arbitration with U.S. company. On October 12, 2005, Romania prevailed in an arbitration before the International Center for Settlement of Investment Disputes (ICSID) within the World Bank in Washington, D. C. Noble Ventures, Inc. (NVI), an American firm, had filed its claim under the bilateral investment treaty (BIT) between the U.S. and Romania seeking to arbitrate pursuant to the ICSID Convention in August 2001. NVI asked for almost $353 million in damages from Romania, alleging unfair treatment in relation to its investment in Combinatul Siderurgic Re ita S.A. (CSR) after the steel company’s privatization. The case involved complex matters of international law such as issues related to expropriation, standards of fair treatment, and the protection of foreign investments. The proceedings also had to resolve a number of Romanian law matters. The three arbitrators were from the U. K., Germany and France. Citation: Monday Business Briefing, Washington, D. C., November 11, 2005, 2005 W.L.N.R. 18249419 (by Miss Alina Nicolae).

Greece and U.S. update prior agreements on extradition and mutual assistance. On January 18, 2006, an Assistant U.S. Secretary of State and the Greek Ambassador to the U.S. signed protocols on Extradition and Mutual Legal Assistance (MLAT) between the two countries. The extradition agreement supplements and updates a 1931 bilateral treaty [See Treaty of Extradition, 47 Stat. 2185; T.S. 855; 8 Bevans 353; 138 L.N.T.S. 293; in force, Nov. 1, 1932]. The MLAT supplements a similar 1999 agreement between the U.S. and Greece. [See Treaty on Mutual Legal Assistance in Criminal Matters, in force Nov. 20, 2001]. Without specifying their contents, the release merely declares that “[t]hey will allow U.S. and Greek law enforcement officials in both countries to cooperate more effectively in bringing criminals to justice and in combating international terrorism.” Among other things, MLATs typically deal with facilitating the timely obtaining of documentary and testimonial evidence in admissible form from one party’s territory to the other’s for use as evidence in criminal trials. Citation: U.S. State Department, Media Note #2006/57, Office of Spokesman, Washington, D. C., Wednesday, January 18, 2006.

South Korean veterans exposed to Agent Orange win damages against its U.S. manufacturers. On January 26, 2006, the High Court of Seoul, South Korea ruled that U.S. firms, Dow Chemical Co. and Monsanto, have to pay damages of more than $60m to almost 6,800 South Korean veterans who had been exposed to Agent Orange during the Vietnam war. Both defendants are doing business in South Korea. According to the Associated Press, the court said in its ruling: “[i]t is acknowledged . . . the defendants failed to ensure safety as the defoliants manufactured by the defendants had higher levels of dioxins than standard.” South Koreans made up the largest foreign contingent of U.S. allies fighting in Vietnam; about 313,000 served between 1963 and 1973. Many veterans have ascribed a range of illnesses ‑ such as birth defects, cardiovascular disease, cancer and nervous disorders ‑ to the defoliant. Anticommunist forces sprayed about 13 million gallons of Agent Orange on Vietnam during the war. The plan was to remove the leaves from forests and mangroves so as to destroy food and cover for Viet Cong forces. Citation: Financial Times (UK), Seoul, Monday, January 27, 2006; Asia-Pacific Section at page 9 (byline of Anna Fifield), 2006 WLNR 1494432.

Intercountry Adoption Convention moves toward U.S. implementation. As of now, 68 nations are parties to the Hague Convention on Protection of Children and for Cooperation in respect to Intercountry Adoption. Its main goals are to ensure that intercountry adoptions are in the best interest of the children in question, and to prevent the abduction, sale or trafficking in children. The Convention is expected to enter into force for the U.S. in 2007. During fiscal year 2005, U.S. citizens adopted over 22,700 orphans, 58% of whom came from Convention countries. In order of most adoptions to least, the top ten sources of FY05 adoptions from Convention countries were: China, Guatemala, India, Colombia, Philippines, Mexico, Poland, Thailand, Brazil and Moldova. China alone accounted for 60% of these adoptions. The Intercountry Adoption Act of 2000 lists the U.S. Department of State as the Central Authority for the U.S. in these matters. Before the U.S. deposits its instruments of ratification at the Hague, it must ensure that it has enough Accredited Adoption Agencies at the ready. The texts of those final rules in Federal Register, Vol. 71, No. 31 may be found at http://www.gpoaccess.gov/fr/search.html. Citation: Media Note 2006/193, Office of the Spokesman, U.S. Department of State, Washington, D. C. Wednesday, February 15, 2006 at 3:22pm.