2006 International Law Update, Volume 12, Number 10 (October)

2006 International Law Update, Volume 12, Number 10 (October)

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

ARBITRATION

Third Circuit, in U.S. litigation over staging of California art exhibit, affirms enforcement of Swiss arbitration awards under Arbitration Convention

In 1990, The Stephen and Mary Birch Foundation, Inc. (Defendant), a not-for-profit corporation, contracted to buy “Luna Luna,” an open-air art exhibit, from Admart AG (Plaintiff). Defendant paid $3 million at contracting time with $3 million due once the exhibit was set-up.

The Agreement provided for arbitration of any disputes in Zurich, Switzerland. It also contained provisions designed to ensure the authenticity of the works and to guarantee clear title.

The following year, however, Defendant announced that it was rescinding the contract for insufficient evidence that Plaintiff had clear title to Luna Luna. The parties then went to arbitration in Zurich. Three years later, a Swiss arbitration panel issued a Final Arbitral Award (FAA) in favor of Plaintiff. During arbitration, Defendant had expressed its concern that operating Luna Luna in the U.S. might expose them to costly litigation there.

The arbitration panel, however, ruled that proof that many of the artists had expressly consented to Luna Luna’s display of their works as well as the contract’s indemnification provision should have allayed such fears. The FAA directed Defendant to pay the outstanding $3 million as agreed; it also required Plaintiff to deliver the specified art works to Defendant. After the parties had failed to comply with the FAA, Defendant appealed to the Swiss Federal Supreme Court, which affirmed the award, prompting another appeal.

At about the same time, Plaintiff sued the Defendant in Delaware federal court to enforce the FAA. It relied on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958 [21 U.S.T. 2517, T.I.A.S. No. 6997] (the Convention), as implemented in the U.S. by 9 U.S.C. Section 201 et seq. The District Court stayed the proceedings pending the Swiss court’s decision.

In 1999, Defendant filed a second arbitration petition in Switzerland, seeking damages resulting from Plaintiff’s failure to comply with the first award. Although the panel decided it had jurisdiction over the claims, it has yet to rule on the merits of Defendant’s new claims.

Three years later, the District Court resumed its confirmation proceedings. On June 8, 2004, it ruled for Plaintiff. The Court confirmed the FAA and required Defendant to pay the amount due under the contract. Defendant appealed. The U.S. Court of Appeals for the Third Circuit affirms.

The Court first addresses Defendant’s arguments that the court (1) should stay its proceedings to await a final order from the second Swiss arbitration panel and (2) should grant Defendant’s motion to adjourn the enforcement of the 1994 FAA under Article VI of the Convention.

The Third Circuit, however, affirms the District Court’s decision to resume confirmation proceedings. It holds that enforcement proceedings may continue with respect to issues no longer contested in on-going arbitration proceedings. Since the issues raised in the second Swiss arbitration proceedings do not overlap those arising in the instant case, there is no need for further delays.

Next, Defendant argued that the lower court had improperly modified the award by not requiring concurrent performance by both parties. The appellate court rejects this argument. “Consistent with the policy of favoring enforcement of foreign arbitral awards, parties have limited [sic] defense to recognition and enforcement of an award as set out in Article V of the Convention.” [Slip op. 50].

Adequate grounds for refusal under Article V, include (1) incapacity, (2) improper notice of arbitration, (3) awards beyond the scope of the original agreement, (4) arbitration procedure in violation of the agreement, and (5) invalidation of the award by another competent authority.

A competent authority at the situs of the arbitration may also set aside an award if it determines (1) that the subject matter of the dispute may not be arbitrable under that country’s law or (2) that enforcement of the award would be contrary to local public policy.

Furthermore, the Convention is “‘clear that when an action for enforcement is brought in a foreign state, the state may refuse to enforce the award only on the grounds explicitly set forth in Article V of the Convention.’ Thus, mistake of fact and manifest disregard of the law do not justify setting aside an award.” [Slip op. 63, 64].

Moreover, enforcement courts have to interpret the “public policy” defense narrowly; it is only available “‘¼ where enforcement would violate the forum state’s most basic notions of morality and justice.’ Parsons & Whittemore Overseas Co., Inc. v. Societe Generale de L’Industrie du Papier (RAKTA), 508 F.2d 969, 974 (2d Cir. 1974).” [Slip op. 65].

In the absence of Article V grounds, the only action a district court may take is to interpret or clarify the meaning of the award. Previous cases “did not give the arbitrator’s decisions a brittle rigidity but found some flexibility to modify [the] execution of [an] award without altering its substance. That leeway, however, is very small and is available only in limited circumstances so as not to interfere with the Convention’s clear preference for confirmation of awards.” [Slip op. 71].

“The District Court judgment confirming the Award was consistent with its substance ... The passage of ten years from the rendition of the Award and the date of the District Court’s confirmation order understandably necessitated some deviation from the original terms of execution.” [Slip op. 81]

Citation: Admart AG v. The Stephen and Mary Birch Foundation, Inc., 457 F.3d 302 (3d Cir. 2006).

CHOICE OF LAW

In negligence action filed in English court over accident in which Plaintiff passenger was left quadriplegic when Respondent driver lost control of car on Australian track, House of Lords applies English law on quantum of damages as procedural matter rather than Australian law which sets cap on non-economic damages and higher discount rate

On February 3, 2002, a serious auto accident took place on a dirt track near Huskisson in New South Wales, Australia. Ms. Wealand (Respondent) lost control of the vehicle she was driving, causing it to turn over. Respondent admits negligence. Mr. Harding (Appellant) was a passenger. The rollover left him quadriplegic. [Respondent owned the vehicle in question and she had insured it with an Australian insurance company.]

Respondent is from Australia while Appellant is English. When the Appellant had gone to Australia in March 2001, he had formed a relationship with Respondent. A few months later, Respondent had come to England to live with Appellant. The accident had occurred on holiday together in Australia. Afterwards, Appellant and Respondent went back to England.

Appellant sued Respondent in an English court where the trial judge applied English law to the assessment of damages for two reasons. The first was because the assessment of damages was a matter of “procedure” governed by the lex fori. Under the second rationale, even if it were a matter of “substantive” law, it was, in this particular case, “substantially more appropriate” to apply English law.

The Court of Appeal (Civil Division) allowed the appeal. The House of Lords granted review on the following issue: whether the English courts should calculate the amount of damages for personal injury caused by negligent driving in New South Wales according to the applicable law chosen in accordance with Part III of the Private International Law (Miscellaneous Provisions) Act of 1995 (hereafter “Part III”) or whether it is a question of procedure which falls to be determined in accordance with English law. The House of Lords unanimously allows the appeal.

As in England, personal injury caused by negligence is an actionable wrong in Australian common law as reinstated by the Motor Accidents Act of 1988 (NSW). Subject to several exceptions and refinements, Chapter 5 of the Motor Accidents Compensation Act of 1999 (MACA), which was in force in Australia at the time of the accident, sets the maximum amount recoverable for non-economic losses (i.e. pain and suffering, loss of amenities of life, loss of expectation of life, or disfigurement) at Aust. $309,000 subject to indexation.

Additionally, MACA prescribes the discount rate for calculating the present value of future economic loss as 5 percent whereas, in England, it is 2.5 percent . Nothing like the Australian provisions forms part of English law. The Appellant claims that, under the provisions of MACA, he would recover about 30 percent less than he would under the English law of damages.

In tort actions, “the [English] courts have distinguished between (1) the kind of damage which constitutes an actionable injury and (2) the assessment of compensation (i.e. damages) for the injury which has been held to be actionable. The identification of actionable damage is an integral part of the rules which determine liability. ... [I]t makes no sense simply to say that someone is liable in tort. He must be liable for something and the rules which determine what he is liable for are inseparable from the rules which determine the conduct which gives rise to liability.”

“Thus, the rules which exclude damage from the scope of liability on the grounds that it does not fall within the ambit of the liability rule, or does not have the prescribed causal connection with the wrongful act, or which require that the damage should have been reasonably foreseeable, are all rules which determine whether there is liability for the damage in question. On the other hand, whether the claimant is awarded money damages (and if so, how much) or, for example, restitution in kind, is a question of remedy.” [¶ 24]

The next question is whether Part III affects the distinction between questions of liability and questions of remedy or procedure. “Section 10 abolishes the Phillips v. Eyre (1870) LR 6 QB 1 requirement of double actionability ‘for the purpose of determining whether a tort or delict is actionable’ and the common law exceptions to that rule created by cases like Boys v. Chaplin [1971] AC 356. ...”

“Section 11 substitutes a ‘general rule’ that the applicable law is the ‘law of the country in which the events constituting the tort or delict in question occur.’ Section 12 provides for displacement of the general rule in certain cases in which it is ‘substantially more appropriate’ for the applicable law to be different.”

“But section 14 provides (in part) that: ‘(2) Nothing in this Part affects any rules of law (including rules of private international law) except those abolished by section 10 above. (3) Without prejudice to the generality of subsection (2) above, nothing in this Part ... (b) affects any rules of evidence, pleading or practice or authorises questions of procedure in any proceedings to be determined otherwise than in accordance with the law of the forum.’” [¶ 31]

“The conclusion that the amount of damages for an injury actionable by the lex causae must be determined according to the lex fori was to be left untouched is confirmed by the [1990] Report of the Law Commission and the Scottish Law Commission ... Paragraph 3.38 dealt with damages: ‘Accordingly, the applicable law in tort or delict determines the question of the availability of particular heads of damages whereas the measure or quantification of damages under those heads is governed by the lex fori.’ [¶ 34].”

“Lord Howie declared an interest on behalf of Cape Industries plc, which had a few years earlier been sued in Texas for asbestos-related injuries (see Adams v Cape Industries plc [1990] Ch. 433) and was anxious that Part III should not import American scales of compensation into English courts.”

“It follows from this that the kind of awards ... of damages made in certain states, in particular in parts of the United States, will not become a feature of our legal system by virtue of Part III. Our courts will continue to apply our own rules on quantum of damages even in the context of a tort case where the court decides that the ‘applicable law’ should be some foreign system of law so far as concerns the merits of the claim.”

“Some aspects of the law of damages are not regarded as procedural and, ... Part III does not alter this. These aspects concern so-called ‘heads of damages’ -- the basic matter which is being compensated for -- such as special damage relating to direct financial loss. Whether a particular legal system permits such a head of damage is not regarded as procedural but substantive and therefore not automatically subject to the law of the forum.” [¶ 37].

“In principle, therefore, I think that the relevant provisions of MACA should be characterised as procedural and therefore inapplicable by an English court.” [¶ 42].

“There is accordingly in my opinion no English authority to cast any doubt upon the conclusion of the Australian High Court in Stevens v Head (1993) 176 CLR 433 that, for the purposes of the traditional distinction between substance and procedure which treats remedy as a matter of procedure, all the provisions of MACA, including limitations on quantum, should be characterised as procedural.” [¶ 48].

“In my opinion, therefore, [the trial judge] was right to treat the MACA restrictions as entirely inapplicable. In the circumstances, it is unnecessary to decide whether, if they had been properly characterised as substantive, it was open to the Court of Appeal to reverse his judgment that it was substantially more appropriate to apply English law. ... [M]ost of the reasons why it may be more appropriate to apply English law are the reasons why the assessment of damages is traditionally characterised as a matter for the lex fori. I would therefore prefer not to express a view on this question. In my opinion the appeal should be allowed and the judgment of [the trial judge] restored.” [¶ 53].

The concurring opinion of another Lord of Appeal stresses the Parliament’s desire to enact statutes worded in such a way as to preclude the English courts from having to apply the damages law of other nations. “The particular problem raised by Lord Howie related to the high level of damages in the United States which he was anxious should not be replicated here.”

“But it would be equally unacceptable if, say, United Kingdom courts had to award damages according to a statutory scale which, while adequate in another country because of the relatively low cost of services etc. there, would be wholly inadequate in this country, having regard to the cost of the corresponding items here. ... Section 14(3)(b) guards against such eventualities.” [¶ 70].

Citation: Harding v. Wealands, 2006 WL 1783207 (HL), [2006] 4 All E.R. 1, [2006] UKHL 32 (July 5).

COMPETITION

In Article 234 reference from Belgian court of suit by one supermarket against another over its allegedly faulty comparison advertising, European Court of Justice rules that EU law does not ban such advertising as long as it can be verified by customers who wish to examine claims

Lidl Belgium GmbH & Co KG (Lidl) and Etablissementen Franz Colruyt (Colruyt) operate supermarkets in Belgium. In January 2004, Colruyt sent a mass mailing to consumers which stated that “we have calculated that a family spending EUR 100 each week in Colruyt stores: - saved between EUR 366 and EUR 1129 by shopping at Colruyt’s rather than at any other supermarket (such as Carrefour, Cora, Delhaize, etc.); - and saved between EUR 155 and EUR 293 by shopping at Colruyt’s instead of a hard discounter or wholesaler (Aldi, Lidl, Makro).”

In addition, Colruyt’s checkout receipts transmit substantially the same claims. Both the letter and the checkout receipts refer to Colruyt’s Internet website, where the price comparisons are explained in more detail. Furthermore, Colruyt attaches a red label “BASIC” to certain products, claiming that these products are sold at the lowest prices in Belgium.

Lidl filed suit in the Brussels Commercial Court (BCC) to enjoin Colruyt’s from comparing its product pricing to Lidl. Lidl’s action was based on Article 23a of the Belgian Law of 14 July 1991 on commercial practices and consumer information and protection as amended by the Law of 25 May 1999. Article 23a transposed Article 3a of the Directive on Misleading and Comparative Advertising (84/450/EEC, 1984 O.J. (L 250) 17, as amended) (Directive) into Belgian law.

The BCC stayed its proceedings and referred the matter to the ECJ pursuant to Article 234 of the Treaty for a preliminary legal ruling on the interpretation of both of the above Directives and also the related Directive 2005/29/EC dealing with unfair business-to-consumer commercial practices, i.e. the Unfair Commercial Practices Directive (2005 O.J. (L 149) 22).

Article 2(2a) of the [1984] Directive defines “comparative advertising” as “any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor.” Article 3a(1) permits comparative advertising if “(a) it is not misleading ...; (b) it compares goods or services meeting the same needs or intended for the same purpose; (c) it objectively compares one or more material, relevant, verifiable and representative features of those goods and services, which may include price; ...”

The ECJ addresses the following two methods of comparative advertising. First, Colruyt compares its prices for a selection of products to competitors’ prices for the same (brand name) or comparable (unbranded or the chain’s own brand) products, and infers the amounts that consumer may save by shopping at Colruyt. The price comparisons are determined monthly and annually. Second, Colruyt claims that all of its products with a red label “BASIC” are sold at the lowest price in Belgium. This includes brand name products and Colruyt’s own brand name products.

The ECJ points out that sound comparative advertising may help customers to understand the merits of comparable products, and thus can stimulate competition that benefits consumers. Thus, such advertising is presumed to be beneficial.

In general, the Directive does not preclude comparative advertising that relates selections of basic consumables to a competitor’s comparable products. The advertiser must make additional information available for consumers who wish to examine and verify the claims.

“... [I]n so far as the selections of products of two competitors to which the comparison relates each consist of products which, when viewed individually, satisfy the requirement of comparability laid down by Article 3a(1)(b) of the Directive, a matter which is for the referring court to establish, such selections can themselves be regarded as meeting that requirement.”

“That may be so, in particular, in the case of selections composed of comparable products sold by two competing chains of stores where it is asserted that the products comprising the advertiser’s selection have the common feature of being cheaper than the comparable products comprising his competitor’s. Such pairs of comparable products do not cease to meet the same needs, or to be intended for the same purpose, simply because they are compared collectively from the point of view of that common comparative feature.”

“The requirement laid down by Article 3a(1)(b) of the Directive may also be satisfied when a comparison is made of the general price level of all the comparable basic consumables sold by two competing chains of stores with a view to inferring therefrom the amount liable to be saved by consumers who make their purchases of such goods from one rather than the other of those chains.”

“In such a situation, both the pairs of comparable products sold by those competing chains and the whole formed by those comparable products when they are acquired together in the context of the purchase of basic consumables are capable of satisfying the condition that they meet the same needs or are intended for the same purpose.”[¶¶ 36-38].

Thus, comparative advertising is permissible if it relates collectively to selections of basic consumables sold by two competing chains of stores in so far as those selections each consist of individual products which, when viewed in pairs, are comparable.

Such comparative advertising, however, can be misleading when an advertiser claims that its price level is generally lower based on a sample of products and the advertisement: (a) fails to reveal that the comparison relates only to a sample of products and not [to] all of the advertiser’s products; (b) fails to give the details of the comparison or the source of the information, or (c) contains a collective reference to a range of amounts that consumers may save by buying from the advertiser without specifying individually the general level of prices charged by each of the competitors.

Thus, an advertiser must be able to check the factual accuracy of the comparisons. The Directive does not require, however, that such proof be made available to all interested parties before the advertisement appears. Here, it is for the Belgian court to determine whether the advertisements at issue meet the requirements outlined by the ECJ.

Citation: Case C-356/04, Lidl Belgium GmbH & Co KG v. Etablissementen Franz Colruyt NV (European Court of Justice, 19 September 2006). The judgment is available on the website curia.europa.eu.

EXTRADITION

In international extradition matter, Third Circuit affirms denial of habeas corpus petition which argued invalidity of treaty and risk of torture or death and defers to Secretary of State for final decision on extradition order sought by Albanian Government

In response to an Albanian request, the U.S. government filed for the extradition of Krenar Hoxha (Petitioner). Although born in Albania, Petitioner became a naturalized American citizen in 2002. Albania sought his extradition to stand trial for the alleged 1996 murders of three Albanian citizens.

In making its case for extradition, the Albanian government introduced a number of documents and put on testimony that tended to link Petitioner to the crimes. An Albanian court has already tried and convicted Petitioner in absentia. Petitioner has challenged his conviction on Albanian constitutional grounds and the case is on hold awaiting his surrender.

In February of 2005, a federal Magistrate Judge in Pennsylvania ruled that the evidence provided by the Albanian government sufficed to show probable cause. The judge then issued a Certificate of Extraditability and Order of Commitment, placing Petitioner in the custody of the U.S. Marshal to await a final disposition by the Department of State.

Petitioner sought habeas corpus in a Pennsylvania federal court, challenging the legality of his extradition to Albania. The District Court denied habeas relief on the ground that probable cause did exist, and “that the extradition treaty between the United States and Albania was in full force and effect and that Petitioner’s humanitarian claims could be considered only by the secretary of state.” [Slip op. 30].

On appeal, Petitioner raised the following issues: (1) that the Magistrate Judge erroneously withheld testimony of recanting witnesses; (2) that the extradition treaty between Albania and the U.S. is no longer in force; and (3) that he will likely face torture and possible death upon his return to Albania. The U.S. Court of Appeals for the Third Circuit, however, affirms.

The Court first notes that extradition is the principal domain of the Executive Branch. “Extradition is an executive rather than a judicial function. Sidali v. INS, 107 F.3d 191, 194 (3d Cir. 1997). For this reason, a court may conduct only a limited inquiry following a complaint seeking extradition.” [Slip op. 32]. The habeas court examines an extradition request to find probable cause. Upon such a finding it issues an extradition order which it transmits to the Secretary of State for her final decision on whether or not to surrender the Petitioner to the requesting State.

A Petitioner may not file a direct appeal of a court’s extradition order “because the order does not constitute a final decision under 28 U.S.C. Section 1291, but [he] may petition for a writ of habeas corpus. The habeas court may consider only ‘whether the magistrate [judge] had jurisdiction, whether the offense charged is within the treaty and ¼ whether there was any evidence warranting a finding of probable cause.’” [Slip op. 33]. First, the court briefly reviews the facts and holds that there are no reasons to disturb the district court’s finding of probable cause.

The Court then analyzes Petitioner’s claim that the extradition treaty between the U.S. and Albania is no longer valid for “a petitioner facing extradition has standing to challenge the validity of the applicable extradition treaty.” [Slip op. 41].

Petitioner argued that the original 1933 extradition treaty between the Kingdom of Albania and the U.S. became invalid in 1944 when the successor government denounced all treaties entered into by the Kingdom of Albania.

“Whether a treaty remains valid following a change in the status of one of the signatories is a political question, and we therefore defer to the views of each nation’s executive branch.” [Slip op. 42]. After reviewing the record and the evidence presented by representatives of Albania and the U.S., that supported the validity of the present treaty, the Third Circuit spurns Petitioner’s challenge.

Lastly, the court determines whether Petitioner’s humanitarian claims warrant habeas relief. “Under the traditional doctrine of ‘non-inquiry,’ such humanitarian considerations are within the purview of the executive branch and generally should not be addressed by the courts in deciding whether a petitioner is extraditable. ...The non-inquiry principle serves interests of international comity by relegating to political actors the sensitive foreign policy judgments that are often involved in the question of whether to refuse an extradition request.” [Slip op.45 & 46].

“Petitioner nonetheless argues that his humanitarian arguments are relevant under Section 2422 of the Foreign Affairs Reform and Restructuring Act (FARR), Pub. L. No. 105-277, 112 Stat. 2681-822 (1998) (codified as Note to 8 U.S.C. Section 1231), which implemented Article 3 of the 1984 U. N. Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment [in force for U.S. Nov. 20, 1994] (the ‘Torture Convention’).” [Slip op. 47]

Although the court recognizes the basic principle that the U.S. should not grant extradition requests to countries which may violate the Torture Convention, the Courts have to leave such decisions to the discretion of the Department of State. FARR further provides that “nothing in this section shall be construed as providing any court jurisdiction to consider or review claims raised under the [Torture] Convention or this section, or any other determination made with respect to the application of the policy set forth in subsection (a), except as part of the review of a final order of removal pursuant to section 242 of the Immigration and Nationality Act¼” [Slip op. 50].

Petitioner also sought judicial review of the Secretary of State’s enforcement of this FARR provision under the Administrative Procedure Act (APA), 5 U.S.C. Sections 701-706 (2000). The present Court rules, however, that it lacks appellate jurisdiction over such enforcement until the Secretary of State has taken final action. Since the Secretary of State has not yet taken any action on Petitioner’s extradition, his claim is not yet ripe.

Citation: Hoxha v. Levi, 2006 WL 2806824 (3d Cir. October 3, 2006).

FORUM NON CONVENIENS

In subrogated Canadian suit by U.S. and Liberian shippers against U. K. and other foreign ocean carriers over lost cargo, Canadian Federal Court of Appeal rules that applicable Canadian statute favoring shippers did not require litigation in Canada and that balance of convenience pointed to litigation in English courts

In this action brought in the Canadian Federal Court (CFC), the Plaintiffs are “Magic Sportswear Corporation,” a Delaware corporation, carrying on business in New York, and “Blue Banana”, a Liberian company, doing business in Monrovia. They are the shipper and consignee, respectively, of some allegedly lost cargo.

The Defendants are the ocean carriers “OT Africa Line Ltd.,” “OT Africa Line,” and the owners, charterers and others interested in the Mathilde Maersk and in the Suzanne Delmas -- the two ships that were transporting the cargo in question from New York City to Liberia.

Defendant, OT Africa Line Ltd., has its headquarters office in London and other offices around the world, including a branch office in Toronto. The insurers of the Plaintiffs’ cargo having paid $30,000 under the policy on a claim by the consignee filed the present damages suit under their right of subrogation.

Like the Plaintiffs, the cargo has no nexus to Canada. On the other hand, Toronto is the home base of the insurers, the place where the bill of lading was issued and where the ocean freight was payable to one of the Defendants.

To reduce the likelihood of jurisdictional disputes, contracts for the carriage of goods by sea often designate not only the exclusive forum for settling disputes between the shipper and the carrier, but also the applicable law. Many contracts specify the High Court in London (HCL), or an arbitrator, as the exclusive forum (1) to resolve any controversies arising from the contract and (2) to apply English law. The expense and inconvenience of having to litigate a claim for lost cargo in a foreign forum can, as a practical matter, divest Canadian shippers of an effective local remedy for a breach of contract by the carrier; this may force them to compromise on terms more advantageous to the carrier.

In 2001, the Canadian Parliament addressed this issue by enacting subsection 46(1) of the Marine Liability Act, S.C. 2001, c. 6 (MLA): “If a contract for the carriage of goods by water to which the Hamburg Rules do not apply provides for the adjudication or arbitration of claims arising under the contract in a place other than Canada, a claimant may institute judicial or arbitral proceedings in a court or arbitral tribunal in Canada that would be competent to determine the claim if the contract had referred the claim to Canada, where (a) the actual port of loading or discharge, or the intended port of loading or discharge under the contract, is in Canada or (b) the person against whom the claim is made resides or has a place of business, branch or agency in Canada; or (c) the contract was made in Canada.” (The “Hamburg Rules” refer to the United Nations Convention on the Carriage of Goods by Sea [1978, 30 March 1978, 1695 U.N.T.S. 3], which entered into force internationally on November 1, 1993.

After the Plaintiffs sued in the CFC, Defendants asked the HCL to issue an anti-suit injunction to forbid the Plaintiffs from litigating their claim in Canada (or anywhere else). Defendants relied on the above choice-of-forum clause. On November 3, 2004, the HCL issued the injunction. Seven months later, the English Court of Appeal dismissed the Plaintiffs’ appeal from the anti-suit injunction.

Supported by the English judgment, Defendants moved in the CFC to stay the Plaintiffs’ action. The CFC, however, upheld the Prothonotary’s [Q.V.] denial of Defendants’ motion to stay the Plaintiffs’ action.

The Defendants took the present matter to the instant Court, the Federal Court of Appeal (FCA). Its review broadly deals with whether the HCL should resolve the dispute over the alleged cargo loss (as the contract provides), or whether the CFC should do so. The CFC concededly has jurisdiction under MLA, subsection 46(1).

This question leads the FCA to two subsidiary issues. The first is to what extent, if at all, has subsection 46(1) modified private international law principles as to the CFC’s discretion to decline to exercise its jurisdiction on the ground that another forum is more appropriate. Secondly, in making that determination, to what extent, if at all, does the CFC have to take into account foreign judgments and contractual clauses choosing a foreign tribunal as the parties’ exclusive forum?

Also relevant here is Clause 25(1) of the conditions to the Bill of Lading. It provides that: “Any claim or dispute whatsoever arising in connection with the carriage under the Bill of Lading shall exclusively be governed by English law and determined by the [HCL].”

The FCA begins by noting that, although this case does not involve a large amount of damages, it does raise issues of principle that could affect hundreds of similar claims. “English law, the proper law of the contract in this case, regards the parties’ contractual choice of forum as virtually conclusive. In contrast, subsection 46(1) permits a party to institute proceedings in Canada for breach of contract, despite the presence of a [contract] clause nominating a foreign court as the exclusive forum for the resolution of disputes under the contract, provided that the claimant establishes that the parties or the contract have one of the statutorily specified connections to Canada.” [¶¶ 12-13].

“In the present case, subsection 46(1) confers jurisdiction on the [CFC] over the Plaintiffs’ claim against Defendants because the contract was made in Canada and Defendants have a place of business in Canada. The appeal raises two issues [of law] concerning the exercise of that jurisdiction. First, does subsection 46(1) remove the discretion of the [CFC] and the [FCA] to grant a stay pursuant to subsection 50(1) of the [Canadian] Federal Courts Act, R.S.C. 1985, c. F-7, (CFCA) even if another jurisdiction is a more convenient forum (the forum non conveniens doctrine) than Canada? Defendants say that it does not, while the Plaintiffs say that it does.” [¶¶ 14-15].

As relevant to this appeal, the [CFCA] provides as follows: “The [FCA] or the [CFC] may, in its discretion, stay proceedings in any cause or matter (a) on the ground that the claim is being proceeded with in another court or jurisdiction; or (b) where, for any other reason, it is in the interest of justice that the proceedings be stayed.”

One issue the FCA has to resolve here is: “...[I]f subsection 46(1) does not deprive the Court of its discretion to stay proceedings when it is the less convenient forum, what weight, if any, should the Court give in its forum non conveniens analysis to the parties’ contractual choice of forum and to the judgments asserting the jurisdiction of the English High Court over the dispute by virtue of the exclusive jurisdiction clause?”

“Defendants say that the principles of comity and freedom of contract, commercial certainty, and the desirability of avoiding parallel proceedings in Canada and England, require that these factors be afforded considerable weight. The Plaintiffs, on the other hand, say that to give the exclusive jurisdiction clause and the English judgments any weight would defeat the purpose of subsection 46(1) of the [MLA] by depriving them of their statutory right to litigate in Canada.”

“For the reasons which follow, I am of the opinion that Defendants are right and that the Plaintiffs’ action in the [CFC] should be stayed. Accordingly, I would allow Defendants’ appeal.” [¶¶ 17-19].

“It is common ground that [subsection 46(1) confers jurisdiction on the [CFC] over the Plaintiffs’ claim in this case. ... The Plaintiffs argue that subsection 46(1) not only confers jurisdiction on the [CFC] over the dispute, but also directs the Court to exercise its jurisdiction, without considering whether it, or the [HCL] is the more convenient forum for litigating it. Accordingly, they say, the [CFC] was wrong to decide otherwise. I disagree for the following three reasons.”

“First, subsection 46(1) does not state that, once one of the jurisdictional criteria in subsection 46(1) is present, the court in which the claimant has elected to proceed must exercise its jurisdiction. The subsection merely provides that, when it applies, a claimant may institute proceedings in a court in Canada that would have jurisdiction if the contract had referred the claim to Canada.”

“Second, subsection 46(1) does not expressly remove the broad discretion of the [CFC] and [this Court] under subsection 50(1) of the [CFCA] to stay a proceeding over which they have jurisdiction, but where ‘the claim is being proceeded with in another jurisdiction’ or a stay ‘is in the interests of justice’. In my opinion, it requires more specific language than that in section 46 to remove from the Courts a power fundamental to their ability to control their own process.”

“Third, it would produce anomalous results to interpret subsection 46(1) as implicitly removing the Federal Courts’ discretion in deciding to stay on the ground that another court is the more convenient forum. Suppose, for example, that, in this case, in addition to the English choice of law and exclusive forum clauses, the contract had provided for the carriage of the cargo from New York to London, the bill of lading had been issued in London, and the loss of the cargo was alleged to have occurred in London, where all the witnesses resided.”

“Since all these connecting factors favour litigating the dispute in a competing forum, England, it would make no sense to require the [CFC] to decide the dispute, simply because it has jurisdiction under subsection 46(1) [merely] on the ground that the carrier has an office in Toronto. And, if proceedings had already been commenced in England, to interpret the legislation as precluding a Canadian court from subsequently considering whether it was the less convenient forum would require the court to exclude considerations of international comity.”

“It would also be odd to conclude that subsection 46(1) requires a court in Canada to decide a dispute because the parties had agreed to a forum outside Canada, whereas if the contract had contained no exclusive jurisdiction clause, a court in Canada would have declined to exercise jurisdiction on the ground that it was not the more convenient forum.” [¶¶ 24-31]

The Plaintiffs also contended that subsection 46(1) would be largely superfluous if the [FCA] interpreted it as taking away the [CFC’s] discretion to grant a stay on the ground that it was not the more convenient forum. The FCA is not persuaded.

“First, subsection 46(1) affirms the Court’s jurisdiction by specifying that claimants who satisfy one of the three connecting factors set out in paragraphs (a), (b), and (c) may pursue their claim in Canada, despite a contractual foreign exclusive jurisdiction clause. Second, the statutory bases of jurisdiction are simpler to apply than the common law’s ‘real and substantial connection’ test for determining whether the Court has jurisdiction over a claim and, arguably, [are] more easily satisfied. Third, it removes the Court’s discretion to stay solely on the ground that the parties have selected an exclusive forum outside Canada.” [¶¶ 35-36].

“Indeed, Section 46(1) would appear to establish that, in select circumstances, [the Canadian] Parliament has deemed it appropriate to limit the scope of Forum Selection Clauses by facilitating the litigation in Canada of claims related to the carriage of goods by water having a minimum level of connection to this country. Such a legislative development does not, however, provide support for the fundamental jurisprudential shift made by the Court of Appeal in the case at bar.”

“To the contrary, Section 46(1) indicates [the Canadian] Parliament’s intent to broaden the jurisdiction of the [CFC] only in very particular instances that can easily be ascertained by a Prothonotary called upon to grant a stay of proceedings pursuant to the Forum Selection Clause of a bill of lading. Section 46(1) in no way mandates a Prothonotary to consider the merits of the case.”[¶ 38].

The next issue is whether the CFC erred in exercising its discretion under Section 50 of the CFCA to refuse to stay the Plaintiffs’ action, on the ground that it was not the less convenient forum. “Preliminarily, the FCA notes that foreign law is a question of fact to be based on evidence before the court. An uncontradicted affidavit in the record by Defendants’ English solicitor declared that Plaintiff’s counsel had failed to meet a deadline and thus had forfeited its chance to appeal the anti-suit injunction to the English Court of Appeal.”

“In such a case, English law regarded the Plaintiffs as having accepted that the HCL had jurisdiction to try the claim. Moreover, English law seems settled at the highest level that the HCL should issue an anti-suit injunction essentially to ensure that the parties abide by the agreement they have made.” [¶ 47 ].

In addition, since the CFC below had misapprehended the record evidence, the FCA has to perform a convenience analysis de novo. “While Section 46 is designed to redress a perceived power imbalance between ship owners and Plaintiffs by favouring Plaintiffs, it only does so to the extent of providing claimants with the option of instituting proceedings in a Canadian forum.”[¶ 65].

The Court then addresses the effect, if any, to be given to the English judgments in this matter. “Three principal considerations favour a Canadian court’s treating the English judgments as relevant in a forum non conveniens analysis: [1] international comity,[2] the avoidance of parallel proceedings on the same matter, and [3] problems of recognition in the event that the parallel proceedings produce different results. Minimising litigation, with its attendant costs and complications, is good public policy.”

“It may seem somewhat odd to suggest that the [CFC] should take the English judgments into account in a forum non conveniens analysis in this case. After all, the English courts refused to stay Defendants’ English proceedings without, apparently, giving any weight to the judgments of the [CFC] refusing a stay to Defendants on the ground that it had not been demonstrated to be forum non conveniens. Comity should be a two-way street.”

“Two considerations may alleviate this concern. First, if the English judgments are relevant in the forum non conveniens analysis, ... I have treated them as only one of several factors to be taken into account in determining how the interests of justice, practicality, and efficiency are best served. Second, the English courts [did] extend comity to the Canadian Parliament’s enactment of subsection 46(1) in that they were very mindful of the delicate problem that it posed, even though, ... the English courts decided that it did not represent ‘strong reasons’ for departing from the normal rule that exclusive jurisdiction selection clauses should be given effect.” [¶¶ 70-72].

“... [T]he approach of Canadian law to comity in the context of identifying the more convenient forum was authoritatively stated by the Supreme Court of Canada in Amchem Products Inc. v. British Columbia, [1993] 3 W.W.R. 441, 14 C.P.C. (3d) 1, [1993] 1 S.C.R. 897, at 913-15. In the present case, the question is whether the English courts have, ... ‘departed from our own test of forum conveniens to such an extent as to justify our courts in refusing to respect the assumption of jurisdiction by the foreign court and in what circumstances such assumption amounts to a serious injustice.’” [¶ 74]

“... I note that the Supreme Court of the United States has moved closer to the position at common law in England and Canada by regarding foreign exclusive jurisdiction clauses as presumptively valid: Vimar Seguros y Reaseguros S.A. v. M/V Sky Reefer, 515 U.S. 528 (Sup. Ct. 1995).” [¶ 76]

“In my view, the critical facts of this case are that the Plaintiffs, the consignees, the goods, and the ports of loading and discharge, have no connection to Canada. It is true that Section 46 confers jurisdiction on a competent Canadian court over the Plaintiffs’ claim, ... However, it is also relevant to ask whether it would frustrate the policy underlying Section 46 for a Canadian court, on the facts of this case, to afford some respect to the English courts’ judgments by factoring them into a forum non conveniens analysis.”

“The principal policy objective of section 46 is the protection of the interests of Canadian exporters and importers, and, I would add, their insurers, by diminishing or eliminating the legal effect of a contractual clause requiring them to litigate any dispute in a foreign forum.”

“While Section 46 preserves the jurisdiction of Canadian courts in proceedings brought by foreign Plaintiffs and consignees, it does not follow that, in deciding whether to exercise its jurisdiction, a court should depart from its normal practice of affording respect to foreign judgments. On the facts of the present case, including the dominant role being played in the litigation by the Canadian insurers of the cargo, it would not frustrate Parliament’s purpose to take the English judgments into account in the course of determining the more convenient forum.”

“In short, Section 46 does not expressly provide that, when determining whether it is the more convenient forum, a Canadian court in which a claimant elects to proceed should assign no weight to the assertion of jurisdiction by a foreign court, which it has supported by an anti-suit injunction. Nor can it be said that Parliament implicitly so directed in a fact situation such as this, where, to give a foreign judgment weight, would not frustrate the policies underlying Section 46.”

“Nor do I think it fatal to the application of the comity principle that the Plaintiffs had commenced proceedings in Canada before Defendants sought an anti-suit injunction in England, since, in so doing, they were merely exercising their contractual rights according to the proper law of the contract. In any event, the Plaintiffs have not indicated whether they propose to pursue their action in the [CFC] in breach of the anti-suit injunction issued against them in England.”

“In my opinion, in the circumstances of this case, Section 46 has not ousted the principles of international comity set out in Amchem Products Inc. . Accordingly, weight should be given to the English judgments asserting their jurisdiction in order to determine if, compared to the [HCL], the [CFC] is forum non conveniens.” [¶¶ 78-83]

The FCA then considers the impact of the contract clause. “The freedom of parties in international trade to determine the terms of their contracts is a fundamental, but not absolute, tenet of Canadian commercial law and has been recognized internationally in Article 3 of the Rome Convention.”

“Hence, in the absence of either express words or an implication necessary to give effect to the policy underlying Section 46, I would include the parties’ exclusive jurisdiction clause in the factors to be considered in the forum non conveniens analysis. No mention is made of this issue in the reasons of the [CFC].” [¶¶ 85-86].

The FCA takes into account the following factors: (a) the residences of the parties, witnesses and experts; (b) the location of the material evidence; (c) the place where the parties negotiated and executed the contract; (d) the existence of proceedings pending between the parties in another jurisdiction: (e) the location of the defendant’s assets (f) the applicable law (g) any advantages conferred on the plaintiff by its choice of forum (h) the interests of justice (I) the interests of the parties: (j) and, finally, the need to have the judgment recognized in another jurisdiction.

Having identified the main elements of a forum non conveniens analysis, the FCA enters upon that analytical task. “On the facts of this case, Liberia would appear to provide the most ‘natural’ forum for the adjudication of the Plaintiffs’ claim, since the alleged loss was reported, and investigated, after the ship docked there and it is where most of the witnesses appear to reside. However, it does not follow from this that another jurisdiction, England, may not provide a more appropriate forum than the [CFC]. Since the [CFC] has assumed jurisdiction over the Plaintiffs’ claim, the burden is on Defendants to show that they should be granted a stay on the ground of forum non conveniens.” [¶¶ 90-91].

Incidentally, neither party attached significance to clause 24 of the contract of carriage. It states that, where the bill of lading covers the transportation of goods to or from ports in the U.S., it is subject to the American Carriage of Goods by Sea Act, which is incorporated into the contract.

“When considering whether the forum chosen by the plaintiff is forum non conveniens, no one factor is to be regarded as determinative. ... [T]heir relative importance may depend on the context of the dispute. ... [I]t would seem from the contradictory reports as to whether the cargo was short, that facts are in dispute.” [¶ 93].

The FCA then applies the above convenience factors to considering, first, the factors favouring the CFC. “I cannot attach much weight to the facts that the contract was made and the ocean freight was paid in Toronto, since they appear to be irrelevant to the issues likely to be in dispute in the cargo claim. Because the parties specified that English law was the proper law, it cannot be inferred from the fact that the contract was made here, that they intended Canadian law to apply to the interpretation and enforcement of the contract.”

“Of potentially more importance is the fact that the cargo insurers are based in Toronto. However, there is nothing in the record to indicate that, if forced to litigate in London, they would suffer great prejudice or be denied an effective remedy.”

[T]he factors connecting the dispute with England are cumulatively much more significant. “First, the English judgments implicate the principle of comity, raise the possibility of parallel proceedings, and make the recognition in England of a judgment by the [CFC] potentially problematic.”

Second, taking into account the parties’ choice of the [HCL] as the exclusive forum respects the principle of freedom of contract, promotes commercial certainty, and does not frustrate the policy objectives of Section 46.”

“Third, it is generally more convenient to litigate in a forum in the jurisdiction whose law governs the dispute. Normally, counsel prefer to argue cases, and courts to decide them, on the basis of the law with which they are most familiar. In this case, the parties have chosen English law. However, ... I cannot assess precisely the significance of the applicable law factor, especially given the similarities of English and Canadian law governing the carriage of goods by sea.”

Finally, “OT Africa Line Ltd. has its head office in London, where it keeps its corporate records, books and accounts; it also may need to call one of its London-based employees to testify about the company’s practice respecting the discharge of cargo.”

“For these reasons, I am persuaded that the [CFC] is a less convenient forum than the High Court in London. In these circumstances, the interests of justice will be better served if the Plaintiffs’ action in the [CFC] is stayed. The stay is conditional on Defendants pursuing, without delay, their proceeding in the [HCL] for a declaration that they are not liable to the Plaintiffs for the partial loss of the cargo. The Plaintiffs are at liberty to ask the [CFC] to consider lifting the stay in the event that the Plaintiffs do not observe this condition.”

“Accordingly, I would allow Defendants’ appeal with costs, set aside the orders of the [CFC] and grant a stay of the Plaintiffs’ action in the [CFC] conditional on Defendants pursuing, without delay, their action in the [HCL].” [¶¶ 94-102]. The two other judges concur.

Citation: Magic Sportswear Corp. v. OT Africa Line Ltd., 2006 F.C.A. 284; 2006 Carswell Nat. 2627 (Can. Fed. Ct. App. 2006).

INTERNATIONAL COMITY

New York Supreme Court (Appellate Division) reverses trial court’s refusal to enforce orders of Mexican court staying enforcement of letter of credit between two Mexican banking institutions, holding that New York courts are not required to extend international comity to foreign court orders which are neither final nor on merits

On December 12, 2002, the Societe Generale (Defendant) issued a letter of credit to Alstom Power and Rosarito Power in favor of the Comision Federal de Electricidad (CFE) up to the sum of $36,812,687.68. Defendant later persuaded the Banco Nacional De Mexico, S.A. (Plaintiff), to be the confirming bank. All of these parties were residents of Mexico.

The Letter provided that the Uniform Customs and Practice for Documentary Credits (UCP) (ICC Publication Number 500) was to govern. To the extent it was not inconsistent with the UCP, however, New York law was to control the Letter’s interpretation and a New York state court was to resolve any disputes arising from it.

On September 1, 2004, the CFE requested payment from the Plaintiff, which forwarded the request to the Defendant. Two days later, the Defendant told the Plaintiff that, because an arbitral panel had not yet entered a final arbitration award against them, Alstom and Rosarito question the CFE’s right to obtain payment at this juncture. These two then obtained ex parte Mexican court orders staying payment on the Letter.

Nonetheless, the Plaintiff did pay CFE the requested amount and then sued the Defendant for reimbursement in the Supreme Court of New York County. Moving for summary judgment, Plaintiff argued that, “pursuant to the law governing the Letter, the UCP and the laws of the State of New York, disputes between parties to the agreement are irrelevant to the bank payment obligations under the Letter.” [Slip op. 21]. The Court agreed. It held that the doctrine of international comity required it to honor the Mexican stay orders and denied Plaintiff’s motion for summary judgment. Plaintiff appealed.

On September 19, 2006, the New York Supreme Court, Appellate Division (SCAD) rules that the doctrine of international comity does not impose a duty on the New York courts to honor the Mexican judgments at issue. It therefore reverses the lower court, grants the Plaintiff’s motion for summary judgment and orders the Defendant to pay the Plaintiff the principal amount of $36,812,687.68 with interest from September 8, 2004.

The general principle governing letters of credit in the Uniform Commercial Code Section 5-103(d), “is the doctrine of independent contracts: ‘[T]he issuing bank’s obligation to honor drafts drawn on a letter of credit by the beneficiary is separate and independent from any obligation of its customer to the beneficiary under the sale of goods contract and separate as well from any obligation of the issuer to its customer under their agreement.’ First Commercial Bank v. Gotham Originals, Inc., 64 N.Y.2d 287, 294, 475 N.E.2d 1255, 1259 (N.Y.C.A. 1985).” [Slip op. 27].

Applying this principle to the instant case, the SCAD concludes that Plaintiff and Defendant have a separate and independent relationship. Thus “¼ [Defendant’s] obligation to honor [Plaintiff’s] presentation to [Defendant] is dependent only on the validity of the presentation which the Letter subjects exclusively to New York law and the New York forum.” [Slip op. 32]. Since all conditions for payment on the Letter under New York law existed, Defendant does have a present duty to reimburse the Plaintiff.

The SCAD also notes that public policy considerations support the Court’s refusal to apply the Mexican stay orders to the Letter. “As a primary financial center and a clearinghouse of international transactions, the State of New York has a strong interest in maintaining its preeminent financial position and in protecting the justifiable expectation of the parties who choose New York law as the governing law of a letter of credit.” [Slip op. 37].

Moreover, it is significant that the Mexican injunctions here were ex parte and non-final. While the New York courts probably do have the discretion to give effect to such orders, they consistently refuse to do so when, as here, the foreign orders are neither final nor on the merits.

Citation: Banco Nacional De Mexico, S.A. v. Societe Generale, No. 8349 (N.Y. App. Div., Sept. 19, 2006).

INTERNATIONAL TRADE

Federal Circuit reviews appeal from U.S. Court of International Trade, which held that improper customs’ procedure had been followed in reclassification of Plaintiff’s imported product, but dismisses appeal for lack of jurisdiction

International Custom Products, Inc. (Plaintiff) imports and distributes products sold to makers of processed food. In April 1999, Plaintiff began importing “white sauce,” a milkfat-based product used in sauces, salad dressings, and other food products. Plaintiff had gotten an advance ruling from the U.S. Bureau of Customs and Border Protection (Customs) on the classification of the sauce; it issued on January 20, 1999, as New York letter ruling D86228.

The ruling categorized the product under subheading 2103.90.9060 of the Harmonized Tariff Schedule of the United States (HTSUS), which has since been renumbered as subheading 2103.90.9091. Relying on the ruling, Plaintiff formed a three-year purchase contract with its foreign supplier and a three-year supply agreement with its largest U.S. customer. Plaintiff also relied on the advance ruling by preparing to set up a manufacturing business. This consisted of buying a plant site and carrying on product research and development.

In March 2004, Customs told Plaintiff that it was starting a tariff rate investigation. Based on it and without providing notice and comment, Customs issued a Notice of Action (NOA) dated April 18, 2005. In it, Customs declared that it would classify 86 unliquidated entries of white sauce under subheading 0405.20.3000, substantially boosting the tariff. On May 6, 2005, 60 of the 86 subject entries were liquidated.

Plaintiff then sued the U.S. (Defendant) in the Court of International Trade (CIT). The suit alleged that Customs’ actions violated 19 U.S.C. Section 1925(c)(1) or (2) by effectively revoking the advance letter ruling without following proper procedures. The trial court held that it had jurisdiction under 28 U.S.C. Section 1581(I)(4) and held the NOA null and void for noncompliance with 19 U.S.C. Section 1925(c)(1).

The CIT also ordered Customs to reliquidate the entries, and ordered that the advance ruling remain in full force until properly modified or revoked by Customs. The Defendant. appealed. The U.S. Court of Appeals for the Federal Circuit held, however, that the CIT lacked subject matter jurisdiction. In an October 17 ruling, it reverses the CIT’s jurisdictional holding, vacates its judgment on the merits, and remands for dismissal of the complaint.

“It is a ‘well-established principle that federal courts ... are courts of limited jurisdiction marked out by Congress.’” Norcal/Cosetti Foods, Inc. v. United States, 963 F.2d 356, 358 (Fed. Cir.1992). ... In subsection 1581(a), Congress set an express scheme for administrative and judicial review of Customs’ actions. The system provides for a protest before Customs, and review of protest denials in the [CIT]. Here, [Plaintiff] did not file a protest and avail itself of jurisdiction under subsection (a).”

“[Plaintiff] contends, ... that jurisdiction nevertheless existed under section 1581(I)(4). Although we have described subsection 1581(I)(4) as a ‘broad residual jurisdictional provision,’ [cite], and even a ‘catch-all provision,’[cite], the unambiguous precedents of this court make clear that its scope is strictly limited, and that the protest procedure cannot be easily circumvented, see, e.g., Am. Air Parcel Forwarding Co. v. United States, 718 F.2d 1546, 1549 (Fed. Cir. 1983) (“[W]here a litigant has access to [the Court of International Trade] under traditional means, such as 28 U.S.C. 1581(a), it must avail itself of this avenue of approach by complying with all the relevant prerequisites thereto. It cannot circumvent the prerequisites of 1581(a) by invoking jurisdiction under 1581(I) ....’ [Cites].”

“Indeed, we have repeatedly held that subsection (I)(4) ‘may not be invoked when jurisdiction under another subsection of Section 1581 is, or could have been, available, unless the remedy provided under that other subsection would be manifestly inadequate.’ Norcal/Crosetti Foods, 963 F.2d at 359. Here, the [Plaintiff] does not contend that subsection (a) was unavailable, but that it was manifestly inadequate. We conclude that the remedy provided by subsection 1581(a) is not manifestly inadequate, and that, therefore, the [CIT] lacked jurisdiction under subsection 1581(I)(4).”

“First, [Plaintiff] alleges many forms of financial hardship that would result from proceeding under subsection 1581(a), including an imminent threat of bankruptcy. In American Air Parcel, the importer made similar allegations. 718 F.2d at 1549. We rejected the argument there, and it is equally insufficient here, to confer residual jurisdiction.”

“Equally unavailing is [Plaintiff’s ] contention that the lack of prospective relief under subsection (a) renders it manifestly inadequate. [Cite]. To find the relief under subsection (a) inadequate on this ground, we would have to assume that Customs would disregard a court ruling on the current imports when classifying identical imports in the future. We decline to indulge such an assumption.”[Slip op. 2].

“[Plaintiff] further contends that the delays inherent in proceeding under subsection 1581(a) would render any available relief manifestly inadequate due to its financial distress. However, delays inherent in the statutory process do not render it manifestly inadequate. [Cite]. Moreover, Congress has provided for an accelerated protest disposition process, 19 U.S.C. Section 1515(b), and this accelerated process was available to [Plaintiff] for some of its entries.”

“Finally, [Plaintiff] contends that a protest would be futile. In Pac Fung Feather Co. v. United States, 111 F.3d 114, 116 (Fed. Cir. 1997), we held that residual jurisdiction was available because the ‘preordained ruling’ available to the importers was a mere formality in light of Customs’ regulations, which ‘unmistakably’ indicated how it would determine the issue in dispute. Here, there are no such regulations in place that would make the protest process futile, and despite the revocation of the advance letter having involved higher level Customs officials, Congress’ express scheme cannot be bypassed.”

“The [CIT] itself has previously warned parties against making such assumptions of futility: ‘Plaintiff cannot take it upon itself to determine whether it would be futile to protest or not. In order to protect itself, a protest should have been filed and an accelerated review should have been requested.’ Inner Secrets/Secretly Yours v. United States, 869 F. Supp. 959, 966 (Ct. Int’l Trade 1994). We reiterate that warning.”

“Because the [CIT] lacked jurisdiction over the case, we have no jurisdiction to reach [Plaintiff’s] argument concerning Customs’ purported statutory violations. Glasstech, Inc. v. Ab Kyro Oy, 769 F.2d 1574, 1577 (Fed. Cir.1985) (‘[A]n appellate court has no jurisdiction to decide the merits of the case if the court from which the appeal was taken was without jurisdiction.’). Therefore, we vacate the trial court’s decision on the merits.”

Citation: International Custom Products, Inc. v. United States, 2006 WL 2949151 (Fed. Cir. 2006).

Guatemala enters into conservation agreement with U.S. The Governments of the U.S. and the Republic of Guatemala along with The Nature Conservancy (TNC) and Conservation International Foundation (CIF) entered into an agreement that would reduce Guatemala’s official debt to the U.S. Thereby, it would free up $24 million for use to conserve tropical forests in Guatemala. Over the next 15 years, Guatemala will devote these funds to support grants to non-governmental organizations (NGOs) and other similar groups to preserve and restore that nation’s significant tropical forest resources. What enabled this program was $15 million in U.S. government funds authorized under the Tropical Forest Conservation Act of 1998 (TFCA) and $2 million from TNC and CIF. These funds will assist Guatemala to conserve its high altitude “cloud forests,” rain forests and coastal mangrove swamps. Many species of songbirds and waterfowl migrate to these spots from the U.S. The TFCA has also generated funds to support similar agreements with Bangladesh, Belize, Colombia, El Salvador, Jamaica, Paraguay, Peru, Panama and the Philippines. Citation: Media Note #2006/887, Office of Spokesman, U.S. State Dept., Washington, D. C., Monday, October 2, 2006 at 2:56 pm.

Jordan receives Millennium Challenge grant from U.S. Ambassador John Danilovich, is the Chief Executive Officer of the Millennium Challenge Corporation (MCC). On October 17, 2006, during a trip there, he signed a $25 million MCC grant agreement to help the Government of Jordan to bolster the nation’s democratic institutions. The grant will fund initiatives to improve the political rights of citizens in the sector of municipal governance, and to increase the efficiency and effectiveness of customs administration. These measures aim to enable more citizens to take part in the political and electoral process, to increase governmental transparency and accountability, and to promote Jordan’s international trade. Citation: Media Note #2006/936, U.S. Dept. of State, Washington, D. C., Tuesday, October 17, 2006 at 10:54 a.m.

Federal Judge dismisses suit over man’s disappearance from cruise ship. On October 20, 2006, the “Greenwich Time” of Connecticut reported that a Florida federal judge had dismissed a lawsuit against Royal Caribbean International (RCI). The family of George A. Smith IV had filed the suit against RCI over his highly publicized disappearance from one of their ships somewhere between Greece and Turkey on a Mediterranean honeymoon cruise on July 5, 2005. His body has not turned up but investigators found blood stains on the balcony beneath Mr. Smith’s porthole. The family suspects that someone had murdered Mr. Smith; the FBI has allegedly been looking into the matter. Mr. Smith’s vanishment led to U.S. congressional hearings on the subject of maritime security and to a Bill that would requiring cruise lines to report instances of passenger disappearances and maritime crimes to the Department of Homeland Security. The RCI contends that, by its immediate reporting of the incident to the FBI and other authorities, it had gone far beyond what the law requires. The missing person’s family may appeal the ruling. Citation: The Associated Press (via Findlaw), Greenwich, Connecticut, Friday, October 20, 2006.

U.S. President signs statute banning U.S. Internet gambling. On October 10, 2006 (as part of an unrelated law on port security), President Bush signed a statute that makes Internet gambling in the U.S. unlawful. American gamblers make up about one-third of the world’s 12 million Internet betters. The statute bars U.S. credit card companies and banks from collecting the payment of bets made at online gambling sites. Online gambling has grown rapidly since the first online casino began in 1995. According to the American Gaming Association (AGA), global revenues from Internet gambling during 2003 amounted to about $5.7 billion on about 1,800 websites. The AGA had predicted that these revenues would triple by 2009. During 2003, Americans wagered about $637 billion in state-sanctioned casinos and lotteries, producing net revenues of $73 billion. It was uncertain how the new law might impact the long-standing dispute (initiated by Antigua and Barbuda) between the U.S. and the World Trade Organization. over earlier U.S. bans on online gambling. Citation: Deutsche Presse-Agentur GmbH (DPA Int’l Serv. in English), Washington, D. C., Saturday, October 14, 2006, filed at 01:00:41 (byline of Pat Reber, DPA staff writer).