2006 International Law Update, Volume 12, Number 7 (July)

2006 International Law Update, Volume 12, Number 7 (July)

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

CONSULAR RELATIONS

U.S. Supreme Court, by vote of 6 to 3, declines either to apply exclusionary rule or to fashion exception to state forfeiture rules when state authorities fail to notify foreign detainees of their rights to contact their respective consulates pursuant to Article 36 of Vienna Convention on Consular Relations

Article 36(1)(b) of the Vienna Convention on Consular Relations (April 24, 1963, 21 U.S.T. 77, 100-101 [1970]; T.I.A.S. No. 6820; 596 U.N.T.S. 261) (VCCR) provides, inter alia, that a member state holding foreign detainees shall notify the prisoners that they may contact their consular officials.

Supreme Court docket No. 04-10566 involves Moises Sanchez-Llamas (Petitioner 04). He is a Mexican national whom U.S. police arrested after an exchange of gunfire in Oregon. At the time of his arrest, the police gave him his Miranda warnings in both English and Spanish. They failed to tell him, however, that he could have the Mexican Consulate notified of his detention. During police interrogation, Petitioner 04 made several incriminating statements.

The Oregon authorities charged Petitioner 04 with attempted aggravated murder, attempted murder, and other offenses. Before trial, he moved to suppress the inculpatory statements arguing that he had made them involuntarily and that the authorities had failed to comply with VCCR Article 36. The trial court denied the motion, and the case went to trial.

The court convicted Petitioner 04. On appeal, he argued that the Article 36 violation demanded the suppression of his statements. The Oregon Court of Appeals, however, affirmed and the U.S. Supreme Court granted certiorari.

Docket No. 05-51 involves Mario Bustillo, a Honduran national (Petitioner 05). Virginia authorities charged him with murdering James Merry in Springfield, Virginia. At trial, the defense argued that a third party was the true killer. The trial court convicted Petitioner 05 of first-degree murder. A Virginia appellate court affirmed his conviction.

Petitioner 05 then petitioned for a writ of habeas corpus in a Virginia court, contending for the first time that the state authorities had violated his right to prompt consular notification under VCCR Article 36. He urged that the Honduran Consulate could have helped him find the true culprit prior to trial. The state court dismissed Petitioner 05’s VCCR claim for his failure to raise it at trial or on direct appeal. Petitioner 05 objected that state procedural default rules should not apply to Article 36 claims.

In these cases, the U.S. Supreme Court granted certiorari on the following issues: (1) whether suppression of evidence is a proper remedy for a violation of VCCR Article 36; and (2) whether a state court may regard an Article 36 claim as forfeited under state procedural rules where a defendant has failed to timely raise the claim. In a 6 to 3 vote, the Court affirms the judgments of the Supreme Courts of Oregon and Virginia.

The Court first points out that the VCCR itself provides no specific remedies for breaches of Article 36. Whether there should be a rule that keeps out evidence obtained through a breach of Article 36 thus remains a matter of domestic U.S. law. Noteworthily, the remedy Petitioner 04 seeks here is not one he could obtain in any of the other 169 VCCR nations.

Moreover, even if it wished to do so, the Supreme Court is unable to require a state court to suppress Petitioner 04’s statements by calling upon a “supervisory power.”As Dickerson v. United States, 530 U.S. 428, 438 (2000), has declared: “it is beyond dispute that we do not hold a supervisory power over the courts of the several States.” [2679].

Furthermore, if authority for the enforcement of a particular judicial remedy in state court should exist, it would have to come from the VCCR itself. “[W]here a treaty provides for a particular judicial remedy, there is no issue of intruding on the constitutional prerogatives of the States or the other federal branches. Courts must apply the remedy as a requirement of federal law. Cf. 18 U.S. C. Section 2515; United States v. Giordano, 416 U.S. 505, 524-525 (1974). But where a treaty does not provide a particular remedy, either expressly or implicitly, it is not for the federal courts to impose one on the States through lawmaking of their own.” [2680]

Petitioner 04 also urged that the VCCR needs to have an effective judicial remedy to safeguard Article 36 rights. Be that as it may, the Court decides that an exclusionary rule would not be appropriate here. The U.S. courts mainly use exclusionary rules to deter law enforcement officials from obtaining inculpatory statements or other evidence from breaches of a defendant’s constitutional rights or analogous statutory rights. A violation of VCCR Article 36, however, is not equivalent to a breach of constitutionally protected rights.

Moreover, the violation of the right to consular notification is at best remotely connected to the gathering of evidence. “Article 36 has nothing whatsoever to do with searches or interrogations. Indeed, Article 36 does not guarantee defendants any assistance at all. The provision secures only a right of foreign nationals to have their consulate informed of their arrest or detention -- not to have their consulate intervene, or to have law enforcement authorities cease their investigation pending any such notice or intervention. In most circumstances, there is likely to be little connection between an Article 36 violation and evidence or statements obtained by police.” [2681]. Finally, the suppression of incriminating and probative evidence is a drastic remedy and by no means the only conceivable way to vindicate VCCR rights.

In Petitioner 05’s case, the Virginia courts denied his Article 36 claim because he had failed to timely raise it at trial or on direct appeal. The general rule in federal habeas cases bars a defendant who fails to raise a claim on direct appeal from raising the claim collaterally. Petitioner contended, however, that the Court should not approve the application of state procedural default rules to Article 36 claims because this would unduly dilute the Article.

Petitioner tried to distinguish his case from Breard v. Greene 523 U.S. 371, 375 (1998) where the Court decided that “the procedural rules of the forum State govern the implementation of the treaty in that State.” [2682-83]. He points out, however, that the International Court of Justice at the Hague (ICJ) has since interpreted the Convention to preclude the application of procedural default rules to Article 36 claims.

Specifically, Germany brought the LaGrand case (LaGrand (Germany v. United States of America), 2001 I.C.J. 104, paragraph 77 (June 27), 2001 International Law Update 102) and Mexico filed the Case Concerning Avena and other Mexican Nationals (Case Concerning Avena and other Mexican Nationals (Mexico v. United States), 2004 I.C.J. No. 128 (March 31), 2004 International Law Update 52) before the ICJ. The ICJ ruled that applying procedural default rules unduly prevented foreign governments from assisting their citizens. Petitioner 05 argued that these ICJ rulings would justify a modification of Breard.

The Supreme Court, however, is not persuaded. “Nothing in the structure or purpose of the ICJ suggests that its interpretations were intended to be conclusive on our courts. The ICJ’s decisions have ‘no binding force except between the parties and in respect of that particular case,’ Statute of the International Court of Justice, Art. 59, 59 Stat. 1062, T. S. No. 993 (1945).” [2684]

While the Court gives respectful consideration to LaGrand and Avena, it concludes that the ICJ’s interpretation is inconsistent with the basic procedural framework of the American legal system. The Court is confident that the established principles of U.S. domestic law can protect the rights of foreign detainees without undermining the importance of the VCCR. The relief Petitioner 05 requests is extraordinary and the Court declines to apply the more liberal procedural rules the Court might apply to the forfeiture of Constitutional claims.

Citation: Sanchez-Llamas v. Oregon, 126 S. Ct. 2669, 74 U.S.L.W. 4493 (2006).

GENEVA CONVENTIONS

In 5 to 3 vote, U.S. Supreme Court holds that military commissions set up by Executive Branch to try Guantanamo Bay detainees violate not only U.S. law but also 1949 Geneva Conventions

On June 29, the U.S. Supreme Court struck down military commissions established by the Executive Branch to try Guantanamo detainees. The majority opinions cited three grounds for finding these military commissions to be illegal: (1) the Executive Branch does not possesses the requisite authority to create such military commissions; (2) the procedures of the military commissions violate federal statutes such as the Uniform Code of Military Justice (UCMJ); and (3) the commissions are inconsistent with international treaties, such as Common Article 3 of the Geneva Conventions of 1949, which function as judicially enforceable federal law.

After the World Trade Center attacks, the U.S. sent armed forces to Afghanistan to deal with the Taliban, a radical Islamic organization. In late 2001, militia forces captured Salim Ahmed Hamdan (Petitioner); he is a Yemeni national who used to work for al Qaeda leader, Osama bin Laden.

The following year, the U.S. transported Petitioner to Guantanamo Bay, Cuba. President Bush later scheduled Petitioner for trial by military commission for various crimes including conspiracy “to commit ¼ offenses triable by military commission.” Petitioner also stands accused of overt acts in furtherance of a conspiracy to commit terrorism: delivering weapons and ammunition to al Qaeda, acquiring trucks for use by Osama bin Laden’s bodyguards, providing security services to bin Laden, and receiving weapons training at a terrorist camp.

In setting up these military commissions, the President relied on Congress’ Joint Resolution authorizing the President to “use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks ... in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons.” Authorization for Use of Military Force (AUMF), Authorization for Use of Military Force, September 18, 2001, Public Law 107-40 [S. J. RES. 23] 107th CONGRESS.

Petitioner filed habeas corpus and mandamus petitions challenging the validity of his military commission. He urged that the commission lacked authority (1) because conspiracy is not a crime recognized by the laws of war; and (2) because the procedures to be employed by the commission, such as restricting the Petitioner’s access to evidence used against him, violated recognized norms of international and military law.

The U.S. District Court for the District of Columbia granted the requested relief and stayed the proceedings of the military commission. It held that Petitioner’s commission would function “in violation of both the Uniform Code of Military Justice (UCMJ), 10 U.S.C. Section 801 et seq., and Common Article 3 of the Third Geneva Convention because it had the power to convict based on evidence the accused would never see or hear.” [2762]

The U.S. Court of Appeals for the District of Columbia Circuit reversed, however, holding that the Geneva Conventions are not judicially enforceable and that the military commission violated no U.S. military laws. The U.S. Supreme Court granted certiorari on these issues. A majority reverses the judgment of the D.C. Circuit Court and remands the case.

Writing for the majority, Justice Stevens denies the Government’s motion to dismiss, based on the Detainee Treatment Act of 2005 (DTA). Although giving the D.C. Circuit Court exclusive jurisdiction to hear appeals from judgments by military commissions, the DTA does not deny the Supreme Court such jurisdiction, thus defeating the Government’s motion. Congress’ rejection of the very language that would have achieved the result the Government urges weighs heavily against its interpretation.

The military commission, a tribunal neither mentioned in the Constitution nor created by statute, was born of military necessity often on or near the battlefield. The majority decides “that the military commission convened to try Hamdan lacks power to proceed because its structure and procedures violate both the UCMJ and the 1949 Geneva Conventions. Four of us also conclude, see Part V, that the offense with which Hamdan has been charged is not an ‘offens[e] that by ... the law of war may be tried by military commissions.’” [2759-60].

The majority also rejects the government’s arguments based on Schlesinger v. Councilman, 420 U.S. 738 (1975), a case in which federal courts, based on comity, had abstained from intervening in a pending courts-martial case against a U.S. serviceman. But federal court abstention here, in the case of a foreign national, would in no way advance the dual goals of encouraging military discipline and ensuring the efficient operation of the U.S. Armed Forces. Thus, Councilman is inapplicable.

Instead, Justice Stevens points to Ex parte Quirin, 317 U.S. 1, 19 (1942) as the relevant precedent. There the Court, far from abstaining pending the conclusion of ongoing military proceedings against Nazi saboteurs, expedited its docket “[i]n view of the public importance of the questions raised by [the cases] and of the duty which rests on the courts, in time of war as well as in time of peace, to preserve unimpaired the constitutional safeguards of civil liberty, and because in our opinion the public interest required that we consider and decide those questions without any avoidable delay.” [2772].

The Court takes particular exception to the rules laid down in Commission Order No. 1. One glaring feature is that they allow for the exclusion of defendant and his hired counsel during presentation of highly sensitive information.

“Another striking feature of the rules governing Hamdan’s commission is that they permit the admission of any evidence that, in the opinion of the presiding officer, ‘would have probative value to a reasonable person.’ Section 6(D)(1). Under this test, not only is testimonial hearsay and evidence obtained through coercion fully admissible, but neither live testimony nor witnesses’ written statements need be sworn. Moreover, the accused and his civilian counsel may be denied access to evidence in the form of ‘protected information’ ... so long as the presiding officer concludes that the evidence is ‘probative’ under Section 6(D)(1) and that its admission without the accused’s knowledge would not ‘result in the denial of a full and fair trial.’” Section 6(D)(5)(b). [2786-87].

The majority of Justices also holds that this Military Commission violates the Geneva Conventions The Government argued that Petitioner is not entitled to protection under the Geneva Conventions because al Qaeda is not a party to them. The majority, however, points to Common Article 3, which provides certain limited protections even to non-parties.

It provides in part that “¼ [I]n a ‘conflict not of an international character occurring in the territory of one of the High Contracting Parties, each Party to the conflict shall be bound to apply, as a minimum,’ certain provisions protecting ‘[p]ersons ¼ placed hors de combat by ¼ detention,’ including a prohibition on ‘the passing of sentences ¼ without previous judgment ¼ by a regularly constituted court affording all the judicial guarantees ¼ recognized as indispensable by civilized people.’” [2795].

The Government next contended that Common Article 3 does not apply here because the conflict with al Qaeda, being “international in scope,” does not qualify as a “conflict not of an international character.” However, this logic fails because Common Article 2 provides that the Conventions apply to all armed conflicts arising between two parties to the Conventions.

Furthermore, a party has to accept the norms of the Conventions when in conflict with a non-party, so long as the non-party agrees to abide by the Conventions. Thus, as noted above, Common Article 3 requires Petitioner to be tried by a “‘regularly constituted court affording all the judicial guarantees which are recognized as indispensable by civilized peoples.’ 6 U.S.T., at 3320 (Art. 3, ¶1(d)).” [2796].

Justice Stevens continues in a plurality opinion, from which Justice Kennedy abstains, but which Justices Souter, Justice Ginsburg, and Justice Breyer join.

Justice Stevens concludes that, to be triable by military commission, an offense must meet four conditions: (1) the offense must have been committed within the theater of war; (2) “the offense charged ‘must have been committed within the period of the war’¼; (3) ¼a military commission not established pursuant to martial law or an occupation may try only ‘[i]ndividuals of the enemy’s army who have been guilty of illegitimate warfare or other offences in violation of the laws of war’ and members of one’s own army ‘who, in time of war, become chargeable with crimes or offences not cognizable, or triable, by the criminal courts or under the Articles of war’¼ (4) ¼a law-of-war commission has jurisdiction to try only two kinds of offenses: ‘Violations of the laws and usages of war cognizable by military tribunals only,’ and ‘[b]reaches of military orders or regulations for which offenders are not legally triable by court-martial under the Articles of war.’” [2777].

More importantly, Justice Stevens writes that, not being an offense internationally recognized by the law of war, conspiracy is not triable by a military commission. “The crime of ‘conspiracy’ has rarely if ever been tried as such in this country by any law-of-war military commission not exercising some other form of jurisdiction, and does not appear in either the Geneva Conventions or the Hague Conventions -- the major treaties on the law of war. ... [U]nder the common law governing military commissions, it is not enough to intend to violate the law of war and commit overt acts in furtherance of that intention unless the overt acts either are themselves offenses against the law of war or constitute steps sufficiently substantial to qualify as an attempt.” [2780-81].

In addition, other international sources confirm that conspiracy is not a recognized breach of the law of war. For instance, “[t]he International Military Tribunal at Nuremberg, over the prosecution’s objections, pointedly refused to recognize as a violation of the law of war conspiracy to commit war crimes, [Cite] and convicted only Hitler’s most senior associates of conspiracy to wage aggressive war [Cite].”

“As one prominent figure from the Nuremberg trials has explained, members of the Tribunal objected to recognition of conspiracy as a violation of the law of war on the ground that ‘[t]he Anglo-American concept of conspiracy was not part of European legal systems and arguably not an element of the internationally recognized laws of war.’ T. Taylor, Anatomy of the Nuremberg Trials: A Personal Memoir 36 (1992); see also id., at 550 (observing that Francis Biddle, who as Attorney General prosecuted the defendants in Quirin, thought the French judge had made a ‘ persuasive argument that conspiracy in the truest sense is not known to international law’).”[2784-85] Because the conspiracy charges fail to support the commission’s jurisdiction, the commission has no power to try Petitioner.

Justice Stevens further notes that “[t]he UCMJ conditions the President’s use of military commissions on compliance not only with the American common law of war, but also with the rest of the UCMJ itself, insofar as applicable, and with the ‘rules and precepts of the law of nations,’ Quirin, 317 U.S., at 28—including the four Geneva Conventions signed in 1949. See Yamashita, 327 U.S., at 20-21. The procedures that the Government has decreed will govern Hamdan’s trial by commission violate these laws.” [2786]

The Geneva Conventions do not elaborate on the phrase “all the guarantees ... recognized as indispensable by civilized peoples” in Common Article 3. It must be understood, however, to include at least the barest of the trial protections recognized by customary international law. The procedures adopted to try Petitioner stray from those governing courts-martial in ways not justified by practical necessity.

Moreover, various provisions of Commission Order No. 1 dispense with the principles, which are indisputably part of customary international law, that an accused must, absent disruptive conduct or consent, be present for his trial and must be made aware of the evidence against him.

In a concurring opinion, which Justices Kennedy, Souter, and Ginsburg join, Justice Breyer would hold that military commissions, such as the one in question, are not totally inconceivable. The President, however, has to obtain congressional authorization before proceeding with such a commission, especially in cases, such as here, where no emergency precludes congressional consultation.

Justice Kennedy, also in a concurring opinion joined by Justices Souter and Ginsburg, believes that much of Justice Stevens’ lengthy plurality opinion was not necessary to the decision of this case. It would have been enough to point out that the President has overstepped the limits set by Congress on his authority in setting up military tribunals.

“In light of the conclusion that the military commissions at issue are unauthorized, Congress may choose to provide further guidance in this area. Congress, not the Court, is the branch in the better position to undertake the ‘sensitive task of establishing a principle not inconsistent with the national interest or international justice.’ Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 428 (1964).” [2809]

Justices Scalia, Alito and Thomas each filed detailed dissenting opinions.

Citation: Hamdan v. Rumsfeld, 126 S. Ct. 2749, 74 U.S.L.W. 4579 ( 2006).

JURISDICTION (PERSONAL)

On appeal from dismissal for lack of personal jurisdiction under New York’s long-arm statute, Second Circuit holds that lower court erred in failing to take into account in-state contacts which underlay contract that gave rise to challenged arbitration award

Sole Resort, S.A. de C.V., a Mexican company (Plaintiff), owned a hotel in Tulum, Mexico. Plaintiff entered into an agreement whereby Allure Resorts Management, LLC, also a non-U.S. corporation (Defendant), would manage the hotel. After ten months of disappointing performance by Defendant, Plaintiff terminated the contract. The formation, performance, and termination of the contract involved several contacts with New York state.

As provided for in the contract, Defendant began an arbitration proceeding against Plaintiff in Miami, Florida, alleging a breach of contract. The arbitrators found in favor of Defendant and awarded $2.1 million in lost future profits. Plaintiff then sued Defendant in a New York federal court to vacate the arbitration award. Defendant moved to dismiss for lack of personal jurisdiction, which the district court granted.

Applying New York’s “long-arm” statute (LAS), the district court first concluded that the New York contacts were not enough to support personal jurisdiction; Plaintiff’s claim rests solely on the actions of the arbitrators, all of which took place in Florida.

Next, the court decided that it did not gain personal jurisdiction on the theory that Defendant had committed a tort elsewhere that caused injury in New York. The arbitration panel had determined that Defendant did not commit a tort and Plaintiff’s action did not challenge that finding. Therefore, the court reasoned, Plaintiff has no colorable claim that Defendant had committed a tort causing injury in New York.

On Plaintiff’s appeal, the U.S. Court of Appeals for the Second Circuit vacates the dismissal and remands the case to the lower court to reconsider whether the parties’ contacts with New York were enough to establish jurisdiction under the LAS.

The Court first examined Section 302(a)(1) of the LAS which provides for specific jurisdiction over nondomiciliaries. See N.Y.C.P.L.R. Section 302. To establish personal jurisdiction under Section 302(a)(1), a plaintiff has to meet two requirements. First, the defendant must have transacted business within the state; and, secondly, the claim asserted must arise from that business activity. McGowan v. Smith, 52 N.Y.2d 268, 273 (1981). The New York courts have generally held that a claim “arises from” a particular transaction when “there is a substantial relationship between the transaction and the claim asserted.” Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 467 (1988).

The Circuit Court finds that the district court had incorrectly limited its jurisdictional inquiry to the arbitrators’ actions in Florida. Although Plaintiff’s claim deals only with allegations that the arbitrators had disregarded the law in awarding judgment to Defendant, the New York contacts underlying the dispute that led to the arbitration are substantially related to Plaintiff’s claim.

“Arbitration is entirely a creature of contract¼[a]ny arbitration proceeding is thus an extension of the parties’ contract with one another, a mechanism through which they attempt to ensure compliance with the terms of that contract. ...There is therefore a substantial relationship between a challenge to the arbitrators’ decision and the contract that provided for the arbitration.” [Slip op. 6] Thus, the district court should reconsider whether the parties’ conduct in negotiating, consummating, and performing the contract which ultimately led to the challenged arbitration satisfies the definition of “transacting business” in New York as defined by Section 302(a)(1).

Alternatively, Plaintiff contended that LAS Section 302(a)(3) confers jurisdiction over its claim. This provision bases the exercise of extraterritorial jurisdiction on five elements: (1) Whether the Defendant committed a tortuous [sic] act outside the state; (2) whether the cause of action arose from that act; (3) whether the act caused injury to a person or property within the state; (4) whether the Defendant expected, or should reasonably have expected, the act to have consequences in the state; and (5) whether the Defendant derives substantial revenue from interstate or international commerce. To satisfy the first element, the plaintiff need only state a colorable cause of action. Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 125 (2d Cir. 2002).

Relying on its line of reasoning under Section 302(a)(1), the Second Circuit holds that the district court erred in confining its analysis of jurisdiction to the facts as found by the arbitrators. “[While] [Plaintiff] does not challenge the arbitrator’s determination of the merits of [the claims] in its petition, all of the facts underlying that contact are substantially related to [Plaintiff]’s claim that the arbitrators’ judgment is infirm.”[Slip op. 8]

Citation: Sole Resort v. Allure Resorts Management, 450 F.3d 100 (2nd Cir. 2006).

LETTERS ROGATORY (EVIDENCE)

Ontario Court of Appeal upholds enforcement of Canadian Plaintiff’s request for Letters Rogatory in U.S. securities fraud class action which orders production of voluminous accounting documents by Canadian branch of accounting firm

The Trustees of the Ontario Service Employees Union Pension Trust Fund (OPT) brought a securities fraud class action against Nortel Networks Corp, a client of Deloitte & Touche, LLP, in a New York federal court. OPT alleged that, between October 2000 and February 2001, Nortel was making false or misleading public statements about its financial condition.

According to OPT, Nortel used five improper financial reporting and accounting practices to make the false or misleading statements. These allegedly consisted of improper vendor financing, improper inventory valuation, improper revenue recognition, failure to account for uncollectible receivables, and goodwill impairment. Later on, when Nortel did own up to its less than rosy financial situation, the value of its shares dropped, causing major losses to OPT.

One of Nortel’s defenses was that it had depended on the guidance of its outside advisors in putting together its financial statements. Deloitte had audited Nortel’s year-end and quarterly financial statements for 2000 and later years. In December 2003, Nortel issued revised statements for 2000 through 2003.

OPT wanted to examine the documents underlying the restatements and audits. Since Deloitte of the U.S. failed to reply to a subpoena for that purpose, OPT then obtained international Letters of Request from the U.S. district court in September 2004 directed at Deloitte of Canada.

Deloitte first objected to certain provisions of the Letters that required Messrs. Clark and Wayland, two Deloitte representatives, to be deposed. Mr. Clark was the lead audit partner with Deloitte and Mr. Wayland was the audit manager of the Nortel account. It also resisted the production of working papers dealing with Nortel’s financial statements and with whether or not certain transactions took place based on Nortel’s 2003 restatements.

Deloitte also contested the production of all work papers inventories. According to the deposition of a Deloitte representative, the requested documents could well amount to more than a million pages demanding a minimum of 1500 person-hours to collect and examine them at different locations. Deloitte also claimed that most of the documents sought were not relevant either as to timeliness or as to subject matter. OPT offered to donate $ 100,000 to defray some of Deloitte’s costs of production.

The application judge exercised her discretion to enforce the letters rogatory issued by the U.S. District Court. Deloitte appealed. The Ontario Court of Appeal, however, dismisses Deloitte’s appeal in an opinion handed down on June 21. [N.B. Nortel took no position at the application to enforce the letters rogatory and takes no position on this appeal.]

OPT argued that the evidence sought by it through the enforcement of the letters rogatory is of particular relevance to the U.S. Class Action, that the evidence is not otherwise obtainable, does not violate principles of Canadian public policy, was defined with reasonable particularity, and to turn over the documents would not unduly burden Deloitte.

The Appellate Court agrees. “Here, ... the allegations of false and misleading statements pertain directly to Nortel’s financial statements, and its restatements. The complaint alleges that Nortel issued false and misleading public statements that overstated its financial condition and performance during the class period, and further that the statements included false and misleading information with respect to the nature and extent of the actual sales made by Nortel—all resulting in the artificial inflation of Nortel’s stock price.”

“Thus, allegations relating to improper financial reporting and accounting practices—as encapsulated in the five complaints referred to above—are at the heart of the U.S. Class Action. Deloitte prepared both the financial statements and the restatements that are in issue and was directly involved in the restatement process. Moreover, Nortel specifically defends on the grounds that it relied on the advice of its advisors, thus putting the contents of Deloitte’s working papers and other documentation in issue, as the application judge noted.” [¶ 20].

“I do not accept the appellants’ criticism that the application judge accorded too much deference to the U.S. court’s order. She correctly observed that she was not bound by the conclusions of the requesting judge, but that ‘his observations and conclusions are entitled to deference and respect.’ I agree with her view that an Ontario court should ‘give full faith and credit’ to the orders and judgments of a U.S. court unless it is of the view that to do so would be contrary to the interests of justice or would infringe Canadian sovereignty’ [Cites]. At the end of the day, she arrived at her own findings and conclusions, as summarized above.”

“The unseverable mix of relevant and irrelevant documents amongst the Requested Documents, together with the sheer volume of the production sought, is admittedly troubling in this case .... However, Deloitte is a major financial audit and consulting firm, worldwide. The application judge noted that it is obliged by professional standards to compile and secure its working papers in a manner in which they can be made available to regulatory entities and successor auditors.”

“It should follow that the documentation is not impossible to prepare for production. Requests for the production of voluminous documentation, in electronic and hard copy form, are hardly unknown in today’s world of complex general and class action litigation. In that sense, there is a certain ‘cost of doing business’ element in the call for Deloitte to respond to the letters rogatory—an offset to the undoubtedly considerable revenues that the appellant earns from providing high level and complex auditing services to companies such as Nortel.” [¶¶ 22-23]

“The application judge was satisfied that the Requested Documents had been identified by subject matter and time frame, and that this was sufficiently specific in the circumstances. She was also satisfied that the requests for documents and for the testimony of Messrs. Clark and Wayland were not unduly burdensome or prejudicial to Deloitte, particularly in light of the undertakings given by OPT and the conditions that the application judge intended to impose.”

“Applying the specific criteria set out in [prior precedent], she concluded [that]: ‘I am of the view that justice requires the production of the Specified Documents and Specified Evidence. I am satisfied that an order enforcing the letters rogatory in the form of Magistrate Judge Dolinger’s order of September 21, 2004 is in the interests of justice.”

“The evidence is indeed relevant, crucial and otherwise unavailable. Its production in the manner ordered will not be unduly burdensome to Deloittes (sic). Given the undertakings of the Applicants and the pre-existing confidentiality agreements and protective orders, Deloittes’ interests will not be unduly prejudiced in a manner that would infringe Canadian sovereignty.”

“This was a discretionary decision and is entitled to considerable deference. I see no palpable or overriding error on the part of the application judge in the findings she made and no error in principle justifying interference on the part of this court.” [¶¶ 25-26].

Citation: Ontario Public Service Employees Union Pension Trust Fund (Trustees of) v. Clark [2006] O. J. No. 2475; 2006 ON. C. LEXIS 2387 (Ont. Ct. App. 2006). [Editors’ Note: As of January 1, 2005, Canada was not listed as one of the 40 parties to the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, 23 U.S.T. 2555; T.I.A.S. 7444; 847 U.N.T.S. 231 (in force as of October 7, 1972)].

PRIVACY, RIGHT TO

European Court of Justice annuls agreement between European Council and United States government to authorize exchange of personal data on European airline passengers on flights to and from European Union and United States on grounds that security matters lie outside powers of European Union

Following the terrorist attacks of September 11, 2001, the U.S. passed legislation in November 2001 providing that air carriers operating flights to, or from, the U.S. or across U.S. territory had to provide the U.S. customs authorities with electronic access to the Passenger Name Record (PNR) data contained in their automated reservation and departure control systems.

While conceding the validity of the security interests at stake, the EC Commission cautioned the U.S. authorities, in June 2002, that those provisions could conflict with EC and Member State legislation on data protection and privacy. The U.S. authorities put off the entry into force of the new provisions.

Ultimately, however, they declined to waive the right to impose penalties on airlines failing to comply with the U.S. legislation on electronic access to PNR data after March 5, 2003. Since then, several large airlines headquartered in the European Union have given the U.S. authorities access to their PNR data.

The Commission next began negotiating with U.S. authorities; this gave rise to a document containing specified undertakings on the part of CBP, looking toward the Commission’s adoption of a decision on adequacy pursuant to Article 25(6) of Directive 95/46/EC (as amended) (see below).

On March 17, 2004, pursuant to Article 300(3) EC, the Commission presented to the Parliament, with a view to its consultation, a proposal for a Council decision about finalizing an agreement with the U.S. The Council, referring to the urgent procedure, asked the Parliament to deliver an opinion on that proposal no later than April 22, 2004. The Parliament twice failed to respond to the described urgency.

The Council reminded the Parliament that the fight against terrorism was a key priority of the European Union. It noted that air carriers and passengers were at that time in a state of uncertainty which urgently needed relief. Moreover, it was arguably essential to safeguard the financial interests of the parties concerned.

On April 21, 2004 the Parliament decided, in accordance with Article 300(6) EC, to obtain an Opinion from the Court of Justice on the harmony or lack of same between the proposed agreement and the organic Treaty. It started that procedure that same day.

The Commission approved the Decision on adequacy, which is the subject of Case C-318/04 on May 14, 2004. Three days later, the Council adopted Decision 2004/496, which is implicated in Case C-317/04.

Later in 2004 and in early 2005, the ECJ granted the United Kingdom leave to intervene in support of the Commission’s orders in both joined cases. In March, the Court allowed the European Data Protection Supervisor to intervene to argue in favor of the forms of orders which Parliament had suggested in both cases.

The European Court of Justice (ECJ), in a Grand Chamber of 13 judges, addressed the question of the interchange of personal information on international air passengers. In Case C-317/04, the European Parliament asked the ECJ to annul Council Decision 2004/496/EC of May 17, 2004; it pertains to an Agreement between the European Community (EC) and the United States on the processing and transfer of PNR data by EC Air Carriers to the U.S. Department of Homeland Security, Bureau of Customs and Border Protection (CBP).

In Case C-318/04, the Parliament sought the annulment of Commission Decision 2004/535/EC of May 14, 2004 relating to whether the protection of personal data contained in the PNR of air passengers sent to the CBP was adequate.

A representative of the EC Council and the Secretary of the U.S. Department of Homeland Security signed the Agreement on May 28, 2004 and thereby caused its immediate entry into force.

The following are some of the key provisions of law which the ECJ relies upon in deciding the above issues. The first is Article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, [Rome, November 4, 1950] (the ECHR). It provides that: “1. Everyone has the right to respect for his private and family life, his home and his correspondence. 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.”

Directive 95/46/EC (as amended) was adopted based on Article 100a of the EC Treaty (which, after amendment, is now Article 95 EC). The 11th recital in its preamble states that the Directive’s principles of safeguarding the rights and freedoms of individuals, notably the right to privacy, give substance to, and enlarge upon those set forth in the Council of Europe’s Convention for the Protection of Individuals with regard to Automatic Processing of Personal Data [January 28, 1981].

The 13th recital in the preamble reads as follows: “... the activities referred to in the Treaty on European Union regarding public safety, defence, State security or the activities of the State in the area of criminal laws fall outside the scope of Community law, without prejudice to the obligations incumbent upon Member States under Article 56(2), Article 57 or Article 100a of the Treaty establishing the European Community...” The 57th recital further declares that: “.. the transfer of personal data to a third country which does not ensure an adequate level of protection must be prohibited.”

Article 2 of the Directive provides that: “For the purposes of this Directive: (a) ‘personal data’ shall mean any information relating to an identified or identifiable natural person (data subject); an identifiable person is one who can be identified, directly or indirectly, in particular by reference to an identification number or to one or more factors specific to his physical, physiological, mental, economic, cultural or social identity; (b) ‘processing’ of personal data shall mean any operation or set of operations which is performed upon personal data, whether or not by automatic means, such as collection, recording, organisation, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, blocking, erasure or destruction; ...”

Directive Article 3 states in part: “2. This Directive shall not apply to the processing of personal data: - in the course of an activity which falls outside the scope of Community law, such as those provided for by Titles V and VI of the Treaty on European Union and in any case to processing operations concerning public security, defence, State security (including the economic well-being of the State when the processing operation relates to State security matters) and the activities of the State in areas of criminal law, ...”

Article 25 of the Directive, titled “Principles”, provides in part: “1. The Member States shall provide that the transfer to a third country of personal data which are undergoing processing or are intended for processing after transfer may take place only if, without prejudice to compliance with the national provisions adopted pursuant to the other provisions of this Directive, the third country in question ensures an adequate level of protection. ....”

“6. The Commission may find, in accordance with the procedure referred to in Article 31(2), that a third country ensures an adequate level of protection within the meaning of paragraph 2 of this Article, by reason of its domestic law or of the international commitments it has entered into, particularly upon conclusion of the negotiations referred to in paragraph 5, for the protection of the private lives and basic freedoms and rights of individuals. Member States shall take the measures necessary to comply with the Commission’s decision.”

The EC Commission based its adequacy decision on the Directive, in particular Article 25(6) thereof. The 11th recital in the preamble to that decision states: “The processing by CBP ... of personal data contained in the PNR ... of air passengers transferred to it is governed by conditions set out in the Undertakings of the ... CBP of 11 May 2004 (... the Undertakings) and in United States domestic legislation to the extent indicated in the Undertakings. The 15th recital in the preamble to the decision states that PNR data will be used strictly for purposes of preventing and combating terrorism and related crimes, other serious crimes, including organised crime, that are transnational in nature, and flight from warrants or custody for those crimes.”

Article 1 of the Decision on adequacy declares that: “For the purposes of ... Directive 95/46/EC, the ... CBP is considered to ensure an adequate level of protection for PNR data transferred from the Community concerning flights to, or from the United States, in accordance with the Undertakings set out in the Annex.”

The PNR data elements include the PNR record locator code, date of reservation, name, address, all forms of payment information, contact telephone numbers, travel agency, travel status of the passenger, e-mail address, general remarks, seat number, no-show history and any collected APIS (Advanced Passenger Information System) information.

The Council adopted Decision 2004/496 on the basis, in particular, of Article 95 EC in conjunction with the first sentence of the first subparagraph of Article 300(2) EC.

Before the ECJ, the Parliament argued, inter alia, that adoption of the Commission decision was ultra vires for failure to comply with the provisions in the Directive. In particular, it maintained that the Commission’s decision infringed the first indent of Article 3(2) of the Directive, which excludes certain activities as falling outside the scope of Community law.

The Court finds this point persuasive. “The first indent of Article 3(2) of the Directive excludes from the Directive’s scope the processing of personal data in the course of an activity which falls outside the scope of Community law, such as activities provided for by Titles V and VI of the Treaty on European Union, and in any case processing operations concerning public security, defence, State security and the activities of the State in areas of criminal law.”

“The decision on adequacy concerns only PNR data transferred to CBP. It is apparent from ... the preamble to the decision that the requirements for that transfer are based on a statute enacted by the United States in November 2001 and on implementing regulations adopted by CBP under that statute. ... The 15th recital states that PNR data will be used strictly for purposes of preventing and combating terrorism and related crimes, other serious crimes, including organised crime, that are transnational in nature, and flight from warrants or custody for those crimes.” [¶¶ 54-55].

“While the view may rightly be taken that PNR data are initially collected by airlines in the course of an activity which falls within the scope of Community law, namely sale of an aeroplane ticket which provides entitlement to a supply of services, the data processing which is taken into account in the decision on adequacy is, however, quite different in nature. ... [T]hat decision concerns not data processing necessary for a supply of services, but data processing regarded as necessary for safeguarding public security and for law-enforcement purposes.” [¶ 57].

“Accordingly, the first limb of the first plea, alleging that the first indent of Article 3(2) of the Directive was infringed, is well founded. The decision on adequacy must consequently be annulled and it is not necessary to consider the other limbs of the first plea or the other pleas relied upon by the Parliament.” [¶¶ 60-61].

The Parliament also argued to the ECJ that Article 95 EC does not constitute a proper legal basis for Decision 2004/496. “The decision does not have as its objective and subject-matter the establishment and functioning of the internal market by contributing to the removal of obstacles to the freedom to provide services and it does not contain provisions designed to achieve such an objective. Its purpose is to make lawful the processing of personal data that is required by United States legislation. Nor can Article 95 EC justify Community competence to conclude the Agreement,” it urged, “because the Agreement relates to data processing operations which are excluded from the scope of the Directive.” [¶ 63].

The Council, on the other hand, contended that “the Directive, validly adopted on the basis of Article 100a of the Treaty, contains in Article 25 provisions enabling personal data to be transferred to a third country which ensures an adequate level of protection, including the possibility of entering, if need be, into negotiations leading to the conclusion by the Community of an agreement with that country. ... The conditions of competition between Member States’ airlines operating international passenger flights to and from the United States could have been distorted because only some of them granted the United States authorities access to their databases. The Agreement is designed to impose harmonised obligations on all the airlines concerned.” [¶ 64].

In addition, “the Commission observes that there is a conflict of laws’, within the meaning of public international law, between the United States legislation and the Community rules and that it is necessary to reconcile them. It complains that the Parliament, which disputes that Article 95 EC can constitute the legal basis for Decision 2004/496, has not suggested an appropriate legal basis. According to the Commission, that article is the ‘natural legal basis’ for the decision because the Agreement concerns the external dimension of the protection of personal data when transferred within the Community. Articles 25 and 26 of the Directive justify exclusive Community external competence.” [¶ 65].

The Court of Justice agrees with Parliament’s position. “Article 95 EC, read in conjunction with Article 25 of the Directive, cannot justify Community competence to conclude the Agreement. The Agreement relates to the same transfer of data as the decision on adequacy and therefore to data processing operations which, ... are excluded from the scope of the Directive. Consequently, Decision 2004/496 cannot have been validly adopted on the basis of Article 95 EC. That decision must therefore be annulled and it is not necessary to consider the other pleas relied upon by the Parliament.” [¶¶ 67-70].

Citation: European Parliament v. Council (Joined Cases C-317/04 and C-318/04), [2006] E.C.R. (European Court of Justice, 30 May 2006).

SOVEREIGN IMMUNITY

District of Columbia Circuit rejects argument that expropriation of company stock by Chinese government qualifies as “commercial activity” within the meaning of the Foreign Sovereign Immunities Act of 1976

Yang Rong (a Chinese national residing in the United States), Rhea Yong, and Rong’s company Broadsino Finance Company (Broadsino) (registered in Hong Kong) (Plaintiffs) brought suit against the Province of Lianoning in Northeast China (Defendant) based on the Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. Section 1602.

The dispute arose from a 1991 joint venture agreement between Plaintiffs and the city of Shen Yang in the Defendant Province relating to automobile production. The venture called itself “Shen Yang Jin Bei Passenger Vehicle Manufacturing Company, Ltd.” (Shen Yang Automotive). Plaintiff Rong served as Shen Yang Automotive’s chief executive and manager. Several other companies, including Broadsino, were also in on the deals. By October 2002, the Chinese Financial Educations Development Foundation (Foundation), a non-governmental organization, owned almost 56 % of the joint venture’s stock. Broadsino also transferred its stock to the Foundation to be held in trust for Broadsino.

In 2002, the Defendant declared the Foundation’s stock “state assets,” and fired Plaintiff from his positions with Shen Yang Automotive. Plaintiffs filed various court proceedings. Their action in Beijing Municipal High Court was unsuccessful. At issue here, the District of Columbia federal court also dismissed Plaintiff’s case for lack of subject matter jurisdiction based on sovereign immunity.

On appeal, Plaintiffs argued that the FSIA “commercial activity” exception in 28 U.S.C. Section 1605(a)(2), applied and removed the Defendant’s actions from immunity under the FSIA. The U.S. Court of Appeals for the District of Columbia Circuit, however, finds the commercial activity exception inapplicable and affirms the dismissal of the complaint.

The Court first reiterates that a foreign state is immune from suit in the U.S. unless one of the FSIA exception applies. In this case, Plaintiffs contended that the Defendant’s “implementation of the scheme to take Plaintiff’s shares, other equity interests, and other property and then to maintain control therefore for its own commercial benefit” constituted “commercial activity” that causes a direct effect in the U.S. within the meaning of the FSIA.

In Republic of Argentina v. Weltover, 504 U.S. 607 (1992), the U.S. Supreme Court outlined three elements of an analysis under Section 1605(a)(2). First, the lawsuit must relate to acts that took place outside the U.S. Second, the foreign sovereign must have performed the act in connection with a commercial activity. Third, the act must have caused a direct effect in the U.S. The main issues in this case involve elements 2 and 3. Here, the second issue is dispositive.

Plaintiffs maintained that the Defendant’s use of the stock after the expropriation independently establishes jurisdiction. The Court disagrees. Even the Province’s later transfer of the stock did not convert this into a “commercial activity.” Otherwise, the courts could deem almost any disposition of expropriated property as constituting “commercial activity” thus opening foreign states to many lawsuits in U.S. courts. Such a result would square neither with precedents in the District of Columbia and in other Circuits, nor with the purposes of the FSIA.

Citation: Rong v. Lianoning Province Government, No. 05-7030, 2006 WL 1867241 (D.C. Cir. July 7, 2006).

WORLD TRADE ORGANIZATION

In complaint filed by United States, WTO panel finds European Community customs law administration inconsistent at several points with GATT 1994 trading rules on uniformity and independence

In March 2005, the U.S. had filed with the WTO a complaint that the administration of European Community (EC) customs laws by 25 different national agencies (one in each Member State), in combination with the absence of effective coordination procedures, violates the EC’s duty to administer its custom laws in a uniform manner. Thus, the EC system allegedly violates GATT Article X:3(a) requiring uniform, impartial and reasonable administration and Article X:3(b) which mandates that customs decisions shall be independent.

The WTO Dispute Settlement Panel (DSP) essentially agreed that the EC system is “opaque” and at times “confusing.” In a press release, the U.S. Trade Representative refers to the example of liquid crystal display (LCD) monitors. Some Member States classify them as “computer-related equipment” with a zero duty rate, while other Member States consider them “other” monitors and levy a 14 % duty.

With respect to the U.S. claim of non-uniform administration of the European Common Customs Tariff in the area of tariff classification in violation of Article X:3(a) of the GATT 1994, the DSP enters the following specific findings.

First, the administrative process leading to the tariff classification of blackout drapery lining amounts to non-uniform administration within the meaning of Article X:3(a) of the GATT 1994. Secondly, the tariff classification of LCD monitors with digital video interface amounts to non-uniform administration within Article X:3(a) of the GATT 1994.

With respect to the U.S. claims of non-uniform administration of the European Community Customs Code and the Implementing Regulation in the area of customs valuation in violation of Article X:3(a) of the GATT 1994, the DSP concludes as follows. First, the imposition by customs authorities in some Member States of a form of prior approval with respect to the successive sales provision, does not square with EC customs laws. Moreover, custom authorities in other Member States do not follow this procedure. This shows that the EC is failing to administer its customs law on successive sales in a uniform manner so as to obey Article X:3(a) of the GATT 1994. The DSP recommends that the EC bring its system into conformity with the above-cited WTO rules violations.

On the other hand, the DSP concludes that the EC is not currently administering Article 29(3)(a) of the Community Customs Code dealing with vehicle repair costs covered under warranty in a way that violates the uniformity obligation in Article X:3(a) of the GATT 1994. Moreover, with respect to the U.S. claim that the EC is failing in its duty to provide prompt review and correction of administrative action relating to customs matters in Article X:3(b) of the GATT 1994, the DSP finds no violation.

Citation: European Communities—Selected Customs Matters (WT/DS315/R) (June 16, 2006); U.S. Trade Representative press release of same date. [DSP Report is available on WTO website at “www.wto.org.”]

Japanese court rules against American company’s film rights. On July 11, the Tokyo District Court reportedly handed down a ruling on a request by Paramount Home Entertainment (Japan) Ltd. for an injunction against one of several Japanese companies to prevent the sales—at bargain-basement prices—of DVD versions of classic movies such as “Roman Holiday.” Paramount of the U.S. had originally released the titles in 1953. The legal issue centered on whether, after a fifty-year period of protection, the movies had entered the public domain in 2003. According to the Kyoto News, the Court held that the copyrights to the movies at issue had already expired. When asked by the media, Japanese court officials declined to comment on the grounds that it was a “nonpublic” case.

Citation: FindLaw based on Associated Press reports, Tokyo, Tuesday, July 11, 2006 at 17:12Z.

British bankers to be surrendered for trial in Texas. On July 8, 2006, U. K. Attorney-General (AG) Lord Goldsmith declined to grant a Conservative Party’s request to intervene in the extradition of three former NatWest bankers for trial on Enron-linked fraud charges in Houston, Texas. The AG explained that investigations had begun in the U.S. where the alleged conspiracy had taken place and where the alleged co-conspirators were located. He further pointed out that the alleged fraud could not have occurred without the connivance of Enron executives in the U.S. The AG was unpersuaded that the U.S. was misusing a treaty designed to combat terrorism.

Citation: washingtonpost.com via Reuters; London, Saturday, July 8, 2006 at 6:53 a.m. (byline of Tim Castle of Reuter’s staff).

Foreign claimants must now pay fees in Russian courts out of own pockets. For many foreign plaintiffs, recent changes in the application of Chapter 25.3 of the Russian Federation Tax Code will increase the difficulty of filing civil actions in the Russian courts. Under Article 126 of the RF Arbitration Procedural Code and Article 132 of the RF Civil Procedural Code, a plaintiff has to prove the payment of a State Duty at the time of filing suit. Until early 2006, the courts have been allowing Russian attorneys representing foreign claimants to take care of this payment by producing the attorney’s own bank statement as proof. For foreign claimants who lacked any establishment in the Federation and no Rouble-denominated accounts with a Russian bank, this was the only commercially practical means of filing suits in the Russian courts. As of February 2006, however, the RF Ministry of Finance has announced that the attorney’s payment of the state duty will no longer be valid. Failure of a foreign plaintiff to prove the payment of the state filing duty within a court-specified time will typically lead to dismissal of the case.

Citation: Law-Now: Russia; London, May 17, 2006 (law firm of CMS Cameron McKenna).

Nigeria agrees to withdraw forces from Bakassi Peninsula. On October 10, 2002, the International Court of Justice at The Hague (ICJ) ruled in Cameroon v. Nigeria (International Court of Justice, Judgment of 10 October 2002), that the Republic of Cameroon was the lawful sovereign over the Bakassi Peninsula, a potentially oil-rich 400-square-mile area in the Gulf of Guinea which the Federal Republic of Nigeria had been claiming. On none of the subsidiary issues, did more than two of the sixteen Judges dissent. With a common border 1,000 miles long, each nation has directly challenged the other’s rights to the Bakassi area for over a decade, occasionally making use of armed force. The ICJ found that Nigeria was under an obligation expeditiously and unconditionally to withdraw its administration along with its military and police forces, inter alia, from the Bakassi Peninsula. Cameroon had filed the application in March 1994. Almost three years after the ICJ’s ruling, the N. Y. Times reports briefly that Nigeria has agreed to withdraw its troops from Bakassi within sixty days.

Citation: World Briefing, The New York Times, Tuesday, June 13, 2006, page A11 (European source: Agence France-Presse). [See also 8 International Law Update, No. 12.]

France’s highest court affirms George Soros’ conviction for insider trading. After almost two decades of litigation, the French Cour de Cassation affirmed the conviction of 75-year-old American billionaire, George Soros, for insider trading in 95,000 shares of Societe Generale (SG) bank during 1988. The basic charge is that Mr. Soros unlawfully traded in SG shares after learning of a planned corporate raid on the bank. French authorities, however, have yet to decide what fine Mr. Soros should pay, a matter remanded to the intermediate Court of Appeal in light of new guidelines laid down by the highest court. According to an attorney, Mr. Soros denies the charges and may bring the matter before the European Court of Human Rights based on the alleged unfairness caused by the excessive length of the proceedings. Despite his fifty years or so on the French financial scene, Mr. Soros’ record has hitherto been clear.

Citation: FindLaw via Associated Press, Paris, Wednesday, June 14, 2006 (byline of Angela Doland, AP writer).

United States moves toward ratification of Convention on Intercountry Adoption. On July 6, the Office of the Spokesman for the U.S. Department of State (DOS) announced that it has entered into an agreement with the Colorado Department of Human Resources for the latter to become the first designated “Accrediting Entity of Adoptions Service Providers” under the Hague Convention on Protection of Children and Co-operation in Respect of Intercountry Adoption as implemented by the Intercountry Adoption Act of 2000 (IAA) (Pub. L. No. 106-279). The DOS is the U.S. Central Authority under the Hague Convention. The IAA requires the DOS not only to enter into agreements with qualified entities but also to oversee their performance. To accredit agencies or persons, the Colorado Department has to guide itself under the standards set forth in 22 C.F.R. Part 96, the final rule on accreditation. These tasks are a necessary preliminaries to the U.S.’s deposit of its Convention ratification papers which is expected to take place during 2007.

Citation: U.S. State Department Media Note #2006/652, Office of the Spokesman, Washington, D.C. Thursday, July 6, 2006 at 2:54 pm.

Spain’s highest court exonerates former Guantanamo prisoner. On July 24, the Supreme Court of Spain overturned a six-year prison sentence imposed in 2005 on Hamed Abderrahmane, a former Guantanamo Bay prisoner, for belonging to a terrorist organization. The Court declared there was a “total absence of tangible proof” against the defendant. The high court also ruled as “totally null and therefore non-existent” any evidence obtained during his two-year detention at the U.S. Guantanamo base. Defendant who hails from the Spanish enclave of Ceuta in north Africa, was arrested in Pakistan in October 2001 while he was trying to flee the country following the September 11 attacks on the U.S. Four psychiatrists said that defendant was suffering from post-traumatic stress (PTS) at the time of his arrest. In their opinion, the PTS had gotten worse during his two years in Guantanamo.

Citation: Agence France Presse—English Wire, Madrid, Monday, July 24, 2006 at 7:06 GMT.

Senate approves new tax agreements with Bangladesh, France and Sweden. On March 31, the U.S. Senate Foreign Relations Committee announced that the Senate has consented to the President’s ratification of four new tax treaties. These are (1) A Convention between the U.S. and Bangladesh for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (Treaty Doc. 109-5); (2) A Protocol Amending the Convention Between the U.S. and France for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital (Treaty Doc. 109-4); (3) A Protocol Amending the Convention Between the U.S. and France for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Estates, Inheritances, and Gifts (Treaty Doc. 109-7) and (4) A Protocol Amending the Convention Between the U.S. and Sweden for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (Treaty Doc. 109-8). During the committee chairmanship of Senator Richard G. Lugar, the full Senate has approved eleven tax agreements including ones with Mexico, Australia, the United Kingdom, Japan, Sri Lanka, the Netherlands, and Barbados.

Citation: U.S. Federal News (HT Syndication), 2006 W.L.N.R. 5474884; Washington, D.C., Friday, March 31, 2006.

European Union clears merger of Alcatel and Lucent. On July 25, the EC Commission approved a planned $13.4-billion (U.S.) merger between French telecom equipment maker, Alcatel S.A., and American competitor, Lucent Technologies, Inc. According to the Commission, the merger’s main impact on competition would be in the supply of optical networking equipment and broadband access solutions. Enough competition in both areas will remain after the merger, it concludes, since powerful telephone companies should be able to ensure that the merged company does not acquire dominant market power. Lucent has historically been strong in North America and Alcatel has a powerful customer base in Europe. The U.S. Federal Trade Commission gave its seal of approval to the merger in June. The agreement, however, is still subject to approval by the shareholders of both companies.

Citation: Globe & Mail (Toronto), 2006 W.L.N.R. 12786400, Brussels, Tuesday, July 25, 2006 (Bell Globemedia Interactive, Inc.) at page B10.

French court awards damages to relatives of Nazi deportees. On June 7, 2006, an administrative court in Toulouse in southwestern France ordered the French government and SNCF, the national rail authority, to pay $79,500 damages to compensate a family for having had four relatives carried by SNCF in cattle cars to a Nazi transit camp at Drancy near Paris in May, 1944. Drancy was a regular stopover point for Jews being deported to Nazi extermination camps such as Auschwitz. The relatives remained there for several months until Allied Forces freed them in July 1944. Two of the present plaintiffs were Alain Lipietz, a Green Party member of the EC Parliament, and his sister, Helene. An attorney for the SNCF announced plans to file an appeal. A similar 2003 case brought in French civil court had run afoul of a thirty-year limitations period which allegedly does not apply in administrative court.

Citation: The Associated Press (via Findlaw), Toulouse, France, Wednesday, June 7, 2006, at 13.43Z.