2007 International Law Update, Volume 13, Number 9 (September)

2007 International Law Update, Volume 13, Number 9 (September)

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

ANTI‑SUIT INJUNCTION

In case of American citizen’s death in airplane crash in Italy, Eleventh Circuit rules that it was improper for district court to stay case pending resolution of Italian litigation, where it would put American plaintiff “effectively out of court”

In October 2001 at the Linate airport in Milan, Italy, a Cessna jet operated by Air Evex, a German Company taxied onto an active runway in the fog, colliding with a Scandinavian Air Systems jet that was just taking off. Several hundred people died. In addition to lawsuits pending in the Italian courts, the estates of seventy of the victims and an injured survivor sued Cessna (Defendant) in a Florida federal court. The survivor and sixty‑nine decedents’ estates were European citizens (European Plaintiffs). One plaintiff was Jessica King, an American citizen (American Plaintiff).

Defendant moved to dismiss in favor of the Italian courts on grounds of forum non conveniens. The district court granted the motion as to the European Plaintiffs but denied the motion as to the American Plaintiff. The district court stayed the proceedings pending the Italian Court’s ruling on the Italian law issues. All plaintiffs appealed. The U.S. Court of Appeals for the Eleventh Circuit vacated the order staying the American Plaintiff’s case and the order dismissing the European Plaintiffs’ Case, and remanded the cases to the district court.

The Court explains its reasoning. “The general rule is that a stay is not a final disposition, and thus not immediately appealable. [Cite]. However, there is an exception for stays that put a plaintiff ‘effectively out of court,’ and in applying that exception we have held that a stay order that is immoderate and involves a protracted and indefinite period of delay is final and appealable under 28 U.S.C. § 1291. [Cites].” [Slip op. 5].

“The Supreme Court first recognized the doctrine at issue here in Idlewild Bon Voyage Liquor Corp. v. Epstein, 370 U.S. 713, 715 n.2 (1962). In that case a liquor distributor filed a complaint in federal court seeking a declaratory judgment that the New York Alcoholic Beverage Control Law would be unconstitutional as it was applied. [Cite]. The distributor asserted a statutory right to have its case heard by a three judge panel. Id. The district court refused to convene a three‑judge court and stayed the lawsuit based on the Pullman abstention doctrine, under which federal courts abstain from resolving constitutional disputes where a state court’s clarification of its own law might render a constitutional ruling unnecessary¼On review the Supreme Court noted: ‘The Court of Appeals properly rejected the argument that the order of the District Court ‘was not final and hence unappealable under 28 U.S.C. §§ 1291, 1292,’ pointing out that ‘appellant was effectively out of court.’ [Cite].” [Slip op. 5‑6].

“Applying the ‘effectively out of court’ doctrine to the facts before us, it is apparent that [the American Plaintiff] is at least as ‘effectively out of court’ as the plaintiff in Idlewild was. The only notable difference between this case and Idlewild is that the stay in this case was issued in favor of foreign litigation, while the stay in Idlewild was issued in favor of state court litigation. The question, then, is whether that distinction matters to application of the ‘effectively out of court’ exception to the finality rule of appellate jurisdiction.”

“[Defendant], of course, contends that it does matter. It argues that ‘[f]or purposes of appealability, the significance of abstention doctrines based on federalism is that generally, when a federal court abstains in deference to a state court or [state] regulatory agency, the abstention necessarily ends the federal court’s involvement with the suit.’ That is true, [Defendant] says, because the resulting judgment in state court will often have res judicata effect on any later federal litigation. This is a sophisticated argument, but not one that can be squared with the Idlewild decision.”

“If the Idlewild doctrine were confined to cases in which abstention necessarily will end federal court involvement in the lawsuit, or generally does so, the Supreme Court was mistaken about the disposition of that very case, and for our purposes the Supreme Court never makes a mistake.” [Slip op. 8].

“¼[T]he ‘effectively out of court’ exception to the final judgment rule is not categorically inapplicable where a stay has been entered in favor of foreign court litigation. Its application in a particular case depends on¼[w]hether the litigant has been placed ‘effectively out of court,’ which will happen when a federal court stays its hand to allow another court to assume partial jurisdiction over the merits of the suit.”

“[American Plaintiff’s] appeal fits within the ‘effectively out of court’ exception to the final judgment rule. He has for all practical effects been put out of court indefinitely while litigation whose nature, extent, and duration are unknown, is pending in Italy. The district court has held its hand while Italian courts assume or continue what amounts to jurisdiction over the merits of the lawsuit. Their decision of Italian law issues will be followed by the district court.”

“The stay order does have the legal effect of preventing [American Plaintiff] from proceeding with his claims in federal court for an indefinite period of time, potentially for years. Because he has been effectively put out of court, we have jurisdiction to review the order that did put him out.” [Slip op. 10].

“We do not mean that there are no differences between federalism and international comity for purposes of evaluating the merits of a stay order, as distinguished from deciding whether appellate jurisdiction exists to review the stay order. As [Defendant] has reminded us, we have previously observed that: ‘The relationship between the federal courts and the states (grounded in federalism and the Constitution) is different from the relationship between federal courts and foreign nations (grounded in the historical notion of comity).’ [Cite]. Those important differences do not, however, affect the extent to which a plaintiff is placed ‘effectively out of court,’ which is the measure that defines our appellate jurisdiction over stay orders.” [Slip op. 10].

“Because we are vacating the stay order and recognizing [American Defendant’s] right to proceed in the district court, one of the considerations that led to the district court’s ruling in the cases of the European plaintiffs has changed ¼ Rather than speculate as to what, if anything, the court might have done differently had it known that it could not stay proceedings in the [American Defendant’s] case, we will vacate and remand this entire case to the district court so that it can decide.” [Slip op. 15].

Citation: King v. Cessna Aircraft Co., 2007 WL 3085567, No. 06‑10519 (11th Cir. 2007).

ARBITRATION

In action by Canadian consumer against U.S. computer maker for latter’s failure to honor mistakenly posted lower on‑line prices, majority of Supreme Court of Canada upholds validity of arbitration clause in Defendant’s sale contract since its choice of National Arbitration Forum headquartered in United States did not introduce “foreign element”

Dell Computer Corporation (Dell), a U.S. company, sells computer equipment retail over the Internet. It has its Canadian head office in Toronto and a place of business in Montreal. In the late afternoon of Friday, April 4, 2003, the order pages on Dell’s English‑language Web site indicated a price of $89 rather than $379 for the Axim X5 300‑MHz handheld computer and a price of $118 rather than $549 for the Axim X5 400‑MHz handheld computer.

The pages of the site that advertise the products, however, listed the correct prices. On April 5, Dell discovered the errors, and blocked access to the erroneous order pages through the usual address, although it did not withdraw the pages from the site.

On the morning of April 7, Olivier Dumoulin (Plaintiff), a Quebec consumer, found out about the low prices from an acquaintance that sent him the “deep links.” These links made it possible to bypass the corrective measures Dell had taken. Using a deep link, Plaintiff ordered a Dell computer at the price of $89.

Later that same day, Dell posted a price correction notice and, also announced that it would decline to process orders for computers at the prices of $89 and $118. At trial in Superior Court, a Dell employee testified that over the course of that weekend, 354 Quebec consumers had placed a total of 509 orders for these Axim computers; on an average weekend, Dell would sell from one to three of them in Quebec.

On April 17, Plaintiff put Dell in default by demanding that it honor his order at the $89 price. When Dell refused, the Union des Consommateurs (Union) and Plaintiff filed suit in the Quebec Superior Court. They also moved the court to authorize the filing of a class action against Dell.

Dell, however, asked the court (1) to refer Union’s and Plaintiff’s claim to arbitration pursuant to the clause set out in the terms and conditions of sale, and (2) to deny the motion to institute a class action. The Union and Plaintiff replied that the arbitration clause was null and void and that, in any event, Defendant could not invoke it against Plaintiff.

The trial judge pointed out that, according to the arbitration clause, the rules of the National Arbitration Forum (NAF), which is “located in the United States,” should govern any arbitration proceedings. Accordingly, she ruled that a “foreign element” was present for purposes of the rules of Quebec private international law and that the bar of the Civil Code of Quebec (CCQ) Art. 3149 should apply. In her view, moreover, the court could not apply the arbitration clause against Plaintiff. She also authorized a class action against Dell.

The Quebec Court of Appeal dismissed Plaintiffs’ appeal from that decision and it appealed to the Canadian Supreme Court. On November 9, 2006, the Quebec Minister of Justice introduced Bill 48, An Act to amend the Consumer Protection Act and the Act respecting the collection of certain debts in the National Assembly. One of the Bill’s provisions would bar a consumer from referring a dispute to arbitration. Bill 48 entered into force the day after the hearing of the appeal in the Supreme Court.

Section 2 of that Bill provides: “Any stipulation that obliges the consumer to refer a dispute to arbitration, that restricts the consumer’s right to go before a court, in particular by prohibiting the consumer from bringing a class action, or that deprives the consumer of the right to be a member of a group bringing a class action is prohibited. If a dispute arises after a contract has been entered into, the consumer may then agree to refer the dispute to arbitration.”

In this Court, Dell submits that no article of Quebec legislation in effect voids the arbitration clause. It, therefore, (1) is not contrary to public order, (2) Art. 3149 CCQ does not forbid it and (3) it is neither external nor abusive.

After Bill 48 went into effect, the Court asked the parties to brief its applicability vel non to the instant case. Dell made three points on why Bill 48 does not affect this case: (1) that the Bill does not have retroactive effect; (2) that the new legislation cannot apply to disputes already before the courts; and (3) that Dell had a vested right to the arbitration procedure provided for in its contract with Plaintiff. The Union contended only that the provision on arbitration clauses merely confirms a pre‑existing prohibition.

Of the many issues raised, in this Court’s view, the most significant one deals with the application of Art. 3149 CCQ. This question is one that involves the ordering of the rules in the CCQ; its answer will influence the future interpretations of that Code. Article 3149 provides that: “A Québec authority also has jurisdiction to hear an action involving a consumer contract or a contract of employment if the consumer or worker has his domicile or residence in Québec; the waiver of such jurisdiction by the consumer or worker may not be set up against him.”

This provision appears in Title Three, designated “International Jurisdiction of Québec Authorities”, and is located in Book Ten of the CCQ entitled “International Law”. In the Supreme Court majority’s view, Article 3149 applies only where there is a relevant “foreign element” that justifies resorting to the rules of Quebec private international law.

“When the Quebec legislature began its revision of the civil law in the mid‑twentieth century, it did so in a way that was consistent with the civil law tradition in its purest form. The codification process, therefore, entailed a reflection on all the Code’s principles and on how to organize them in one central document with a view to simplifying and clarifying the rules, and thus making them more accessible. The organization of rules is an essential feature of codification.”

“According to Professors Brierley and Macdonald: ‘The rational and systematic character of the Code also bears on its mode of presentation. One of the central features of the Code is its taxonomic structure. This affects both its organization and its drafting style. Just as the very existence of a Code labelled ‘Civil Code’ presupposes a larger legal universe that can be divided and subdivided — public law, private law; and, within private law, procedure and substance; and, within substantive private law, commercial law and civil law — the same taxonomic approach is carried through into the Code itself.’”

“.. [T]he inventory of subjects selected for inclusion and the manner of their placement serve to define the range of meaning that each of the subjects so included may have. The initial organizational choices bear directly on the manner in which the Code adapts to changing circumstances.... [Cite].”

“Private international law is the branch of a state’s domestic law that governs private relationships that ‘exten[d] beyond the scope of a single national legal system.’ ... [There are] a variety of conceptions of private international law. Thus, in some countries, this branch of law is limited to the conflict of laws, whereas in France, private international law has a broader scope, extending also to questions concerning the status of foreign nationals and the nationality of persons.”

“In English private international law, an intermediate approach has been adopted that generally concerns three types of questions: (I) conflict of laws, (ii) conflict of jurisdictions and (iii) the recognition and enforcement of foreign judgments. [Cites]. What is the situation in Quebec law?” [¶ 16].

“The drafters of the original rules of Quebec private international law naturally drew on French law. Like the Code Napoléon, the Civil Code of Lower Canada contained only a few articles on this subject, and until the CCQ was enacted in 1991, they and a few provisions of the Code of Civil Procedure (CCP) and from specific statutes constituted the private international law of Quebec.”

“ ... [I]n the nineteenth and early twentieth centuries, a growing number of states had recourse to codification, adopting increasingly comprehensive and systematic rules. [Cites]. The subsequent project to codify Quebec’s private international law was part of that trend; it was included in the mandate for the proposed general reform of the Civil Code that was assigned to the Civil Code Revision Office (the Office) in 1965.”

“In 1975, an initial draft codification of the rules of Quebec private international law was submitted to the Office by its private international law committee, ... The content of this report was amended slightly and was incorporated two years later into Book Nine of the Draft Civil Code. [Cites]. The structure of Book Nine attests to the Quebec legislature’s adoption of the intermediate approach of English private international law ... The commentaries shed light on the distinction between rules of jurisdiction governing purely domestic disputes and those that, because of a foreign element, form part of private international law. ...” [¶¶ 17‑20].

“Given that domestic disputes are governed by the general provisions of Quebec domestic law, there is no reason to apply the rules relating to the international jurisdiction of Quebec authorities to a dispute that involves no foreign element.” [¶¶ 23‑24].

“This foreign element ... must be ‘[a] point of contact which is legally relevant to a foreign country’, which means that the contact must be sufficient to play a role in determining whether a court has jurisdiction.”

“...[O]ur private international law is based on English law. ... North and Fawcett define private international law as follows: ‘Private international law, then, is that part of law which comes into play when the issue before the court affects some fact, event or transaction that is so closely connected with a foreign system of law as to necessitate recourse to that system.’ ...”

“The connecting factor and foreign element concepts are recognized in Quebec private international law, too: These two concepts can, therefore, overlap. A connecting factor is a tie to either the domestic or a foreign legal system, whereas the foreign element concept refers to a possible tie to a foreign legal system. Thus, in a personal action brought in Quebec, the fact that a defendant is domiciled in Quebec is a connecting factor with respect to the Quebec legal system but not a foreign element, whereas the fact that a defendant is domiciled in England will be considered both a connecting factor with respect to English jurisdiction and a ‘foreign element’ with respect to the Quebec legal system.”

“A state is free to determine what connecting factors or foreign elements it considers to be relevant. In Quebec, the legislature adopted a number of factors already found in the main Western private international law systems. ....”

“Article 3148 provides in part: ‘In personal actions of a patrimonial nature, a Québec authority has jurisdiction where (1) the defendant has his domicile or residence in Québec; (2) the defendant is a legal person, is not domiciled in Québec but has an establishment in Québec, and the dispute relates to its activities in Québec; (3) a fault was committed in Québec, damage was suffered in Québec, an injurious act occurred in Québec or one of the obligations arising from a contract was to be performed in Québec; (4) the parties have by agreement submitted to it all existing or future disputes between themselves arising out of a specified legal relationship; (5) the defendant submits to its jurisdiction. However, a Québec authority has no jurisdiction where the parties, by agreement, have chosen to submit all existing or future disputes between themselves relating to a specified legal relationship to a foreign authority or to an arbitrator, unless the defendant submits to the jurisdiction of the Québec authority.’” [ ¶¶ 26‑30].

“It can be seen that what these traditional factors have in common is a concrete connection with Quebec; if private international law is invoked, it can be assumed that there is an equally concrete foreign element that can serve as a basis for applying a foreign legal system. ...”

“...[T]he title on the conflict of laws ... [makes] it possible for the parties to provide that a purely domestic juridical act will be governed by the law of a foreign jurisdiction. However, immediately after recognizing the autonomy of the will of the parties where the designation of the applicable law is concerned, the legislature hastened to limit it in the second paragraph of the provision. Thus, in the absence of a foreign element, a juridical act remains subject to the mandatory rules that would apply if no law were designated. ...” [¶ 31].

“... [T]he wording of Art. 3111 CCQ is based on that of Art. 3 of the Convention on the Law Applicable to Contractual Obligations (Rome Convention of 1980) which authorizes the ‘[choice of] a foreign law’ where there is no foreign element. It is also conceivable that the determination of the law applicable to a juridical act will at times require a more complex analysis than the one to be made where adjudicative jurisdiction is in issue. ...”

“In the title on the international jurisdiction of Quebec authorities, on the other hand, there is no exception to the foreign element requirement, and it is clear that a court asked to apply the rules of private international law must first determine whether the situation [does involve] a foreign element. This position is consistent with the traditional definition of private international law and with the Office’s intention. It must now be asked whether, in the case at bar, the [mere] choice of arbitration procedure gives rise to a foreign element warranting the application of Art. 3149 CCQ. ...”

“International arbitration law is strongly influenced by two texts drafted under the auspices of the United Nations: the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 330 U. N. T. S. 3 (‘New York Convention’), and the UNCITRAL Model Law on International Commercial Arbitration, U. N. Doc. A/40/17 (1985) (Model Law).”

“The New York Convention entered into force [for Canada in 1986] Article II ... provides that a court of a contracting state that is seized of an action in a matter covered by an arbitration clause must refer the parties to arbitration. At present, 142 countries are parties to the Convention. The accession of this many countries is evidence of a broad consensus in favour of the institution of arbitration.“

“The Model Law ... is a model for legislation that the UN recommends that states take into consideration in order to standardize the rules of international commercial arbitration. The Model Law was drafted in a manner that ensured consistency with the New York Convention: The final text of the Model Law was adopted on June 21, 1985 by the U. N. Commission on International Trade Law (UNCITRAL). ... [T]he UNCITRAL Secretariat states that it: ‘...reflects a worldwide consensus on the principles and important issues of international arbitration practice. It is acceptable to States of all regions and the different legal or economic systems of the world.’ In 1986, Parliament enacted the Commercial Arbitration Act, ... which was based on the Model Law. The Quebec legislature followed suit that same year and incorporated the Model Law into its legislation.” [ ¶¶ 36‑41].

The Model Law, however, has a different status. “... [T]he Model Law is a non‑binding document that the United National (sic) General Assembly has recommended that states take into consideration. Thus, Canada has made no commitment to the international community to implement the Model Law as it did in the case of the New York Convention. Art. 940.6 CCP provides that Title I on arbitration proceedings is to be interpreted in light, where applicable, of the Model Law and certain documents related to it ‘[w]here matters of extraprovincial or international trade are at issue in an arbitration’.” In fact, this [italicized] language came straight from Art. 1492 of the French Code of Civil Procedure. [¶ 46]. ... Quebec authors agree that Art. 940.6 CCP has imported the concept of international arbitration from French law.” [¶ 48].

“The matter‑of‑international‑trade test is different from connecting factors such as the parties’ place of residence or the place where the obligations are performed. ... [T]he test under Art. 940.6 CCP is clearly distinct from the foreign element requirement. Where the Quebec legislature intended different rules to apply, it has made this clear.”

“The rules on arbitration proceedings set out in Title I of Book VII of the [CCP] apply, ... to any arbitration proceeding subject to Quebec law. The parties are free to attribute foreign connections to an arbitration process, in which case the rules of private international law may be applicable. However, an arbitration clause is not, in itself, a foreign element warranting the application of the rules of Quebec private international law. The commentators are unanimous on this point.”

“The neutrality of arbitration as an institution is one of the fundamental characteristics of this alternative dispute resolution mechanism. Unlike the foreign element, which suggests a possible connection with a foreign state, arbitration is an institution without a forum and without a geographic basis. [Cite]. Arbitration is part of no state’s judicial system.. The arbitrator has no allegiance or connection to any single country. [Cite]. In short, arbitration is a creature that owes its existence to the will of the parties alone. [Cite].”

“To say that the choice of arbitration as a dispute resolution mechanism gives rise to a ‘foreign element’ would be tantamount to saying that arbitration itself establishes a connection to a given territory, and this would be in outright contradiction to the very essence of the institution of arbitration: its neutrality. This institution is territorially neutral; it contains no foreign element. Furthermore, the parties to an arbitration agreement are free, subject to any mandatory provisions by which they are bound, to choose any place, form and procedures they consider appropriate. They can choose cyberspace and establish their own rules.”

“It was open to the parties in the instant case to refer to the CCP to base their procedure on a Quebec or U.S. arbitration guide or to choose rules drawn up by a recognized organization, such as the International Chamber of Commerce, the Canadian Commercial Arbitration Centre or the NAF. The choice of procedure does not alter the institution of arbitration in any of these cases. The rules become those of the parties, regardless of where they are taken from.” [¶¶ 49‑52].

“The trial judge saw a foreign element in the fact that [t]he NAF is located in the U.S. The Court of Appeal rejected this conclusion, and the Union has abandoned this argument. ... The place where decisions concerning arbitration services are made or where the employees of these organizations work has no impact on the disputes in which their rules are used.” [¶ 55].

“My [dissenting] colleagues ... nonetheless consider it logical to accept that an arbitration clause, in itself, constitutes a foreign element that can result in application of the provisions on the international jurisdiction of Quebec authorities. Their interpretation has [undesirable ] consequences for agreements other than consumer contracts. ... This interpretation [also] ... implies that the codifiers failed to achieve their objective of ordering the rules in both Book Ten on private international law and Chapter XVIII on arbitration agreements in Book Five.” [¶ 60].

“In enacting Art. 3149 CCQ, the legislature could not have intended to take an obscure approach requiring a decontextualized reading of the Title on the international jurisdiction of Quebec authorities. ... It would not be appropriate to shatter the consistency of the rules on arbitration and those on the international jurisdiction of Quebec authorities by placing all disputes concerning an arbitrator’s jurisdiction within the scope of the rules on the jurisdiction of Quebec authorities regardless of whether there is a foreign element.” [¶ 65].

On the application of Article 3149 CCQ, the majority concludes as follows. “The legal experts who worked on the reform of the Civil Code, the Minister of Justice who was in office at the time of the enactment of the CCQ and many Canadian and foreign authors recognized that a foreign element was a prerequisite for applying the rules on the international jurisdiction of Quebec authorities. The ordering effected in a codification process and the rule that a provision must be interpreted in light of its context require an interpretation of Art. 3149 CCQ that limits it to cases with a foreign element.”

“Since it is important for the Court to maintain the internal consistency of the [CCQ] , the Court should adopt a contextual interpretation that limits the scope of the title on the international jurisdiction of Quebec authorities to situations with a relevant ‘foreign element.’ The prohibition in CCQ Art. 3149 against waiving the jurisdiction of Quebec authorities only applies to that type of case.”

“Arbitration is essentially a neutral institution, so it does not in itself have any foreign element. An arbitration tribunal has only those connections that the parties to the arbitration agreement intended it to have. The independence and territorial neutrality of arbitration are characteristics that must be promoted and preserved in order to foster the development of this institution. At the time a party invoked it, no provision of Quebec legislation barred the arbitration clause.” [¶¶ 3, 66].

As a result, a majority of six Justices allows the present appeal, reverses the Court of Appeal’s judgment, refers Plaintiff Dumoulin’s claim to arbitration and dismisses the motion for authorization to institute a class action.

Citation: Union des Consommateurs c. Dell Computer Corp., Docket: 31067; 2007 CarswellQue. 6310 (Sup. Ct. Can., July 13, 2007).

HUMAN RIGHTS

Inter‑American Court of Human Rights finds State of Colombia liable for massacre of judicial officials looking into activities of local paramilitary groups in January of 1989

On January 18, 1989, 15 judicial employees, including two judges and various technicians, were investigating human rights violations in the district of Santander, in particular the murder of 19 local merchants. A large group of armed men arrived claiming to be members of the Colombian rebel group FARC, and detained the judicial employees. Eventually, the armed men executed the judicial employees at a place called “La Rochela.” Three of them, however, survived. Before leaving the situs of the crime, the armed men painted graffiti on the victim’s vehicles, indicating that guerillas had carried out the murders. It turned out that the armed men belonged to a paramilitary group called “Los Masetos,” allegedly sponsored by area landowners and politicians, and supported by the military.

The lawyer group “Jose Alveras Restrepo” initiated the legal case with a 1997 demand on the Colombian Government. The Inter‑American Commission on Human Rights submitted the case to the Court on March 10, 2006, noting that most of the culpable parties had escaped investigation and punishment. A ruling on this massacre has special importance because the victims were judicial officers who were investigating acts of violence and identifying perpetrators.

The Commission charged Colombia with violating various human rights, including the right to life and its duty to respect human rights. In responding to the charges, Columbia admitted some of the relevant facts. For example, Colombia admitted that the perpetrators acted with the support or acquiescence of government officials.

The Court expressly outlines the grounds for Colombia’s “international responsibility” in this case. It has been the jurisprudence of the Court that international responsibility arises when a state violates its general obligations under the Inter‑American Convention on Human Rights. A state’s international responsibility may arise out of acts or omissions by any state organ, regardless of where it is in the state’s hierarchy, that violate the Convention. Unlike in criminal law, the culpability, intent, or precise identification of the responsible parties is irrelevant. It suffices to show that the state supported or acquiesced in the human rights violations at issue (¶¶ 66‑68).

Turning to the case at bar, the Court finds Colombia internationally responsible for the human rights violations in this case on the following grounds. First, Colombia had set up a legal framework that was the basis for armed groups such as the one at issue. Decree 3398 of 1965 (implemented through Law 48 of 1968) permitted civilians to obtain military weapons to act as military self‑defense groups. These “self‑defense” groups later evolved into paramilitary groups.

Second, when the present human rights violations took place, that legal framework was still in existence. Third, the human rights violations occurred in the context of rules and methods for fighting guerillas issued by the highest authority of the armed forces. Military rules stated that military officials should organize the civil population in self‑defense groups and exercise control over them.(Mil. Regulations “Combat Manual Against Bandits and Guerillas” of June 25, 1982; “Counter‑Guerilla Combat Regulations” of April 9, 1969, approved by the General Command of the Military Forces).

Other findings included that members of the military had promoted the establishment of the paramilitary “Los Masetos,” and continued to support the group; that the army used members of “Los Masetos” as guides and provided them with military weapons; that Colombia admitted that, in the La Rochela massacre, “Los Masetos” acted with the support and acquiescence of government officials. Colombia also admitted that the victims were investigating crimes allegedly committed by paramilitary groups; that the purpose of the human rights violations in this case was to interfere with the investigation of other human rights violations and to kill the investigators; and finally that Colombia admits that it should have protected the judicial employees (¶¶ 101‑103).

The Court concluded that Colombia must pay $7.8 million to the relatives of the 12 judicial workers. According to commentators, the Court appears to have established a general standard for state liability for acts committed by paramilitary groups. The Court had previously issued decisions regarding state responsibility for paramilitary killings in Colombia, namely the Puerto Bello and the Mapiripan Massacre cases.

Citation: Inter‑American Court of Human Rights, Case of the Rochela Massacre v. Colombia. Merits, Reparations and Costs. Judgment of May 11, 2007 (Only in Spanish) Series C No. 163. The decision is available in Spanish on the website of the Inter‑American Court of Human Rights at www.corteidh.or.cr. There are many comments on this decision available in English on the internet, for example at www.opinionjuris.org, www.forcolombia.org, and www.colectivodeabogados.org.

SOVEREIGN IMMUNITY

Where American investors sued Bank of China for making unauthorized distributions at request of Americans’ Chinese agent, Tenth Circuit holds that Bank of China’s statutory sovereign immunity does not extend to transfers made to U.S. bank

Orient Mineral Company (OMC) is a Nevada corporation, whose Chairman is Art Wilson. In 1994 Wilson met Yue Xiaoqun, a Chinese citizen working in the U.S. Yue convinced Wilson to invest in Chinese gold mines and was made a director and shareholder in OMC. In 1995, Yue and Wilson formed Wil‑Bao Mineral Company (WBMC) under Chinese law as a joint venture of OMC and Jiaocun Gold Company, which the city of Jiaocun, China wholly owned.

R. Ellsworth McKee, a U.S. citizen, lent $3 million to OMC for WBMC’s benefit. To maintain control of the funds, Preston Jones, an associate of McKee, joined the board of directors. The $3 million investment went to a holding account in the Lingbao sub‑branch of the Bank of China (Defendant); the Peoples Republic of China wholly owned and operated it. Defendant ran a branch in New York City. OMC issued a letter and resolution, signed by the president of OMC and bearing the corporate seal; they named Preston Jones as the “sole and exclusive agent to approve, direct, or otherwise designate the funds on deposit with the Bank¼” [Slip op. 5].

At Yue’s request the Bank opened accounts for WBMC. Believing that he retained sole authority to authorize expenditures greater than $25,000, Jones authorized the transfer of the funds from the OMC account to WBMC’s accounts. On August 22, 1996 the Bank wired $400,000, at Yue’s request, to the account of his wife, Saren Gaowa, at Utah’s First Zions National Bank.

When they found out about this transfer, OMC and WBMC (Plaintiffs) sued Defendant in Utah district court. Defendant asserted immunity under the Foreign Sovereign Immunities Act of 1976, as amended. The court found it had jurisdiction to the extent that they pertained to the $400,000 transfer to the Utah bank, but ruled for Defendant on the merits of the claims. Plaintiffs appealed the decision to the U.S. Court of Appeals for the Tenth Circuit and Defendant cross‑appealed. The Court affirms.

Explaining its decision, the Court declared: “¼[T]he parties also do not dispute that the Bank is engaged in commercial activity. [Cite]. Nevertheless, there must also be a sufficient nexus between the [Defendant]’s commercial activity and the U. S..” [Slip op. 12].

“In this case, although Plaintiffs asserted at least five different theories of recovery against the [Defendant], all of their claims are based on the Bank’s alleged breach of a duty, created contractually or otherwise, (1) to preserve the funds [OMC] wired to its temporary account in the [Defendant]’s [WMBC] sub‑branch, and to disburse those funds only according to Jones’ directions; and (2) to require Jones’ authorization for any withdrawals from [WBMC’s] accounts in an amount greater than $25,000.” [Slip op. 13].

“Plaintiffs assert several ways in which the [Defendant] carries on commercial activity in the United States. First, the [Defendant] drafted a letter, dated May 14, 1996, promising to keep safe the funds [OMC] wired to its temporary account in the Bank’s Lingbao sub‑branch until [OMC’s] representative, Jones, arrived in China. With this letter, according to Plaintiffs, the [Defendant] established an ongoing business relationship with [OMC].” [Slip op. 14].

“But the evidence established that it was Yue, a director of [OMC] and [WBMC’s] manager, who made arrangements with the [Defendant], in China, for [OMC] to wire $3 million into a temporary account in the [Defendant]’s Lingbao sub‑branch. The Bank provided Yue with such a letter, dated May 14, 1996, written in Chinese and addressed to Yue¼ [One] Eck delivered [the above letter and resolution] in person to the [Defendant]’s Lingbao sub‑branch when Eck accompanied Jones to China. This series of events can not be construed as the [Defendant]’s carrying on commercial activity in the U. S.” [Slip op. 14].

“Plaintiffs next argue that the [Defendant] carries on commercial activity in the U.S. by operating a branch Bank in New York City. We agree. But ‘the fact that a foreign sovereign is engaged in commercial activity in the United States does not serve as a license for U.S. courts to entertain all claims against it.’ [Cites].” [Slip op. 14‑15].

“Plaintiffs point to the fact that, when McKee transferred $3 million for [OMC] from an American bank to [OMC’s] temporary account in the [Defendant]’s Lingbao sub‑branch, that wire transfer went through the Bank’s New York branch. And when the [Defendant] transferred [WBMC] funds back to the U.S., as Jones requested, those transfers also may have gone through the New York branch. These connections alone, however, are insufficient to establish subject matter jurisdiction under ... the FSIA’s commercial activity exception because none of Plaintiffs’ claims against the [Defendant] are ‘based upon’ these particular transactions.” [Slip op. 15].

“Plaintiffs further argue that the [Defendant]’s transfer of $400,000 of [WBMC] funds to the bank in Utah amounts to the Bank’s carrying on commercial activity in the U.S. ¼ However, we do not believe this single act constitutes ‘commercial activity carried on in the U. S.’ by the [Defendant] under the first clause of § 1605(a)(2). The Bank acted within China, not the U.S. The consequence of the act was felt in the U.S. when the Utah bank received the funds but the Utah bank was not acting as an agent of the Bank. Rather, it was acting as an independent, arms‑length entity in an ordinary commercial transaction. So, the Utah bank’s act in the U.S. cannot be attributed to the [Defendant].” [Slip op. 15‑16].

“Section 1605(a)(2)’s second clause applies when ‘the action is based . . . upon an act performed in the U.S. in connection with a commercial activity of the foreign state elsewhere.’ Under this clause, a ‘material connection must exist between the act performed in the U.S. and plaintiff’s cause of action.’ [Cites]. For the same reasons stated above, however, Plaintiffs here have failed to establish that their claims are based upon any action the [Defendant] took in the U.S.” [Slip op. 16].

As to whether the Defendant’s actions caused a direct effect in the U.S. the Circuit Court stated that, “¼The [Defendant]’s transfer of $400,000 of [WBMC’s] funds from its account in the [Defendant]’s Lingbao sub‑branch to the Utah bank had a direct effect in the U.S. — the Utah bank received $400,000 on Gaowa’s behalf.”

“The [Defendant] suggests that the ‘direct effect’ occurring in the U.S. must be ‘legally significant’ in order for an American court to have subject matter jurisdiction ... There are courts that have adopted a ‘legally significant act’ test when applying § 1605(a)(2)’s third clause.” [Slip op. 17].

“We reject engrafting this additional requirement ... for many reasons. First, the statute’s text does not require it. [Cites]. Second, requiring legally significant acts to occur in the U.S. would render the second and third clauses of § 1605(a)(2) redundant ... [Cites]. Third, the phrase ‘legally significant act’ is vague and ambiguous, adding nothing to the analysis. Thus, we will simply apply the third clause of § 1605(a)(2) as it is written, without judicial adornment.”

“In this case, it is clear that the Bank’s commercial activity in China produced a ‘direct effect’ in the U.S. – the transfer of $400,000 to a Utah bank¼the Bank took affirmative action that caused an effect in the U.S. – money was received in the U.S. And that effect was direct, that is, it followed as ‘an immediate consequence’ of the Bank’s permitting Yue to withdraw more than $400,000 from Wil‑Bao’s Chinese bank account without Jones’s authorization¼” [Slip op. 18‑19].

Citation: Orient Mineral Co. v. Bank of China, 2007 WL 3088281, No. 05‑4037 (10th Cir. 2007).

SOVEREIGN IMMUNITY

In case of RICO claim alleging money‑laundering scheme between French bank and government run Congolese Petroleum Company to avoid interference from Congo’s creditors, Second Circuit holds that Congolese Petroleum Company is statutorily immune from suit

Kensington International Limited (Plaintiff) is a Cayman Islands corporation managed by Elliott International Capital Advisors, Inc., a U.S. corporation. Between 1996 and 2001, Plaintiff obtained the “right, title and interest” as lender under certain loan agreements executed in the 1980s. The Republic of the Congo had borrowed over $30 million dollars but has not made any installment payments since October 1985. Plaintiff obtained judgments against Congo in an English court to enforce the debt obligations, amounting to about $100 million, but Congo has not paid anything on these judgments.

Société Nationale Des Petroles Du Congo (SNPC) is an oil company, which is principally run by the Republic of the Congo. Bruno Jean‑Richard Itoua was chairman and director of SNPC at all times relevant to this appeal. BNP Paribas S.A. (BNP) is a French bank. On May 27, 2005, Plaintiff filed a RICO action in federal court against SNPC, Itoua and BNP. Plaintiff alleges that Defendants conspired to divert oil revenues from the Republic of Congo into the pockets of powerful Congolese public officials, while at the same time protecting both the oil and the oil revenues from seizure by legitimate creditors.

Plaintiff further alleges that BNP loaned money to SNPC in exchange for future oil deliveries. Plaintiff alleges that the value of the oil pledged was far in excess of the money loaned by BNP, and that this overcollateralization served to shield a substantial portion of Congo’s oil revenues from both oversight and attachment by creditors. Plaintiff further charges that the parties designed these prepayment transactions to enable BNP to deliver Congo’s oil to buyers and to send the proceeds to the Congolese President without interference from Congo’s unpaid creditors.

SNPC and Itoua moved to dismiss on a variety of grounds including immunity under the Foreign Sovereign Immunities Act (FSIA). The District Court denied the motions holding that their activities fell within the “commercial activities” exception to FSIA. SNPC and Itoua appealed to the U.S. Court of Appeals for the Second Circuit. That Court reverses the district court with respect to SNPC, vacates the district court’s ruling with respect to Itoua and remands the question of Itoua’s right to invoke immunity under the FSIA.

“The first prong of the commercial activities exception applies if the Plaintiff’s action is ‘based upon a commercial activity carried on in the United States by the foreign state.’ 28 U.S.C. § 1605(a)(2).” [Slip op. 7].

“¼We cannot agree with [Plaintiff]’s position that its action is ‘based upon’ the alleged acts in the U.S. merely because those acts satisfy the interstate commerce element of the RICO statute¼the [FSIA’s] ‘based upon’ element requires a ‘degree of closeness between the acts giving rise to the cause of action and those needed to establish jurisdiction that is considerably greater than common law causation requirements.’” [Slip op. 8].

“The requisite nexus does not exist between SNPC’s commercial activity in the U.S. – the shipment of oil and the premium payments – and the gravamen of [Plaintiff]’s complaint. These acts in the U.S. had no bearing on [Plaintiff]’s ability or inability to recover the money owed by Congo under the loan agreements. As [Plaintiff]’s complaint makes clear, its claims arise from the alleged scheme to use ‘excessive over collateralized’ oil loans to thwart legitimate creditors for the financial benefit of government officials. The gravamen of [Plaintiff]’s complaint therefore is SNPC’s entering into the prepayment agreements with BNP. It is these agreements that are at the core of the alleged scheme to hide assets and prevent oil revenues from being used to satisfy debts held by legitimate creditors. This scheme would have the same alleged effect on [Plaintiff]’s ability to collect on its debt even if all of the oil shipments had been to destinations outside the U.S. or if the premium payments had been made through BNP’s Paris office instead of its New York branch.” [Slip op. 8‑9].

“[Plaintiff] has failed to show how the oil shipments and premium payments, rather than the execution of the prepayment agreements themselves, form the basis of its action. Furthermore, it is clear that the prepayment agreements themselves have no connection to the U.S. As the undisputed affidavit presented by BNP established, these agreements were negotiated in France, written in French, apply to foreign entities, are governed by French law, and specify France as the exclusive jurisdiction to resolve disputes arising out of those agreements.”

“The second prong of the commercial activities exception applies if the plaintiff’s action is ‘based . . . upon an act performed in the U.S. in connection with a commercial activity of the foreign state elsewhere.’ 28 U.S. C. § 1605(a)(2) ¼ Here, [Plaintiff] has not argued that any non‑commercial acts performed by SNPC in the U.S. allegedly formed the basis of its complaint. Accordingly, this prong of the commercial activities exception is also inapplicable.” [Slip op. 9].

“The third prong of the commercial activities exception applies when the plaintiff’s action is ‘based . . . upon an act outside the territory of the U.S. in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the U. S.” 28 U.S. C. § 1605(a)(2).”

Accepting as true [Plaintiff]’s allegation that SNPC executed an elaborate scheme to thwart legitimate creditors from collecting on debts owed by Congo by ‘stealing’ oil and engaging in ‘straw men’ transactions to keep the oil revenue away from creditors, we cannot conclude that these actions had a ‘direct’ or ‘immediate’ consequence in the U.S. The record does not indicate that the prepayment agreements required performance in the U.S. [Cites]. Nor does the record indicate that [Plaintiff] has suffered harm felt in the U.S. [Plaintiff] is a foreign corporation and thus any alleged injury it suffered occurred outside the U. S.” [Slip op. 10].

“[T]he financial losses allegedly suffered by [Plaintiff], a foreign corporation that is not present in the U. S., do not meet the ‘direct effect in the U.S. standard. [Plaintiff] contends that the ‘direct effect’ in the U.S. is the interference with a judgment obtained by [Plaintiff] in another lawsuit in the [New York] District Court ...– against the Republic of the Congo – which recognized the validity of the foreign judgment Kensington had obtained in London¼ Thus, according to [Plaintiff], SNPC has ‘breached a contract’ requiring ‘performance in New York.’ [Slip op. 11].

“We reject [Plaintiff]’s assertion that the legal judgment at issue here is equivalent to a private contract that requires performance in New York. This judgment does not have a ‘place of performance.’ There is no requirement that repayment of this debt be made in New York. Payment could come from anywhere and take any form. In addition, the judgment is against the Republic of the Congo, not SNPC or Itoua. The New York judgment placed no obligations or responsibilities on SNPC or Itoua to perform any act, let alone one in the U.S. [A]ccepting [Plaintiff]’s rationale would substantially narrow the scope of the FSIA. The threshold for recognition of a foreign judgment is not high.” [Slip op. 12].

The Circuit Court than addressed the question of whether individual officials enjoy sovereign immunity under the FSIA. “The U. S., which submitted an amicus brief in this case at the request of the Court, contends that these definitions do not encompass individual officials, and thus Itoua is not entitled to invoke the protections of the FSIA.”

“[I]f the FSIA applies to Itoua, then, like SNPC, he is immune from this suit and should be dismissed from the case. Accordingly, we vacate the district court’s decision with respect to Itoua and remand the case to the district court to address in the first instance (1) under what circumstances, if any, the FSIA applies to individuals; and (2) whether Itoua has demonstrated the existence of such circumstances.” [Slip op. 14].

Citation: Kensington International Ltd. v. Itoua, 2007 WL 3024817, No. 06‑1763‑cv (2d Cir. 2007).

SOVEREIGN IMMUNITY

In contract litigation, Seventh Circuit rules [1] that company owned by Belarusian government is subject to jurisdiction of U.S. courts to enter contempt order where its contract agrees to arbitrate in U.S. to be governed by Illinois law and [2] but that service of process upon Belarusian embassy was invalid under Vienna Convention on Diplomatic Relations

In 1992, Integral Research & Development Corp. (Defendant), a company wholly owned by the Belarusian government, entered into an “Exclusive Sales Agreement” with Digital Devices, Inc. (DDI). DDI was to be the exclusive sales and marketing agent in the United States for Defendant’s products. Two years later, DDI transferred the rights under the agreement to Autotech Technologies L.P. (Plaintiff). In 1996, Plaintiff filed suit in the U.S. District Court for the Northern District of Illinois against Defendant, alleging breach of contract, fraud, and violation of the Racketeer Influenced and Corrupt Organizations Act (RICO). Defendant counterclaimed for fraud and RICO violations.

On April 3, 1997, Plaintiff and Defendant agreed to dismiss the federal suit while retaining the court’s jurisdiction to enforce the Agreed Order. The Agreed Order prevented Defendant from making direct or indirect sales in the U. S., Canada, or to Mexican subcontractors.

Eight months later, Plaintiff moved to have Defendant held in contempt of the Order. It claimed that Defendant was selling goods to a company run by an individual called Art Scornavacca. The court granted the Motion for contempt and fined Defendant $5,000 per day. The Defendant appeals.

The U.S. Court of Appeals for the Seventh Circuit finds that subject matter jurisdiction was proper for both the original case and the contempt proceeding.

The Circuit Court first addressed subject matter jurisdiction under the Foreign Sovereign Immunities Act (FSIA), 28 U.S. C. §§ 1330. “Although normally parties cannot consent to federal jurisdiction, the FSIA presents a special case, ... The statute makes immunity from suit the general rule for foreign states, see § 1604, but, perhaps more importantly, § 1605 provides for exceptions from that general rule.”

“At least two of those exceptions readily apply to this litigation. The first, set out in § 1605(a)(1), is waiver; the other, found in § 1605(a)(2), is for commercial activities carried on in the United States, or carried on elsewhere with a direct effect in the United States. Several consequences flow from any decision that an exception to immunity applies: first, the district court has subject matter jurisdiction over the claim, § 1330(a); second, it has personal jurisdiction over the state, § 1330(b); and third, the foreign sovereign (or, as here, its instrumentality) must defend the case on the merits. [Cite].”

“[Defendant] never filed a piece of paper proclaiming that it was waiving its sovereign immunity, but it did so implicitly in a number of ways. It never raised an immunity defense prior to these contempt proceedings – not in a responsive pleading, not in any other motion, and not in the Agreed Order. Failing to raise sovereign immunity and then participating fully in a court proceeding amounted to an implied waiver of immunity. [Cite].” [Slip op. 6].

“[Defendant] also signaled a waiver of its immunity by agreeing in its original contract with [DDI] to arbitrate in the [U. S.]and by agreeing to a contract governed by Illinois law. [Cite]. The underlying contract was all about marketing [Defendant’s] products in the U.S. It therefore deals with commercial activity undertaken in the U.S. by an instrumentality of a foreign sovereign. That is all that § 1605(a)(2) requires.”

“[Defendant] suggests that the FSIA does not authorize federal district courts to enter monetary contempt sanctions against foreign sovereigns. This rule, it asserts, implicates not just the kind of remedy the court may order, but the court’s basic competence, even if the court has jurisdiction over the underlying suit. [Defendant] argues, ‘absent a clear and specific waiver of sovereign immunity from contempt itself, a district court lacks the jurisdiction to enforce its orders through monetary contempt proceedings against a foreign sovereign.’”

“We cannot accept this degree of fine‑tuning. Once a court is entitled to exercise subject matter jurisdiction over the suit, it has the full panoply of powers necessary to bring that suit to resolution and to enforce whatever judgments it has entered. From our common‑law ancestors forward, one of the most important of those powers is the power to punish contempt of court. [Cite].” [Slip op. 7].

The Court then addresses the sufficiency of the service of process as to the contempt charge. “The question here is whether the notice given to [Defendant] – service on the Belarusian ambassador – was sufficient both under the FSIA and for due process purposes.” [Slip op. 11]

“Here, the record contains no indication that [Defendant] ever received notice of the contempt proceeding. All we have are summary allegations from its adversary in the transcript and in a motion, neither of which can substitute for proof of notice. The only hint of service in the record is a copy indicating that there was service on the ambassador from Belarus¼” [Slip op. 12].

“[Plaintiff]’s attempt to serve [Defendant] through the Belarusian embassy does not fill this gap. In fact, service through an embassy is expressly banned by an international treaty to which the U.S. is a party .... The Vienna Convention on Diplomatic Relations, Apr. 18, 1961, 23 U.S. T. 3227; T. I. A. S. 7502; 500 U. N. T. S. 95, prohibits service on a diplomatic officer.” [Slip op. 13].

Citation: Autotech Technologies LP v. Integral Research & Development Corp., 499 F.3d 737 (7th Cir. 2007).

WORLD TRADE ORGANIZATION

WTO Panel issues mixed ruling in Japan‑Korea dispute over Japanese restrictions on imports of Dynamic Random Access Memories (DRAMS) from Korea

On July 13, 2007, the Dispute Settlement Body (DSB) of the World Trade Organization (WTO) issued its report in the matter of Korea’s complaint against Japan regarding the latter’s imposition of countervailing duties on certain Dynamic Random Access Memories (DRAMs) from Korea. The dispute arose out of Japan’s Investigating Authorities’ (the JIA) investigation of Korean DRAMs made by Hynix Semiconductor, Inc. (Hynix). JIA concluded that certain debt restructuring programs between Hynix and its creditors on October 2001 and December 2002 were improper subsidies. JIA calculated a countervailing duty rate of 27.2 % on imports of DRAMs from Hynix. The United States and EU asked to join the consultations in March 2006. Japan accepted both requests.

According to Korea, numerous errors in the Japanese response violated various articles of the Agreement on Subsidies and Countervailing Measures (the SMC Agreement) and the GATT 1994. For instance, the JIA allegedly failed to properly calculate the benefit and failed to base its final injury determinations on positive evidence.

The Panel found various violations of Japan’s obligations under the SCM Agreement. In particular, the Panel held (1) that Japan improperly found government “entrustment or direction” of the Four Creditors to take part in the December 2002 restructuring; (2) that Japan erred in finding that the December 2002 restructuring benefitted Hynix; (3) that Japan mistakenly calculated the amount of benefit conferred by the October 2001 and December 2002 restructurings; (4) that Japan improperly used methods to calculate the amount of benefit that were not provided for in its national legislation or implementing regulations; and (5) that Japan incorrectly levied countervailing duties in 2006, despite the JIA finding that some of the subsidies applied only from 2001 through 2005. (See section 8.2 of the Panel Report).

The Panel also rejected several of Korea’s claims. These included (1) that Japan improperly treated certain Hynix creditors as “interested parties”; (2) that Japan erred in finding government “entrustment or direction” of the creditors to take part in the October 2001 restructuring; and (3) that Japan mistakenly concluded that the October 2001 restructuring conferred a benefit on Hynix. (See section 8.1 of the Panel Report).

Citation: Japan – Countervailing Duties on Dynamic Random Access Memories (DRAMs) from Korea (DS 336) (July 13, 2007). Panel report is available on WTO website at “www.wto.org”; “WTO issues mixed ruling in Korea‑Japan chip dispute,” Siliconvally.com, July 13, 2007. See also 2005 International Law Update 29; 2005 International Law Update 111.

Indonesian high court awards defamation damages against Time Magazine. In its May 1999 cover story, the Asian edition of Time Magazine reported that the family of former Indonesian ruler, Haji Mohammad Suharto, had accumulated $15 billion dollars during his 32‑year rule. The story claimed that the family had transferred most of these funds from Switzerland to Austria before riots and pro‑democracy charges of widespread rights abuses led Suharto to step down in 1998. Suharto had filed a defamation suit in the Central District of Jakarta and later the Jakarta High Court, both of which had ruled in Time’s favor. A panel of three Supreme Court judges (including a retired general who rose to high rank under Suharto’s regime), however, reversed the lower courts on August 31, 2007. It also assessed $106 million in damages. Time Inc., the magazine publishing division of media giant, Time Warner Inc., owns Time Magazine. Prior to the recent ruling, Time Inc. had asserted that it had based its article on four months of investigations in 11 countries. These had allegedly disclosed an intricate network of Suharto’s corporate investments, bank transfers and property holdings in Switzerland, Uzbekistan and Nigeria. Citation: The Associated Press (online), Jakarta, Indonesia, Tuesday, September 11, 2007 at 1:35:52Z (Ali Kotarumalos, AP writer).

Federal District Court blocks transfer of Guantanamo detainee to Tunisia. On Tuesday, October 9, the Hon. Gladys Kessler, U.S. District Judge for the District of Columbia unsealed her order that preliminarily enjoined the U.S. Defense Department (DOD) from transferring Mohammed Abdul Rahman, a Guantanamo Bay detainee, back to Tunisia where he allegedly faces torture. Judge Kessler declared that a Tunisian tribunal had convicted Mohammed Abdul Rahman, who has a heart condition, in absentia and had sentenced him to 20 years in prison. Apparently there were convincing allegations that he would face torture there and this would constitute “the devastating and irreparable harm he is likely to face if transferred.” In her ruling, Judge Kessler stressed that “it is imperative” that her court “protect its jurisdiction until the Supreme Court issues a definitive ruling.” A DOD spokeswoman said that the U.S. tries to avoid repatriating detainees to countries where they will probably endure torture. Allegations of torture, she said, prompt investigations before sending detainees to the allegedly abusing nation. Citation: The Associated Press (online); San Juan, Puerto Rico; Wednesday, October 10, 2007 at 01:01:12Z (Andrew O. Selsky, AP Writer).

European Union commits to joining European Human Rights Court. Over the years, each of the EU’s 27 Member States have already joined the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR). But an aggrieved party cannot now invoke the ECHR against the EU as such or its governmental agencies and institutions at the European Court of Human Rights in Strasbourg, the judicial branch of the forty‑seven member Council of Europe. Citizens of these 47 nations may bring actions in the Human Rights court along with any citizens of a third country with a human rights grievance against a Member State. Such a party can sue the EU at the European Court of Justice in Luxembourg, but that court typically deals with the structural provisions of the Treaty of Rome as amended, and its implementing regulations and decisions rather than with human rights violations. In the European Union Reform Treaty, endorsed on October 19 at a summit in Lisbon, Portugal, and expected to come into force in 2009, the EU as a legal entity agrees to sign up to the Human Rights Convention. According to Council of Europe officials, that means that EU institutions can be held to account in court cases involving alleged civil liberties breaches. Citation: The Associated Press (online); Strasbourg, France; Friday, October 19, 2007 at 10:21:19Z.

European Union ministers fail to approve three biotech products from U.S. On September 26, Agriculture ministers from nine EU countries declined to approve three genetically modified (GM) varieties of maize for use on the European market. Deep divisions continue to exist among EU nations over whether biotech crops pose a risk to human or animal health. The EU’s food safety authority, EFSA, had cleared the products . Several U.S. companies, Pioneer Hi‑Bred International Inc. and Mycogen Seeds jointly developed and marketed two of the GM crops. U.S. biotech firm Monsanto Co. developed the third. They designed these products to resist insects like the corn root worm and to tolerate herbicides. Austria, Malta, Poland, Hungary, Slovenia, Greece, Latvia, Lithuania and Luxembourg reportedly voted “No” while France and Italy abstained, because of public health and environmental concerns. Britain, Germany, the Netherlands and Sweden were among those who voted “Yes.” In the coming weeks, it will be up to the EU Commission to decide whether or not to approve the three products. Citation: The Associated Press (online), Brussels, Belgium; Wednesday, September 26, 2007 at 13:27:18Z.

U.S. ratifies Western and Central Pacific Fisheries Convention. On June 27, 2007, the United States completed the process becoming a member of the 2004 Western and Central Pacific Fisheries Commission. The Commission is a treaty‑based organization set up to conserve and manage tunas and other highly migratory fish stocks across a vast range of the Pacific Ocean. On June 27, the U.S. Embassy in New Zealand, delivered the U.S. instrument of ratification for the Western and Central Pacific Fisheries Convention to the Government of New Zealand, which acts as the Depositary for the Convention. The U.S. officially became a Contracting Party to the Convention and a member of the Commission on July 27, 2007. The U.S. submission also included a declaration authorizing American Samoa, Guam and the Northern Mariana Islands to take part in the work of the Commission as Participating Territories. Some of the members include Australia, Canada, China, Japan, New Zealand and Pacific Island States. While the Commission focuses mainly on tuna species, it also works to reduce the accidental catch of sea birds and sea turtles in commercial fisheries and has adopted measures to improve compliance with, and enforcement of, fisheries regulations. Citation: Media Note # 2007/528, Office of Spokesman, U.S. Department of State, Washington, D. C., released on June 28, 2007.

Panama and U.S. sign agreement to promote trade. On June 28, the U.S. and Panama signed the United States‑Panama Trade Promotion Agreement, a comprehensive agreement that will eliminate tariffs and other barriers to trade in goods and services between the U.S. and Panama. The U.S. is the leading source of imports and Panama’s leading export market. Panama represented a market of about $2.5 billion for U.S. exports in 2006, and, in 2005, received about $5.1 billion in U.S. foreign direct investment. As Panama moves forward with its important Canal expansion and poverty reduction initiatives, this historic trade agreement will generate the jobs and growth necessary to complement those efforts and secure a more prosperous future for both nations. The State Department looks forward to working with Congress and hopes for prompt approval of this and the other pending free trade agreements. Peru, Colombia, Panama, and the Republic of Korea embrace democratic governance and open markets as a means of creating economic opportunity and freedom for their people. They are longstanding partners who share our values and have chosen to strengthen economic ties with the U.S. Citation: Press Statement #2007/525, U.S. Department of State, Office of Tom Casey, Deputy Spokesman, Thursday, June 28, 2007.

Japan court rejects New York fund’s challenge of poison pill defense by Japanese takeover target. On August 7, Japan’s Supreme Court ruled in favor of Bull‑Dog Sauce Co.’s “poison pill” set up last month to counter New York‑based Steel Partners Japan Strategic Fund’(SPJ)’s hostile takeover bid by diluting SPJ’s existing stake in Bull‑Dog. Generally, a “poison pill” is any financial tactic or provision a company may employ to make its unwanted takeover prohibitively expensive or otherwise less financially desirable. Last month, SPJ asked Japan’s highest court to block Bull‑Dog’s anti‑takeover plan, claiming that it was discriminatory and contrary to Japanese law. Japan’s public policy, however, has long disapproved of corporate takeovers that bring about heated showdowns in favor of management by consensus. Japanese critics typically characterize funds like SPJ as short‑term opportunists, whose plan is to drive up stock prices and then to cash in. Nevertheless, under the pressure of foreign investors, mergers and acquisitions in Japan by 2006 had increased over tenfold the number in 1985. Since today’s Japanese shareholders seem less accepting of relatively low dividends and share prices, Japanese management may feel pressured to raise dividends, buy back shares and otherwise boost stock prices. Citation: The Associated Press (online), Tokyo, Japan, Tuesday, August 7, 2007 at 08:28:29Z.