2008 International Law Update, Volume 14, Number 10 (October)

2008 International Law Update, Volume 14, Number 10 (October)

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

ARBITRATION (INVESTMENT DISPUTES)

After ICSID arbitration, English court granted freezing orders against the Republic of Bolivia. Court of Appeal finds that arbitration proceedings were not “proceedings” for the purpose of Civil Jurisdiction and Judgments Act 1982 to permit interim relief to preserve the outcome of the arbitration proceedings

Under the auspices of the World Bank, a large number of nations signed the Convention on the Settlement of Investment Disputes between States and Nationals of Other States [in force October 14, 1966; 17 U.S.T. 1270; T.I.A.S. 6090; 575 U.N.T.S. 159]. It created the International Center for Settlement of Investment Disputes (ICSID). While ICSID is based in Washington DC, arbitrations conducted under its auspices are not subject to any national law. The number of ICSID arbitrations has grown greatly in recent years as a result of the widespread use of bilateral investment treaties (BITs). Under the BITs, Contracting States agree in advance that nationals of the other state party will have a right of recourse to ICSID arbitral procedures and tribunals to resolve investment disputes. One such agreement, the Agreement on Encouragement and Reciprocal Protection of Investments between Netherlands and Bolivia, entered into force on November 1, 1994. This is an appeal from a decision of the London High Court which set aside freezing orders granted in favor of the Appellant (ETI) against the Republic of Bolivia and (Entel), the Respondents.

In 1995, ETI, a Dutch company, made a series of agreements with the Bolivian Government and Entel. At the time, the latter was a Bolivian state‑owned telecommunications company. The deals brought about [1] the privatisation of Entel, [2] ETI’s becoming owner of 50% of Entel’s shares, and [3] ETI’s receiving management control of Entel.

According to ETI, by December 2007, Entel had made investments in infrastructure and technology of more than US$741 million and was employing 1,500 Bolivians. In May 2007, ABN AMRO Bank N.V. (ABN AMRO) valued Entel’s business at between US$587 million and US$650 million. The result was that ETI’s interests amounted to between US$294 million and US$325 million.

In June 2006, however, Bolivia proclaimed an extensive National Development Plan. It entailed the re‑nationalisation of various formerly state‑owned companies which had become private during the 1990s. In ETI’s view, the Bolivian government began taking measures that would reduce the value of ETI’s investment in Entel; ETI also was afraid that the government planned to expropriate its interest in Entel without paying fair compensation. In April 2007, the Bolivian government did repeal several earlier decrees dealing with the privatization of Entel.

ETI filed a request for arbitration against Bolivia at the ICSID pursuant to the BIT between the Netherlands and Bolivia. ICSID registered ETI’s request which formally started the ICSID arbitration procedures. Bolivia formally denounced the ICSID Convention and refused to take part in the arbitration. The Bolivian government then re‑nationalized Entel. ETI complained that various decrees issued by Bolivia heightened ETI’s fears that that Bolivia was unlikely to compensate ETI for its expropriated shares.

On May 5, 2008, ETI obtained an ex parte order of attachment in a New York city federal court (the SDNY). The order provided that the U.S. Marshal was to levy upon such of Entel’s monies and/or interest on deposit within the court’s jurisdiction including certain time deposits held by Entel with JP Morgan Chase Bank N.A.

ETI then obtained from an English court a “without notice” order against Bolivia and Entel; it purported to freeze certain bank deposits in London pursuant to § 25 of the Civil Jurisdiction and Judgments Act 1982 (CJJA) and the CJJA 1982 (Interim Relief) Order 1997.

Bolivia and Entel successfully applied have the order set aside; the Judge ruled that it had not made its freezing order applicable to the New York proceeding in the sense required by § 25 of the 1982 Act as extended by the 1997 order; § 25. First, neither the Act of itself nor as applied by the 1997 Order reach so far as to make an order in support of ICSID arbitrations; second, the court should not have issued the order because it was “inexpedient” under § 25(2) to grant such relief; third, Bolivia was entitled to claim state immunity and, finally, there was no independent basis for the order against Entel.

ETI appealed to the U. K. Court of Appeal (Civil Division.). It contended, first, that one could properly treat the New York proceedings as “substantive” for the purposes of § 25. Second, it maintained that there was nothing in the 1997 order that blocked its application to arbitration proceedings. Third, ETI pointed out that the subject matter of ICSID arbitration proceedings lay outside the scope of Article 1 of the Judgments Regulation ( Regulation 44/2001EC). The Civil Division disagrees, however, and dismisses ETI’s appeal.

The lead speech then outlines its rationale on the major issues. “The question on this point is whether the nature of the New York proceedings is such as to engage the power of the English court to grant interim relief under Section 25 of the 1982 Act. The background to Section 25 was the decision of the House of Lords in The Siskina [1979] A.C. 210 that the English court did not have jurisdiction to grant interim relief by way of Mareva injunction against a foreign defendant otherwise than in support of a cause of action in respect of which the defendant was amenable to the jurisdiction.”

“Article 24 of the Brussels Convention (now Art. 31 of the Judgments Regulation) provided: ‘Application may be made to the courts of a Contracting State for such provisional, including protective, measures as may be available under the law of that State, even if, under this Convention, the courts of another Contracting State have jurisdiction as to the substance of the matter’.”

“When The Siskina was decided in October 1977 the United Kingdom had not acceded to the Brussels Convention, although negotiations were far advanced, and Lord Diplock, delivering the only speech, refused to exercise what he described (at 260) as a legislative function in order to grant a remedy, similar to that available in other member states, in support of foreign courts which were adjudicating on the merits of the claim.”

“The 1982 Act was enacted primarily (but not exclusively) to enable effect to be given in the United Kingdom to the Brussels Convention. The United Kingdom signed the Convention acceding to the Brussels Convention in 1978, although it did not come into force until 1987.”

“The main purpose of Section 25 was twofold: first, to give the English court jurisdiction to order provisional or protective measures where the courts of another Brussels Convention Contracting State had jurisdiction as to the substance of the matter; and second, to enable subordinate legislation to be enacted to reverse the effect of The Siskina so that interim relief could be granted in England where proceedings were pending abroad in non‑Convention cases, or where there were arbitration proceedings.”

“Section 25 was headed ‘Interim relief ... in the absence of substantive proceedings’ and provided (in its original form as enacted in 1982): ‘(1) The High Court ... shall have power to grant interim relief – ... (2) On an application for any interim relief under subsection (1) the court may refuse to grant that relief if, in the opinion of the court, the fact that the court has no jurisdiction apart from this section in relation to the subject‑matter of the proceedings in question makes it inexpedient for the court to grant it. (3) Her Majesty may by Order in Council extend the power to grant interim relief inferred by subsection (1) so as to make it exercisable in relation to proceedings of any of the following descriptions, namely — (a) proceedings commenced, or to be commenced, otherwise than in a Contracting State; (b) proceedings whose subject‑matter is not within the scope of the 1968 Convention as determined by Article 1; (c) arbitration proceedings.’”

“Section 25 came into effect in 1987 at the same time as the Brussels and Lugano Conventions came into force for the United Kingdom (and it was amended in 1996 in a material respect to which I shall revert in the next section of this judgment), but the powers under Section 25(3) were not exercised until 1997, when the 1997 Order was made. The 1997 Order came into force on April 1, 1997. By contrast with Section.25 itself, the changes to the 1997 Order since it was first enacted are not material, since the changes are solely those consequential on the application of the Judgments Regulation.

“I am satisfied that the foreign proceedings to which Section 25 and the 1997 Order are referring are proceedings on the substance of the matter. First, that appears from the legislative purpose of Section. 25 which was to implement Article 24 of the Brussels Convention, and to reverse the effect of The Siskina. Article 24 itself speaks of the case where the courts of another Contracting State have jurisdiction ‘as to the substance of the matter’. In The Siskina, Lord Diplock referred several times to the court in which the substantive relief was sought: supra at 256. Secondly, the heading of the section refers to the jurisdiction of the English court to grant interim measures ‘in the absence of substantive proceedings’ and legitimate assistance may be derived from that in construing Section 25. [Cite]. Thirdly, the application of Section 25 to foreign substantive proceedings is confirmed by many references in decisions of this Court on Section 25 to the foreign court dealing with the ‘substantive proceedings’ or the ‘substantive dispute.’[Cites]”

“Fourth, in Refco Inc. v. Eastern Trading Co. [1999] 1 Lloyd’s Rep. 159 at 170‑172, this Court laid down a two stage test, which was applied in Motorola Credit Corp. v. Uzan (No.6) [2003] E.W.C.A. Civ. 752. The first stage was to consider whether the English court would grant interim relief if the substantive proceedings were in fact being conducted in England. The second was whether the fact those substantive proceedings were abroad made it inexpedient for the purposes of Section 25(2) to grant the relief.”

“The first test would not be workable if the foreign proceedings were solely for interim relief in support of proceedings in a third country or in arbitration. The English court would simply not be able to apply the first test on the hypothesis that there were proceedings solely for interim relief in England. I accept that this point cannot be taken too far since the court in those cases was only considering the normal case of substantive proceedings abroad.”

“As I have said, the judge accepted that Section 25 was limited to giving the court jurisdiction to assist foreign substantive proceedings, provided the expression ‘substantive proceedings’ was not understood too narrowly, citing the decision of this Court in Kensington International Ltd. v. Congo [2007] E.W.C.A. Civ. 1128; [2008] 1 Lloyd’s Rep. 161 . ETI says that this decision shows that it is not necessary that the foreign proceedings be substantive proceedings on the merits of the claim, because the foreign proceedings were in fact ‘interim attachment’ proceedings. Such proceedings could be regarded as ‘substantive’.”

“The case was concerned with an attempt by Kensington to execute English judgments in Switzerland by attaching debts due to the Republic of the Congo. Kensington applied to the Court of First Instance(CFIG) in Geneva for an interim attachment of debts said to be owed by a third party company, Vitol SA, to the Congo. The CFIG ... granted an interim attachment order preventing Vitol SA from making certain payments to the Congo. The scope of that order was disputed between the parties. It was in respect of that order that the English court exercised its jurisdiction pursuant to Section 25 of the 1982 Act.”

“It is important to emphasise again that the proceedings in Switzerland in that case were for enforcement of the English judgments. The issue of whether the Swiss proceedings were substantive or not was not before the Court of Appeal. I accept ... that the fact that interim orders had also been obtained in Geneva pending a final third party debt order in full or partial satisfaction of English judgments against Congo did not derogate from the fact that the proceedings in Geneva were substantive proceedings to enforce a foreign judgment.”

“But I would accept that the notion of substantive proceedings may have to be given a liberal interpretation to ensure international judicial co‑operation. ... As a result of the decision of the U.S. Supreme Court in Grupo Mexicano de Desarrollo SA v. Alliance Bond Fund Inc, 527 U.S. 308 (1999), a U.S. federal court has no power under federal law to make an in personam order restraining disposal of assets pending judgment/award, but does have power under Rule 64 of the Federal Rules of Civil Procedure to order attachment of debts under the law of the state in which it sits: Karaha Bodas Co. LLC v. Perusahaan Pertambangan Minyak Dan Gas Bumi, 313 F. 3d 70, 83 (2d Cir. 2002), cert. den. 539 U.S. 904 (2003). [See 2003 International Law Update 37] The New York Court of Appeals has held that, under New York law, [its] courts can only attach property located in New York: ABKCO Indus. Inc. v. Apple Films Inc., 39 N.Y.2d 670 (1976); [Cite].”

“In my judgment, this ground of appeal fails because, on any view, the English proceedings are not in aid of, or related to, any substantive proceedings in New York, however liberally those expressions are interpreted. As I have said, the complaint in the SDNY describes the proceedings as an ‘an action for an order of attachment in aid of arbitration’ and founds jurisdiction and venue on the fact that property belonging to Entel and/or Bolivia was situate in New York. The SDNY attachment proceedings constitute interim relief to protect assets pending the outcome of the ICSID arbitration. The New York proceedings are directed solely at assets in New York, and proceedings in England directed at assets in England cannot be ancillary to the New York attachment.” [Paras. 63‑78]

The Court comes last to the question of the sovereign immunity of Bolivia and perhaps its agencies. “But it is, in fact, a matter of the greatest importance (as is made clear by the provision in Section 1(1) of the State Immunity Act 1978 that the court must give effect to immunity even if the State does not appear) and would normally fall to be considered first. I am satisfied that Bolivia is entitled to immunity, and that the appeal on this ground fails.”

“As I have said, the judge decided this point on the basis of Section 9 of the 1978 Act, which provides: ‘(1) Where a State has agreed in writing to submit a dispute which has arisen, or may arise, to arbitration, the State is not immune as respects proceedings in the courts of the United Kingdom which relate to the arbitration. (2) This section has effect subject to any contrary provision in the arbitration agreement and does not apply to any arbitration agreement between States.’”

“But Section 13 of the 1978 Act provides: ‘(2) Subject to subsections (3) and (4) below — Relief shall not be given against a State by way of injunction or order for specific performance or for the recovery of land or other property; and [t]he property of a State shall not be subject to any process for the enforcement of a judgment or arbitration award or, in an action in rem, for its arrest, detention or sale. (3) Subsection (2) above does not prevent the giving of any relief or the issue of any process with the written consent of the State concerned: and any such consent (which may be contained in a prior agreement) may be expressed so as to apply to a limited extent or generally; but a provision merely submitting to the jurisdiction of the courts is not to be regarded as a consent for the purposes of this subsection. (4) Subsection (2) above does not prevent the issue of any process in respect of property which is for the time being in use or intended for use for commercial purposes; ...’”

“Consequently it is plain that there is nothing in Section 9 which overrides the prohibition in Section 13. Proceedings for a freezing order to preserve the position pending execution of an [arbitration] award are within Section 13 and are not ‘proceedings which relate to the arbitration’ for the purposes of Section 9. The point can be tested by reference to commercial contracts. By Section 3, a State is not immune ‘as respects proceedings relating to ... a commercial transaction entered into by the State.’ It cannot be suggested that because of Section 3, and notwithstanding Section 1, the State could be enjoined from breach of the contract.” [Paras. 110‑113]

Citation: Euro Telecom International NV v. Republic of Bolivia , [2008] E.W.C.A. Civ. 880; 2008 WL 2872426 (CA (Civ Div)); [2008] 2 C. L. C. 153 (July 28).

CHILD ABDUCTION

In mandamus proceeding seeking to set aside restrictions on parent’s access to child, Court of Appeals of Texas interprets and applies Texas law against international parental abduction, using Uniform Child Abduction Prevention Act as interpretation aid

Axel Michael Sigmar is involved in several international legal disputes, and frequently travels to Mexico. Apparently he received threats, and equipped himself with a concealed handgun. In the midst of this turmoil, he and his wife Lucia divorced with identical visitation rights for their daughter A.J. Lucia subsequently moved for a modification of the divorce decree, also requesting that Sigmar have only supervised access to the child, and that he temporarily not dispose of any assets. The Judge Barbara Hale found that Sigmar posed a threat of international abduction, and ordered that he only have supervised visits with A.J. The Judge also ordered that he not sell any assets until an evidentiary hearing in the modification matter.

Sigmar is now seeking a writ of mandamus to compel the Judge to set aside the restrictions.

The Court of Appeals of Texas agrees with the Judge. In general, mandamus relief is available only to correct a clear abuse of discretion when there is no adequate remedy by appeal. Here, because temporary orders in child custody disputes are not subject to interlocutory appeal, mandamus is a possible remedy.

As for the restrictions on Sigmar’s access to A.J., the Court notes that Texas was the first state to implement laws against international parental abduction. See Tex. Fam. Code Ann. §§ 153.501‑.503. In interpreting the Texas law, the Court refers to materials about the Uniform Child Abduction Prevention Act which resembles the Texas law.

Section 153.503 permits the trial court to impose abduction prevention measures if there is a “potential risk” of international abduction. The court should consider the obstacles to finding and returning a child from a foreign country, and the harm to the child if he/she is abducted to a foreign country. In particular:

“Section 153.502 provides statutory ‘abduction risk factors’ for a court to consider in determining whether there is a potential risk of international abduction. See TEX. FAM. CODE ANN. § 153.502 (Vernon Supp. 2008). Subsection (a) provides a list of six preliminary factors the court ‘shall consider,’ including whether the parent: (1) ‘has taken, enticed away, kept, withheld, or concealed’ the child; (2) has threatened to do so; (3) ‘lacks financial reason to stay in the United States’; (4) ‘has recently engaged in planning activities that could facilitate the removal of the child from the United States’; (5) ‘has a history of domestic violence’; or (6) ‘has a criminal history or a history of violating court orders.’ Id. § 153.502(a) ...”

“If upon consideration of the factors in subsection (a) the court finds ‘credible evidence of a risk of abduction,’ ‘the court shall also consider’:”

“(1) whether the parent has strong familial, emotional, or cultural ties to another country, particularly a country that is not a signatory to or compliant with the Hague Convention on the Civil Aspects of International Child Abduction; and”

“(2) whether the parent lacks strong ties to the United States, regardless of whether the parent is a citizen or permanent resident of the United States.”

“TEX. FAM. CODE ANN. § 153.502(b) ... “

”In addition, if the court finds ‘credible evidence of a risk of abduction’ under subsection (a), ‘the court may also consider’: (1) ‘whether the parent is undergoing a change in status with the United States Immigration and Naturalization Service that would adversely affect that parent’s ability to legally remain in the United States’; (2) whether INS has denied the parent’s application for citizenship; (3) whether the parent has forged or presented misleading or false evidence to obtain a visa, passport, or other identification card or has made any misrepresentation to the federal government; or (4) whether the foreign country to which the parent has ties presents legal or practical obstacles to the recovery and return of a child who is abducted to that country or poses a risk of harm to the child.8 TEX. FAM. CODE ANN. § 153.502(c) ...” [Slip op. 3]

Here, the Judge found that Sigmar had strong ties to Mexico and Austria, and was liquidating U.S. assets. According to the Judge’s findings, both of those countries lack effective mechanisms for the enforcement of the child custody order. Also, the U.S. Department of State has issued a travel warning for Mexico.

“... [A]n affirmative finding on only one of these preliminary factors (if supported by the evidence) is all that is required to proceed to a consideration of the additional factors listed in subsections (b) and (c).”

“To begin with, the statute states that ‘the court shall consider evidence’ relevant to the six factors. Id. § 153.502(a) ... The statute does not specify the number of factors on which a court must make an affirmative finding. ... In addition, the statute lists these factors in the disjunctive.”

“The comment to section 7 of the UCAPA suggests that no particular quantum of risk factors is required.”

“The more of these factors that are present, the more likely the chance of an abduction. However, the mere presence of one or more of these factors does not mean that an abduction will occur just as the absence of these factors does not guarantee that no abduction will occur.”

“UNIF. CHILD ABUSE PREVENTION ACT § 7 cmt., 9 Part IA U.L.A. at 42.”

“For these reasons, we hold that evidence sufficient to support an affirmative finding on only one of the six preliminary factors may constitute ‘credible evidence of a risk of abduction’ sufficient for a court to consider the additional factors listed in subsections (b) and (c).” [Slip op. 4]

Applying this to the case at bar, the Court agrees with the Judge that Sigmar’s recent sale of an office building in Austin, and his insistence that A.J.’s passport be renewed, could facilitate A.J.’s removal from the U.S. Such events are credible evidence of a risk of abduction. Furthermore, Sigmar has ties to both Austria and Mexico. As for subsection (c) concerning the obstacles and risks which may be posed if Sigmar were to abduct A.J., the Court holds that such matters are legislative facts under Tex. R. Evid. 201(a), and a court may take judicial notice of them.

“ ... [W]e hold that facts regarding another country’s compliance with the Hague Convention on the Civil Aspects of International Child Abduction, or whether that country poses obstacles to the prompt return of a child taken there or poses risks to the child’s safety are legislative facts about which a trial or appellate court may take judicial notice without prompting by the parties.16 See [1 STEVEN GOODE ET AL., GUIDE TO THE TEXAS RULES OF EVIDENCE] § 201.2 (with regard to judicial notice of legislative facts, a court ‘may employ whatever facts [it] reasonably believe[s], without any requirements of indisputability or of opportunity of parties to be heard concerning such beliefs’) ...” [Slip op. 5]

Here, the travel warnings provided by the U.S. Department of State supports the Judge’s finding under subsection (c). The Court concludes that the evidence, and the information of which it has taken judicial notice, support the Judge’s finding of potential risk of international abduction.

After making further findings that the restrictions are consistent with the public policy of Texas and the best interest of the child, the Court finds that the Judge did not abuse her discretion in requiring supervised visitation.

Citation: In Re Axel Michael Sigmar, No. 10‑08‑00328‑CV (Court of Appeals of Texas, Tenth District, November 5, 2008).

DISCOVERY (IMPLIED UNDERTAKING RULE)

After guardian of minor Plaintiff in child injury litigation gave deposition testimony, Canadian Supreme Court holds that, under Implied Undertaking Rule, lower court should, under circumstances, have denied attorney general’s request for authority to turn over deposition to police investigating potential criminal aspects of child’s injury at daycare home

In 2001, Jade Doucette, a 16‑month‑old girl (Plaintiff) suffered a seizure while in the care of an employee of Wee Watch Day Care Systems Inc.(Defendant), a daycare organization in Vancouver, B. C. Doctors later diagnosed the Plaintiff as having suffered a brain injury. On Jade’s behalf, her parents sued the Defendant’s owners and operators for damages, alleging that the employee’s negligence had proximately cause Jade’s injury.

At the same time period, Vancouver police were looking into the circumstances leading to the Plaintiff’s injury, but did not filed charges. In November 2004, the employee moved to prevent the release of the information from the transcripts of her deposition to the Attorney General of British Columbia (AG) or to the police; she invoked the Implied Undertaking Rule (IUR).

The AG opposed the employee’s motions and cross‑moved for an order varying the IUR to allow the release of the transcripts to the police, or, alternatively, for an order permitting the police to apply for the transcripts by way of search warrant or subpoena. The employee’s deposition took over four days. and the transcripts had stayed in the possession of the civil parties and their counsel. In 2006, the parties settled the civil claim; as a result, no one ever entered the employee’s deposition into evidence at a trial, nor has anyone ever revealed its contents in open court.

The chambers judge rejected the argument that the IUR did not apply at all to evidence of crimes, since “evidence of crimes” could range from statements giving rise to mere suspicion to downright admissions of guilt. The chambers judge held that it was more desirable to leave the discretionary power of relief to the courts, rather than to the parties. The B. C. Court of Appeal allowed the AG’s appeal. It held that the IUR could not “form a shield from the detection and prosecution of crimes in which the public has an overriding interest.” The court also held that discovery material remained subject to search or seizure. The employee appealed to the Supreme Court of Canada which allows that appeal.

The opinion then explores these interesting issues. “Quite apart from the cases of exceptional prejudice, as in disputes about trade secrets or intellectual property, which have traditionally given rise to express confidentiality orders, there are good reasons to support the existence of an implied (or, in reality, a court‑imposed) undertaking.”

“In the first place, pre‑trial discovery is an invasion of a private right to be left alone with your thoughts and papers, however embarrassing, defamatory or scandalous. At least one side in every lawsuit is a reluctant participant. Yet a proper pre‑trial discovery is essential to prevent surprise or ‘litigation by ambush’, to encourage settlement once the facts are known, and to narrow issues even where settlement proves unachievable.”

“Thus, Rule 27(22) of the B. C. Rules of Court compels a litigant to answer all relevant questions posed on an examination for discovery. Failure to do so can result in punishment by way of imprisonment or fine pursuant to Rules 56(1), 56(4) and 2(5). In some provinces, the rules of practice provide that individuals who are not even parties can be ordered to submit to examination for discovery on issues relevant to a dispute in which they may have no direct interest. It is not uncommon for plaintiff’s counsel aggressively to ‘sue everyone in sight’ not with any realistic hope of recovery but to ‘get discovery’. Thus, for the out‑of‑pocket cost of issuing a statement of claim or other process, the gate is swung open to investigate the private information and perhaps highly confidential documents of the examinee in pursuit of allegations that might in the end be found to be without any merit at all.”

“The public interest in getting at the truth in a civil action outweighs the examinee’s privacy interest, but the latter is nevertheless entitled to a measure of protection. The answers and documents are compelled by statute solely for the purpose of the civil action and the law thus requires that the invasion of privacy should generally be limited to the level of disclosure necessary to satisfy that purpose and that purpose alone. Although the present case involves the issue of self‑incrimination of the [deponent], that element is not a necessary requirement for protection. Indeed, the disclosed information need not even satisfy the legal requirements of confidentiality set out in Slavutych v. Baker (1975), [1976] 1 S. C. R. 254 (S. C. C.). The general idea, metaphorically speaking, is that whatever is disclosed in the discovery room stays in the discovery room unless eventually revealed in the courtroom or disclosed by judicial order.”

“There is a second rationale supporting the existence of an [IUR]. A litigant who has some assurance that the documents and answers will not be used for a purpose collateral or ulterior to the proceedings in which they are demanded will be encouraged to provide a more complete and candid discovery. This is of particular interest in an era where documentary production is of a magnitude (‘litigation by avalanche’) as often to preclude careful pre‑screening by the individuals or corporations making production.[Cite].”

“For good reason, therefore, the law imposes on the parties to civil litigation an undertaking to the court not to use the documents or answers for any purpose other than securing justice in the civil proceedings in which the answers were compelled (whether or not such documents or answers were in their origin confidential or incriminatory in nature).”

“The need to protect the privacy of the pre‑trial discovery is recognized even in common law jurisdictions where there is no implied undertaking. See J. B. Laskin, ‘The Implied Undertaking’ (a paper presented to the CBA‑Ontario, CLE Conference on Privilege and Confidential Information in Litigation — Current Developments and Future Trends, October 19, 1991), at pp. 36‑40. Rule 26(c) of the United States’ Federal Rules of Civil Procedure provides that a court may, upon a showing of ‘good cause’, grant a protective order to maintain the confidentiality of information disclosed during discovery. The practical effect is that the courts routinely make confidentiality orders limited to pre‑trial disclosure to protect a party or person being discovered ‘from annoyance, embarrassment, oppression, or undue burden or expense’. See, e.g., Cipollone v. Liggett Group Inc., 785 F.2d 1108 (3rd Cir. 1986).”

“Breach of the [IUR] may be remedied by a variety of means including a stay or dismissal of the proceeding, or striking a defence, or, in the absence of a less drastic remedy, contempt proceedings for breach of the undertaking owed to the court. See Lac d’Amiante, at ¶ 64, and Goodman v. Rossi (1995), 125 D.L.R. (4th) 613 (Ont. C.A.), at p. 624.”

 “The undertaking is imposed in recognition of the examinee’s privacy interest, and the public interest in the efficient conduct of civil litigation, but those values are not, of course, absolute. They may, in turn, be trumped by a more compelling public interest. Thus, where the party being discovered does not consent, a party bound by the undertaking may apply to the court for leave to use the information or documents otherwise than in the action, In such an application the judge would have access to the documents or transcripts at issue.” [¶¶ 24‑30].

“An application to modify or relieve against an [IUR] requires an applicant to demonstrate to the court on a balance of probabilities the existence of a public interest of greater weight than the values the implied undertaking is designed to protect, namely privacy and the efficient conduct of civil litigation. In a case like the present, of course, there weighs heavily in the balance the right of a suspect to remain silent in the face of a police investigation, and the right not to be compelled to incriminate herself.”

“The chambers judge took the view (I think correctly) that in this case that factor was decisive. In other cases the mix of competing values may be different. What is important in each case is to recognize that unless an examinee is satisfied that the undertaking will only be modified or varied by the court in exceptional circumstances, the undertaking will not achieve its intended purpose.”

“I would prefer to rest the discretion on a careful weighing of the public interest asserted by the applicant (here the prosecution of a serious crime) against the public interest in protecting the right against self‑incrimination as well as upholding a litigant’s privacy and promoting an efficient civil justice process. What is important is the identification of the competing values, and the weighing of one in the light of the others, rather than setting up an absolute barrier to occasioning any ‘injustice to the person giving discovery’. Prejudice, possibly amounting to injustice, to a particular litigant may exceptionally be held justified by a higher public interest, as in the case of the accused whose solicitor‑client confidences were handed over to the police in Smith v. Jones , [1999] 1 S. C. R. 455 (S.C.C.). ...”

“Of course any perceived prejudice to the examinee is a factor that will always weigh heavily in the balance. It may be argued that disclosure to the police of the evil secrets of the psychopath at issue in Smith v. Jones may have been prejudicial to him but was not an ‘injustice’ in the overall scheme of things, but such a gloss would have given cold comfort to an accused who made his disclosures in the expectation of confidentiality. If public safety trumps solicitor‑client privilege despite a measure of injustice to the (unsympathetic) accused in Smith v. Jones, it can hardly be disputed in this jurisdiction that the [IUR] would yield to such a higher public interest as well.” [¶ 32]

“As stated, the onus in each case will be on the applicant to demonstrate a superior public interest in disclosure, and the court will be mindful that an undertaking should only be set aside in exceptional circumstances. In what follows, I do not mean to suggest that the categories of superior public interest are fixed. My purpose is illustrative rather than exhaustive. However, to repeat, an undertaking designed in part to encourage open and generous discovery by assuring parties being discovered of confidentiality will not achieve its objective if the confidentiality is seen by reluctant litigants to be too readily set aside.” [¶ 38]

“Another situation where the deponent’s privacy interest will yield to a higher public interest is where the deponent has given contradictory testimony about the same matters in successive or different proceedings. If the contradiction is discovered, the [IUR] would afford no shield to its use for purposes of impeachment. In provinces where the [IUR] has been codified, there is a specific provision that the undertaking ‘does not prohibit the use of evidence obtained in one proceeding, or information obtained from such evidence, to impeach the testimony of a witness in another proceeding.’[Cites].”

“While statutory, this provision, in my view, also reflects the general common law in Canada. An undertaking implied by the court (or imposed by the legislature) to make civil litigation more effective should not permit a witness to play games with the administration of justice. [Cite]. Any other outcome would allow a person accused of an offence ‘[w]ith impunity [to] tailor his evidence to suit his needs in each particular proceeding’ R. v. Nedelcu (2007), 41 C.P.C. (6th) 357 (Ont. S.C.J.), at ¶¶ 49‑51).” [¶ 41]

“The chambers judge took the view that ‘leaving the discretionary power of exemption or variation with the courts is preferable to giving litigants the power to report to the police, without a court order, anything that might relate to a criminal offence’ (¶ 27). I agree. On such an application, the court will be able to weigh against the examinee’s privacy interest the seriousness of the offence alleged, the ‘evidence’ or admissions said to be revealed in the discovery process, the use to which the applicant or police may put this material, whether there is evidence of malice or spite on the part of the applicant, and such other factors as appear to the court to be relevant to the exercise of its discretion. This will include recognition of the potential adverse effects if the protection of the implied undertaking is seen to be diluted or diminished.” [¶ 44]

“As mentioned earlier, the lawsuit against the appellant and others was settled in 2006. As a result, the appellant was not required to give evidence at a civil trial; nor were her examination for discovery transcripts ever read into evidence. The transcripts remain in the hands of the parties and their lawyer. Nevertheless, the [IUR] continues. The fact that the settlement has rendered the discovery moot does not mean the appellant’s privacy interest is also moot. The undertaking continues to bind. When an adverse party incorporates the answers or documents obtained on discovery as part of the court record at trial the undertaking is spent, but not otherwise, except by consent or court order. ...” [¶ 51].

“I would not preclude an application to vary an undertaking by a non‑party on the basis of standing, although I agree with Livent Inc. v. Drabinsky that success on such an application would be unusual. What has already been said provides some illustrations of potential third party applicants. In this case the [AG] supported by the Vancouver Police, demonstrated a sufficient interest in the appellant’s transcripts to be given standing to apply. Their objective was to obtain evidence that would help explain the events under investigation, and possibly to incriminate the appellant. I think it would be quite wrong for the police to be able to take advantage of statutorily compelled testimony in civil litigation to undermine the appellant’s right to silence and the protection against self‑incrimination afforded him by the criminal law.”

Accordingly, in my view, the present application was rightly dismissed by the chambers judge. On the other hand, a non‑party engaged in other litigation with an examinee, who learns of potentially contradicting testimony by the examinee in a discovery to which that other person is not a party, would have standing to seek to obtain a modification of the [IUR] and for the reasons given above may well succeed. Of course if the undertaking is respected by the parties to it, then non‑parties will be unlikely to possess enough information to make an application for a variance in the first place that is other than a fishing expedition. But the possibility of third party applications exists, and where duly made, the competing interests will have to be weighed, keeping in mind that an undertaking too readily set aside sends the message that such undertakings are unsafe to be relied upon, and will therefore not achieve their broader purpose.”

“While I would not deny the [AG] standing to seek to vary an implied undertaking to which he is not a party, I agree with the chambers judge that his application should be rejected on the facts of this case. The purpose of the application was to sidestep the appellant’s silence in the face of police investigation of her conduct. The authorities should not be able to obtain indirectly a transcript which they are unable to obtain directly through a search warrant in the ordinary way because they lack the grounds to justify it.” [¶ 53]

“I would allow the appeal with costs to the appellant both here and in the courts below.” [The other Justices concur]. [¶ 59].

Citation: Doucette (by guardian ad litem) v. Wee Watch Day Care Systems Inc., 2008 CarswellBC 411; [2008] 1 S.C.R. 157 (Can.Sup. Ct. 2008).

FORUM NON CONVENIENS

In litigation arising out of Argentinean automobile accidents involving Ford Explorers with Firestone Tires, Florida appellate court rules that trial court did not abuse its discretion by denying Defendants’ motion to dismiss for forum non conveniens, where Argentinean courts would impose 3% filing fee in this case where Plaintiffs sought large amount of damages

A series of rollover accidents occurred in Argentina, involving Ford Explorers with Firestone tires. The injured parties and the families of the deceased parties (Plaintiffs) brought suits against Ford Motor Company and Bridgestone/Firestone North American Tire, LLC (Defendants), in Florida state court. Defendants moved to dismiss on forum non conveniens grounds, arguing that the balance of convenience to the parties and witnesses would favor litigation in Argentina’s courts. The trial court denied the motions.

The District Court of Appeal of Florida reverses and remands. It finds that that the trial court did not conduct an adequate analysis of the forum non conveniens issue pursuant to Kinney System, Inc. v. Continental Insurance Co., 674 So. 2d 86 (Fla. 1996). On remand, the trial court again denied the forum non conveniens motions. Defendants again appealed. The Court of Appeal affirms the lower court’s discretionary ruling that Argentina is an inadequate and unavailable alternative forum under the circumstances.

“A Defendant seeking dismissal on forum non conveniens grounds bears the burden of persuasion as to each Kinney factor. [Cite]. The first factor the court must analyze is whether there is an available adequate alternative forum which possesses jurisdiction over the whole case. [Cite].”

Both Plaintiffs and Defendants offered affidavits from Argentinean legal experts containing their opinions of the Argentinean courts’ jurisdiction over the case. “Upon reviewing these affidavits, the trial court determined that the existence of jurisdiction in Argentina was arguable and concluded that it could not ensure that an Argentine court would not dismiss the case for lack of jurisdiction ... [Hence] the trial court’s conclusion that Appellants did not carry their burden of persuasion on this issue was not unreasonable.”

“[Defendants]’ experts asserted that Argentine law provides causes of action and remedies analogous to those sought by Plaintiffs in the United States, and allows for actual and foreseeable damages, as well as pain and suffering damages. However, Plaintiffs’ experts explained that Plaintiffs in Argentina are required to pay a filing fee of 3% of the damages sought in the lawsuit as a prerequisite to consideration of the case.”

“The trial court concluded that Defendants did not satisfy their burden of persuasion as to the adequacy of the Argentine forum, finding the 3% filing fee of particular importance to its decision. We find this conclusion to be reasonable in light of the affidavits submitted by Defendants’ experts. The 3% filing fee may deprive Plaintiffs of a remedy in Argentina, particularly in cases such as these, where Plaintiffs are seeking a substantial amount of monetary damages.” [Slip Op. 5‑6].

Citation: Bridgestone/Firestone North America Tire, LLC v. Garcia, No. 4D07‑1793 (Fla. App. August 6, 2008).

JURISDICTION

In case of a foreign banking conglomerate involved in a leveraged bond scheme, the Court of Appeal of California rules that the California trial court had personal jurisdiction over the defendants, where bank representatives solicited business in person in the State of California

The Anglo Irish bank, a corporation with its principal place of business in Ireland, is the parent company of the Isle of Man bank and the trust company, corporations with their principal places of business in Isle of Man. The Irish bank, Isle of Man bank and the trust company sought investors to borrow funds form the Isle of Man bank to purchase bonds to be held by the trust company. In March 2000, Davies, who was at that time managing director of the trust company, and Connolly, who was at that time director of the Isle of Man bank, met with 10 or 11 potential investors in California.

Kal Brar and Imelda Brar (“plaintiffs”), California residents, are co-trustees of the Satnam Trust. Plaintiffs transferred more than $4 million form the Satnam Trust to the Kivrar Trust, that had been created to purchase bonds. After meeting with Davies and Connolly, plaintiffs appointed the trust company trustee of the Kivrar Trust. In June 2000 the Kivrar Trust II was created. The Kivrar Trust II borrowed funds to purchase additional bonds. The plaintiffs’ investments suffered losses, estimated to be approximately $2 million by December 2007.

Plaintiffs filed suit against Anglo Irish bank, Isle of Man bank, the trust company and others (“defendants”) in May 2005, alleging intentional misrepresentation, fraudulent concealment, securities fraud, breach of fiduciary duty, negligent misrepresentation and an accounting.

Defendants moved to quash service for lack of personal jurisdiction. The trial court denied the motion finding that each defendant had sufficient contacts with the State to be subject to specific personal jurisdiction. Defendants Appealed to the Court of Appeal of California filing petitions for a writ of mandate, challenging the denial of their motions to quash. The Court of Appeals stayed the trial court proceedings and issued an order to show cause. After considering the case the Court of Appeals denied the petitions and lifted the stay of trial court proceedings and discharged the order to show cause. [Slip Op. 1‑2].

“The proper jurisdictional question is not whether the defendant can be liable for the acts of another person or entity under state substantive law, but whether the defendant has purposefully directed its activities at the forum state by causing a separate person or entity to engage in forum contacts.”

“Davies, Connolly, and McGee visited California for the purpose of engaging in economic activity with California residents. Contrary to Petitioners’ argument that they only sought to satisfy Isle of Man’s “know your customer” requirements, the purpose of satisfying those requirements was to make the leveraged investments possible. They discussed leveraging “with profit bonds” with the [plaintiffs] and other potential investors during the visit by Davies and Connolly in March 2000, McGee’s visit a few months later, and Davies’s visit in May 2001. Through those visits, they succeeded in garnering millions of dollars in investments from California residents.”

“... [W]e conclude that the Irish bank, the Isle of Man bank, and the trust company purposefully directed their activities at California residents by and through the individuals who visited California on their behalf. We conclude further that Petitioners, and each of them, purposefully derived benefit from their activities in California and deliberately engaged in significant activities within this state, and that they therefore purposefully availed themselves of forum benefits.” [Slip Op. 5]

“[Defendants] argue that after creating offshore trusts for the apparent purpose of removing assets from the jurisdiction of California courts, the plaintiffs should not be allowed to sue foreign defendants in California courts “just because their investment did not prove as fruitful as they had hoped.” We conclude that by investing in foreign trusts, the plaintiffs did not waive the right to sue Petitioners in a California court to seek redress for injuries related to or arising out of Petitioners’ California activities. Moreover, the plaintiffs do not allege only that the investments were unsuccessful, but that Petitioners made material misrepresentations and omissions in California in connection with the investments.” [Slip Op. 6]

Citation: Anglo Irish Corporation, PLC v. Superior Court of Los Angeles County, B206714 (Cal. App. 2008).

JURY TAMPERING

Where young woman of prior good character sent note to member of friend’s criminal jury asking her to acquit friend, U. K. Court of Appeal (Criminal Division) reviews Defendant’s good references, clean record and plea of guilty and reduces length of her confinement

The Defendant on appeal is Kelly Leanne Cameron aged 20, a young woman of previous good character. She was a student at Huddersfield University in West Yorkshire NE, majoring in hospitality management. By the summer of 2008, she had successfully finished two years of a four year course. As part of the curriculum, Defendant was scheduled to take up a work placement at “Disney World” in Florida on September 4, 2008. She was the only student to obtain such a notable opportunity.

On August 12, 2008, the Defendant attended the first day of a jury trial of a close friend named Gavin Conroy in the Crown Court of Bradford in the north of England. The criminal trial by jury was for violating Section 18 of the Offences against the Person Act 1861. The Defendant watched the trial from the public gallery throughout the first day. At some point, she became aware that one of the jurors was Katie Walker, whom Defendant knew through a mutual friend, Samantha McSheffery. The juror also recognized the Defendant, from seeing her at the public house where Mr. Conroy was alleged to have committed his offense.

Having recognized the juror, and apparently unaware of the consequences, the Defendant decided to ask Miss McSheffery to get a message to the juror asserting that Mr. Conroy was not guilty. To that end, at 2.48pm, the Defendant sent the following message to Miss McSheffery: “Sam, please do a favour and text Katie that you have brought into ‘spinks’ before. Just text her saying [Mr. Conroy is] not guilty. I will call and explain later but please do this for me.”

As a result of that message, Miss McSheffery sent a text message to the juror saying that she had received a text from the Defendant saying: “Please tell friend he is not guilty. He did not do it.” When the court was adjourning that afternoon, the municipal judge gave the customary direction to the jury as to what to do if anyone approached them about one of their cases. At that moment, the Defendant began to realize the potential seriousness of what she had asked Miss McSheffery to do. She tried to get in touch with her to find out whether she had sent the message and, if not, to prevent it being sent. Unfortunately, she had already forwarded the text message to the juror.

The following morning, the juror responsibly reported the matter to the court. Fortunately, she did not tell any of her fellow jurors about the message that she had gotten. The judge was, therefore, able to release her from jury service and to get on with the trial. The jury eventually acquitted Mr. Conroy of the Section 18 offense, but found him guilty instead of a Section 20 offense.

The police arrested Defendant and interviewed her on August 13, the same day as the juror had reported the approach. The Defendant fully admitted arranging the sending of the message. She said that, until she heard the judge’s cautionary instruction, she had very little knowledge of court procedures and thus had no idea how serious her action was in trying to influence the juror. She fully accepted that her actions were wrong. Two weeks later, on August 27, 2008, the Defendant pleaded guilty. The particulars of the charges made clear that she admitted trying to sway the juror’s vote in favor of Mr. Conroy.

In view of the pre‑existing arrangements for the Defendant to travel to Florida a few days later to take up her job placement, the court adjourned overnight to allow time for an urgent pre‑sentence report. The following day the judge obtained the pre‑sentence report that recommended a community order or a suspended sentence order with one or more requirements. The report also indicated that there was a low risk of re‑offending and that the Defendant was remorseful. The judge also had before him five character references from responsible individuals at the university and from a family friend, all of whom spoke highly of the Defendant. The report cited the judge to a number of authorities in relation to sentence in this type of case.

When passing sentence, the judge indicated that he was inclined to believe that the Defendant had been naive and stupid, but he rightly stressed the paramount need for jurors to perform their public service without outside interference. He pointed out that the case law had often made plain that custody ( sometimes substantial in length) is typically unavoidable in cases of this type. In his view, he should not suspend sentence, and thus he handed down an immediate sentence of twelve months’ detention in a young offender institution. He made it clear on the record that he had shortened the sentence by one‑third to reflect the prompt guilty plea. Defendant then sought review of the length of her sentence by the Court of Appeal (Criminal Division).

Defendant’s counsel contended to the appellate tribunal that the sentence below was manifestly excessive. She has referred the Court to the material authorities that were before the judge below, to the various points that were made in mitigation, and to the additional penalties that the Defendant has already suffered in the light of her immediate custodial sentence, most particularly the loss of her work placement in the United States, an inability to continue with her degree program to date, and the uncertainty as to whether she will ever be able to travel to the United States in the future.

This is the Court’s response. “To state the obvious, ... it is the very foundation stone of our system of jury trial that jurors are able to carry out their duties uninfluenced and unaffected by outside interference; most particularly that they are able to do so absent any threat or encounter, direct or indirect, designed, or having the tendency, to persuade them from the proper performance of their task in accordance with the oath that they have taken. The naive and indirect approach to a juror may be just as disturbing for the juror as a more calculated one, and the consequences may be disastrous. That is why, to deter others, custody is inevitable for those who interfere with jurors, and sometimes substantial periods of custody.”

“That said, in passing sentence, regard must be had to the facts of the particular case, and especially to the nature and the degree of the interference. Here a custodial sentence was, as we have indicated, inevitable. The length of the sentence imposed by the judge was within the general range indicated by the authorities. The real question on this application, as it seems to us, is whether, given the exceptional facts of this case, the custodial sentence should have been shorter.”

“In the end, we are persuaded that it should have been. As we have indicated, the Defendant is 20 years of age and of previous good character. She acted out of naivety. The moment she appreciated the gravity of what she had set in train, she tried to prevent the juror from being contacted. The message that was passed to the juror was delivered indirectly and was not a threatening one. Fortunately for the Defendant, the juror behaved entirely responsibly and thus the trial was able to continue to a conclusion with little disruption. The Defendant made an immediate and full confession. She pleaded guilty at the first available opportunity. She has lost already her prime job placement in the United States and as a result of this conviction may not be able to travel there in the future to take up any similar opportunity. In those circumstances, we grant the application for leave, and reduce the sentence to one of four months’ detention in a young offender institution.”

“In closing, we would emphasise that this is a case decided entirely upon its own exceptional facts. It should not be regarded as providing any sort of sentencing guideline. Against that background, and to the extent that we have indicated, the appeal against sentence is therefore allowed.” [¶¶ 14‑18].

Citation: Regina v. Cameron, [2008] E.W.C.A. Crim. 2493; 2008 WL 4699009 (CA (Crim Div)) (15 October).

United States receives claims settlement sums from Libya. On October 31, 2008, Secretary of State Condoleezza Rice certified to Congress that the United States has received $1.5 billion pursuant to the U.S.‑Libya Claims Settlement Agreement. These funds are enough to cover the required compensation to victims of Libyan terrorism under the Libyan Claims Resolution Act. At the same time, the President issued an Executive Order to implement the Claims Settlement Agreement. The Administration will now move quickly to arrange for delivery of these funds in lieu of the pending U.S. court cases against Libya. Secretary Rice considers Libya’s decision in 2003 to resolve outstanding claims through the U.S.‑Libya Claims Settlement Agreement a laudable landmark in our bilateral relationship with that nation; it also furnishes a measure of justice to families of U.S. victims of terrorism and opens an avenue for an ongoing and expanding U.S.‑Libyan partnership. Today, the Secretary looks upon Libya as a remarkable and important partner in the common effort against both terrorism and the proliferation of WMDs. It serves as a model for other countries that may wish to renounce their isolation and rejoin the community of nations. Moreover, the U.S. and Libya are enlarging their cooperation across all areas, including education and culture, science and technology, commerce, human rights, good governance, and defense. Citation: U.S. State Department Press Statement #2008/927, released at Washington, D.C., October 31, 2008.

Armenia and United States sign Open Skies agreement. The Armenian Minister of Economy, Nerses Yeritsian, and his delegation recently came to Washington for the annual U.S.‑Armenia Joint Economic Taskforce (USATF). The two nations formed the USATF in 2000 which has been meeting annually to further economic cooperation and to advance economic and market reforms in Armenia. The two representatives signed an Open Skies air services agreement at the end of the meeting. This agreement will allow air carriers of the United States and Armenia to make decisions on routes, capacity, and pricing based primarily on commercial considerations. It also includes liberal “doing business” rights and provides opportunities for cooperative marketing arrangements with the United States, including code sharing. Citation: Media Note 2008/986, U.S. State Department Spokesman, Washington, D.C., released on Friday, November 21, 2008.