2008 International Law Update, Volume 14, Number 7 (July)

2008 International Law Update, Volume 14, Number 7 (July)

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

CHILD ABDUCTION

Where Chilean father challenged removal of his child to United States by child’s mother, Second Circuit rules that parent did not have custody rights under Hague Convention, where father only had rights to visitation and to prevention of wife from removing child from Chile

On April 22, 2001 Valentina Almendra Villegas Arribada (Child) was born to Hugo Alejandro Villegas Duran (Petitioner) and Johana Ivette Arribada Beaumont (Respondent), an unmarried couple. The child lived with Respondent in Chile following the couple’s separation in 2004.

Petitioner had visitation rights, and Respondent was not supposed to remove the Child from Chile without Petitioner’s permission. Respondent obtained an order from the Eighth Minors’ Court of Santiago to travel to the U.S. temporarily.

After the Respondent and the Child remained in the U.S., Petitioner petitioned for the Return of Child in a New York federal court on July 25, 2006. The Court denied the petition and dismissed on jurisdictional grounds. It held that Petitioner did not have custody rights under the Hague Convention on the Civil Aspects of International Child Abduction (Hague Convention) [T. I. A. S 11670, in force for U.S. July 1, 1988] as implemented by the International Child Abduction Remedies Act (ICARA), 42 U.S.C. Section 11601 et seq. (2000). Petitioner noted this appeal.

The U.S. Court of Appeals for the Second Circuit, however, affirms the district court. The issue is whether the Petitioner has custody rights under the Hague Convention, or whether they are simply rights of access. If the Petitioner has custody rights, then a U.S. Federal court would have jurisdiction to order the return of the Child. If the Petitioner has merely has access rights (as the district court found), then a United States court lacks jurisdiction to order the return of the Child.

The Court explains. “A petitioner cannot invoke the protection of the Hague Convention unless the Child to whom the petition relates is `habitually resident’ in a State signatory to the Convention and has been removed to, or retained in, a different State. [Cite]. ... [A] removal or retention is considered ‘wrongful’ for the purpose of return of the Child under the Hague Convention where: (a) it is in breach of rights of custody attributed to a person under the law of the State in which the child was habitually resident immediately before the removal or retention; and (b) at the time of removal or retention those rights were actually exercised, either jointly or alone, or would have been so exercised but for the removal or retention. Hague Convention, Art. 3, 51 Fed. Reg. at 10,498.”

“Under Chilean law, when parents live separately, the responsibility for the personal care of their child rests with the mother. [Cite]. However, the other parent still has a ne exeat right: the right to determine whether the child will leave the country. [Cite]. Although Respondent was granted permission by order of the Chilean court to leave the country with the child for three months, violation of the conditions of that order can be a violation of Petitioner’s ne exeat right.”

“In interpreting the Hague Convention, this Court has held that violating a ne exeat right is insufficient to qualify as a violation of custodial rights...we found that a ne exeat clause does not create rights of custody within the meaning of the Hague Convention. We agree with the district court that Petitioner did not establish the custody requirement by a preponderance of the evidence. Petitioner primarily relies on an affidavit from the Chilean ... ‘Central Authority’ as support for his argument that he has custodial rights under Chilean law... However, it is readily apparent that, even if it is authoritative, the district court was not bound to follow it.”

“As this Court has previously stated, ‘a foreign sovereign’s views regarding its own laws merit — although they do not command — some degree of deference.’ [Cite] Reasons existed for the district court to refrain from giving the affidavit absolute deference. Most importantly, the Central Authority’s conclusion that joint custody exists under Chilean law as a default rests almost exclusively on the ne exeat right.”

The rights that the Petitioner has in this case do not create rights of custody under the Hague Convention and ICARA. They only consist of Petitioner’s right of access to the Child.

Citation: Duran v. Beaumont, 534 F.3d 142 (2nd Cir. 2008).

COMPETITION LAW (EUROPEAN UNION)

On appeal from judgment by EU Court of First Instance, European Court of Justice finds no substantive errors of EU competition law on concentrations between undertakings such as Sony Corporation of USA and Bertelsmann on part of EU Commission contrary to rulings of CFI but remands to that Court since it had not reached several other important issues

This is an appeal of a Ruling by the Court of First Instance (CFI) dated on October 3, 2006, under Article 56 of Statute of European Court of Justice, before a Grand Chamber of 13 judges. Impala is an international association, incorporated under Belgian law; its members are 2,500 independent music production companies. The chief substantive legal provision involves Article 2(2) and (3) of Council Regulation (EEC) No. 4064/89 of December 21, 1989 on the control of concentrations between undertakings as amended by Council Regulation (EC), No 1310/97 of June 30, 1997 (the Regulation).

This is the factual background. On January 9, 2004 the Commission got a notice pursuant to the Regulation of a proposed concentration by which the undertakings Bertelsmann and Sony proposed to merge their global recorded music businesses. Bertelsmann is an international media company; it is active in recorded music through its wholly‑owned subsidiary, Bertelsmann Music Group (BMG). In the recorded music sector, Sony does business through Sony Music Entertainment (SME).

The proposed operation would integrate the parties’ global recorded music businesses into the concentration , setting up three or more newly‑created companies pursuant to a Business Contribution Agreement dated December 11, 2003. In the aggregate, these joint venture companies were to do business under the name Sony BMG. Under the agreement, Sony BMG would be active in the discovery and development of artists (the so‑called A & R (Artist and Repertoire) activity) and the marketing of the resulting discs. Sony BMG would not get involved in related activities such as music publishing, manufacturing and distribution.

On January 20, 2004, the Commission sent out questionnaires to a number of players on the market. Impala replied to that questionnaire and later lodged a separate submission. It set out the reasons why the Commission should declare the operation incompatible with the common market. Impala set out its concerns about further concentration in the market and the impact that this would have on market access (including in the retail sector) the media, the internet and consumer choice.

The Commission found that the notified operation raised serious doubts as to its compatibility with the common market and the functioning of the Agreement on the European Economic Area (the EEA Agreement). It, therefore, launched formal proceedings.

On May 24, 2004, the Commission sent a statement of objections (SO) to the parties to the concentration. It provisionally decided that the notified operation seemed incompatible with the common market and the functioning of the EEA Agreement. Thus, it seemingly would strengthen a collective dominant position (CDP) in the recorded music market and in the wholesale market for licences for online music. It might also coordinate the parent companies’ behaviour in a way incompatible with Article 81 EC.

The parties to the concentration answered the SO. The Hearing Officer held a hearing in June 2004. Impala, inter alios, was present. By the Contested Decision (TCD), the Commission found the concentration compatible with the common market pursuant to Article 8(2) of the Regulation. After proceedings before the CFI, the court found that it followed, both from TCD and from the arguments advanced by the Commission before it, that the only alleged element of opacity of the market resulted from the lesser transparency of the campaign discounts.

It held, [1] that the evidence, as mentioned in TCD, did not support the Commission’s conclusions and [2] that those conclusions decidedly differed from the findings made in the SO. In those circumstances, the CFI held that the first and second pleas in law were well founded and annulled TCD without examining the third to fifth pleas raised before it. The Appellants request that the ECJ should set aside the Judgment under Appeal (JUA); dismiss Impala’s application to annul TCD or, alternatively, refer the case back to the CFI for reconsideration.

By Appellant’s seven grounds of appeal (and their subparts), the Appellants allege the following mistakes committed by the CFI: [1] the CFI relied on the SO as a point of reference for its review of the substance of TCD; [2] it required the Commission to undertake new market investigations after the response to the SO; [3] it applied an excessive and incorrect standard of proof for decisions approving a concentration; [4] it exceeded the scope of its role in carrying out judicial review; [5] it misinterpreted the pertinent legal criteria applying to the creation, or strengthening, of a CDP; [6] it applied an incorrect standard of reasoning as to decisions approving a concentration; and [7] it relied on evidence that was not disclosed to the parties to the concentration. Sony BMG Music Entertainment BV adopts in full both the appeal and the forms of order sought by the Appellants. [The present digest will focus on grounds [6] and [7] dealing mainly with the substantive law of competition in the EU.]

When the CFI has found or assessed the facts, the Court of Justice has jurisdiction under Article 225 EC to review the CFI’s legal characterisation of those facts and the legal conclusions it has drawn from them. The ECJ thus has no jurisdiction to establish the facts or, in principle, to examine the evidence which the CFI accepted in support of those facts. Provided that the parties have properly obtained the evidence and have complied with the general principles of law and the rules of procedure in relation to the burden of proof and the taking of evidence, it is for the CFI alone to assess the value which it should attach to the evidence offered to it. Save where the lower court has distorted the clear sense of the evidence, that appraisal does not therefore constitute a point of law which is subject as such to review by the ECJ.

On the other hand, according to the ECJ’s case‑law, the extent of the obligation to state reasons is a question of law reviewable by the Court on appeal. This is because a review of the legality of a decision carried out in that context must necessarily take into consideration the facts on which the CFI based itself in reaching its conclusion as to the adequacy or inadequacy of the SO.

In the present case, as is apparent, inter alia, from the record and contrary to what Impala contends, the Appellants do not seek generally to challenge the findings of fact made by the CFI as such. On the contrary, they raise mostly appealable questions of law.

The fifth ground of appeal alleges that the CFI had erred in construing the pertinent legal criteria that apply to the creation or strengthening of a CDP. “... [T]the Court has already held, in substance, that the concept of a [CDP] is included in that of ‘dominant position’ within the meaning of Article 2 of the Regulation [Cite]. ...[T]he existence of an agreement or of other links in law between the undertakings concerned is not essential to a finding of a [CDP]. Such a finding may be based on other connecting factors and would depend on an economic assessment and, in particular, on an assessment of the structure of the market in question.[Cites].”

“In the case of an alleged creation, or strengthening of, a [CDP], the Commission is obliged to assess, using a prospective analysis of the reference market, whether the concentration which has been referred to it will lead to a situation in which effective competition in the relevant market is significantly impeded by the undertakings which are parties to the concentration and one or more other undertakings which together, in particular because of correlative factors which exist between them, are able to adopt a common policy on the market [cite] in order to profit from a situation of collective economic strength, without actual or potential competitors, let alone customers or consumers, being able to react effectively.”

“Such correlative factors include, in particular, the relationship of interdependence existing between the parties to a tight oligopoly within which, on a market with the appropriate characteristics (in particular in terms of market concentration, transparency and product homogeneity) those parties are in a position to anticipate one another’s behaviour and are therefore strongly encouraged to align their conduct on the market in such a way as to maximise their joint profits by increasing prices, reducing [either] output, [or] the choice or quality of goods and services, diminishing innovation or otherwise influencing parameters of competition. In such a context, each operator is aware that highly competitive action on its part would provoke a reaction on the part of the others, so that it would derive no benefit from its initiative.”

“A [CDP] significantly impeding effective competition in the common market – or a substantial part of it – may thus arise as the result of a concentration where, in view of the actual characteristics of the relevant market and of the alteration to those characteristics that the concentration would entail, the latter would make each member of the oligopoly in question, as it becomes aware of common interests, consider it possible, economically rational, and hence preferable, to adopt on a lasting basis a common policy on the market with the aim of selling at above competitive prices, without having to enter into an agreement or resort to a concerted practice within the meaning of Article 81 EC and without any actual or potential competitors, let alone customers or consumers, being able to react effectively.”

“Such tacit coordination is more likely to emerge if competitors can easily arrive at a common perception as to how the coordination should work, and, in particular, of the parameters that lend themselves to being a focal point of the proposed coordination. Unless they can form a shared tacit understanding of the terms of the coordination, competitors might resort to practices that are prohibited by Article 81 EC in order to be able to adopt a common policy on the market.”

“Moreover, having regard to the temptation which may exist for each participant in a tacit coordination to depart from it in order to increase its short‑term profit, it is necessary to determine whether such coordination is sustainable. In that regard, the coordinating undertakings must be able to monitor to a sufficient degree whether the terms of the coordination are being adhered to.”

“There must, therefore, be sufficient market transparency for each undertaking concerned to be aware, sufficiently precisely, and quickly, of the way in which the market conduct of each of the other participants in the coordination is evolving. Furthermore, discipline requires that there be some form of credible deterrent mechanism that can come into play if deviation is detected. In addition, the reactions of outsiders, such as current or future competitors, and also the reactions of customers, should not be such as to jeopardise the results expected from the coordination.”

“The conditions laid down by the [CFI] in ¶ 62 of its judgment in Airtours v Commission, which that court concluded, in ¶ 254 of the [JUA], should be applied in the dispute before it, are not incompatible with the criteria set out in the preceding paragraph of this judgment.”

“In applying those criteria, it is necessary to avoid a mechanical approach involving the separate verification of each of those criteria taken in isolation, while taking no account of the overall economic mechanism of a hypothetical tacit coordination.”

“... [T]he assessment of, for example, the transparency of a particular market should not be undertaken in an isolated and abstract manner, but should be carried out using the mechanism of a ‘hypothetical tacit coordination’ as a basis. It is only if such a hypothesis is taken into account that it is possible to ascertain whether any elements of transparency that may exist on a market are, in fact, capable of facilitating the reaching of a common understanding on the terms of coordination and/or of allowing the competitors concerned to monitor sufficiently whether the terms of such a common policy are being adhered to.”

“In that last respect, it is necessary, in order to analyse the sustainability of a purported tacit coordination, to take into account the monitoring mechanisms that may be available to the participants in the alleged tacit coordination in order to ascertain whether, as a result of those mechanisms, they are in a position to be aware, sufficiently precisely and quickly, of the way in which the market conduct of each of the other participants in that coordination is evolving.”

“In the present case, the Appellants submit that, even though the [CFI] stated in ¶ 254 of the [JUA] that it was following the approach adopted in its judgment in Airtours v Commission, in practice, it committed an error of law in inferring the existence of a sufficient degree of transparency from a number of factors which were not, however, relevant to a finding of an existing [CDP].”

“In that context, the Appellants object in particular to the fact that the [CFI] indicated in ¶ 251 of the [JUA] that the conditions laid down in ¶ 62 of the judgment in Airtours v Commission could, ‘in the appropriate circumstances, be established indirectly on the basis of what may be a very mixed series of indicia and items of evidence relating to the signs, manifestations and phenomena inherent in the presence of a [CDP]’.”

“... [O]bjection cannot be taken to ¶ 251 of itself, since it constitutes a general statement which reflects the [CFI]’s liberty of assessment of different items of evidence. It is settled case‑law that it is, in principle, for the [CFI] alone to assess the value to be attached to the items of evidence adduced before it.[Cites].”

“Similarly, the investigation of a pre‑existing [CDP] based on a series of elements normally considered to be indicative of the presence, or the likelihood of, tacit coordination between competitors cannot therefore be considered to be objectionable of itself. However, ... it is essential that such an investigation be carried out with care and, above all, that it should adopt an approach based on the analysis of such plausible coordination strategies as may exist in the circumstances.”

“In the present case, the [CFI], before which Impala raised arguments relating, in particular, to the parts of TCD relating to market transparency, did not carry out its analysis of those parts by having regard to a postulated monitoring mechanism forming part of a plausible theory of tacit coordination.”

“It is true that the [CFI] referred in ¶ 420 of the [JUA] to the possibility of a ‘known set of rules’ governing the grant of discounts by the majors. However—as the Appellants rightly submit ...—the [CFI] was content to rely, in ¶¶ 427 to 429 of the [JUA], on unsupported assertions relating to a hypothetical industry professional. In ¶ 428 of the judgment, the [CFI] itself acknowledged that Impala, ... ‘admittedly did not explain precisely what those various rules governing the grant of campaign discounts are’.”

“... Impala represents undertakings which, even if they are not members of the oligopoly formed by the majors, are active in the same markets. In those circumstances, it is clear that the [CFI] disregarded the fact that the burden of proof was on Impala in relation to the purported qualities of such a hypothetical ‘industry professional’.”

“... [I]t must be held that, in misconstruing the principles which should have guided its analysis of the arguments raised before it concerning market transparency in the context of an allegation of a [CDP], the [CFI] committed an error of law.”

“That error vitiates the part of the [JUA] which concerns the examination by the [CFI] of the arguments relating to the manifest errors of assessment committed by the Commission, including the finding of that court in ¶ 377 of the [JUA]. However, it is not, of itself, capable of invalidating that court’s finding in ¶ 325 of the [JUA] that, in substance, TCD had to be annulled because it was inadequately reasoned. Further grounds of appeal thus fall to be examined.”[¶¶ 119‑134]

The sixth ground of appeal claims the commission of an error of law when the [CFI] applied an incorrect standard of reasoning with respect to decisions approving a concentration. It is clear from settled case‑law that the statement of reasons required by Article 253 EC must be appropriate to the measure at issue and must disclose, in a clear and unequivocal fashion, the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent Community Court to exercise its power of review.”

“The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular (a) the content of the measure in question, (b) the nature of the reasons given and (c) the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 253 EC must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question.” [Cites]

“The institution which adopted the measure is not required, however, to define its position on matters which are plainly of secondary importance or to anticipate potential objections. [Cites]. Moreover, the degree of precision of the statement of the reasons for a decision must be weighed against practical realities and the time and technical facilities available for making the decision. [Cites].”

“Thus, the Commission does not infringe its duty to state reasons if, when exercising its power to examine concentrations, it does not include precise reasoning in its decision as to the appraisal of a number of aspects of the concentration which appear to it to be manifestly irrelevant or insignificant or plainly of secondary importance to the appraisal of the concentration. [Cite]. Such a requirement would be difficult to reconcile with the need for speed and the short timescales which the Commission is bound to observe when exercising its power to examine concentrations and which form part of the particular circumstances of proceedings for control of those concentrations.”

“It follows that, where the Commission declares a concentration to be compatible with the common market on the basis of Article 8(2) of the Regulation, the requirement to state reasons is satisfied when that decision clearly sets out the reasons for which the Commission considers that the concentration in question, ... does not create or strengthen a dominant position as a result of which effective competition would be significantly impeded in the common market or in a substantial part of it.”

“While it is true that the Commission is not obliged, in the statement of reasons for decisions adopted under the Regulation, to take a position on all the information and arguments relied on before it, including those which are plainly of secondary importance to the appraisal it is required to undertake, it none the less remains the case that it is required to set out the facts and the legal considerations having decisive importance in the context of the decision. The reasoning must in addition be logical and must not disclose any internal contradictions. [Cites].”

“It is in the light of these principles that the objections raised by the Appellants under the sixth ground of appeal should be examined. 171. As their principal argument, the Appellants submit that a Commission decision approving a concentration cannot be annulled on the ground of inadequate reasoning. They rely in particular in this regard on Article 10(6) of the Regulation.” [¶¶ 166‑170]

“... [T]he purpose of that provision is to ensure legal certainty where, exceptionally, the Commission has not adopted a decision within the prescribed period. Thus, the undertakings concerned are free to implement their concentration as soon as approval is deemed to have been given.”

“As Impala observes, the line of argument of the Appellants based on Article 10(6) of the Regulation has the result that decisions approving concentrations do not have to be reasoned at all, as they cannot be challenged on the ground of lack of a statement of reasons.”

“... [A]n inadequate statement of reasons in breach of Article 253 EC constitutes an infringement of essential procedural requirements for the purposes of Article 230 EC and is, moreover, a plea which may, and even must, be raised by the Community judicature of its own motion [Cite]. Furthermore, according to settled case‑law, where it is necessary to interpret a provision of secondary Community law, preference should as far as possible be given to the interpretation which renders the provision consistent with the Treaty and the general principles of Community law [Cite]. It follows that Article 10(6) of the Regulation must be interpreted and applied in the light of Articles 230 EC and 253 EC.”

“Thus, ... Article 10(6) constitutes an exception to the general scheme of the Regulation, which is laid down in particular in Articles 6(1) and 8(1) thereof. According to them, the Commission is to rule expressly on the concentrations which are notified to it, whether its decision be a negative or a positive one. It follows that, not only can Article 10(6) of the Regulation not form the basis of a general presumption that concentrations are compatible with the common market, it also cannot serve as a basis for an exception to the rule that a decision approving such a concentration may be challenged on the ground of infringement of the duty to state reasons. The legitimate need for legal certainty in exceptional situations, which that provision reflects, cannot go so far as to exclude decisions relating to concentrations in whole or in part from review by the Community judicature. The Appellants’ line of argument based on Article 10(6) of the Regulation must therefore be rejected.”

“In the alternative, the Appellants submit, inter alia, that since TCD allowed Impala to ascertain the reasons for the approval at issue and the [CFI] to exercise its power of judicial review, that court did not observe the settled case‑law of the Community judicature on the requirement to state reasons.”

“... [I]t is settled case‑law, first, that the purpose of the statement of reasons required by Article 253 EC is to enable the persons concerned to ascertain the reasons for the measure and to enable the competent Community Court to exercise its power of review and, secondly, that the requirements to be satisfied by the statement of reasons must be appraised by reference to the nature of the measure at issue and the context in which it was adopted. [Cites].”

“In the present case, it is true that a certain imbalance in [TCD] between the presentation of the elements tending to plead in favour of there being sufficient transparency and the presentation of the impact of the campaign discounts, which plead, according to the Commission, against such transparency, may appear unfortunate. Nevertheless, in the light, first, of the context in which [TCD] was adopted, marked in particular by the short space of time between the written reply to the [SO] and the hearing before the Commission, on the one hand, and the end of the formal proceedings, on the other. Secondly, [under] the requirements laid down by the case‑law referred to in ...this judgment, ... the [CFI] could not, without committing an error of law, find that the Commission had failed to comply with the duty to provide an adequate statement of reasons for [TCD].”

“In the first place, [TCD] showed the reasoning followed by the Commission in a way which subsequently allowed a party such as Impala to challenge its validity before the competent Court. It would be unreasonable in that regard to require, ... a detailed description of each of the factors underpinning [TCD], such as the nature of campaign discounts, the circumstances in which they might be applied, their degree of opacity, their size or their specific impact on price transparency. [Cites]. That is all the more the case because Impala was [cites] closely associated with the formal proceedings [cites] and that it was, in addition, perfectly able to challenge the validity of the Commission’s substantive appraisal in [TCD] before the [CFI].”

“In the second place, ...the [CFI] was aware of the reasons for which the Commission decided to approve the concentration at issue. It also devoted numerous paragraphs in its judgment to an analysis of whether those reasons were well founded. ... [T]he duty to state adequate reasons in decisions is an essential procedural requirement which must be distinguished from the question whether the reasoning is well founded, which is concerned with the substantive legality of the measure at issue [Cites]. The reasoning of a decision consists in a formal statement of the grounds on which that decision is based. If those grounds are vitiated by errors, the latter will vitiate the substantive legality of the decision, but not the statement of reasons in it, which may be adequate even though it sets out reasons which are incorrect. It cannot therefore be claimed that it was impossible for the [CFI] to exercise its power of judicial review. [Cites].” [¶¶ 172‑181]

“Under the first paragraph of Article 61 of the Statute of the Court of Justice, if the appeal is well founded, the Court of Justice is to quash the decision of the [CFI]. It may itself give final judgment in the matter, where the state of the proceedings so permits, or refer the case back to the [CFI] for judgment. Since the [CFI’s] judgment of July 13, 2006 examined only two of the five pleas relied on by Impala in support of its action, the Court of Justice considers that the present case is not in a state where judgment may be given. The case must therefore be referred back to the [CFI].” [¶¶ 189‑190]

Citation: Bertelsmann AG, and Sony Corporation of America v. Commission of the European Communities, Independent Music Publishers and Labels Association (Impala), Case 413/06; OJ 2008 C223/7 (ECJ Aug. 30, 2008)(Grand Chamber).

EXTRATERRITORIALITY (CRIMINAL)

In case of RICO criminal charge involving unlawful transfers from Dominican Bank, Eleventh Circuit rules that RICO may apply extraterritorially where Defendant initiated transfers of funds from U.S. bank accounts of foreign company for benefit of U.S. Company and U.S. Citizen

Between January 2000 and February 2003 Luis Alvares Renta (Defendant) initiated a series of bank transfers from Banco Intercontinental SA (Plaintiff) that totaled more that $48 million. At that time, Plaintiff Ramon Baez‑Figueroa, Defendant’s relative by marriage, controlled the funds. The transfers ultimately benefited companies owned by Defendant or Baez‑Figueroa or Defendant’s personal accounts.

In 2003, the Government of the Dominican Republic (DR) had Plaintiff put into receivership. The receivership sued Defendant, a dual citizen of the U.S. and the DR, in a Florida federal court alleging fraudulent transfer and civil RICO claims. Plaintiff won a $177 million judgment.

Defendant appealed, claiming that the lower court should have dismissed (1) all claims on forum non conveniens grounds; (2) the RICO claims (a) for unripeness and (b) because RICO cannot apply extraterritorially. The U.S. Court of Appeals for the Eleventh Circuit disagrees and affirms.

Apparently treating the issue of extraterritorial application of civil RICO charges as novel, the Court reasons that: “The first question, one of first impression in this Circuit, is whether RICO applies extraterritorially at all...The more widely accepted view, and the one we adopt today, is that RICO may apply extraterritorially if conduct material to the completion of the racketeering occurs in the U.S., or if significant effects of the racketeering are felt here. [Cites].”

“It is clear that Plaintiff ‘s case has failed to qualify under the effects test. No harm to a U.S. person or business [from] this scheme has been brought to our attention. The effects were felt predominantly in the DR, where [Plaintiff] was based and where the majority of its depositors and creditors were located. Extraterritorial jurisdiction, if it exists, must derive from the conduct test.”

“Significant amounts of conduct in furtherance of the RICO conspiracy occurred in both the U.S. as well as the DR. Indeed, the conduct occurring in, or directed at, the U.S. in this case was not an insubstantial or preparatory part of the overall looting scheme, but the actual means of its consummation. This scheme was carried out by directing transfers of funds to and from accounts at American banks, including the American bank accounts of the victim, [Plaintiff], and of one RICO enterprise, [Plaintiff]. Among its primary goals was enrichment of an American entity, Wadeville, controlled by an American Defendant. We have no doubt that under these circumstances, Congress would intend [Plaintiff] to have recourse to American courts and remedies.” [Slip Op. 21‑23]

Citation: Liquidation Commission of Banco Intercontinental v. Renta, 530 F.3d 1339 (11th Cir. 2008).

JURISDICTION

Where Arizona court convicted Mexican citizen of solicitation to commit smuggling, Arizona Court of Appeals rules that Arizona courts may exercise subject matter jurisdiction over charge, even where Defendant completed solicitations in Mexico, since offense would involve travel to Arizona

Authorities arrested Andres Coz Flores (Defendant) after being discovered with other aliens in Maricopa County Arizona. Defendant told police that he had contracted with an unknown person in Mexico to transport Defendant into Los Angeles. a grand jury indicted Defendant for conspiracy to commit smuggling and pled guilty to solicitation to commit smuggling.

Defendant later moved for post‑conviction relief, arguing that he had completed the crime of solicitation within Mexico and that, therefore, the Arizona Courts lack subject matter jurisdiction. The trial court denied the motion stating that, “the admitted criminal conduct constituted the offense of solicitation to commit human smuggling. This offense, like conspiracy, was ongoing and was committed in significant part in Maricopa County, where the Defendant and co‑Defendants were ultimately arrested.”

Defendant appealed to the Arizona Court of Appeals which affirms the conviction.

The Court outlines the issue as follows. A plea agreement waives all non‑jurisdictional defects. A Defendant, however, cannot waive subject matter jurisdiction, not even by a guilty plea, and he can raise it at any time. Here, it is undisputed by the parties that, while in Mexico, Defendant solicited another person to smuggle him into Arizona. Thus, Defendant committed the crime of solicitation while in Mexico. None of Defendant’s conduct that constituted any element of the offense took place in Arizona. Arizona has statutory jurisdiction over crimes where the conduct constituting any element of the offense or a result of such conduct occurs within Arizona.

Before deciding whether Arizona has statutory jurisdiction, the Court first examines whether there are federal constitutional limitations to Arizona’s jurisdiction. Of special concern are Article I, Section 10, and the Supremacy Clause in Article VI, Clause 2.

“Because the text of A.R.S. Section 13‑108 may fairly be construed to give Arizona jurisdiction ‘over crimes having any contact with this state,’[Cite], criminal jurisdiction should reach the extent permitted under federal and international law.”

“... [T]he power to regulate immigration is exclusively a federal power. DeCanas v. Bica, 424 U.S. 351, 354 (1976). But the Court has never held that every state enactment which in any way deals with aliens is a regulation of immigration and thus per se pre‑empted by this constitutional power, whether latent or exercised. In DeCanas, the Supreme Court outlined three ways in which state statutes related to immigration may be preempted: (1) if the state statute actually regulates immigration, (2) if it was the ‘clear and manifest purpose of Congress’ to preclude even ‘harmonious state regulation touching on aliens in general;’ and (3) if the state law ‘stands as an obstacle to the accomplishment and execution of the full purpose and objectives of Congress,’ [Cite].”

“Arizona’s human smuggling statute does not regulate immigration, because it does not regulate ‘who should or should not be admitted into the country, and the conditions under which a legal entrant may remain.’ [Cite]. The statute simply prohibits the knowing transportation of illegal aliens for profit or commercial purpose, requiring as an element of the offense that the persons transported be illegal aliens. The statute does not thereby determine the legality of a person’s presence in the U.S.. Thus, it does not constitute a state regulation of immigration, and it is not preempted on this ground. [Cite].”

“Arizona’s human smuggling act is not preempted by a “clear and manifest” purpose of Congress to prevent states from adopting even harmonious regulations prohibiting the smuggling of illegal aliens... There is no indication in the [Immigration and Nationality Act] or its history that Congress intended to preclude harmonious state regulation touching on the smuggling of illegal aliens in particular.”

“Arizona’s human smuggling law is not preempted because it neither conflicts with federal law nor stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress in enacting the INA. [Cite]. Rather, we find that Arizona’s human smuggling law furthers the legitimate state interest of attempting to curb ‘the culture of lawlessness’ that has arisen around this activity by a classic exercise of its police power. Moreover, to a large extent, Arizona’s objectives mirror federal objectives.”

The Court notes that, under the so‑called Effects Test, acts done outside State X but intended to produce and actually producing detrimental effects within State X, permit State X to punish the one who caused the harm as if he had been present at the effect.

Citation: State v. Flores, 218 Ariz. 407, 188 P.3d 706 (Ariz. App. 2008).

DEFAMATION

In libel action by parental opponent of gay lifestyles curriculum in British Columbia schools against radio “shock jock” who seemed to compare her to such historic rabble‑rousers as Hitler, George Wallace, Orval Faubus and others, Canadian Supreme Court upholds judgment for Defendants based on “fair comment” defense

Kari Simpson (Plaintiff) belonged to an organization which opposed the placement and use of materials in schools showing families with same‑sex parents. It also was against any promotion of, or tolerance for, gay lifestyles in the schools. She helped put together a document aimed to assist parents to successfully oppose gay rights‑related teachings in public schools called the Declaration of Family Values; she also spoke at a rally where she vigorously advanced her position on the school controversy.

In October 1999, Rafe Mair (Defendant), a so‑called “shock jock” radio talk‑show host, wrote and read an editorial on a private radio station owned and operated by radio station CNKW a subsidiary of station WJC (Defendant 2). In the editorial, Defendant referred to the Plaintiff’s speech and made statements which compared the Plaintiff to violent and intolerant historical figures.

This is a partial quote: “For [Plaintiff’s] homosexual, one could easily substitute Jew. I could see Governor Wallace—in my mind’s eye I could see Governor Wallace of Alabama standing on the steps of a schoolhouse shouting to the crowds that no Negroes would get into Alabama schools as long as he was governor. It could have been blacks last Thursday night just as easily as gays. Now I’m not suggesting that [Plaintiff] was proposing or supporting any kind of holocaust or violence but neither really—in the speeches, when you think about it and look back ‑‑ neither did Hitler or Governor Wallace or [Orval Faubus] or Ross Barnett. They were simply declaring their hostility to a minority. Let the mob do as they wished.”

The Plaintiff brought a civil action for libel in the British Columbia courts against Defendant and the Defendant 2. The court of first instance dismissed it. The judge found that Defendant’s statements were indeed defamatory, but that the issue in question was a matter of public interest and thus applied the defense of “fair comment” to the Defendant’s words.

The Court of Appeal allowed the Plaintiff’s appeal. It ruled that the defense of fair comment was not available because no evidentiary foundation existed for the imputation that the Plaintiff “would condone violence toward gay people”, nor had Defendant testified that he had an honest belief that the Plaintiff would do so. Defendant and Defendant 2 appealed. The Supreme Court of Canada allows the appeal and dismisses the action. In the Court’s view, the editorial made clear the factual basis of the controversy Defendant’s listeners were generally aware of it. In the absence of proven malice on his part, which the trial judge had held was not a dominant motive, the law shielded his expression of opinion. Defendant was a radio personality with opinions, not a reporter of facts. Thus, the applicable defense was fair comment.

“This is a private law case that is not governed directly by the Canadian Charter of Rights and Freedoms. Yet it was common ground in the argument before us that the evolution of the common law is to be informed and guided by Charter values. Particular emphasis was placed on the importance of ensuring that the law of fair comment is developed in a manner consistent with the values underlying freedom of expression. However, the worth and dignity of each individual, including reputation, is an important value underlying the Charter and is to be weighed in the balance with freedom of expression, including freedom of the media.”

“The Court’s task is not to prefer one over the other by ordering a ‘hierarchy’ of rights (Dagenais v. Canadian Broadcasting Corp., [1994] 3 S. C. R. 835 (S. C. C.)), but to attempt a reconciliation. An individual’s reputation is not to be treated as regrettable but unavoidable ‘road kill on the highway of public controversy,’ nor should an overly solicitous regard for personal reputation be permitted to ‘chill’ freewheeling debate on matters of public interest. As it was put by counsel for the intervener, Media Coalition, ‘No one will really notice if some [media] are silenced; others speaking on safer and more mundane subjects will fill the gap.’” [¶ 2]

“The [Plaintiff] on this appeal did not challenge the view that [Defendant’s] imputation that [Plaintiff] ‘would condone violence toward gay people’ was a comment not an imputation of fact. I agree that the ‘sting’ of the libel was a comment and it would have been understood as such by [Defendants’] listeners. ‘What is comment and what is fact must be determined from the perspective of the reasonable viewer or reader. [Cite]. [Defendant] was a radio personality with opinions on everything, not a reporter of the facts. The applicable defence was fair comment. On that point, I agree with the trial judge.” [¶ 27].

“... [A] properly disclosed or sufficiently indicated by the audience factual foundation (or [one] so notorious as to be already understood by the audience) is an important objective limit to the fair comment defence, but the general facts giving rise to the dispute between [Defendant] and [Plaintiff] were well known to [Defendants’] listening audience, and were referred to in part in the editorial itself. [Plaintiff’s] involvement in the Declaration of Family Values was familiar to [Defendants’] audience. Her repeated invitations to her followers to pick up the phone and call talk shows and politicians assured her views a measure of notoriety. [Cite].”

“The [Plaintiff] has offered no persuasive reason to justify the Court of Appeal’s interference with the trial judge’s conclusion that the defence has established that every element of the factual foundation was either stated or publicly known; that [Defendant] was aware of them all; and that they were all substantially true in the sense that they were true in so far as they go to the pith and substance of the opinion [Defendant] expressed.” [¶ 34].

“Of course the law must accommodate commentators such as the satirist or the cartoonist who seizes on a point of view, which may be quite peripheral to the public debate, and blows it into an outlandish caricature for public edification or merriment. Their function is not so much to advance public debate as it is to exercise a democratic right to poke fun at those who huff and puff in the public arena.”

“This is well understood by the public to be their function. The key point is that the nature of the forum or the mode of expression is such that the audience can reasonably be expected to understand that, on the basis of the facts as stated or sufficiently indicated to them, or so generally notorious as to be understood by them, the comment is made tongue‑in‑cheek so as to lead them to discount its ‘sting’ accordingly.” [¶ 48].

“Applying the law of fair comment to the facts of the case, the trial judge dealt with the issues in an appropriate sequence. The defamatory meaning of the words complained of was considered in their full context in determining that the comments were defamatory. No reason existed to interfere with that conclusion, as it was plainly correct. The public debate about the inclusion in schools of educational material on homosexuality clearly engaged public interest. No statement existed which would be understood to be a matter of fact, and the language in which it was couched was such that it was clearly opinion. The comment was based on a sufficient substratum of facts to anchor the defamatory comment.”

“The Plaintiff did not dispute the contents or tone of her speeches in the court record. Further, the Defendants satisfied the honest belief requirement. Notwithstanding the absence of a subjective honest belief that the Plaintiff would condone violence, Defendant was entitled to rely on the objective test. The [Plaintiff’s] use of violent images could support an honest belief on the part of at least some of her listeners that she ‘would condone violence toward gay people’. Considering both the content of the [Plaintiff’s] speeches and the broad latitude allowed by the defence of fair comment, the defamatory imputation that while the [Plaintiff] would not engage in violence herself she ‘would condone violence’ by others, was an opinion that could honestly have been expressed on the proved facts by a person ‘prejudiced, exaggerated or obstinate [in] his views’.”[¶ 62].

Citation: Simpson v. Mair, 2008 CarswellBC 1311, 2008 S.C.C. 40 (Sup. Ct. Can. June 27).

SOVEREIGN IMMUNITY

Where California power agency accuses Canadian power company with manipulating California power market, Ninth Circuit Rules that company is “foreign state” for purposes of FSIA, where Province of British Columbia had created it

During 2000 and 2001, the state of California experienced an energy shortage resulting in blackouts and substantially increased energy costs. In response to this crisis the state’s Department of Water Resources (Plaintiff), was given authority to enter into contracts with any person or entity for the purchase of added power. During 2001, Plaintiff and Powerex (Defendant), a Canadian power corporation, transacted thousands of electricity purchases. In February 2005, Plaintiff sued Defendant in California state court, alleging that Defendant had manipulated the market in order to tighten energy supplies in the state.

Citing the Federal Power Act, 16 U.S.C. Section 825 and the Foreign Sovereign Immunities Act, 28 U.S.C. Section 1441(d), Defendant removed the case to federal court. The federal court initially dismissed the case finding that sole jurisdiction lay with the Federal Energy Regulatory Commission (FERC).

Plaintiff then amended its complaint. Upon considering the amended complaint, the federal court remanded the case to the California state court (1) because only state law contract issues remained and (2) because the FSIA did not apply to Defendant, which the Ninth Circuit had ruled not be a “foreign state” in California v. NRG Energy Inc., 391 F.3d 1011 (9th Cir. 2004). Later, the U.S. Supreme Court vacated the NRG Energy Inc. decision on jurisdictional grounds in 2007. See Powerex Corp. v. Reliant Energy Servs., Inc., 127 S. Ct. 2411 (2007).

Defendant next appealed the district court’ determination, that it is not a “foreign state” under the FSIA. Because this action concerns contracts between the Plaintiff and Defendant, Defendant concedes that this case would fall within the “commercial activity” exception in the FSIA if the Act does apply to it. This case turns on whether Defendant is an “organ” of either Canada or a Canadian political subdivision.

The U.S. Court of Appeals for the Ninth Circuit reverses and remands. The Court holds that Defendant is in fact a “foreign state.”

“Congress has granted procedural and substantive protections to foreign sovereigns and entities with certain relationships to them. Procedurally, ‘foreign state[s],’ as defined by 28 U.S.C. Section 1603(a), are empowered to remove civil actions brought against them to federal court for a bench trial . [Cite]. Substantively, ‘a foreign state shall be immune from the jurisdiction of the courts of the U.S. and of the States,’ unless it falls within certain exceptions. Because [NRG Energy] was vacated on jurisdictional grounds by the Supreme Court ... we are not bound by it, and we accord that opinion deference only to the extent we find it persuasive.” [Slip Op. 17‑18]

“An entity is an organ of a foreign state (or political subdivision thereof) if it ‘engages in a public activity on behalf of the foreign government.’” [Slip Op. 19‑20]

The Court then examines Defendant’s parent company, BC Hydro. That company was created by the British Columbia Hydro and Power Authority Act in order to hold the Province’s assets and to promote major hydroelectric development. Early on, BC Hydro assisted the Province and Canada in negotiating and implementing a treaty regarding power generation and flood control along the Columbia River.

“Hydro is governed by British Columbia’s Hydro and Power Authority Act. R.S.B.C., ch. 212, Section 1(1) (1996). By that legislation, the corporation is ‘for all its purposes an agent of the government and its powers may be exercised only as an agent of the government.’ [Cite]. In NRG Energy, we concluded that ‘BC Hydro was an immune foreign sovereign as defined by the [FSIA]. “ [Slip Op. 20‑21]

The Court then turns to the Defendant’s status under the FSIA. “In November 1988, British Columbia’s Minister of Energy, Mines, and Petroleum Resources notified BC Hydro’s CEO and Chairman that the Provincial Cabinet desired a ‘single window agency to be responsible to market the export of power outside the province and that this entity should be a wholly owned subsidiary of BC Hydro.’ [Defendant] (under a different name) was incorporated one month later. The ‘circumstances surrounding [Defendant’s] creation’ weigh in favor of finding [Defendant] an organ of British Columbia. [Cite].” [Slip Op. 22]

“[W]e respectfully disagree with the NRG Energy court’s finding that [Defendant] enjoys a ‘high degree of independence from the government.’ [Cite]. On the contrary, [Defendant] is restrained by provincial regulations and directives applicable to government corporations, the Province can limit [Defendant’s] ability to enter banking and other financial arrangements, and [Defendant’s] financial operations are reviewed by the Province’s comptroller general. [Cite].”

“Although [Defendant] may enjoy a limited degree of tactical independence, its purposes and strategies—indeed, its continued existence—are determined by the Province. [Defendant’s] earnings are consolidated with those of BC Hydro for purposes of establishing BC Hydro’s rates. . . . BC Hydro pays approximately 85% of its consolidated net income to the BC Government annually. [Cite]”

“The relevant question is not whether [Defendant] earns a profit but where does that profit go? Here it does not go to private shareholders; it goes to the benefit of the public in payments to the province and reduced electricity prices.”

“[Defendant’s] employment policies do not obviously qualify it or disqualify it as an ‘organ’ of British Columbia. Although [Defendant’s] employees are not civil servants and are not paid within provincial guidelines nor included in the government pension program, this court has repeatedly held that ‘[a] company may be an organ of a foreign state for purposes of the FSIA even if its employees are not civil servants.’ [Cite]”

“Taking a holistic view of [Defendant], one sees a corporation that is a wholly‑owned, second‑tier subsidiary of British Columbia, created pursuant to an order of the Province. A majority of its directors are indirectly selected by the Lieutenant Governor in Council, and its remaining directors are subject to government approval. It is immune from taxation. By statute, the government’s comptroller oversees its financial operations. It implements international agreements at the direction of the government, and it carries out domestic policy goals. Its profits redound to the benefit of the Province’s citizens. For these reasons, we agree with Justice Breyer that ‘[Defendant] is the kind of government entity that Congress had in mind when it wrote the FSIA’s ‘commercial activit[y]’ provisions.’ [Cite].” [Slip Op. 25‑28]

Citation: California Dept. of Water Resources v. Powerex Corp., 533 F.3d 1087 (9th Cir. 2008).

TERRORISM

In suit on behalf of American citizens killed or injured by bombings in Sudan of U.S. Embassies, D.C. Circuit holds that state sponsor of terrorism exception to FSIA is not unconstitutional delegation of Congressional Power, where it delegates to Secretary of State power to label country as such

On August 7, 1998, al Qaeda agents bombed U.S. embassies in Nairobi, Kenya and Dar es Salaam, Tanzania. Certain victims of the bombings and their families (Plaintiffs) sued the Republic of Sudan and the Interior Ministry for the Republic of Sudan (Defendants) in the District of Columbia federal court. It alleged that the Defendants rendered material support for the bombings. Plaintiffs assert jurisdiction under the exception for state sponsors of terrorism, 28 U.S.C. Section 1605(a)(7) in the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. Sections 1602—11 (FSIA).

Defendant moved to dismiss the claim on the grounds that the state sponsor of terrorism exception is an unconstitutional delegation of congresses power to define the jurisdiction of the lower courts and that the complaint fails to allege sufficient facts. The district court denied Defendants motion. Defendant then filed an interlocutory appeal. The U.S. Court of Appeals for the District of Columbia Circuit affirms the ruling and remands the case to the district court for further proceedings.

Here, Defendant asserts that the courts of the U.S. lack jurisdiction because Defendant (as a foreign state) enjoys sovereign immunity from suit. Congress adopted the doctrine in 28 U.S.C. Section 1604 which provides that “a foreign state shall be immune from the jurisdiction of the courts of the U.S. and of the States except as provided in sections 1605 to 1607.”

Plaintiffs argue (and the district court concluded) that the district court had jurisdiction under 28 U.S.C. Section 1605(a)(7), which provides that “[a] foreign state shall not be immune from the jurisdiction of courts of the U.S. or of the States in any case . . . against a foreign state for personal injury or death that was caused by an act of torture, extrajudicial killing, aircraft sabotage, hostage taking, or the provision of material support or resources . . . for such an act if such act or provision of material support is engaged in by an official, employee, or agent of such foreign state while acting within the scope of his or her office, employment, or agency . . . .”

This exception to foreign sovereign immunity, however, applies only where the U.S. Secretary of State has designated the foreign state as a “state sponsor of terrorism.” The Secretary of State makes such determination. The jurisdiction of the court under this statute depends on the Secretary’s designation. Here, Sudan creatively argues that giving such power to the Secretary of State (an official of the Executive Branch) is an unconstitutional statutory delegation of congressional authority to the Executive. It violates the separation of powers embodied in the Constitution. The Court disagrees.

“In the state sponsor of terrorism exception, Congress did not empower the Executive to create a statute‑like definition or delineation of an area of jurisdiction within which the Article III courts might exercise judicial authority over otherwise immune foreign sovereign states. Rather, Congress delineated the area of immunity and the exception to the immunity, delegating to the Executive only the authority to make a factual finding upon which the legislatively enacted statute and the judicially exercised jurisdiction would partially turn.” [Slip Op. 5‑9].

The Court also notes that Section 1605(a)(7) is not the only component of the FSIA that predicates the Court’s jurisdiction, in part, upon an Executive factfinding. The FSIA in its entirety depends upon the President’s decision to recognize an entity as a foreign nation because the FSIA only applies to recognized nations. Sudan does not dispute this delegation of factfinding authority. It is well‑settled that the recognition of a foreign state is exclusively a function of the Executive.

The Secretary of State may label a country a state sponsor of terrorism if the government of such country has repeatedly provided support for acts of international terrorism. Plaintiff argues that this delegation is not specific enough. It does not define “repeatedly,” “support,” or “acts of international terrorism,” or require Congress’ approval. No further definition of these terms is necessary. Also, a related statute requiring the Secretary of State to prepare a detailed assessment of state sponsors of terrorism defines the terms “terrorism” and “international terrorism.” 22 U.S.C. Section 2656f(d)(1), (2).

The statutory context of Section 1605(a)(7), together with the Executive Branch’s inherent constitutional authority in the area of foreign affairs, provides more than enough guidance to the Secretary of State in making a finding of fact upon which the operation of Section 1605(a)(7) partially depends. Therefore, the Court opines that Section 1605(a)(7) does not include an unconstitutional delegation of authority to the Executive Branch.

Defendant further argues that Plaintiffs failed to plead the jurisdictional causation requirement. In particular, Plaintiffs failed to plead sufficient facts to “reasonably support a finding” that Defendant’s material support of al Qaeda in the early 1990s caused the embassy bombings in Kenya and Tanzania in 1998.”

“Before we consider Respondents’ allegations, however, we must address [Defendant’s] contention that heightened specificity is required of Respondents’ pleading because causation is a jurisdictional requirement. But the FSIA directs that ‘[a]s to any claim for relief with respect to which a foreign state is not entitled to immunity under section 1605 or 1607 of this chapter, the foreign state shall be liable in the same manner and to the same extent as a private individual under like circumstances. . . .’ 28 U.S.C. Section 1606 ...”

“In support of their claim that [Defendant’s] ‘material support’ of al Qaeda was a cause of the embassy bombings, appellees allege that Sudan ‘entered into an arrangement with al Qaeda and Hezbollah under which those organizations received shelter and protection from interference while carrying out planning and training of various persons for terrorist attacks, including the attacks of August 7, 1998.’”

“Although ‘Plaintiffs’ allegations are somewhat imprecise as to the temporal proximity of Sudan’s actions to, and their causal connection with, the’ terrorist act and ‘do not chart a direct and unbroken factual line between Sudan’s actions’ and the terrorist act, this ‘imprecision is not fatal for purposes of jurisdictional causation so long as the allegations, and the reasonable inferences drawn therefrom, demonstrate a reasonable connection’ between the foreign state’s actions and the terrorist act.” [Slip Op. 15‑20]

Citation: Owens v. Republic of Sudan, 531 F.3d 884 (D.C. Cir. 2008).

TORTURE

In action by foreign national under Torture Victim Protection Act against U.S. and its officers for removal Plaintiff from U.S. to Syria where he alleges he was tortured, Second Circuit rules that Plaintiff failed to state claim, where Plaintiff failed to allege that Defendants had any power under Syrian law

Maher Arar (Plaintiff), a dual citizen of Syria and Canada, alleges that U.S. officials removed him to Syria with the knowledge or intention that Syrian authorities would subject him to torture. Plaintiff brought suit against the U.S. and a number of U.S. officials, in a New York federal court. The complaint alleged multiple violations of the Torture Victim Protection Act, 28 U.S.C. Section 1350 (TVPA) (appended as a statutory note to the Alien Tort Claims Act, 28 U.S.C. Section 1350) (ATCA) and the Fifth Amendment to the U.S. Constitution. The District Court dismissed Plaintiff’s case for failing to allege facts sufficient to state a claim under the TVPA. Plaintiff appealed. The U.S. Court of Appeals for the Second Circuit, however, affirms the District Court ruling.

The Court first points out that the TVPA creates a cause of action for damages against “[a]n individual who, under actual or apparent authority, or color of law, of any foreign nation . . . subjects an individual to torture.” A Defendant alleged to have violated the TVPA acts under color of foreign law when he “exercise[s] power ‘possessed by virtue of [foreign] law’” and commits wrongs “‘made possible only because the wrongdoer is clothed with the authority of [foreign] law.’”

To determine what it means to act under “color of foreign law” for the purposes of the TVPA, the Court generally looks to “principles of agency law and to jurisprudence under 42 U.S.C. Section 1983 [civil rights statute). ” Kadic v. Karadzic,70 F.3d 232, 245 (2d Cir. 1995). Here, Plaintiff contended that when the state or its officials played a significant role in the result, this satisfies the Section 1983 test. The Court disagrees. “In NRG Energy, we concluded that ‘BC Hydro was an immune foreign sovereign as defined by the Foreign Sovereign Immunities Act (FSIA).’” [Slip Op. 20‑21]

“When [a] violation is the joint product of the exercise of a State power and of a non‑State power[,] . . . the test under the Fourteenth Amendment and Section 1983 is whether the state or its officials played a ‘significant’ role in the result.” [Cite]. We also noted, however, that, when the ‘non‑State’ actor is a federal official, we will not find that state law played a ‘significant role’ unless the complained‑of actions can be attributed to ‘the control or influence of the State Defendants.’ [Cite]. As we explained, this ‘control or influence’ test reflects the ‘evident purpose of Section 1983[,] [which is] to provide a remedy when federal rights have been violated through the use or misuse of a power derived from a State.’ [Cite]. Because federal officials cannot exercise power under foreign law without subjecting themselves to the control or influence of a foreign state, our comments in [case precedent] are entirely consistent with the test for TVPA liability outlined above, which we hereby adopt in this opinion.”

“[Plaintiff] alleges that Defendants removed him to Syria with the knowledge or intention that Syrian authorities would interrogate him under torture. He also alleges that, while he was in Syria, Defendants provided Syrian authorities with information about him, suggested subjects for Syrian authorities to interrogate him about, and received ‘all information coerced from [him] during [these] interrogations.’ [Cite].”

Nowhere, however, does [Plaintiff] contend that the U.S. Defendants possessed any power under Syrian law, that their allegedly culpable actions resulted from the exercise of power under Syrian law, or that they would have been unable to undertake these culpable actions had they not possessed such power. Because prior precedents of the Supreme Court and our Court indicate that such allegations are necessary to state a claim under the TVPA, we affirm the District Court’s dismissal of Count one of [Plaintiff’s] complaint.” [Slip Op. 23‑26]

Citation: Arar v. Ashcroft, 532 F.3d 157 (2nd Cir. 2008).

The U. K. government has officially recognized sharia law and civil tribunals in Britain.

The government has quietly approved the powers for sharia judges to rule on cases ranging from divorce and financial disputes to those involving domestic violence. Rulings issued by a network of five sharia courts are now enforceable with the full power of the judicial system, through the county courts or High Court. Sharia courts with these powers are functioning in London, Birmingham, Bradford and Manchester with the network’s headquarters in Nuneaton, Warwickshire. The government plans to set up two more courts for Glasgow and Edinburgh. Sheikh Faiz‑ul‑Aqtab Siddiqi, whose Muslim Arbitration Tribunal administers the courts, said he had taken advantage of a clause in the Arbitration Act 1996. For more than a century, Jewish Beth Din courts have been operating under the same provision in the Arbitration Act and adjudicate civil cases, ranging from divorce to business disputes. Under the authority of the Act, the government classifies the sharia courts as arbitration tribunals. The rulings of arbitration tribunals are binding in law, provided that both parties in the dispute agree. Siddiqi said: “We realised that under the Arbitration Act we can make rulings which can be enforced by county and high courts. The Act allows disputes to be resolved using alternatives like tribunals. This method is called Alternative Dispute Resolution (ADR), which for Muslims is what the sharia courts are. In a recent inheritance dispute handled by the court in Nuneaton, the tribunal divided the estate of a Midlands man among his three daughters and two sons. The judges awarded the sons twice as much as the daughters, in accordance with sharia. Had the family gone to a traditional British court, the daughters would have received equal shares. Citation: The Sunday Times (online), London, September 14, 2008 (byline of Abu Tamer, assisted by Ms. Helen Brooks).