2009 International Law Update, Volume 15, Number 9
(September)
Legal Analyses published by Mike Meier,
Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com.
ALIEN TORT CLAIMS ACT
In case involving alleged torture and murder of Colombian
trade union leaders by paramilitary and police, Eleventh Circuit finds lack of
subject matter jurisdiction under ATCA and failure to state claim upon which
relief can be granted for TVPA claims where Colombian government merely
tolerated paramilitary actors and complaint failed to adequately allege
conspiracy between police and trade unionists’ employers
The Complaint alleges that the Colombian bottling companies
that employed the Plaintiffs collaborated with Colombian paramilitary forces
and Colombian police to murder and torture Plaintiffs, many of whom are trade
union leaders. Plaintiffs also sued the Coca‑Cola Company and its Colombian
subsidiary Coca‑Col0a de Colombia, S.A. (the Coca‑Cola Defendants). Plaintiffs
sued in a Florida federal court, alleging the systematic intimidation,
kidnapping, detention, torture and murder of Colombian trade unionists by
paramilitary forces working as Defendants’ agents. After the Defendants jointly
moved to dismiss the complaint under Civil Rule 12(b)(1) for lack of subject
matter jurisdiction, the Plaintiffs amended their complaint by filing four
separate complaints (the Gil case, the Galvis case, the Leal case and the
Garcia case).
The Gil case involved a bottling factory run by Bebidas y
Alimentos de Urabá and its owner, Richard Kirby (the Bebidas Defendants). The
other three cases implicate separate bottling factories operated by Panamco
Colombia and its owners, Panamerican Beverages Company, LLC and Panamco, LLC
(the Panamco Defendants).
The District Court held that it lacked subject matter
jurisdiction over the ATCA and TVPA claims against the Coca‑Cola Defendants in
the Gil case. The bottler’s agreement between The Coca‑Cola Defendants and the
Bebidas Defendants lacked the requisite control for the Coca‑Cola Defendants to
be answerable for the acts of Bebidas or its employees.
In a separate opinion, the District Court found that each of
the four complaints failed to plead factual allegations sufficient to invoke
the court’s subject matter jurisdiction under the ATCA and the TVPA. This
appeal resulted.
The U.S. Court of Appeals for the Eleventh Circuit affirms.
The Court upholds the jurisdictional dismissal of the ATCA claims. It vacates
the dismissal of the TVPA claims, however, for lack of subject matter
jurisdiction. It instructs the District Court instead to dismiss the TVPA
claims for failure to state a claim.
“Plaintiffs contend [that] Colombia has experienced
pervasive civil unrest. This stems from a longstanding civil war involving
armed leftist groups on one side and the Colombian military, as well as right‑wing
paramilitaries, on the other. Since 1986, when the largest trade union
confederation in Colombia was formed, over 4,000 trade unionists have been
murdered. Plaintiffs describe the violent persecution of trade unionists in
Colombia as reaching ‘epidemic proportions’ for many years. Plaintiffs also
contend they lack an access to an independent or functioning legal system in
Colombia, because they suggest the country is not governed by the rule of law.
...”
It is not alleged “[that] any defendant caused or
precipitated the violence; rather, Defendants are accused of capitalizing on
the hostile environment and conspiring with paramilitaries – or the local
police in the case of Garcia – to rid their respective bottling facilities of
unions.”
“Plaintiffs each brought claims under the ATCA and TVPA. ...
Federal subject matter jurisdiction exists for an ATCA claim when the following
three elements are satisfied: (1) an alien (2) sues for a tort (3) committed in
violation of the law of nations. ... In this case, as in most ATCA cases, the
only issue is whether Plaintiffs have satisfactorily pled a violation of the
law of nations [or a U.S. treaty].. See [Kadic v. Karadzic, 70 F.3d 232, 238
(2d Cir. 1995)].”
TVPA claims require the following three elements: (1) an
individual (2) committed torture or extrajudicial killing (3) under the actual
or apparent authority, or color of law, of any foreign nation. 28 U.S.C. § 1350
note § 2(a). Failure to plead any of the elements of a TVPA claim results in a
failure to state a claim upon which relief can be granted ...” ‘[D]efects in
pleading claims under the [TVPA] are not jurisdictional defects[, rather t]hese
pleading issues involve stating claims on which relief can be granted.... not a
lack of subject matter jurisdiction.”
“ATCA claims generally require allegations of state action
because the law of nations are the rules of conduct that govern the affairs of
a nation, acting in its national capacity, in relations with another nation,
... TVPA claims, by statutory definition, always require allegations of ‘actual
or apparent authority, or color of law.’ ... ‘State‑sponsored torture, unlike
torture by private actors, likely violates international law and is therefore
actionable under the Alien Tort [Claims] Act.’ ...” [Slip op. 20‑22]
To establish A2TCA subject matter jurisdiction, the
complaint must sufficiently plead either [1] that state actors committed the
wrongful acts or [2] the culprits were sufficiently connected to the government
as to be acting under color of law and [3] that the defendant(s) or their
agents, conspired with the state actors, or those acting under color of law, in
carrying out the tortious acts. The District Court ruled that the allegations
in the Gil, Galvis and Leal cases did not sufficiently show that the Colombian
paramilitary had committed the torture and murder under color of law. In its
view, official toleration of the misdeeds of private security forces does not
transform their actions into state acts.
In the absence of state action, plaintiffs can plead valid
ATCA claims for torture and murder carried out in the course of committing war
crimes. Plaintiffs argue that the use of open violence to suppress the unions
took place as a result of a raging civil war. The Circuit Court rejects the
Plaintiffs’ arguments; the mere occurrence of the acts during an armed civil
conflict is not enough to establish an ATCA claim. The Court therefore affirms
the District Court’s dismissal of the Gil, Galvis and Leal cases for lack of
subject matter jurisdiction.
As to the ATCA claim in the Garcia case, it did involve the
actions of the local police rather than paramilitary forces. The Court,
however, finds that the District Court did not err in dismissing this complaint
for lack of subject matter jurisdiction, because the Complaint failed to
sufficiently establish a conspiracy. For instance, the Garcia complaint alleged
that the local police had arrested, detained and mistreated local union leaders
because of false accusations by the bottling plant’s chief of security that he
had found a bomb. Although Plaintiffs had alleged that the police acted because
either the Security Chief arranged for payment or that the police had a shared
purpose, the attenuated chain of conspiracy fails to render the conceivable
claims plausible.
The Court further notes that there was no allegation that
the treatment received by the Plaintiffs fell within the scope of the
conspiracy. Plaintiffs also failed to allege that a single illegal detention of
less than a day, followed by transfer of custody to lawful authorities,
violated the norms of customary international law.
The Court vacates the District Court’s dismissal of the TVPA
claims. The district court incorrectly determined that the TVPA claims lacked
subject matter jurisdiction because subject matter jurisdiction was lacking for
the ATCA claims. The Court concludes that 28 U.S.C. § 1331 does confer subject
matter jurisdiction over TVPA claims. Thus the correct ruling would have been
to dismiss the TVPA claims for failure to state a viable claim under Rule
12(b)(6).
“To survive a motion to dismiss for failure to state a claim
upon which relief can be granted on the TVPA claims, Plaintiffs must
sufficiently allege (1) the paramilitaries were state actors or were
sufficiently connected to the Colombian government so they were acting under
color of law and (2) the Defendants, or their agents, conspired with the state
actors, or those acting under color of law, in carrying out the state‑sponsored
torture. Plaintiffs failed to do so.” [Slip op. 32‑33]
Citation: Sinaltrainal v. Coca‑Cola Company, No. 06‑15851
(11th Cir. August 11, 2009).
ARBITRATION
In dispute over enforcement of Swedish arbitral award
against Respondent Azerbaijan oil company, Second Circuit overrules Texas
Trading case and remands to district court to determine whether Respondent is
agent of foreign state and whether it is entitled to Due Process protections
Frontera Resources Azerbaijan Corporation (Frontera) is a
Cayman Islands company. The Republic of Azerbaijan is the situs of and owns the
State Oil Corporation of the Azerbaijan Republic (SOCAR). In November 1998, the
companies agreed to allow Frontera to develop and manage Azerbaijan oil
deposits and to deliver oil to SOCAR.
In 2000, disputes developed over oil payments. Not only did
SOCAR seize the oil, but also the bank that had financed Frontera in this
venture foreclosed on the loan and settled with SOCAR. Frontera continued to
press for payment, while SOCAR denied liability based on its settlement with
the bank. The matter went to arbitration before a Swedish tribunal which
awarded Frontera about $1.24 million plus interest.
Frontera petitioned a New York federal court to enforce the
Swedish award against SOCAR. It relied on Article II(2)of the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (New York Convention)
[June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38,] as implemented at 9 U.S.C. §
207.
The district court, however, dismissed the petition for lack
of personal jurisdiction. It found that SOCAR lacked enough contacts with the
U.S. to meet the Due Process Clause criteria. Frontera appealed. The U.S. Court
of Appeals for the Second Circuit finds that the district court had properly
acquired jurisdiction over either SOCAR or SOCAR’s property. It had erred,
however, in holding that the foreign states and their agents enjoy rights under
the Due Process Clause. The Court overrules its prior holding in Texas Trading &
Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300 (2d Cir. 1981), and
remands for a jurisdictional analysis.
The Court first addresses the issue of jurisdiction over
SOCAR. “We have previously avoided deciding whether personal or quasi in rem jurisdiction
is required to confirm foreign arbitral awards pursuant to the New York
Convention. ... However, the numerous other courts to have addressed the issue
have each required personal or quasi in rem jurisdiction. ...”
“Unlike ‘state courts[,] [which] are courts of general
jurisdiction[,]... federal courts are courts of limited jurisdiction which thus
require a specific grant.’ ... ‘The validity of an order of a federal court
depends upon that court’s having jurisdiction over both the subject matter and
the parties.’”
“Because of the primacy of jurisdiction, ‘jurisdictional
questions ordinarily must precede merits determinations in dispositional
order.’ We therefore hold that the district court did not err by treating
jurisdiction over either SOCAR or SOCAR’s property as a prerequisite to the
enforcement of Frontera’s petition. The district court may, however, have given
the Constitution’s Due Process Clause an unwarranted place in its analysis
....’” [Slip op. 7‑10]
“The Due Process Clause famously states that ‘no person
shall be... deprived of life, liberty or property without due process of law.’
U.S. Const. amend. V ... In Texas Trading, we held that a foreign state was a
‘person’ within the meaning of the Due Process Clause, and that a court
asserting personal jurisdiction over a foreign state must – in addition to
complying with the Foreign Sovereign Immunities Act (FSIA) [28 U.S.C. § 1602] –
therefore engage in ‘a due process scrutiny of the court’s power to exercise
its authority’ over the state. ....”
“Texas Trading reached this conclusion without much
analysis, while also noting that cases on point were ‘rare.’ Id. at 313. The
FSIA had been enacted only five years earlier, and pre‑FSIA suits against
foreign states were generally supported by quasi in rem jurisdiction. Id.
Subsequently, we applied Texas Trading not only to foreign states but also to
their agencies and instrumentalities. ...”
“Since Texas Trading, however, the case law has marched in a
different direction. In Republic of Argentina v. Weltover, Inc., the Supreme
Court ‘assum[ed], without deciding, that a foreign state is a ‘person’ for
purposes of the Due Process Clause,’ 504 U.S. 607, 619 (1992), but then cited
South Carolina v. Katzenbach, 383 U.S. 301, 323‑24 (1966), which held that
‘States of the Union are not `persons’ for purposes of the Due Process Clause,’
504 U.S. at 619. Weltover did not require deciding the issue because
Argentina’s contacts satisfied the due process requirements, see id. at 619
& n.2, but the Court’s implication was plain: If the ‘States of the Union’
have no rights under the Due Process Clause, why should foreign states?”
“In Price v. Socialist People’s Libyan Arab Jamahiriya, 294
F.3d 82 (D.C. Cir. 2002), the D.C. Circuit reasoned that, because ‘the word
‘person’ in the context of the Due Process Clause of the Fifth Amendment
cannot, by any reasonable mode of interpretation, be expanded to encompass the
States of the Union,’ Katzenbach, supra at 323, ‘absent some compelling reason
to treat foreign sovereigns more favorably than ‘States of the Union,’ it would
make no sense to view foreign states as ‘persons’ under the Due Process
Clause,’ Price, supra at 96.”
“The Price court found no such reason, see id. at 95‑100,
and we find that case’s analysis persuasive. As the Price court noted, the
States of the Union ‘both derive important benefits [from the Constitution] and
must abide by significant limitations as a consequence of their participation
[in the Union],’ id. at 96, yet a ‘foreign State lies outside the structure of
the Union,’ ...”
“If the States, as sovereigns that are part of the Union,
cannot ‘avail themselves of the fundamental safeguards of the Due Process
Clause,’ Price, supra at 97, we do not see why foreign states, as sovereigns
wholly outside the Union, should be in a more favored position. This is
particularly so when the Supreme Court has ‘[n]ever... suggested that foreign
nations enjoy rights derived from the Constitution,’ and when courts have instead
‘relied on principles of comity and international law to protect foreign
governments in the American legal system.’ Id. ... Thus, we hold that the
district court erred, ... by holding that foreign states and their
instrumentalities are entitled to the jurisdictional protections of the Due
Process Clause.” [Slip op. 11‑14]
The precise issue in this case is whether SOCAR, as an
instrumentality or agency of a foreign state, enjoys Due Process
protections.“The district court did not decide whether SOCAR is an agent of the
state because Texas Trading rendered the question unnecessary and,
unsurprisingly, there was scant briefing on the issue. ...”
“ ... The Supreme Court has gone so far as to accord due
process protections to privately owned foreign corporations. See Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 418‑19 (1984) ...
Accordingly, we choose to remand so that in the first instance the district
court can determine, in light of Texas Trading’s demise and [First Nat’l City
Bank v. Banco Para El Comercio Exterior de Cuba (Bancec), 462 U.S. 611, 626‑27,
629, 632 (1983)]’s new relevance to this context, (1) whether SOCAR is an agent
of Azerbaijan, and if not, (2) whether SOCAR is entitled to the protections of
the Due Process Clause.” [Slip op. 17‑19]
Citation: Frontera Resources Azerbaijan Corp. v.
State Oil Co. Of the Azerbaijan Republic, No.07‑1815‑cv (2d Cir. September 28,
2009).
CHILD ABDUCTION
In case of minor child taken from Greece to United States
by his father in violation of Greek Court’s reading of Hague Child Abduction
Convention, Ninth Circuit holds that the District Court was wrong to grant
comity to the Greek Court’s decision, where that decision was clearly wrong
This case involves custody claims by the divorced parents of
a minor child under the Hague Convention on the Civil Aspects of International
Child Abduction, Oct. 25, 1980, T.I.A.S. No. 11,670, 1343 U.N.T.S. 49 (the
Convention). Despina Asvesta (Mother), a Greek citizen and the Mother of the minor
child retained custody of the minor child in Greece after travelling there for
a short visit. The child’s father, George Petroutsas (Father), a dual U.S. and
Greek Citizen, secreted the child back to the U.S. during a court‑ordered
visit.
The father petitioned a Greek court for the return of the
child under the Convention, which it denied. After the father took the child
from Greece and returned to the U.S., the mother petitioned a California
federal court under the Convention for the return of the child. The District
Court granted the mother’s petition on the basis of comity to the Greek court’s
decision. The father appealed. The U.S. Court of Appeals for the Ninth Circuit
reverses the District Court’s decision and remands the case for further
proceedings.
The Convention requires that the court of the country to
which the child has been removed, return a wrongfully removed or retained child
to his or her country of “habitual residence,” unless the removing party
establishes an exception or defense. Unless and until there is a determination
against the child’s return, “the judicial or administrative authorities of the
Contracting State to which the child has been removed or in which it has been
retained shall not decide on the merits of rights of custody.” See Art. 16.
The Court finds that the District Court’s grant of comity to
the Greek court was improper. The Court explains that the decision to extend
comity to a foreign judgment may depend on a profound inquiry into the
propriety of the foreign court’s application of the Convention, as well as on
considerations of due process and fairness. A court “may properly decline to
extend comity to the Greek court’s determination if it clearly misinterprets
the Hague Convention, contravenes the Convention’s fundamental premises or
objectives, or fails to meet a minimum standard of reasonableness.” [Slip Op.
8]
The Greek Court had held that the child had not been
illegally removed to, and kept in, Greece for three reasons. First, Petroutsas
consented to the stay in Greece; second, Petroutsas was not exercising the
right of custody over the child at the time of the move; and, third, there was
a severe danger that the minor’s return to the U.S., would expose him a great
risk of harm. [Slip Op. 9]
The Greek Court’s analysis of Article 3 made no
determination whether Greece or the U.S. was the child’s habitual residence. If
it ruled for Greece, this would have been dispositive. The Court notes that the
failure to decide this central point casts doubt on its entire Article 3
determination. Without ascertaining the habitual residence of the child, the
court could not have applied the appropriate law. Thus it could not properly
rule on “determining whether Petroutsas had custodial rights to the child,
whether he was exercising those rights, or whether Asvesta had violated his
rights by removing and retaining the child in Greece.” [Slip Op. 10]
Citation: Asvesta v. Petroutsas, No. 08‑15365 (9th
Cir. September 4, 2009).
FOREIGN AFFAIRS DOCTRINE
The Ninth Circuit concludes that California law
purporting, inter alia, to extend limitations period for addressing claims by
Holocaust survivors and their heirs to recover art work stolen by Nazis in 1940
infringes on the federal government’s exclusive foreign affairs powers in
settling such international claims
Marei von Saher (Plaintiff) brought a claim against the
Norton Simon Museum of Art at Pasadena under the time limits of §354.3 for the
return of a diptych which the Nazis had looted during World War II.
Plaintiff is the only surviving heir of Jacques Goudstikker,
a deceased Dutch art dealer who once had a collection of over 1,500 valuable
paintings. She filed this suit in 2007 against the Defendant under § 354.3 and
California Penal Code § 496, seeking the return of a diptych entitled “Adam and
Eve.” The diptych is a pair of oil paintings by sixteenth‑century master Lucas
Cranach the Elder (hereinafter the “Cranachs”). It is currently on public
display at the Defendant. Goudstikker bought the Cranachs at a Berlin art
auction in May 1931.
When the German army invaded the Netherlands in May 1940,
Goudstikker and his family fled. The Nazis looted Goudstikker’s gallery, and
sent the artwork to the country estate of Reichsmarschall Herman Göring located
near Berlin. The collection remained there until about May 1945, when Allied
Forces found it. They sent the collection to the Munich Central Collection
Point, where experts identified the works as from the Goudstikker collection.
In 1946, the Allied Forces returned the Goudstikker artworks
to the Netherlands government. It somehow failed to return the Cranachs,
however, to the Goudstikker family. After restitution proceedings in the
Netherlands, the Dutch government delivered the Cranachs to a George
Stroganoff, one of the claimants, and he sold them to the Defendant.
The Defendant filed a Rule 12(b)(6) motion to dismiss
Plaintiff’s complaint. The district court granted the motion. It held that §
354’s extension of the statute of limitations was unconstitutional on its face,
because it violated the foreign affairs doctrine, as interpreted and applied by
the Ninth Circuit in Deutsch v. Turner, 324 F.3d 692 (9th Cir. 2005). Though
the California Statute does seek to redress wrongs committed in the course of
World War II, such matters fall within the federal government’s exclusive power
to wage war, including the procedure for resolving postwar claims. Moreover,
Plaintiff did not file her complaint within the three‑year period of California’s
regular statute of limitations. She appealed. The U.S. Court of Appeals for the
Ninth Circuit reverses and remands.
“The Supreme Court has characterized the power to deal with
foreign affairs as a primarily, if not exclusively, federal power. See, e.g.,
Am. Ins. Assoc. v. Garamendi, 539 U.S. 396, 413‑14 (2003). The Court has
declared state laws unconstitutional under the foreign affairs doctrine when
the state law conflicts with a federal action such as a treaty, federal
statute, or express executive branch policy. See, e.g., Garamendi, supra at 421‑22....
Occasionally, however, in the absence of any conflict, the Court has declared
state laws to be incompatible with the federal government’s foreign affairs
power. ...” [Slip op.8‑9]
“The Defendant argues that § 354.3 is preempted under either
theory. First, the Defendant contends, § 354.3 conflicts with the Executive
Branch’s policy of external restitution following World War II. Alternatively,
the Defendant argues, § 354.3 is preempted because it infringes on the federal
government’s exclusive power to conduct foreign affairs, and specifically, the
power to redress injuries arising from war.” [Slip op. 9]
“The U.S. authorities stopped accepting claims for external
restitution of looted artwork as of September 15, 1948. Plunder and Restitution
at SR‑143. By the beginning of 1949, close to three million pieces of Jewish
cultural property had been restituted to twelve different countries by the U.S.
authorities. Id. Had California enacted § 354.3 in 1945, it would have directly
conflicted with the federal government’s policy of external restitution. . . .
Section 354.3 cannot conflict with or stand as an obstacle to a policy that is
no longer in effect.” [Slip op. 13]
“Unlike its traditional statutory counterpart, foreign
affairs field preemption may occur ‘even in [the] absence of a treaty or
federal statute, [because] a state may violate the Constitution by establishing
its own foreign policy.’ Deutsch, supra at 709 The central question, then, is
this: in enacting § 354.3, has California addressed a traditional state
responsibility, or has it infringed on a foreign affairs power reserved by the
Constitution exclusively to the national government?” [Slip op. 15]
“... Property, of course, is traditionally regulated by the
state. But § 354.3 cannot be fairly categorized as a garden variety property
regulation. Section 354.3 does not apply to all claims of stolen art, or even
all claims of art looted in war. The statute addresses only the claims of
Holocaust victims and their heirs. . . .”
“California certainly has a legitimate interest in
regulating the museums and galleries operating within its borders, and
preventing them from trading in, and displaying, Nazi‑looted art. . . . As
enacted, the statute allows suits against ‘any museum or gallery that displays,
exhibits, or sells any article of historical, interpretive, scientific, or
artistic significance,’ whether located in the state or not.. . . . . By
opening its doors as a forum to all Holocaust victims and their heirs to bring
Holocaust claims in California against ‘any museum or gallery’ whether located
in the state or not, California has expressed its dissatisfaction with the
federal government’s resolution (or lack thereof) of restitution claims arising
out of World War II. In so doing, California can make ‘no serious claim to be
addressing a traditional state responsibility.’” [Slip op. 15‑18]
“Section 354.3 establishes a remedy for wartime injuries. .
. . [it] creates a new cause of action ‘with the aim of rectifying wartime
wrongs committed by our enemies or by parties operating under our enemies’
protection.’ Deutsch, supra at 708. This is significant because, as the Deutsch
Court noted, ‘[a] state is generally more likely to exceed the limits of its
power when it seeks to alter or create rights and obligations than when it
seeks merely to further enforcement of already existing rights and duties.’ Id.
at 708. . . . Our conclusion today is buttressed by the documented history of
federal action addressing the subject of Nazi‑looted art. . . . This history of
federal action is so comprehensive and pervasive as to leave no room for state
legislation. . . ..” [Slip op. 19‑22]
Citation: Saher v. Norton Simon Museum of Art at
Pasadena, No. 07‑56691 (9th Cir. August 19, 2009).
FORUM NON CONVENIENS
Where one side in dispute has first filed its fraud case
in U.S. federal court, Irish Supreme Court decides that, where closest
precedent from European Court of Justice (ECJ) did not decide the applicability
under Brussels 1 Regulation of common law doctrines of forum non conveniens and
lis alibi pendens on how to proceed where first filed case lay in U.S. Federal
Court rather than in EC Member State court; thus it should refer legal question
to ECJ before ruling on merits of case before it
Goshawk Dedicated Ltd., and Kite Dedicated Ltd. (formerly
known as Goshawk Dedicated (No.2) Ltd.) along with Cavell Management Services
Ltd. and Cavell Managing Agency Ltd. are the Plaintiffs in this case before the
Irish Supreme Court. The Defendant is Life Receivables Ireland Ltd. is a
subsidiary of International Investment and Underwriting The Plaintiffs are
English companies and the Defendant is an Irish company.
Defendant, however, has already filed proceedings against
Plaintiffs here, in a Georgia federal court. The present Defendant (as
plaintiff), sought certain reliefs against the present Plaintiffs (as
defendants) and against others who are not party to these Irish proceedings.
The U.S. proceedings sought relief for, inter alia, alleged
misrepresentation, fraud, securities fraud, and other relief. The prior U.S.
proceedings, therefore, related to the same dispute being raised here. The
Defendant moved the Irish High Court for an order staying the Irish proceedings
pending the final determination of the Georgia litigation. The High Court
rejected the application and the Defendant appealed.
The significant procedural issue that arose between the
parties related to the proper interpretation of the Brussels I Regulation and
its application to the circumstances of this case. It also involved the common
law doctrine of forum non conveniens. More particularly, it focused on the
extent and application of the doctrine of lis alibi pendens to this case. under
the Brussels I Regulation to proceedings concerning the same cause of action
when the earlier proceedings had been commenced in a non‑Member State.
The parties and the court examined and analysed the key
decision of the ECJ in Owusu v. Jackson (t/a :/Villa Holidays Bal‑Inn Villas et
al. (C‑281/02) [2005]; E.C.R.I. I‑1383; [2005] Int. Lit. Proc.25 but the ECJ
has not given a ruling on the precise question at issue here.
The Irish High Court found the following facts. In June
2005, the Defendant bought a partnership interest in a Delaware partnership
known as Life Receivables II, LLP. The Defendant and Life Receivables Holdings
are the only partners but in which the Defendant would appear to be the only
partner with a financial stake.
The partnership is, in turn, a beneficiary of Life
Receivables Trust (LRT) whose commercial value derives from trust property;
these consist of life insurance policies bought in the early years of this
decade together with a contingent cost insurance issued by Goshawk in respect
of those policies. As Plaintiff in the U.S. proceedings, Defendant here alleged
that the Georgia defendant had fraudulently induced it into buying into the
partnership.
The complaint in the U.S. proceedings alleges securities
fraud, common law fraud, negligent misrepresentation and conspiracy to commit
fraud in connection with a transaction valued at a figure in excess of U.S. $14
million. The primary jurisdiction invoked is in respect of the securities fraud
pursuant to U.S. law, and a supplemental jurisdiction is alleged over the U.S.
common law claims, on the grounds that the same facts and circumstances gave
rise to all claims.
Apart from the securities claims, one of the major
allegations made is that Goshawk, relying on material furnished through or by
an actuarial company, American Viatical Services, located in Atlanta, Georgia,
made representations appearing on the face of the life policies, to persons
including Life Receivables, the defendant in the Irish proceedings. It is also
alleged that Cavell, acting through one of its principals, devised a run off
scheme to commute Goshawk’s obligations to, inter alia, Life Receivables. It is
alleged that, at certain times, that principal, acting on behalf of both
Goshawk and Cavell, made material misrepresentations and omissions.
The proceedings filed by the defendant in Georgia, U.S.A.,
on June 29, 2007, are clearly first in time. The plaintiffs have later
commenced these Irish proceedings; they seek declarations that the plaintiffs
did not make the misrepresentations, together with other similar relief, on
September 6, 2007. The Irish proceedings are a mirror image of the Georgia
proceedings, except that none of the additional co‑defendants in Georgia are
parties in the Irish proceedings.
On September 5, 2007, the plaintiffs in these proceedings
moved in the U.S. District Court to dismiss the defendant’s complaint, on the
basis that the court lacks subject
matter jurisdiction over the defendants
since the transactions in issue in the case are
predominantly foreign and lack
the necessary domestic conduct or effects to permit the application by that
court of American securities laws. The defendant in these proceedings resisted
that motion, and a ruling by the U.S. District Court was, at the time of this
appeal, awaited.
The Irish trial judge referred to the undisputed EC law. He
quoted from the ECJ’s judgment in the Owusu case. There a person was injured
while on holiday in Jamaica. It was submitted that Jamaica would be a more
convenient forum for the conduct of litigation. The ECJ rejected the travel
agent’s effort to stay the proceedings first filed against him in England
despite his Jamaican domicile and the convenient access to local eye witnesses
that would result from allowing the proceedings to take place in Jamaica.
“Counsel for the plaintiffs relies squarely on the decision
of the ECJ in Owusu and argues that the failure to respond to the second
question posed is merely the adoption of the normal formula found in the case
law of the ECJ. Senior counsel, submits that Owusu answered the issue in its
entirety.”
“The issue which arose in Owusu was whether the third
country was a more appropriate forum, and that is also the issue in these
proceedings. There is, he contends, no point of principle calling for the
application of a different approach to existing foreign proceedings and to
intended proceedings. Lis alibi pendens is not a doctrine, but a rule adopted
by jurisdictions, to resolve a practical problem, namely to avoid conflicting
judgments.’”
“There were formerly two solutions in being for that
problem, the first being the common law discretionary approach, and the second
the civil law approach which applies the ‘first in time’ rule. The Irish
courts, following on from Owusu, have a mandatory jurisdiction, pursuant to the
Regulation and may not decline this, unless there is provision for a derogation
from the application of that Article, in the Regulation itself.”
“Owusu is the most relevant case law, but it was limited to
the facts of that case, which are not similar to the circumstances of this
case, and indeed the circumstances of this (the pending case) are expressly
excluded. In this case, there is a pending proceeding which is first in time in
a non‑Contractual State. It is a situation identified in Owusu, but expressly
not answered. In these circumstances the issue may not be considered acte
clair.”
“This Court is satisfied that it is necessary to refer the
legal question to the ECJ. The exact format of the reference may be considered
in submissions by the parties after the delivery of this judgment. However, in
essence, such a reference would query whether, when a defendant is sued in its
country of domicile, it is inconsistent with the Regulation for the court of a
Member State to decline jurisdiction or to stay proceedings on the basis that
proceedings between the same parties and involving the same cause of action are
already pending in the courts of a non‑Member State and therefore first in
time.”
“It may be necessary also, having regard to the absence of
any clear guidance, to pose an additional question concerning the criteria to
be applied by a Member State [which is] coming to a decision whether to stay
pending proceedings in a Member State, depending on the response to the first,
primary, question to be posed.” [450].
Citation: Goshawk Dedicated Ltd v Life Receivables
Ireland Ltd [2009] I.E.S.C. 7; [2009] I. L. Pr. 26 (Sup. Ct. Ire. 2009)
Russian Constitutional Court extends domestic moratorium
on death penalty. The Constitutional Court of the Russian Federation has
ruled that a moratorium on capital punishment should remain in force until the
nation expressly and permanently outlaws the death penalty. The original
moratorium came about in 1999 but its legal basis will expire in January 2010.
The Chief Judge says that Russia must extend the moratorium on executions until
it ratifies that amendment to the European convention that bans the death
penalty. When it joined the Council of Europe in 1996, an organization of over
forty nations in the European sphere (not to be confused with the European
Union) Russia proclaimed a moratorium on capital punishment and pledged to
abolish it, but has not yet done so. The Russian Federation is a party to the
European Convention for the Protection of Human Rights and Fundamental
Freedoms, [312 U.N.T.S. 221; E.T.S. 5, as amended]. On the other hand, it has
not yet ratified Protocol 6 [E.T.S. 114] to the Convention which contains an
unqualified ban on the death penalty. Citation: Russian Constitutional
Court, St. Petersburg, Russia, Thursday, November 19, 2009, 07:59:03 GMT
(Associated Press Report).
