2012 International Law Update, Volume 18, Number 1 (January - March)

2012 International Law Update, Volume 18, Number 1 (January - March)

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

ARBITRATION

District of Columbia Circuit remands a suit to district court for further proceedings after considering the appealability of a stay order and the applicability of a writ of mandamus in a case seeking to enforce a London arbitral award against Belize

Belize is a country slightly smaller than Massachusetts, formerly British Honduras. It is situated just south of Mexico and north of Guatemala. In September 2005, the Prime Minister of Belize executed an accommodation agreement with Belize Telemedia Limited on behalf of the government of Belize. The agreement allowed Telemedia to acquire property in order to better accommodate the government’s telecommunications needs. It would also entitle Telemedia to a tax set‑off, to favorable business tax treatment, and to exemption from import taxes.

According to the agreement, Belize law would govern the agreement and that if Telemedia were to sue the government of Belize on the agreement, then the government would irrevocably and unconditionally waive its sovereign immunity. The agreement also stated that the London Court of International Arbitration (LCIA) would resolve any contract disputes pursuant to its rules.

In February 2008, a new Prime Minister announced that the agreement was invalid and that he refused to abide by it. Telemedia claimed a breach of the agreement and, on May 9, 2008, invoked the LCIA arbitration clause. The Belize government took no part in the proceedings.

The tribunal found that the agreement was valid and, in March 2009, issued a final award against Belize in the amount of $38 million. The Prime Minister continued to argue that the agreement was invalid and that the ruling of a foreign arbitral tribunal did not bind his government. Telemedia assigned the final award to Belize Social Development Limited (BSDL).

On April 6, 2009, the Attorney General of Belize sued Telemedia and BSDL in the Belize Supreme Court. The court issued an ex parte interim injunction prohibiting Telemedia and BSDL from pursuing enforcement of the final award in any jurisdiction outside of Belize. Telemedia sought to have the injunction discharged and the final award declared valid and binding on the government. Instead, the court extended the injunction.

In November 2009, BSDL petitioned a U.S. district court to confirm and enforce the final award in accordance with section 207 of the Federal Arbitration Act (FAA), 9 U.S.C. § 201‑208 (2006). The Government moved in the alternative to stay or to dismiss the petition. BDSL then moved to suspend the district court’s scheduling order and for a status conference. The district court denied BSDL’s motion to suspend and its later motions to clarify. The court granted Belize’s motion to stay the petition to confirm pending the outcome of the Belize Supreme Court case.

BSDL appealed the stay order or, if the order is not yet final, asks the appellate court to treat it as a petition for a writ of mandamus. The U.S. Court of Appeals for the District of Columbia Circuit vacates the stay order and remands the case to the district court for further proceedings. The Court begins by determining whether the lower court’s stay is a final decision for the purpose of appeal under Section 1291. The Court states that a stay is not ordinarily a final order; however, there is the “effectively out of court” doctrine that supports an appeal. The Court states, “The doctrine’s applicability, however, is limited to cases where the object of the stay is to require all or an essential part of the federal suit to be litigated outside of federal court.” [Slip op. 8].

“The stay at issue may be sufficiently indefinite as to require a finding of pressing need, but it is not so indefinite as to constitute the equivalent of a dismissal under the ‘effectively out of court’ doctrine.” Therefore, the Court holds that the method of appeal BSDL calls for does not afford it an adequate means of attaining the relief it requests. In the alternative, BSDL invokes the collateral order doctrine. The Court notes that it has previously acknowledged the similarities between the requirements for mandamus and collateral order review.

“In cases where the claim of appealability is not insubstantial, the court is mindful of the advantage of limiting the use of appellate recourse in response to stay orders, yet keeping the door open for the occasional case reflecting abuse of discretionary authority. Because BSDL has shown a clear and indisputable right to the issuance of the writ and the writ is appropriate here, we proceed with the analysis under the mandamus framework.” [Slip op. 9]

Next, the Court finds that BSDL has shown a clear and indisputable right to the issuance of mandamus because the lower court did not issue its stay on a ground set forth in the Convention on the Recognition and Enforcement of Foreign Arbitral Awards [opened for signature June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 3 (“New York Convention”)]. The Court notes that the government of Belize is unable to cite any authority to support the stay.

“The Agreement provides that the LCIA Rules govern arbitration arising from any dispute over its terms. Because the arbitration occurred in London and under the arbitral laws of England, the courts of England are the competent authority with primary jurisdiction over the Final Award. Absent proceedings for setting aside or suspending the Final Award in those courts, the Government of Belize can offer no basis on which to conclude that the stay of BSDL’s petition for enforcement was properly issued under the FAA and the New York Convention.” [Slip op. 10]

After evaluating other circuit court opinions on point, the Court finds that the stay was sufficiently indefinite to require a preliminary finding of a pressing need. “Therefore the order as issued, staying BSDL’s petition pending foreign litigation of indefinite duration, exceeded the proper exercise of discretion by the district court under [Landis v. North American Co., 299 U.S. 248 (1936)]” [Slip op. 13]

Lastly, the Court finds that mandamus is appropriate because the FAA provides a carefully structured scheme for the enforcement of foreign arbitral awards and represents an emphatic federal policy in favor of arbitral dispute resolution, which applies with special force in the field of international commerce. The plain terms of the FAA instruct a district court to confirm an arbitral award unless it finds one of the grounds for refusal or deferral of recognition or enforcement in the New York Convention.

“No such finding supported issuance of the stay here, and that alone is sufficient to justify mandamus. Moreover, there could not have been such a finding under Article VI of the Convention, for no ‘application for the setting aside or suspension of the award’ had been made to a ‘competent authority’ in England, the ‘country in which’ and ‘under the laws of which [the] award was made.’” [Slip op. 13]

“[T]the original jurisdiction vested in the district court by section 203 of the FAA and the limitations on that authority under section 207 of the FAA defined the district court’s task: to review and grant BSDL’s petition to confirm the Final Award absent a finding that an enumerated exception to enforcement specified in the New York Convention applied. The stay order as issued was not in conformity with federal law and international commitments, and the indefinite stay, lacking justification by any pressing need, exceeded the bounds of any inherent authority the district court may have had to stay proceedings in the interest of judicial economy. Mandamus is appropriate here to compel the district court to exercise its authority when it is its duty to do so.” [Slip op. 13‑14]

The Court concludes, however, that it should remand the case because it may rightfully assume that the district court will conduct further proceedings not inconsistent with the opinion.

The Dissenter would have dismissed the BSDL’s appeal. “Mandamus for this case is akin to using a chainsaw to carve your holiday turkey. Indeed, if you ask me which is the more extraordinary ‑ the District Court’s temporary stay or this Court’s invocation of mandamus jurisdiction under these circumstances ‑ I would say the latter.” [Slip op. 16]

Citation: Belize Soc. Dev. Ltd. v. Gov’t of Belize, 668 F.3d 724; 394 U.S.App. D.C. 179 (D.C. Cir. 2012).

CHOICE OF LAW

A majority of the Fifth Circuit reverses and remands the district court’s dismissal of a wrongful death claim as out of time, finding that Louisiana’s choice of law statute called for the application of Iraq’s longer statute of limitations but that compelling considerations of remedial justice required the Court to allow the suit to proceed once Plaintiffs establish the actual date on which they had gotten notice of the tragedy

Sergeant Christopher Everett was a Texas Army National Guardsman deployed to Iraq. On September 7, 2005, while washing a Humvee, a power washer electrocuted Everett. The cause was an improperly connected neutral grounding wire on the generator, which supplied electricity to the power washer. The Plaintiffs are Everett’s parents and heirs, all of whom live in Texas.

The government told the Plaintiffs about the accident and gave a packet of information about the incident on December 15, 2005. Though the packet of information mentioned the involvement of Arkel International, LLC (Defendant), the Everetts claimed that they were not aware of that until April 2008. Defendant is domiciled in Baton Rouge, Louisiana.

At the time of the accident, Defendant had a contract with the United States to repair and maintain generator equipment at Sergeant Everett’s base. Defendant claims that the generator was not the primary cause of Everett’s death.

The Plaintiff first sued Defendant in Texas state court for damages, for wrongful death under the Iraqi Civil Code. The Plaintiffs alleged that several defendants including Defendant had acted negligently in maintaining the generator and that such negligence proximately caused Everett’s death. In September 2008, while the Texas case was pending, the Everetts filed an identical action in Louisiana state court. Again, the Defendants removed the action to federal court and the Texas action was stayed.

In April 2009, the Texas federal court granted the Plaintiffs’ motion to dismiss. The Louisiana federal court next granted the Plaintiffs’ motion to dismiss all defendants except Arkel. In September 2009, the Louisiana federal court lifted a stay and reopened the action. Defendant moved for summary judgment, contending that Louisiana’s statute of limitations barred the Plaintiffs’ claims. The Plaintiffs, however, argued that the Iraqi statute of limitations applied. The district court gave Defendant summary judgment and dismissed the action with prejudice. The Plaintiffs noted their appeal.

The U.S. Court of Appeals for the Fifth Circuit reverses and remands. Since this is a diversity case, the federal Court must apply the choice‑of‑law rules of Louisiana, the forum state, to identify the substantive law that applies. The Court states that the law of the state in which the allegedly wrongful conduct and the resulting injury occurred will apply regardless of the parties’ domiciles or other linking factors. In this case, the alleged negligence in maintaining the generator and Everett’s death both happened in Iraq. Therefore, Iraq’s substantive law applies to the merits.

Next, the Court looks to the Louisiana Civil Code to determine what the Code provides for prescriptive periods. When the substantive law of another forum applies, there are two exceptions regarding which statute of limitations is applicable. The potential bar of another state becomes relevant only when the prescription and preemption law of Louisiana would bar the suit.

“It would be fair to say that [the] Iraqi courts at the time of Sergeant Everett’s death would not entertain a suit brought against a Louisiana company who had contracted with the Coalition Provisional Authority and whose alleged negligence while performing under that contract caused the death of a service member in Iraq. Thus, perhaps there is no limitations period applicable to such a suit that can be applied. Whether that is the right view, or whether we only need to know what the Iraqi limitations period would be for personal injuries claims generally, is a matter to be decided under Louisiana law inasmuch as it is that state’s choice‑of‑law rules we are interpreting.” [Slip op. 10‑11]

Next, the Court turns to whether the Iraqi statute of limitations would bar the suit. The Court notes that the Plaintiffs have the burden of proving the content and meaning of foreign law, [See Fed. R. Civ. Pro. 44.1] and Defendant claims that Plaintiff had failed to do so. After reviewing several sources of Iraqi law, the Court discovered nothing to draw into question that the applicable prescriptive period ends three years after a Plaintiff: [1] becomes aware of the claim and [2] figures out who is the culpable party or parties.

“As Defendant did not put forth any alternative translation and has not suggested how the translation might be inaccurate, we hold that Iraqi law on the period of prescription has been proven.” [Slip op. 14] Though Defendant tried to argue that the Everetts became aware of Defendant’s involvement in 2005, the Court of Appeals declined to determine such an issue in a summary judgment context and one which the district court did not otherwise clearly address. Since the Court found that Iraqi law did not bar the suit, the Court must determine whether compelling considerations of remedial justice warranted maintaining the action in Louisiana once Plaintiffs prove the date on which they got due notice of the tragedy and the identity of the responsible party.

“First, this action involves a situation where, through no fault of the Plaintiffs, an alternative forum is not available. Although both the alleged injury‑causing conduct and the injury occurred in Iraq, that country does not provide an available forum because of paragraph 3 of CPA Order 17 § 4. The Texas prescriptive period [had] expired and, as Defendant insisted in the Texas proceeding, that state’s courts potentially lacked personal jurisdiction over Defendant. The Plaintiffs lacked any other forum than Louisiana.”

“Second, even were the Plaintiffs’ claims not barred in Iraq under CPA Order 17, it would be extremely inconvenient for either party to litigate in Iraq. Defendant is a limited liability company domiciled in Louisiana and the Plaintiffs are residents of Texas. For all the progress in Iraqi security that the United States purchased with its blood and treasure, that country might reasonably be avoided as a desirable forum in which Americans can litigate.” [Slip op. 17]

“Viewing the summary judgment evidence in the light most favorable to the nonmovants, we conclude [that] the district court erred in granting judgment. The suit is barred under Louisiana prescription law, has not been shown to be barred under the prescription law of Iraq, whose substantive law applies to the merits of the action, and maintenance of the action in Louisiana is warranted by compelling considerations of remedial justice. On remand, the factual issue regarding when Plaintiffs [actually] received [the] necessary notice will need to be resolved.” [Slip op. 18].

A dissenter would have upheld the district court’s decision. “In this case, Sergeant Everett’s parents chose, as a matter of convenience, to sue initially in Texas rather than Louisiana. They thus exposed themselves to what the majority describes as Defendant’s compelling motion to dismiss for lack of personal jurisdiction in Texas. Yet they knew within three or four months of the accident that their son had been electrocuted and they were informed of the potential involvement of Defendant, a Baton Rouge‑headquartered company. They could have filed a timely suit in Louisiana under Louisiana law against Defendant. I would conclude that this chronology did not give rise to compelling circumstances of remedial justice.” [Slip op. 25].

Citation: McGee v. Arkel Int’l, LLC, No. 10‑30393 (5th. Cir. Feb. 16, 2012).

COPYRIGHT LAW, INTERNATIONAL

U.S. Supreme Court affirms Tenth Circuit’s ruling that Congress’ enactment of section 514 of the Uruguay Round Agreements Act was constitutional though it removes copyrighted work from the public domain

Petitioners are orchestra conductors, musicians, publishers, and others who formerly enjoyed free access to works in the public domain. They filed a lawsuit challenging the constitutionality of § 514 of the Uruguay Round Agreements Act in 2001.The Berne Convention for the Protection of Literary and Artistic Works (Berne Convention or Berne), which took effect in 1886, is the principal instrument that governs international copyright issues. The United States joined the Convention in 1989.

In §514 of the 1994 Uruguay Round Agreements Act (URAA), Congress gave works enjoying copyright protection abroad the same full term of protection available to U.S. works. The URAA grants copyright protection to pre‑existing works of Berne member countries protected in their country of origin, but previously lacking protection in the United States to improve U.S. protections in three undesirable situations: [1] that the United States failed to protect works from the country of origin at the time of publication;[2] that the United States did not protect sound recordings made before 1972; or [3] that the foreign author or composer had failed to comply with U.S. statutory formalities.

The URAA affords no protection to a foreign work after its copyright term has expired, whether under the laws of the country of origin or U.S. laws. This causes the work to fall within the public domain. URAA’s § 514 grants authors the protection they would have enjoyed had the United States maintained copyright relations with the author’s country. Finally, foreign authors gain no credit to make up for the protection they lacked in years prior to § 514’s enactment. Congress then tried to include ameliorating accommodations to foreign authors.

Petitioners sued the United States in the U.S. District Court for the District of Colorado. The District Court, however, gave summary judgment to the U.S. The Petitioners appealed to the U.S. Court of Appeals for the Tenth Circuit, which affirmed in part and remanded with an instruction to the District Court to address the First Amendment claim. The District Court then held that Section 514 does not regulate speech on the basis of its content. The law must be upheld if narrowly tailored to serve a significant government interest. The District Court concluded that the Petitioners are entitled to Summary Judgment because §514’s constriction of the public domain was not justified by any of the asserted federal interests (compliance with Berne Convention, securing greater protection for U.S. authors abroad, or remediation of the inequitable treatment suffered by foreign authors whose works lacked protection in the United States).

The U.S. Court of Appeals for the Tenth Circuit reversed. The Supreme Court of the United States granted certiorari and affirms the Tenth Circuit’s holding.

The Court begins by declaring that §514 does not exceed Congress’ authority under the Copyright Clause of the U.S. Constitution. Analyzing the text of this Clause, the Court finds that it does not exclude the extension of copyright protection to works in the public domain. It finds that the Petitioners are requesting a reading of the clause that is incompatible with the Court’s previous decisions.

“The difference, Petitioners say, is that the limited time had already passed for works in the public domain. What was that limited term for foreign works once excluded from U.S. copyright protection? Exactly zero, Petitioners respond. We find scant sense in this argument, for surely a ‘limited time’ of exclusivity must begin before it may end. In aligning the United States with other nations bound by the Berne Convention, and thereby according equitable treatment to once disfavored foreign authors, Congress can hardly be charged with a design to move stealthily toward a regime of perpetual copyrights.” [Slip op. 18‑19].

The history behind the Copyright Clause corroborates this view. Though the Petitioners argue that Congress has acted contrary to its customary practice by enacting a statute that removes works from the public domain, the Court disagrees. The Court points out that Congress has previously removed works from the public domain before the passage of the URAA. “Subsequent actions confirm that Congress has not understood the Copyright Clause to preclude protection for existing works. Several private bills restored the copyrights of works that previously had been in the public domain. . . . These bills were unchallenged in court.” [Slip op. 21]

Next, the Court looks to the stated purpose of the Copyright Clause. It is to promote the Progress of Science and Useful Arts by enacting systems of copyright and patent protection. Petitioners argue that removing works from the public domain is not within this purpose, as it does not relate to new works. The Court disagrees,

“In response to this argument, we held that the Copyright Clause does not demand that each copyright provision, examined discretely, operate to induce new works. Rather, we explained, the Clause empowers Congress to determine the intellectual property regimes that, overall, in that body’s judgment, will serve the ends of the Clause. And those permissible ends, we held, extended beyond the creation of new works.” [Slip op. 24‑25]

“Considered against this backdrop, §514 falls comfortably within Congress’ authority under the Copyright Clause. Congress rationally could have concluded that adherence to Berne promotes the diffusion of knowledge. A well‑functioning international copyright system would likely encourage the dissemination of existing and future works. Full compliance with Berne, Congress had reason to believe, would expand the foreign markets available to U.S. authors and invigorate protection against piracy of U.S. works abroad, thereby benefitting copyright‑intensive industries stateside and inducing greater investment in the creative process.” [Slip op. 26]

“Congress determined that U.S. interests were best served by our full participation in the dominant system of international copyright protection. Those interests include ensuring exemplary compliance with our international obligations, securing greater protection for U.S. authors abroad, and remedying unequal treatment of foreign authors. The judgment §514 expresses lies well within the ken of the political branches. It is our obligation, of course, to determine whether the action Congress took, wise or not, encounters any constitutional shoal. For the reasons stated, we are satisfied it does not. The judgment of the Court of Appeals for the Tenth Circuit is therefore [a]ffirmed.” [Slip op. 36]

The Dissenters find that the Copyright Clause did not authorize Congress to enact the statute. Conducting statutory interpretation, the dissenters state that its conclusion has long been upheld by case law. “The fact that, by withdrawing material from the public domain, the statute inhibits an important preexisting flow of information is sufficient, when combined with the other features of the statute that I have discussed, to convince me that the Copyright Clause, interpreted in the light of the First Amendment, does not authorize Congress to enact this statute.” [Slip op. 69]

Citation: Golan v. Holder, 132 S. Ct. 873; 181 LE.2d 835 (2012).

DISCOVERY, REQUESTS FROM ABROAD

Second Circuit reverses district court’s finding that the “for use” requirement of the federal discovery statute limited admissibility to evidence that would likely be admitted by a foreign tribunal

Plaintiff, Anselm Brandi‑Dohrn (Plaintiff), is a shareholder of Defendant, IKB Deutsche Industriebank AG (IKB), a bank located in Germany. In July 2008, Plaintiff sued IKB in Germany to recover for securities fraud. He stated that IKB misled him into buying its shares by failing to disclose its significant exposure to risky collateralized debt obligations (CDOs) backed by U.S. based subprime mortgages. Moreover, IKB issued a press release that falsely downplayed the impact that the ratings agencies’ downgrading of the CDOs would have on the Bank’s operations. During the August 2010 trial in Germany, the court dismissed the case and Plaintiff appealed to an intermediate appellate court.

Plaintiff then filed an ex parte application in the U.S. District Court for the Southern District of New York to serve subpoenas on three nonparties. The discovery sought related to the exposure of the CDOs and Plaintiff wishes to use it to persuade the German appellate court to overturn the dismissal. The district court initially granted the application on July 27, 2011 and Plaintiff issued the subpoenas. Before the third parties produced discovery, IKB moved to vacate the order or quash the subpoenas. On November 16, 2011, the district court granted IKB’s motion to quash the subpoenas, finding that the evidence sought was actually for use in the German counsel’s other cases.

The U.S. Court of Appeals for the Second Circuit reverses the district court’s order. The Court analyzes 28 U.S.C. §1782. The Court notes that the goal of the statute is to provide equitable discovery procedures in the U.S. courts; therefore, courts have liberally construed the statute. In the Court’s view, the district court must consider several statutory requirements and then use discretion in balancing a number of factors. Once the balancing is complete, a district court can deny the discovery request if they find that the information sought is solely for the purpose of harassment. This discretion does have some limitations.

“District courts must exercise their discretion under § 1782 in light of the twin aims of the statute: providing efficient means of assistance to participants in international litigation in our federal courts and encouraging foreign countries by example to provide similar means of assistance to our courts. We have thus held, for example, that although there is no requirement under § 1782 that the type of discovery sought be available in the relevant foreign jurisdiction, a court may look to the nature, attitude and procedures of that jurisdiction as ‘useful tool[s]’ to inform its discretion.” [Slip op. 9]

The Plaintiff argued that the district court had misconstrued the “for use” requirement of § 1782 as requiring that the Plaintiff show that the foreign tribunal would admit the material sought. The Court agrees. “As in [Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264‑65 (2004)] there is no statutory basis for any admissibility requirement. If Congress had intended to impose such a sweeping restriction on the district court’s discretion, at a time when it was enacting liberalizing amendments to the statute, it would have included statutory language to that effect.” [Slip op. 11]

The Court states that the district court should not have been concerned with admissibility abroad because it is up to the foreign tribunal to determine this issue. The German appellate court is free to admit or exclude any evidence it so chooses. Requiring a district court to apply the admissibility rules of a foreign jurisdiction would require interpretation and analysis of foreign law, which the Court finds to be fraught with danger. “Accordingly, as a district court should not consider the discoverability of the evidence in the foreign proceeding, it should not consider the admissibility of evidence in the foreign proceeding in ruling on a section 1782 application. We join our sister Circuits in coming to this conclusion.” [Slip op. 12]

“IKB contends that, although there is no foreign admissibility requirement, the receptivity of the foreign court to the evidence sought is a relevant consideration when a district court decides how to exercise its discretion. Accordingly, IKB argues that the District Court properly concluded that, since the evidence would likely not be admitted in the proceeding before the German appellate court, it was being sought for purposes of harassment because it would be used in other cases brought by Plaintiff’s German counsel.” [Slip op. 13]

“We recognize that section 1782(a) gives discretion to the District Court, as it authorizes, but does not require, a federal district court to provide judicial assistance to foreign or international tribunals or to interested person[s] in proceedings abroad. Indeed, we have affirmed denials of section 1782 applications where, although the statutory requirements of section 1782 were met, the twin goals of the statute were not.” [Slip op. 13‑14] Therefore, the district court exceeded its discretion.

Citation: Brandi‑Dohrn v. IKB Deutsche Industriebank AG, No. 11‑4851‑cv, 2012 US App. LEXIS 4719 (2d Cir. Mar. 6, 2012).

TERRORISM

The Fourth Circuit upholds district court’s dismissal of a complaint where Plaintiff claims detention as an enemy combatant gives rise to a cause of action upon which he may recover compensatory damages against United States government officials

Plaintiff Jose Padilla, a United States citizen and member of al Qaeda, has been taking part in the organization’s terrorist missions since the 1990s. He was convicted in the U.S. District Court for South Carolina of conspiring with others within the United States to support al Qaeda’s global campaign of terror. Moreover, he had traveled to Afghanistan in 2000 to receive combat training. After al Qaeda had killed over 3,000 people in the September 11, 2001 attacks on the United States, Congress empowered the President to use his war making power to defeat the terrorist threat.

While the U.S. military was in combat against al Qaeda in Afghanistan, Padilla orchestrated his return to the United States from Afghanistan. After arriving in Chicago, FBI agents arrested Padilla after he falsely denied that he had ever visited Afghanistan. The government first confined Padilla in a federal detention center in New York.

After deciding that Padilla possessed vital intelligence and posed a threat to the U.S., President George W. Bush ordered Defendant Donald Rumsfeld to detain Padilla as an enemy combatant on June 9, 2002. Authorities next transferred Padilla to confinement in South Carolina. Padilla claims that government officials repeatedly abused him, and threatened him with torture.

On November 17, 2005, a federal grand jury in the Southern District of Florida indicted Padilla on criminal terrorism charges, a federal court convicted Padilla on August 16, 2007 on one count of conspiracy to murder, kidnap, or maim persons overseas and two counts of providing material to al Qaeda.

On June 11, 2002, Padilla filed a petition for a writ of habeas corpus in the Southern District of New York, challenging the legality of his detention. The district court denied the petition, but the Second Circuit reversed. On certiorari, the Supreme Court vacated the petition, ruling that Defendant should have filed it in South Carolina, the district of his confinement.

Padilla refiled his habeas petition in a South Carolina federal court on July 2, 2004. The court granted Padilla’s petition, holding that the U.S. could not detain him as an enemy combatant because it had captured him within the United States. The Fourth Circuit reversed, upholding the President’s authority to detain Padilla. Two months later, while Padilla’s petition for certiorari to the Supreme Court was pending, the government unsealed the indictment in the Southern District of Florida. It then petitioned this court to vacate its prior opinion and to authorize Padilla’s removal into civilian custody. The Supreme Court denied certiorari.

Padilla filed this action in the U.S. District Court for the District of South Carolina on February 9, 2007, claiming that the government unlawfully detaining him as an enemy combatant. In particular, Padilla claims that, as a U.S. citizen captured within the United States, he was unconstitutionally designated as an enemy combatant. He also alleges multiple constitutional violations stemming from his ensuing military detention. Of the original 61 Defendants, seven Defendants remain. On February 17, 2011, the district court granted the government’s motion to dismiss the suit. Padilla appeals.

The U.S. Court of Appeals for the Fourth Circuit affirms. Reviewing the district court’s opinion de novo, the Court first addresses Padilla’s argument that the law implied a new cause of action for money damages against top Defense Department officials for a range of policy judgments pertaining to the designation and treatment of enemy combatants. The Circuit Court notes that the Supreme Court has always used restraint in implying new remedies at law. Padilla wishes to invoke a [Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971)] action. “To maintain a Bivens claim, Padilla must demonstrate both that there are no special factors counseling hesitation in the absence of affirmative action by Congress and that “Congress has not already provided an exclusive statutory remedy. . . . We do not require congressional action before recognizing a Bivens claim, as that would be contrary to Bivens itself. We will, however, refuse to imply a Bivens remedy where, as in this case, Congress’s pronouncements in the relevant context signal that it would not support such a damages claim.” [Slip op. 11]

Next, the Court notes that there are special factors when the judiciary implies causes of action for enemy combatants held in military detention. First, the Constitution delegates authority over military affairs to Congress and to the President as Commander in Chief. It contemplates no comparable role for the judiciary. Second, judicial review of military decisions would stray from the traditional subjects of judicial competence.

“The reasons for this constitutional structure are apparent. Questions of national security, particularly in times of conflict, do not admit of easy answers, especially not as products of the necessarily limited analysis undertaken in a single case. It is therefore unsurprising that our Constitution recognizes that core strategic matters of warmaking belong in the hands of those who are best positioned and most politically accountable for making them. This explicit constitutional delegation of control over military affairs is quite relevant to the Bivens inquiry.” [Slip op. 13]

The Court further notes that Congress failed to specify a damages remedy for Defendants in Padilla’s position. The Court includes several possible reasons for this, but states that Congress may decide to change its policy and provide a damages remedy. The Court states that the federal courts are an improper forum to discuss the issues Padilla raises and they do not provide him with a remedy under Bivens.

“This is a case in which the political branches, exercising powers explicitly assigned them by our Constitution, formulated policies with profound implications for national security. One may agree or not agree with those policies. One may debate whether they were or were not the most effective counterterrorism strategy. Nevertheless, the forum for such debates is not the civil cause of action pressed in the case at bar. The fact that Padilla disagrees with policies allegedly formulated or actions allegedly taken does not entitle him to demand the blunt deterrent of money damages under Bivens to promote a different outcome. Being judicial requires that we be judicious, and adherence to our constitutional role in this area requires that we await affirmative action by Congress. Put simply, creating a cause of action here is more appropriately for those who write the laws, rather than for those who interpret them.” [Slip op. 18‑19]

Next, the Court discusses the second factor causing hesitation in extending the Bivens remedy to Padilla, which is the departure from core areas of judicial competence. This factor is similar to the dangers of intruding on the constitutional powers of another branch of government.

“The factors counseling hesitation are many. We have canvassed them in some detail, but only to make a limited point: not that such litigation is categorically forbidden by the Constitution, but that courts should not proceed down this highly problematic road in the absence of affirmative action by Congress. If Congress were to create a damages remedy here, we would trust that the legislative process gave due consideration to the broader policy implications that we as judges are neither authorized nor well‑positioned to balance on our own. ¼”

“Before recognizing a Bivens action, courts must not only consider special factors that would counsel hesitation, but also whether any alternative, existing process for protecting the interest amounts to a convincing reason for the Judicial Branch to refrain from providing a new and freestanding remedy in damages. ¼In such circumstances, we cannot regard the legislative failure to provide Padilla with the monetary damages he seeks from each Defendant as an invitation to design some preferred remedial regime of our own.” [Slip op. 24‑25]

Citation: Lebron v. Rumsfeld, 670 F.3d 540 (4th Cir. 2012).

FOREIGN AFFAIRS

The Ninth Circuit holds that the federal government’s constitutional power to regulate foreign affairs pre‑empts Section 354.4 of the California Code of Civil Procedure which would provide monetary compensation to victims of the still controversial issue of Armenian Genocide

In 2000, the California legislature enacted Section 354.4 of the California Code of Civil Procedure, empowering California courts to adjudicate insurance claims brought by Armenian Genocide victims arising out of policies issued or in effect between 1875 and 1923. The law also expands the statute of limitations for such claims.

In 2003, the Plaintiffs, including Vazken Movsesian, filed a class action suit in the U.S. District Court for the Central District of California against Victoria Versicherung AG (Victoria) and Ergo Versicherungsgruppe AG (Ergo), and their parent company Munchener Ruckversicherungs‑Gesellschaft Aktiengesellschaft AG (Munich Re). The Plaintiffs are of Armenian descent who claim benefits under the Defendants’ life insurance policies issued or in effect during the Ottoman Empire between 1875 and 1923.

Relying on Section 354.4, the Plaintiffs claimed breach of contract, breach of covenant of good faith and fair dealing, unjust enrichment, and constructive trust. Defendant Munich Re moved to dismiss all of the claims; it contended that § 354.4 is unconstitutional because the federal constitutional powers over foreign affairs preempts that field. The district court denied the motion to dismiss all claims except for the unjust enrichment and constructive trust claims.

Munich Re then moved to certify the district court’s order for interlocutory appeal to the U.S. Court of Appeals for the Ninth Circuit. The district court granted the motion and stayed the case. Munich Re timely petitioned the Ninth Circuit for permission to pursue an interlocutory appeal, which the Court granted. A three‑judge panel of the Ninth Circuit then affirmed the district court’s rulings.

After reviewing the case en banc, the Ninth Circuit vacates the panel’s opinion and reverses the district court’s dismissal. The Constitution, the Court explains, grants the federal government exclusive authority to administer foreign affairs. This pre‑empts any state laws that intrude into this exclusive federal power. Foreign affairs preemption encompasses two related doctrines: conflict preemption and field preemption.

Under conflict preemption, an expressed federal foreign policy pre‑empts any the state law that conflicts with it. The Supreme Court has also ruled that, even if there is no express federal policy on point, federal would also pre‑empt state law which intrudes into the field of foreign affairs without addressing any traditional state responsibility.

After reviewing several Supreme Court decisions, the Circuit Court concludes that “even when the federal government has taken no action on a particular foreign policy issue, the state generally is not free to make its own foreign policy on that subject.” [Slip op. 2018]

The Court also declares that “[f]ield preemption is a rarely invoked doctrine. Supreme Court jurisprudence makes clear, however, that field preemption may be appropriate when a state intrudes on a matter of foreign policy with no real claim to be addressing an area of traditional state responsibility.” [Slip op. 2023]

With regard to the constitutionality of section 354.4, the Court finds that the section does not concern an area of traditional state responsibility. By looking to the text and legislative history of the section, the Court finds that the California legislature did not merely intend the law to be merely an insurance regulation nor was it made as a neutral law for general application. Since it applies only to a specific class of insurance policies for a limited class of people, the Court finds it clear that the legislature actually intended the section to provide not only a forum but also potential monetary relief for those Armenians who suffered losses covered by insurance. The Court states that the section is similar to other laws which other federal courts have held to have been preempted.

Further, the Court holds that the section clearly invades the federal government’s foreign affairs power. “Section 354.4 has more than some incidental or indirect effect on foreign affairs. The statute expresses a distinct political point of view on a specific matter of foreign policy. It imposes the politically charged label of ‘genocide’ on the actions of the Ottoman Empire (and, consequently, on present‑day Turkey) and expresses sympathy for Armenian Genocide victims. The law establishes a particular foreign policy for California – one that decries the actions of the Ottoman Empire and seeks to provide redress for Armenian Genocide victims by subjecting foreign insurance companies to lawsuits in California. [Slip op. 2025‑26]

Furthermore, the statute’s jurisdictional grant rests specifically on a determination that each claimant is an “Armenian Genocide victim, or heir or beneficiary of an Armenian Genocide victim.” Cal. Civ. Proc. Code § 354.4(b). . . . [State] courts applying this provision may therefore have to decide whether the policyholder “escaped to avoid persecution, which in turn would require a highly politicized inquiry into the conduct of a foreign nation.” [Slip op. 2026]

The passage of nearly a century since the events in question has not extinguished the potential effect of section 354.4 on international affairs. On the contrary, present‑day Turkey expresses great concern over the “genocide” issue; it continues to be a hotly contested matter of foreign policy around the world.

“In conclusion, section 354.4 expresses a distinct point of view on a specific matter of foreign policy. Its effect on foreign affairs is not incidental; rather, section 354.4 is, at its heart, intended to send a political message on an issue of foreign affairs by providing relief and a friendly forum to a perceived class of foreign victims. Nor is the statute merely expressive [of an opinion.] Instead, the law imposes a concrete policy of redress for Armenian Genocide victims, subjecting foreign insurance companies to suit in California by overriding forum‑selection provisions and greatly extending the statute of limitations for a narrowly defined class of claims.”

“Thus, section 354.4 has a direct impact upon foreign relations and may well adversely affect the power of the central government to deal with those problems. Section 354.4 therefore intrudes on the federal government’s exclusive power to conduct and regulate foreign affairs.” [Slip op. 2026‑27]

Citation: Movsesian v. Victoria Versicherung AG, 670 F.3d 106 (9th Cir. 2012).

FOREIGN CORRUPT PRACTICES ACT

The Fourth Circuit affirms the district court’s ruling that a former U.S. congressman violated the Foreign Corrupt Practices Act (FCPA) by conspiring with and receiving bribes from a United States corporation in exchange for performing official acts with the Nigerian government

His district first elected former Louisiana Congressman, William J. Jefferson, in 1991; he served on several House committees and he maintained offices in both Washington, DC, and Louisiana. In March of 2005, the FBI and the Department of Justice launched a corruption investigation of Jefferson’s activities abroad.

On June 4, 2007, the federal grand jury in Alexandria, Virginia, returned a sixteen‑count indictment against Jefferson. It alleges, inter alia, that Jefferson successfully solicited bribes from Vernon Jackson, the President of iGate, a Louisville, Kentucky telecommunications firm, in exchange for Jefferson’s help in promoting iGate’s telecommunications technology in Africa. In return for money and the delivery of iGate shares to ANJ Group, a Louisiana company controlled by Jefferson’s wife, the congressman sent letters on official congressional letterhead, conducted official travel, and met with domestic and foreign government officials to promote iGate’s technology.

To advance the iGate ventures, Jefferson also solicited bribes from a Nigerian company called Netlink Digital Television (NDTV). NDTV was pursuing a telecommunications venture with iGate in Africa. In return for a portion of their revenue, stocks, and fees, Jefferson performed several official acts. These involved meetings with Nigerian officials to promote NDTV’s venture with iGate.

iGate’s business focused on the development of technology that enabled the delivery of cheap, high speed broadband services over existing telephonic infrastructures. iGate’s goals were to market its technology to the military, to targeted African telecommunications and cable companies, and to Historically Black Institutions located throughout the United States.

After Vernon Jackson got favorable results from Jefferson’s work in promoting iGate to the Army, Jefferson asked Jackson and iGate to hire ANJ, the Jefferson family consulting firm, to market iGate’s products. In 2003, Jefferson began to promote iGate’s technology abroad, often travelling to West Africa to meet with high‑ranking foreign officials. During 2003 and 2004, Jefferson made multiple trips to Africa to meet with foreign officials and to promote the iGate‑NDTV venture.

In August 2007, Jefferson moved to dismiss for several grounds, including improper venue, and sought a transfer to the District of Columbia. The district court, however, denied the motion in November 2007,. On September 7, 2007, Jefferson had also moved to dismiss the bribery‑related charges, arguing that they failed to allege an official act under the bribery statute. The district court had denied his motion.

On March 20, 2009, Jefferson moved for reconsideration of the denied motion and the court issued a follow‑up opinion confirming its earlier ruling. On June 9, 2009, Jefferson’s jury trial commenced in Alexandria. The jury convicted Jefferson of eleven offenses, including conspiracy, wire fraud, bribery, money laundering, and racketeering arising from his involvement in several bribery and fraud schemes. Jefferson appeals his convictions on several grounds.

The U.S. Court of Appeals for the Fourth Circuit affirms all of the convictions on the their merits but vacates one conviction for improper venue. Count 1 of the indictment included conspiracy to violate the FPCA through iGate Incorporated with several people in the U.S., e.g. Jefferson’s family, and in Nigeria.

Jefferson argues that he did not commit any “official” act. Citing precedents, the Court states, “An act may be official even if it was not taken pursuant to responsibilities explicitly assigned by law. Rather, official acts include those activities that have been clearly established by settled practice as part [of] a public official’s position.” [Slip op. 36].

“Put simply, we agree with [United States v. Sun‑Diamond Growers of California, 526 U.S. 398 (1999)] and [Valdes v. United States, 475 F.3d 1319 (D.C. Cir. 2007)] that the bribery statute does not encompass every action taken in one’s official capacity, and we also agree with Valdes that [United States v. Birdsall, 233 U.S. 223, 230‑31 (1914)] did not so hold. Although Birdsall recognized that every act within the range of official duty comes within the purview of an official act, the inquiry does not end there, and such an act must yet adhere to the definition confining an official act to a pending question, matter, cause, suit, proceeding or controversy. We thus part company with Jefferson’s broad assertion that Sun‑Diamond supersedes Birdsall.” [Slip op. 41]

Though Jefferson tries to argue that the money he received were those he customarily received as a Congressman, the Court begs to differ. “Importantly, the various individuals and businesses that were paying Jefferson—by delivering money and things of value to enterprises owned by his family members—were doing so with the specific understanding that he would assist in their business ventures.” [Slip op. 42]

Citation: United States v. Jefferson, 674 F.3d 332 (4th Cir. 2012).

DAMAGES AWARDS UNDER FOREIGN LAW

In litigation brought by a U.S. company against the Islamic Republic of Iran, the District of Columbia Circuit affirms in part and reverses in part a district court’s conclusion that compound interest is a remedy under Iranian law and remands the case for recalculation of the award based on simple interest

Incorporated on March 12, 1960, Sherkat Sahami Labaniat Pasteurize Pak (Pak Dairy) is a joint venture between McKesson Corporation, a U.S. company, and some Iranian private citizens, McKesson’s ownership interest in Pak had decreased to 31% at the time of the Islamic Revolution. McKesson complains that, in the wake of the Revolution, agents and instrumentalities of the government of Iran seized control of Pak’s board of directors. The board then froze McKesson’s stake in Pak and blocked its receipt of dividend payments.

In 1982, McKesson sued Iran in the District of Columbia federal court. Its basic claim is that Iran had unlawfully expropriated its property without paying fair compensation.

The district court stayed the case while the Plaintiffs presented their claims before the Iran‑United States Claims Tribunal.

Although the Tribunal held that interference with McKesson’s rights had not amounted to an expropriation by the last date of the Tribunal’s jurisdiction, it did rule that Pak Dairy had unlawfully withheld from McKesson cash dividends declared in 1979 and 1980. The tribunal awarded McKesson $1.4 million in damages. Since this sum failed to fully compensate McKesson. it revived its suit in the district court.

Iran moved to dismiss, claiming that it was immune from suit under the Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. § 1605. The court held, however, that McKesson had properly pleaded jurisdiction under the “commercial activities” exception in the FSIA.

On appeal, the U.S. Court of Appeals for the D.C. Circuit, remanded for further development of the record about the Pak board of directors. The district court found that the evidence established the necessary principal‑agent relationship between the Government of Iran and Pak’s board of directors.

The Court of Appeals affirmed the findings of the district court. In 2000, the district court held a bench trial to determine the appropriate amount of damages. The court awarded about $20 million in damages, including interest. On appeal, Iran again argued that the court below lacked jurisdiction. The Court of Appeals reaffirmed the existence of jurisdiction under the FSIA and affirmed most of the district court’s decision. It remanded, however, for the determination of two factual issues, whether Pak had instituted a so‑called “come‑to‑the‑company” requirement for the payment of dividends, and whether it would have been futile for McKesson to “come” to Pak to collect its dividends. Iran unsuccessfully petitioned the Supreme Court for certiorari. The Circuit Court then vacated a portion of the McKesson decision that dealt with the Treaty of Amity between the United States and Iran [1955 Treaty of Amity, Economic Relations, and Consular Rights, U.S.‑Iran, Aug. 15, 1955, 8 U.S.T. 899 (“Treaty of Amity”)] On remand, the district court affirmed its earlier conclusion that the Treaty did provide a cause of action. The appellate court then reversed this decision and remanded the case to the district court with instructions to address three specific issues. Upon review, the district court held that McKesson did not have a cause of action under Iranian law. The court then entered judgment for McKesson on its Iranian law causes of action, awarding about $43 million in damages plus interest. Iran again appealed.

The U.S. Court of Appeals for the District of Columbia Circuit affirms in part. It reverses the district court’s conclusion, however, that compound interest is a remedy under Iranian law and remands the case for recalculation of the award. The Court begins by analyzing the Act of State doctrine. It precludes the U.S. courts from inquiring into the validity of the public acts of a recognized foreign sovereign done within its own territory.

“This case turns on claims that agents of the Iranian government—acting as representatives of various agencies and companies—took over Pak’s board of directors, froze out McKesson’s board members, and stopped paying dividends to McKesson. The facts allege a pattern of conduct by Iran’s agents that cannot fairly be characterized as public or official acts of a sovereign government. Iran did not pass a law, issue an edict or decree, or engage in formal governmental action explicitly taking McKesson’s property for the benefit of the Iranian public.”

“Instead, it allegedly took control of Pak’s board of directors and abused its position as majority shareholder, making McKesson’s claims akin to a corporate dispute between majority and minority shareholders. This is not the type of public act of a foreign sovereign power to which the Act of State doctrine applies.” [Slip op. 10].

Since the Treaty of Amity did not provide a cause of action, the Court analyzed customary international law, and notes that absent compelling and unusual circumstances, it will not imply causes of action in the face of congressional silence.

The Court also considered the applicability of the FSIA regarding McKesson’s expropriation claim. “This argument is unpersuasive, however, because the legislative history on which McKesson relies refers to the expropriation exception of §1605(a)(3), an entirely different FSIA provision than the one conferring jurisdiction in this case. The expropriation exception applies only when rights in property taken in violation of international law are at issue and that property or any property exchanged for it ‘is present in the United States or is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States.’” [Slip op. 17].

Having determined that customary international law does not provide McKesson with a cause of action, the Court considers whether McKesson’s suit may proceed in a U.S. court under Iranian law. “Iranian law—by Iran’s own explanation— operates differently. Iran has conceded that the Treaty of Amity does create a private right of action under Iranian law, and only contests whether the Treaty permits McKesson to bring its claim in a U.S. court. ¼”

“Moreover, Iran has produced no evidence indicating that its domestic law recognizes a similar presumption against implying causes of action under treaties. To the contrary, Iran’s own expert testified that the Treaty is a special law which supersedes the general Iranian laws, and Iran argued in its brief that the general laws of Iran do not provide separate causes of action because the Treaty – as lex specialis – provides the sole cause of action.” [Slip op. 22] The Court, however, holds that the Treaty of Amity does provide a cause of action under Iranian law.

After examining the Treaty of Amity, the Court notes that Iran tries to challenge the finding made by the district court under the Treaty. “Iran cannot have it both ways—it cannot claim that the Treaty trumps its domestic laws by foreclosing other causes of action while simultaneously claiming that its domestic laws regarding vicarious liability trump the plain language of the Treaty, which would hold Iran liable for any taking of the property of foreign nationals. We thus find Iran’s attribution defense unavailing because it conflicts with both the language of the Treaty and Iran’s description of the hierarchy of its own laws.” [Slip op. 27].

Lastly, the Court considers the district court’s grant of compound interest as part of its damages award. “In fact, the Iranian Code of Civil Procedure, Article 712 explicitly states that “[d]amages which are arisen out of damages shall not be recovered,” which implies that any recovery of interest is forbidden under Iranian law, much less compound interest. Iran’s expert opined that, under Islamic and Sharia law, payment of interest is forbidden, and statements made by Iran’s religious leaders implicitly support his interpretation. ¼”

“Moreover, the Treaty was enacted long before the Islamic Revolution took place, making it erroneous to assume that Iran’s current legal system is identical to the one in place when the Treaty was enacted. In light of the utter lack of evidence indicating that compound interest is a recognized remedy under Iranian law, we reverse that portion of the award. However, because Iran does not challenge the award of simple interest in this case, we remand for calculation of an award consisting of the value of McKesson’s expropriated interest in Pak and its withheld dividends plus simple interest.” [Slip op. 30]

Citation: McKesson Corp. v. Islamic Republic of Iran, 678 F.3d 1066 (D.C. Cir. 2012).

JURISDICTION

The Sixth Circuit affirms a district court’s dismissal of a suit concerning a contract entered into in foreign country for lack of personal jurisdiction in Ohio over the Defendant, a Russian citizen who does own Ohio realty but is rarely there

Plaintiff Richard A. Conn contracted with Defendant Vladimir Zakharov, a Russian citizen, in which Conn would gain a 15% share of a proposed venture by Zakharov’s company. No sooner had Conn moved to Russia to perform the agreement, than Zakharov repudiated the contract. Conn then moved back to the United States.

As to contacts with the U.S., Zakharov attended graduate school at Case Western Reserve University in University Heights, Ohio, and graduated in 2002. Zakharov and his wife own and maintain real estate year round in Pepper Pike, Ohio which Zakharov spent millions of dollars renovating. Zakharov also owns several vehicles registered in Ohio, and maintains a bank account in Ohio, He also spends some time in Ohio each year.

After returning from Russia, Conn sued Zakharov in an Ohio federal court basing jurisdiction on his property ownership. Conn claimed a breach of contract and sought an judicial accounting to determine what a 15% share of the Russian venture would have been. Zakharov moved to dismiss the complaint [1] for lack of personal jurisdiction,[2] forum non conveniens, and [3] failure to state a viable claim.

After discovery relating to the personal jurisdiction issue, the district court granted Zakharov’s motion to dismiss. Finding that Zakharov was not an Ohio resident, the court ruled that, for lack of sufficient Ohio contacts, Plaintiff had not properly served him with process.       Plaintiff filed an appeal. The U.S. Court of Appeals for the Sixth Circuit, however, affirms. It rules that both Ohio state law and the federal Due Process Clause precluded the district court from finding personal jurisdiction over Zakharov.

The Court begins by citing its decision in International Techs. Consultants v. Euroglas S.A., 107 F.3d 386, 391 (6th Cir. 1997). There it stated that “[a] federal court sitting in diversity may not exercise jurisdiction over a Defendant unless courts of the forum state would be authorized to do so by state law—and any such exercise of jurisdiction must be compatible with the due process requirements of the United States Constitution.” [Slip op. 3]

Due process requires that the parties have sufficient contacts with the forum state so that it is fair to subject them to jurisdiction there. The Plaintiff has shown his belief that there is personal jurisdiction over Defendant by suing him in an Ohio federal court. When Defendant challenges such jurisdiction, the Plaintiff has to establish specific facts that personal jurisdiction exists over the non‑resident Defendant by a preponderance of the evidence. However, where, as is the case here, the Defendant has moved to dismiss the case under Rule 12(b)(2) for lack of personal jurisdiction and the district court rules on the motion without an evidentiary hearing, the Plaintiff need only make a “prima facie” case that there is personal jurisdiction.

Reviewing the district court’s dismissal de novo, the Court of Appeals concludes that the District Court did not have personal jurisdiction over Zakharov unless [1] Conn proved that jurisdiction was proper under a long‑arm statute of Ohio and [2] the federal Due Process Clause allowed for jurisdiction.

The Court first looks to Ohio state law, which declares that personal jurisdiction is only available if the long‑arm statute confers jurisdiction and jurisdiction is proper under the Federal Due Process Clause. The Court notes that Ohio’s long‑arm statute does not reaches the limits of the Due Process Clause. Therefore, the Court analyzes Federal Due Process law.

Ohio law specifies that it will grant personal jurisdiction over non‑residents if their conduct falls within one of nine listed bases of jurisdiction. In the Court’s view, Conn failed to allege that his claims arose out of, or were related to, Zakharov’s activities in Ohio.

Moreover, federal due process requires that the Defendant have sufficient minimum contacts with the forum state so that finding personal jurisdiction does not offend “traditional notions of fair play and substantial justice.” The Court, therefore limits its analysis to whether Due Process allows the imposition of general jurisdiction under the facts of this case.

Next, the Court points out that, because Conn admits that the suit is not related to any of Zakharov’s contacts with Ohio, Zakharov is not subject to long‑arm jurisdiction under Ohio’s long arm statute. Conn argued that Zakharov’s ownership of Ohio property makes him presumptively subject to the jurisdiction of the Ohio courts.

The Court of Appeals also notes that Ohio law does not hold that a person is a “resident” merely because he owns a residence in the state. “Looking at the facts of this case, we cannot conclude that Zakharov has demonstrated an intent to be an Ohio resident—that is, the intent to remain permanently in Ohio. Zakharov travels to Ohio under a tourist or business visa, which means that he must eventually leave Ohio to return to Russia. The fact that DiMarco [Prouse, Dash & Crouch, L.L.P. v. DiMarco, 887 N.E.2d 1211, 1213‑16 (Ohio Ct. App. 2008)] traveled to Canada on a tourist visa was persuasive evidence to the DiMarco court that he had no intent to remain in Canada permanently; Zakharov’s traveling to Ohio under a tourist visa is similarly persuasive to us. Furthermore, Zakharov is not registered to vote in Ohio, does not have an Ohio driver’s license, and has spent an average of only a few weeks a year in Ohio over the past several years.” [Slip op. 9‑10]

Conn then argues that Zakharov was personally served in Ohio, and that this alone confers personal jurisdiction. The Court disagrees that there was personal service on Zakharov. “Even assuming that [Burnham v. Superior Court of California, 495 U.S. 604 (1990)] permits jurisdiction based solely on proper, personal service of process on a Defendant who is present within the forum state, there could be no jurisdiction here based on such service.”

“Conn sent service of process through certified mail to Zakharov’s Pepper Pike property. His housekeeper received that process when Zakharov was not in the United States. Sometime later, Zakharov arrived in Ohio and was given the documents. This is clearly not ‘personal service’ as envisioned by Ohio law, which requires that personal service of process be accomplished by the sheriff or bailiff of the jurisdiction, or by a person over eighteen ‘who has been designated by order of the court.’ OHIO CIV. R. 4.1(B). And receipt of service of process through certified mail is not sufficient by itself to convey jurisdiction under Ohio’s long‑arm statute and its accompanying rule of civil procedure.” [Slip op. 11]

Lastly, Conn argues that despite the inapplicability of the long‑arm statute, Zakharov is still subject to jurisdiction under federal general jurisdiction. The Circuit Court disagrees. “First, as we have explained, Ohio law does not appear to recognize general jurisdiction over non‑resident defendants, but instead requires that the court find specific jurisdiction under one of the bases of jurisdiction listed in Ohio’s long‑arm statute. Indeed, to hold otherwise would come dangerously close to collapsing Ohio’s two‑part jurisdictional inquiry into one, an outcome that the Ohio Supreme Court has repeatedly rejected. We do acknowledge, however, that courts within the Sixth Circuit have come to inconsistent, and in some cases directly contradictory, conclusions on whether Ohio law recognizes general jurisdiction, with some cases holding that it does and other cases explicitly taking the opposite view or simply holding that Ohio law requires application of the long‑arm statute in order to find jurisdiction over a non‑resident Defendant.” [Slip op. 12]

“Second, even if Ohio law does recognize general jurisdiction over non‑resident defendants, Federal Due Process law does not allow for general jurisdiction based on Zakharov’s contacts with Ohio. As we have explained, the Supreme Court distinguishes between general jurisdiction and specific jurisdiction, either one of which is an adequate basis for personal jurisdiction under the Due Process Clause.” [Slip op. 13‑14]

“Even if we did find that Zakharov’s contacts were sufficient to subject him to the state’s general jurisdiction, we do not believe that exercising jurisdiction would accord with fair play and substantial justice. First, the burden on Zakharov to defend this action in Ohio is heavy because he lives in Russia and would have to travel around the world to engage in litigation.” [Slip op. 16‑17]

“Second, Ohio has no interest in this lawsuit—which involves an alleged agreement that was not negotiated in Ohio, agreed to in Ohio, or intended to be performed in Ohio—when neither party is a resident or citizen of Ohio, foreign law will be applied, and no effects from the dispute will be felt in Ohio.”

“Finally, although Conn clearly has an interest in bringing this action in Ohio, he is not foreclosed from bringing the suit in the District of Columbia—indeed, his counsel agreed at oral argument that this was an option—and Conn may always bring the lawsuit in a Russian court, which he admits would have jurisdiction and would hear the case on the merits, even if the merits appear to be stacked against Conn under Russian law. Therefore, Ohio is not the only forum where Conn may attempt to gain relief from his alleged harm.” [Slip op. 17]

Citation: Conn v. Zakharov, 667 F.3d 705 (6th Cir. 2012).

PRELIMINARY INJUNCTION

In connection with the enforcement of a large Ecuadorian judgment in the federal courts in New York, the Second Circuit reverses a district court’s grant of a preliminary injunction, finding [1] that the Plaintiff failed to demonstrate a valid legal basis for the injunction and [2] that New York state’s Uniform Foreign Money Judgments Recognition Act does not afford challenges to the legality of foreign judgments except in defense of adverse party’s suit to enforce said judgment

From 1964 to 1992, Texaco collaborated with the Ecuadorian government to extract oil in the Lago Agrio region of the Ecuadorian Amazon. In 1992, Texaco withdrew from its oil extraction efforts. The Plaintiffs are residents of the Lago Agrio region and filed a federal suit in the Southern District of New York, alleging several tort claims. The district court dismissed the Plaintiffs’ claims on the ground of international comity and forum non conveniens. The court found that the claims were not related to the United States but solely related to Ecuador. After several years of litigation, Texaco agreed to submit to the jurisdiction of the Ecuadorian courts; however, it contested the validity of the ultimate Ecuadorian judgment.

In 1994, Texaco entered into a settlement with the Ecuadorian government and its government‑owned oil company, Petroecuador. Under the settlement, Texaco’s subsidiary agreed to fund several environmental remediation projects to gain a release from liability. The parties finalized the settlement in 1998, after Chevron, which acquired Texaco in 2001, spent $40 million on the remediation.

Ecuador and Chevron continue to litigate the validity and effect of the settlement, however, before an arbitration panel. After the court dismissed the New York action, the Plaintiffs filed a lawsuit against Chevron in Ecuador. After seven years of litigation, the Ecuadorian trial court issued a decision holding Chevron liable for $8.6 billion in compensatory damages and $8.6 billion in punitive damages unless Chevron apologized within fourteen days. Chevron did not apologize and the court entered a judgment of $17.2 billion against it.

In 2005, one of the Plaintiffs contacted a documentary filmmaker and created a film depicting the relevant environmental and political issues which had arisen in Ecuador. During the film, the filmmaker included footage that suggested that one of the Plaintiff’s experts had been working hand‑in‑glove with the Plaintiffs during his investigations.

After Chevron saw this footage, it launched several discovery proceedings in various U.S. district courts. Through these proceedings, Chevron gained access to an extraordinary quantity of material. Included in the material were several hundred hours of outtakes from the documentary film. This footage featured the expert stating his disdain for the Ecuadorian judiciary; his poor opinion of the Plaintiffs’ litigation; his views on various legislative, and political strategies; and how the Plaintiffs planned to use any resulting Ecuadorian judgment to force a quick settlement with Chevron.

Based on this new material, Chevron alleges that fraud had tainted the Ecuadorian judgment. Chevron presented this fraud claim to the Ecuadorian trial court and convinced it to remove the expert’s interpretations from the final decision. The trial court nevertheless found Chevron liable. Both parties appealed to the intermediate court, which upheld the trial court’s judgment.

On February 1, 2011, Chevron filed its complaint in the U.S. District Court for the Southern District of New York, asserting claims of fraud, extortion, obstruction of justice, etc. Chevron sought a permanent injunction and money damages. The district court granted the injunction. The Plaintiffs appealed. The U.S. Court of Appeals for the Second Circuit reverses the district court, vacates the injunction, and remands the case to the district court with instructions to dismiss Chevron’s declaratory judgment claim. As to the preliminary injunction, the Court looks to New York’s Uniform Foreign Money‑Judgments Recognition Act. The Act supports the enforcement of foreign judgments that are final and enforceable in the forum rendered. There are ten exceptions to the presumption of enforceability. One of the mandatory exceptions requires that a court decline to enforce a judgment if the judgment was rendered under a system, which does not provide impartial tribunals or procedures compatible with the requirements of due process of law.

“Whatever the merits of Chevron’s complaints about the Ecuadorian courts, however, the procedural device it has chosen to present those claims is simply unavailable: The Recognition Act nowhere authorizes a court to declare a foreign judgment unenforceable on the preemptive suit of a putative judgment‑debtor. The structure of the Act is clear. The sections on which Chevron relies provide exceptions from the circumstances in which a holder of a foreign judgment can obtain enforcement of that judgment in New York; they do not create an affirmative cause of action to declare foreign judgments void and [to] enjoin their enforcement.” [Slip op. 16]

“That the Ecuadorian judgment is now, in light of the Ecuadorian intermediate court’s January 2012 ruling, potentially final, conclusive and enforceable where rendered makes Chevron’s theory of relief no more consistent with New York law. The existence of such an enforceable judgment is a necessary condition that must precede the invocation of the Recognition Act; it is not, as we have just explained, a sufficient condition. There is thus no legal basis for the injunction that Chevron seeks, and, on these facts, there will be no such basis until judgment‑creditors affirmatively seek to enforce their judgment in a court governed by New York or similar law.” [Slip op. 19‑20]

Next, the Court looks to international comity matters. Considerations of international comity provide additional reasons to conclude that the Recognition Act cannot support the broad injunctive remedy granted by the district court. “We need not address here whether and how international comity concerns would affect a hypothetical effort by a state to vest its courts with the authority to issue so radical an injunction. There is no such statutory authorization, for New York has authorized no such relief. To resolve the dispute before us, we need only address whether the statutory scheme announced by New York’s Recognition Act allows the district court to declare the Ecuadorian judgment non‑recognizable, or to enjoin Plaintiffs from seeking to enforce that judgment. Because we find that it does not, the injunction collapses [even] before we reach issues of international comity.” [Slip op. 24‑25]

Lastly, the Court considers the implications of the federal Declaratory Judgment Act. It does not create a separate substantive cause of action but addresses the “case or controversy” limitations of Article III of the Constitution. “Such a regime would unquestionably provoke extensive friction between legal systems by encouraging challenges to the legitimacy of foreign courts in cases in which the enforceability of the foreign judgment might otherwise never be presented in New York.”

“As Chevron’s effort to secure injunctive relief illustrates, permitting such speculative declaratory relief would encourage efforts by parties to seek a res judicata advantage by litigating issues in New York in order to obtain advantage in connection with potential enforcement efforts in other countries. And while the declaratory judgment might definitively settle the question of enforcement in New York—a question that in the ordinary course might never arise at all—it would hardly ‘finalize’ the larger dispute between the parties about the legitimacy of the Ecuadorian judgment or its enforceability in other countries.”

“We thus agree with the court in [Basic v. Fitzroy Eng’g, Ltd., 949 F. Supp. 1333, 1341 (N.D. Ill. 1996)], that a far better remedy is available: Chevron can present its defense to the recognition and enforcement of the Ecuadorian judgment in New York if, as and when the [Plaintiff]s seek to enforce their judgment in New York.” [Slip op. 28].

Citation: Chevron Corp. v. Naranjo, 667 F.3d 232 (2d Cir. 2012).

FOREIGN MONEY JUDGMENTS, ENFORCEMENT OF

The United Kingdom Supreme Court rules that a U.S. money judgment against Argentina may be enforced in England [1] only if the rendering court had applied United Kingdom rules on the exceptions to sovereign immunity and [2] only if the sovereign judgment debtor is not immune from English execution procedures

The NML is a Cayman Island company. It is affiliated with a New York based hedge fund of a type sometimes described as a “vulture fund.” Speculators often use such funds to feed on the debts of sovereign states that are in acute financial difficulty. They buy sovereign debt at a discount to face value and then seek to enforce it judicially for a higher amount.

This appeal relates to bonds issued by the Republic of Argentina as to which, together with all its other debt, Argentina declared a moratorium in December 2001. Between June 2001 and September 2003, affiliates of NML bought , at a little over half their face value, bonds with a principal value of $172,153,000 (“the bonds”).

On May 11, 2006, a Federal Court in New York gave summary judgment to NML, as beneficial owner, for a total, including interest, of over $284 million. NML next brought a successful common law action on that judgment in the English Commercial Court.

The Court of Appeal, however, reversed that judgment. It held that sovereign or state immunity shielded Argentina from such a judgment. An appeal was allowed to the Supreme Court of the United Kingdom. The question raised by this appeal is whether the above finding was correct. A five‑justice panel reverses in a 3 to 2 vote.

The total bundle of issues for decision by the Supreme Court amounted to the following five:

(1) “whether the present proceedings for recognition and enforcement of the New York court’s judgment were ‘proceedings relating to ¼ a commercial transaction’ within the meaning of section 3 of the State Immunity Act 1978 ;”

(2) “whether the Defendant was precluded from claiming state immunity in respect of the proceedings by section 31 of the Civil Jurisdiction and Judgments Act 1982 ;”

(3) “whether the bonds contained a valid submission to the jurisdiction of the English court in respect of the present proceedings within the meaning of section 2 of the State Immunity Act 1978;

(4) “whether the Claimant was entitled to raise at the inter partes hearing two new points not previously relied on for the ex parte application;” and

(5) “whether, having regard to the answers to the above questions, Argentina was entitled to claim state immunity with respect to the claims made in the present proceedings.

The resolution of the first two issues turns on statutory interpretation. The court must engage in this interpretation, in the context of simultaneous developments not only in the law of sovereign immunity but also in the recognition of foreign country judgments. (For space limitation reasons, the present summary limits itself to the majority’s ruling on the first two statutory issues. It does preserve, however, the high Court’s paragraphing system should a reader wish to study the full opinion of the Court.)

8. Q. What is the current English law on state immunity from suit?

“At the beginning of the 20th century, state immunity was a doctrine of customary international law, applied in England as part of the common law. Under this doctrine a state enjoyed absolute immunity from suit in the court of another state. The property of the state was also immune from execution. During the time when a state could not be sued, there was no procedural provision in this jurisdiction for service of process on a foreign state.”

“The resolution of the first two issues turns on statutory interpretation. This must be carried out in the context of simultaneous developments in the law of sovereign immunity and of the recognition of foreign judgments. From all the authorities it seems to us, ¼that the real principle on which the [former] exemption of every sovereign from the jurisdiction of every court has been deduced is that the exercise of such jurisdiction would be incompatible with his [or her] regal dignity—that is to say with [the] absolute independence of every superior authority.”

“[The subsequent relaxation of this doctrine by the Civil Jurisdiction and Judgments Act 1982] reflected a growing recognition around the world of the ‘restrictive doctrine’ of state immunity under which immunity related to governmental acts in the exercise of sovereign authority (acta jure imperii) but not to commercial activities carried on by the state (acta jure gestionis). [281].

14. “Prior to the 1982 Act the common law provided two alternative remedies to a plaintiff who had obtained a judgment against a debtor in a foreign jurisdiction. He could bring a claim on the judgment or he could bring a claim on the [original] cause of action in respect of which he had obtained the judgment. The former did not merge in the latter.”

15. “In order to establish jurisdiction to sue on the judgment, the plaintiff had to serve a writ in personam in accordance with the normal procedure. The existence of a foreign judgment was not a ground upon which permission could be obtained to serve a writ out of the jurisdiction. The plaintiff had to establish that a number of conditions were satisfied in order to claim successfully on the foreign judgment. In particular, he had to establish that [1] the foreign court had had jurisdiction over the Defendant in accordance with the English rules of private international law and [2] the judgment had to be final and conclusive on the merits.”

19. Q. Do the present proceedings constitute “proceedings relating to a commercial transaction” within the meaning of the State Immunity Act of 1978?

“The 1978 Act had its origin in the need to give effect to the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 [ECSI], but as the Bill passed through Parliament, the scope of the legislation was widened so as to make provisions in relation to state immunity having effect on all states, and not just [on] those party to the Convention. ¼[Cite].”

20. “Section 3(1) of the 1978 Act provides: ‘A State is not immune as respects proceedings relating to: (a) a commercial transaction entered into by the state’. Section 3(3)(b) defines ‘commercial transaction’ as including ‘any loan or other transaction for the provision of finance ¼’ In view of this definition, it is not surprising that it is common ground that the action in respect of which NML obtained judgment in New York was a ‘proceeding relating to a commercial transaction’ within the meaning of section 3(1)(a). Permission to effect service on Argentina out of the jurisdiction was obtained from [the Commercial Court] on the basis of an averment that the common law action that was to be brought in England on the New York judgment was also a ‘proceeding relating to a commercial transaction.’” [282‑3]

26. “I agree with the Court of Appeal that the expression ‘relating to’ is capable of bearing a broader or narrower meaning as the context requires. I disagree, however, with their conclusion as to the relevant context. Sections 1 to 11 of the 1978 Act are a comprehensive statement of the scope of state immunity under the law of the United Kingdom. Section 3(1)(a) makes it plain that the United Kingdom applies the restrictive doctrine of state immunity.”

“The context in which the question of the meaning of ‘relating to’ has arisen in this case is the issue of whether Argentina is or is not protected by state immunity against the proceedings that NML seek to bring. The object of bringing these proceedings is to enforce the New York judgment. Argentina has not suggested that (subject to the issue of immunity) these proceedings did not fall within CPR r 6.20(9), which provides for service out of the jurisdiction if ‘a claim is made to enforce any judgment or arbitral award’.”

“The only issue is whether Argentina is immune from the claim. Whether a state is immune from such a claim should, under the restrictive doctrine of state immunity, depend upon the nature of the underlying transaction that has given rise to the claim, not upon the nature of the process by which the Claimant is seeking to enforce the claim. ¼” [283].

“When considering whether a state is entitled to immunity in respect of a claim to enforce a foreign judgment, the question ‘does the claim constitute proceedings relating to a commercial transaction?’ can only be given a meaning that is sensible if ‘relating to’ is given a broad, rather than a narrow, meaning. The proceedings relate both to the foreign judgment and to the transaction underlying that judgment, but in the context of restrictive state immunity it only makes sense to focus on the latter.”

28. “The fallacy in this argument is that the issue raised in the present proceedings is not the regularity of the New York judgment but whether Argentina is immune to an action on that judgment. [Queen’s Counsel Howard] put the matter more accurately [in] his written case:] ‘It is important to bear in mind that the issue in these proceedings is not whether the English court had jurisdiction to entertain proceedings on the bonds. It is common ground that it did not.”

“Rather, the issue is whether the present proceedings for the recognition and enforcement of the New York judgment are proceedings ‘relating to’ that judgment, or are, instead, proceedings ‘relating to’ a ‘commercial transaction entered into by’ Argentina within the meaning of section 3(1)(a) on the grounds that the New York proceedings on which the New York judgment was based were proceedings ‘relating to’ a commercial transaction entered into by Argentina (i.e. ‘relating to’ the bonds).”

“Under international law, the question of whether Argentina enjoys immunity in these proceedings depends upon whether Argentina’s liability arises out of acta jure imperii or acta jure gestionis. This involves consideration of the nature of the underlying transaction that gave rise to the New York judgment. The fact that NML is seeking to enforce that judgment in this jurisdiction by means of an action on the judgment does not bear on the question of immunity. This leads to the conclusion that the context in which the issue of the meaning of the words ‘relating to’ arises in this case requires one to look behind the New York judgment at the underlying transaction.” [285].

37. “When Parliament enacted the 1978 Act, the exemption from immunity under section 3(1)(a) in respect of proceedings relating to a commercial transaction entered into by the state was not qualified by any requirement for a link between the transaction and the United Kingdom. This was not accidental. The United Kingdom ratified the ECSI on the same day that the 1978 Act came into force, and the Act was designed to give effect to the Convention.”

“The original Bill followed closely the structure of the ECSI. Its scope was, however, significantly enlarged by amendment. The ECSI [as such] only applies as between contracting states. The 1978 Act [expanded its applicability of the ECSI’s terms]¼ to all states.”

“The ECSI does not give effect to the restrictive doctrine of sovereign immunity. Article 24.1 provides, however, that any state may declare that ‘its courts shall be entitled to entertain proceedings against another contracting state to the extent that its courts are entitled to entertain proceedings against states not party to the present Convention. Such a declaration shall be without prejudice to the immunity from jurisdiction which foreign states enjoy in respect of acts performed in the exercise of sovereign authority (acta jure imperii).’”

38‑39. “The United Kingdom made such a declaration at the time of ratification of the Convention. ¼I can see no justification for giving section 3(1)(a) a narrow interpretation on the basis that it is desirable to restrict the circumstances in which it operates to those where the commercial transaction has a link with the United Kingdom. The restrictive doctrine of sovereign immunity does not restrict the exemption from immunity to commercial transactions that are in some way linked to the jurisdiction of the forum.”

40. “¼By reason of section 3(1)(a) of the 1978 Act, Argentina is not immune from the proceedings that NML have commenced in this jurisdiction. My conclusion accords with the decisions on the identical points of the Quebec Court of Appeal and the Supreme Court of Canada [Cites]¼ None of these cases concerned, however, the meaning of ‘relating to’ in the context of an action on a foreign judgment. Such an action is sui generis and I did not find the authorities in question of assistance.”

41. “For these reasons I differ from the Court of Appeal on the answer to the first issue. My conclusion is that the present proceedings are ‘proceedings relating to ¼ a commercial transaction’ within the meaning of section 3 of the 1978 Act.”

42. “The conclusion that I have reached resolves an issue that may not have occurred to the draftsman of the 1978 Act or to Parliament when enacting it. While section 9 of the Act makes express provision for arbitration awards, the Act makes no mention of proceedings in relation to foreign judgments against states, other than Part II, which deals with judgments against the United Kingdom in the courts of other states party to the ECSI.”

“There have been, in fact, only eight [European] ratifications of that Convention. Prior to 1978 there had been no attempts to enforce in the United Kingdom foreign judgments against states. As I have explained, the 1920 and the 1933 Acts gave little scope for registering foreign judgments against states and there is no recorded instance of an attempt to do this before 1978.”

“In 1978, the Rules of Court made no provision for impleading a foreign sovereign, no doubt reflecting the previous absolute doctrine of state immunity. Section 12(1) of the 1978 Act [did] made provision for service on a state and section 12(7) made it plain that such service required permission, which could only be granted in accordance with the rules of court governing service out of the jurisdiction.”

“There was no provision in 1978 for service out of the jurisdiction of a claim to enforce a judgment. In these circumstances it is perhaps not surprising that the Act made no express provision in relation to proceedings to enforce foreign judgments, other than judgments against the United Kingdom covered by the ECSI.”

Q. Does section 31 of the Civil Jurisdiction and Judgments Act 1982 prevent Argentina from claiming state immunity with respect to the present proceedings?

44. “The primary object of the 1982 Act was to give effect to the ECSI [which] made provision for the reciprocal recognition and enforcement of judgments. The application of section 31 was not, however, restricted to the states who were parties to that Convention.” [289].

“Section 31 provides for the recognition and enforcement of a New York judgment against a state in respect of a personal injury caused in New York. Conversely it would not permit recognition of a New York judgment against a state in respect of a personal injury caused by the state in the United Kingdom unless, as in reality would be likely to be the case, there was an alternative basis for recognition that satisfied section 31, such as submission to New York jurisdiction by the foreign state. In short, far from providing an additional hurdle that the Claimant has to cross before enforcing a foreign judgment against a state, section 31 provides an alternative scheme for restricting state immunity in the case of foreign judgments. ¼”

49. “Both the wording of section 31(1) and the scheme to which it gives effect appear to me to be clear. State immunity cannot be raised as a bar to the recognition and enforcement of a foreign judgment if, under the principles of international law recognised in this jurisdiction, the state against whom the judgment was given was not entitled to immunity in respect of the claim.”

52. “Section 31(4) made section 12 of the 1978 Act applicable to proceedings for the recognition or enforcement of a foreign judgment and thereby made such proceedings subject to the rules of court governing service out of the jurisdiction. These rules were significantly amended in consequence of the passing of the 1982 Act by RSC (Amendment No 2) 1983 (SI 1983/1181). In particular the following new provision was introduced into RSC, Ord 11, r 1(1) : ‘service of a writ out of the jurisdiction is permissible with the leave of the court if, in the action begun by the writ, ¼ (m) the claim is brought to enforce any judgment or arbitral award.’”

53. “It thus became possible to obtain leave to serve out of the jurisdiction proceedings in respect of an action on a foreign judgment in circumstances where this was not governed by any Convention. No question appears to have been raised as to the fact that this opened the door to enforcement proceedings in this country of overseas judgments given against states.”

54. “For these reasons, ¼ I conclude that the effect of section 31 of the 1982 Act, together with the addition to RSC Ord. 11 was accurately summarised by Dicey, Morris & Collins, The Conflict of Laws , 14th ed (2006), vol 1, para 14–095, as follows: ‘The effect of [section 31] is that a foreign judgment against a state, other than the United Kingdom or the state to which the court which pronounced the judgment belongs, is to be recognised and enforced in the United Kingdom [1] if [the judgment] would be so recognised and enforced if it had not been given against a state and [2] [if] the foreign court would have had jurisdiction in the matter if it had applied rules corresponding to those applicable to such matters in the United Kingdom in accordance with sections 2 to 11 of the [1978 Act] ¼”

“A foreign judgment against a state will be capable of enforcement in England, if both of the following conditions are fulfilled: [1] that the foreign court would have had jurisdiction (a) if it had applied the United Kingdom rules on sovereign immunity set out in sections 2 to 11 of the [1978 Act], the effect of which is that a state is not immune (inter alia) where it submits to the jurisdiction or (b) where the proceedings relate to a commercial transaction; [2] that, under United Kingdom law, the state is not immune from the processes of execution.” [290‑91].

Citation: NML Capital, Ltd. v. Republic of Argentina, [2011] U.K.S.C. 21.

WARFARE

In case brought by relatives of five civilians and one soldier killed in United Kingdom sector during Iraq hostilities, a Grand Chamber of the European Court of Human Rights holds the United Kingdom government’s inadequate investigations of the events liable for appropriate wrongful death damages and litigation expenses

[The following is based on the official headings of the complex proceedings before a 17 judge Grand Chamber of the European Court of Human Rights in Strasbourg. The Applicants were the relatives of Iraqi citizens who had been killed in Iraq in the period following the invasion of the country by the United Kingdom (UK), the United States (US) and their coalition partners on March 20, 2003, and prior to the passing of authority to the Interim Iraqi Government on May 28, 2004.]

British soldiers had shot and killed the relatives of Applicants 1, 2, and 4. Applicant 3’s wife had been killed during exchanges of fire between British soldiers and insurgents; it is impossible to determine who had fired the lethal shot. Applicant 5 alleged that British troops had arrested his son and had then forced him into a river where he had drowned. British troops had arrested and detained Applicant 6’s son and he had later died in custody from unspecified or unknown causes.

A summary investigation into the deaths of the relatives of Applicants 1‑3 decided that the deaths had fallen within the Rules of Engagement. As to the death of Applicant 4’s brother, an inquiry ruled that the troops’ use of force had fallen within the Rules of Engagement. and that no prosecution was justified. As to Applicant 5’s son, an investigation did lead to the prosecution of 4 soldiers, but a “collapse” of the prosecution’s case led to their acquittals.

Applicants 5 and 6 later brought civil claims against the UK Ministry of Defence. As a result, the Ministry paid them a substantial sum and issued a formal apology. As regards the death of Applicant 6’s son, an investigation did take place. Applicant 6 then brought a civil claim, as a result of which the government paid him a substantial sum by way of compensation and issued a formal apology. Applicants 1‑4 and 6 were parties to proceedings before the UK courts which challenged the refusals by the Secretary of State to conduct independent investigations into the deaths of their relatives.

On June 13, 2007, the House of Lords concluded that the UK had no had jurisdiction under Article 1 of the European Convention for the Protection of Human Rights and Fundamental Freedom, Nov.4, 1950; Europe T.S. No.5; 213 U.N.T.S, 221, over the relatives of Applicants 1‑4 at the relevant times, so that there was no obligation to investigate.

The UK Government conceded during the proceedings that it had had jurisdiction over Applicant 6’s son. In May 2008, the Secretary of State for Defence announced a public inquiry into the death of his son, although the inquiry had still to deliver its report. Relying on Article.2 [See Note 1], all six Applicants complained of the failure to carry out a full and independent investigation into the circumstances of the deaths of their relatives. They claimed just satisfaction under Article 41. ¼

Right to life as provided under Convention Article 2

H6 “(a) Under art. 1, the exercise of ‘jurisdiction’ was a necessary condition for a state to be held responsible for acts or omissions imputable to it which gave rise to an alleged infringement of Convention rights. As a state’s jurisdictional competence under art. 1 was primarily territorial, it was only in exceptional cases that acts of the contracting states performed, or producing effects, outside their territories could constitute an exercise of jurisdiction for the purposes of art. 1.”

H7 “(b) Such exceptional circumstances had been found to exist where the acts of the state authorities produced effects outside the state’s own territory. In particular, the acts of diplomatic and consular agents present on foreign territory could amount to an exercise of jurisdiction when these agents exerted authority and control over others.”

“Further, the exercise of extra‑territorial jurisdiction by a contracting state had been recognised when, through the consent, invitation or acquiescence of the territorial state, it had exercised all or some of the public powers normally to be exercised by government of that state, provided the acts in question were attributable to it rather than to the territorial state.”

“In addition, in certain circumstances, the use of force by a state’s agents operating outside its territory could bring an individual within the state’s jurisdiction. In the latter cases, what was decisive for jurisdiction to arise was the exercise of physical power and control by state agents over the person in question. Whenever the state through its agents exercised control and authority over an individual, it was under an obligation under art.1 to secure to that individual the Convention rights which were relevant to his situation; in that sense, the Convention rights could be ‘divided and tailored’.”

H8 “(c) A further exception to the principle of territoriality existed where, as a consequence of lawful or unlawful military action, a contracting state exercised, either directly or through a subordinate local administration, effective control of an area outside that national territory. Where such domination over the territory was established, it was not necessary to determine whether the contracting state exercised detailed control over the policies and actions of the subordinate local administration, as the fact that that administration survived as a result of the contracting state’s support entailed that state’s responsibility for its policies and actions.”

Under art.1 , the controlling state was under an obligation to secure, within the controlled area, the entire range of Convention rights and was liable for any violations of those rights. The question whether a contracting state exercised effective control over an area was a factual determination. The primary factor to be taken into account was the strength of the state’s military presence in the area. Other relevant indicators included the extent to which the state’s military, economic and political support for the local subordinate administration provided it with influence and control over the region.”

H9 “(d) The existence of the mechanism under [Convention] art. 56 could not be interpreted as limiting the scope of the term ‘jurisdiction’ in art. 1.”

H10 “(e) In the past it had been recognised that, in order to avoid a ‘vacuum’ of protection within the ‘legal space’ of the Convention, in cases of military occupation of the territory of one Convention state by another Convention state, the occupying state was in principle to be held accountable for breaches of the within the occupied territory. However, that did not imply, a contrario, that jurisdiction under art.1 could never exist outside the ‘legal space’ of Council of Europe Member States.”

H11 “(f) Following the removal from power of the previous regime on May 1, 2003 and until the transfer of authority to the Interim Government on June 28, 2004, the UK and the US had been the occupying powers in Iraq and had assumed the exercise of some of the public powers normally exercised by a sovereign government. The UK in particular had assumed authority and responsibility for maintaining security and supporting the civil administration in the province in South‑East Iraq.”

H12 “(g) In those exceptional circumstances the UK, through its soldiers engaged in security operations in that area during the relevant period, had exercised authority and control over individuals killed in the course of those security operations, so as to establish a jurisdictional link between the deceased and the UK for the purposes of art. 1.”

“In particular, it was undisputed that the deaths of the relatives of Applicants 1, 2 and 4‑6 had been caused by the acts of British soldiers during the course of security operations. It followed that. in all those cases, there had existed a jurisdictional link between the UK and the deceased for the purposes of art. 1.”

“Applicant 3’s wife had been killed during an exchange of fire between a patrol of British soldiers and unidentified gunmen and it was not known which side had fired the fatal bullet. [S]ince the death had occurred in the course of a UK security operation, however, during which British soldiers had taken part in the fatal exchange of fire, there had likewise existed a jurisdictional link between the UK and the wife of Applicant 3.”

Right to life: killing by state agents; procedural obligations; prompt and effective investigation; independence of investigating authorities; securing of evidence

H13 “(a) The complaints of the Applicants did not relate to any substantive breach of the right to life under art.2 , but rather to alleged breaches of the procedural duty under art.2 to carry out an effective investigation into the killings of their relatives.”

H14 “(b) Although the security situation in South‑East Iraq at the relevant time had been difficult, art.2 was one of the most fundamental provisions in the Convention, and no derogation from it was permitted under art.15 except in respect of deaths resulting from lawful acts of war. In particular, the procedural obligation under art.2 to carry out an effective official investigation into the killing of individuals, including by state agents, applied also in difficult security conditions.”

“Although in such circumstances, concrete constraints could compel the use of less effective measures of investigation or result in delays in the investigation, the authorities were nevertheless required to take all reasonable steps in order to ensure that an effective, independent investigation was conducted into alleged breaches of the right to life.”

H15 “(c) Although the form of investigation could vary depending on the circumstances, once the authorities had become aware of a matter, they were required to act of their own motion, in a prompt and reasonably expedited manner. For the investigation to be effective, it had to be capable of leading to a determination of whether the force used had been justified and to the identification and punishment of those responsible; in particular, the authorities had to take the reasonable steps available to them to secure the evidence concerning an incident.”

“Further, when the investigation concerned killings by state agents, those responsible for, and carrying out, the investigation had to be independent from those implicated in the events, both from a hierarchical and a practical point of view. There had also to be a sufficient element of public scrutiny of the investigation or its results; although the degree of public scrutiny required could vary from case to case, the victim’s next‑of‑kin had in any case to be involved in the procedure to the extent necessary to safeguard their interests.”

“Finally, the investigation had to be broad enough to assess not only the actions of the state agents who had directly used lethal force but also all the surrounding circumstances, including such matters as the planning and control of the operations in question.”

H16 “(d) It was necessary to bear in mind the practical problems caused by the fact that the UK was an occupying power in a foreign and hostile region in the immediate aftermath of invasion and war, including the breakdown of the civil infrastructure. In such circumstances, the procedural duty under art.2 had to be applied realistically, taking account of the specific problems faced by investigators.”

“[T]he situation also entailed, however, that, if any investigation into acts allegedly committed by British soldiers was to be effective, it was particularly important that the investigation was, and was seen to be, operationally independent of the military chain of command.”

H17 “(e) The relatives of Applicants 1, 2 and 4 had been shot by British soldiers, the identity of whom were known. The question to be investigated was whether in each case the soldier had fired in conformity with the Rules of Engagement. As regards the Applicant 3’s wife, art.2 had required an investigation to determine the circumstances of the shooting, including whether appropriate steps had been taken to safeguard civilians in the vicinity.”

“As regards the son of Applicant 5, it appeared that he had drowned and it was necessary to determine whether, as alleged, British soldiers had forced him into the water. In each of those cases, the testimony of eye‑witnesses had been crucial and it had therefore been essential that, as quickly as possible after the event, both the military and the Iraqi witnesses should have been questioned by an expert and fully independent investigator.”

H18 “(f) It was clear—and had not been disputed by the Government—that the investigations into the shooting of the relatives Applicants 1–3 had fallen short of the requirements of art.2; the investigation had remained entirely within the military chain of command and had gone no further than taking statements from the soldiers involved.”

H19 “(g) With regard to the investigation into the deaths of the relatives of Applicants 4 and 5, the investigating authorities had been under a separate chain of command from the soldiers who had been under investigation. [T]he investigating authorities had not been operationally independent from the military chain of command, however, given that they had not been free to decide for themselves when to start or terminate an investigation, and did not report in the first instance to the prosecuting authority. Accordingly, the investigators had not been sufficiently independent from the soldiers implicated in the events to satisfy the requirements of art.2.”

H20 “(h) In addition, the initial phase of the investigation into the shooting of Applicant 4’s brother had suffered from other flaws, including that the soldier who had shot the Applicant’s brother had not initially been questioned. Further, although Iraqi witnesses who had allegedly witnessed the shooting had apparently been questioned, no statements had been taken. In any case, due to the lack of independence, the investigation had initially been terminated before it was completed. The investigation was reopened 9 months later, and the case was referred to the prosecuting authority by the commanding officer.”

“Although the prosecutors had then taken depositions from the military witnesses, the long period of time which had been permitted to pass before the soldier who had fired had been questioned, combined with the delay before a fully‑independent investigator had interviewed the other military witnesses, had entailed a high risk that the evidence had been contaminated and become unreliable. Further, it did not appear that any fully independent investigator had ever taken evidence from the Iraqi witnesses.”

H21 “(i) Although there was no indication that the military chain of command had sought to intervene in the investigation of the death of Applicant 5’s son, the investigators had nevertheless lacked independence. Further, the unexplained long delay between the death and the court‑martial had seriously undermined the effectiveness of the investigation, not least because some of the soldiers allegedly involved had become untraceable. Further, the narrow focus of the investigation had been inadequate to satisfy the requirements of art.2.”

“Given the evidence which appeared to show that Applicant 5’s son had been taken into custody by British soldiers who were assisting Iraqi police, and that, as a result of mistreatment, he had drowned, [Convention] art.2 had required an independent examination, accessible to the victim’s family and the public, of the broader issues of state responsibility for the death, which should have included the instructions, training and supervision given to soldiers.”

“Although the Applicant 5 had received a substantial sum in settlement of his civil claim, accompanied by an admission of liability, there had never been a full and independent investigation into the circumstances of the death of his son. Accordingly Applicant 5 could still claim to be a victim within the meaning of art.34 and the Government’s preliminary objection in that regard was to be rejected.”

H22 “(j) A full, public inquiry was nearing completion into the circumstances of the death of Applicant 6’s son. Given that inquiry, Applicant 6 accepted that he was no longer a victim of any breach of the procedural obligation under art.2 and Government’s objection in respect of Applicant 6 was to be upheld.”

H23 “(k) In conclusion, there had been a violation of the procedural duty under art.2 in respect of Applicants 1‑5.”

Just satisfaction: non‑pecuniary damage; costs and expenses; default interest (article 41)

H24 “(a) A respondent State was—in principle—free to choose the means by which it will discharge its legal obligation under art.46. Accordingly, with regard to the Applicants’ request that the Court order the Government to conduct a Convention‑compliant investigation into their relatives’ deaths, it was for the Committee of Ministers to address the issues as to what may be required in practical terms by way of compliance.”

H25 “(b) The guiding principle under art.41 was equity, and it was not the role of the Court to function akin to a domestic tort mechanism court in apportioning fault and compensatory damages between civil parties. In that regard awards on account of non‑pecuniary damage served to give recognition to the fact that moral damage had occurred as a result of a breach of a fundamental human right. In the light of all the circumstances, it was just and equitable to award Applicants 1‑5 the full amount claim[ed] in relation to non‑pecuniary damage. The Applicants were also awarded a sum for costs and expenses. Provision was made for interest in default of payment.”

Citations: Al‑Skeini v. United Kingdom et al., [2011] ECHR 1093; [2011] EHRR 18; 30 BHRC 561 (2011).

The United States and Greece agree to restrict imports of most Greek antiquities. Standing at the Parthenon Museum in Athens, Greece last week, Secretary of State Hillary Clinton signed an agreement with the Greek Minister of Foreign Affairs to restrict imports of ancient Greek artifacts to the U.S. Once ratified by the Greek parliament, the agreement, called a Memorandum of Understanding (MOU), would give the Greek government the right to restrict import of “cultural heritage” objects to the U.S. It would cover a list of objects dating from the late Stone Age through the end of the Byzantine Empire in the 15th century. The U.S. and Greece will agree upon a list of objects to be restricted, and the U.S. will enter the list into the Federal Register. This is the fifteenth such cultural heritage agreement signed by the U.S. The agreements fulfill obligations of the U.S. as a party to the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export, and Transfer of Ownership of Cultural Property, [TIAS; 823 UNTS 231; in force for U.S. Dec. 2, 1983]. The Convention seeks to protect the pillage of cultural heritage in countries which have a rich history but limited means with which to protect it. The U.S. has similar agreements with countries as diverse as Canada, Iraq, China, and Cyprus. Citation: “Elginism” Posted online under Art Info, Greece Archaeology at 1:54 p.m. on February 2, 2012, at www.elginism.com.

The United States has signed agreements to promote freedoms of international trade and investment among all nations. (1) The U.S. pursues the signing of expansive Free Trade Agreements (FTAs) to furnish new opportunities for American workers, farmers, ranchers, and service providers. In recent years, the United States has adopted FTAs, inter alia, with: Canada, Mexico, Israel, Jordan, Chile, Singapore, Australia, Morocco, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and Bahrain. (2) The U.S. Bilateral Investment Treaty (BIT) program focuses on protecting private investment, in fostering market‑oriented policies in signatories, and in expanding U.S. exports. BITs try to effectuate these goals: [1] by safeguarding investment abroad in countries which do not already protect investor rights e.g. through existing agreements (such as updated treaties of friendship, commerce, and navigation (FCNs), or by FTAs; [2] by fostering the adoption of market‑oriented domestic policies that treat private investment in an open, transparent, and non‑discriminatory way; and [3] by supporting the growth of, and compliance with, international law standards consistent with these objectives. Among the regional BIT members are the FTAA, NAFTA, MEFTA and APEC. Most of the above FTA nations are also BIT members. Citation: Website of the Office of the U.S. Trade Representative, www.ustr.gov.