2012 International Law Update, Volume 18, Number 2 (April - June)

2012 International Law Update, Volume 18, Number 2 (April - June)

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

Anti‑Suit Injunction

Where Defendants seek anti‑suit injunction in Singapore, Second Circuit affirms the issuance of an anti‑suit injunction, finding that the district court properly exercised its discretion in preventing a clear threat to its jurisdiction over the case

Defendants, Morgan Stanley Asia (Singapore) PTE, Morgan Stanley & Co. International, PLC, Morgan Stanley Capital Services Incorporated, Morgan Stanley & Co. Incorporated, and Pinnacle Performance Limited (“Pinnacle”), appeal from an order of the district court issuing a preliminary injunction prohibiting the Defendants from pursuing their own anti‑suit injunction in the Republic of Singapore. Such an injunction would require the Plaintiffs to litigate their claims exclusively in Singapore. The Defendants also seek review of the district court’s denial of their motion to dismiss the Plaintiffs’ complaint for forum non conveniens or due to the forum selection clause included in the contracts upon which the suit is based.

The United States Court of Appeals for the Second Circuit affirms the district court’s issuance of the anti‑suit injunction. The Court notes that in order to issue such an injunction, the court must address the propriety of the injunction under the “China Trade Test” and then determine whether it is appropriate to enter a preliminary injunction. The Court holds that the district court was correct in determining that the Plaintiffs satisfied both tests. “Faced with this clear threat to its jurisdiction over the case, the district court properly exercised its discretion in finding that this factor weighed heavily against Appellants. . . . We agree with the district court that Appellees have demonstrated irreparable harm through the actual and imminent possibility that they will be enjoined from prosecuting their suit in this, or in any other non‑Singaporean, forum, and that there are sufficiently serious questions going to the merits.” [Slip op. 5] (internal quotation omitted).

With regard to the motion to dismiss, the Court declines to address it, remanding it to the district court to determine the question of personal jurisdiction over the Defendants.

Citation: Leng v. Pinnacle Performance Ltd., No. 11‑5150‑cv (2nd Cir., Apr. 10, 2012).

COPYRIGHT

Fourth Circuit holds that Copyright Act has extraterritorial reach when the type of infringement permits further reproduction abroad

A group of companies (jointly “Alpha”) sued two groups of foreign companies (“Al Dobowi,” based in the United Arab Emirates; and “Linglong,” based in China) for copyright infringement. Alpha develops and sells specialized tires for underground mining vehicles, trademarked as “Mine Mauler.” Alpha filed copyright registrations for its tire designs.

It appears that a former Alpha employee gained access to confidential documents about the Alpha tires and its customers, and shared them with others, including Al Dobowi. Linglong agreed to manufacture the tires, which were then sold under the brand name “Infinity.” Alpha soon noticed the similarity of Infinity tires with its own Mine Mauler tires, and filed a lawsuit in October 2009 in the U.S. District Court for the Eastern District of Virginia. Eventually, the jury found for Alpha and awarded $26 million in damages.

Al Dobowi and Linglong appeal, challenging the verdict and the district court’s exercise of jurisdiction.

The U.S. Court of Appeals for the Fourth Circuit affirms in part, reverses in part, and vacates in part. The Court finds that the district court properly exercised jurisdiction over the defendants, and affirms the judgment as to the Copyright Act and conversion claims, as well as the jury’s damages award. However, the Court dismisses the remaining claims submitted to the jury, and vacates the award of attorneys’ fees.

As for the merits of the case, Al Dobowi and Linglong argue that The Copyright Act of 1976 (An Act for the general revision of the Copyright Law, title 17 of the United States Code, and for other purposes, Pub. L. 94‑553 (Oct. 19, 1976), 17 U.S.C. §§ 101‑810) has no extraterritorial reach.

“We hold that Alpha has presented a cognizable claim under the Copyright Act and therefore uphold the jury’s finding of liability on that count. We adopt the predicate‑act doctrine, which posits that a plaintiff may collect damages from foreign violations of the Copyright Act so long as the foreign conduct stems from a domestic infringement. No court applying the doctrine has ascribed significance to the timeliness of domestic claims, and we decline to endorse Appellants’ proposal that we limit its application to cases where a domestic violation is not time barred.”

“As a general matter, the Copyright Act is considered to have no extraterritorial reach. ¼ But courts have recognized a fundamental exception: ‘when the type of infringement permits further reproduction abroad,’ a plaintiff may collect damages flowing from the foreign conduct. Update Art, Inc. v. Modin Publ’g, Ltd., 843 F.2d 67, 73 (2d Cir. 1988).”

“This predicate‑act doctrine traces its roots to a famous Second Circuit opinion penned by Learned Hand. See Sheldon v. Metro‑Goldwyn Pictures Corp., 106 F.2d 45, 52 (2d Cir. 1939). The Second Circuit in Sheldon was confronted with an undisputed domestic Copyright Act violation. The defendant had converted the plaintiff’s motion picture while in the United States and then exhibited the picture abroad. Id. The court was required to decide whether the damages award could include profits made from foreign exhibition of the film. Id. Answering the question in the affirmative, Judge Hand articulated the framework of the predicate‑act doctrine:”

“‘The Culver Company made the negatives in this country, or had them made here, and shipped them abroad, where the positives were produced and exhibited. The negatives were ‘records’ from which the work could be ‘reproduced,’ and it was a tort to make them in this country. The plaintiffs acquired an equitable interest in them as soon as they were made, which attached to any profits from their exploitation, whether in the form of money remitted to the United States, or of increase in the value of shares of foreign companies held by the defendants. . . . [A]s soon as any of the profits so realized took the form of property whose situs was in the United States, our law seized upon them and impressed them with a constructive trust, whatever their form.’”

“Id. Once a plaintiff demonstrates a domestic violation of the Copyright Act, then, it may collect damages from foreign violations that are directly linked to the U.S. infringement.”

“The Second Circuit has reaffirmed the continuing vitality of the predicate‑act doctrine. Update Art, 843 F.2d at 73. In Update Art, the plaintiff owned the rights to distribute and publish a certain graphic art design. Id. at 68. Without authorization from the plaintiff, the defendant published the image in an Israeli newspaper. Id. at 69. The court reasoned that ‘the applicability of American copyright laws over the Israeli newspapers depends on the occurrence of a predicate act in the United States.’ Id. at 73. ‘If the illegal reproduction of the poster occurred in the United States and then was exported to Israel,’ the court continued, ‘the magistrate properly could include damages accruing from the Israeli newspapers.’ Id. But if the predicate act of reproduction occurred outside of the United States, the district court could award no damages from newspaper circulation in Israel. Id.”

“More recently, the Ninth Circuit embraced the predicate‑act doctrine. L.A. News Serv. v. Reuters Television Int’l, Ltd., 149 F.3d 987, 990‑92 (9th Cir. 1998). ¼ [¼] At least two other circuits have recognized the validity of the predicate‑act doctrine, even if they have not had occasion to squarely apply it to the facts before them. Litecubes, LLC v. N. Light Prods., Inc., 523 F.3d 1353, 1371 (Fed. Cir. 2008) (endorsing principle that ‘courts have generally held that the Copyright Act only does not reach activities ‘that take place entirely abroad’ ‘ (quoting Subafilms, 24 F.3d at 1098)); Liberty Toy Co. v. Fred Silber Co., 149 F.3d 1183, 1998 WL 385469, at *3 (6th Cir. 1998) (unpublished table decision) (‘[I]f all the copying or infringement occurred outside the United States, the Copyright Act would not apply. However, as long as some act of infringement occurred in the United States, the Copyright Act applies.’ (citations omitted)).”

“We join our sister circuits that have adopted the predicate‑act doctrine. The doctrine strikes an appropriate balance between competing concerns, protecting aggrieved plaintiffs from savvy defendants while also safeguarding a defendant’s freedom from stale claims. Absent the predicate‑act doctrine, a defendant could convert a plaintiff’s intellectual property in the United States, wait for the Copyright Act’s three‑year statute of limitations to expire, and then reproduce the property abroad with impunity. Such a result would jeopardize intellectual property rights and subvert Congress’s goals as engrafted on to the Copyright Act. But lest the doctrine lead to a windfall for plaintiffs and force a defendant to face liability for stale claims, plaintiffs may collect only those damages ‘suffered during the statutory period for bringing claims, regardless of where they may have been incurred,’ L.A. News, 149 F.3d at 992.”

“Applying the predicate‑act doctrine to this case, we conclude that Alpha has presented a valid claim under the Copyright Act. Accordingly, we sustain the jury’s finding of liability on that count.”

“Distilling applicable case law, we find that a plaintiff is required to show a domestic violation of the Copyright Act and damages flowing from foreign exploitation of that infringing act to successfully invoke the predicate‑act doctrine. Alpha has shown both. Appellants concede on appeal that Alpha has established a domestic violation of the Copyright Act. While in the United States, Vance and Al Dobowi unlawfully converted Alpha’s blueprints and reproduced them absent authorization. These acts constitute infringing conduct under the Copyright Act. See Update Art, 843 F.2d at 73 (concluding there would be an actionable violation if defendant illegally reproduced image while in the United States). And Alpha has demonstrated damages flowing from extraterritorial exploitation of this infringing conduct. Al Dobowi and Linglong used the converted blueprints to produce mining tires almost identical to those of Alpha. They then sold these tires to former customers of Alpha, causing Alpha substantial damage. See Sheldon, 106 F.2d at 52 (finding damages flowing from foreign exploitation of infringing act where defendant converted negatives of motion picture in United States and exhibited the film abroad).”

“Effectively granting the validity of the above analysis, Appellants contend that the predicate‑act doctrine may not be employed when recovery of damages from a domestic violation of the Copyright Act is barred by the three‑year statute of limitations. Because the statute of limitations bars Alpha from collecting damages for activities within the United States, Appellants assert that the jury’s Copyright Act verdict may not stand.”

“We are not persuaded by Appellants’ creative interpretation of applicable case law. It may be true that, in each of the cases in which a court has invoked the predicate‑act doctrine, the plaintiff would have been eligible to receive a damages award based solely on a domestic infringement. But courts ascribed no relevance to this observation, never discussing the statute of limitations and its effect on the predicate‑act doctrine. Quite the opposite, at least the Ninth Circuit anticipated that a plaintiff may collect damages from extraterritorial conduct, even if the statute of limitations bars an award based on domestic infringement. L.A. News, 149 F.3d at 992 (‘Defendants’ argument that adoption of the Second Circuit rule would permit plaintiffs to circumvent the statute of limitation by recovering damages for distribution abroad occurring many years after the infringing act in the United States is without merit. An action must be ‘commenced within three years after the claim accrued.’ . . . A plaintiff’s right to damages is limited to those suffered during the statutory period for bringing claims, regardless of where they may have been incurred.’ (emphasis added)). That Alpha may not collect damages from Appellants’ domestic activities is thus of no moment to the analysis, as the district court accurately instructed the jury.” [Slip op. 19‑24]

Citation: Tire Engineering and Distribution, LLC v. Shandong Linglong Rubber Company, Ltd., No. 10‑2271 (4th Cir. 2012).

JUDICIAL ASSISTANCE

In dispute over judicial assistance under 28 U.S.C. Section 1782, Eleventh Circuit finds that, as matter of first impression, an Arbitration Panel of Chamber of Commerce in Ecuador is a “foreign tribunal” for purposes of the statute

The following case involves a billing dispute following the shipping of cell phones and accessories. Consorcio Ecuatoriano de Telecomunicaciones S.A. (“CONECEL”) contracted with Jet Air Service Ecuador S.A. (“JASE”) for the shipment of CONECEL’s cell phones and related accessories. Even though the companies had worked together for at least a decade, the relationship fell apart in 2008 when CONECEL allegedly discovered that JASE had overbilled it by millions of dollars.

In July 2010, CONECEL filed an application under 28 U.S.C. Section 1782 in the U.S. District Court for the Southern District of Florida to obtain evidence for the pending proceeding Ecuador. CONECEL was seeking information from JASE’s United States affiliate, JAS Forwarding (USA), Inc. (“JAS USA”), which was involved in JASE’s invoicing.

CONECEL explained that it needed the evidence from JAS USA for two reasons: First, JASE brought an arbitration case for CONECEL’s non‑payment of invoices, and the evidence was necessary for CONECEL’s defense. That dispute was pending before the Center for Arbitration and Conciliation of the Guayaquil Chamber of Commerce. Second, CONECEL was allegedly contemplating civil and criminal actions against two former employees who may have violated Ecuador’s collusion laws by approving JASE’s inflated invoices. CONECEL allegedly needed the necessary evidence up front.

The District Court authorized the subpoena to JAS USA, but JASE intervened and moved to quash the subpoena. The District Court denied JASE’s motions, and JASE appealed to the Eleventh Circuit.

The U.S. Court of Appeals for the Eleventh Circuit affirms the District Court: (1) The arbitral tribunal where the arbitration is pending in Ecuador is a “foreign tribunal” for purposes of the statute; (2) the District Court did not abuse its discretion in granting the discovery order because the application was narrowly tailored and primarily requested information concerning JASE’s billing of CONECEL, which is the issue in dispute.

First, the Court finds that the arbitral tribunal in Ecuador is in fact a “foreign tribunal.”

“A district court has the authority to grant an application for judicial assistance under section 1782 if four statutory requirements are met:

“‘(1) the request must be made ‘by a foreign or international tribunal,’ or by ‘any interested person’; (2) the request must seek evidence, whether it be the ‘testimony or statement’ of a person or the production of ‘a document or other thing’; (3) the evidence must be ‘for use in a proceeding in a foreign or international tribunal’; and (4) the person from whom discovery is sought must reside or be found in the district of the district court ruling on the application for assistance.’”

“In re Clerici, [481 F.3d 1324, 1331‑32 (11th Cir. 2007)] ¼ (quoting 28 U.S.C. § 1782(a)). JASE does not dispute that requirements (1), (2), and (4) have been met here. As a party to the dispute, CONECEL plainly is an ‘interested person’; CONECEL’s application seeks evidence in the form of document production and deposition testimony; and the application seeks discovery from JAS USA, which has an office and does business in Miami and is therefore ‘found in the district of the district court ruling on the application for assistance’—namely, the Southern District of Florida.”

“At issue is the third requirement—that the evidence sought must be for use in a proceeding in a foreign or international tribunal. JASE claims that there is no such proceeding. CONECEL advances two independent theories for why there is: that the arbitration between the parties is a proceeding already pending in a foreign tribunal; and that CONECEL also wants the evidence for use in reasonably contemplated civil collusion proceedings that it may file against two of its former employees. Because we now hold that the pending arbitration proceeding is a ‘proceeding in a foreign or international tribunal,’ 28 U.S.C. § 1782(a), we have no occasion to address the second theory.”

“Although an issue of first impression in this Circuit, the determination of whether a foreign arbitration falls within the scope of section 1782 is guided in substantial measure by the Supreme Court’s seminal decision in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004). Most significantly for our purposes, the Court in Intel emphasized the breadth of the statutory term ‘tribunal.’ In discussing the legislative history of section 1782, Justice Ginsburg, writing for the Court, observed that Congress in 1964 introduced the word ‘tribunal’ into the statute to replace the previous version’s term ‘judicial proceeding,’ quoting with approval from a Senate Report ‘explain[ing] that Congress introduced the word ‘tribunal’ to ensure that ‘assistance is not confined to proceedings before conventional courts,’ but extends also to ‘administrative and quasi‑judicial proceedings.’‘ Id. at 248‑49 (quoting S. Rep. No. 88‑1580, at 7 (1964), reprinted in 1964 U.S.C.C.A.N. 3782, 3788). And then, in determining whether the Directorate‑General for Competition of the European Commission was a ‘tribunal’ under the statute, the Supreme Court reiterated that the legislative change from the phrase ‘any judicial proceeding’ to the current phrase—‘a proceeding in a foreign or international tribunal’—was intended to ‘provide the possibility of U.S. judicial assistance in connection with administrative and quasi‑judicial proceedings abroad.’ Id. at 258 (alterations and internal quotation marks omitted). As the Supreme Court noted, ‘[w]hen Congress acts to amend a statute, we presume it intends its amendment to have real and substantial effect.’ Id. at 258‑59 (quoting Stone v. INS, 514 U.S. 386, 397 (1995)).” [¼]

“Thus, while the Supreme Court in Intel was not tasked with specifically deciding whether a private arbitral tribunal falls under the statute, its broad functional construction of the term ‘tribunal’ provides us with substantial guidance. Consistent with this functional approach, we examine the characteristics of the arbitral body at issue, in particular whether the arbitral panel acts as a first‑instance adjudicative decisionmaker, whether it permits the gathering and submission of evidence, whether it has the authority to determine liability and impose penalties, and whether its decision is subject to judicial review. ¼”

“The pending arbitration between JASE and CONECEL meets the functional criteria articulated in Intel. In connection with its section 1782 application, CONECEL submitted declarations from its Ecuadorian counsel explaining that the arbitral panel has the ‘authority to receive evidence, resolve the dispute, and award a binding decision.’” [¼]

“Based on the undisputed record before this Court, the arbitral panel in Ecuador, after receiving evidence from the parties, will render a first‑instance binding decision on the merits that is subject to judicial review. This arbitral panel is, in the words of the Supreme Court, ‘a first‑instance decisionmaker’ whose judgment is subject to judicial review, and we therefore ‘have no warrant to exclude [it] . . . from § 1782(a)’s ambit.’ ¼ In short, CONECEL’s application satisfied the prima facie requirements of 28 U.S.C. § 1782(a).” [Slip op. 12‑20, footnotes omitted]

The panel acts as a first‑instance decisionmaker; it permits the gathering and submission of evidence; it resolves the dispute; it issues a binding order; and its order is subject to judicial review. That is all the statute requires.

Second, the District Court did not abuse its discretion.

“Interpreting the Supreme Court’s decision in Intel, a panel of this Court already has spelled out four factors that should be considered by the district court in exercising its discretion:”

“‘Once the prima facie requirements are satisfied, the Supreme Court in Intel noted these factors to be considered in exercising the discretion granted under § 1782(a): (1) whether ‘the person from whom discovery is sought is a participant in the foreign proceeding,’ because ‘the need for § 1782(a) aid generally is not as apparent as it ordinarily is when evidence is sought from a nonparticipant’; (2) ‘the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal‑court judicial assistance’; (3) ‘whether the § 1782(a) request conceals an attempt to circumvent foreign proof‑gathering restrictions or other policies of a foreign country or the United States’; and (4) whether the request is otherwise ‘unduly intrusive or burdensome.’ The Supreme Court in Intel added that ‘unduly intrusive or burdensome requests may be rejected or trimmed.’”

“In re Clerici, 481 F.3d at 1334 (citation omitted) (quoting Intel, 542 U.S. at 264‑65). JASE’s argument that the district court abused its discretion only focuses on the fourth factor. JASE claims that CONECEL’s request for discovery from JAS USA is overbroad and improperly seeks confidential and proprietary information related to how both JAS USA and JASE price their services.”

“The main problem with JASE’s claim is that it fails to provide us with any sound basis for overturning the district court’s exercise of discretion or for upending the district court’s determination that the discovery request was narrowly tailored. This Circuit has held that once the section 1782 factors are met and the district court is therefore authorized to grant the application, ‘the federal discovery rules, Fed. R. Civ. P. 26‑36, contain the relevant practices and procedures for the taking of testimony and the production of documents.’ Weber v. Finker, 554 F.3d 1379, 1384‑85 (11th Cir. 2009) (quoting In re Clerici, 481 F.3d at 1336). As we explained in Weber:”

“‘Section 1782 does not require that every document discovered be actually used in the foreign proceeding. Quite the opposite. Section 1782 expressly provides that the district court should grant discovery under the Federal Rules of Civil Procedure. Pursuant to Rule 26(b)(1) of the Federal Rules of Civil Procedure, ‘[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense—including the existence, description, nature, custody, condition, and location of any documents . . . .’ Fed. R. Civ. P. 26(b)(1). Id. at 1385.’”

“CONECEL’s discovery requests in the instant section 1782 application were undeniably relevant to CONECEL’s defense in the pending arbitration. CONECEL’s defense in the arbitration is based on establishing that JASE overbilled in violation of the contractual arrangement between the parties. Evidence in JAS USA’s possession relating to, for example, ‘the rates charged or to be charged to CONECEL’ or ‘the procedure or methodology for applying the rates to be charged to CONECEL’ is plainly relevant to this defense. Moreover, we find unpersuasive JASE’s unsubstantiated claim that JAS USA’s compliance with the subpoena would require the disclosure of confidential pricing information that would harm its competitiveness in the marketplace. On its face, CONECEL’s application does not seek general price information from JASE or JAS USA or information about how JASE or JAS USA bills any other clients besides CONECEL. Rather, every request in the application that bears on pricing information uses language limiting the request to information relating directly to CONECEL, such as ‘the rates charged or to be charged to CONECEL,’ or ‘services provided by JAS Ecuador or its affiliates to CONECEL,’ or ‘billing or invoicing to CONECEL,’ or ‘services rendered . . . in connection with shipments to CONECEL.’ The district court did not abuse its discretion in concluding that the subpoena requests information that ‘relates directly to the contract at issue’ and was ‘narrowly tailored.’” [Slip op. 22‑24]

The Court therefore affirms the District Court.

Citation: Application of Consorcio Ecuatoriano de Telecomunicaciones S.A., Pursuant to 28 USC 1782 for Judicial Assistance in Obtaining Evidence From JAS Forwarding (USA), Inc., For Use In a Foreign Tribunal v. JAS Forwarding (USA), Inc., No. 11‑12897 (11th Cir. June 25, 2012).

JURISDICTION (PERSONAL JURISDICTION IN DEFAMATION CASES)

Where Defendant publisher of book that accused Plaintiff, an international mining corporation, of human rights violations overseas, Plaintiff brought libel action in Ontario courts wherein the Defendants moved to stay the Ontario action, submitting [1] that there was no real and substantial connection between the subject‑matter of the action and Ontario and [2] that the Ontario court was not the convenient forum for the action; Supreme Court of Canada upheld the propriety of resort to the Ontario courts

 The Appellant is Les Éditions Écosociété Inc. (Écosociété). It is the publisher of a book by A. Deneault, with D. Abadie and W. Sacher, entitled Noir Canada: Pillage, corruption et criminalité en Afrique (2008) (Noir Canada); the book comments on the international mining activities of some Canadian corporations, including the Respondent, Banro Corporation (Banro).

Banro brought an action in Ontario against Écosociété, Deneult, Abadie and Sacher, alleging that Noir Canada’s content is libellous and that the book accuses Banro of committing human rights violations and fraud to further its financial interests in Africa. The defendants moved to stay the Ontario action, submitting [1] that there was no real and substantial connection between the subject‑matter of the action and Ontario and [2] that the Ontario court was not the convenient forum for the action.

Banro is incorporated under the Canada Business Corporations Act, R.S.C. 1985, c. C‑44. It engages in the exploration and development of gold properties in the Democratic Republic of Congo (DRC). Banro’s activities are international in scope; it has offices and hundreds of employees located in Ontario, the United Kingdom, South Africa and the DRC. Four of Banro’s nine officers are residents of Ontario, three are residents of the DRC, one officer resides in the United Kingdom and another in South Africa. Banro’s Board of Directors consists of eight members, two based in Ontario, two in South Africa, two in the United Kingdom, one in France and one in British Columbia. Banro’s head office is located in Toronto, and the corporation is publicly traded on the Toronto Stock Exchange.

Écosociété, the defendant in the main action, is a corporation based in Montréal, Quebec, that is incorporated under the laws of that province. Its head office is in Montréal, where all of the individual defendants work and reside. Noir Canada was published in Montréal and released to bookstores for purchase by the public on or about April 15, 2008. The defendant Alain Denault is the author, while defendants Delphine Abadie and William Sacher contributed research and editorial assistance.

Two French editions of the book have been printed, totalling nearly 5,000 copies, of which 93 were distributed to bookstores in Ontario, including 27 in the city of Toronto. A number of copies are available in Ontario public libraries. Noir Canada is also available for purchase on Écosociété’s website. One defendant—William Sacher—gave a speech about the book at the University of Toronto on July 27, 2008. Many websites and newspaper articles available and accessible in Ontario have referenced the book.

Banro has no offices, affiliates or subsidiaries in Quebec, nor does it operate or own mining properties in that province. Banro’s public profile in Quebec is very limited.

The appellants raise three main arguments to support their submission that jurisdiction was not properly assumed in this case. First, they contend that, in multijurisdictional defamation cases, the constitutional principles of order and fairness restrict a court’s power to assume jurisdiction over an action to situations where there has been substantial publication in the jurisdiction. They write that “[i]n the absence of other substantial connections between the subject matter of the action or the defendant and the forum there must at least be substantial publication for a court to find a real and substantial connections.”

They argue that should this Court fail to endorse that approach, authors or publishers whose publications circulate in multiple jurisdictions would constantly face the threat of being sued in an unlimited number of jurisdictions. That threat could easily operate as a “libel chill” and be harmful to freedom of expression in Canada.

Second, the appellants argue that there is no real and substantial connection between the forum and the defendants as, among other things, there is no evidence on the record that suggests that the respondent suffered harm to its reputation in Ontario. For that reason, the appellants contend that the motion judge wrongly relied on the respondent’s bald assertion that its reputation in Ontario was “particularly important” It is the appellants’ view that, in light of the minimal distribution of the impugned book and the lack of evidence of publication, injury to reputation could not be inferred.

Third, the appellants challenge the motion judge’s conclusion that Écosociété was subject to the jurisdiction of the Ontario court because it was carrying on business in Ontario. In their opinion, the mere fact of offering books for sale in bookstores in Ontario and on a website which is accessible from Ontario cannot properly ground a finding of “carrying on business” in that jurisdiction. The appellants thus submit that Judge Roberts’s finding to that effect is unsupported by the evidence and is inconsistent with the constitutional principles of order and fairness.

If this Court were to find that Ontario had jurisdiction, the appellants submit that the courts below erred in law by failing to recognize that the following four factors showed that Quebec was a clearly more appropriate forum in which to hear the present action:

[1] the cost of this proceeding continuing in Ontario is disproportionate compared with the minimal potential for recovery for damage to reputation in Ontario; [2] there is a parallel proceeding in Québec with respect to Noir Canada and as a result there is a risk of inconsistent findings in respect of the [appellants’] conduct and duplicated expenses for the [appellants] if this action proceeds in Ontario; [3] Québec law governs the [respondent’s] claim; and [4] the relative juridical advantage and disadvantage of the parties favours proceeding in Québec [since the appellants would otherwise be deprived of the benefit of enhanced protection of freedom of expression provided by Quebec’s new anti‑Strategic Lawsuits Against Public Participation legislation (SLAPP).

Finally, the appellants invite the Court to clarify the choice of law rule that applies in multijurisdictional defamation cases. They submit that the law of the jurisdiction where substantial publication occurred should apply. In the appellants’ view, Quebec law should govern the present dispute regardless of whether the action proceeds in Quebec or Ontario.

It is the respondent’s view that the appellants, through this appeal, are “seeking to redefine defamation jurisprudence by introducing into a preliminary jurisdictional analysis tort‑specific considerations of publication of defamatory material and a party’s ability to substantiate damages” The respondent contends that “a restructuring of Canadian libel law in the manner that the appellants propose is contrary to the fundamental considerations underlying Canadian law on jurisdiction, ... and [will] distance such Canadian law from that of other common law nations”

Furthermore, according to the respondent, requiring plaintiffs in multijurisdictional cases to show that substantial publication occurred in the jurisdiction and to adduce evidence of sufficient harm to reputation in that jurisdiction would subject them to an evidentiary burden that plaintiffs in intrajurisdictional cases do not face

The respondent writes that “[as] with any tort, the reasonable foreseeability of harm to another party can serve to affix liability in defamation actions”. The respondent submits that the appellants knew that the distribution of nearly one hundred copies of Noir Canada in bookstores in Ontario and online would result in the book being read and purchased in that jurisdiction. The respondent argues that the appellants were equally aware of the respondent’s strong connections with Ontario. Therefore, according to the respondent, it was reasonably foreseeable that Noir Canada would be read and purchased in Ontario and would cause harm to the respondent’s reputation in that jurisdiction. Consequently, the respondent submits that a presumption of a real and substantial connection exists based on [[r. 17.02(g) of]] the Rules of Civil Procedure and that the fact that a tort occurred in Ontario is a significant factor supporting the assumption of jurisdiction by the Ontario court in the present action.

The respondent accordingly argues that the appellants’ core arguments ought to be rejected. In the respondent’s view, the requirement of “substantial publication” not only would be unworkable and create confusion, but runs counter to the law of jurisdiction in Canada, which clearly distinguishes between issues of standing to bring a claim in a given forum and the substantive elements of that claim.

The respondent also notes that this proposed requirement is based on a “snapshot” in time. It writes that “[t]o impose this concept would absurdly require the plaintiff—upon learning of a defamatory publication—to simply await ‘substantial’ publication, while incurring the consequent damage, in order to ensure that its defamation claim would be permitted to proceed” Similarly, requiring the plaintiff to prove “harm to reputation” at the jurisdictional stage is inconsistent with one of the basic tenets of defamation law in Canada, namely that the main concern in a libel action is vindication of reputation, not the damages that one can obtain. It also fails to take account of the well‑established principle of defamation law that damages are presumed when the defamatory material is made available to the public at large.

Relying on Young v. Tyco International of Canada Ltd., 2008 ONCA 709, 92 O.R. (3d) 161 (Ont. C.A.), the respondent submits that a motion judge’s exercise of his or her discretion as to forum non conveniens is owed deference on appeal. According to the respondent, the party who seeks the exercise of the court’s discretion must show that the forum it proposes is clearly more appropriate, which is an “extremely heavy burden” to meet on appeal. In this case, the respondent takes the view that the appellants have failed to meet this burden, and further contend that the courts below reached the correct conclusion in finding that Ontario was the most appropriate forum to hear this action.

The respondent argues that the correctness of the conclusion reached by the courts below is chiefly evidenced by the following factors: (1) its residence is in Ontario, a factor which is a matter of significance in a defamation case; (2) Ontario law would govern the action; (3) there is no risk of multiplicity of proceedings as the respondent is not a party to the defamation action filed against the appellants by Barrick Gold Corporation (“Barrick Gold”) in Quebec; and (4) the respondent would suffer a major juridical disadvantage if this action were tried in Quebec in terms of burden of proof and because its action would be barred by the application of the limitation period, or rather prescription in Quebec law, pursuant to art. 2929 of the Civil Code of Québec, S.Q. 1991, c. 64.

The respondent further submits that this latter factor is sufficient to outweigh all other considerations in the forum non conveniens analysis. Finally, in response to the appellants’ argument that it is paramount that they not be deprived of the benefit of Quebec’s anti‑SLAPP legislation, the respondent asserts that “there is no right to inaccurate, unbalanced and biased reporting that can unjustifiably damage reputation.”

33 Justice LeBel then explains the Court’s reasoning on the issues.

1 “With a globalized world comes the sometimes poisonous gift of ubiquity. Our conduct, however local, is now more likely to have global effects. For instance, words printed in one location can inform, or offend, readers all over the world. In the present case, an Ontario‑based corporation has taken legal action in Ontario against a publisher based in the province of Quebec for defamation. Can an Ontario court assume jurisdiction over this action and, if so, should it exercise its jurisdiction?”

2 “The decisions of this Court have established that a court can assume jurisdiction over an action if there is a real and substantial connection between the action and the court’s territory. In companion cases, this Court has set out a series of factors that would meet the real and substantial connection test (see Van Breda v. Village Resorts Ltd., 2012 SCC 17 (S.C.C.) [hereinafter “Club Resorts”). As in Club Resorts, we must determine here whether there is a real and substantial connection between the plaintiff’s claim in defamation and the chosen forum, namely, an Ontario court.”

3 “The tort of defamation presents an interesting challenge for the principles underlying the assumption of jurisdiction. At common law, the tort of defamation crystallizes upon publication of the libellous material, and publication of the libellous material is presumed when it is printed in a book. The tort of defamation will thus crystallize in all jurisdictions where the book is available. This also raises difficult issues when publication occurs through the Internet, as this Court noted recently in Crookes v. Wikimedia Foundation Inc., 2011 SCC 47, [2011] 3 S.C.R. 269 (S.C.C.).”

“Is it sufficient, however, that the defamatory book be available in a jurisdiction for a court to assume jurisdiction over a defamation claim involving that book? If a court may assume jurisdiction on that basis, in what circumstances should it apply the doctrine of forum non conveniens and decline to exercise its jurisdiction in favour of another, more convenient forum? This case also raises the issue of “libel tourism”: if more than one forum can assume jurisdiction over a single instance of tortious conduct, should we prevent plaintiffs from choosing the forum of greatest juridical advantage?”

“In my reasons in the Club Resorts case, I set out the analytical framework for assuming jurisdiction under the common law real and substantial connection test. I also set out the proper approach to the application of the doctrine of forum non conveniens.”

34 “Applying this analysis to the tort of defamation poses special challenges; in particular, it raises concerns about forum shopping. The tort of defamation is crystallized upon publication of the libellous material. In Canada, publication occurs when libellous material is read by a third party. In the case of libellous material printed in a book that is circulated in a library, it is possible to draw an inference of publication (R.E. Brown, The Law of Defamation in Canada (2nd ed. (loose‑leaf), at p. 22‑58; Hiltz & Seamone Co. v. Nova Scotia (Attorney General) (1997), 164 N.S.R. (2d) 161 (N.S. S.C.), at para. 28; Paulsson v. Cooper, at para. 37).”

35 “The defendants in this action have expressed the concern that an overly flexible application of the real and substantial connection test would render them liable in defamation in more than one jurisdiction. Indeed, given the elements of the tort of defamation, if an allegedly libellous book is distributed in more than one jurisdiction, then an inference may be drawn that the libellous material has been published in all these jurisdictions. If publication is sufficient to connect the plaintiff’s claim to a given jurisdiction, then the courts of more than one jurisdiction could potentially assume jurisdiction over the same tort.”

36 “The elements of a tort such as defamation potentially vary from one jurisdiction to another, thus making it easier or more difficult to sue depending on one’s choice of jurisdiction. That being the case, a plaintiff might make a strategic choice and sue in the jurisdiction in which he or she enjoys the greatest juridical advantage. This is the well‑known problem of ‘forum shopping’ or ‘libel tourism’. I propose to address this problem at the forum non conveniens stage of the analysis.”

37 “The motion judge’s decision to assume jurisdiction should be upheld. When the analytical framework identified in Club Resorts is applied, it is clear that there is a real and substantial connection between Banro’s claim and Ontario.”

38 “Here, the alleged tort of defamation occurred in Ontario. Noir Canada was distributed in Ontario. At this stage of the proceedings, the plaintiff need not show evidence of harm or that the book was read. The plaintiff need only allege publication and its allegations should be accepted as pleaded unless contradicted by evidence adduced by the defendants.”

“For the purposes of proving defamation, publication may be inferred when the libellous material is contained in a book that is circulated in a library; the new evidence adduced by Banro on consent establishes that 15 copies of Noir Canada were circulated in Ontario libraries and one copy was checked out. In addition, Banro adduced evidence establishing that its reputation in Ontario is vital to conducting business, attracting investors and maintaining good relations with regulators such as the Ontario Securities Commission.”

39 “As discussed in Club Resorts, the commission of a tort in Ontario is a recognized presumptive connecting factor that prima facie entitles the Ontario court to assume jurisdiction over this dispute. For the reasons discussed above, the defendants have not shown that only a minor element of the tort of defamation occurred in Ontario. As a result, they have not displaced the presumption of jurisdiction that arises in this case.”

40 “On this basis, I conclude that the motion judge correctly assumed jurisdiction. That said, it is then entirely appropriate for the respondent party in such a motion to raise the doctrine of forum non conveniens, and ask that factors that go beyond the objective connecting factors considered in the jurisdictional analysis be taken into account.”

41 “The application of forum non conveniens is an exercise of discretion reviewable in accordance with the principle of deference to discretionary decisions: an appeal court should intervene only if the motion judge erred in principle, misapprehended or failed to take account of material evidence, or reached an unreasonable decision (see Young v. Tyco International of Canada Ltd., at para. 27). I find that the motion judge made no such error. Roberts J. correctly exercised her discretion in maintaining Ontario’s jurisdiction over the plaintiff’s claim.”

42 “In this Court, the defendants put forward the following reasons for which the Ontario court should have declined to exercise its jurisdiction: [1] the cost of this proceeding continuing in Ontario is disproportionate compared with the minimal potential for recovery for damage to reputation in Ontario; [2] [the] parallel proceeding in Québec with respect to Noir Canada and [the resulting] risk of inconsistent findings [concerning] the Defendants’ conduct and duplicated expenses for the Defendant if the action proceeds in Ontario;

[3] Québec law governs the Plaintiff’s claim; and [4] the relative juridical advantage and disadvantage of the parties favours proceeding in Québec. [A.F., at para. 93].”

43 “I will review each of these submissions in turn.”

44 “The defendants’ first argument is one of proportionality. The defendants submit that the cost of litigating the plaintiff’s claim in Ontario far outweighs the potential for recovery. The defendants submit that the evidence necessary for litigating the claim is outside Ontario, and, consequently, that “the expense and cost of litigating those issues is out of all proportion to the potential recovery given the limited publication in Ontario and the absence of evidence of harm to reputation in Ontario. (A.F., at para. 100).”

45 “The defendants’ argument of proportionality rests on the lack of evidence of harm, which is not of concern at this preliminary stage of the proceedings. The plaintiff’s claim is assumed to be proven as pleaded unless contradicted by evidence. Furthermore, harm is typically presumed in defamation cases, and in this case Banro has adduced sufficiently compelling evidence of its reputation in Ontario. Finally, financial recovery may not be the central issue. It is conceivable that, for Banro, a declaratory judgment is as valuable to its reputation as any pecuniary award.”

46 “The defendants submit that ‘[m]ultiplicity of proceedings should be avoided because of the waste of judicial resources and the risk of inconsistent findings’ (A.F., at para. 104). The defendants are referring to a defamation action brought by Barrick Gold which they were still facing in Quebec at the time of the hearing in this Court, also in relation to Noir Canada. I gather that the defendants are bearing the cost of two separate lawsuits and that litigating both actions together would minimize costs.”

47 “With respect, I cannot agree with the defendants. Firstly, it is incorrect for them to say that ‘[m]atters with parties or issues in common should be litigated in the same forum’ (A.F., at para. 104). Rather, it should be said that matters with parties or issues in common should be litigated in the same action. Even if Ontario declined to exercise its jurisdiction, it is not a foregone conclusion that Banro’s action would be amalgamated with Barrick Gold’s action in Quebec.”

“In Visram v. Chandarana [2007 CarswellOnt 4663 (Ont. Master)], 2007 CanLII 28334, which the defendants cite as supporting their contention, the Ontario Superior Court had the option of staying some of the claims in an action on the basis that Ontario was not the most appropriate forum, while allowing other claims asserted against Ontario residents only to proceed in Ontario. The motion judge declined to stay part of the action, not to avoid a multiplicity of fora, but to avoid a multiplicity of proceedings arising from the overlapping claims against the same parties. In the present case, Barrick Gold’s action and Banro’s action are already separate claims, and although they arose from the same book, the claims are related to different allegedly defamatory statements.”

48 “In addition, the defendants submit that a multiplicity of proceedings would risk ‘Ontario and Québec courts [coming] to opposite conclusions’ (A.F., at para. 107). With respect, I am not persuaded by this argument. Again, there is no guarantee that these actions would be joined, if both were litigated in Quebec. It is thus entirely conceivable that the same Quebec court would also come to opposite conclusions in respect of the two actions simply because the plaintiffs, the facts and the statements relating to each plaintiff are different.”

49 “One factor that must be considered in the forum non conveniens analysis is the law applicable to the tort. Restricting the available choice of laws might be a way to curb forum shopping. Indeed, there would be little strategic advantage to forum shopping if the conflicts rules were to require application of the same law regardless of where the matter is tried.

50 “In Tolofson v. Jensen, [1994] 3 S.C.R. 1022 (S.C.C.), La Forest J. established lex loci delicti, or the place where the tort occurred, as a general principle for determining choice of law for torts. However, La Forest J. also left room for the creation of exceptions to the general rule of lex loci delicti for torts such as defamation. The rationale for the rule is that in the case of most torts, the occurrence of the wrong constituting the tort is its most substantial or characteristic element, and the injury or consequences are typically felt in the same place. In establishing lex loci delicti as a general rule, however, La Forest J. also recognized that “[t]here are situations ... notably where an act occurs in one place but the consequences are directly felt elsewhere, when the issue of where the tort takes place itself raises thorny issues.... Difficulties may also arise where the wrong directly arises out of some transnational or interprovincial activity” (p. 1050).”

51 “La Forest J. suggested that in such cases, ‘it may well be that the consequences would be held to constitute the wrong’ (ibid.). Significantly, La Forest J. went so far as to suggest without deciding that the tort of defamation may be just such a case: ‘[I]t could well be argued ... that, unlike a motor vehicle accident [the tort at issue in Tolofson], the tort of libel should be held to take place where its effects are felt.’ (p. 1042). La Forest J. thus left room for the creation of exceptions to the general rule of lex loci delicti for torts such as defamation.”

52 “The defendants argue against the application of lex loci delicti here. They submit that the Ontario court should have declined to exercise its jurisdiction because Quebec is the place of the most substantial publication, and therefore Quebec law is applicable. The defendants cite Olde v. Capital Publishing Ltd. Partnership (1996), 5 C.P.C. (4th) 95 (Ont. Gen. Div.), aff’d (1998), 108 O.A.C. 304 (Ont. C.A.), as standing for the proposition that we should look to the standard of substantial publication to determine the centre of gravity of the tort, and identify the most convenient forum on that basis.”

“If I understand the argument, Ontario could assume jurisdiction on the basis that the tort occurred there; Ontario defamation law uses the traditional common law standard of publication, but substantial publication would be considered to determine whether Ontario should, in fact, exercise its jurisdiction based on whether or not its law would be applicable.”

53 “The defendants’ argument is not persuasive. First, there is a factual difference between Capital Publishing and the present case. In Capital Publishing, the libellous material was published in a magazine distributed mainly in the United States; the record showed that only one copy of the magazine was purchased in Ontario, while the vast majority were sold in the United States (Capital Publishing, at para. 3). In the present case, the majority of copies were indeed distributed in Quebec, but the number of copies available in Ontario remains substantial. Moreover, there is evidence that Écosociété actively promoted its book in Ontario, unlike the situation where a copy of the libellous material is accessed by happenstance in the forum of choice.”

54 “Second, and as the English experience demonstrates, the substantial publication requirement provides both courts and litigants with little guidance (see D. Price, K. Duodo and N. Cain, Defamation: Law, Procedure & Practice (4th ed. 2009), at p. 448). One can easily imagine a publication, such as a bestselling novel, being substantially published in more than one jurisdiction, in which case, the problem of forum shopping and the multiplicity of jurisdictions would remain.”

55 “More fundamentally, however, the use of the substantial publication requirement in England reflects England’s merits‑based approach to the assumption of jurisdiction, which is arguably inconsistent with the Canadian approach of treating jurisdiction separately from the merits of a claim. The defamation law of Canada has not adopted the substantial publication standard. In Canada, the evidentiary standard for proving publication remains the traditional common law standard, according to which a single instance of publication is sufficient for the tort to crystallize. To adopt the standard of substantial publication in the context of private international law would amount to a significant change in the substantive tort. It would be anomalous to adopt a new standard in the context of private international law but to continue applying the traditional standard in the context of the substantive tort.”

56 “While the defendants’ approach cannot be accepted, the question of whether the lex loci delicti represents the proper rule for choice of law in defamation remains. Although I need not decide the question in this case, I note that one possible alternative to the lex loci delicti in defamation cases, which has gained some significant support, may be the place of most substantial harm to reputation.”

57 “It is well settled in Canadian law that the tort of defamation occurs upon publication to a third party—that is, when the allegedly defamatory material is read or downloaded by someone other than the plaintiff or the publisher. On the other hand, it is also clear that the harm occasioned by the publication of a defamatory statement is not the publication itself, but rather injury to the plaintiff’s reputation. While the constitutional right to the protection of freedom of expression must be upheld in the crafting of the law of defamation, this Court has recognized that one of the primary purposes of the law of defamation is to protect the reputation of the individual, which was elevated to quasi‑constitutional status in Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130 (S.C.C.): ‘Although it is not specifically mentioned in the Charter, the good reputation of the individual represents and reflects the innate dignity of the individual, a concept which underlies all the Charter rights. It follows that the protection of the good reputation of an individual is of fundamental importance to our democratic society. Further, reputation is intimately related to the right to privacy which has been accorded constitutional protection.... The publication of defamatory comments constitutes an invasion of the individual’s personal privacy and is an affront to that person’s dignity. [paras. 120‑21].”

58 “The importance of place of reputation has long been recognized in Canadian defamation law. For example, the importance of permitting plaintiffs to sue for defamation in the locality where they enjoy their reputation was recognized by the Ontario High Court in Jenner v. Sun Oil Co., [1952] 2 D.L.R. 526 (Ont. H.C.). In that case, McRuer C.J.H.C. found that the plaintiff would not be able to satisfactorily ‘clear his good name of the imputation made against him’ other than by suing for defamation in the locality where he enjoyed his reputation—that is, where he lived and had his place of business and vocation in life.’ (pp. 538 and 540).”

59 “The approach adopted by McRuer C.J.H.C. is consonant with the one recently adopted in Australia (see for example the Defamation Act 2005 (Qld.). Prior to 2005, the choice of law rule for the tort of defamation in Australia was lex loci delicti, as in Canada. In 2004, acting on the recommendations of the Australian Law Reform Commission, the Attorneys General of Australia’s States and Territories agreed to enact model provisions which included a defamation‑specific choice of law rule. In cases where a matter is published in more than one Australian jurisdictional area, the rule establishes that the applicable law is that of the jurisdictional area most closely connected to the harm occasioned by the publication as a whole.”

“’In determining which jurisdictional area has the closest connection with the harm, courts may take the following factors into account: (a) the place at the time of publication where the plaintiff was ordinarily resident or, in the case of a corporation that may assert a cause of action for defamation, the place where the corporation had its principal place of business at that time; and (b) the extent of publication in each relevant Australian jurisdictional area; and (c) the extent of harm sustained by the plaintiff in each relevant Australian jurisdictional area; and (d) any other matter that the court considers relevant.’ (Defamation Act 2005, s. 11(3)).”

60 “The Australian Law Reform Commission’s recommendations were motivated by a concern that applying the lex loci delicti rule to such claims would encourage forum shopping (Law Reform Commission, Report No. 11 Unfair Publication: Defamation and Privacy (1979), at p. 190‑191). Concern about ‘forum shopping’ has increased in recent years, not only in Australia, but also in England, the United States and Canada.”

“There have been calls for the adoption in this country of an approach similar to the Australian one. In particular, if Canadian courts are not ready to accept the proper law of the tort as a rule of conflicts in defamation cases, Professor Castel has suggested the following: For choice of law purposes, the tort of defamation should be deemed to be committed where the plaintiff suffered the most injury to his or her reputation, that is, where substantial damage occurred. Only one law would be relevant. For jurisdiction purposes, the plaintiff should be given a wide choice depending upon the circumstances and provided that the court hearing the case applies the proper law and not its own law as a matter of principle.” (J.‑G. Castel, “Multistate Defamation: Should the Place of Publication Rule Be Abandoned for Jurisdiction and Choice of Law Purposes?” (1990), 28 Osgoode Hall L.J. 153, at p. 177; see also C. Martin, “Tolofson and Flames in Cyberspace: The Changing Landscape of Multistate Defamation” (1997), 31 U.B.C. L. Rev. 127, at pp. 149 and 158).”

61 “It should be emphasized that this proposal would not result in a change to the substantive tort of defamation. Rather, the approach already adopted in Australia and recommended by Professor Castel appears to reflect the view that when it occurs at a multistate level, the elements of the tort of defamation play different roles when the rules of jurisdiction are applied than they do when the rules of choice of law are applied. In Professor Castel’s opinion, ‘rules of jurisdiction and of choice of law address different concerns and ... the test of place of publication should not always be used for both purposes.’ (p. 154).”

62 “In the case at bar, whether we apply the lex loci delicti rule or consider the location of the most substantial harm to reputation, the applicable law is that of Ontario and not Quebec. As a result, whichever approach is adopted, this factor favours Ontario in the forum non conveniens analysis. In this case, nothing turns on the question of whether lex loci delicti ought to be abandoned as the choice of law rule in multijurisdictional defamation cases. For this reason, I believe it prudent to leave this issue for another day.”

63 “The parties have also raised issues of juridical advantage. On the one hand, the appellants submit that they would be deprived of the procedural advantages of the new anti‑SLAPP provisions in the Quebec Code of Civil Procedure, R.S.Q., c. C‑25 (art. 54.1 to 54.6). On the other hand, in the event that the action is stayed in Ontario and transferred to Quebec, Banro might face an argument that its claim is barred on the basis of the short one‑year limitation period for defamation claims under art. 2929 of the Civil Code of Québec.”

“Arguments about which law would govern the civil liability of Écosociété could also be raised under s. 3126 of the Civil Code of Québec and would have to be resolved by the courts of Quebec. In the end, when these factors are weighed, the balance of fairness would appear to favour Banro and I find no error, in this respect, in the judgments rendered by the courts below.”

64 “Moreover, although this claim has connections to more than one forum, given the strength of the connections between the plaintiff and Ontario, it is not at all clear that the plaintiff is engaged in libel tourism and that Quebec would be a clearly more appropriate forum.”

65 “For the reasons set out above, I would dismiss the appeal with costs. Appeal dismissed.”

Citation: Banro Corp. v. Editions Ecosociete, 2012 CarswellOnt 4270; 2012 SCC 18; J.E. 2012‑787; 212 A.C.W.S. (3d) 711; 343 D.L.R. (4th) 647; 91 C.C.L.T. (3d) 105; 18 C.P.C. (7th) 1; 429 N.R. 293 (Can. Sup. Ct. April, 2012).

PIRACY

Fourth Circuit resolves contradictory district court decisions as to definition of “piracy”; finds that Congress’s proscription of “piracy as defined by the law of nations” in 18 U.S.C. § 1651 necessarily incorporates modern developments in international law; upholds piracy convictions and sentences for Somalian pirates who failed in boarding the Navy vessel they were mistakenly attacking

One night in April 2010, a couple of Somalian pirates were on the prowl on the high seas off the East Coast of Africa between Somalia and the Seychelles. The pirates, however, made a poor choice of target for their attack. They charged the Navy frigate USS Nicholas, believing it to be a helpless merchant ship. The USS Nicholas returned fire and apprehended Abdi Wali Dire and several others. Dire and his companions (Defendants) were brought to trial and convicted in federal court in Virginia. In a consolidated appeal, the Defendants challenge, among other things, their conviction for “piracy” under 18 U.S.C. Section 1651.

The U.S. Court of Appeals for the Fourth Circuit rejects the Defendants’ arguments and affirms the convictions. The Defendants claim that their star‑crossed attack does not constitute “piracy” because they failed to board the Navy vessel.

“In these consolidated appeals, the defendants first contend that their ill‑fated attack on the USS Nicholas did not constitute piracy under 18 U.S.C. § 1651, which provides in full: ‘Whoever, on the high seas, commits the crime of piracy as defined by the law of nations, and is afterwards brought into or found in the United States, shall be imprisoned for life.’”

“According to the defendants, the crime of piracy has been narrowly defined for purposes of § 1651 as robbery at sea, i.e., seizing or otherwise robbing a vessel. Because they boarded the Nicholas only as captives and indisputably took no property, the defendants contest their convictions on Count One, as well as the affixed life sentences. [¼]”

“The [United States v. Hasan, 747 F. Supp. 2d 599, 602 (E.D. Va. 2010) (‘Hasan I’)] opinion was issued on the heels of the August 17, 2010 published opinion in United States v. Said, 757 F. Supp. 2d 554 (E.D. Va. 2010) (Jackson, J.), wherein a different judge of the Eastern District of Virginia essentially took these defendants’ view of the piracy offense by recognizing a robbery element. Like these defendants, the Said defendants have been charged with piracy under 18 U.S.C. § 1651 for attacking—but not seizing or otherwise robbing—United States Navy ship. See Said, 757 F. Supp. 2d at 556‑57 (describing indictment’s allegations that, around 5:00 a.m. on April 10, 2010, Said defendants fired at least one shot on USS Ashland from skiff in Gulf of Aden). The Said court granted the defendants’ pretrial motion, pursuant to Federal Rule of Criminal Procedure 12, to dismiss the piracy count from the indictment because no taking of property was alleged. Id. at 556.”

“As the Said court recognized, article I of the Constitution accords Congress the power ‘[t]o define and punish Piracies and Felonies committed on the high Seas, and Offences against the Law of Nations.’ U.S. Const. art. I, § 8, cl. 10 (the ‘Define and Punish Clause’). In its present form, the language of 18 U.S.C. § 1651 can be traced to an 1819 act of Congress ¼ [¼]”

“Invoking the principle that a court ‘must interpret a statute by its ordinary meaning at the time of its enactment,’ the Said court deemed Smith to be the definitive authority on the meaning of piracy under 18 U.S.C. § 1651. ¼ The Said court noted that it was the first court since the 1800s to be tasked with ‘interpreting the piracy statute . . . as it applies to alleged conduct in international waters.’ Id. at 558. Looking to courts that have addressed the piracy statute post‑Smith in other contexts, the Said court concluded that ‘the discernible definition of piracy as ‘robbery or forcible depredations committed on the high seas’ under § 1651 has remained consistent and has reached a level of concrete consensus in United S[t]ates law.’ Id. at 560. [¼]” [Slip op. 7‑11] (footnotes omitted)

“Here, the district court took a different tack, as laid out in its sweeping Hasan I opinion denying these defendants’ pretrial motion to dismiss the Count One piracy charge from their Indictment. That is, the court focused on piracy’s unusual status as a crime defined by the law of nations and subject to universal jurisdiction.”

“The district court began by recognizing that, ‘[f]or centuries, pirates have been universally condemned as hostis humani generis—enemies of all mankind—because they attack vessels on the high seas, and thus outside of any nation’s territorial jurisdiction, . . . with devastating effect to global commerce and navigation.’ Hasan I 747 F. Supp. 2d at 602. The court then turned its attention to the Define and Punish Clause, and specifically the potential ‘double redundancy [presented] by pairing ‘Piracies’ with ‘Felonies committed on the high Seas’ and ‘Offences against the Law of Nations,’ the latter two categories being broader groupings of offenses within which piracy was already included.’ Id. at 605 (quoting U.S. Const. art. I, § 8, cl. 10). [¼]” [Slip op. 13‑14] (footnotes omitted)

“The district court in Hasan I astutely traced the meaning of ‘piracy’ under the law of nations, from the time of the Act of 1819 to the modern era and the crime’s codification at 18 U.S.C. § 1651. The court commenced with the Supreme Court’s 1820 decision in United States v. Smith, relating that Justice Story easily concluded that ‘the Act of 1819 ‘sufficiently and constitutionally’ defined piracy by expressly incorporating the definition of piracy under the law of nations.’ See Hasan I, 747 F. Supp. 2d at 616 ¼ The district court also recounted that, ‘[t]o ascertain how the law of nations defined piracy, the [Smith] Court consulted ‘the works of jurists, writing professedly on public law[s,] the general usage and practice of nations[, and] judicial decisions recognising and enforcing [the law of nations on piracy].’‘ Id. ¼ The Smith Court thereupon announced that ‘whatever may be the diversity of definitions, in other respects, all writers concur, in holding, that robbery, or forcible depredations upon the sea, animo furandi, is piracy.’ 18 U.S. (5 Wheat.) at 161 ¼ Further, because the Smith prisoner and his associates were, at the time they allegedly plundered and robbed a Spanish vessel, ‘freebooters, upon the sea,’ the Court deemed the case to be one of piracy punishable under the Act of 1819. Id. at 163.” [Slip op. 17‑18]

“As detailed in Hasan I ‘there are two prominent international agreements that have directly addressed, and defined, the crime of general piracy.’ See 747 F. Supp. 2d at 618. The first of those treaties is the Geneva Convention on the High Seas (the ‘High Seas Convention’), which was adopted in 1958 and ratified by the United States in 1961, rendering the United States one of today’s sixty‑three parties to that agreement. ¼ Under the High Seas Convention,

 “[p]iracy consists of any of the following acts:”

“(1) Any illegal acts of violence, detention or any act of depredation, committed for private ends by the crew or the passengers of a private ship or a private aircraft, and directed:

(a) On the high seas, against another ship or aircraft, or against persons or property on board such ship or aircraft;

(b) Against a ship, aircraft, persons or property in a place outside the jurisdiction of any State;

(2) Any act of voluntary participation in the operation of a ship or of an aircraft with knowledge of facts making it a pirate ship or aircraft;

 (3) Any act of inciting or of intentionally facilitating an act described in sub‑paragraph 1 or sub‑paragraph 2 of this article.”

“Geneva Convention on the High Seas, art. 15, opened for signature Apr. 29, 1958, 13 U.S.T. 2312, 450 U.N.T.S. 11 (entered into force Sept. 30, 1962).”

_“The second pertinent treaty is the United Nations Convention on the Law of the Sea (the ‘UNCLOS’), which has amassed 162 parties since 1982—albeit not the United States, which has not ratified the UNCLOS ‘but has recognized that its baseline provisions reflect customary international law.’ See United States v. Alaska, 503 U.S. 569, 588 n.10 (1992). ¼ Relevant here, the UNCLOS provides that”

“[p]iracy consists of any of the following acts:”

“(a) any illegal acts of violence or detention, or any act of depredation, committed for private ends by the crew or the passengers of a private ship or a private aircraft, and directed: (I) on the high seas, against another ship or aircraft, or against persons or property on board such ship or aircraft;(ii) against a ship, aircraft, persons or property in a place outside the jurisdiction of any State; (b) any act of voluntary participation in the operation of a ship or of an aircraft with knowledge of facts making it a pirate‑ship or aircraft; (c) any act of inciting or of intentionally facilitating an act described in subparagraph (a) or (b).”

“U.N. Convention on the Law of the Sea, art. 101, opened for signature Dec. 10, 1982, 1833 U.N.T.S. 397 (entered into force Nov. 16, 1994). Upon comparing the High Seas Convention with the UNCLOS, the district court in Hasan I recognized that the latter treaty ‘defines piracy in exactly the same terms as the [former agreement], with only negligible stylistic changes.’ See 747 F. Supp. 2d at 620. The court also observed that the UNCLOS ‘represents the most recent international statement regarding the definition . . . of piracy.’ ¼ [¼]”

“¼ The court then embarked on the relevant analysis.”

“First, the district court interpreted 18 U.S.C. § 1651 as an unequivocal demonstration of congressional intent ‘to incorporate . . . any subsequent developments in the definition of general piracy under the law of nations.’ Hasan I, 747 F. Supp. 2d at 623. The court rationalized:

“’The plain language of 18 U.S.C. § 1651 reveals that, in choosing to define the international crime of piracy by [reference to the ‘law of nations’], Congress made a conscious decision to adopt a flexible—but at all times sufficiently precise—definition of general piracy that would automatically incorporate developing international norms regarding piracy. Accordingly, Congress necessarily left it to the federal courts to determine the definition of piracy under the law of nations based on the international consensus at the time of the alleged offense.’ [¼]”

 “’Having concluded that Congress’s proscription of ‘piracy as defined by the law of nations’ in 18 U.S.C. § 1651 necessarily incorporates modern developments in international law,’ the district court next endeavored to ‘discern the definition of piracy under the law of nations at the time of the alleged offense in April 2010.’ Hasan I, 747 F. Supp. 2d at 630. In so doing, the court observed that the law of nations is ascertained today via the same path followed in 1820 by the Supreme Court in Smith: consultation of ‘‘the works of jurists, writing professedly on public law[s];’‘ consideration of ‘‘the general usage and practice of nations;’‘ and contemplation of ‘‘judicial decisions recognising and enforcing that law.’‘ See Hasan I, 747 F. Supp. 2d at 630 ¼ [¼]”

“On appeal, the defendants maintain that the district court erred with respect to Count One both by misinstructing the jury on the elements of the piracy offense, and in refusing to award post‑trial judgments of acquittal. Each aspect of the defendants’ position obliges us to assess whether the court took a mistaken view of 18 U.S.C. § 1651 and the incorporated law of nations. ¼”

“Simply put, we agree with the conception of the law outlined by the court below. Indeed, we have carefully considered the defendants’ appellate contentions ¼ yet remain convinced of the correctness of the trial court’s analysis.”

“The crux of the defendants’ position is now, as it was in the district court, that the definition of general piracy was fixed in the early Nineteenth Century, when Congress passed the Act of 1819 first authorizing the exercise of universal jurisdiction by United States courts to adjudicate charges of ‘piracy as defined by the law of nations.’ ¼”

“The defendants’ view is thoroughly refuted, however, by a bevy of precedent, including the Supreme Court’s 2004 decision in Sosa v. Alvarez‑Machain. ¼ The Sosa Court was called upon to determine whether Alvarez could recover under the Alien Tort Statute, 28 U.S.C. § 1350 (the ‘ATS’), for the U.S. Drug Enforcement Administration’s instigation of his abduction from Mexico for criminal trial in the United States. See 542 U.S. at 697. The ATS provides, in full, that ‘[t]he district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.’ 28 U.S.C. § 1350. Significantly, the ATS predates the criminalization of general piracy, in that it was passed by ‘[t]he first Congress . . . as part of the Judiciary Act of 1789.’ ¼” [Slip op. 21‑38]

The district court correctly applied the UNCLOS definition of piracy as customary international law. The Court therefore affirms the Defendants’ piracy convictions, as well as their mandatory life sentences.

In fact, the Court is issuing a per curiam opinion in conjunction with this opinion, vacating the Said opinion, and remanding for further proceedings.

Citation: United States v. Dire, No. 11‑4310 (4th Cir. 2012).

TORTURE

Supreme Court affirms lower courts’ findings that a claim under the Torture Victims Protection Act can only be asserted against a natural person, not an organization

Azzam Rahim immigrated to the United States in the 1970’s and became a naturalized citizen. In 1995, he visited the West Bank and was arrested by Palestinian Authority intelligence officers. He was taken to prison and was imprisoned, tortured, and ultimately killed. The Next year, the U.S. Department of State issued a report that concluded that Rahim died in the custody of the Palestinian Authority intelligence officers in Jericho. In 2005, Rahim’s relatives filed an action against the Palestinian Authority and the Palestinian Liberation Organization, asserting claims of torture and extrajudicial killing under the Torture Victim Protection Act (“TVPA”). The Defendants filed a motion to dismiss for failure to state a claim. The district court granted the motion, concluding that the Act allowed lawsuits against “an individual,” which only extended to natural person. The circuit court affirmed. The Plaintiffs appeal.

The Supreme Court of the United States affirms the lower courts’ findings to resolve the split among the Circuits regarding whether the TVPA authorizes suits against defendants that are not natural persons. The Court notes that the statute does not define the word “individual.” The Plaintiffs argue that because the Act does not explicitly define “individual,” the word can include nonsovereign organizations. The Court declined to interpret individual in such a way. The Court then moves on to look at the ordinary meaning of the word. “We say ‘the individual went to the store,’ ‘the individual left the room,’ and ‘the individual took the car,’ each time referring unmistakably to a natural person. And no one, we hazard to guess, refers in normal parlance to an organization as an ‘individual.’ Evidencing that common usage, this Court routinely uses ‘individual’ to denote a natural person, and in particular to distinguish between a natural person and a corporation.” [Slip op. 7]

The Court also notes that Congress does not use the word differently than courts. The Dictionary Act of Congress demonstrates that individual is quite distinct from the artificial entities that are considered “persons.”

Next, the Court looks to the intent of Congress when enacting the TVPA. “This is not to say that the word ‘individual’ invariably means ‘natural person’ when used in a statute. Congress remains free, as always, to give the word a broader or different meaning. But before we will assume it has done so, there must be some indication Congress intended such a result.” The Court finds that Congress did not intend a different meaning for individual in the TVPA. Since the word is used several times throughout the statute in the same way, the Court notes that an organization could not be tortured; therefore, “individual” was meant to only refer to natural persons. “It is also revealing that the Act holds perpetrators liable for extrajudicial killing to any person who may be a claimant in an action for wrongful death. ‘Person,’ we have recognized, often has a broader meaning in the law than ‘individual,’ and frequently includes nonnatural persons. We generally seek to respect Congress’ decision to use different terms to describe different categories of people or things. Our construction of ‘individual’ to encompass solely natural persons credits Congress’ use of the disparate terms; petitioners’ construction does not.” [Slip op. 9]

The Plaintiffs argue that the TVPA should be read similarly to acts like the Alien Tort Statute; however, the Court disagrees. “We also decline petitioners’ suggestion to construe the TVPA’s scope of liability to conform with other federal statutes that petitioners contend provide civil remedies to victims of torture or extrajudicial killing. None of the three statutes petitioners identify employs the term ‘individual’ to describe the covered defendant, and so none assists in the interpretive task we face today.”

Lastly, the Court concludes, “The text of the TVPA convinces us that Congress did not extend liability to organizations, sovereign or not. There are no doubt valid arguments for such an extension. But Congress has seen fit to proceed in more modest steps in the Act, and it is not the province of this Branch to do otherwise. The judgment of the United States Court of Appeals for the District of Columbia Circuit is affirmed.”

Citation: Mohamad v. Palestinian Auth., No. 11‑88, (U.S. Supreme Court, April 18, 2012).

WORLD TRADE ORGANIZATION

WTO Appellate Body rejects European Union’s claims that United States provided $19 billion in subsidies to The Boeing Company, finding that majority of programs challenged by EU were not subsidies

On March 12, 2012, the World Trade Organization (“WTO”) Appellate Body issued a report in the case of the “United States—Measures Affecting Trade in Large Civil Aircraft (Second Complaint).” This dispute began several years ago on June 27, 2005, when the European Communities (also “European Union”, or “EU”) requested consultations with the United States concerning the allegedly prohibited subsidies provided to U.S. producers of large civil aircrafts. Since The Boeing Company is the only U.S. producer of large civil aircrafts, the EU’s complaint referred to subsidies given to this company.

On January 20, 2006, the EU requested the establishment of a panel, which the WTO Dispute Settlement Body (DSB) formed in February 2006. Several countries maintained their third‑party rights at the meeting. After a request from the EU, the Panel was composed on November 22, 2006. During the dispute, the EU claimed ten measures performed by the U.S. government constituted subsidies as prohibited by the WTO Agreement on Subsidies and Countervailing Measures (“SCM Agreement). These measures included tax incentives and breaks provided by the States of Washington, Kansas, and Illinois; payments and access to facilities and equipment provided by several government agencies; and reimbursements for independent research and development provided by the National Aeronautics and Space Administration (“NASA”) and the Department of Defense (“DOD”).

The EU estimated that the alleged subsidies amounted to $19.1 billion between 1989 and 2006. The EU alleged that the majority of the subsidies was accounted for by the value of the NASA research and development subsidies. Further, the EU claimed that the U.S. acted inconsistently with the SCM Agreement because to effect of the subsidies was to cause adverse, prejudicial effects to its interests. The EU also claimed that the U.S. caused serious prejudice to its interests by violating their bilateral agreement concerning providing support to the large civil aircraft sector.

After several time extensions, the Panel was able to complete its work and issued a report on March 31, 2011. The Panel found that only some of the measures that the EU claimed as subsidies were actually subsidies. The Panel held that some of measures provided by Washington, Kansas, and Illinois; and some of the research and development measures provided by the NASA and the DOD were subsidies. The Panel estimated that these subsidies totaled about $5.3 billion, not the $19 billion the EU claimed. Further, the Panel held that some of the subsidies provided to The Boeing Company caused adverse effects to the EU’s interests in the form of specific prejudice. The Panel found that the subsidies caused displacement and impedance of Airbus, a European large aircraft manufacturer, from third country markets, price suppression, and lost sales. However, the Panel rejected the EU’s claims that other challenged measures constituted subsidies that cause adverse effects on its interests. Lastly, the Panel ordered the U.S. to take appropriate steps to remove the adverse effects or withdraw the subsidy.

On April 1, 2011, the EU notified the DSB of its decision to appeal to the WTO Appellate Body. The U.S. also decided to appeal. After nearly a year, the Appellate Body completed review of the record and issued a report on March 12, 2012.

The Report finds that the NASA and DOD payments and research and development programs constitute “financial contributions” within the meaning of the SCM Agreement. The Appellate Body also finds that some of the claimed subsidies did not constitute specific subsidies under the Agreement. The Report upholds the Panel’s finding that the tax breaks provided by Washington State constituted the foregoing of revenue, and therefore were financial contributions and subsidies under the Agreement. The Appellate Body also upholds the Panel’s findings with regard to the reductions provided by Kansas.

Regarding the Panel’s analysis of the adverse effects the subsidies had on the EU’s interest, the Appellate Body notes that the Panel looked to the three different markets of large aircrafts, which include the 100–200 seat, 200–300 seat, and 300–400 seat markets. The Panel analyzed the technological effects on the 200–300 seat market, and looked to at the price effects on the 100–200 seat and 300–400 seat markets. The Appellate Body upholds the conclusion that the NASA and DOD research and development payments caused a serious prejudicial effect on the interest of the EU in the 200–300 seat market. Specifically, the Panel found that the subsidies caused significant lost sales and price suppression in that market. However, the Appellate Body reverses the Panel’s finding that the subsidies caused a threat of impedance and displacement in the market in Kenya, Iceland and Ethiopia.

With regard to the Panel’s analysis of price effects, the Appellate Body reverses the Panel’s findings that the subsidies and tax reductions caused serious prejudice to the EU’s interests in the 100–200 seat and 300–400 seat large aircraft markets. Instead, the Appellate Body completes the analysis and finds that the effects of the [Kansas tax breaks] complemented and supplemented the price effects of the [] subsidies and the State of Washington [] tax rate reduction, thereby causing serious prejudice, in the form of significant lost sales, within the meaning of Article_5(c) and Article_6.3(c) of the SCM_Agreement, in the 100200 seat LCA market.” (Original Panel Report, paragraph 1350(d)(iv)(C)).

“We realize that, after more than five years of panel proceedings and eleven months of appellate review, a number of issues remain unresolved in this dispute. Some may consider that this is not an entirely satisfactory outcome. Our mandate under Article_17 of the DSU does not permit us to engage in fact‑finding. However, wherever we have found that there are sufficient factual findings by the Panel or undisputed facts to complete the analysis, we have done so with a view to fostering the prompt settlement of this dispute in accordance with Article_3.3 of the DSU.” (Original Panel Report, paragraph 1351).

Lastly, “[t]he Appellate Body recommends that the DSB request the United_States to bring its measures, found in this Report, and in the Panel Report as modified by this Report, to be inconsistent with the SCM_Agreement, into conformity with its obligations under that Agreement. More specifically, having regard to the recommendation made by the Panel in paragraph 8.9 of its Report and the provisions of Article_7.8 of the SCM_Agreement, the Appellate Body recommends that the United_States take appropriate steps to remove the adverse effects found to have been caused by its use of subsidies, or to withdraw those subsidies.” (Original Panel Report, paragraph 1352).

Citation: United States—Measures Affecting Trade in Large Civil Aircraft (2nd Complaint), Report of the Appellate Body (WT/DS353/AB/R) (12 March 2012). The Report is available at www.wto.org.