Legal Analyses written by Mike Meier,
Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com.
1998
International Law Update, Volume 4, Number 6 (June).
ANTI-TRUST
U.S.
and EU sign Agreement on Anti-Trust Cooperation
On
June 4, 1998, the European Commission and the U.S. Government signed an
Agreement on Transatlantic Anti-Trust Cooperation. The European Commissioner for Competition,
Karel Van Miert, signed it on behalf of the EU; U.S. Attorney General Janet
Reno and Federal Trade Commission Chairman Robert Pitofsky signed it on behalf
of the U.S. The Agreement entered into
force upon signature.
The
purpose of the Agreement is to effectively act on anti-competitive activities
occurring in the territory of one party and affecting the other party (Article
I 2.). According to the Agreement, both
parties commit to cooperation in anti-trust enforcement rather than applying
their anti-trust laws extraterritorially (referred as "positive
comity") (Article III). If anti-competitive
behavior occurring within one party's territory adversely affects the other
party, the affected party may request the other party to take action.
Thus,
a party may defer or suspend its own enforcement activities if the
anti-competitive activities within the other party's territory do not have a
direct, substantial and reasonably foreseeable effect within that party's
territory (Article IV).
Each
party's laws define what "anti-competitive activities" mean. The EC interprets the term "anti-competitive
activities" based on the EC Treaty, Articles 85, 86, and 89, as well as
Articles 65 and 66(7) of the ECSC Treaty.
The sources of U.S. law are the Sherman Act, the Clayton Act, the
Wilson Tariff Act, and the Federal Trade Commission Act (Article II).
Citation: Decision of the Council and of the Commission ...
(98/386/EC, ECSC), and Agreement between the European Communities and the ...
United States ... on the application of positive comity principles in the
enforcement of their competition laws, 1998 O.J. of the European Communities (L
173) 26, 28 (18 June 1998); European Union News press release No. 53/98 (June
4, 1998).
ARBITRATION
In
litigation with German firm over quality of its product, Eleventh Circuit
upholds its jurisdiction under New York Convention and rules that arbitrators
did not violate Convention in admitting expert witness and technical report
Nitram,
Inc. is a Florida maker of nitric acid.
Barnard and Burke Group, Inc. (BBG) of Texas agreed to put a "tail
gas expander" into its plant. BBG agreed to buy the expander from M.A.N.
Maschinenfabrik Augsburg-Nurnberg AG, now MAN GHH, a German maker of turbines.
After
installation in early 1985, two "wrecks" took place in the
expander. Though later repaired, the
casualties brought about months of down time and millions of dollars in losses
to Nitram.
In
October 1985, Nitram sued both its business insurer (IRI) and BBG in Florida
state court, claiming that compensation was due it either because IRI policy
covered it or, if not, BBG was liable.
IRI paid Nitram for some losses and then cross-claimed against BBG as
Nitram's subrogee. Defendants than
removed the case to federal court where BBG filed a counterclaim against Nitram
for contract breach.
BBG
then filed a third-party claim against MAN GHH alleging that the latter's
faulty expander was the main cause of Nitram's losses. After Nitram settled with, and dismissed
claims against, IRI, the latter became subrogated to Nitram's claims against
BBG.
On
motion of MAN GHH, the district court ordered enforcement of the arbitration
clause in its contract with BBG. It
provided for binding arbitration in Tampa under American Arbitration
Association (AAA) rules and Florida law.
After BBG settled with Nitram and IRI, the remaining claims for the
arbitrators depended on whether MAN GHH's expander or BBG's design and piping
had caused the two wrecks.
The
panel took evidence in January and March of 1993 and ruled in favor of MAN
GHH. BBG then unsuccessfully moved to
vacate the awards.
On
appeal, BBG argued (1) that the panel did not carry out the parties' agreement,
(2) that it erred in admitting a late-submitted German institute's technical
report (TUV) and the testimony of Hansen, a former IRI piping expert who had
taken part in the redesign of the expander, and (3) that the awards were
arbitrary and capricious. MAN GHH
cross-appealed because the court did not grant it pre-judgment interest.
On
the arbitration issues, the U.S. Court of Appeals for the Eleventh Circuit
affirms in part and vacates and remands in part.
The
Court first sua sponte examines the basis of its jurisdiction. The lower court had relied upon diversity and
had applied the domestic Chapter 1 provisions of the Federal Arbitration Act
(FAA). As a matter of first impression
in the circuit, the Court holds that the New York Convention and FAA Chapter 2
apply to arbitrations involving a foreign corporation such as MAN GHH although
the panel sits in the U.S. and applies U.S. law. The Eleventh Circuit joins the First, Second,
Seventh and Ninth Circuits in so holding.
"Specifically
for purposes of the case sub judice, we hold that an arbitral award made in the
United States, under American law, falls within the purview of the New York Convention‑‑and
is thus governed by Chapter 2 of the FAA‑‑when one of the parties to the
arbitration is domiciled or has its principal place of business outside of the
United States." [slip op. 4]
On
the merits, the Eleventh Circuit sees only two defenses under the New York
Convention that might apply here. A
member state court may deny confirmation of an award under Article V(1)(d) if
"the arbitral procedure was not in accordance with the agreement of the
parties." Additionally, under
Article V(2)(b), it may do so if "the recognition or enforcement of the
award would be contrary to the public policy of" the enforcing nation.
Reviewing
the conclusions of the district court de novo and placing the burden on the
challenger, the Court of Appeals sees no glitch under the Convention.
MAN
GHH had offered the technical report a few days before the January hearings but
the panel did not admit it until the March hearings. Thus, its admission did not surprise or
prejudice appellants. AAA Rule 3 merely
provides, without any time deadlines, that "the AAA will make
arrangements for the exchange of documentary evidence."
On
the second point, when MAN GHH had called Hansen and appellants had objected,
the panel itself had called him as an expert witness. Appellants argued that both federal and state
law bar "side switching." They
cited discovery rules, along with attorney-client and work-product cases, that
did have the incidental effect of imposing limits on adverse party access to
opposing experts.
Appellants
cited no authority, however, for any blanket rule or policy preventing one
party from calling an expert once employed by the adverse party. Even if there were such a rule, its violation
would not rise to the level of a "public policy" defense under the
Convention.
Finally,
after citing many authorities, the Court concludes "that no defense
against enforcement of an international arbitral award under Chapter 2 of the
FAA is available on the ground that the award is 'arbitrary and capricious,' or
on any other grounds not specified by the Convention. The appellants' attempt to invoke such a
defense thus fails." [slip op. 9]
Citation: Industrial Risk Insurers v. M.A.N.
Gutehoffnungshutte, GmbH, Nos. 94-2982, 94-2530 (11th Cir. May 22, 1998).
ATTORNEYS
Japan
amends its Foreign Attorneys' Law to enlarge scope of practice by foreign
lawyers
The
Japanese Parliament (Diet) has adopted an amendment of the Foreign Attorneys'
Law (Gaiben Ho). The amendment will
allow foreign attorneys in Japan to broaden their scope of activity. It will reduce the period of required
practical training for foreign lawyers in Japan from 5 to 3 years (of which 1
year in Japan can be counted). The Law
will encourage partnerships between foreign and Japanese attorneys.
In
particular, the amendment contains the following provisions:
-
Expansion of the scope of work performed by attorneys in advising on foreign
law: If the requisites are met, foreign
attorneys may practice law in the area of foreign law ("law business ... where the entire or
main parts of the law, which is or was effective in specified foreign countries
... can or should be applied") [Article 5, Number 2; Article 63, Number
4].
-
Relaxation of requirements for previous professional experience: To become an authorized foreign law business
attorney, the attorney must show "more than 3 years" of experience
[Article 10, Clause 1, Number 1]. Up to
one year of experience in Japan may count toward this period. [Article 10,
Clause 2 et seq.]
-
Deregulation to permit joint business relationships between foreign and
Japanese attorneys: Foreign and Japanese
attorneys may jointly engage in a law business that requires a knowledge of law
which is, or was, effective in foreign countries [Article 49, Number 2, Clause
1].
The
amendment will enter into force three months after its publication, that is, on
August 13, 1998.
Citation: 1998 [Heisei 10] Kanpo [Japanese Official
Gazette] Number 2379 of May 13, 1998; Note on the Foreign Attorneys' Law of
February 14, 1998, on the website www.okuyama.com. [The editor prepared this summary with the help
of Ms. Akemi Yonemura, Washington, D.C.]
ATTORNEYS
ICTY
promulgates Code of Professional Conduct for Defense Counsel
Effective
June 12, 1997, the "International Tribunal for the Prosecution of Persons
Responsible for Serious Violations of Humanitarian Law Committed in the
Territory of Former Yugoslavia since 1991" (ICTY) has issued rules of
conduct for defense attorneys.
Noting
that counsel from all over the world represent clients before it, the Tribunal
concluded that it needed a uniform set of conduct rules. Drafters consulted the ethics rules of eleven
national bars including those of Bosnia/Herzegovina and the ABA Model Rules
of Professional Conduct.
The
Code defines "counsel" as including any person who has satisfied the
Registrar that he or she is entitled to practice law in a State, or is a
University professor of law. The first
section (Articles 4-11) treats of the attorney's general duties to his or her
clients. These include competence,
independence, and diligence. Counsel is
to communicate as needed with the client and, subject to several exceptions, to
maintain the confidentiality of the client's affairs. The attorney is to avoid
conflicts of interest but to explain a conflict situation to the client should
one arise.
Articles
12-16 relate to counsel's duties to the Tribunal such as candor and avoiding ex
parte communications with the Tribunal.
Other parts deal with counsel's duties to opposing counsel and to third
parties and with the obligation to maintain the integrity of the profession.
Citation: ICTY Code of Conduct for Defense Counsel
Appearing Before the International Tribunal, 37 I.L.M. 488 (March, 1998).
AVIATION
In
suit arising out of Soviet shoot down of Korean aircraft over Sea of Japan,
U.S. Supreme Court holds that Death on High Seas Act does not allow recovery
for victims' pain and suffering
On
September 1, 1983, Soviet aircraft used missiles to shoot down Korean Air Lines
(KAL) flight KE007. En route from Alaska
to South Korea, the plane had strayed into Soviet air space over the Sea of
Japan. According to experts, the plane
had remained airborne for about twelve minutes after the missiles hit it. It then crashed into the sea, killing all 269
persons aboard.
Along
with two other plaintiffs, Philomena Dooley sued KAL as personal representative
of Cecelio Chuapoco. Over and above
pecuniary damages to next of kin, plaintiffs sought damages for decedent's
pre-death pain and suffering.
In
1996, however, the U.S. Supreme Court handed down Zicherman v. Korean Air
Lines, 516 U.S. 217, 1996 Int'l Law Update 15.
There the Court held that the exclusively applicable U.S. law in cases
of fatal air crashes on the high seas was the Death on the High Seas Act (DOHSA)
[46 U.S.C.App. Section 761ff]. DOHSA did
not in terms allow recovery for loss-of-society damages. On this basis, the district court dismissed
all of the instant plaintiffs' pain-and-suffering claims.
In
affirming, the Court of Appeals rejected petitioners' argument that general
maritime law provided a survival action for pain and suffering damages, holding
that Congress has decided who may sue and for what in cases of death on the
high seas [see 117 F.3d 1477 (D.C. Cir. 1997)].
On certiorari, the U.S. Supreme Court unanimously affirms.
The
Court points out that, before Congress enacted DOHSA in 1920, admiralty law did
not provide for wrongful death suits.
The thinking was that such suits were personal to the victim and expired
with her. DOHSA created a right of
action for wrongful death on the high seas.
It limited damage recovery, however, to pecuniary losses suffered by the
decedent's surviving close relatives.
In
later decisions, the Court denied survivors the right to obtain damages for
loss of society. In so doing, it ruled
that Congress had legislated comprehensively in DOHSA and had put nothing in
the statute about nonpecuniary recoveries.
Plaintiffs
argued that DOHSA is strictly a wrongful death statute. It does not deal one way or the other with
the principle that a decedent's representative should be able to pursue a
survival action on decedent's behalf to recover for her own losses. Such a suit under general admiralty law would
allow damages for the pain and suffering endured by plaintiffs' decedents as
the airliner careened downward toward the sea.
The
Court sees no merit in these contentions.
DOHSA has a survival provision but one much more restrictive than the
model urged by plaintiffs. It allows
recovery for the survivors' financial losses in a personal injury action carried
on to completion after plaintiff dies.
Moreover,
Congress in 1920 did insert a survival provision along traditional lines into
the Jones Act [45 U.S.C. Section 59]. It
allows seaman to sue for damages for their own personal injuries. Since Congress did not go further and include
a similar provision in DOHSA, however, it is not for the Court to capsize the
symmetry set by the legislature.
Citation: Dooley v. Korean Air Lines Co., Ltd., No. 97-704
(Sup. Ct. June 8, 1998).
U.S.
and France conclude new aviation agreement leading to "open skies"
arrangement
On
April 8, 1998, the U.S. and France concluded a new aviation agreement to
expand access to each other's market and increase competition. The parties signed the Agreement on June 18,
1998. The main points of the Agreement
are:
-
Passenger flights: Within five years, the U.S. and France will develop
"open skies" relations and will let airlines determines flights and
fares.
-
Transition period: Airlines may operate from anywhere in France to anywhere in
the U.S. and vice versa. The capacity
will increase gradually. U.S. and French
carriers may have code-sharing agreements.
- Air
cargo: The market for cargo flights will
gradually open between 1988 and 2011.
-
Dispute settlement: Arbitration may involve the International Civil Aviation
Organization (ICAO) if the parties cannot agree themselves. Notably, the arbitrators may recommend
preliminary relief measures pending a final decision. Arbitration must conclude within 160 days of
appointment of the president of the arbitral tribunal, or within 220 days of
the decision of one of the parties to arbitrate.
Citation: Information received from the Press Department of
the French Embassy in Washington, D.C., Phone: (202) 944-6066; News from
France, Vol. 98.07, 13 April 1998, page 3; USA Today (April 9, 1998), page
7A. [Additional information is available
on the website www.info-france-usa.org.]
AVIATION
U.S.
continues to bar flights over large parts of Afghanistan
The
Federal Aviation Administration (FAA) has extended the prohibition on
flights over Afghanistan until May 10, 2000, for safety reasons because of the
ongoing civil war. The FAA, however,
lifted the prohibition for Afghan airspace east of 070 degrees 35' east
longitude, and south of 33 degrees north latitude. The prohibition dates originally from the
year 1994 because of the Afghan political factions' weapons' capability of
attacking airplanes.
Citation: 63 Federal
Register 26684 (May 13, 1998).
COMPETITION
German
High Court reverses its own jurisprudence to permit comparative advertising
In a
special preliminary statement issued on May 22, 1998, the German High Court
(Bundesgerichtshof, BGH) announced, based on two not-yet-published decisions
(Docket numbers I ZR 211/95 of February 5, 1998, and I ZR 2/96 of April 23,
1998), that it has reversed its previous jurisprudence and found
"comparative advertising" compatible with German competition
law.
German
courts have held for decades that comparisons in advertising ("our product
is better than our competitor's product because ...") were improper and
violated Article 1 of the Law Against Improper Competition [UWG]. The BGH Chamber in charge of competition law,
the I. Zivilsenat, relied upon EU competition rules [EC Directive 97/55/EC of
October 6, 1997].
Comparative
advertising is permissible if (a) the comparison is not misleading, (b) the ad
compares only verifiable and typical characteristics, and (c) the
advertisement does not impugn other competitors. Even though EU Directive 97/55/EC will not
enter into force until April of the year 2000, the BGH decided in advance to
adapt its jurisprudence accordingly.
[EU
Directive 97/55/EC amends Directive 84/450/EEC concerning misleading
advertising to include comparative advertising. It came out in the 1997 O.J. of
the European Communities (L 290) 18, October 23, 1997.]
Citation: Bundesgerichtshof Pressemitteilung [German BGH
press release] Number 39/98 (May 22, 1998), available on the www at www.jura.uni-sb.de;
also reported in German newspaper Sueddeutsche Zeitung, May 23, 1998.
CRIMINAL
LAW
In
case of Mexican national erroneously arrested in Mexico for alleged murder in
Los Angeles, Ninth Circuit affirms summary judgment on Alien Tort Claims Act
counts because arrest and detention did not violate norms of international law
At
the request of the Los Angeles Police Department (LAPD), Mexican officials
arrested Jose Gonzalez Martinez, a Mexican national, in Mexico for a murder
allegedly committed in Los Angeles.
Under Article VI of the Mexican Federal Penal Code, Mexican authorities
may prosecute Mexican nationals in Mexico for crimes committed abroad.
As it
turned out, however, Martinez did not commit the murder. He then sought damages in U.S. district
court, based on the Alien Tort Claims Act (ATCA) [28 U.S.C. Section 1350
(1994)] and state law grounds, for the 59 days he spent in a Mexican jail. [Under ATCA, federal district courts have
jurisdiction over any civil action by an alien for a tort committed in violation
of the "law of nations" or a treaty of the U.S.]
The
district court gave summary judgment to the LAPD, and Martinez appealed. The U.S. Court of Appeals for the Ninth
Circuit affirms the ATCA summary judgment but reverses on Martinez's state law
claims.
To
adjudicate Martinez's ATCA claim, a court must decide (1) whether there is an
applicable norm of international law proscribing the tort of false
imprisonment, and (2) whether defendant breached that norm in this particular
case. For guidance regarding the norms
of international law, courts may look to court decisions, the work of jurists,
and the usage of nations. See Siderman
de Blake v. Republic of Argentina, 965 F.2d 699, 714-15 (9th Cir. 1992).
The
Court agrees that international law clearly bans arbitrary arrest and detention. For example, Article 9 of the Universal
Declaration of Human Rights [G.A. Res. 217A(III), 3 U.N. GAOR Supp. No. 16,
U.N. Doc. A/810 (1948)] and Article 9 of the International Covenant on Civil
and Political Rights [S. Treaty Doc. 95-2, 999 U.N.T.S. 171] forbid arbitrary
detention. Under the Restatement (Third)
of the Foreign Relations Law of the United States Section 702 (1987), detention
is "arbitrary" if not pursuant to law or incompatible with
principles of justice or human dignity.
Here,
however, Mexican authorities did not arbitrarily detain Martinez. The Court explains that police arrested
Martinez pursuant to a valid Mexican arrest warrant. They informed him of the charges and brought
him before a judge. While in jail, he
consulted with an attorney and saw his family twice a week. Therefore, neither Martinez's arrest nor his
detention were "arbitrary" within the meaning of international law.
Citation: Gonzalez Martinez v. City of Los Angeles, No.
96-55869 (9th Cir. April 21, 1998).
[Editor's Note: The U.S. Senate, in approving the above Covenant,
stipulated that it not be self-executing in U.S. domestic law].
ECONOMIC
SANCTIONS
EU
ends its WTO challenge to U.S. Cuban Sanctions Act
On
April 21, 1998, the EU dropped its legal challenge before the WTO involving the
Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 (also called
Helms-Burton Act). The EU had claimed
that the Act's trade restriction on goods of Cuban origin related to expropriated
properties were inconsistent with WTO trading rules.
In a
related matter, U.S. President Bill Clinton and European Commission President
Jacques Santer announced on May 18, 1998, that they had reached a general
agreement regarding extraterritoriality and secondary boycotts of U.S.
sanctions laws such as the Iran-Libya Sanctions Act and the Helms-Burton Act.
On
May 18, 1998, at the EU-U.S. London Summit, the parties issued a statement on
"Transatlantic Partnership on Political Cooperation." In that statement, as for economic sanctions,
the parties agreed on a new set of principles.
Economic sanctions should be used only as a last resort. "Wherever
possible, effective measures taken by the UN Security Council are the optimal
approach." As to extraterritoriality,
the parties agreed that "a partner will not seek or propose and will
resist the passage of new economic sanctions legislation based on foreign
policy grounds which is designed to make economic operators of the other
behave in a manner similar to that required of its own economic
operators."
Citation: European
Union News press release No. 43/98 (May 18, 1998); Notice on the WWW website of
the WTO www.wto.org; The New York Times, April 21, 1998, page A1. [The complete
statement on Political Cooperation is available on the website of the EC
Commission Office in Washington, D.C., http://www.eurunion.org.]
ECONOMIC
SANCTIONS
U.S.
Treasury Department implements Burma sanctions
On
May 20, 1997, U.S. President Bill Clinton issued Executive Order 13047
"Prohibiting New Investment in Burma." The Executive Order certified to Congress
under Section 570(b) of the Foreign Operations, Export Financing, and Related
Programs Appropriations Act of 1997 [Pub.L. No. 104-208] that Burma's
Government had committed large-scale repression of the Democratic opposition,
and thus invoked the U.S. prohibition on new investment by U.S. persons.
The
Office of Foreign Assets Control of the U.S. Department of the Treasury has now
issued the Burmese Sanctions Regulations (31 C.F.R. 537) to implement the
Executive Order. The regulations bar any
contracts that include the economic development of Burmese resources. Also, a U.S. person may not approve or facilitate
such activities by a foreign person. The effective date of the regulations is
May 21, 1998.
Citation: 63 Federal
Register 27846 (May 21, 1998).
ENVIRONMENT
U.S.
and seven other nations conclude Multilateral Dolphin Protection Agreement
On
May 21, 1998, the U.S., Colombia, Costa Rica, Ecuador, Mexico, Nicaragua,
Panama and Venezuela signed a Multilateral Dolphin Protection Agreement in
Washington, D.C. U.S. Secretary of State
Madeleine K. Albright signed the Agreement on behalf of the U.S.
The
Agreement resulted from the negotiations of the Inter-American Tropical Tuna
Commission. Its purpose is to protect
dolphins during tuna fishing operations.
The Agreement provides a basis for the U.S. to remove its tuna-trade
embargoes from nations that become parties to the Agreement. It will enter into force after ratification
by four countries.
The
Agreement is also open to signature by Belize, Chile, El Salvador, the EU,
France, Guatemala, Honduras, Japan, Peru, Spain, and Vanuatu.
Citation: U.S. Department of State Press Statement (May
21, 1998).
EVIDENCE
In
challenge to admission of foreign hotel records in drug smuggling case, Fourth
Circuit finds handwritten endorsements on documents by employees and testimony
by foreign Customs Agent insufficient foundation for admissibility under 18
U.S.C. Section 3505
Donald
Wardrick and Porteal Groom were busy transporting heroin into the United
States. They would recruit young people
to take empty suitcases with them to a certain hotel in Pakistan. A named individual would then exchange their
empties with baggage full of drugs.
Wardrick and Groom would foot the transportation and subsistence
expenses of their apparently unwitting couriers.
All
went smoothly until Pakistani officials detected and searched the bulging
suitcases. Upon their arrest, the
couriers provided the names of Wardrick and Groom. The officials then contacted the DEA. The latter set up a successful
"controlled delivery" in Maryland that led them to Wardrick, Groom
and associates. Federal authorities then
had Wardrick and Groom indicted for drug violations.
At
the trial, the government offered into evidence some hotel registries and
charge records showing that the couriers had stayed at the designated hotels in
Pakistan. Defendants claimed a lack of
proper certification but the trial judge let the records in. From their convictions, defendants took an
appeal. In a per curiam opinion, the
U.S. Court of Appeals for the Fourth Circuit affirms.
The
Court points out that, under 18 U.S.C. Section 3505, foreign records of a
regularly conducted activity are admissible if, inter alia, a person with
personal knowledge has certified them as the records they purport to be. Here, each foreign hotel custodian had
written the word "attested" and had signed his name on each page of
the records.
In
addition, the government offered the testimony of Pakistani Customs Agent
Mughal who testified about each of the certification requirements. Despite having discussed the matters with
hotel employees, however, Agent Mughal did not have enough knowledge to testify
about internal record-keeping procedures at the hotels. His testimony does not reveal the “thorough
understanding” of a record-keeping system that courts require before an
“outsider” can authenticate business records.
Since
Agent Mughal was not a “qualified witness” who could provide a foreign
certification under Section 3505, the judge below had mistakenly let in the
hotel records. The Court sees this error
as harmless, however, in light of much other evidence showing that the drug
couriers stayed at Pakistani hotels designated by Wardrick.
Citation: United States v. Wardrick, No. 96-4831 (4th Cir.
April 13, 1998) (unpublished).
INTERNET
German
trial court imposes probation and DM 100,000 fine on former CompuServe
executive for facilitating distribution of pornography through internet
Felix
Somm is the former German Chief for the U.S.-based internet provider
CompuServe. German authorities charged
him with contributing to the distribution of child pornography and other
sexually explicit material through the internet [German: Mittaeterschaft bei
der Verbreitung pornographischer Inhalte im Internet].
At
the trial before a Munich court (Amtsgericht), a defense expert testified
that, given the large quantity of information on the internet, Somm could not
have been aware of any pornographic contents.
In addition, the information was stored on a computer in the U.S. The prosecution eventually dropped the charge
of distributing child pornography and, in the closing statement, asked for a
finding of "not guilty" on the facilitation charge.
In an
unprecedented decision announced on May 28, 1998, the court nevertheless found
Somm guilty. It then sentenced him to
two years jail time (on probation) and imposed a DM 100,000 fine [about $57,000].
The defense attorneys stated that they would appeal the decision.
[The
German Law for on-line services is the Information and Communication Service
Law (IuKDG) (see 1997 Int'l Law Update 148).
It only vaguely describes the responsibility of service providers for
the contents. They must have knowledge
of the contents, and it must be technically possible and reasonable to prevent
their use. The German Media Services Federal Framework Agreement
(Mediendienste-Staatsvertrag) provides that "service providers are responsible
for third-party contents that they distribute only if they have knowledge of
these contents" (Section 5,2); ... "service providers are not
responsible for third-party contents which they only provide access to
..." (Section 5,3). Such contents
may be blocked only if that is technically feasible and reasonable (Section
18,3)].
Citation: The court
has not yet published its written opinion but the Sueddeutsche Zeitung reported
the trial and judgment on May 29, 1998. -- [There is an advocacy page on the
WWW, available in German and English, which contains a summary and references
to various news reports about this case, at http://freudenstadt.net/somm.]
SEA,
LAW OF
In
its first judgment, International Tribunal for Law of Sea (ITLOS) orders Guinea
to release foreign tanker seized offshore while refueling fishing vessels upon posting of bond by flag state
In
October 1997, the M/V Saiga, a tanker, was refueling fishing boats at sea off
the Guinean coast of West Africa. Its flag state was St. Vincent and the
Grenadines. Guinean customs patrol boats
seized the tanker off the Sierra Leone shore, injuring several crew
members. They took the vessel to
Conakry, detained the ship and crew and pumped the cargo ashore. The latter was worth about $1,000,000.
Several
weeks later, the flag state applied to the International Tribunal for the Law
of the Sea (ITLOS) for the prompt release of the Saiga along with its cargo and
crew pursuant to Article 73. On December
4, the ITLOS ordered Guinea to let the Saiga and its crew go, 12 to 9, upon the
posting of an appropriate bond or security.
Article
292 of the U.N. Convention on the Law of the Sea (UNCLOS) provides that the
flag state may apply for release of a detained vessel after ten days. UNCLOS also gives the Tribunal only twenty
more days to render judgment. The ITLOS,
however, passes only on the issue of release "without prejudice to the
merits of any case before the appropriate domestic forum against the vessel,
its owner or its crew." Moreover, it reads the severe time limits as
allowing it to base its judgments on arguable or plausible, rather than
definitive, grounds.
Article
73 provides for release on bond when the coastal state has arrested a foreign
ship for breaching its fishing regulations in the Exclusive Economic Zone
(EEZ). Contrariwise, Guinea alleged that
the Saiga was taking part in unlawful smuggling for which UNCLOS does not
provide for release on bond.
The
first question the majority raises is whether refueling of fishing vessels
within the EEZ falls within the coastal state's sovereign control over living
resources within that zone. The majority
does not definitively resolve the issue.
It does conclude, however, that there has been a plausible allegation
of non-compliance with Article 73. The majority then fixed a bond in the amount
of $400,000 plus the value of the gas oil already offloaded.
The
dissenting judges disapprove of the majority's conjectures about refueling
fishing vessels as well as the plausibility standard. They would give more weight to the law of the
detaining state's treatment of the arrest.
[Ultimately,
both sides agreed that the ITLOS could decide the merits of the dispute. Shortly before the Tribunal was to consider
provisional measures, Guinea released the ship, captain and crew.]
Citation: The M/V "Saiga" (St. Vincent and the
Grenadines v. Guinea), Case No. 1 (Int'l Trib. for Law of Sea, December 4,
1997), 92 Am.J. Int'l L. 278 (1998) [International Decision reported by Bernard
H. Oxman].
SOVEREIGN
IMMUNITY
Where
plaintiffs requested deposition of Greek government officials, D.C. Circuit
issues mandamus to vacate discovery order; district courts must evaluate
alternative jurisdictional grounds before resorting to FSIA
Rosemarie
Marra and Marrecon Enterprises (Liberia) (jointly the plaintiffs) hold a 9%
interest in a consortium that paid $44 million for a casino license in Athens,
Greece. The Greek government had
allegedly solicited U.S. investments in the casino but revoked the license a
year later and offered to refund the $44 million.
The
plaintiffs sought damages for breach of contract. The Greek government sought dismissal of the
action based, inter alia, on the Act of State Doctrine, forum non conveniens,
and the Foreign Sovereign Immunities Act (FSIA).
The
plaintiffs then sought to depose Greek Tourism Minister Vaso Papandreou and
Economy Minister Gianos Papantoniou, to explore the Greek government's
solicitation of U.S. investments. The
district court authorized the depositions.
The
Greek government, however, petitioned for a writ of mandamus to vacate the
discovery order. The U.S. Court of
Appeals for the District of Columbia Circuit grants the writ and vacates the
order.
The
FSIA does not grant foreign states immunity from U.S. jurisdiction in actions
based on a commercial activity in the U.S., or based upon an act performed in
the U.S. in connection with a commercial activity elsewhere, or if the commercial
activity had substantial contact with the U.S. [28 U.S.C. Section 1605(a)(2),
Section 1603(e)].
"[O]ur
cases do not foreclose the possibility that some degree of solicitation in the
U.S. might satisfy the 'substantial contact' requirement. Thus the depositions
do relate to facts on which a FSIA determination could turn. ... Relevance,
however, is not enough. Because
sovereign immunity is an immunity from suit, ... a district court authorizing
discovery to determine whether immunity bars jurisdiction must proceed with
circumspection, lest the evaluation of the immunity itself encroach unduly on
the benefits the immunity was to ensure." [slip op. 15-17]
Here,
the district court failed in two respects.
First, approving oral depositions of cabinet-level government officials
is novel. Principles of international
comity require the same respect for foreign officials as is due to U.S.
officials. Absent a showing of need for
oral testimony from the Ministers, the district court erred in authorizing the
depositions. Second, the lower court failed to evaluate other potentially
dispositive jurisdictional defenses.
The
concurring judge thinks that discovery is not likely to turn up any facts that
show that Greece engaged in any commercial activity in the U.S. as FSIA Section
1605(a) requires. In her view, the Court
would not find "substantial contact" within the meaning of the FSIA
in cases where the foreign sovereign merely conducted pre-contractual
solicitation.
Citation: In re:
Minister Papandreou et al., No. 97-7191 (D.C. Cir. April 10, 1998).
SUBSIDIES
WTO
completes framework for "non-actionable" environmental, regional,
and R&D subsidies
The
WTO has completed a framework on "non-actionable" subsidies. Generally, the WTO Agreement on Subsidies and
Countervailing Measures prohibits subsidies on exports, or subsidies
conditioned on the use of domestic over imported goods.
The
new Agreement will permit governments to establish subsidy programs to protect
the environment, assist disadvantaged regions, and promote research and
development, as long as they meet specific criteria. The new Agreement is already operational. On June 2, 1998, the WTO Committee on
Subsidies and Countervailing Measures adopted procedures for arbitrating
disputes involving such subsidies.
Citation: WTO Press
Release PRESS/101 (3 June 1998). [The formats that governments must use for
initial and additional notifications of "non-actionable" subsidies,
along with the arbitration guidelines, are available on the WTO website
www.wto.org.]
TRADE
U.S.
and EU begin new trade framework, the "Transatlantic Economic Partnership"
(TEP), aimed at removing
trade barriers
The
recent London Summit was the sixth of the twice-yearly meetings of U.S. and EU
leaders that began with the New Transatlantic Agenda of 1995 [see 1996 Int'l
Law Update 12]. On May 18, 1998, U.S.
President Bill Clinton, British Prime Minister Tony Blair, and European
Commission President Jacques Santer announced a new trade initiative, the
"Transatlantic Economic Partnership" (TEP).
Under
the TEP, both the U.S. and the EU will draw up action plans to cut down or
erase transatlantic trade barriers. In
particular, the TEP will focus on trade in agricultural products (including
biotechnology), services, industrial tariffs, electronic commerce, intellectual
property rights (IPR), investment, government procurement, and competition.
Citation: The White
House, Office of the Press Secretary (London, England), Press Release (May 18,
1998); European Union News press release No. 45/98 (Mary 19, 1998). [The complete
statements from the London EU-U.S. Summit are available on the website of the
EC Commission in Washington, D.C., at http://www.eurunion.org.]
TRADE
Nova
Scotia Court of Appeals dismisses appeal of accused convicted for importing
unlawfully-removed Bolivian cultural property into Canada; statute held not
void for vagueness under Article 7 of Canadian Charter of Rights and Freedoms
After
Canadian Customs received a box from New York addressed to a Mr. Yorke,
officials began to suspect that Yorke was unlawfully importing Bolivian
textiles, in part by using false information on the forms. After further investigation, Canadian
authorities charged Mr. Yorke with unlawfully importing foreign cultural property
that he had illegally exported from Bolivia.
Such
conduct allegedly violated Section 43 of the Cultural Property Export and
Import Act, R.S.C. 1985, c. C‑51 (the Act).
Section 37(1) of the Act defines "foreign cultural property"
as any object specifically designated by a reciprocating state (such as
Bolivia) as being of importance for archeology, prehistory, history,
literature, art or science.
There
was evidence that Yorke had spent about nine years in South America, mainly in
Bolivia. Between 1980 and 1985, he had
gathered about 6,000 textiles and weavings from the native people of
Bolivia. In partnership with one Steve
Berger, an American citizen, Yorke would ship these textiles to Canada and
offer them for sale to museums and collectors in both Canada and the United
States.
At
Yorke's lengthy bench trial in Nova Scotia, the Crown called two expert
witnesses. One gave opinion evidence
about the Bolivian legal system. She
cited and expounded those Bolivian laws that dealt with cultural property. The other opined that the exhibits seized
from the accused constituted Bolivian cultural property. Nine Customs and
police officials also testified.
The
judge found Yorke guilty. On his appeal,
the Court of Appeals of Nova Scotia concluded that it should dismiss.
One
of Yorke's main arguments was that the Act's unique scheme of incorporating
foreign law as an element of a crime made the Act void for vagueness under
Section 7 of the Canadian Charter of Rights and Freedoms (the Charter). In his view, the Act failed to provide formal
and substantive notice of what the foreign law banned so that a reasonable
citizen would understand.
The
Court disagrees, however. The Act merely
regulates the importation of property into Canada, a matter well understood by
the average Canadian citizen. "The
provisions of the Act under which the accused was convicted set clear limits to
the prohibited conduct. The provisions
are certain and unambiguous. The interpretive role of the courts is minor. There is no arbitrary enforcement
discretion. There is a sound basis for
legal debate. No specialized knowledge is needed to understand the
provisions." [300]
At a
trial under the Act, the government has to prove the law of Bolivia as a fact
by calling an expert. In the Court's
view, the Bolivian Decree set up three classes of cultural property with
reasonable clarity. It would be
impossible to itemize every piece of property under legal protection. The
Decree conplied with UNESCO's 1978 Convention on Cultural Property. The record also showed that Yorke was
extremely well informed about Bolivian textiles and kept detailed records of
his purchases and sales.
Moreover,
the Act is regulatory in nature, based on strict liability. Its basic requirement is that a party
bringing Bolivian items into Canada exercise reasonable care. A professional importer, however, knows how
to, and should, make reasonable inquiries with knowledgeable persons or
institutions about the legal status of any Bolivian property he or she plans to
export.
Finally,
Canadian authorities had made strenuous efforts to publicize the Convention
and the Act among those in the import business.
Nor
does the Act make crimes out of conduct that takes place outside of
Canada. The instant offense occurred
near Halifax and Bolivian law was a mere factual datum about which Yorke had a
duty to make reasonable inquiry.
Citation: Regina v. Yorke, 122 C.C.C. (3d) 298 (N.S.C.A.
1998).
TRADE
WTO
Appellate Body partially reverses dispute settlement report on U.S.-EC
computer equipment case, finds tariff classification GATT-consistent
On
June 5, 1998, the WTO Appellate Body issued an opinion in the U.S.-EC computer
network equipment report, partially reversing the earlier Dispute Settlement
Panel Report (see 1998 Int'l Law Update 33).
The
dispute arose from increased EC, Irish and British tariff classifications for
Local Area Network (LAN) equipment and personal computers with multimedia
capability. They had reclassified the
equipment from "automatic data processing machines" (tariff category
84.17 in the European Uruguay Round tariff schedule) to telecommunications
products, thereby almost doubling the applicable tariffs. The U.S. brought a WTO complaint and alleged
economic harm. The increased tariffs classification allegedly violated Article
II of GATT 1994.
In a
Dispute Settlement Panel Report circulated in February 5, 1998, the Panel found
that the EC had in fact violated Article II:1 of GATT 1994 [treatment no less
favorable than provided in GATT schedules of commitment] and that the EU had in
fact failed to grant U.S. equipment a treatment no less favorable than provided
for in the EC Schedule of commitments (Schedule LXXX). It had thus acted
inconsistently with Article II:1 of GATT 1994.
The
Appellate Body reversed the Panel's conclusion that the EC tariff treatment of
LAN equipment is inconsistent with GATT Article II:1. In particular, the Appellate Body concluded
that the U.S. was not entitled to "legitimate expectations" that LAN
would receive a certain tariff treatment.
[The
U.S. Trade Represented issued a statement that this decision will have only a
limited economic impact on the U.S.
Under the Information Technology Agreement (ITA), tariffs go to zero on
January 1, 2000, no matter how LAN equipment is classified in tariff
schedules].
Citation: WTO, Appellate Body, European Communities --
Customs Classification of Certain Computer Equipment (WT/DS62/AB, WT/DS67/AB,
WT/DS68/AB) (5 June 1998). The WTO Appellate Body opinion is available on the
WTO website www.wto.org; European Union News press release No. 54/98 (June 5,
1998); U.S. Trade Representative press release 98-59 (June 5, 1998).
TRADE
WTO
circulates dispute settlement report in shrimp/turtle case, finding U.S.
violations of GATT
On
May 15, 1998, the WTO Dispute Settlement Body circulated the Report in the
case "United States -- Import Prohibition of Certain Shrimp and Shrimp
Products" (WT/DS58), brought by India, Malaysia, Pakistan and Thailand
against the U.S. The U.S. had imposed a
ban on certain shrimp and shrimp products based on Section 609 of Pub.L. No.
101-62 (16 U.S.C. 1537 note) [Amendment to Endangered Species Act of 1973, 16
U.S.C. Section 1531].
[Section
609 prohibits the importation of shrimp and products from shrimp that have been
harvested with commercial fishing technology that may adversely affect certain
species of sea turtles, unless the harvesting nation has a protection program
in place that reduces incidental sea turtle mortality to the average rate of
U.S. fishermen, or the harvesting nation's fishing environment does not
endanger sea turtles.]
The
complainants alleged that the U.S. ban violated GATT 1994 Articles I, XI, and
XIII, and constituted "nullification and impairment of benefits"
granted under GATT.
The
Panel concluded that the U.S. import ban is inconsistent with Article XI:1
[elimination of quantitative restrictions on trade such as quotas or import
licenses] and cannot be justified under Article XX [General exceptions,
including environmental reasons]. The
Panel specifically found that the U.S. could not justify its ban with Article
XX, which permits exceptions for environmental and other reasons, because the
U.S. ban or comparable measures may "jeopardize the multilateral trading
system" (Paragraph 7.6). Environmental
issues should be resolved by international agreements, not by unilateral sanctions.
In
its Concluding Remarks (Section IX.), the Panel noted that the issue here was
not the urgency of protecting sea turtles. Members may set their own
environmental objectives, but must do so in ways that are WTO consistent. The best way for the parties to protect sea
turtles would be a cooperative agreement on integrated conservation strategies.
Citation: WTO, Report of the Panel, United States - Import
Prohibition of Certain Shrimp and Shrimp Products (WT/DS58) (15 May 1998). [The
Report is available on the WTO website www.wto.org.]
TRADE
OECD
members agree on rules for project finance transactions receiving export-credit
support
The
nine participating countries (including the EU with its 15 Member States, and
the U.S.) of the OECD "Arrangement for Officially Supported Export
Credits" have agreed on new rules for project finance transactions that
benefit from official export credit support.
The rules will apply to all officially supported export credits for
project finance transactions, regardless of whether provided through direct
financing, refinancing, insurance or guarantees.
The
purpose is to implement market terms in government export credit support, for
example (i) loan repayment terms to match the revenue-generating capacity of
projects, and (ii) maximum repayment terms up to 14 years. Thus, export credit agencies may work with
credit terms that reflect cash flows. It will facilitate cooperation with banks
and other financing institutions in co-financing transactions.
To
ensure transparency and effective monitoring, the participating countries
agreed to give prior notification of all project finance transactions that will
benefit from the new flexibility. As for the EU, the EU Council (Ministerial
level) must formally accept the new rules.
The
new rules will enter into force on September 1, 1998, and will apply for an
initial trial period of three years.
Citation: OECD News
Release (3 June 1998). [For additional
information, contact the OECD Trade Directorate in Paris, Janet West or Tom
Vis, Phone: (33)(1) 45-24-89-10/18-22; Fax: (33)(1) 45-24-19-41.]
TRADE
India
imposes "special additional duty" (SAdd) on imports
With
notifications issued on June 2 and June 13, 1998, the Indian Department of
Revenue has issued a new Special Additional Duty (SAdd) of 4% for imports that
are "sold" in India, to be included as Section 8A of the Custom
Tariff Act, 1975.
The
duty will apply to the aggregate of value, comprising the (i) original value of
the goods, (ii) basic custom, (iii) special customs, and (iv) additional
customs (CVD). Thus, the SAdd applies
like sales tax on the invoice value of the goods inclusive of all taxes before
sale. Most goods produced for export are
exempted even if they bear basic or additional duty.
[Editors'
Note: The SAdd is regarded as a "swadeshi" (economic nationalism) tax
targeting multinational companies operating in India.]
Citation: Indian
Department of Revenue notification 034/13.06.98; Reports received from Mr.
Arun Goyal of the Academy of Business Studies, 24/4866 Sheeltara House, Ansari
Road, New Delhi 110 002, India, Phone: (91-11) 328-1314, Fax: (91-11) 325-2880,
E-mail: arung@giasdl01.vsnl.net.in.
TRADE
European
Union issues regulation on introduction of "euro" in 1999 as official
EU currency in eleven Member States
The
EU Council has issued regulatory details on the introduction of the
"euro" as the official EU currency beginning January 1, 1999. The euro is made up of 100 cent (Article 2).
The
euro will not became an official currency in all 15 EU Member States. The "participating Member States"
are Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, the Netherlands,
Austria, Portugal, and Finland (Article 1).
The
euro will replace the national currencies, such as the German Mark and the
Italian Lira at the pre-set conversion rate (Article 3). It will also irrevocably fix the conversion
rates for each participating national currency.
The euro will be the unit of account for the European Central Bank (ECB)
and the central banks of the participating Member States (Article 4). During
the transitional period between January 1, 1999, and December 31, 2001, the
national currencies will still circulate with their values expressed in euros
(Articles 5-9). The EU will phase out
the national currencies within six months after the transitional period
(Article 15).
Beginning
January 1, 2002, the ECB and the central banks of the participating Member
States will circulate euro banknotes (Article 10). At the same time, the participating Member
States will begin issuing coins denominated in euro or in cent (Article
11). The Regulation enters into force on
January 1, 1999.
The
same issue of the Official Journal contains the technical specifications for
the euro, as well as decisions abrogating the previous findings of
"excessive deficits" in the participating Member States.
Citation: Council
Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro, 1998
O.J. of the European Communities (L 139) 1, 11 May 1998.
- WTO
Arbitrator decides that EU must lift beef hormone ban by May 1999. According to a press release of the U.S.
Trade Representative, a WTO arbitrator has held that the EU must comply by May
13, 1999, with the WTO recommendations to lift its ban on hormones in beef.
This arbitral decision is related to the WTO Appellate Body opinion of January
16, 1998, in the U.S.-EU beef hormone dispute [see 1998 Int'l Law Update
20]. There, the Appellate Body affirmed
a Dispute Settlement Panel Report finding that the EU ban on imports of beef
from cattle treated with certain growth hormones is inconsistent with EU
obligations under the Sanitary and Phytosanitary Measures (SPS)
Agreement. WTO dispute settlement rules
grant Members a reasonable period of time to implement the recommendations
of a Panel or the Appellate Body. After the EU, the U.S. and Canada could not
agree on time period for implementation, the EU requested a WTO arbitrator to
set the date. Citation: U.S.
Trade Representative press release 98-54 (May 28, 1998).
