Legal Analyses written by Mike Meier,
Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com.
2000
International Law Update, Volume 6, Number 2 (February).
COMPETITION
Detailed
treaty between United States and Japan on mutual cooperation in the enforcement
of their respective competition laws, regulations and policies has entered into
force
On
October 7, 1999, an Agreement between the Government of the United States and
the Government of Japan Concerning Cooperation on Anticompetitive Activities
entered into force. Both Japan and the United States realistically admit that,
from time to time, differences may come up over whether and how to enforce
their antitrust laws. The parties declare the importance of antitrust
enforcement to their respective economies and affirm their commitment to
carefully consider each other's important interests in applying their
competition laws.
For
purposes of this Treaty, Article I defines the "competition
authorities" as including the U.S. Department of Justice and the Federal
Trade Commission and the Japan Fair Trade Commission. On the U.S. side, the
"competition laws" refer to the Sherman and Clayton Acts, the Wilson
Tariff Act and the Federal Trade Commission Act and their implementing
regulations. For Japan, it includes the Antimonopoly Law of April 1947 and its
corresponding regulations.
There
are a number of conflictual situations that the Treaty deals with. For example,
one party's antitrust enforcement might involve a national or corporation of
the other country. Moreover, it might pertain to anticompetitive activities
(other than mergers or acquisitions) substantially carried out on the other
party's territory.
The
Treaty will also apply if one or more entities taking part in a merger or
acquisition or a company controlling one or more parties to the transaction is
a domestic company of the other party. Another instance is where the relief
sought demands or bars conduct in the other party's territory. Finally, the
Treaty will govern where the other party has required, encouraged or approved
the conduct being investigated.
Since
mutual notification that one of the above situations exist is key, the Treaty
sets time limits for providing notice. The Treaty also requires each party to
keep the other up to date on amendments to its competition statutes, as well as
to the guidelines, regulations or policy statements relating to these statutes.
Under
Article III, each party's competition authority is to help the other party's
international enforcement efforts to the extent feasible and domestically
lawful. This may include supplying information as to each one's enforcement
directed at behavior that might adversely affect competition in the other party
as well as relevant data asked for by the other party.
The
Treaty sets out criteria in Article IV for deciding whether the parties can,
and should, coordinate their antitrust efforts. These elements include
cost-effectiveness, the relative abilities of the parties to obtain the needed
information and the potential benefits of correlating relief. If one party
believes that anticompetitive activity within the other party is adversely
affecting the first party's economy, the former may, in appropriate cases,
request the other under Article V to initiate anticompetitive measures. Each
requested party agrees to give due consideration to these petitions and to keep
the requesting party informed of any action taken.
The
Treaty suggests a number of factors that each party should take into account
where the enforcement activities of one party are likely to impair the other's
important interests. In addition to assessing the relative impact of the
activities on each other, Article VI mentions the presence or absence of the
accused's intention to have an impact on the markets of the enforcing state,
the degree to which the unlawful activities substantially lessen competition in
each country's markets and the degree of harmony or dissonance between the
enforcing measures and the laws or policies of the other country. Other Article
VI factors include the possibility that both parties will make conflicting
demands on the suspected entities or individuals, the location of relevant
assets and suspects, and the impact of the enforcement activities of one party
on sanctions sought by the other.
In
general, this Treaty is without prejudice to using other bilateral or multilateral
agreements involving Japan and the U.S. and is not intended to derogate from
the requirements of domestic law or international agreements. Article XI (4)
also provides that "Nothing in this Agreement shall be construed to
prejudice the policy or legal position of either Party regarding any issue
related to jurisdiction."
Citation:
State Dept. No. 99‑137, 1999 WL 1083830 (Treaty).
DECLARATORY
JUDGMENTS
In
litigation by American "whistle
blower" seeking statutory award for assisting in prosecution of
multi-million dollar Amway fraud on Canadian government, Ontario Court of Appeals issues declaratory
judgment requiring Minister of National Revenue to personally consider and
decide award question
Dorothy
Edgar is a seventy-year-old resident of the United States who served as an
executive secretary to Edward Engel, vice-president of finance at Amway
Corporation between 1976 and 1979. In 1977, Engel found out that Amway and its
Canadian subsidiary, Amway of Canada Ltd. (ACL), were cheating Canadian customs
authorities out of millions of dollars, using a complex system of phony books
and invoices.
In
January of 1979, Engel and Edgar resigned from Amway and several months later
the government learned about the fraud. Dwight St. Louis, the Regional Manager
of Customs Investigations, phoned Engel and asked for his help but Engel turned
him down. When contacted, however, Edgar cooperated by supplying crucial Amway
documents showing the nature of the scheme and who was involved in it. A senior
Canadian official wrote an internal memo acknowledging the vital nature of the
Amway documents that Edgar had supplied.
When
the RCMP became involved, both Engel and Edgar cooperated in the criminal
prosecution of the Amway companies. After the two companies pleaded guilty,
they had to pay $25 million in fines. The RCMP paid Edgar $31,000 for her aid
and she released the RCMP from any further obligation to her.
Next
the Minister of National Revenue (MNR) brought a civil action against the Amway
companies but did not ask Edgar for her aid. Engel, however, signed a
cooperation agreement with the Ministry and later received $320,000 for his
help.
The
Amway companies reached a $45 million settlement in September of 1989 of which
the "net proceeds" the government actually received were a little
more than $16 million. Regulations under both the Customs and the Excise Acts
empowered the payment of an award out of net proceeds to a person who
"contributed substantially to the detection of a violation of the customs
laws or the Excise Act." The MNR
has "sole discretion" in the matter and the decision is to be final.
[Editorial Note: As we read the statute, the MNR could have awarded Edgar
almost $1.6 million.]
In
December 1986, Edgar had sent in a written request for the "maximum
award" to Edward Sojonky, Q.C., a senior attorney in the Canadian
Department of Justice. St. Louis supported her request. It also turned out that
as early as 1980, St. Louis had written a confidential Investigator's Report to
the Ministry in which he praised Edgar's role in the Amway investigation. After
noting Edgar's important help in both the criminal and civil matters, St. Louis
declared: "[i]n so doing, this person has suffered personal harassment and
in light of the scope of this fraud it is recommended that the maximum
Informant's Award be considered."
At
the first level, the Customs department decided that Edgar was merely a conduit
for Engel and rejected her claim for a separate award. Eventually, Edgar's
claim reached a Deputy Minister who met with Edgar's attorney. The Minister
later advised the attorney that the department would not pay Edgar's claim but
she suggested that the presentation of additional information could lead
to reconsideration.
In
1993, Edgar sued the Ministry on contract, breach of warranty, negligence and
quantum meruit claims. After a late 1997 trial, the judge dismissed all of
Edgar's claims. The judge found that there was no contract nor did St. Louis
have authority to commit the Ministry to an award. Moreover, there was no
negligence since the law authorized the Deputy Minister to decide this type of
matter. Finally, the quantum meruit claim failed because there was no "unjust
enrichment" where the government got back what was lawfully owing to it.
Edgar
appealed the judgment, claiming error in the rejection of her negligence and
quantum meruit claims. Central issues are whether the trial judge erred in
reading the Award Payment Regulations as demanding that the Minister personally
determine whether to grant plaintiff an award. If the answer is yes, then the
Court must decide what is the legal consequence of having action taken by a
Deputy.
According
to the Interpretation Act, a minister can do authorized acts through his
deputies "unless a contrary intention appears." In the Court's view, when the Award statute
goes beyond the common phrase "the Minister may" and requires the
Minister to act "in his sole discretion," it does express a contrary
intention.
"Accordingly,
on the first issue my conclusion is that the trial judge did err in finding
that s. 3(1) of the Customs and Excise Award Payment Regulations did not
require the Minister himself to authorize or refuse a payment to the
appellant." [Slip op. 20]
Plaintiff
argued that the Minister's failure to act in person was negligence, i.e., a
breach of the duty to make sure that the
right official decides. The Court disagrees.
"Throughout the 1980s and 1990s it appears that all
parties were unaware of the relevant regulation. In fact it was repealed in
1986, long after the facts giving rise to Edgar's claim arose, but before her
application for an award. Edgar and the Ministry placed the matter before
various officials in government including, ultimately, the Deputy Minister of
National Revenue. Edgar played a full and active role in this process. She did
so without objection. In such circumstances, it would be wrong, in my view, to
enunciate an absolute rule to the effect that a decision unintentionally made
by the wrong person in a government department constitutes negligence."
[Slip op. 23]
Finally,
the Court discusses the relief options. It could dismiss the appeal but this
would frustrate the twenty-year fight of an elderly woman by forcing her to
start all over in a judicial review proceeding. Secondly, the Court could
exercise its discretion and simply fix the amount of an award. This, however,
would go against a statute that reposes that power solely in the Minister. It
would also seem, in effect, to involve a
judicial exercise of an unwarranted power to order the Crown to pay an award.
Plaintiff's
alternative position was for the Court, in its discretion, to issue a
declaratory judgment that the Minister must with due promptness personally
consider and decide whether or not to hand down an award and, if so, in what
amount. The Court finds this the most practical and equitable solution.
"The
remedy is both useful and necessary in that it settles conclusively the crucial
issue of who must make a decision respecting Edgar's claim. It informs
everyone, including the Minister (who is a party to the action) that, under the
Customs and Excise Award Payment Regulations, only he can decide the appellant's
claim and that he has not in fact done so in the past. Thus, in my view, the
issuance of the declaration is logically and legally defensible; it strikes a
proper balance between the privileged position of a Minister of the Crown and
the unusual, perhaps exceptional, facts of this appeal." [Slip op. 27]
Citation:
Edgar v. Attorney General of Canada, 1999 Ont. C. A. Lexis 576 (December 2, 1999).
EXTRADITION
Second
Circuit holds that, under U.S.-Canada Extradition Treaty, fact that sexual
abuse offenses committed in Canada would be time barred under U.S. law does not
preclude extradition to Canada where no limitations period applies to such
offenses
As a
result of an investigation by the Royal Newfoundland Constabulary, Canadian
authorities charged John E. T. Murphy with felony charges stemming from the
physical and sexual abuse of minors at the Mount Cashel Orphanage in that
province between 1951 and 1960. Canadian law has no statute of limitations for
these offenses.
After
a considerable time, Canadian authorities found out that Murphy had fled to New
York state. In November 1996, they petitioned for his extradition pursuant to
the 1976 U.S.-Canada Treaty on Extradition [T.I.A.S. No. 8237] and the 1991
Amending Protocol [Sen. Treaty Doc. No. 101-17 (1990)]. U.S. authorities
arrested Murphy in May 1998 on an extradition warrant.
The
New York district court magistrate concluded that Murphy was extraditable under
the Treaty. He found probable cause to believe that Murphy had committed the
charged crimes and the case met the requirement of dual criminality. He
rejected Murphy's argument that the running of the U.S. statutes of limitation
on these offenses barred his delivery to Canada for trial. In his subsequent
petition for habeas corpus, the district court agreed with the magistrate and
denied the petition. Petitioner then appealed.
Describing
the case as one of first impression in the Circuit, the U. S. Court of Appeals
for the Second Circuit affirms.
The
Court first points to the relatively narrow scope of its review powers. An
appellate court can only determine
whether the magistrate had jurisdiction, whether the offenses charged lay within the Treaty and
whether any evidence showed reasonable
grounds to believe in the petitioner's guilt. In sum, the court questions only
the legality of the proceedings below. The wisdom of handing over a particular extraditable petitioner is for the
executive branch.
Petitioner
noted that the federal five-year limitation for these offenses runs from the
victims' eighteenth birthday. Under New York law, a five-year limitations
period runs from the eighteenth birthday of the victim or from the date of
reporting to a law enforcement agency, whichever takes place earlier. Here,
more than thirty years has elapsed since petitioner left the orphanage.
Petitioner
admitted the absence of limitations in Canada on these charges but contended
that to extradite him would violate the principle of dual criminality set forth
in Article 2(1) of the Treaty. This provides that "Extradition shall be
granted for conduct which constitutes an offense punishable by the laws of both
Contracting Parties... " Presumably, therefore, the charges against him
would no longer be "punishable" in the U.S.
In
the Court's view, the dual criminality doctrine focuses on the nature of the
conduct as criminalized in the requesting state and in the asylum state, not on
the statute of limitations issue. Hence, it cannot agree with petitioner's
position.
The
Court stresses that the Treaty's limited reference to limitations periods
undercuts petitioner's theory. "Article 4(1)(ii) of the Treaty provides
that ... a fugitive may raise a statute of limitation defense to avoid
extradition, but only one based on the statute of limitation of the requesting
state." [602-03]
While
Article 8 of the Treaty does guarantee the extraditee the right to use
"all remedies and recourses" that the requested state's law provides, the precedents are clear that this
does not apply to the asylum state's limitations periods. "One who commits
a crime in a foreign country simply
'cannot complain if required to submit to such modes of trial ... as the
laws of that country may prescribe for its own people, unless a different mode
be provided for by treaty.' (Cits.)" [603]
Citation:
Murphy v. United States, 199 F.3d 599 (2d Cir. 1999).
FORUM
NON CONVENIENS
Where
naturalized U.S. citizen from Colombia sued Colombian elevator company with
Maine charter in Maine federal court for wrongful death of naturalized husband
while visiting in Colombia, First Circuit upholds dismissal on forum non
conveniens grounds
Originally
from Colombia, the Iragorri family became U.S. citizens in 1989. In 1992, while
the family was in Bogota, Colombia, Mr. Iragorri apparently fell to his death
down an elevator shaft while he was visiting his mother who lived in a
partially finished apartment building.
The
evidence of what happened is in conflict. An elevator mechanic had looked at
the elevator a few hours before the accident but had decided to shut it down
until the repairs could be completed. The doorman testified that he found a
screwdriver holding the elevator doors open on the fifth floor where Iragorri's
mother lived. He also found Iragorri lying at the bottom of the elevator shaft.
While the doorman initially declared that Iragorri was drunk, he later
testified that Iragorri appeared normal.
International
Elevator, Inc. (IEI) maintained the elevator at the apartment building. IEI
began in 1924 as a Maine subsidiary of Otis Elevator. Though Otis sold it in
1988, the company kept its Maine charter and still distributes Otis elevators.
Iragorri's
widow sued several parties for negligence, including IEI. The district court in
Connecticut transferred the case to the federal court in Maine where IEI was
subject to jurisdiction. Upon a defense motion, the Maine district court
dismissed on forum non conveniens grounds. Plaintiff appealed but the U.S.
Court of Appeals for the First Circuit affirms.
As
for the applicable rules, the Court notes that when a defendant moves for
dismissal on forum non conveniens grounds, it must show (a) that an adequate
alternative forum exists and (b) that considerations of convenience and
judicial efficiency strongly favor litigating in the alternative forum. The
movant can usually satisfy the first requirement if it shows that the alternative forum can
address the claim and that the defendant is amenable to service of process
there. The second requirement demands an analysis of the traditional private
and public interest factors, including the access to evidence and a possible
need to view the premises.
As
for the adequacy of the alternative forum, Iragorri argued that Colombia is a
dangerous country. She produced a State Department travel advisory warning U.S.
citizens who travel to Colombia, especially to the city of Cali, about the risk
of violence. The district court, however, found this unconvincing. The travel
advisory singled out the city of Cali and Iragorri was a native of Colombia
presumably aware of its troubles and better able to negotiate its hazards. This
was not an unreasonable conclusion, in the appellate Court's view.
Iragorri
also argued that Colombian courts not grant adequate damages for pain and
suffering (called "moral damages" in Colombia). In the court's view,
this alone does not mean that Colombia falls short in being an adequate forum.
"At worst, a plaintiff forced to litigate a wrongful death action in
Colombia rather than in an American jurisdiction faces a downgrade in remedy,
i.e., an institutional inhospitability [sic] to generous awards for non‑economic
losses. This circumstance, in and of itself, does not impugn the adequacy of
the proposed alternative forum." [Slip op. 5] It is enough that Colombian
courts accept wrongful death cases, that they grant pecuniary and "moral
damages" in such actions, and that the statute of limitations had not run
in Colombia.
As
for the balancing of the relevant private and public interests, the district
court noted that the court or the jury must assess the credibility of the two
principal witnesses, the doorman and the elevator mechanic. Both were Spanish
speakers whose attendance a Maine court could not compel. Assuming the
Colombian courts would cooperate, the parties would have to take their
depositions in Colombia and have them translated into English. Furthermore, IEI
would be unable to implead other potentially responsible parties as it could do
in Colombia.
In
sum, the district court concluded that a Colombian forum could do better
justice because of the relative ease of communicating the most important and
most controversial testimony. As the U.S. Supreme Court has emphasized, where
the lower court has considered all relevant public and private interest factors
and the balancing is reasonable, its decision deserves substantial deference.
Citation:
Iragorri v. International Elevator, Inc., No. 99-1188 (1st Cir. January 28,
2000).
FREEDOM
OF PRESS
European
Court of Human Rights holds that defamation award against Norwegian newspaper
for publishing Norwegian Ministry of Fisheries report on conduct of seal
hunting violated Convention Article 10 on freedom of expression
Bladet
Tromso A/S is a limited liability company that publishes a newspaper of about
9,000 in circulation in northern Norway. Its editor is Pol Stensaas, a
Norwegian national. During March and April of 1988, the Norwegian Ministry of
Fisheries appointed a journalist named Lindberg as a seal-hunting inspector
aboard the vessel M/S Harmoni. His June 30 report claimed several violations of
the seal-hunting regulations, naming five crew members. Inter alia, the report
alleged that some hunters had flayed seals alive.
Relying
on the Public Access to Official Documents Act of 1970, the Ministry decided
not to publish the Lindberg report because it alleged statutory violations. Mr.
Lindberg then sent his report to the Bladet Tromso. The latter published some
of its allegations on July 15 and the rest of the report (with names of crew
members deleted) on July 19 and 20.
In
May 1991, seventeen Harmoni crew members sued Bladet Tromso and Mr. Stensaas
(applicants) for defamation. The following March, the Norwegian District Court
found that six published statements were defamatory and not shown to be true
and declared the statements null and void. One statement related to the
skinning of seals alive and another implied that the seal hunters had
criminally threatened Lindberg. Four statements claimed that unnamed hunters
had killed four harp seals, illegal acts in 1988. The Norwegian court ordered
the payment of damages totaling Nkr 27,000 plus costs. It also denied
applicant's request for leave to appeal to the Supreme Court.
Applicants
filed a case against Norway with the European Commission of Human Rights in
December 1992. In September 1998, the Commission referred the matter to a
seventeen-judge Grand Chamber of the new (as of November 1, 1998) European
Court of Human Rights (ECHR). The ECHR concludes, 13 to 4, that Norway has not
shown that its interference was "necessary in a democratic society."
Accordingly, there was a violation of Convention Article 10.
Article
10(1) provides in part: "Everyone has the right to freedom of expression.
This right shall include freedom to hold opinions and to receive and impart
information and ideas without interference by public authority and regardless
of frontiers." The parties did not
dispute that the measures in question amounted to an "interference by a
public authority" with the applicants' freedom of expression under Article
10(1).
Article
10(2) provides in relevant part that "the exercise of these freedoms,
since it carries with it duties and responsibilities, may be subject to such formalities,
conditions, restrictions or penalties as are prescribed by law and are
necessary in a democratic society, ... for the protection of the reputation or
rights of others..." In this case, there was no dispute on whether the
inference was "prescribed by law" and aimed at a legitimate goal of
"the protection of the reputation or rights of others." On these
issues, the Court agrees with the parties.
The
central dispute, however, is whether the governmental interference was "necessary in a democratic
society." The applicants and the Commission argued that this condition had
not been met whereas Norway took the opposite position. In analyzing the
necessity test, the ECHR has to consider whether the interference conformed to
a "pressing social need," whether it was proportionate to the
legitimate aim pursued and whether the justifications provided by the national
authorities were relevant and adequate.
While
the national government is entitled to a "margin of appreciation,"
this power is not without bounds. It goes hand in hand with a European
supervision by the Court. In this case, the Court has to have the last word on
whether a restriction comports with the freedom of expression protected by
Article 10.
An
important factor in this case is the essential role of the press in a democratic
society. Within proper bounds, its duty is to publish information and ideas on
all matters of public interest. This might sometimes include a degree of
exaggeration or even of provocation. The interest of democratic society in
furthering this vital "watchdog" function limits the national
appreciation margin.
The
ECHR finds the factors considered by the Norwegian court relevant to protecting
reputation. As to their adequacy under Article 10, however, the Court must take
into account the context of the whole seal-hunting controversy during this
period. The ECHR also notes that Article 10 applies not only to ordinary news
but also to matters that may offend, shock or disturb the State or any segment
of its people.
While
the national court found sensationalist elements in the stories in question,
the ECHR has to evaluate this style in the broader context of perennial
seal-hunting issues. During the relevant period, applicant was publishing, in a
balanced manner, its own opinions as well as those of the Ministry of
Fisheries, Greenpeace and the seal hunters. Thus, the main thrust of these
articles was not to accuse the hunters of wrongdoing but to call upon the
government to take steps in light of the Lindberg report to improve the
reputation of seal hunting.
As
to the degree of defamation, the illegal hunting of harp seals was not
particularly serious, in the Court's view. In addition, readers could
understand that Bladet's reports may have somewhat embellished the alleged
threats to hit Mr. Lindberg. The fact that the articles did not name the
accused hunters also reduces their defamatory impact. The newspaper criticisms
thus did not attack every, or any specific, crew member.
The
Article 10 safeguards of press freedom require that the press act in good faith
to put forth accurate and reliable information pursuant to journalistic ethics.
Since the challenged articles set forth factual statements rather than
opinions, the ECHR considers whether the paper's reliance on the Lindberg
report released it from its usual duty to independently verify defamatory
allegations of fact.
As
to the reliability of the report, the Court points out that Mr. Lindberg was
performing official duties assigned by the Ministry of Fisheries. The press
should normally be able to rely in good faith on official reports without
having to undertake independent research. This is so even if the Ministry
itself had later expressed some doubts
about the quality of the report. Thus, Norway failed to satisfy the necessity
test.
Pursuant
to the "just satisfaction" provisions of Convention Article 41, the
Court unanimously orders Norway to compensate applicants within three months of
the date of judgment. These sums include Nkr 323,342 (about $40,400) in
pecuniary damages, Nkr 370,199 (about $46,200)
for costs and expenses and Nkr 65,000 (about $8,000) for additional
interest. Beyond the three-month period, Norway is to pay simple interest at an
annual rate of 12% (the current Norwegian rate) until settlement.
Citation:
Bladet Tromso and Stensaas v. Norway, 29 E.H.R.R. 125, 1999 WL 1142688
(ECHR).
MARITIME
LAW
Fifth
Circuit finds that Jones Act which does bar foreign plaintiffs from bringing
U.S. law claims under Act does not prohibit
foreign seaman from bringing suit under Act for maritime claims arising
under foreign or international law
Section
688(b)(1) of the Jones Act provides that "[n]o action may be maintained
under ... this section or under any other maritime law of the United States for
maintenance and cure or for damages for the injury or death of a person who was
not a U.S. citizen at the time of incident ..." Section 688(b)(2) creates
an exception to this ban if there are no remedies in the country having
jurisdiction or in the home country.
Warren
Roy Jackson, a Honduran seaman not residing in the U.S., injured himself while
working on a vessel off the coast of Mexico and sued the vessel's owner and
operator (jointly "defendants") in a Louisiana federal court. He
based his liability claims on negligence and unseaworthiness arising under (1)
the Jones Act, (2) the tort laws of Mexico and Honduras and (3) the
international lex maritima. He contended that, while the Jones Act may bar him
from making American law claims, it does not expressly preclude foreign
citizens from bringing foreign or
international claims.
The
district court dismissed on the grounds that the Jones Act barred foreign law
claims by foreign seaman and this appeal ensued. The U.S. Court of Appeals for
the Fifth Circuit agrees with the plaintiff and reverses.
In
the Court's view, the plain meaning of Section 688(b)(1) merely prevents a
foreign seaman from bringing a claim under U.S. law. Section 688(b)(2) creates
an exception to this rule. Under it, a foreign seaman can bring an American
maritime law case if he shows that there are no foreign law remedies available
in other fora.
"It
is true that this result arguably creates an anomaly whereby it will be easier
for foreign seamen to get foreign law claims into U.S. courts than for them to
get in maritime claims brought under United States law. The result also seems
contrary to the legislative history of the Jones Act, which suggests that
Congress did not intend for foreign seamen to be able to sue in American courts
except where they would have no other available forum. Nonetheless, the plain
text of the statute dictates this result. There is no ambiguity in Section
688(b)(1); it simply does not refer to foreign law claims. Accordingly, federal
courts are not barred from hearing them." [Slip op. 2]
Citation:
Jackson v. North Bank Towing Corp., No. 99-30030 (5th Cir. Jan. 31, 2000).
TRADE
Kazakhstan
issues new rules for labeling of many specified products, requiring more
detailed labels in both Kazakh and Russian and extending grace period for
compliance
In
January 2000, the Kazakh Government amended the labeling rules applicable to
commercial products. Resolution Number 44 provides a newly revised list of
commodities that have to carry Kazakh and Russian labels. The affected items
include poultry products, dairy products, fats and oils, sweets, cereal
products, liquor, animal feed, tobacco, paint, and electric household items.
The Resolution exempts vitamins, pharmaceuticals, leather goods, fabrics,
kitchen utensils, telephones, radios, and furniture.
The
labels must bear (1) the product name, (2) the country of origin, (3) the
manufacturer, (4) the date of manufacture, (5) the expiration date, (6) storage
instructions, (7) usage instructions, and (8) nutritional information (for food
products).
Resolution
Number 121 amends the requirement published on August 31, 1999, which would
have blocked the entry of non-complying products beginning February 1, 2000.
The grace period for non-complying products will now expire on April 1, 2000.
[Editorial
Note: The Harmonized System Tariff numbers are available upon request from the
U.S. Commercial Service in Almaty, website: www.usis.kz. Please address
specific questions directly to the Committee on Standardization, Metrology and
Certification of the Ministry of Energy, Industry and Trade (Gosstandart),
website: www.banknet.kz/gosstandart.]
Citation:
Kazakhstani Government Resolutions Number 44 (Kazakhstanskaya Pravda of January
14, 2000) & Number 121 (Kazakhstanskaya Pravda of January 26, 2000).
[Summary Report on these requirements by O. Chukreyeva of U.S. Commercial
Service in Kazakhstan, along with English translation, is available through
U.S. Department of Commerce, USA Trade Center, Phone: (202) 482-4522, or
through BISNIS website www.bisnis.doc.gov.]
TRADEMARKS
In
third round of litigation, English Court of Appeal dismisses appeals by
Anheuser-Busch and Czech brewer from denial of their petitions to obtain
exclusive use in United Kingdom of trade marks for "Budweiser" and
"Bud" based on evidence of long-time honest parallel use of marks
In
1875, Anheuser-Busch, Inc.(AB), an American brewer of beer, took on the trade
name of "Budweiser." It chose this name apparently out of admiration
for the brewing methods used for centuries in the Bohemian town of Budweis, as
it was known under the Austro-Hungarian empire.
The
town is now in the Czech Republic and goes by its Czech name of Ceske
Budejovice. An established brewing company in that town named Budejovicky
Budvar N.P. (BB) also claims the right to the Budweiser name and other related
marks. Litigation in the English courts has brought the matter to the English
Court of Appeal for the third time.
In
1919, BB and another brewery in Budweis objected to AB's registration of the
mark on grounds that the mark signified a geographical origin. Neither their
settlement agreement or another one in 1939 specified whether either AB or BB
was entitled to use BUDWEISER as a U.K. trade mark. Between 1920 and 1960, BB
concentrated its labeling on the trade
name, BUDVAR, or the brew (var) from BUDweis. In 1960, however, BB registered
BUDWEISER as an international European mark. From then on it used both
Budweiser and Budvar on its labels, sometimes emphasizing the one, sometimes
the other.
BB
registered "Budweiser Bier" and "Budweis Beer" as
appellations d'origine with the International Bureau for the protection of
intellectual property. The company began commercially delivering beer to Great
Britain with labels that gave prominence to "Budweiser." It obtained its designation "Budweiser
Budvar" in 1967. In 1971, BB registered the mark BUDWEISER BUDVAR
disclaiming any exclusivity in the use of the word BUDWEISER. By midsummer of
1979, BB had sold more than 1,000,000 bottles in the U.K.
Between
1945 and 1973, AB sold its beer only in the U.S. Embassy and in PX stores
selling to U.S. service personnel stationed in the U.K. Between 1962 and 1973,
AB sold from 3,000,000 to 6,000,000 cans of its beer to American military. A
substantial number of British citizens also learned about AB's beer from visits
to the U.S. and from ads in American magazines circulating in Britain.
In
the first round of litigation, the English Court of Appeal ruled that AB's
"passing off" action lacked merit. Hence, both companies were
entitled to use the name BUDWEISER in the U.K.
When
BB applied in 1979 to register BUD as a trade mark, AB contested it in the second round. The courts,
however, rebuffed AB's objection and allowed for concurrent use of BUD as a
natural abbreviation in line with both companies' parallel use of BUDWEISER
itself as authorized in the first round.
The
third round of litigation stemmed from AB's efforts between 1979 and 1989 to
register the mark BUDWEISER in various formats for beer, ale and porter. BB
opposed these attempts. Over AB's objections, BB also sought to register the
BUDWEISER mark for beer, ale and porter for malt drinks other than those sold
in the U.S. Embassy and PX stores in the U.K.
Much
time elapsed until the Registrar ruled on the applications in July of 1997.
Though relying heavily on the records in the prior proceedings, the Registrar
also received some additional evidence. For instance, since 1979, the U.K.
trade of both companies had grown substantially. By 1992, for example, AB's
sales totaled 53.5 million and BB's had reached over 5.5 million.
Evidence
as to the appearance of each other's products showed a clear distinction
between AB's bottles and cans and the bottles of BB. Moreover, on most products
and promotional material, BB used both Budweiser and Budvar together. In
several instances, however, material used to promote BB used the term BUDWEISER
alone. Substantial evidence also showed that those in the beer trade and
members of the public usually refer to BB's product as "Budweiser" or
"Czech Budweiser" or "Bud" or "Czech Bud." The
Registrar ultimately decided that both companies were entitled to use the mark
in the U.K.
The
reviewing Justice in the High Court (Chancery Division) held that there had
been a long-time honest and concurrent use of the BUDWEISER mark by both
companies in the U.K. Moreover, he agreed that traders and customers typically
used "Budweiser" to refer to BB's product. Accordingly, he dismissed
both AB's and BB's appeals. Both sides then went to the Court of Appeals.
After
due consideration, a three-justice panel of that Court dismisses both appeals
and refuses leave to appeal to the House of Lords.
The
first Justice points to section 10 of the old statute that required a trade
mark to distinguish goods of the mark owner from other goods. He also notes
that Section 11 of the Act in part bars the registration as a trade mark of
"any matter the use of which would, by reason of its being likely to
deceive or cause confusion or otherwise, be disentitled to protection in a
court of justice..." The latter
phrase incorporates equitable principles in effect as of enactment of the first
trade mark statute in 1875.
The
Court of Chancery first recognized trade marks as a type of incorporeal
property in the early 19th century. As of 1875, the case law had laid down the
following principles. First, the right to enjoin an infringer did not depend on
proving the latter's intention to deceive. Secondly, the proprietor of a distinctive
trade mark could only acquire property in it by public use. Third, the main
remedy to protect trade marks was the injunction to prevent a deception on the
general public. The courts tried to accommodate this interest, however, to the
traders' vested property in trademarks they had honestly adopted and whose
public use had attracted a valuable goodwill. Finally, in cases of honest
concurrent use, neither owner of the mark could restrain the other from using
it.
The
Justice notes also that, to refuse registration to BB, would seemingly involve
much greater hardship than granting it would cause to AB or to the public
convenience. He cautions against placing too much weight on the outcome of AB's
earlier passing-off action. It did not succeed, despite proof of reputation,
confusion and the risk of deception, simply because AB could not show that it
possessed goodwill in the U.K. as of 1973-74.
Finally,
Section 12(2) provides that the applicant for registration of a trade mark used
by another must bring himself within either honest concurrent use or special
circumstances or both. In light of all the circumstances, the Justice concludes
that BB and AB have made concurrent use of the trade mark BUDWEISER. On this
record (as in the passing off action) there is no sustainable suggestion that
BB's use was other than honest. He also finds that the widespread trade and
customer usage of "Bud" or "Budweiser" when referring to
BB's beer provides "special circumstances" that justify overriding
any objection under Section 11.
In
the opinion of the second Justice, the decisive factor is that there is no way
to impugn the lower court's exercise of its discretion under Section 12(2).
That court focused on the practical realities of the U.K. market place in beer.
Most customers will realize that there are two products bearing the name
Budweiser, one American, the other Czech, and will make up their minds whether
they prefer one over the other.
Correspondingly,
the tradesman will either stock both brands or will carry the brand that his
particular customers appear to prefer. If
he stocks both brands and the customer asks for "Budweiser,"
he will typically ask the customer which brand he wants. To upset the
long-standing concurrent marketing arrangement based on a fear that a few
unwary customers might be confused or deceived would cause disproportionate
hardship on one or the other of the parties here.
The
third Justice concurs generally but differs with the court below in one
respect. He holds that the Section 11 objection was valid in that a court of
equity in 1875 would have barred the use of the competing terms because of the
resulting confusion.
The
Justice, therefore, sees the appeal as turning on the application of Section
12(2). The marks that AB and BB wish to register are identical as are the type
of products. Only the power conferred by Section 12(2) authorizes the
registration of both marks. Fortified by the conclusions of the courts in the
passing off case as in the "Bud" case, the Justice is satisfied that
there has been honest concurrent use of the disputed terms. Finally, the
Justice also states his strong impression that "the circumstances are, by
any standards, special" within Section 12(2). Thus, the High Court judge
properly exercised its discretion under the Act.
Citation:
Anheuser Busch, Inc. v. Budejovicky Budvar, N.P. 2000 WL 438 (CA)(Ct. App. Civ.
Div.)(Smith Bernal Tr., 7 Feb. 2000).
WORLD
TRADE ORGANIZATION
WTO
Panel finds that United States breached Subsidies Agreement because of
countervailing duties it imposed on formerly subsidized U.K. steel and may
require U.S. to change countervailing duty practice with respect to foreign
state-supported companies that later become privatized
A
Dispute Settlement Panel of the World Trade Organization (WTO) has ruled in
favor of the European Union (EU) in its dispute with the U.S. over
countervailing duties imposed on certain steel originating in the United
Kingdom (UK). Affected were certain hot-rolled lead and bismuth carbon steel
products (leaded bars).
The
EU filed this complaint on June 12, 1998, claiming that the U.S. countervailing
duties violated Articles 1.1(b), 10, 14 and 19.4 of the WTO Agreement on
Subsidies and Countervailing Duties ("SCM Agreement"). Brazil and
Mexico were third parties to the dispute and submitted arguments.
In
1993, the U.S. Department of Commerce established a subsidy rate of 12.69
percent on steel imports from United Engineering Steels Ltd. (UES). The
state-owned British Steel Corporation (BSC) had set up UES in 1986. British
Steel plc took over the assets of BSC in 1988. The UK Government then
privatized British Steel plc in 1988 and sold its shares at fair market value.
In 1995, UES became an affiliate of British Steel plc and changed its name to
British Steel Engineering Steels (BSES). British Steel plc (now Corus plc) had
been getting government subsidies before the privatization, but received no
subsidies afterwards.
The
U.S. imposed the countervailing duties in March 1993 for the subsidies that BSC
received before the privatization in the years 1977/78 - 1985/86. The U.S.
Department of Commerce classified the subsidies as non-recurrent and spread
them out over 18 years (which is considered the useful life of production
assets in the steel industry). The rationale of the countervailing duties was
that a portion of the prior subsidies "traveled with" state company
assets.
At
issue are the reviews of the U.S. Department of Commerce (DOC) of the years
1994, 1995 and 1996. In its review of 1994, DOC set a subsidy rate of 1.69 % on
imports from UES. After it reviewed 1995, the DOC raised the subsidy rate to
2.4 % for UES and to 7.35 % for BSES. In the 1997 review, the DOC lowered the
BSES subsidy rate to 5.28%.
The
EU argued that because British Steel paid fair market price for BSC, British
Steel did not benefit from the support granted to the previously state-owned
company. The Panel finds that the DOC had misread the SCM Agreement. Thus, it
failed to show what "benefit" UES and British Steel plc/BSES may have
received through the pre-1985/86 "financial contributions" by the UK
Government (paragraph 6.85).
As
the Panel states: "[N]o countervailing duty may be imposed on an imported
product if no (countervailable) subsidy has been bestowed directly or indirectly
on inter alia the production of that imported product. As a result of the three
administrative reviews at issue, the United States imposed countervailing
duties on 1994, 1995 and 1996 imports of leaded bars, without showing that any
subsidy had been bestowed directly or indirectly on the production of those
imports. ... For this reason, the imposition of countervailing duties as a
result of the ... administrative reviews constitutes a violation of the US
obligation under Article 10 of the SCM Agreement to 'take all necessary steps'
to ensure that its countervailing duties are 'in accordance with' Article VI:3
of the GATT 1994 and the terms of the SCM Agreement." (paragraph 6.86).
Finally,
the Panel recommends that the U.S.
revise its change-in-ownership methodology in countervailing duty cases
(including its administrative practices in deciding such cases) to comply with
the SCM Agreement.
Citation:
United States - Imposition of Countervailing Duties on Certain Hot-Rolled Lead
and Bismuth Carbon Steel Products Originating in the United Kingdom
(WT/DS138/R) (23 December 1999). [See also EURECOM, Monthly Bulletin of
European Union Economic and Financial News, January 2000.]
European
Union tightens travel sanctions imposed on Yugoslav officials. The EU has
again revised its travel sanctions imposed on Yugoslav government officials and
representatives that bar their entry into the EU. The travel sanctions now
apply to "President Milosevic, his family, all Ministers and senior
officials of the Federal and Serbian Governments, and for persons whose
activities support President Milosevic." The EU Council will identify
other barred individuals according to new criteria, which include all persons
indicted by the International Criminal Tribunal on Yugoslavia, and leaders of
the military and police forces. Citation: 2000 O.J. of European Communities (L 21) 4, 26 January
2000.
U.S.
President suspends lawsuits under 1996 Helms-Burton Act for another six months.
President Clinton has again exercised his authority under the Cuban Liberty and
Democratic Solidarity (LIBERTAD) Act to suspend for another six months the
Title III law suit provisions of the Act. These provisions permit lawsuits
against companies involved with Cuban properties that the Cuban government expropriated
after Fidel Castro took power in 1959. The President also noted in his letter
sent to the chairmen of relevant committees in the House and Senate that
important initiatives are under way to promote democracy in Cuba. Citation:
U.S. Department of State Press Statement (January 15, 2000); The Washington
Post, January 16, 2000, page A22.
German
Labor Court affirms discharge of community kindergarten director for collecting
child pornography from Internet. A German Labor Court in Braunschweig, Germany,
has upheld the dismissal of a community child care center's head after police
found 60 child pornography data files on his personal computer. The petitioner
had obtained the material through the Internet and had then printed it out in
color. After the government had charged him with breaching
anti-child-pornography laws, the local administration fired him. It spurned
petitioner's claims that he had collected the material as evidence in a
possible prosecution of child pornography providers. At the time of his
dismissal, no court had convicted petitioner of the charges. The Labor Court,
however, finds that it was not unlawful to fire petitioner without notice and
before formal conviction based solely on the suspicion of pedophilic
tendencies. Citation: Arbeitsgericht Braunschweig, Urteil vom 22. Januar
1999, 3 Ca 370/98 – Kuendigung wegen Kinderpornographie. [Decision is available
in German on website: www.netlaw.de.]
U.S.
Supreme Court declines to review extradition to ICTR of pastor accused of
genocide in Rwanda. The U.S. Supreme Court has denied certiorari in the
case of Elizaphan Ntakirutimana, the former President of the Rwandan Seventh
Day Adventist Church. This clears the
way for his extradition to the International Criminal Tribunal for Rwanda
(ICTR) [a United Nations war crimes tribunal sitting in Arusha, Tanzania]. In
1994, Ntakirutimana allegedly led a Hutu mob to kill hundreds of Tutsi
civilians who had sought shelter in his church. The ICTR indicted him in 1996
and sought his extradition from the U.S. In August 1999, the Ninth Circuit had
held that the U.S. could extradite Ntakirutimana to the ICTR even in the
absence of a formal extradition treaty (see 1999 Int'l Law Update 99). Citation:
Ntakirutimana v. Reno, No. 99-479 (S.Ct. January 24, 2000); The Washington
Post, January 25, 2000, page A25.
