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

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

1999 International Law Update, Volume 5, Number 12 (December).

BANKRUPTCY

British Columbia Supreme Court dismisses bankruptcy petition filed against debtors by stranger corporation formed to help numerous low-income creditors holding unpaid lottery tickets to collect their claims in return for share of profits as abuse of bankruptcy and violation of bans on maintenance and champerty

The Interclaim group of companies (ICG) was set up in 1996. Interclaim Bermuda Ltd. (IBL) is a private Bermuda corporation. Interclaim Holdings Ltd. (IHL) and Interclaim Recovery Ltd (IRL) are wholly-owned subsidiaries of IBL and Irish corporations.

The ICG engaged in the business of buying complex, multi-jurisdictional legal claims and judgments from persons who did not have the means to enforce them. These are acquired from financial institutions, sovereign governments and individuals. IHL acquires these interests; IRL provides services to IHL for investigating and enforcing those claims or debts.

The debtors were engaged in internationally marketing lottery tickets. Some time later, ICG found out that the debtors were trying to shelter millions of dollars owed to buyers of lottery tickets and trade creditors.

ICG tried to get title to the legal claims by paying the ticket buyers and trade creditors a percentage of the worth of their claims. In return, the payees would agree to transfer their interests to ICG and to take part nominally in ICG's plan to recover the debts.

It soon became clear to ICG that it was impracticable to make deals with each of the myriad, unconnected and underfunded victims. It then conceived the idea of petitioning the debtors into bankruptcy under the Bankruptcy and Insolvency Act, listing fifteen buyers of lottery tickets as co-petitioners.

When ICG had done this, the debtors applied to the Supreme Court of British Columbia to set aside the interim receivership order and to dismiss the petition. Their complaint was that ICG was making an improper use of bankruptcy that amounted to unlawful champer­ty and maintenance. The Court grants the application and dismisses the petition.

In the Court's view, the Act sought to furnish a remedy for the creditors of an insolvent debtor, setting up a procedure whereby the Court could see to the pro rata payment of creditors. On the other hand, ICG was trying to utilize bankruptcy as a legal platform to secure a stake in the claims of known and unknown claimants. It would be an unsound policy to let the Act be abused in this novel way.

In addition, the law of champerty and maintenance tries to keep strangers from  intruding into the litigation of third parties without justification. If the assignee of another's claim had a "genuine pre-existing commercial interest" in the litigation, the courts would usually uphold the assignment. Present law, however, does not put up with a stranger getting involved in third-party litigation merely to share in the profits. This would not be a "valid commercial interest."

In this case, ICG had no relationship with the ticket buyers. Although ICG's intervention may have offered claimants the most practical chance to advance their claims effectively, it breached the existing common law ban on maintenance and champerty.

Finally, the Court sees a basic unaddressed issue of access to justice in this case. It invites the higher courts to give thought to whether sound policy might suggest the creation of a new exception to these doctrines in cases similar to this one.

Citation: In re Down, 178 D.L.R. 4th 294 (B.C.S.C. 1999).

CHOICE OF LAW

In litigation between foreign parties over enforcement of  arbitration clauses brought in New York federal court, Second Circuit rules that federal common law developed under Federal Arbitration Act governs interpretation of disputed contracts, not state law

In July 1993, Smith Cogeneration International, Inc. (SCI) entered into a Power Purchase Agreement (PPA) with Compania Dominicana de Electricidad (CDE), a utility owned by the Dominican Republic. SCI was to build, finance and run the plant. Enron, a competitor in this enterprise, set up a joint venture with SCI called the Project Agreement (PA) in November 1993.

Two weeks later, Smith Cogeneration Dominicana (SCD), an affiliate of SCI, formed a limited partnership with Travamark Two B.V., an Enron affiliate (1993 Agreement). This agreement set up SECLP, a limited partnership organized under the laws of the Turks and Caicos Islands, and required SCI to assign its interest in the PPA to SECLP. Thus, the latter was to take over the building and running of the power plant.

Under a 1994 Agreement, SCD assigned part of its interest in SECLP to Enron affiliates, Atlantic Commercial Finance B.V. (ACF) and Enron Reserve I (ER).

The PPA, the 1994 Agreement and the PA all provided for the arbitration of "any dispute...arising under or relating to any obligation or claimed obligation under the provisions of this Agreement." In addition, they all stipulated that the arbitration take place in New York under the Federal Arbitration Act (FAA) and Texas law.

During 1995, ER assigned its general partnership interest to Enron Dominican Republic Operations (EDRO) and ACF assigned its limited partnership interest to Enron Dominican Republic (EDR). The assignees are all Enron affiliates under common control.

It turned out by 1996 that SCI could not meet its financial duties to SECLP. This led to an amendment of the 1994 Agreement to include the Smith Dominicana Holding Limited Partnership (SDHLP) to increase the funds available to SECLP.

In July 1998, SCI filed a suit in the Dominican courts against SECLP, Enron International C.V., Enron Development Corp., ER, ACF, and Travamark. The following month, SECLP and Euron petitioned a New York federal court to compel arbitration of the dispute with SCI and to enjoin SCI from prosecuting the Dominican lawsuit. The district court granted the petition and an appeal ensued. The U. S. Court of Appeals for the Second Circuit affirms. [On the issue of jurisdiction, see JURISDICTION, below.]

SCI contended on appeal that the lower court should have applied the choice-of-law doctrines of New York to find out which contract law governs the construction of the Agreements in question. Moreover, they argued that New York law points toward applying the law of Turks and Caicos. Stressing that this is a federal question case, not one based on diversity jurisdiction, the Court sees no convincing reason to apply New York substantive law merely because it is the forum. Moreover, the Agreements themselves invoke federal law, i.e., the FAA, as to the issues of enforcing arbitration.

"When we exercise jurisdiction under Chapter Two of the FAA, we have compelling reasons to apply federal law, which is already well‑developed, to the question of whether an agreement to arbitrate is enforceable. (Cits.) Under the circumstances here, where there is little connection to the forum and the Agreements between the parties state an intention to be governed by the FAA, proceeding otherwise would introduce a degree of parochialism and uncertainty into international arbitration that would subvert the goal of simplifying and unifying international arbitration law." [Slip op. 8]

In addition, there is the question of what contract law applies to the interpretation of the Agreements. On this point, the 1994 Agreement declares that "matters of interpretation of the provisions of this Agreement shall be governed by Texas law in any such arbitration." [id.]

"It is thus clear that neither party intended New York law, procedural or otherwise, to govern any aspect of their dispute. As no party is domiciled in New York, and no transactions have taken place here, New York has no connection to this litigation other than it is the location of the arbitration. While the language quoted immediately above might justify looking to Texas law on assignments, neither party argued that it applied. Thus, we will apply the body of federal [common] law under the FAA." [id.]

Citation: Smith/Enron Cogeneration Limited Partnership, Inc. v. Smith Cogeneration International, Inc., 1999 WL 1114706 (2nd Cir.(N.Y.)).

ENVIRONMENTAL LAW

Fifth Circuit dismisses environmental law action brought by Indonesian citizen that challenged mining operations and "cultural genocide" by U.S. companies in Indonesia as not violating customary international law under Alien Tort Claims Act

Tom Beanal is a community leader in Irian Jaya, Indonesia. He brought an action in a Louisiana federal  court against Freeport-McMoran, Inc. and Freeport-McMoran Copper & Gold, Inc. (Delaware corporations, hereinafter jointly referred to as Freeport). Freeport operates an open pit copper, gold and silver mine in the Jayawijaya Mountain in Irian Jaya, Indonesia, known as the "Grasberg Mine."  The mine covers approximately 26,400 square kilometers.

In his complaint, Beanal alleged that the mining operations violate international law, through human rights violations and "cultural genocide," destroying the environment and religious symbols of his tribe, the Amungme.

Beanal invoked jurisdiction under (1) 28 U.S.C. Section 1332 on diversity or alienage jurisdiction, (2) The Alien Tort Claims Act (ATCA), 28 U.S.C. Section 1350, and (3) The Torture Victim Protection Act of 1991 (TVPA), Section 1, 28 U.S.C. 1350 note.

The district court initially dismissed the complaint for failure to state a claim and instructed Beanal to restate his claims with more specificity. The district court later dismissed Beanal's second and third amended complaints. Beanal appealed but the U.S. Court of Appeals for the Fifth Circuit affirms.

ATCA confers subject matter jurisdiction when (1) an alien sues, (2) for a tort, (3) that was committed in violation of the "law of nations" or a treaty of the United States. See Kadic v. Karadzic, 70 F.3d 232, 238 (2d Cir. 1995) [1995 Int'l Law Update, December issue, page 5]. Since Beanal does not claim any violation of a United States treaty, the issue is whether Beanal states a claim for violations of the "law of nations," that is, customary international law.

As for individual human rights violations, Beanal alleges under ATCA that Freeport has committed mental torture, death threats and house arrests. Beanal's allegations, however, lack any names, dates, locations, times or any facts that would put Freeport on notice as to what conduct supports the nature of the claims.

The Court agrees with the district court that Beanal's claims lack factual specificity. Therefore, it does not reach the issue of whether state action is required to sustain an ATCA action for individual human rights violations. The Court notes that Beanal had alleged some specific instances of abuses that third parties had experienced in his second amended complaint, but the district court had struck them because Beanal lacked standing to assert the rights of third parties.

As for environmental torts and abuses, Beanal alleges that Freeport dumps 100,000 tons of tailings per day in nearby rivers and thereby impairs aquatic life and may cause flooding.

"Nevertheless, "it is only where the nations of the world have demonstrated that the wrong is of mutual and not merely several, concern, by means of express international accords, that a wrong generally recognized becomes an international law violation in the meaning of the [ATCA].' ... Thus, the [ATCA] 'applies only to shockingly egregious violations of universally recognized principles of international law.' ... "

"The sources of international law cited by Beanal and the amici merely refer to a general sense of environmental responsibility and state abstract rights and liberties devoid of articulable or discernable standards and regulations to identify practices that constitute international environmental abuses or torts. Although the United States has articulable standards embodied in federal statutory law to address environmental violations domestically [see, e.g., The National Environmental Policy Act (42 U.S.C. Section 4321 et seq.) and The Endangered Species Act (16 U.S.C. Section 1532)], nonetheless, federal courts should exercise extreme caution when adjudicating environmental claims under international law to insure that environmental policies of the United States do not displace environmental policies of other governments." [Slip op. 14-15]

Finally, as for genocide and "cultural genocide," the Court once again finds that Beanal's allegations were conclusory and lacked specificity. In particular, it is doubtful that the international community has universally accepted "cultural genocide" as a violation of international law. Thus, the Court declines to recognize cultural genocide as a discrete violation of international law.

The conventions, agreements and declarations cited by Beanal and the amici curiae proclaim amorphous rights to enjoy culture or cultural development. They do not, however, identify what constitutes an act of cultural genocide. Therefore, it would be difficult to apply these vague and declaratory international documents to Beanal's claim.

Citation: Beanal v. Freeport-McMoran, Inc., No. 98-30235 (5th Cir. November 29, 1999).

EUROPEAN UNION

In case referred by Greek Supreme Court of Cassation, European Court of Justice holds that Greek statute requiring an automatic lifetime expulsion from Greece of any foreign national convicted for drug offenses is incompatible with basic freedoms to travel guaranteed by EU law as applied to EU citizen and was not justified by public policy

The Haraklion Criminal Court in Greece charged Donatella Calfa, an Italian citizen, with possessing and using banned drugs. After a trial, the Court convicted and sentenced her to three months in prison and to a lifetime expulsion from Greece.

In the absence of compelling (e.g., family) reasons, Greek law requires expulsion of foreign nationals upon conviction for drug offenses. The Minister of Justice, after no less than three years, has discretion to annul the exile. The law does not permit a permanent and total expulsion of Greek citizens but, in the case of a serious drug offense, the court may bar him or her from living in certain areas of Greece for not more than five years.

Ms. Calfa appealed her conviction to the Arios Pagos (Supreme Court of Cassation). This Court, in turn, referred a question of EU law to the European Court of Justice (ECJ). The Greek court was concerned with the compatibility of its law with the provisions of the EC Treaty relating to freedom to provide services.

In its response, the ECJ first notes that the principle of freedom to furnish services includes the unrestricted right of an EU tourist to visit other Member States to benefit from its services. Although the Court seldom interferes with matters of local criminal jurisdiction, domestic criminal statutes must not restrict the basic freedoms assured by Community law. Expelling all foreign nationals for drug convictions sets up a barrier to the exercise of these freedoms by EU citizens.

On the other hand, the Court notes, Member States may deem that the use of drugs amounts to such a danger to its society as to warrant special measures against foreign nationals. To qualify under a public policy exception, however, there must be "a genuine and sufficiently serious threat to the requirements of public policy affecting one of the fundamental interests of society."

Being a derogation from a fundamental Treaty principle, the ECJ must interpret the public policy exception  narrowly. EC law deals with special measures relating to the movement and residence of foreign citizens and explicitly limits the right of Member States to exile them on public policy grounds. For example, such a measure must rest exclusively on a showing that the personal conduct of the individual constitutes a genuine threat to the demands of public policy. The mere fact of a criminal conviction is not enough.

The Greek drug law, however, imposes expulsion automatically upon a drug conviction. It takes no account of the personal conduct of the particular individual or of the existence of a threat to Greek public policy.

The ECJ therefore concludes that the Greek sentencing law puts up such a barrier to the freedom to provide services, to the freedom of movement of workers and to the freedom of establishment under EU law as to fail any justification based on public policy.

Citation: Criminal Proceedings against Donatella Calfa, Judgment of Court in Case C-348/96 [1999].

EXTRADITION

Where extraditee's attorney sought disclosure of British diplomatic letter received by U.S. Justice Department and Department eventually released it, the U.S. Supreme dismisses extraditee's appeal as moot

Sally Croft, a British citizen, was a follower of the Indian guru Bhagwan Shree Rajneesh and lived in the Rajneeshpuram community in Oregon in the 1980s. While living in the community, she allegedly participated in a conspiracy to kill a U.S. attorney in Oregon. The U.S. subsequently requested her extradition from England.

During the extradition proceedings, Croft's attorney, Leslie Weatherhead, sought disclosure of a 1994 letter sent by British Foreign Office to the U.S. Department of Justice under the Freedom of Information Act (FOIA) [5 U.S.C. Section 552]. The Justice Department denied his request on national security grounds.

The district court reviewed the letter in camera and agreed with the Justice Department. The U.S. Court of Appeals for the Ninth Circuit held that the Government had failed to show how the letter's release would damage security interests. (See 1998 International Law Update 117.)

In the meantime, however, while the case was pending before the U.S. Supreme Court, the U.S. Department of Justice had decided to release the letter to Weatherhead because the substance of it had already become public through disclosure by British diplomats.

With an 8-1 decision, the U.S. Supreme Court therefore vacates the judgment of the Court of Appeals and dismisses the case as moot. Justice Antonin Scalia dissents without further explanation.

Citation: United States v. Weatherhead, No. 98-1904 (S.Ct. December 3, 1999); Washington Post, December 4, 1999, page A2.

EXTRADITION

In reviewing U.S. petition to extradite fugitive from U.S. for computer crime against Florida branch of American Express, House of Lords rules that its Computer Misuse Act of 1990 made all charged conduct subject to prosecution under English law

At the request of the United States, British authorities arrested a man named Allison in London under the Extradition Act of 1989. The U.S. charge was that, between January and June of 1996, Mr. Allison had conspired with Joan Ojomo within U.S. jurisdiction to gain unauthorized access to the American Express (Amex) computer system with intent to commit (1) theft and (2) forgery. There was also a charge of conspiracy to gain such access (3) to modify the contents of the Amex computer system without lawful authority.

Joan Ojomo was an Amex credit analyst in the credit section of its office in Florida. Contrary to her authority, she accessed 189 accounts not specifically assigned to her and gave out confidential information thus obtained to Allison and others. The recipients used this data to encode other credit cards and to supply PIN numbers. Under the alleged scheme, they ended up withdrawing about $1,000,000 from ATM machines.

At his arrest, Allison was carrying forged Amex cards. Moreover, a London ATM machine had photographed him using one of the stolen or forged cards to obtain money.

In June 1997, the Bow Street Magistrate committed Allison on the third charge but not on the first two. Allison then sought Habeas Corpus, claiming that none of the three charges were "extradition crimes" under the 1989 Act and the United States of America (Extradition) Order 1976, SI 1976 No. 2144. The U.K. government secured review of the Magistrate's ruling on charges (1) and (2).

The Divisional Court handed down its ruling in May 1998. The Court dismissed both the Habeas Corpus proceeding and the judicial review proceedings. It did, however, certify a legal question of general public importance about the proper construction of the Computer Misuse Act of 1990 (CMA). The House of Lords allows the appeal.

Interpreting the Act of 1989, the Lords note its reference to the relevant Order in Council on extradition in effect just before September 26, 1989, and in any amendments to it. The Order in Council dealing with extradition to the U. S. is 1976 No. 2144. It effectuates and schedules the Extradition Treaty between the two countries.

Article III of the Treaty and the annexed schedule do not refer to computer crime. An offense under the CMA, therefore, would have to come with the residual "other offense" class.

Moreover, the parties do not dispute that violations of CMA Section 2 come within Treaty Section (1)(a) as an offense punishable for more than one year in prison. It is also conceded that the charged activities would be felonies under U.S. law as required by Treaty Section (1)(c). Allison's Habeas Corpus application, however, questions whether the offenses are extraditable under U.K. law [Section (1)(b)] and therefore as conspiracies within Section (2). [Editorial Note: an almost universal requirement under extradition treaties is that of "dual criminality" as to each charge on which extradition is sought.]

The Law Lords all agree on the issues raised by the certified question. The CMA contains provisions that supplement the provisions of the 1989 and earlier Acts. It also makes computer crime an offense and makes it extraditable under the law of the U.K.

The evidence before the magistrate showed that Joan Ojomo's conduct fell squarely within the provisions of Section 1(1) of the CMA. That is, she intentionally caused a computer to give her access to data that she knew she was not authorized to access.

In the Law Lords' view, the lower court also erred in its rejection of charges (1) and (2). Properly construed, the CMA does not authorize an operator to access data merely because it is similar to that specifically authorized. "The[] plain words leave no room for any suggestion that the relevant person may say: 'Yes, I know that I was not authorised to access that [specific] data but I was authorised to access other data of the same kind.'"

Citation: Regina v. Bow Street Magistrates Court and Allison, [1999] 4 All E.R. 1, [1999] 3 W.L.R. 620, 1999 WL 477953 (HL).

HAGUE SERVICE CONVENTION

Ninth Circuit certifies questions to Washington Supreme Court dealing with Washington's 90-day deadline for serving defendants in context of Hague Service Convention, issue being whether German Central Authority may be considered defendant's "agent" so that service is perfected for purposes of tolling state statute once Central Authority has received complaint from plaintiff

The Ninth Circuit has certified two questions to the Supreme Court of Washington that involve the tension between Washington's 90-day deadline for serving defendants and the Convention on The Service Abroad of Judicial and Extrajudicial Documents in Civil Or Commercial Matters (November 15, 1965, 20 U.S.T. 361, T.I.A.S. No. 6638) (the Convention) that governs the transnational service of process among signatory countries.

Gary Dean Broad seriously injured his hand by getting it caught in a trolley roller of the "Kingdome Mannesmann Facade Maintenance System."  The system had been sold by Mannesmann AG of Germany. Broad and his wife sued Mannesmann in a Washington federal court based on alienage. Mannesmann had never done any business in Washington State.

Under Washington law, once plaintiff files a complaint, he must serve the defendant within 90 days (Wash. Rev. Code Section 4.16.170). Since Mannesmann is a foreign company, the plaintiffs served Mannesmann pursuant to the Convention.

Germany requires foreign plaintiffs to address their requests for service of process solely to the Central Authority  designated under the Convention (Annex, Article 7a(1)). Unlike Washington law, however, the Convention does not set any time limit for effecting service. The German Central Authority (here the Bavarian State Ministry of Justice) failed to serve the defendant within Washington's 90-day period. This was partly because plaintiffs had failed to submit German translations of the documents.

Subsequently, the district court dismissed the action because plaintiff had not perfected service within 90 days. Plaintiffs appealed. Noting the tension between Washington State law and treaty law, the U.S. Court of Appeals for the Ninth Circuit finds that the application of Washington law in the Hague Convention context is uncertain enough to justify certification to the Washington Supreme Court.

"The plaintiffs can avoid a limitations bar under state law in one of two ways. Although the Hague Convention requires actual service, it does not speak to the question of whether the central authority constitutes an agent or substitute for purposes of meeting the limitation period. Indeed, the Hague Convention does not mention limitations periods at all. It is unclear whether Washington deems a designated central authority in a signatory country a 'substitute' or 'agent' for purposes of executing service within 90 days. Since the position of the state court is uncertain on whether substitute service exists in this case, certification on the question is appropriate."

"Second, the plaintiffs can avoid a limitations bar to their lawsuit if an exception to the limitations period applies. Plaintiffs argue that the time limit may be tolled under the state's nonresident defendant statute [Wash. Rev. Code Section 4.16.180]. ... If, as the defendant contends, Washington does not deem a designated central authority in a signatory country a 'substitute,' then the nonresident tolling statute may apply. This may be particularly true since the Hague Convention does not guarantee service of process, but merely facilitates it. The Washington Supreme Court has not addressed the issue of whether the state's nonresident tolling statute applies where a plaintiff must comply with the Hague Convention." [Slip op. 9-10]

The Ninth Circuit therefore requests the Washington Supreme Court to answer the following questions: "(1) whether state law deems a designated foreign central authority a 'substitute' or 'agent' for purposes of meeting Washington's 90-day time period for service of process; (2) alternatively, whether state law recognizes an exception to the 90-day time limit for service of process where plaintiffs must, under the Hague Convention, relinquish control over serving a defendant to a foreign central authority for an indefinite period of time." [Slip op. 2]

Citation: Broad v. Mannesmann Anlagenbau AG, No. 98-35263 (9th Cir. November 23, 1999).

INTERNET

German Appeals Court reverses conviction of former CompuServe manager for allegedly facilitating telegraphic distribution of pornography through Internet

On November 17, 1999, a German district court (Landgericht) in Munich overturned the conviction of the former CompuServe manager, Felix Somm, for facilitating the distribution of child pornography through the Internet.

A Munich trial court (Amtsgericht) had convicted Somm on May 28, 1998, and had sentenced him to two years in jail (suspended) and a fine of approximately $57,000. See 1998 Int'l Law Update 69. The conviction was based on the German Information and Communication Service Law (IuKDG) which vaguely outlines the responsibilities of Internet service providers as to the content to which they provide access.

The district court agreed with Somm that he had only provided German customers with access to the information available on CompuServe USA servers and could not be considered an accomplice to the distribution of illegal materials. It also found that Somm did not have the technical means to keep materials off the net that are considered illegal in Germany.

Citation: Decision of the Landgericht Muenchen (district court Munich); Deutsche Press-Agentur (news agency) report of November 17, 1999; The Week in Germany (newsletter of German Information Center, New York), November 19, 1999. Several Internet websites provide information on the Somm case, including www.heise.de, www.cyber-rights.org, and www.qlinks.net. The previous decision of the trial is available through both websites in English and in German.

INTERNET

In case where plaintiff sought injunction against e-mail "spam," German trial court finds that German law does not prohibit it and rejects analogy to United States cases involving "captive audience"

A German trial court in the city of Kiel has held that the unsolicited sending of promotional e-mails (commonly called "spam") is not yet prohibited. Therefore, the recipient of such unsolicited e-mails cannot obtain an injunction. Furthermore, the court held that such e-mails do not interfere with the basic right-of-information freedom (see Article 5, paragraph 1, sentence 1, of the German Grundgesetz).

The plaintiff subscribes to Internet and e-mail service through Germany's largest Internet provider, T-Online. He also maintains a non-commercial website where he provides information about sailing and other recreational activities. On this website, he had the following statement: "Warning: the unsolicited sending of promotional e-mails to my e-mail address may harm your wallet. As for risks and side effects, please consult your attorney." He received, among other things, an e-mail from his service provider, asking him to include advertising banners.

The plaintiff had argued that the German Federal Code (Bundesgesetzbuch, BGB) prohibits unsolicited e-mails [see Sections 1004, 823, paragraph 1, and 823, paragraph 2 (violations of basic rights)]. The Court disagrees.

In particular, the Court holds that the law cannot protect the plaintiff from such e-mails in advance because there is no law protecting against unsolicited e-mails nor does spam infringe any basic rights. Furthermore, the plaintiff can easily delete the e-mail in question without undue effort. The Court also notes that to grant plaintiff such an injunction would lead it down a slippery slope toward enabling all citizens to  fence off all undesired communications. For example, one traveler might request not to be addressed by homeless people in a train station who ask for money.

There are German legal scholars who have implied a "right to tranquility," using the U.S. jurisprudence regarding a "captive audience" as an analogy. The Court doubts that the term "captive audience" is appropriate in interpreting the German Federal Code and that the U.S. cases involving a "captive audience" are apposite. For example, the cited U.S. case involved oral political propaganda on a public bus. This scenario, however, implicates political opinions and the inability to escape the propaganda by simply pushing a button.

Citation: Amtsgericht Kiel, Urteil vom 30. September 1999, 110 C 243/99, E-Mail-Werbung VI. [Decision is available in German on website: www.netlaw.de.]

JURISDICTION (SUBJECT MATTER)

In federal litigation between foreign corporations over enforcement of arbitration clause, Second Circuit concludes that New York Arbitration Convention and Federal Arbitration Act grant federal jurisdiction regardless of whether U.S. is "center of gravity" for parties or transactions

[For the preliminary facts, see CHOICE OF LAW above.] In July 1998, SCI filed a suit in the Dominican courts against SECLP, Enron International C.V., Enron Development Corp., ER, ACF, and Travamark. The following month, SECLP and Euron petitioned a New York federal court to compel arbitration of the dispute with SCI and to enjoin SCI from prosecuting the Dominican lawsuit. The district court granted the petition and an appeal ensued. The U.S. Court of Appeals for the Second Circuit affirms.

SCI's threshold contention on appeal is jurisdictional. He maintained that, pursuant to the New York Convention [The Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958], the district court lacked jurisdiction over plaintiffs' suit.

Both sides agree that Chapter II of the FAA is the only basis for federal jurisdiction here. Section 203 of the Act declares that "[a]n action or proceeding falling under the Convention shall be deemed to arise under the laws and treaties of the United States."

"The Convention and the implementing provisions of the FAA set forth four basic requirements for enforcement of arbitration agreements under the Convention: (1) there must be a written agreement; (2) it must provide for arbitration in the territory of a signatory of the convention; (3) the subject matter must be commercial; and (4) it cannot be entirely domestic in scope." [Slip op. 4]

Though this case seems to fit the four demands of the Convention and the FAA, SCI argued for an added "center of gravity" test. By this it apparently meant that some key element of the arbitration must lie in a state party to the Convention. This is not the case here. SCI and SECLP are incorporated in the British Virgin Islands and in the Turks and Caicos Islands respectively, and the power plant is in the Dominican Republic. None of these states is a party to the Convention.

The Court first notes that, in referring to the “Contracting State,” Article II of the Convention only denotes the situs of the court where a party seeks recognition of an arbitral award. It does not require that the enforcing court otherwise have jurisdiction over one or more of the parties.

"Similarly, the FAA in 9 U.S.C. Section 202 makes no mention of a requirement that the arbitration involve parties subject to the jurisdiction of Contracting States or that the location of the dispute be 'centered' in such a State. While 9 U.S.C. Section 202 explicitly excludes domestic disputes from Chapter Two of the FAA, it does not make any distinctions among foreign disputes or foreign parties." [Slip op. 5]

Moreover, the Convention's traveaux preparatoires show an intent to remedy several of the shortcomings found in the prior Geneva Convention of 1927. "Most importantly, the Convention eliminated the requirement in the Geneva Convention that the parties be subject to the jurisdiction of Contracting States. (Cits.) Under Article II of the Convention, the citizenship of the parties to the agreement and the location of the disputed subject matter are not controlling." [id.]

SCI also relies on the reservation allowed by Article I(3) of the Convention. It provides that "any State may on the basis of reciprocity declare that it will apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State."

The Court, however, sees no trace of a "center of gravity" test in this provision. "All that the reciprocity provision requires is that the award be granted in a 'Contracting State.' In this case, the arbitration agreements between SCI and Enron contemplated arbitration in the United States‑‑a signatory to the Convention. If the arbitration results in an award, it will have been granted in a signatory State and will be enforceable either here or in another Contracting State." [Slip op. 6]

The present controversy met the four standard elements noted above, hence no further test need apply. In the Court's view, the lower court did have jurisdiction under both the Convention and Chapter Two of the FAA.

Citation: Smith/Enron Cogeneration Limited Partnership, Inc. v. Smith Cogeneration International, Inc., 1999 WL 1114706 (2nd Cir.(N.Y.)).

WORLD TRADE ORGANIZATION

U.S. and China reach bilateral agreement for China's WTO accession in which China agrees to reduce duties on imports and to eliminate export subsidies

On November 15, 1999, after six days of turbulent negotiations in Beijing between the team of the U.S. Trade Representative Charlene Barshefsky and the Chinese Trade Minister Shi Guangsheng, the U.S. and China reached a bilateral agreement for China's accession to the World Trade Organization (WTO). China has been negotiating its WTO accession for over 13 years.

The comprehensive agreement provides access to the Chinese market for U.S. agricultural and industrial products and services. China agreed to reduce both tariff and non-tariff barriers to agricultural and industrial goods. For example:

- China will reduce duties from an overall average of 22.1% to 17%.

- China will eliminate export subsidies.

- U.S. automobile companies may provide auto financing.

- China will reduce tariffs on automobiles from the current 80%-100% to 25%.

- China will grant access to U.S. companies including banks, insurance companies, and telecommunications businesses.

- Telephone companies may own up to 49% of telecommunications ventures upon China's WTO accession, and up to 50% two years following China's accession.

With this agreement, China is a step closer to WTO accession. China still must conclude bilateral negotiations with a number of other WTO members, including the European Union and Canada. Thereafter, China must complete multilateral negotiations in Geneva for the accession protocol that sets forth the legal framework, and complete its domestic procedures for accession.

Citation: U.S. Trade Representative press release 99-95 (November 15, 1999) and press remarks of USTR Barshefsky; WTO press release (15 November 1999); Statement of Japanese Minister Takashi Fukaya on the China-U.S. Agreement on WTO Accession, Ministry of International Trade and Industry (MITI) (November 15, 1999), available on the MITI website www.miti.go.jp; The Ministry of Foreign Affairs of Japan (MOFA), Press Conference by the Press Secretary (16 November 1999), available on the MOFA website www.mofa.go.jp.

OECD governments agree on Consumer Protection Guidelines for E-Commerce. On December 8, 1999, the governments constituting the Organization for Economic Co-operation and Development (OECD) have agreed on common guidelines for business-to-consumer transactions through the internet. Internet-based business transactions are referred to as "e-commerce." The "Recommendation of the OECD Council Concerning Guidelines for Consumer Protection in the Context of Electronic Commerce" were approved by the OECD Council to ensure that consumers who shop on-line over the internet receive the same protections as someone who orders from a catalogue or buys in a regular store. The guidelines are expected to create voluntary compliance within the private sector because increased consumer confidence will allow this new business to develop its full potential. In particular, the guidelines require (1) "Transparent and Effective Protection" equivalent to those provided in regular business transactions, (2) "Fair Business, Advertising and Marketing Practices," as well as (3) "Online Disclosures" about the business and the transaction that the consumer is about to agree to. The guidelines do not apply to business-to-business transactions. Citation: OECD news release (8 December 1999). The full text of the guidelines is available on the OECD website www.oecd.org.

U.S. and Austria finalize new extradition treaty. On October 27, 1999, the U.S. (through Under Secretary Loy) and Austria (through Ambassador Peter Moser) signed protocols of exchange and exchanged ratification documents for a new U.S.-Austria Extradition Treaty. The new Treaty had been signed in January 1998, approved by the U.S. Senate in October 1998, and ratified by U.S. President Clinton in January 1999. It will enter into force on January 1, 2000, replacing the previous sixty-year-old treaty. Citation: U.S. Department of State press statement (October 27, 1999).

International Court of Justice allows Equatorial Guinea to intervene in Cameroon v. Nigeria case. In an order dated October 21, 1999, the ICJ granted the request of Equatorial Guinea to intervene in the litigation over the Land and Maritime Boundary between Cameroon and Nigeria. The intervenor stressed that it had no wish to take part in those aspects of the proceeding that dealt with the land boundary between the two original parties. Since it was negotiating with its neighbors about its own maritime boundary, Equatorial Guinea merely intends to explain to the Court its legal rights in the hopes that the ICJ's ruling on the parties' maritime boundary would not affect those rights. What prompted the intervention was the fact that Cameroon's Memorial had arguably disregarded the median line between itself and intervenor, a position that Cameroon had never hinted at during their negotiations. Neither of the original parties had objected to the intervention request. Citation: International Court of Justice Press Communiqué 99/44: Land and Maritime Boundary between Cameroon and Nigeria. [Full text of order will appear on ICJ website at http://www.icj‑cij.org.

U.S. and Canada resolve NAFTA dispute over sport fishing and tourism services. The U.S. and Canada have settled their dispute over Ontario's regulation of sport fishing and tourism services. Since 1994, Ontario had attempted to limit the amount of certain fish that U.S. fishermen could catch in lakes along the Minnesota-Ontario border unless they "stay overnight" in Ontario and use Ontario facilities. Pursuant to consultations under Article 2006 of NAFTA, Ontario has revoked those requirements. This ends the Section 301 investigation the U.S. had begun in April 1999. Citation: U.S. Trade Representative press release 99-94 (November 5, 1999).

China issues anti-cult law to combat Falun Gong and other movements regime deems undesirable. On October 30, 1999, the Standing Committee of the National People's Congress (NPC) issued an Anti-Cult Law to restrict "religious cults" such as the banned Falun Gong. The law requires courts, prosecutors, police and the administration to control and subdue any cult activity. The law provides severe penalties for cult leaders, including the death penalty. China has also published additional information about Falun Gong that allegedly shows its negative characteristics. For example, China claims the Falun Gong has ruined more than 1400 lives by driving members into insanity and death, and that it has stolen 59 classified State documents. It also accuses the leader Li Hongzhi of enriching himself by publishing heretical ideas. [N.B. On July 22, 1999, the Chinese Ministry of Civil Affairs had banned the "Research Society of Falun Dafa" and the Falun Gong organization.] Citation: Newsletter, Embassy of the People's Republic of China, No. 99-21 (November 1, 1999); The Economist (U.S. Edition of November 6, 1999). [For additional information on Falun Gong matter, please consult Internet, for example, through website of Chinese Embassy in U.S. (www.china-embassy.org) and website "Falun Dafa in North America" (minghui-ca.FalunUSA.net).

U.S. and Greece cooperate in protecting cultural property. The U.S. Embassy in Greece and the Greek Ministry of Culture have signed a Memorandum of Intent to protect cultural property. The purpose is to curb the pilferage of Greek antiquities. The Memorandum identifies the categories of artifacts that are at risk and is the first step in controlling the illegal transfer from Greece to the U.S. — This procedure follows the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import and Transfer of Ownership of Cultural Property (Nov. 17, 1970) [823 U.N.T.S. 231]. The U.S. currently has similar Memoranda in place with Bolivia, El Salvador, Guatemala, Peru, Mali, Canada, and an emergency agreement with Cyprus. Citation: U.S. Department of State Press Statement (December 3, 1999).

U.S. opens satellite communications market to foreign competition. The U.S. Federal Communications Commission (FCC) has issued a final rule (upon reconsideration) to streamline its DISCO II Order and to simplify the procedures for foreign market participants to the U.S. for fixed-satellite services. It permits the operators of in-orbit non-U.S. satellites to request authority to provide space segment capacity service to licensed earth stations in the U.S. (under DISCO II, such a request can only be made by an earth station operator). Also, it permits earth station licensees to access a particular non-U.S. satellite to provide fixed-satellite service in the conventional C- or Ku-bands without further regulatory approval, once that non-U.S. satellite is authorized to serve the U.S. Citation: 64 Federal Register 61791 (November 15, 1999).

EU makes decisions restricting arms trade in Cambodia, petroleum for Yugoslavia, EU access for Yugoslav individuals, and flight restrictions on the Taliban in Afghanistan. The European Union (EU) has issued a variety of restrictive measures regarding politically sensitive areas. First, the EU issued Council Decision 1999/730/CFSP to control the spread of small arms and light weapons in Cambodia. The EU will assist the Cambodian government by providing an EU Project Manager and a budget of EUR 500,000 for this purpose. Second, with Council Regulation 2421/1999, the EU has amended the existing regulation prohibiting the sale and supply of petroleum and certain petroleum products to certain parts of Yugoslavia. It permits petroleum to be delivered to two destinations within the Republic of Serbia upon authorization, namely, the city of Nis and the city of Pirot. [The Washington Post reported on December 7, 1999, at page A22, that fuel trucks arrived in Yugoslavia to provide fuel to Nis, which is controlled by Milosevic's Serbian opponents]. Third, the EU has amended the list of individuals who are prohibited from entering the EU. The list includes Yugoslav President Slobodan Milosevic, his family, as well as government officials and supporters. Fourth, with Council Common Position 1999/727/CFSP, the EU has issued restrictive measures against the Taliban of Afghanistan. It prohibits flights by or on behalf of the Taliban, and freezes Tali­ban funds according to U.N. Security Council Resolution 1267 (1999). Citation: 1999 O.J. of the European Communities (L 294), page 1 [Taliban], page 5 [Cambodia], page 7 [petroleum for Yugoslavia], 16 November 1999; (L 314) 36, 8 December 1999 [undesirable Yugoslav individuals].

German district court finds Internet domain can be attached to satisfy debt. A district court in Essen, Germany, has held that Internet domains (such as "www.something.com") represent economic value and are comparable to a transferable permit or a license. They may be purchased, sold, rented, and even auctioned off. Therefore, they may be attached like any other property to satisfy unpaid debts. The court also rejected the respondent's argument that Internet domains are "work product" that could not be attached. Citation: Landgericht Essen, Beschluss vom 22. September 1999, 11 T 370/99 - Pfaendung von Domains. The decision is available in German on the website www.netlaw.de.

EU amends provisions regarding counterfeit and pirated goods in light of the new Community trade mark requirements. The European Union has issued a new regulation that amends the implementation measures for Regulation 3295/94 on counterfeit and pirated goods in light of the new EU trademark rules [Editors' Note: In the EU, a "regulation" is directly applicable to the Member States without further implementation.] It provides a "Standard Form for an application for action in respect of a Community trade mark" with which an applicant can notify the customs authorities of possible trade mark infringements. The regulation applies retroactively from July 1, 1999, on. Citation: Commission Regulation (EC) No 2549/1999, 1999 O.J. of the European Communities (L 308) 16, 3 December 1999.