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.

2000 International Law Update, Volume 6, Number 9 (September).

EXTRADITION

Ninth Circuit holds that, in extradition proceedings, Secretary of State must arrive at final decision as to whether requesting state is likely to torture extraditee upon surrender as condition for district court’s power to review through habeas corpus

Since a judge in Tijuana, Mexico had issued a warrant for his arrest in 1991 for homicide, robbery, and other crimes that allegedly occurred in 1989, U.S. authorities found and arrested Ramiro Cornejo-Barreto in 1996. Mexico then formally requested the extradition of Cornejo-Barreto under the U.S.-Mexico Extradition Treaty (31 U.S.T. 5059; T.I.A.S  9656).

The U.S. is a party to the U. N. Convention Against Torture and Other Forms of Cruel, Inhuman or Degrading Treatment or Punishment (G.A. Res. 39/46, 39 U.N. GAOR Supp. No. 51 at 197, U.N. Doc. A/RES/39/708 (1984) which entered into force for the U.S. on November 20, 1994 (“the Torture Convention”). Mexico is also a party to this Convention.

Cornejo-Barreto, who is a permanent U.S. resident, filed a petition for habeas corpus, alleging that police would again torture him in Mexico if the U.S. extradited him. He expressly referred to Article 3 of the Torture Convention which prohibits countries from surrendering individuals (“refoulement”) who will face torture in the requesting country.  At the 1997 hearing before a magistrate judge, Cornejo-Barreto provided evidence that the State Police in Tijuana had tortured him in 1989 by means of electric shocks and repeated beatings.

The Magistrate issued an extradition certificate and an order of commitment, noting that the police are likely to torture petitioner again upon his surrender to Mexico. Nevertheless, the district court denied habeas corpus, and this appeal ensued. The U.S. Court of Appeals for the Ninth Circuit affirms the district court’s denial of habeas corpus, but directs that its decision is without prejudice to the filing of a new petition in case the Secretary of State actually decides to surrender Cornejo-Barreto.

Under the “rule of non-inquiry,” extradition courts usually do not inquire into the quality of the justice systems in requesting countries. This rule, in the Court’s view, does not bar review of the actions of the Secretary of State since federal legislation implementing the Torture Convention supersedes that rule.

The U.S. Department of State adopted regulations to implement those portions of the “Foreign Affairs Reform and Restructuring Act” (FARR) of 1998 (Pub.L. 105-277, Section 2242) that relate to the Torture Convention. Section 2242(a) states that it is “the policy of the United States not to expel, extradite, or otherwise effect the involuntary return of any person to a country in which there are substantial grounds for believing the person would be in danger of being subjected to torture ...”

Under the FARR Act, Congress granted the agencies (here the Department of State) the initial responsibility for carrying out Article 3 of the Torture Convention. Under the implementing federal legislation, the Administrative Procedure Act (APA) allows an extraditee who is making a torture claim to employ habeas corpus to review the Secretary of State’s discretionary decision to extradite. Thus, an APA challenge is ripe for review, the Court points out, only after the Secretary has finally decided to hand over a fugitive who alleges he is likely to be tortured. In the absence of final agency action here, however, the appellate Court need not reach the merits of Cornejo-Barreto’s claim.

Citation: Cornejo-Barreto v. Seifert, No. 98-56827 (9th Cir. July 11, 2000).

FORUM SELECTION CLAUSES

Where Greek government revoked license to build casino near Athens, District of Columbia Circuit holds that, despite repudiation of substantive contract terms, forum-selection clause in license was severable and required plaintiff to litigate in Greek courts

In 1994, the Greek Ministry of Tourism licensed a consortium of investors, including Rosemarie Marra as 9% partner, to run a gambling casino at Flisvos on the outskirts of Athens. The Greek government would be a partner in the enterprise to receive a percentage of annual profits plus an annual fee. After thirty years, the Greek government would acquire title to the gambling complex.

The license featured a forum-selection clause. It provided that disputes between the government tourist agency and the consortium “arising from the application of this license, the interpretation or performance of its terms, the extent of the rights and obligations of the State and the holder of the license, and in general any matter that may occur concerning a license, shall be settled by the Greek courts.”

Matters soon went downhill. There was local political opposition to the casino site and the central government began to negotiate for a new location. Finally, the Prime Minister, Andreas Papandreou, had to step down due to illness in the midst of it all. Vaso Papandreou, the new Minister of Tourism, revoked the consortium’s license ab initio.

Most of the partners challenged the revocation in the Greek courts. Alleging breach of contract and unlawful expropriation of property, however, Marra sued in a U.S. federal court seeking damages of $1,600,000,000 from Papandreou and various government agencies (“the Greek Government” or defendants).

The Greek government moved to dismiss based on a claim of state immunity from suit under the Foreign Sovereign Immunities Act. Marra replied that the government’s efforts to recruit U.S. investors brought it within the “commercial activity” exception under Section 1605(a)(2). When the court allowed Marra limited jurisdictional discovery, including the deposing of Greek officials, defendants sought a writ of mandamus from the Court of Appeals to vacate the order.

The Court of Appeals granted the writ (“Papandreou I”). Conceding that the discovery might well turn up facts relevant to the immunity issue, it expressed concern that too much discovery could turn the evaluation of the immunity into an encroachment on its inherent benefits, i.e., freedom from undue litigation. It directed the lower court to explore alternative non-merits routes to dismissal.

Back in the lower court, the Greek government moved to dismiss based on the forum-selection clause. Applying M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), the district court granted the motion (“Papandreou II”). In dismissing, the court set two conditions: (1) the Greek government would have to waive any applicable statute of limitations if plaintiff files a Greek suit within six months and (2) defendants would have to appoint a U.S. agent to receive service of process on their behalf.

Marra brought the present appeal from the dismissal and defendants cross-appealed, claiming that the conditions breached the mandate in Papandreou I. The U. S. Court of Appeals for the District of Columbia Circuit now affirms in part and dismisses in part.

Having agreed with defendants that they could claim immunity to the merits of the contract claim while waiving it as to the forum clause, the Court points out that each side has set up a contractual “conundrum.”  Marra contends that defendants cannot logically repudiate the license ab initio while demanding that the court enforce the forum-selection clause of that same contract. Defendants reply that Marra cannot recover damages for breach of the license agreement while at the same time resisting the force and effect of the contract’s forum clause.

In the Court’s view, “[Marra’s] ‘repudiation’ shoe does not quite fit here, for two reasons. Adherence to the forum-selection clause is not an obligation owed by Marra to the Greek government, but a condition precedent to suit under the contract, binding equally on both parties.” 

“This is a distinction with a difference, since the ‘rationale behind the rule that a repudiation of a contract by one party will excuse the other party from the duty to perform contractual obligations and conditions, is the prevention of economic waste, in the sense that, following a clear repudiation, the other party should not be required to perform the formal, economically wasteful, and useless act of further performing.’ (Cit.) This purpose of preventing ‘wasteful’ and ‘useless’ acts of performance is not served in any way by excusing Marra from compliance with the forum-selection provision.” 

“Moreover, the rule urged by Marra is contrary to the conceptual understanding, noted above, of a forum-selection clause as severable from the contract in which it is contained. Therefore while the Greek government's denial of its contractual obligations to Marra relieves her of her duty to perform her side of the contract's terms (for instance, she is no longer obligated to pay her annual license fee), that action does not work a repudiation of the forum-selection clause unless it is specifically directed at the clause itself. Were this not the case, ... the value of a forum-selection clause would be significantly diminished, since it will often be the case that a plaintiff can plausibly allege that the defendant's nonperformance constitutes a ‘repudiation’ of its contractual obligations precluding it from recourse to the clause.” [1125]

In the Court’s view, suit against a contract repudiator can only hold him liable according to the terms of the contract. That means that if an arbitration or forum-selection clause sets up a condition precedent, the plaintiff must show that the condition is performed, prevented or waived. “So too here;  under the terms of the Flisvos license, Marra was obliged to sue in the Greek courts in order to recover for breach of the license. The Greek government wins, in our view, the battle of dueling absurdities.” [1125-26]

With apparent relief, the Court finally notes that defendants’ cross-appeal involves no “ontological dilemmas.” Marra did not file a Greek suit within six months of the dismissal and thus has no interest in serving defendants’ in the United States. The issues  in the cross-appeal are thus moot.

Citation: Marra v. Papandreou, 216 F.3d 1119 (D.C. Cir. 2000).

GUN CONTROL

Citing cross-border trade in illegal guns with United States, Canadian Supreme Court upholds constitutionality of 1995 Firearms Act; imposition of licensing and registration obligations on owners of ordinary firearms was valid exercise of Parliament’s criminal law powers

In 1995, the Canadian Parliament amended existing gun control statutes by enacting  the Firearms Act, S.C. 1995, c. 39. Its most notable addition to these laws relates to a requirement of the licensing and registration of a class of guns often called “ordinary firearms” or “long guns” or “[hitherto] unrestricted firearms.”

Under the new law, the chief firearms officer may conduct a background check and deny the five-year revocable license to an applicant with a criminal record having to do with drug or violent offenses or with a history of mental illness. Before acquiring a firearm, the applicant has to pass a course dealing not only with the basic rules of gun safety but also with the legal duties that go with owning a firearm. An applicant may obtain judicial review of  the refusal to grant a license or of its later revocation.

In addition, the Act criminalizes the possession of an unregistered firearm of any type. A federal official will maintain a Canadian Firearms Registry to record all licenses and registration certificates plus all imported, exported, lost and stolen guns.

The Province of Alberta plus the other provinces and a number of interested organizations challenged the power of the federal Parliament to pass such a law via a reference to the Alberta Court of Appeal. In a 3 to 2 vote, the Court dismissed the reference. Alberta then appealed to the Supreme Court of Canada. That Court upholds the validity of the Act as a proper exercise of Parliament’s criminal law power.

 “The determination of which head of power a particular law falls under is not an exact science. In a federal system, each level of government can expect to have its jurisdiction affected by the other to a certain degree. (Cit.)   Laws mainly in relation to the jurisdiction of one level of government may overflow into, or have ‘incidental effects’ upon, the jurisdiction of the other level of government. It is a matter of balance and of federalism: no one level of government is isolated from the other, nor can it usurp the functions of the other.” [para. 26]

In the Court’s view, the Firearms Act in “pith and substance” aims to increase public safety by placing controls on access to firearms to deter their misuse by owners and users. Among the “mischiefs” the Act tries to address include the illegal trade in guns both inside Canada and across the border with the United Sates as well as the role of guns in violent crime, suicide and accidental shootings. The Act allows background checks in an effort to keep guns out of the hands of those who have shown themselves to have been incapable or unwilling to use them safely. Safety courses should help law-abiding owners to avoid accidental deaths and injuries.

Moreover, this is a valid use of parliamentary powers over criminal law. Historically guns have been looked upon as hazardous products posing considerable risks to the safety of the Canadian people. The Parliament could reasonably conclude that an effective mode of gun control is through clear criminal prohibitions backed up by appropriate criminal penalties.

Moreover, the Act’s extension of federal regulation to ordinary guns does not interfere with existing provincial regimes on property regulation and, even as to ordinary guns, grapples with the hazardous aspects of firearms and their misuse. There is no intent to regulate the manufacture of, or trade in, guns. Hence, these controls lie within Parliament’s criminal law power.

Additionally, the Court does not have to sever the registration provisions from the licensing aspects. Though licensing addresses individual citizens and registration deals with the guns themselves, both are intertwined facets of raising the level of gun safety by cutting down on the accidental as well as the deliberate misuse of all types of firearms.

Nor does the Firearms Act encroach on provincial powers so as to unbalance Canadian federalism. There are four main points to be made here. First, just because guns are a form of “property” is not enough to prove that all gun control laws are in pith and substance a provincial matter. Second, the Act does not get in the way of provincial powers to regulate the property and civil rights aspects of gun ownership and use. Third, assuming (but not deciding), that the provinces can legislate as to the property aspects of firearms, the “double aspect” doctrine authorizes the federal Parliament to deal with safety issues as to ordinary firearms. Finally, the Act does not let the federal government stray into new fields because gun control has been a staple of federal legislation since Confederation.

Moreover, misuse of firearms clearly raises moral issues. Even if there were none, however, the Parliament can still use the federal criminal law power to ban dangerous conduct which has little relation to public morality. Northern, rural and aboriginal Canadians also argued that the Act did not allow for their special needs. Even so, this does not impair Parliament’s jurisdiction to pass it. Finally, objections to the cost and efficacy of the Act are not germane to separation of powers concerns. If, as the Court holds, Parliament has acted constitutionally, it is the judge of the likely effectiveness of the Act.

Citation: Reference re Firearms Act (Can.),  File No. 26933, 2000 S.C.C. 31 (Can. Sup. Ct. June 15).

HUMAN RIGHTS

European Court of Human Rights unanimously rules that failure of Turkish tribunals to carefully evaluate Iranian citizen’s asylum claims that her allegedly adulterous behavior would likely subject her to stoning or flogging upon her deportation back to Iran violated Articles 3 and 13 of the European Convention

Hoda Jabari, a citizen of Iran, is now living in Istanbul, Turkey. Afraid of being convicted for adultery, she had become a fugitive from Iran in 1997. Adultery is a serious offense in Iran with a potential sentence of stoning to death or flogging. Illegally in Turkey, she attempted to fly from Istanbul to Canada through France using a forged Turkish passport. The Paris police, however, sent her back to Istanbul. At the Istanbul airport, police arrested Jabari and authorities ordered her deportation to Iran.

She then sought asylum in Turkey but her petition failed because she had not filed it within five-days of her arrival in Turkey. The U.N. Human Rights Commission branch office in Ankara granted her refugee status in February 1998. Two months later, however, the Ankara Administrative Court dismissed her petition to avoid deportation as untimely. It ruled that no obvious illegality tainted her deportation and that sending her back to Iran would not cause her irreparable harm.

Jabari then filed an application with the European Commission of Human Rights in February 1998 which the Commission found to have been partly admissible in October 1999. Before the European Court of Human Rights, a Chamber of seven judges heard Jabari’s application.

Applicant contended that her deportation to Iran would violate Article 3 of the European Convention on Human Rights (B. Carter and P. Trimble, 1999-2000 Int’l Law Sel. Docs. at 472). It provides that: “No one shall be subjected to torture or to inhuman or degrading treatment or punishment.”  (Id. at 473)  She also relied upon Article 13 which states: “Everyone whose rights and freedoms as set forth in this Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”  (Id. at 476)

In the Court’s view, the fundamental nature of Article 3 rights requires it to rigorously scrutinize her claim. The Court unanimously concludes that the Turkish authorities did not meaningfully evaluate applicant’s claim on its merits because of its lateness. The mechanical application of  this brief time period, however, did not square with applicant’s Article 3 rights. When the Ankara Administrative Court unduly limited its judicial review to the technical legality of applicant’s deportation, it ignored the more critical issues as to whether her fears were substantially founded in fact.

The Court took judicial notice of current surveys of the situation in Iran showing that stoning as a punishment for adultery is still on the statute books and that the authorities may invoke it. Iran still looks upon adulterous activity as a serious violation of Islamic law. Jabari’s deportation to Iran would give rise to a real danger of subjection to treatment that would violate  Article 3.

Given the irreversible nature of the injury that applicant might suffer in violation of Article 3, the Ankara Administrative Court also breached Article 13 by failing  to provide an effective domestic law remedy. That provision requires an independent and rigorous evaluation of the merits of a claim that deportation would amount to a potential breach of Article 3.

Citation: Jabari v. Turkey (Eur. Ct. Hum. Rts. July 11, 2000). [Press release of Registrar of Court of July 11, 2000. Text of decision and press release are available on Court’s website “www.echr.coe.int”].

PATENTS

English Court of Appeal dismisses appeal of inventor in unsuccessful suit against English patent agents for failing to make sure that American patent searchers it had engaged did proper and thorough search of American patents on jukeboxes

Gill Jennings & Every (GJE) is a firm of patent agents with an English practice. Woolcott & Company, Inc. is a reputable American corporation generally engaged in patent searching since about the mid 1970's. Arbiter Group PLC came up with a new sort of jukebox in the mid 1980's and began selling it in the U.K. market in 1987 as the “Discmaster.” 

Interested in breaking into the U.S. market, Arbiter needed advice on whether this would be lawful in view of existing U.S. “Patent B.”  In a November 12, 1987 telex, GJE asked Woolcott to provide their opinion as to whether Patent B was still in force. Six days later, Woolcott telexed back that: “Searches through the records of the US Patent and Trademark Office have revealed that the patent is still in force.”

It was not until 1991 that Arbiter found out that Patent B had run out on September 20, 1987  for failure to pay maintenance fees. Concluding that it was too late to succeed in marketing its jukebox in the U.S., Arbiter filed an English action against Woolcott claiming it had breached its duty and against GJE for breach of contract and of the duty of due care to a client.

GJE defended on the theory that they had delegated to Woolcott’s expert searchers the assignment of determining the validity of Patent B and had a right to rely on their information. Arbiter contended on the contrary that GJE should have gotten confirmation in writing or some other evidence that corroborated  Patent B’s status.   

When Woolcott failed to appear at the trial, the judge entered a default judgment against it. As to GJE, however,  the trial judge found that it was not liable to plaintiff. According to the evidence, since 1980 a U.S. patent holder has had to pay a maintenance fee every four years computed from the date the U.S. Patent and Trademark Office (USPTO) had granted the patent. The USPTO publishes the expirations in its Official Gazette which comes out weekly but sometimes falls behind its due dates. It is also a frequent practice for some patent attorneys to check the status of a patent by phone and, for a small fee, he or she can obtain confirmation in writing. Although Woolcott made its inquiries in November 1987, the Gazette  did not get around to reporting the demise of  Patent B until December 8, 1987.

From its adverse judgment, Arbiter noted its appeal. The Court of Appeal, however, dismisses it.  In the chief opinion, the Court explains its reasoning. “... [I]t was accepted that no U.K. agent would know what was available in the U.S. Patent Office or what searches needed to be carried out. Therefore it is not clear how such an agent would be able to monitor what had been done, whether by a U.S. searcher or a U.S. Patent attorney. If a U.S. Patent attorney had said, for example, that the only way one can find out the status of a U.S. patent is by referring to the Patent Office Gazette, no U.K. Patent agent (except one who had taken particular trouble to find out the law in that country) would know whether that was or was not right. So being told what had been done would not put him in a position of being able to correct errors and ensure that what was possible to be done had been done.”

“I have come to the conclusion that if I only take into account the evidence of the experts, it is not possible to say that GJE did something which would not have been done by a competent English patent agent or failed to do something which would have been done by a competent English patent agent. So it appears to me that GJE did not breach its duty of care to the plaintiff. It did what any competent agent here would have done, that is to say, it relied upon the result reported to it by what were regarded as highly competent U.S. Patent searchers, within the scope of their expertise and in relation to a matter which was easy to determine accurately in the United States.” [N/A] On the other hand, the record does show that Woolcott had breached its duty of care but, as the Court suggests, it is not worth pursuing.

Citation: Arbiter Group P.L.C. v. Gill Jennings & Every, No. Chanf. 99/0303/3, 2000 WL 741944 (CA) (Ct. App. Civ. Div. 26 May)(Smith Bernal Tr.).

PRIVACY

EU Commission issues Decision on adequacy of protection of personal data transferred from EU to U.S., and responds to questions asked by U.S. Department of Commerce

Under Directive 95/46/EC, EU Member States may allow the transfer of personal data to a third country only if the third country ensures an adequate level of privacy protection. It considers the transfer of data from the EU to the United States adequately protected if organizations comply with the “safe harbor” privacy principles for the protection of personal data transferred from a Member State to the United States (“the Principles”), and the “frequently asked questions” (the FAQs) providing guidance for the implementation of the Principles issued by the U.S. Department of Commerce on July 21, 2000.

Decision 2000/520/EC regards all data transfer that obeys the Principles, the FAQs, and certain other documents, as conforming with EU data protection requirements (Article 1). EU Member State authorities, however, may suspend data flows if a violation of the Principles occurs or is likely (Article 2). The Annexes to the Decision contain the following documents:

(1) Annex I: A reprint of the “Safe Harbor Privacy Principles” issued by the U.S. Department of Commerce, which provide guidance on data transfer from the EU to the U.S.

(2) Annex II: The FAQs, which answer specific questions, such as whether there are “Journalistic Exceptions,” what the role of “Data Protection Authorities” is, how an organization can self-certify its adherence to the Safe Harbor Principles, and what “confidential commercial information” means.

(3) Annex III: “Safe Harbor” Enforcement Overview, an outline of the authority of the Federal Trade Commission under Section 5 of the Federal Trade Commission Act to take action against those who fail to protect the privacy of personal information.

(4) Annex IV: Damages for Breaches of Privacy, Legal Authorizations and Mergers and Takeovers in U.S. Law, which explains U.S. law regarding claims for damages for breach of privacy, when personal information may be used in the U.S. in a manner inconsistent with the Safe Harbor Principles, and the effects of mergers and takeovers on the application of the Safe Harbor Principles.

(5) Annex V: An explanatory letter from the Federal Trade Commission that summarizes its stance regarding online privacy.

(6) Annex VI: A letter from the U.S. Department of Commerce explaining its role in protecting consumer data received by airlines.

(7) Annex VII: A statement that the EU recognizes the U.S. Federal Trade Commission and the U.S. Department of Transportation as the proper agencies to investigate and redress privacy complaints in this regard.

The EU Member States must comply with this Decision within 90 days. The same issue of the Official Journal of the European Communities contains similar Decisions on the protection of personal data provided in Switzerland and Hungary.

In a related matter, a Member of the European Parliament (MEP) submitted a question to the EU Commission regarding internet surveillance by American secret services. The MEP states that U.S. institutions, namely the National Security Agency (NSA) and the CIA, under the “United States Plan for Information System Protection,” can monitor all internet information worldwide through a “federal intruder detection network” (Fidnet).

The Commission answers by referring to the privacy protection provided by Directives 95/46/EC and 97/66/EC. Both Directives, however, grant exemptions for the protection of important public interests such as security and crime prevention. The Commission also notes that the alleged interception of communications for national security reasons falls outside its competence as the EC Treaty defines it.

Citation: Commission Decision of 26 July 2000 pursuant to Directive 95/46/EC .... on adequacy of protection provided by safe harbour privacy principles and related frequently asked questions issued by U.S. Department of Commerce (2000/520/EC), 2000 O.J. of European Communities (L 215) 7, 25 August 2000; Question of Member of European Parliament on “Internet surveillance by American secret services,” 2000 O.J. of European Communities (C 225 E), 12, 8 August 2000.

SOVEREIGN IMMUNITY

In case where contract of Yemenite company with U.S. for supply of U.S. wheat fell through for failure of Yemenite company to provide letter of credit, Eleventh Circuit finds jurisdiction over Ministry as controlling Yemenite company and holds FSIA “arbitration” and “commercial activity” exceptions applicable

In May 1996, S & Davis, an Alabama company, agreed to supply 300,000 metric tons of wheat to the General Corporation for Foreign Trade and Grains (“General Corporation”) of Yemen. According to S & Davis, the parties drew up and signed the contract in Yemen “according to the instructions of the Ministry of Supply & Trade,” and “all aspects of the contract were reportedly discussed with the Minister of Supply who appeared to [be] the principal in the transaction.” The contract specified that the parties would arbitrate contract disputes using the Grain and Feed Trade Association (GAFTA) in London.

As it turned out, however, General Corporation, could not obtain a letter of credit as the contract demanded. S & Davis next invoked the arbitration clause. Although the original GAFTA arbitration panel found that General Corporation had breached the contract by failing to open a letter of credit, it nevertheless found that the Ministry was not liable and that no damages were due to S & Davis. The appellate arbitration panel affirmed the finding of contract breach but awarded S & Davis approximately $17,000,000 in damages against General Corporation.

In December 1998, S & Davis sought enforcement of the award in federal district court under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards [21 U.S.T. 2517, T.I.A.S. 6997; 330 U.N.T.S. 3] (“New York Convention”). The Ministry claimed immunity under the Foreign Sovereign Immunities Act of 1976 (FSIA). The district court, however, found that there was sufficient FSIA subject matter jurisdiction and personal jurisdiction to proceed. The Ministry filed an interlocutory appeal but the U.S. Court of Appeals for the Eleventh Circuit affirms.

This appeal involves the denial of sovereign immunity based on the “commercial activity exception” to sovereign immunity which has a “direct effects” component. See 28 U.S.C. Section 1605(a)(2). The “direct effects” component of the commercial activity exception to sovereign immunity, the Court declares,  is inextricably intertwined with the “minimum contacts” component of personal jurisdiction.

Here, General Corporation had admitted that it was an agency or instrumentality of the Republic of Yemen. The Ministry, however, denied this relationship without providing evidence that General Corporation was an independent entity, such as incorporation papers and other specific information about the company. Therefore, the Ministry did not sufficiently rebut S & Davis’ proof that the company was a government entity.

As for subject matter jurisdiction under the FSIA, a plaintiff must overcome the presumption that the foreign state is immune from suit in the United States by showing that the conduct that forms the basis of its complaint falls within one of the statutorily defined exceptions.

The Court proceeds to consider various exceptions to sovereign immunity. First, a waiver may be express or by implication under the narrowly construed Section 1605(a)(1). Here, the Court finds that an agreement to arbitrate in a signatory country (here: England), without more, does not demonstrate the requisite intent to waive sovereign immunity.

Second, sovereign immunity may be inapplicable by virtue of the arbitration exception of Section 1605(a)(6)(B), which denies sovereign immunity in proceedings to confirm an award that “may be governed by a treaty ... calling for the recognition and enforcement of arbitral awards.” This exception does apply because there was a sufficient showing that General Corporation is an agency or instrumentality under the control of the Ministry, and because the New York Convention is precisely the kind of treaty Congress had in mind.

In addition, there was clearly “commercial activity” within the meaning of Section 1605(a)(2). “Commercial activity” includes import-export transactions involving sales to, or purchases from, companies in the U.S. In sum, the Ministry is not entitled to sovereign immunity under the FSIA because it falls within either the “arbitration exception” or the “commercial activity exception.”

Finally, the Ministry contested personal jurisdiction by claiming that it had been involved in only one regulatory act, the approval of the contract to import wheat. That contract was allegedly ”negotiated, executed and performable in Yemen.” The Court disagrees.

“Having determined that the Ministry was involved in more than ‘one regulatory act,’ the contract itself anticipates further contacts between the two nations. One of the parties to this contract was a United States corporation who was required to provide ‘U.S. wheat No. 2 or better” (none of which is grown in Yemen) to be imported to Yemen. Performance logically required contact and interaction with the United States, as discussed in the contract (such as designating a U.S. bank for payment and a point of departure for shipping). ... [T]he contract did not state it was subject to the laws of Yemen, there were direct dealings between parties of both countries ..., and the direct effect occurred with the defendants’ failure to open a letter of credit at the New York bank. ‘When minimum contacts have been established, often the interests of the plaintiff and the forum in the exercise of jurisdiction will justify even the serious burden placed on the alien defendant.’” [Slip op. 35]

Citation: S & Davis Int’l, Inc. v. Yemen, The Republic of, Minister of Supply and Trade, No. 99-108880 (11th Cir. July 21, 2000).

TAXATION

Russian Federation amends tax code provisions dealing with VAT, Excise Taxes, Personal Income Tax and Unified Social Tax with substantial impacts on companies and individuals

On August 5, 2000, the President of the Russian Federation, Vladimir Putin, signed into law four chapters of Part Two of the Russian Federation Tax Code and Federal Law No. 118-FZ “On the Implementation of Part Two of the Russian Federation Tax Code and Amendments to Certain Federal Laws on Taxation” (hereinafter “the implementation law”). The changes affect VAT, Excise Taxes, Personal Income Tax, and Unified Social Tax. The official gazette “Rossijskaya Gazeta” published the amendments on August 10, 2000. The majority of the amendments enter into force on January 1, 2001. The changes include:

- VAT (Chapter 21 of the Tax Code): The VAT rates and general structure remain, but other provisions will affect most businesses in Russia. (1) The laws change the “place of service” rules that determine whether a transaction occurred in Russia for VAT purposes. (2) CIS countries are treated the same way as all other foreign countries. (3) The new provisions repeal VAT exemptions such as for license fees for the use of intellectual property and narrow the exemption for pharmaceuticals.

- Personal Income Tax (Chapter 23): The amendment repeals the progressive tax rates and introduces a 13% flat tax rate which applies to almost all categories of income for Russian tax residents. The new provisions tax dividends and any other income received by persons who are not Russian tax residents at 30%. Thirty-five percent is the new tax on Income from gambling, lottery prizes, and other specified sources.

- Unified Social Tax (Chapter 24): The new laws replace the employer contributions to four separate social benefit funds with one unified social tax.

- Excise Taxes (Chapter 22): To make up for the reduction in federal taxes, the amendments increase the excise taxes for gasoline and other oil products by almost 300%.

The implementation law repeals the Housing Fund Tax and reduces (and eventually repeals) the Road Users Tax. Regional authorities may grant tax exemptions for the regional portion of federal taxes, and municipal governments may have additional profits taxes of up to 5% of taxable profits.

Citation: Part Two of Russian Federation Tax Code, Report prepared by Alexander Chmelev and Evgeny Astakhov, Baker & McKenzie, Moscow Office, distributed by U.S. Department of Commerce, BISNIS, Phone: (202) 482-2293, Website “www.bisnis.doc.gov.”

VIENNA CONVENTION (CONSULAR RELATIONS)

In case where two Mexican nationals were transporting illegal aliens, Seventh Circuit assumes (without deciding) that Article 36 of Vienna Consular Convention grants individual rights but nevertheless declines to keep out inculpatory statements made where authorities violated Vienna Convention

October 21, 1998, was a bad day for the alien smuggling operation of Juan Chaparro-Alcantara and Jaime Romero-Bautista. First, their van broke down in South Jacksonville, Illinois. When the police came, they found out that the 13 passengers were undocumented Mexicans. Finally, the police arrested the two men for transporting these aliens.

Both defendants are Mexican nationals permanently residing in the U.S. An officer informed them of their Miranda rights, but failed to mention their rights under the Vienna Convention to contact the Mexican consulate [Vienna Convention on Consular Relations, April 24, 1963, 21 U.S.T. 77, T.I.A.S. 6820, 596 U.N.T.S. 261] The two then made inculpatory statements.

Article 36(1)(b) of the Consular Convention provides in part that: “The said [arresting] authorities shall inform the person concerned without delay of his [consular notification] rights under this sub-paragraph.”

When defense counsel got wind of the Immigration and Naturalization Service’s (INS) plan to deport the passengers, he objected, claiming that some of the passengers had made statements that contradicted the Government’s version of the facts. A district court granted a motion to keep the passengers in the U.S. for a time, but eventually released them for deportation.

The defendants then moved to suppress their inculpatory statements because U.S. authorities had not informed them of their Article 36 rights to notify their consular officials. They also challenged the deportation of the passengers who may have been material witnesses. From their convictions, defendants appealed but the U.S. Court of Appeals for the Seventh Circuit affirms.

As a general rule, international agreements and agreements between the U. S. and other sovereign nations do not create judicially enforceable individual rights within the U. S. The courts have acknowledged certain exceptions to that rule, and have conceded that Article 36 of the Consular Convention “arguably confers on an individual the right to consular assistance following arrest” (see Breard v. Greene, 523 U.S. 371, 376 (1998) (per curiam)).

Like the Ninth Circuit in Lombera-Camorlinga, 206 F.3d 882, 885 (9th Cir. 2000) (see 2000 International Law Update 63), the Court does not squarely decide this issue. In this case, the Court deems it enough to assume that the Convention does create such an individual right and directly to confront whether an exclusionary rule would be an appropriate sanction for a violation of that right.

In the Court’s view, there is no exclusionary rule generally applicable to evidence obtained in violation of international law. The precedents sometimes develop an exclusionary rule to enforce a Constitutional right [e.g., against unreasonable searches and seizures] or where a statute itself requires exclusion.

Nothing in the Consular Convention requires the suppression of incriminating statements made after the police fail to carry out Article 36. Nor does it appear that the drafters of the Convention considered a suppression remedy. The Court therefore concludes that:

“We cannot attach the judicially created remedy of suppression to the Vienna Convention without some explicit support from the treaty itself. Only the legislature can require that the exclusionary rule be applied to protect a statutory or treaty-based right.”

“In concluding that suppression is not an available remedy under Article 36 of the Vienna Convention, we note our agreement with our colleagues in the Ninth ... and the Eleventh Circuit ... We also note that to impose judicially such a drastic remedy, not imposed by any other signatory to this convention, would promote disharmony in the interpretation of an international agreement. ... Although we hold that the exclusionary rule is not appropriate for a violation of Article 36, we emphasize that compliance with Article 36 is an important responsibility.” [Slip op. 13-14]

The Court also spurns defendants’ argument that the Government had improperly deported material witnesses. “The responsibility of the Executive Branch faithfully to execute the immigration policy adopted by Congress justifies the prompt deportation of illegal-alien witnesses upon the Executive’s good-faith determination that they possess no evidence favorable to the defendant in a criminal prosecution. The mere fact that the Government deports such witnesses is not sufficient to establish a violation of the Compulsory Process Clause of the Sixth Amendment or the Due Process Clause of the Fifth Amendment. A violation of these provisions requires some showing that the evidence lost would be both material and favorable to the defense.” [Slip op. 20-21]

In this case, defense counsel had interviewed almost all of the potential witnesses. Moreover, the INS had returned the passengers to Mexico only after the district court had specifically found them not to be material witnesses.

Citation: U.S. v. Chaparro-Alcantara, No. 99-2721 & 99-2874 (7th Cir. August 21, 2000).

WORLD TRADE ORGANIZATION

WTO Appellate Body affirms findings that U.S. Anti-Dumping Act of 1916 violates GATT and WTO trading rules in that it lacks requirement of showing “material injury” or industry support and authorizes treble damages and criminal penalties rather than trade sanctions

In June 1998, the European Communities (EU) asked to consult with the U.S. under WTO procedures regarding Title VIII of the U.S. Revenue Act of 1916 [39 Stat. 756, 15 U.S.C. Sections 71-74]. The consultations having been unsuccessful, the WTO set up a Dispute Settlement Panel (DSP) in February 1999. Japan brought a complaint on the same matter with India and Mexico joining.

The Antidumping Act of 1916 (the Act) provides, in essence, that an importer must not "commonly and systematically" sell foreign products at a "substantially" lower price than in the country of origin "with the intent of destroying or injuring an industry in the Uni­ted States." Though the Act provides for civil and criminal sanctions, no court has yet imposed the Act's criminal sanctions. [Editors’ Note: Several cases involving steel imports and a printing press manufacturer are currently pending in U.S. federal courts in Utah, Ohio and Iowa, and the Act may become an issue in those proceedings].

The Panel concluded that the Act was inconsistent with GATT 1994 and the Anti-Dumping Agreement. Ruling that it nullifies and impairs benefits to the EU,  the Panel recommended that the U.S. bring the 1916 Act into compliance with the WTO Agreement. The U.S., the EU and Japan appealed on procedural and substantive grounds.

The Appellate Body of the World Trade Organization (WTO) essentially upholds the Dispute Settlement Panel, affirming that the Act violates GATT 1994 and the WTO Anti-Dumping Agreement. After reviewing the arguments that all parties presented on appeal, the Appellate Body enters the following conclusions as to the substantive arguments (Part IX. of the Report):

(1) The Panel had correctly found that the 1916 Act is inconsistent with GATT Articles VI:1 and VI:2, Articles 1, 4 and 5.5 of the Anti-Dumping Agreement, and Article XVI:4 of the WTO Agreement.

(2) The Panel had properly concluded in the Japan Panel Report that the 1916 Act is at odds with GATT Articles VI:1 and VI:2, Articles 1, 4.1, 5.1, 5.2, 5.4, 18.1 and 18.4 of the Anti-Dumping Agreement, and Article XVI:4 of the WTO Agreement.

The Appellate Body also complains that the Act does not require a showing of “material injury,” and allows for excessive punishment including imprisonment and treble damages whereas WTO rules only provide for anti-dumping duties.  In the tribunal’s view, the Act is also deficient because it does not require that a minimum proportion of the industry concerned support the complaint. The U.S. Trade Representative disagrees with the Appellate Body on the theory that the Act “is more akin to antitrust law than an antidumping law ....”

Citation: United States - Anti-Dumping Act of 1916 (WT/DS136/AB/R, WT/DS162/AB/R) (28 August 2000). [Report is available on  WTO website “www.wto.org”; U.S. Trade Representative press release 00-59 (August 28, 2000); European Union news release No. 49/00 (August 28, 2000)].

India implements “bar code” requirement for consumer products. The Indian “Directorate General of Foreign Trade” (DGFT) has announced that “bar coding” on consumer product exports will be compulsory as of  December 1, 2000. Also consignments in wholesale packaging must carry such a bar code. All finished and packaged products meant for retail sale must bear the code to make exporters use “value added products” rather than low price products. The DGFT considers the bar code the distinguishing mark. This requirement applies to specific industries, including ready-made garments, engineering products, food, pharmaceuticals, leather goods, sporting goods, plastic goods, and handicrafts. Citation: India Trade Notes, provided by Mr. Arun Goyal, Academy of Business Studies, 4/4866 Sheeltara House, Ansari Road, New Delhi 110 002, India, Phone: (91)(11) 328-1314, 326-3470, 326-3570, FAX: (91)(11) 325-2880, E-mail: arung@giasdl01.vsnl.net.in.

Human Rights group sues high Chinese official over human rights abuses. On August 28, 2000, five veterans of the Tiananmen Square military crackdown in Beijing filed an action in the Manhattan federal court under the Alien Tort Claims Act of 1789 (ATCA) and the Torture Victim Protection Act of 1992. Drawn up with the aid of nonprofit human rights groups, the suit seeks damages from Li Peng, the chairmen of  China’s National People’s Congress, who was prime minister at the time of  the June 4, 1989 incident. The complaint charges that Mr. Li was responsible for  "crimes against humanity, including summary execution, arbitrary detention, torture and other torts."   A process server handed the complaint and summons to a State Department employee who was protecting Mr. Li at the Waldorf Towers.   The district court had already ruled that a federal employee guarding Mr. Li was able to accept the papers because of the difficulty of reaching Mr. Li in any other way. Plaintiffs contend that Mr. Li is not entitled to diplomatic immunity since he is not credentialed as a Chinese envoy to the United States. The Chinese government has demanded that U.S. officials dismiss the lawsuit. Citation: New York Times, September 1, 2000, Section 1; Page 4; Column 4; and September 3, 2000, Section A; Page 6; Column 1 (Bylines by Edward Wong).

EU again revises Yugoslavia sanctions and continues to suspend for an additional limited period of time the flight ban between the EU and Yugoslavia. The EU has again modified the list of undesirable Yugoslav persons whom it does not allow to enter EU territory, including President Milosevic and numerous government officials. — Even though the EU wishes to continue pressure on the regime of Yugoslav President Milosevic, it continues to suspend the ban on EU-Yugoslavia flight traffic until March 31, 2001. Citation: 2000 O.J. of the European Communities (L 200) 1& 24, 8 August 2000.

German Court imposes swift and severe punishments on “skinheads” for murder of immigrant. A court in Halle in the former East Germany recently handed down heavy prison sentences for three “skinhead” defendants. For beating to death Alberto Adriano, a Mozambican father of three, on June 11, 2000, a 24‑year‑old German received a life sentence. The court also sentenced  his two teen‑age accomplices to nine-year prison terms. As part of a new ''accelerated'' punishment policy, the trial and prison terms took place less than three months after the offense. Chancellor Gerhard Schroeder later placed a floral wreath at an improvised memorial to Mr. Adriano in Dessau. During unrelated police raids in Halle and Weimar on August 30, officers found an index containing 1,500 names and addresses of clients for neo‑Nazi propaganda and music material. The index listed customers from Germany, Finland, Norway, Austria, Switzerland and the Netherlands. Officers have also come across 30,000 CD covers, videos and placards sporting Swastika symbols. Most of this music material is unlawful under German laws that ban racial discrimination. Citation: Associated Press Report, September 3, 2000; International Herald Tribune (Neuilly‑sur‑Seine, France), September 4, 2000, at page 5, Byline of John Schmid; Deutsche Presse‑Agentur, September 5, 2000, BC Cycle, dateline Magdeburg.

                        

EU bars imports of rough diamonds from Sierra Leone. Pursuant to United Nations Security Council Resolution 1306 (2000) of 5 July 2000, the EU has prohibited the import of rough diamonds from Sierra Leone the proceeds from which the rebels use to finance their activities. This prohibition does not apply to rough diamonds controlled by the Government of Sierra Leone through a certificate of origin. Citation: 2000 O.J. of  European Communities (L 200) 21, 8 August 2000.