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.

1996 International Law Update, Volume 2, Number 4 (April).

ANTI-SUIT INJUNCTIONS

Fifth Circuit enjoins plaintiff's parallel action in Japan based on private nature of dispute, parties' original plan to adjudicate their claims in U.S., and duplicative and vexatious nature of Japanese action

Achilles Corporation was the exclusive Japanese distributor of Kaepa's athletic shoes. Their contract provided that Texas law governed disputes, that the English language would govern contract interpretation, and that Achilles would consent to Texas jurisdiction over it. Increasingly unhappy with Achilles' performance, Kaepa sued Achilles in Texas state court in 1994, claiming fraud and negligent misrepresentation. Achilles removed the case to federal court and an arduous discovery process began. Then, in February 1995, Achilles brought its own action against Kaepa in Japan based on claims of fraud and breach of contract.

On Kaepa's motion, the U.S. district court enjoined Achilles from proceeding with its foreign action. Achilles then took an appeal.

The U.S. Court of Appeals for the Fifth Circuit affirms. Noting that Achilles' Japanese suit was a "mirror-image" of the American lawsuit, the Court declines Achilles' invitation generously to grant comity to the Japanese proceeding. In the Court's view, the antisuit injunction in this private contract suit does not trample upon U.S.-Japan relations. "[T]he dispute has been long and firmly ensconced within the confines of the United States judicial system: Achilles consented to jurisdiction in Texas; stipulated that Texas law and the English language would govern any dispute; appeared in an action brought in Texas; removed that action to a federal court in Texas; engaged in extensive discovery pursuant to the directives of the federal court; and only then, with the federal action moving steadily toward trial, brought identical claims in Japan." [627]

The dissenter disagrees. He emphasizes that, under rules of concurrent jurisdiction, courts should ordinarily let parallel proceedings go forward at least until one court reaches a final judgment that the prevailing party can plead as res judicata in the other.

The dissenter favors the strict standards used in the Second, Sixth and D.C. Circuits, i.e., that a district court should not issue an antisuit injunction unless (1) the foreign action threatens the jurisdiction of the district court or (2) the party filing the foreign action was trying to evade important domestic public policies. Neither situation is present here.

Citation: Kaepa, Inc. v. Achilles Corp., 76 F.3d 624 (5th Cir. 1996).

Federal Court of New South Wales enjoins complex, multi-party federal and New York state securities and fraud actions against New York law firm of Skadden, Arps, Slate, Meagher & Flom to permit litigation of all claims in Australian court

In 1988, a group of investors (applicants) bought some $200,000,000 of senior subordinated 13.75% debentures or "junk bonds" issued by Linter Textiles of New South Wales, Australia. Some of these investors were New Yorkers. Contrary to applicants' understanding, the "Linter Companies" (i.e., Linter, its subsidiaries and the Linter Group Ltd., also of New South Wales) had allegedly arranged with certain banks for the issuance of debentures involving indebtedness to the banks that would be senior to the applicants' debentures. During 1991, the equity court of New South Wales ordered the Linter Companies into bankruptcy.

Applicants then filed suit in September 1991 in the Federal District Court of New South Wales against fifty-four respondents allegedly involved in the fraudulent scheme. Overall, applicants claimed violations of the Australian Trade Practices Act, common law fraud under New South Wales law, common law fraud under New York law and violations of the American S.E.C. Act of 1933.

Beginning in March 1991, many applicants also sued the Linter Companies in the Southern District of New York, alleging violations of federal Securities law and common law fraud arising out of statements in the prospectus and registration statement (Linter I). The Court, however, dismissed this case out of comity to the bankruptcy proceedings pending in Australia.

In April 1991, applicants brought another action in the same federal court against the Linter Companies and many of the banks involved, all of whom were residents of Australia (Linter II). In response to motions to dismiss similar to those made in Linter I, the district court, in December 1992, dismissed Linter II based not only on comity grounds but also on forum non conveniens. It especially noted that the bank defendants would not be able to pursue their claims for contribution and indemnity in New York federal court. The Second Circuit affirmed both Linter I and II in June 1993 and the Supreme Court denied certiorari.

At different times during 1994, varying groups of applicants brought four different suits against the New-York-based law firm of Skadden, Arps, Slate, Meagher and Flom (Skadden) in New York state courts seeking damages for fraud and aiding and abetting in connection with Skadden's role in the debenture transactions. Skadden unsuccessfully moved to have the New York state actions dismissed on forum non conveniens grounds and lost its appeals on this point.

Early in 1995, several parties filed cross-claims against Skadden in the Australian federal litigation. Skadden then submitted to the jurisdiction of the Australian court. Having exhausted its efforts to get out of the American lawsuits, Skadden asked the Australian court in September 1995 for an "anti-suit" injunction that would bar its opponents from prosecuting the New York federal and state proceedings against it. At this point, Skadden waived any right to raise limitations defenses in the Australian forum. Skadden did tell the Court, however, that inability to get an injunction would force it to seek the joinder of many parties in the American proceedings to protect its rights.

In a matter of first impression in Australia, the Federal District Court of New South Wales grants the anti-suit injunction in two opinions. The Court finds that any juridical disadvantages applicants might undergo from trial in Australia are either neutral or outweighed by other considerations. As examples, the Court mentions their loss of the right to an American jury trial, the chance of possibly higher punitive damages awards under U.S. law and the availability in Australian law of an award of legal expenses against the losing party. The Court also notes that Australian law does not let parties take discovery depositions of nonparty witnesses.

The Court further points out that it has become the only tribunal in which the manifold claims of the numerous parties have the best chance of being fairly resolved. This is so because Skadden could not join certain important Australian parties in the New York cases. Moreover, the mere filing of the duplicative New York proceedings tends to show the vexatious and oppressive purposes of the latter. The Court also looks upon continued New York proceedings as potentially interfering in its own processes.

Most importantly, the Court is concerned that there is a danger of conflicting results between the U.S. and Australian proceedings that would prejudice Skadden's claims for contribution or indemnity, e.g., due to res judicata doctrines. The Court finally stresses that applicants could easily have obviated Skadden's procedural difficulties if they had simply joined Skadden (which has an office in Sydney) as a defendant in the main Australian federal action.

Citation: Allstate Life Insurance Co. v. Australia and New Zealand Banking Group Ltd., Federal No. 73/96 (Fed. Dist. Ct. New S. Wales, January 19/February 21, 1996).

AVIATION

D.C. Circuit finds in case of carpets damaged during air transport that Warsaw Convention's "willful misconduct" exception to liability limitations requires showing reckless disregard such that subjective intent of carrier could be inferred

Mohammad Ali Saba chose Air France to transport a load of carpets from Salzburg, Austria, to Dulles International Airport in Virginia. Air France's cargo agent, however, stored the carpets outside for five days. Eighty-six carpets suffered water damage due to rain, and Saba sued Air France for the loss.

The so-called Warsaw Convention limits the carrier's liability for checked baggage and goods to 250 French francs per kilogram (Unification of Certain Rules Relating to International Transportation by Air, October 12, 1929, Art. 22(2), reprinted in 49 U.S.C. App. § 1502). Saba, however, relied on an exception the Convention provides for if the carrier causes the damage by "willful misconduct" (Art. 25(1)). The district court found for Saba, and Air France appealed.

The U.S. Court of Appeals for the District of Columbia Circuit reverses and remands. The Court finds that to show that the carrier is not entitled to a liability limitation because of its willful misconduct, the plaintiff must establish that the carrier had at least reckless disregard such that the carrier's subjective intent may be inferred. The plaintiff must show that the carrier engaged in an act known to cause or likely to cause injury.

Here, Saba failed to show willful misconduct or its equivalent reckless disregard. There was no evidence that Air France knew that it would rain and that the carpets were not adequately packaged. The Court therefore reverses with instructions to enter judgment on Air France's conceded negligence as limited by the Warsaw Convention.

The dissenter chides the majority for establishing a new standard for reckless disregard that lacks precision.  "In sum, the majority's 'subjective' standard of reckless disregard requires awareness by the carrier of the likely consequences of its actions, but permits an inference of that state of mind from circumstances in which the carrier departs in an extreme fashion from standards of ordinary care. ... In at least two past cases, this circuit has based a finding of 'reckless disregard' on objective evidence that the carrier should have known its actions posed a substantial risk of harm." [9]

Citation: Saba v. Compagnie Nationale Air France, No. 94-7211 (D.C. Cir. March 15, 1996).

BANKING

Federal Reserve amends Regulation K on operations of foreign banks to specify criteria for evaluating their activities in U.S.

The Board of Governors of the Federal Reserve System has amended Regulation K (12 C.F.R. Part 211) regarding activities of foreign banks in the United States. The amended rule provides criteria for evaluating the operations of foreign banks that are not subject to comprehensive supervision or regulation on a consolidated basis by their home country supervisor. A Board determination that a foreign bank is not subject to such regulation may lead to termination of the bank's lending activities.

Some examples of the sixteen criteria for making such a determination are:

The proportion of the foreign bank's total assets and total liabilities that are found or "booked" in its home country, and the distribution and location of its assets and liabilities that are located or booked elsewhere.

The extent to which the operations and assets of the foreign bank are subject to supervision by its home country supervisor.

The managerial resources of the foreign bank, including the competence, experience and integrity of the officers and directors, as well as the integrity of its principal shareholders.

The scope and frequency of external audits of the foreign bank.

The foreign bank's record of compliance with relevant laws.

The rule was set to enter into force on March 25, 1996.

Citation: 61 Fed.Reg. 6918 (February 23, 1996).

CHILD ABDUCTION

Under Child Abduction Convention, Sixth Circuit orders return of child abducted by wife from German husband over wife's arguments that husband had failed to exercise parental rights and that return would harm child

Thomas Friedrich is the six-year-old son of Jeana Friedrich, a U.S. servicewoman stationed in Germany, and her husband, Emanuel Friedrich, a German citizen. After their separation, Jeana secretly took Thomas to her home in Ohio. The removal of a child from the country of its habitual residence is "wrongful" under the Convention if a person in that country is (or would be) exercising custody rights under that country's laws at the moment of removal (Art. III).

Under German law, both parents had equal de jure custody of the child, Emanuel's rights not having been ended. After Emanuel obtained a custody award from the German Family Court, he filed a successful action in U.S. federal court for his son's return. Jeana appealed.

The U.S. Court of Appeals for the Sixth Circuit affirms. It concludes that Jeana had wrongfully removed Thomas from Germany based on the Hague Convention on the Civil Aspects of International Child Abduction [19 ILM 1501, T.I.A.S. No. 11670 (1980)] and its implementing legislation, the International Child Abduction Remedies Act (42 U.S.C. §§ 11601-11610).

The Court also rejects Jeana's argument that Emanuel was not exercising his custody rights because he did not pay support money for, or take care of, Thomas during the brief period of separation in Germany. "The only acceptable solution, in the absence of a ruling from a court in the country of habitual residence, is to liberally find 'exercise' whenever a parent with de jure custody rights keeps, or seeks to keep, any sort of regular contact with his or her child." [5-6]

Jeana also defended on grounds there was a grave risk that the return would expose Thomas to physical or psychological harm (Arts. 13b, 20). The Court, however, does not regard evidence of a potentially difficult adjustment enough. It declares that "even if the home of Mr. Friedrich were a grim place to raise a child in comparison with the pretty, peaceful streets of Ironton, Ohio, that fact would be irrelevant to a federal court's obligation under the Convention." [12]

Citation: Friedrich v. Friedrich, No. 94-3832 (6th Cir. March 13, 1996).

U.S. amends regulations on issuance of passports to minors to harmonize with international and domestic law on child abduction

 

The Bureau of Consular Affairs of the U.S. Department of State recently amended 22 C.F.R. § 51.27 on passport applications for minors. The new regulation permits the denial of passport services to minors based on a court order.

The State Department will accept orders of U.S. state courts or foreign courts that have jurisdiction and that are consistent with the principles of the Hague Convention, supra, and the Uniform Child Custody Jurisdiction Act (9 U.L.A. 111-70 (1968)). Both of these measures prefer that the court of the child's "habitual residence" or "home state" exercise custody jurisdiction (see 61 Fed.Reg. 6505).

The State Department has also recently changed the processing of incoming cases involving minors (61 Fed.Reg. 7069). For answers to questions about the abduction of a child by a spouse or about adopting a child in a foreign country, contact the U.S. Department of State, Office of Children's Issues, Phone: (202) 736-7000. The Department of State also offers publications such as "International Parental Child Abduction" and "International Adoptions" through an automatic FAX service by dialing (202) 647-3000, or through the Internet [http://travel.state.gov].

Citation: 61 Fed. Reg. 6505 & 7069 (February 21 and 26, 1996).

COPYRIGHT

European Community issues directive to protect databases

The EC has issued a directive (to be implemented into national law by the member states) to protect databases.  The broad definition of "databases" includes literary, artistic, musical or other collections of material such as texts, sound, images, numbers, facts, and data.

Under the directive, the author of a database has the exclusive right to carry out or authorize:

Reproduction by any means

Translation, adaptation, arrangement and any other alteration

Any distribution to the public

Any display to the public

The directive grants rights of protection to the maker of the database, but also provides for exeptions.  For example, databases may be used without authorization for:

Extraction for private purposes

Illustrations for teaching or scientific research

Purposes of public security, as well as administrative and judicial procedures.

The member states must provide appropriate remedies in case of infringement of the rights provided in this directive, and must adapt their laws accordingly before 1 January 1998.

Citation: Directive 96/9/EC of the European Parliament and the of Council of 11 March 1996 on the legal protection of databases, 1996 Official Journal of the European Communities (L 77) 20, March 27, 1996.

CRIMINAL LAW

In en banc opinion, First Circuit concludes that seaborne carriage of drugs from one Puerto Rican island to another across international waters is not importation from "any place outside" U.S.

Federal authorities charged Filipe Ramirez-Ferrer and two others with violating 21 U.S.C. § 952(a) that makes it unlawful "to import into the United States from any place outside thereof, a controlled substance."  The government's evidence showed that defendants traveled 39 miles from the Puerto Rican mainland to a Puerto Rican island named Mona, picked up 16 kilograms of cocaine, and traveled back to a point within one mile of the main island where police interdicted it.

From their convictions, defendants appealed and a obtained a reversal from a panel of the appellate court on the grounds that this activity did not amount to importation from outside the U.S. The Court then reheard the case en banc.

In a 4 to 3 ruling, the U.S. Court of Appeals for the First Circuit reverses the convictions as not within § 952(a). In 1989, the majority notes, the President proclaimed a twelve-mile belt of territorial waters. Thus, defendants clearly traveled through about 15 miles of international waters. The Court agrees with the defense, however, that congress did not intend the term "place" to include a passage through international waters in a voyage from one part of the U.S. to another. Rather, the intent was to ban classic importation of drugs from non-U.S. territory into the U.S.

The precedents that the dissenters rely upon generally dealt with the classic situation of traveling into international waters, e.g., to pick up drugs from a mother ship, and then returning to U.S. territory -- not the situation before the Court. Finally, the government's construction does not accord with its past enforcement practices and would extend the potential scope of the statute to absurd lengths.

The dissenters, on the other hand, see in the majority ruling a major disregard of precedent and an overly restrictive reading of the antidrug statutes. The First Circuit should follow consistent case law reading § 952(a) as covering what might be called "reimportation" situations such as this case. "As of today, a major criminal statute means one thing in the 15 states of the Fifth, Ninth and Eleventh Circuits; and it means something eccentrically different in four Northeastern states and Puerto Rico." [17]

Citation: United States v. Ramirez-Ferrer, No. 94-1018 (1st Cir. March 27, 1996).

FEDERAL TORT CLAIMS

Second Circuit affirms dismissal of FTCA action resulting from export of diseased U.S. cattle to Zimbabwe, based on "misrepresentation" exception to FTCA's waiver of sovereign immunity

Dorking Genetics, a Zimbabwe partnership, imported cattle from New York that had apparently caught bovine leucosis. A U.S. Department of Agriculture (USDA) veterinarian had endorsed the cattle's health certificate. Zimbabwe authorities later destroyed most of Dorking's herds. Dorking then sued the U.S. under the FTCA alleging that its employee had negligently certified that the cattle had met Zimbabwe's health requirements. The district court dismissed on the grounds that claims for negligent misrepresentation are not actionable under the FTCA and Dorking filed an appeal.

The U.S. Court of Appeals for the Second Circuit affirms, holding that the U.S.'s waiver of sovereign immunity in the FTCA does not extend to '[a]ny claim arising out of ... misrepresentation." [28 U.S.C. § 2680(h)]. The misrepresentation exception bars not only claims arising from intentional or negligent misrepresentation, but also those that arise out of the conduct underlying the misrepresentation.

Applying the FTCA test for determining the U.S.'s substantive liability, the Court points out that a private person would not have been liable for similar conduct under the laws of New York where the acts or omissions took place. "New York does not recognize a duty of private actors to prohibit exports of diseased cattle. Indeed, it is hard to imagine how state law could recognize a duty of a private person to stop international commercial transactions, the regulation of which is reserved exclusively to the federal government." [1266] Nor did the U.S.'s voluntary incorporation of Zimbabwe's health requirements into its export regime create a "Good Samaritan" duty to ban the export under New York law. To be liable, the government must be negligent in its actual performance of an undertaking. The United States, however, has not undertaken any duty to inspect cattle before export for 21 U.S.C. § 105 provides merely that the USDA "may cause inspection to be made" of animals for export. Moreover, USDA regulations place the burden of inspection upon the exporter.

Citation: Dorking Genetics v. United States, 76 F.3d 1261 (2nd Cir. 1996).

IMMIGRATION

Ninth Circuit upholds preliminary injunction against deportation of resident aliens of Arab origin based on prima facie showing that INS's selective enforcement of immigration laws violats First Amendment

In consolidated actions against the U.S. Attorney General, eight permanent U.S. residents of Arab descent alleged that the INS had singled them out for selective enforcement of immigration laws in retaliation for constitutionally protected membership in the Popular Front for the Liberation of Palestine, allegedly a world-wide communist organization.

The district court issued a preliminary injunction against further deportation proceedings against six aliens and granted a motion for further discovery. Though it gave summary judgment to the government on the claims of two other aliens based on lack of jurisdiction, the Court permanently enjoined the use of confidential material to deny applications for legalization.

Finding subject matter jurisdiction under general federal question and immigration statutes, the U.S. Court of Appeals for the Ninth Circuit reverses and remands the summary judgment against the two aliens. The Court then affirms (1) the preliminary injunction against selective enforcement and (2) the permanent ban on the use of undisclosed classified information in legalization proceedings.

The Court first notes that the close link between alienage classifications and matters of foreign policy or national security does not preclude the judicial branch from examining whether political branches have unconstitutionally used a foreign policy crisis as an excuse for treating aliens arbitrarily. While foreign policy powers do allow the political branches wide discretion to decide which aliens to exclude from the United States, the First Amendment does not authorize those branches to restrict the associational rights of resident aliens in a way it could not restrict the rights of citizens. Thus, the government may not deport resident aliens because they associate with particular disfavored groups. The Court also bars the government from using undisclosed classified information to adjudicate resident aliens' applications for legalization as breaching their due process rights.

Citation: American-Arab Anti-Discrimination Committee v. Reno, 70 F.3d 1045 (9th Cir. 1995).

SOCIAL SECURITY

Germany and U.S. amend Administrative Agreement on Social Security regarding contributions and computing of benefits

The German Federal Parliament passed a law approving supplementary agreements to the Administrative Agreement on Social Security between Germany and the United States (1976 BGBl. II, page 1357; 1986 BGBl. II, page 82; 30 U.S.T. 6099, T.I.A.S. No. 9542). Authorities published the law, along with the German and English versions of the supplementary agreements, in the Official Gazette, the Bundesgesetzblatt.

The many changes that the supplementary agreements bring about include, for example, the amount of contributions paid per calendar month, the way of computing benefits, retroactive voluntary contributions, and transfer of persons between the two countries.

The law entered into force for Germany on March 21, 1996. The Bundesgesetzblatt will publish the effective date of the supplementary agreements.

Citation: Gesetz zum Zweiten Zusatzabkommen . . . über soziale Sicherheit . . . , 1996 Bundesgesetzblatt II, number 11, page 301, March 21, 1996.

SOVEREIGN IMMUNITY

Fifth Circuit holds that sale of machinery to private company by wholly-owned subsidiary of manufacturer controlled by Finnish government deprives company of immunity pursuant to "commercial activity" exception of FSIA

While Kenneth Brown was operating a paper winder, the machine pulled his arm into it and maimed him for life. He sued the manufacturer of the machine, Valmet Paper Machinery (Valmet), a wholly-owned subsidiary of a Finnish corporation of which the government of Finland owns a seventy-percent interest. Valmet moved to dismiss because it claimed to be the instrumentality of a foreign state entitled to sovereign immunity under the FSIA. Finding the "commercial activity" exception of 28 U.S.C. § 1605(a)(2) applicable, however, the court denied the motion. Valmet then filed this interlocutory appeal.

The U.S. Court of Appeals for the Fifth Circuit affirms. The plaintiffs alleged the required jurisdictional facts with enough particularity to overcome the presumption of immunity in § 1604. Once defendant claims to be a "foreign state," the plaintiff must show that some exception to immunity applies. The defendant, however, retains the ultimate burden of persuasion on immunity. Here, the information found in the answers to interrogatories and in other discovery material showed that Valmet had made and sold the machine that mutilated the plaintiff.

Citation:  Brown v. Valmet-Appleton, 77 F.3d 860 (5th Cir. 1996). [Editors' Note: the Fifth Circuit has previously addressed Valmet's claim of immunity under the FSIA. See Aldy v. Valmet Paper Machinery where the Court, on similar facts, affirmed the denial of immunity. See 1996 International Law Update 32].

TORTS

In malicious prosecution case, House of Lords adopts provision of American Restatement of Torts as English law on required extent of defendant's initiative in prosecution  

John Martin and Ulka Watson were unfriendly next-door neighbors for many years in Orpington, England. Beginning in 1988, Watson began a series of complaints that Martin was exposing himself to her. Matters culminated on July 20, 1989, when Watson called the police, claiming that Martin, while naked, had climbed a ladder over the garden fence and in her view. When police came, Watson told them she was willing to testify in court. Authorities then arrested Martin and brought charges of indecent exposure against him. When Martin's case came to trial in county court, however, the prosecution presented no evidence and the court discharged Martin. Martin then sued Watson for malicious prosecution, and the county court awarded him L3,500 in July 1992. In a two to one vote, the Court of Appeal set aside the award and Martin obtained leave to seek review in the House of Lords.

Adopting the reasoning of Lord Keith of Kinkel, five law lords unanimously allowed the appeal and reinstated Martin's damage award. The only disputed issue was the extent to which Watson had set the law in motion against Martin since she did not sign the charge sheet. After discussing many precedents from England and Commonwealth courts, Lord Keith adopts into English law the principle set forth in the Restatement of Torts § 653 (2nd ed. 1977) [malicious prosecution].

In essence, if a complainant supplies police with information she believes is true and the police discretionarily prosecute the plaintiff based on that information, the exercise of police discretion insulates the complainant from liability for malicious prosecution. If complainant's report, however, was the determining factor in initiating the prosecution or if the complainant knew that her report to police was false, then she is liable for malicious prosecution, the other elements being present. This is particularly so here since Watson had been the only source of police information, thus effectively precluding the exercise of police discretion.

Citation: Martin v. Watson, [1996] 1 AC 74, [1995] 3 All ER 559 [House of Lords].

TRADE

At instance of Brazil and Venezuela, GATT panel holds that American EPA's Gasoline Rule discriminates against foreign producers and importers as to quality standards

Early in 1995, Venezuela and Brazil asked the United States for consultations regarding possible violations of GATT regulations caused by EPA's 1993 rule entitled "Regulation of Fuels and Fuel Additives -- Standards for Reformulated and Conventional Gasoline" or the Gasoline Rule (GR). When the parties could not agree, Venezuela and Brazil succeeded in having the Dispute Settlement Body (DSB) appoint a panel to look into the matter. The European Communities and Norway also presented arguments.

The Clean Air Act and the GR set standards for reducing pollution from vehicle emissions, especially as to ozone. Beginning in January 1995, the GR allowed only "reformulated" gasoline to be sold in certain U.S. regions with high levels of air pollution. In other areas, it is lawful to sell "conventional" gasoline, i.e., gasoline no dirtier than that sold in the base year of 1990. Applicable to refiners, blenders and importers of gasoline, the GR standards usually impose either an individual baseline or the 1990 statutory baseline.

Venezuela and Brazil contended that the Gasoline Rule violates the "national treatment"  provisions of Article III:1 and 4 of GATT and the MFN provision of Article I. There were also claims that the GR violates Article 2 of the Technical Barriers to Trade Agreement (TBT). The United States, however, claims that the exceptions in Article XX, ¶¶ (b), (d) and (g) justify the GR and that the GR does not fall within the scope of the TBT.

The three-member panel rules against the U.S. On the national treatment issue, the panel finds that foreign and domestic gasolines are "like products." In the panel's view, the GR treats foreign gasoline less favorably by limiting use of the individual baseline method (which 97% of domestic producers can use) and this contravenes Article III:4. Moreover, the panel spurns the American suggestion that it allow certain advantages possessed by foreign refiners and importers largely to offset any disadvantages caused by the GR. The panel also rejects U.S. reliance on an exception found in Article XX(b) allowing for noncompliance with GATT measures for activity "necessary to protect human, animal or plant life or health."  Conceding the health-relatedness of gasoline content, the panel found that the U.S. had not met its burden of showing the necessity of adopting measures inconsistent with GATT provisions. Providing for individual baselines for foreign companies seems feasible to the panel as does determining the origin of the gasoline. Nor do the needs-of-enforcement provisions of Article XX(d) apply since the GR's discriminatory baseline provisions supplied content standards, not enforcement machinery. Nor did the U.S. carry its burden of justifying the GR as a necessary means to preserve the air as an exhaustible resource. The panel saw no link between less favorable baseline provisions for foreign companies and the legitimate goal of saving the air. The panel calls upon the U.S. to bring the offending aspects of the GR into conformity with GATT requirements.

Citation: On the Rule issued by the Environmental Protection Agency on 15 December 1993 entitled "Regulation of Fuel and Fuel Additives: Standards for Reformulated and Conventional Gasoline," GATT panel decision of January 17, 1996.

Germany and U.S. conclude agreement on cooperative exchange of information to enhance nuclear safety: The German Federal Minister for Environment, Nature Protection and Nuclear Safety and the United States Nuclear Regulatory Commission recently concluded an Agreement on the exchange of information and cooperation to improve nuclear safety. The Agreement outlines the scope of the envisioned information exchange, and how the information is supposed to be used. It also deals with intellectual property issues and administrative matters. Effective on October 19, 1995, the Agreement will remain in force for five years. Citation: Bekanntmachung der Vereinbarung ... über den Austausch von Informationen und über die Zusammenarbeit in Fragen der nuklearen Sicherheit, 1996 Bundesgesetzblatt II, number 9, page 259, 11 March 1996.

U.S. regulates sales of chemical components of drugs to Colombia:  The U.S. Drug Enforcement Administration (DEA) has revoked the "regular customer status" of purchasers of chemicals under the Controlled Substance Import Export Act (CSIE) [21 U.S.C. § 971(c)(1)].  Thus, exporters of regulated chemicals (e.g. narcotics precursors such as acetone and ethyl ether) must notify the DEA of any shipments of these substances to Colombia. The goal here is to curb the sale of chemicals that are ultimately used for illicit cocaine manufacture in Colombia. Citation: 61 Fed.Reg. 13759 (March 28, 1996).

Regulation on maize imports from U.S. is amended by EU.  The EU amended its regulation on the import of residues from the manufacture of starch from U.S. maize.  The amendment changes the CN code 23031019 to 23099020, and provides a new "certificate of conformity" form. Citation: 1996 Official Journal of the European Communities (L 54) 22, March 5, 1996.

SEC gives exempted status to government securities from Argentina, Brazil and Venezuela under 1934 SEC Act:  The Securities and Exchange Commission (SEC) issued a rule to designate the securities of Argentina, Brazil and Venezuela as "exempted securities" under the 1934 Securities Exchange Act for the purposes of marketing and trading futures contracts on those securities in the U.S. Citation: 61 Fed.Reg. 10271 (March 13, 1996).

CFTC issues final amendatory rule that relaxes controls over foreign exchange-traded commodity options:  The Commodity Futures Trading Commission (CFTC) issued a final rule to amend 17 C.F.R. Part 30, eliminating the requirement that the CFTC authorize each offer and sale of a particular foreign exchange-traded commodity before it can be offered or sold in the United States. The amendment does not affect existing restrictions on transactions involving stock index futures and foreign government debts. Citation: 61 Fed.Reg. 10891 (March 18, 1996).

Major U.S. corporations file merger notifications under EC competition law: Chase Manhattan Bank and Chemical Banking filed a notice of concentration under Merger Reg. 4064/89/EEC in Case No. IV/M.642, 1995 O.J. of the European Communites (C 260) 4, 5 October 1995.  The European Commission's statement of non-opposition to the merger appears in the O.J (C 33) 7, 6 February 1996.  Other merger notifications include Upjohn/Pharmacia, in Case No. IV/M.631, O.J. (C 294) 9, 9 November 1995, and Union Carbide/Enichem in Case No. IV/M.550, O.J. (C 40) 3, 17 February 1995.

Several nations have acceded to multilateral patent agreements to which U.S. is party during latter part of 1995: Effective October 1, Turkey acceded to the Strasbourg Agreement concerning the International Patent Classification [TIAS 8140, 26 UST 1793] and to the Patent Cooperation Treaty, with regulations [TIAS 8733; 38 UST 7645].  Azerbaijan acceded to the Cooperation Treaty as of September 25.  On September 14, Portugal and, on October 3, the Ukraine acceded to the 1961 International Convention for the Protection of New Varieties of Plants (1978 revision) [TIAS 10199; 33 UST 2703]. Citation: U.S. Department of State Dispatch, "Treaty Actions," November 20 and 27, 1995.