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.

1995 International Law Update, Volume 1, Number 12 (December).

ARBITRATION

Finding no obstacle in COGSA, U.S. Supreme Court upholds stay of federal litigation under FAA relating to cargo damage for arbitration of dispute in Tokyo pursuant to clause in ocean bill of lading

Bacchus Associates (Bacchus) was an American distributor of fruit. After it contracted with a Moroccan fruit supply corporation to buy a shipload of fruit, Bacchus chartered the M/V SKY REEFER, owned by Maritima, a Panamanian company, and time-chartered to a Japanese company. The shipment reached the U.S. with about $1,000,000 in cargo damage. Article 3 of the bill of lading provided for binding arbitration of disputes in Tokyo governed by Japanese law. Vimar Seguros, a maritime insurer, paid Bacchus over $733,000 and both parties sued Maritima and the vessel in federal district court. Citing clause 3 of the bill and § 3 of the Federal Arbitration Act (FAA), defendants moved for a stay of proceedings to allow arbitration in Japan. The district court granted the motion but certified the question for interlocutory appeal. The First Circuit affirmed.

The U.S. Supreme Court granted certiorari to resolve a split in the Circuits on the effect of the Carriage of Goods by Sea Act (COGSA) on the enforceability of foreign arbitration clauses in maritime bills of lading. In a majority opinion for six Justices written by Justice Anthony M. Kennedy, the Court affirms. Justice Kennedy holds that COGSA does not preclude enforcement of this arbitration clause under the FAA. The additional expense and procedural inconvenience of arbitrating in Tokyo will not impair the substantive liabilities for negligence or fault specified in § 3 of COGSA. In support of this proposition, Justice Kennedy cites English case law and the Brussels Convention for the Unification of Certain Rules relating to Bills of Lading [51 Stat. 233 (1924)] on which Congress had modelled COGSA.

In Justice Kennedy's view, the United States cannot afford to indulge in a parochial reading of COGSA that might forfeit the benefits of international maritime accords and the goals of world wide uniformity merely because of the risk of inconvenience to the plaintiff or insular doubts as to the ability and willingness of foreign arbitrators to enforce plaintiffs' COGSA rights. Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991), further undermines plaintiffs' arguments. There the Court upheld a boilerplate choice-of-forum clause on the back of a cruise ticket requiring Washington residents to litigate an injury action against Carnival in Florida. In addition, the Court cannot clearly foresee this early in the case whether a Tokyo arbitration will actually harm plaintiffs' interests. Finally, the district court's ultimate power to oversee the execution of any final award will adequately safeguard plaintiffs' COGSA rights. Justice Sandra Day O'Connor concurs in the judgment only.

On the other hand, Justice John Paul Stevens vigorously dissents. COGSA had aimed to invalidate historical practices under which ship owners had regularly presented shippers with contracts of adhesion. These would often contain boilerplate forum-selection and choice-of-law clauses favorable to them as well as language immunizing themselves from liability for cargo damage. Stressing that contract clause 3 specifies not only arbitration in Tokyo but also application of Japanese law, Justice Stevens finds that long settled authority had rightly viewed such clauses as a clear "relieving" or "lessening" of COGSA rights. The relative cost and inconvenience of having to try claims, especially modest ones, thousands of miles from home base often led to discounted settlements or to abandonment of the claim.

Moreover, the Tokyo tribunal might (1) be unwilling to apply COGSA at all or (2), in applying it, might give it an inappropriate reading not correctable by plenary review in the Supreme Court. Justice Stevens further deplores the potential damage the majority opinion's promotion of non-uniformity will wreak upon the negotiability of ocean bills of lading. Finally, Justice Stevens criticizes the majority's reliance upon Carnival Cruise Lines, a domestic U.S. case where COGSA did not apply.

Citation: Vimar Seguros y Reaseguros v. M/V SKY REEFER, 115 S.Ct. 2322, 132 L.Ed.2d 462 (1995).

BANKING

Japan and United States enter into agreements involving improved access by U.S. firms to Japanese markets in financial services

In the area of financial services, U.S. banks have long desired to operate on a more level playing field vis-à-vis Japanese financial institutions. In an exchange of letters done on February 13, 1995, the two financial giants negotiated a series of agreements designed to bring about more openness and less regulation in this area in Japan.

In general, they embody a qualified commitment to national and MFN treatment in the financial markets of the two countries. The U.S. also sets new conditions for the continued operation of Japanese financial institutions in the U.S. based on selected requirements of a comparable degree of reciprocity by Japan.

Citation: Japan-United States: Measures Regarding Financial Services, 34 I.L.M. 617-660 (1995).

CHOICE OF LAW

In Maine injury action arising out of Maine road accident involving bus owned and operated by Canadian company and carrying Canadian passengers, Supreme Judicial Court of Maine orders application of Canadian law of damages

Trius, Inc. is a Canadian Corporation with licenses and permits to operate busses in various places including Maine. In December 1992, a Trius bus carrying Canadian residents collided with a pickup truck in Maine. Eight injured passengers and several of their spouses then brought a consolidated action against Trius in a Maine court, alleging driver negligence and careless supervision. They sought compensation for pain and suffering, mental anguish, permanent impairment, loss of enjoyment of life, medical expenses, loss of past and future income and loss of consortium.

Before trial, Trius moved to have the court apply the more restrictive law of Canada on damages. Beginning with a trilogy of decisions in 1978, the Canadian Supreme Court had set a cap of $100,000(Can.) on non-pecuniary damage recoveries to be adjusted for inflation. The trial court denied the motion but reported the issue to the Supreme Judicial Court of Maine. That Court vacates the ruling below and remands the case.

In multistate personal injury cases, Maine follows the reasoning in the Restatement of Conflicts (2nd), §§ 6, 145 and 146. According to § 146, the forum court would apply the law of the situs of the injury (lex loci delicti) "unless, with respect to the particular issue, some other state has a more significant relationship ... to the occurrence and the parties ..." Trial judges applying this test are to isolate the issues, examine the policies underlying the differing rules of law, and analyze the contacts the parties and events have with the two jurisdictions. Here the Court concludes that "[a]lthough Maine has a significant interest in regulating conduct on its highways, the rule at issue is primarily 'loss-allocating' rather than 'conduct-regulating.'" [573] Praising the "common domicile" rule, the Court notes that not only is the defendant a Canadian Corporation but also the plaintiffs are from Canada. Moreover, Canada is the place where they had bought their tickets and to which the trip was to return. Therefore, the Canadian law of damages should control.

Citation: Collins v. Trius, Inc., 663 A.2d 570 (Me. 1995).

COMPETITION

Mexico enacts Federal Act of Economic Competition (FECCO) and creates Federal Commission of Competition (FCC) to investigate and punish anti-competitive behavior

A translation by Professor Jorge A. Vargas of the San Diego University Law School makes more accessible the text of recent Mexican anti-trust legislation designed to bring Mexican law more in line with similar provisions in the United States and Canada. FECCO's main goal is to promote economic efficiency and to protect the process of competition and free market operations. Its 39 articles include detailed provisions on monopolies, monopolistic practices, mergers, administrative procedures, sanctions and administrative appeals.

To be the watchdog of anti-competitive behavior, FECCO creates a new independent agency called the Federal Competition Commission (FCC). In addition to investigative and adjudicative roles, the FCC can render non-binding advisory opinions on the effects of other statutes and regulations upon competition. It can also order the suspension, correction or termination of anti-competitive behavior as well as fine violators. The FCC is actively working with American and Canadian representatives to assure Mexican compliance with NAFTA requirements in the competition sector.

Citation: Federal Act of Economic Competition [June 23, 1993], 34 I.L.M. 1045-66 (1995).

U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) update DOJ's 1988 Antitrust Enforcement Guidelines for Inter-national Operations

The April 1995 Guidelines furnish DOJ and FTC antitrust policy guidance to companies engaged in transnational activities. Part 3 of the Guidelines deals with sensitive international antitrust enforcement issues such as prescriptive jurisdiction and the "effects doctrine," international comity, and the impact of foreign government involvement in anticompetitive activities. In Part 4, the Guidelines set forth the Agencies' views about personal jurisdiction and venue as well as various procedural rules. The latter have to do with agreements to promote the exchange of documents and other evidence as well as the Hart-Scott-Rodino amendments to the Clayton Act.

Part 2 of the Guidelines specifies U.S. policies under statutes with high international relevance. These include the Sherman and Clayton Acts, the FTC Act, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the National Cooperative Research and Production Act, the Webb-Pomerene Act, and the Export Trading Company Act of 1982. The Guidelines also cross-reference three major types of international agreements: (1) bilateral arrangements on antitrust cooperation with Germany, Australia and Canada, (2) trade collaboration agreements with the 25 members of the OECD, and (3) mutual legal assistance treaties (MLAT's) between the U.S. and over a dozen countries in criminal matters.

Citation: U.S. Department of Justice and Federal Trade Commission Antitrust Enforcement Guidelines for International Operations [April 1995], 34 I.L.M. 1080-1114 (1995).

CONTRACTS

International Institute for Unification of Private Law (UNIDROIT) completes work on Principles of International Commercial Contracts (PICC)

UNIDROIT has developed a model code of transnational contract principles. Its seven chapters deal with such important topics as the effect of mandatory national and international law, the formation of contracts, rules of validity, rules of interpretation, content, plus performance and non-performance issues such as termination and damages.

According to its Preamble, PICC has several goals. First, it provides a complete set of uniform rules that parties can voluntarily incorporate into their agreements as their governing law. Secondly, when conventional choice-of-law principles fail to yield "the relevant rule of the applicable law," the PICC may provide a solution to the problem. Thirdly, adjudicatory bodies may use the PICC as an aid in interpreting or supplementing other uniform international law instruments. Finally, the Preamble expresses the hope that national legislators may rely upon PICC as a model.

Citation: UNIDROIT: Principles of International Commercial Contracts [1994], 34 I.L.M. 1067-79 (1995).

CRIMINAL PROCEDURE

Plaintiffs injured by wartime atrocities in Bosnia may file federal Alien Tort suit against Bosnian Serb leader as private citizen, according to Second Circuit

Croat and Muslim citizens of Bosnia-Herzegovina filed suit in federal court under 28 U.S.C. § 1350 alleging that Bosnian-Serb military forces violated customary international law by committing atrocities such as rape and torture upon them during the Bosnia civil war. The defendant is Radovan Karadzic, President of the self-proclaimed Bosnian-Serb republic "Srpska" within Bosnia-Herzegovina. Plaintiffs had Karadzic personally served while he was in New York as an invitee of the United Nations. Although the district court dismissed the action for lack of subject-matter jurisdiction, the U.S. Court of Appeals for the Second Circuit reverses.

In the Court's view, the law of nations no longer binds only sovereign states. Certain forms of conduct may violate international law whether undertaken by governmental agents or by private individuals. Examples are international bans against piracy, slave trade and certain war crimes. At this stage, "[i]t suffices to hold ... that the alleged atrocities are actionable under the Alien Tort Act, without regard to state action, to the extent that they were committed in pursuit of genocide or war crimes, and otherwise may be pursued against Karadzic to the extent that he is shown to be a state actor." [8221]

Citation: Kadic v. Karadzic, No. 94-9035, 64 U.S.L.W. 2231 (2d Cir. October 13, 1995).

[Editorial Note: The UN war crimes tribunal at The Hague is the first international body for prosecuting war crimes since the Nuremberg and Tokyo tribunals after World War II. It has indicted 43 suspects, including Karadzic, on charges of genocide and war crimes. For more information on the Tribunal, contact the UN International Criminal Tribunal for the Former Yugoslavia, Phone (31)(70) 416-5343, FAX (31)(70) 416-5355].

EMPLOYMENT

Fifth Circuit rules that American subsidiary of Japanese parent company has standing to raise parent's FCN Treaty defense to charge of employment discrimination based on race and national origin

Upon being demoted and fired, Theodore Papaila, a Caucasian of American origin, sued Uniden American Corporation (UAC) alleging job discrimination based on race and national origin. UAC is an Indiana Corporation and a wholly-owned subsidiary of Uniden Corporation, a Japanese corporation based in Tokyo. Papaila alleged that UAC treated certain of its Japanese employees more favorably as to base salaries, fringe benefits and job security. The trial judge granted summary judgment to UAC on the grounds that Article VIII(1) of the United States-Japan Treaty of Friendship, Commerce and Navigation of 1953, 4 U.S.T. 2063, precluded Papaila's claims.

The U.S. Court of Appeals for the Fifth Circuit affirms. This FCN Treaty allows Japan to incorporate subsidiaries under U.S. law that would normally be "American" companies subject to Title VII of the Civil Rights Act. Article VIII(1), however, allows the parent to hire and place Japanese citizens in certain key management positions within the sub. Although the FCN Treaty does not apply in terms to American companies, the Court holds that UAC has standing to claim the Treaty defense on behalf of its parent, at least with respect to the employment decisions the parent made.

Citation: Papaila v. Uniden American Corp., 51 F.3d 54 (5th Cir.), cert. denied, 116 S.Ct. 187 (1995).

ENVIRONMENT

United States and Mexico agree to work together on exchanging data needed to support biological resources

The U.S. Department of the Interior has signed an agreement with Mexico's Secretariat of Environment, Natural Resources and Fisheries (SEMARNAP) to pursue scientific and technical cooperation in developing, analyzing, and communicating data and information needed to support biological resources. Effective May 16, 1995, and indefinite in duration, the collaboration may consist of exchanges of technical information, visits of professional specialists, cooperative research, training activities, and fora such as seminars, workshops, and conferences. Other matters dealt with include funding, personnel, and intellectual property rights. The agreement does not involve the exchange of classified material in the absence of joint consultation between the two governments as to security measures.

Citation: State Dept. No. 95‑99; KAV No. 4224.

INSURANCE

Japan and United States reach accord on methods for making Japanese insurance market more accessible to U.S. insurance companies

Japan has the second largest insurance market in the world with an estimated value of over $320,000,000,000 in yearly premiums. As Japan began a major venture in legislative reform of the insurance industry, the U.S. was anxious to make sure that the reform did not discriminate against foreign providers of insurance services within Japan. Among the main features of the exchange of letters done on October 11, 1994, were a commitment by the Japanese to make their insurance licensing and new products rules more transparent and publicly available, to speed up the process of applications for licenses, new products and rates, to protect sensitive information in these applications and to make sure that foreign insurance companies have a fair chance to receive notice and to exchange views with the Japanese Ministry of Finance on insurance regulatory matters. Japan also agreed to enforce strictly its Anti-Monopoly Act in the insurance industry.

Citation: Japan-United States: Measures Regarding Insurance, 34 I.L.M. 661-675 (1995).

JUDICIAL ASSISTANCE

German Federal Constitutional Court upholds validity of service under Hague Service Convention in American suit that seeks punitive damages against German company though German courts would not enforce such punitive damage awards

Traditional Medicinal,Inc. (TMI), an American corporation, brought an American contract suit against a German limited liability company [petitioner] and its U.S. subsidiary. TMI sought about $2,000,000 in compensatory damages plus punitive damages. After serving the subsidiary under American law, TMI employed the Hague Convention on Service Abroad of Judicial and Extrajudicial Documents (20 U.S.T. 361, T.I.A.S. No. 6638, 4 I.L.M. 338 (1965), 16 I.L.M. 1339 (1977)) [HSC] to serve petitioner at its seat in Berlin. When the Berlin Central Authority approved service, petitioner ultimately brought the matter to the Federal Constitutional Court claiming that such service would violate (1) the principle of proportionality and (2) the state's monopoly on punishment.

The Constitutional Court concludes, however, that service was proper even though it might lead to a punitive damage judgment the actual enforcement of which the Federal Supreme Court has held would violate the German Basic Law. The Court first rules that the HSC itself raises no constitutional problems. Moreover, German authorities may refuse to comply with the HSC under Article 13 only upon a showing that service would endanger German "sovereignty or security" and not merely the financial interests of a German company. In addition, the U.S. Supreme Court has upheld state service upon a German parent company by locally serving its American subsidiary. See Volkswagenwerk AG v. Schlunk, 486 U.S. 694 (1988). Finally, an American plaintiff could, in any event, initially serve a purely compensatory claim upon a German company under the HSC and then could later amend the complaint to include punitive damages.

Citation: German Federal Constitutional Court orders concerning Service of Punitive Damage Claims, 34 I.L.M. 975 (1995).

Eleventh Circuit holds that 1993 revisions to F.R.Civ.P. 4(e) and (f) did not abolish former practice of serving local U.S. agent of person outside of country at time of service

Owen Silvious brought a civil RICO action against Ghaith Pharaon as owner and operator of BCCI, claiming that Pharaon defrauded Silvious of moneys deposited with BCCI in 1985 and payable in 1990. After several unsuccessful attempts to serve Pharaon in Saudi Arabia and in Georgia (USA), the magistrate authorized Silvious to serve an alleged agent of Pharaon in Georgia. When Pharaon did not answer the complaint, Silvious moved for a default judgment. The district court held, however, that revised Civil Rule 4 no longer allowed for service on a person outside the U.S. by serving an agent on U.S. territory in accordance with such cases as Volkswagenwerk AG v. Schlunk, 486 U.S. 694 (1988), and dismissed the case.

The U.S. Court of Appeals for the Eleventh Circuit, in a per curiam opinion, reverses and remands. The Court reads Rule 4(e)(2) as referring not to defendant's location at the time of service but to the situs of the agent authorized by appointment or by law to accept service when plaintiff served him or her. "The individual and the agent need not be in the same place. For example, in the case of an individual who is located in a foreign country but whose legal agent is located in a judicial district of the United States, a plaintiff may either personally serve the individual, per Rule 4(f), or effect substituted service through the individual's agent, per Rule 4(e)." [701] Upon remand, the district court is to determine whether the factual conditions for applying Rule 4(e)(2) actually existed.

Citation: Silvious v. Pharaon, 54 F.3d 697 (11th Cir. 1995).

[Editorial Note: When an American plaintiff wishes to make personal service on a defendant located in certain foreign countries in a civil or commercial lawsuit, he or she may have to comply with the Hague Service Convention, 20 U.S.T. 361, T.I.A.S. No. 6638, 4 I.L.M. 338 (1965) (including the myriad but vital reservations and declarations thereto) which provides the exclusive methods of service between U.S. courts and parties in the thirty-four Member States.]

NUCLEAR POWER

Nuclear research agencies of United States and United Kingdom update and extend prior arrangements for mutual exchange of information on safety of nuclear reactors

The U.S. Nuclear Regulatory Commission (USNRC) and the United Kingdom's Health and Safety Executive (HSE) have entered into a new five-year agreement for mutual cooperation in the exchange of information relating to nuclear reactor safety research and development. Effective April 4, 1995, it amends and augments the terms of the 1977 arrangements between USNRC and the U.K. Atomic Energy Authority.

The accord invites the mutual exchange, for example, of technical reports, computer codes, and experimental data and for joint workshops and similar programs in both countries. The agencies may arrange in writing for visits and temporary assignments of personnel to each other's installations as well as joint research projects. Subject to the legal requirements of privilege or confidentiality as well as to intellectual property rights, each agency supports a policy of the widest possible exchange of reactor safety information. Those planning to disseminate proprietary information outside USNRC, HSE or other concerned agencies or their contractors, licensees and consultants have to obtain the approval of the originating agency. There is also a disclaimer of any warranty of accuracy in information supplied under the arrangement.

Citation: State Dept. 95-105; KAV No. 4230.

European Community and United States conclude agreement on peaceful nuclear cooperation

On November 7, 1995, the European Atomic Energy Community (Euratom) and the United States concluded a nuclear cooperation agreement in Brussels. This agreement will be the basis for research, industrial trade, and safety in nuclear issues. The agreement permits, for example, non-sensitive nuclear activities, enrichment of radioactive materials up to 20%, as well as irradiation of fissile materials and post-irradiation examination. Reprocessing and alteration in form or content of sensitive fissile materials is also contemplated. The agreement should enter into force in early 1996 after approval by the U.S. Congress, and will last for 30 years. The EU has not yet issued the text of this agreement.

Citation: EC Commission Document COM(95)171 final (proposed agreement after negotiations of May 10, 1995).

SOVEREIGN IMMUNITY

In suit against Mexican government agency, Ninth Circuit rules that exception found in noncommercial torts provision of FSIA does not apply to commercial activities

The Export Group (Export) operates in international trade. It specializes in exclusive representation of companies in North America wishing to sell products to agencies of the Mexican government. Export became the sole representative of Reef Industries, Inc. (Reef) in submitting bids to ANDSA, a Mexican government agency. A corrupt ANDSA employee, however, leaked bidding information to the Mexican Coffee Institute (INMECAFE). The latter submitted a bid to ANDSA under the company name of NEUERO and won the contract. Export brought a federal diversity action against INMECAFE and others for interfering with business and contract relations plus other claims. When INMECAFE failed to answer the complaint, Export got a $2,000,000 default judgment. Later, INMECAFE successfully moved under F.R.Civ.P. 60(b)(4) to set aside the default and dismiss the complaint on the grounds that the federal court lacked jurisdiction under the Foreign Sovereign Immunities Act of 1976.

The lower court had ruled that INMECAFE's behavior had constituted "commercial activities" ordinarily exempted from immunity by 28 U.S.C. § 1605(a)(2). It had concluded, however, that exception (B) from the noncommercial tort exception in §1605(a)(5) also applied to commercial torts under §1605(a)(2). Since §1605(a)(5)(B) excludes claims arising out of "interference with contract rights," it thus restored sovereign immunity to INMECAFE. Export took an appeal.

The U.S. Court of Appeals for the Ninth Circuit reverses. It points out that §1605(a)(5) in terms applies only to tortious activities "not otherwise encompassed in paragraph (2) above." In turn, subsection (B) states that it applies to "this paragraph," i.e., §1605(a)(5). "It is consistent with the broader legislative intent of Congress, which is to hold foreign states accountable in United States courts for all acts committed in their capacity as market participants, to interpret the plain language of section 1605(a)(2) as not restricted by other clauses that establish separate and alternative exceptions to sovereign immunity applicable to actions of foreign states performed in a noncommercial capacity." [1476]

Citation: Export Group v. Reef Industries, Inc., 54 F.3d 1466 (9th Cir. 1995).

TRADE

Federal Circuit examines imposition of antidumping duties on NEC as a result of sales of its TV sets within the United States

NECHE is a Japanese maker of TV sets and NECT is the U.S. company that imports and sells them in the United States. Both are wholly-owned subsidiaries of NEC of Japan. As a result of various proceedings in which Zenith, an American maker of TVs, intervened, the International Trade Administration (ITA) imposed antidumping duties on certain TV sets of NEC. NEC undertook to show that its TV sales to affiliated sales companies in the home market were actually at "arms length" and thus a reliable indicator of the fair market value (FMV) of the imported NECHE sets. It also argued that the applicable Japanese commodity tax required sales to related companies to be at arms length. In NEC's appeal to the Court of International Trade (CIT), the Court affirmed the imposition of the antidumping duties.

The U.S. Court of Appeals for the Federal Circuit affirms the CIT in part and remands in part with instructions. The Court finds that ITA erred in failing to consider NEC's Japanese commodity tax argument. On remand, the ITA is to consider that argument. The ITA, however, properly rejected NEC's alternative related‑party sales argument‑‑that the ITA should have looked to sales of other manufacturers to determine whether NECHE‑NECSCs sales were made at arm's length. Finally, the ITA imposed upon NEC an unreasonable burden with respect to proving entitlement to a level‑of‑trade adjustment. The ITA may have to consider anew the evidence and arguments already presented by NEC on the level-of-trade adjustment issue. The CIT is to return the case to the ITA for further proceedings consistent with this opinion.

Citation: NEC Home Electronics, Ltd. v. United States, 17 I.T.R.D. 1129, 54 F.3d 736 (Fed. Cir. 1995).

European Commission issues new schedule of nomenclature relating to EC external customs duties

EC Regulation 2658/87 established a goods nomenclature ("combined nomenclature," CN) to meet the requirements of the Common Customs Tariff and the external trade statistics of the EC. The CN is based on the nomenclature of the "harmonized system" of the International Convention on the Harmonized Commodity Description and Coding System (U.K.T.S. 15 (1989); for U.S. see 19 U.S.C. § 3001)

In a 1003-page document, the Commission revises the CN effective January 1, 1996, because of recent recommendations of the Customs Cooperation Council, and because of agreements reached in the Uruguay Round. It also had to take account of the recent accession of Austria, Finland and Sweden.

The CN classifies products under sections such as "Mineral products," "Products of chemical or allied industries," and "Machinery and mechanical appliances." The information in the schedule includes the CN code number, the description of the item, the (ad valorem) rate of duty (autonomous and conventional), and the unit description. The conventional duties apply to imported goods originating in contracting parties to GATT, or countries with which the EC has an agreement with a MFN tariff clause. The autonomous duties apply if they are less than the conventional duties.

In a related matter, the Commission issued corrections to amendments that have been made to Regulation 2658/87, correcting certain duty rates.

Citation: Commission Regulation (EC) No 2448/95 of 10 October 1995 amending Annex I to Council Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and the Common Customs Tariff, 1995 Official Journal of the European Communities (L 259) 1, 30 October 1995.; the corrections to Regulation 2658/87 are at (L 264) 1, 4, 7 November 1995.

EC publishes list of institutions for technical compliance examinations

The EC has published a "List of notified bodies" under the "new approach" directives on technical harmonization (including the tasks for which they have been notified). The more than 500 institutions listed therein test certain products for their compliance with European requirements, and award the "CE" conformity mark.

The European "new approach" to technical harmonization and standards limits such harmonization to the adoption of so‑called "essential requirements" for safety, health or other requirements. Products that meet these "essential requirements" can circulate freely in the EC. So far, the EC has produced "new approach" directives in the areas of, for example:

Toy Safety

Electromagnetic Compatibility

Machinery

Medical Devices

For instance, under the heading "Medical Devices" (Directive 93/42/EEC), the List includes the British Standards Institution (BSI), Quality Assurance, P.O. Box 375, UK-MK14 6LL Milton Keynes as a competent institution for all medical devices for full quality assurance, production quality assurance, and product quality assurance.

Citation: List of notified bodies designated by the Member States and the EFTA countries (EEA members) under the new approach Directives, 1995 Official Journal of the European Communities (C 280) 1, 25 October 1995.

TRANSPORTATION

Seventh Circuit refuses to apply limitations period in bill of lading to entire agreement

Zenith Electronics Corp. sued its forwarding agent Panalpina, Inc. for its alleged breach of contract, and of its duties under the 1984 Shipping Act, 46 U.S.C. § 1701. Since Panalpina had failed to timely deliver the bills of lading to a guarantor bank before the letter of credit expired, Zenith could not collect the price of 2,100 TVs it had shipped to Peru by Pantainer, Inc., Panalpina's wholly owned subsidiary.

The district court granted Panalpina summary judgment because the bills of lading contained a clause requiring a party to bring suit against the "carrier" within one year of the delivery of the goods. Zenith appealed.

The U.S. Court of Appeals for the Seventh Circuit reverses. In the Court's view, Zenith's letter of instruction shows that Panalpina was not only in charge of carriage; it also had other duties, such as presenting the bills of lading to the guarantor bank. Since the instructions did not mention any time limits and did not refer to the time restriction in the bills of lading, the time restriction fails to protect Panalpina's forwarding services. Furthermore, Panalpina failed to establish the existence and applicability of a trade custom under which the time restriction of the bill of lading would apply to the parties' entire agreement.

Citation: Zenith Electronics Corp. v. Panalpina, Inc., 68 F.3d 197 (7th Cir. 1995).

Comprehensive air transport agreement between the United States and Canada enters into force

Recognizing the unique geographic and political relationship between the two countries, the governments of the United States and Canada entered into a comprehensive new agreement on air transport in Ottawa effective February 24, 1995. Among the goals are the enhancement of commercial air service, fair competition to benefit each other's carriers as well as the flying public, avoidance of discrimination and the promotion of the highest degree of safety.

Among the many other issues dealt with in its twenty-four main Articles include pricing, computer reservation systems, airport access and user fees, tariffs, customs charges, and dispute resolution. Each party is impartially to apply its own laws and regulations to the carriers of the other party whenever they operate locally. The parties also pledge to help the other in carrying out obligations under governing international air transport agreements including those dealing with hijacking and other crimes aboard aircraft. In four detailed Annexes, the agreement deals with schedules and routes, slot allocations to high density airports such as Washington National and O'Hare, charter flights, and continuation of designations and authorizations.

Citation: State Dept. No. 95-73, KAV No. 4196.

United States concludes "open skies" agreements with ten European nations

The United States has recently concluded "open skies" agreements on air transport with Austria, Belgium, Denmark, Finland, Iceland, Luxembourg, Netherlands, Norway, Sweden, and Switzerland. For example, on September 5, 1995, the U.S. and Belgium amended their 1980 air agreement with an "open skies" provision. It allows Belgian carriers to fly to any destination in the U.S. (U.S. carriers already had that right in Belgium).

These agreements also provide easy access to airports, and put no limits on the capacity or number of airlines. They also allow for "coach sharing," that is, the airlines can sell other airlines' flights. At this point, only the Netherlands Agreement of October 14, 1995, has entered into force. Some countries are provisionally applying the terms of the open skies agreements until the agreements legally enter into force.

The parties have not yet published these agreements but they rest on the same standard "open skies" agreement (Air Transport Agreement Between the Government of the United States of America and the Government of ...). In the context of these agreements, several airlines have filed requests for antitrust immunity with the U.S. Department of Transportation to protect their close cooperation from U.S. antitrust laws.

Citation: Information received from the U.S. Department of State, Aviation Negotiations, Washington, DC, Phone: (202) 647-8001.

Anti-dumping: The EC Commission imposes a provisional anti-dumping duty on 3.5" computer diskettes originating in the United States, Mexico and Malaysia (CN Code ex 8523 20 90). Except for diskettes of 3M, TDK and Verbatim, the rate of duty on U.S. diskettes is 44%. Citation: 1995 Official Journal of the European Communities (L 249) 3, 17 October 1995.

Aviation: U.S. continues to restrict flights to Iraq and Libya. Two final rules of the Federal Aviation Administration prohibit flights between the U.S. and those countries, unless specifically approved. Citation: 60 Fed. Reg. 49138 (Sept. 21) and 48643 (Sept. 20).

Trade: The EC allocates export licenses for cheeses (CN code 0406) exported to the United States under the GATT agreements according to a special procedure that designates "preferred importers" in the U.S. With a new Regulation, the Commission reopens the procedure for 1996.  The national competent authorities will issue export licenses based on Regulation 1466/95. The Commission subsequently published "allocation coefficients" for various cheeses. Citation: Commission Regulation 2454/95, 1995 Official Journal of the European Communities (L 252) 16, 20 October 1995; (L 272) 14, 15 November 1995; correction at (L 273) 54, 16 November 1995.

 NAFTA: The U.S. Department of Transportation adopts a final rule implementing the preferential tariff treatment and other provisions of the North American Free Trade Agreement (NAFTA). The rule implements the interim amendments to the Customs Regulations that had been published in 1993 as T.D. 94-1. For the U.S., the NAFTA provisions are in the North American Free Trade Agreement Implementation Act, Pub.-Law 103-182, 107 Stat. 2057. Citation: Department of the Treasury, Customs Service, September 6, 1995, 60 Fed. Reg. 46334. For further information, contact Joyce Metzger, Office of Field Operations, at (202) 927-0792.