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.

1997 International Law Update, Volume 3, Number 8 (August).

AVIATION

In on-going litigation over Soviet shoot-down of Korean airliner, D.C. Circuit holds that Death on High Seas Act, not Korean law, applied because parties did not challenge district court determination that U.S. law governed

The following case is one in the line of many that arose out the 1983 incident where, near Sakhalin Island, a Korean airliner veered into Soviet airspace where a Soviet military fighter plane shot it down.  In a consolidated proceeding, a District of Columbia jury found that Korean Air Lines had committed "willful misconduct," thus removing the Warsaw Conventions's limit on liability.  The U.S. Court of Appeals for the District of Columbia Circuit affirmed and remanded to the originating courts to determine compensatory damages.  The five cases involved in this interlocutory appeal have not yet gone to trial. 

The plaintiffs claimed that "general maritime law" permits them to recover for the decedents' pre-death pain and suffering, and that Korean law allows damages for pre-death pain of the victims and for the mental grief of the surviving relatives.  The district court, however, ruled that U.S. law applied.  The U.S. Court of Appeals for the District of Columbia Circuit affirms.

The U.S. Supreme Court had decided in Zicherman v. Korean Air Lines, 116 S.Ct. 629, 637, ­­1996 Int'l L. Update 15, that the Warsaw Convention [49 Stat. 3000] only authorizes compensation for "legally cognizable harm."  The forum court would determine the law applicable. After its choice-of-law analysis under forum law, the lower court here concluded that U.S. law governed.  No party challenged that determination.  The court further ruled that the Death on the High Seas Act [46 U.S.C. § 761] (DOHSA) was the controlling U.S. law, and that it did not allow recovery of non-pecuniary damages.

The Court disagrees with the plaintiffs that "general maritime law" nevertheless permits them to recover.  On the contrary, lower federal courts should not extend the general maritime law to areas in which Congress has already legislated.  For deaths on the high seas, Congress decided in DOHSA who may sue and for what.

The Court also rejects a related argument.  "Because the Death on the High Seas Act is a 'wrongful death' statute, plaintiffs insist that it has no bearing on survival remedies.  They have missed the point.  That the Act provides remedies only to certain surviving relatives for their losses and provides no compensation for the decedent's own losses is the very reason why courts may not create a survival remedy." [15-16]

The Court also rebuffs the plaintiffs' argument that the law of Korea applies and provides such a remedy.  According to the plaintiffs, 46 U.S.C. § 764 allows for a right of action based on foreign law for a wrongful act that occurred on the high seas.  According to plaintiffs' South Korean attorney, Korean law permits damages for the victims' pre-death suffering and the survivors' mental anguish.

"If plaintiffs were correct, § 764 would license them to pick and choose among provisions of U.S. and South Korean law in order to assemble the most favorable package of rights against the defendant.  That would be odd enough.  But stranger still is the notion that South Korean law has any bearing on this case.  Faced with Zicherman's directive to make a choice-of-law determination, ... the district court chose U.S. law, not South Korean law.  Plaintiffs have not appealed this ruling.  So how does South Korean law enter the picture?" [20-21]

Citation:  In re: Korean Air Lines disaster of September 1, 1983, No. 96-5278 (D.C. Cir. July 11, 1997).

EVIDENCE

Supreme Court of Canada holds that reference by witness to fact that defendant might carry insurance does not warrant automatic discharge of jury but may justify range of discretionary remedies designed to cure jury prejudice

In May 1986, while playing rugby at a British Columbia high school match, a scrum collapsed, causing 18-year-old Mark Hamstra to become paraplegic.  He and his father filed a damage action against the B.C. Rugby Union (BCRU), a voluntary non-profit entity, Brian Rigby, its game representative, and the local school district for failure properly to supervise the scrum. 

During the eighth day of the jury trial, defense counsel's cross-examination of one of the players brought out a reference to how an insurance adjuster had unfairly recorded the player's account of the incident.  Neither side objected nor did the trial judge comment.  On day 14, plaintiff's counsel was cross-examining a defense expert on rugby on whether he was worried about the financial impact of the suit upon BCRU when the witness replied: "No. I assume some insurance company is going to pay for it."

At this point, the judge merely cautioned the jury to disregard the reference to insurance.  Later, however, he granted BCRU's motion to dismiss the jury on the grounds that his warning was unlikely to remove the prejudicial effect of the evidence from the jurors' minds.  He gave plaintiffs the option to have a new jury trial or to have the judge complete the present proceeding and they chose the latter.  The trial judge ultimately dismissed the plaintiffs' case. 

The B.C. Court of Appeals reversed and ordered a new trial on the grounds that the trial judge should not have dismissed the jury.  The Supreme Court of Canada allows the appeal and remands for the lower appellate court to rule on remaining issues.

The Court first overrules its own 1951 precedent that the mention of insurance coverage should automatically lead to a mistrial and discharge of a civil jury.  In today's world, persons who serve on juries know about compulsory automobile insurance and the prevalence of insurance in many other areas of human endeavor.  Instead, the decision of what action to take should lie in the sound discretion of the trial judge.  Thus, there may be cases in which the judge concludes that no other alternative would satisfy the demands of justice than the jury's dismissal.  On the other hand, a prompt and adequate warning to the jury might often be adequate under different circumstances. 

In this case, the Court holds, the trial judge did not err.  He did not base his action on an automatic approach to the issue but on his discretion.  After hearing arguments by both sides, he reluctantly concluded that the reference to insurance may have caused the jury to believe that such coverage did exist and that this belief could prejudice BCRU during jury deliberations.  Thus, there was no occasion for the Court of Appeal to order a new trial on this ground.

Citation: British Columbia Rugby Union v. Hamstra, 145 D.L.R.4th 193 (Sup. Ct. Can. 1997).

EXTRADITION

House of Lords rejects extraditee's appeal in habeas corpus matter brought by Russian citizen to challenge extradition to United States based on inadmissibility of hearsay evidence that he had committed computer fraud against Citibank

In March, 1995, British authorities arrested Vladimir Levin, a Russian citizen, on a provisional warrant issued pursuant to an extradition request from the United States.  A federal grand jury had indicted Levin for wire and bank fraud, forgery, and misuse of computers.  The indictment claimed that Levin had used a computer terminal in St. Petersburg to gain unauthorized access to the automated fund transfer service of Citibank in their New Jersey computer.  He then had fraudulently made 40 transfers of funds amounting to about $10,700,000 from accounts belonging to Citibank clients to accounts that Levin or his accomplices controlled. 

Pursuant to an 1989 Order in Council implementing the U.S.- U.K. extradition treaty, the case went to a magistrate for an assessment of the evidence.  The statute requires the production of such evidence as would, under the laws of England and Wales, justify the committal of a person for trial.  After a hearing, the magistrate found enough evidence to show the commission of 66 offenses and ordered Levin's committal to prison pending the Secretary of State's decision to surrender Levin to U.S. authorities.  Levin then sued out a writ of habeas corpus that challenged the sufficiency of the evidence offered against him.  The lower court dismissed the petition and the case came to the House of Lords.

The House of Lords unanimously dismisses the appeal.  At the magistrate's hearing, two bank officials had explained how the Citibank system worked and had produced printouts showing transfers that the clients had denied authorizing.  An accomplice of Levin also identified Levin as the one who had initiated the unauthorized payment instructions from his St. Petersburg computer.  He had also presented a printout he had surreptitiously gotten from Levin's computer.

The Lords also reject Levin's complaint that the U.S. printouts were inadmissible hearsay.  In the first place, the government was not introducing them as testimonial assertions of fact but as recording the transactions themselves, as might a photocopy of a forged check.  Moreover, extradition proceedings are "criminal" under statutes that would admit the printouts even if they did constitute hearsay.

Finally, the Lords rebuff Levin's alternative claim that the admission of the printouts and the accomplice's testimony made the proceedings unfair.  Magistrates do have a limited discretion to exclude certain evidence from extradition proceedings, e.g., on the grounds that the police had obtained it under outrageous conditions.  This is not such a case.  Moreover, since extradition stems from concepts of comity and reciprocity as well as treaty obligations, magistrates should have only the rarest of occasions to make use of this discretion.

Citation: In re Levin (habeus [sic] corpus), House of Lords, 19 June 1997 (reported in The Times of 21 June 1997).

Honduras Supreme Court turned down U.S. extradition request for former Haitian Chief of Police for lack of evidence of charged crimes under Honduran standards

On July 22, 1997, in a 5-4 decision, the Honduran Supreme Court turned down the U.S. request to extradite a former Chief of Police of Haiti, Colonel Joseph Michel François, on drug charges.  François was one of the leaders in the 1991 coup against former Haitian President Jean-Bertrand Aristide, and was a key member in the 1991-1994 military government that eventually resigned under U.S. pressure.

François moved to Honduras last year and opened a furniture store.  Upon U.S. request, he was arrested on March 7.

The lower court considered the evidence for drug trafficking insufficient.  The Honduran Supreme Court agreed.  The Supreme Court, however, did not issue a public statement but only notified the U.S. Embassy in Tegucigalpa and François of its decision on July 24.  François was released from the Honduran Central Penitentiary on the same day.  Sources have reported that the Supreme Court based its decision on Article 1 of the U.S.-Honduras Extradition Treaty [Treaty for the Extradition of Fugitives from Justice, January 15, 1909, Honduras-United States, 37 Stat. 1616, T.S. No. 569, 8 Bevans 892; implemented in Honduras as the Decreto Número 126 of 1909].  Article 1 provides, inter alia, that extradition will be granted only if the evidence is legally sufficient under the standards of the party where the extraditee is found.  Also, the charged acts must be such that the extraditee would be arrested and charged in the country where he is found.

The Foreign Ministry of Honduras issued a statement, emphasizing that Honduras has often cooperated with the U.S. in stemming narco-trafficking, and that this case shows the independence of the Honduran Judiciary.

Citation:  Secretaría de Relaciones Exteriores de la República de Honduras, Dirección de Comunicación Institucional, Comunicado (24 de julio de 1997); Information received from the Embassy of Honduras, Washington, D.C., Phone: (202) 966-9750; The New York Times, July 25, 1997, page A7; La Prensa (Honduras), 23 de julio de 1997.

FEDERAL TORT CLAIMS

Where U.S. government agents carried out uncoordinated "sting" operation from Miami by having Belize police plant cocaine in aircraft that led to arrest and mistreatment of passengers and crew in Honduras, Eleventh Circuit finds "foreign country" exception of Section 2680(k) inapplicable in later FTCA suit

In April of 1991, the United States Customs Service ("Customs") and the United States Drug Enforcement Administration, ("DEA"), began an investigation of drug shipments between Belize and Miami, Florida.  As part of that investigation and at the request of the U.S. Embassy, Belize police placed forty-five kilograms of cocaine on a Belize Air flight from Belize to Miami on April 6, 1991. 

When the plane made an unexpected stopover in Honduras, however, drug sniffing dogs discovered the cocaine.  Since the DEA had told neither the flight crew nor the Honduran police nor the U.S. Embassy about the "sting" operation, the police arrested the passengers and crew and detained them under abusive conditions for several days.  Not only did the police confine them in a rat-infested room without toilet facilities but hooded some of them, and regularly kicked and beat them with a rubber hose until their release almost a week later.

Several passengers and crew later sued the United States under the Federal Tort Claims Act ("FTCA") for its injurious negligence and incompetence.  In addition, Donna, the pilot's wife sued for loss of consortium.  After a bench trial, the district court held that the "foreign country" exception to the FTCA waiver of sovereign immunity under 28 U.S.C. § 2680(k) did not apply.  The Court found the United States liable and awarded damages to all plaintiffs except Donna.

On appeal, the United States argued that the foreign country exception to the FTCA did apply because all of the negligent acts or omissions took place outside of the U.S.  The plaintiffs, however, urged the court to adopt a "headquarters claim" exception to the FTCA, under which the place of injury does not control jurisdiction under the statute. 

The U.S. Court of Appeals for the Eleventh Circuit finds no error in the trial court's general FTCA analysis.  The Court held erroneous, however, the trial court's failure to award damages to Donna for loss of consortium.  The Court first examines whether the law of Florida would allow recovery for the torts alleged, and decided that it would.  The court next holds that the acts or omissions that led to the injuries actually took place in Florida, thus taking the case out of § 2680(h).  Finally, the Court notes that, under Florida law, a spouse (here, Donna) may maintain a claim for loss of consortium if the injured spouse has a proper claim.  Here, the record shows a clear injury to the relationship via a major change in her husband's personality.  Given this fact, the district court erred in refusing to award damages to Donna.  

Citation: Couzado v. United States, 105 F.3d 1389 (11th Cir. 1997).

HEAD-OF-STATE IMMUNITY

Eleventh Circuit rejects Panamanian ex-military commander Noriega's argument that U.S. could not prosecute him for drug offenses because of his immunity as head of state

Manuel Antonio Noriega was the commander of the Panamanian Defense Forces until U.S. forces removed him from power during a confrontation in December 1989-January 1990.  Prior to his fall, Noriega had allegedly helped the Colombian-based Medellin Cartel to move cocaine to the U.S.  Noriega deposited the proceeds of his activities in the Panama branch of the Bank of Credit and Commerce International (BCCI). 

Authorities took Noriega to Miami, where they tried and convicted him of drug-trafficking crimes. Though Noriega appealed his conviction, the U.S. Court of Appeals for the Eleventh Circuit affirms.

First, Noriega claimed that he was the de facto Panamanian head-of-state although the U.S. had never formally recognized him as such.  U.S. courts have long recognized as limits to their jurisdiction "the exemption of the person of the sovereign from arrest or detention within a foreign territory."  The Schooner Exchange v. McFadden, 11 U.S. (7 Cranch) 116, 137 (1812). Where the Executive Branch either expressly grants or denies a request to suggest immunity, courts must follow that direction.  Courts should make an independent ruling on immunity, however, when the Executive Branch fails clearly to convey its position on a particular immunity request.

Noriega's immunity claim fails under either approach.  The Executive Branch has suggested that the court should deny Noriega head-of-state immunity.  Furthermore, Noriega never served as the constitutional leader of Panama.  Finally, there is precedent that courts may deny immunity to a head of state for private or criminal acts.

Second, Noriega's capture did not violate the Treaty Providing for the Extradition of Criminals, May 25, 1904, United States of America - Republic of Panama ("U.S.-Panama Extradition Treaty") [34 Stat. 2851].  To prevail on an extradition treaty claim under United States v. Alvarez-Machain, 504 U.S. 655 (1992), a defendant must show that the express language of a treaty and/or the established practice thereunder constitutes the U.S.'s affirmative agreement not to seize foreign nationals from the territory of its treaty partner.  Noriega has not carried that burden.

Third, the U.S. military invasion of Panama did not constitute a violation of Noriega's substantive due process rights.  Generally, under the Ker-Frisbie doctrine, a defendant cannot defeat personal jurisdiction by showing that authorities secured his presence in court illegally.  In addition, the harm suffered by Panamanian civilians during the armed conflict before Noriega's arrest cannot support his due process claim.  Finally, there is no authority that would allow a court to exercise its supervisory power to dismiss an indictment based on harm done by the government to third parties.

Citation:  United States v. Noriega, No. 92-4687 (11th Cir. July 7, 1997).

INSURANCE

In case of vehicle accident in Honduras, Fifth Circuit, in case of first impression, holds that Mississippi Uninsured Motorist Act does not provide worldwide uninsured motorist coverage

Bradley Boatner, age 17, died while on a humanitarian mission in a rural area in Honduras when a truck occupied by Boatner and several others veered off the road.  Neither the owner nor the driver of the truck carried insurance.

 Boatner's parents sought damages from Atlanta Specialty Insurance Company (ASIC) pursuant to the Boatners' own automobile policy (which included uninsured motorist coverage).  ASIC denied coverage because the policy applied only to losses occurring within the U.S., Canada, and Puerto Rico.  The Boatners brought a declaratory judgment action against ASIC.  ASIC appeals the district court's denial of its summary judgment motion.

The U.S. Court of Appeals for the Fifth Circuit reverses and renders judgment for ASIC.  Whether the territorial restriction in ASIC's uninsured motorist insurance policy violates Mississippi public policy is an issue of first impression.  Here, the question is whether Mississippi, in enacting its Uninsured Motorist Act [Miss. Code 1972, § 83-11-101], intended that Mississippians would enjoy worldwide uninsured motorist coverage.  The lower court had ruled that, in the absence of a territorial limitation in the Uninsured Motorist Act, there is no such restriction. 

The Fifth Circuit strongly disagrees.  Just because the legislature did not explicitly include a territorial restriction in the Act does not mean that uninsured motorist coverage applies to accidents around the world.  In fact, the Mississippi legislature, through nothing more than silence, could not have intended Mississippians to have such broad-based uninsured motorist coverage.  The geographical coverage of the insurance policy does not have to be broader than the underlying Uninsured Motorist Act.  Therefore, the territorial restriction in the insurance policy does not violate Mississippi public policy.

Citation:  Boatner v. Atlanta Specialty Ins. Co., No. 96-60815 (5th Cir. June 27, 1997).

JURISDICTION

In SEC suit concerning sale of unregistered foreign securities, Eleventh Circuit applies "national contacts" test for determining personal jurisdiction over Costa Rican corporation

The U.S. Securities and Exchange Commission (SEC) brought an action in Florida federal court against a Costa Rican corporation, Bosque Puerto Carillo, and two of its officers (jointly Bosque).  To finance its teak tree plantation, Bosque had allegedly sold unregistered securities to U.S. residents.  For this purpose, Bosque advertised in the in-flight magazines of American Airlines and Costa Rica's Lacsa Airlines, and had a Florida-based author write two favorable articles about Bosque's securities.  Buyers paid for the securities through the Miami branch of a Costa Rican bank.  All defendants are Costa Rican citizens.

Without an evidentiary hearing, the district court dismissed for lack of personal jurisdiction over the defendants because they lacked "minimum contacts."  The SEC appealed.

The U.S. Court of Appeals for the Eleventh Circuit reverses.  As for the forum, the Court disagrees with Bosque's assertion that the Eleventh Circuit has "not yet specifically set forth a rule for identifying the relevant forum -- the United States or the State where the district court sits -- for purposes of minimum contacts analysis in a nondiversity action involving an alien defendant. ... However, a survey of our precedents reveals that we generally have deemed the applicable forum for minimum contacts purposes to be the United States in cases where, as here, service of process has been effected pursuant to a federal statute authorizing nationwide or worldwide service, although we have never explicitly stated a rule to that effect." [2179]  The question then is whether a party has sufficient contacts with the U.S. as a whole, rather than with any particular state.

Furthermore, Fed.R.Civ.P. 4(k)(2) [service of documents to establish personal jurisdiction] authorizes personal jurisdiction over foreign defendants when the defendant has enough aggregate contacts with the U.S. but not enough to satisfy the long-arm statute of any particular state.  In this case, personal jurisdiction rests on federal securities law that does provide for worldwide service of process.  Therefore, the entire U.S. is the proper venue for minimum contacts analysis.

Citation:  United States Securities and Exchange Commission v. Carrillo, No. 96-4408 (11th Cir. June 30, 1997).

LIS PENDENS

After five-year stay of English litigation pending outcome of related New York case still awaiting trial, English Court of Appeal declines to fire its receiver and lifts stay

Ashford Hotels Ltd. (Ashford) is a Delaware corporation with its principal place of business in New York.  In 1989, Ashford set out on a project to convert an English country home into a hotel.  Allied Irish Bank (the Bank) agreed to finance the venture with a loan of £3,000,000.  Higgins and Tyree (Higgins), two New York businessmen, next agreed to indemnify Ashford against its liability to the Bank.  The venture did not go well, and in a 1992 action, the Bank obtained a default judgment against Ashford in the English courts for over £3,600,000.  The Bank then had the court appoint a receiver to deal with the indemnity arrangement between Higgins and Ashford.

Next, Higgins sued Ashford and others in a New York state court to rescind the indemnity agreement on grounds of fraud.  Most of the evidence for this case was in New York and Ashford was actively defending the suit.  In 1993, the receiver sued Higgins in England on the indemnity agreement.  Noting the major impact that the outcome in the New York action would have on the 1993 suit in England, Higgins persuaded the English court in April 1994 to stay this action pending the resolution of the New York suit. 

Five years having passed without even reaching trial in the New York action, Higgins proposed a settlement whereby both Ashford and Higgins would each drop all outstanding claims against the other.  Though interested, Ashford correctly pointed out that, under both New York and English law, it had no right to settle without the consent of the receiver.  The receiver, however, said no.

Arguing that their inability to settle would cost them $1,000,000 in legal costs, Higgins moved in both the 1992 and 1993 English actions to have the court order the receiver either to consent to the settlement or to be removed from office.  Alternatively, it could order the Bank to indemnify them for any losses from having to litigate the New York action.  In response, the Bank asked the court to lift the stay on the 1993 suit for Higgins' dilatory handling of the New York suit.  The English court of first instance denied Higgins' motion and lifted the stay. 

Higgins took an interlocutory appeal but the English Court of Appeal (Civil Division) dismisses.  The Court finds that the receiver's thumbs down on the settlement was not improper and that there are no grounds for removing him from his office.  His action in staying uninvolved with the New York action was also sensible and rested on the then prospect of its speedy resolution.

As to its jurisdiction to require the Bank to indemnify Higgins, the Court finds it to be, though relatively recently, part of the armory of the Court by analogy to Mareva injunctions.  On the other hand, discretionary factors counsel against its use in this case of "equitable execution."  In the Mareva context, for example, the injunction often reaches to third party banks where compliance involves expense.  This has little bearing here and justice does not require imposition of a duty to indemnify.

As to the stay, due to the unreality of the June 30, 1997 trial date in New York, the balance of convenience has shifted from New York back to England.  The New York litigants can use evidence turned up there in the English courts.  Thus, the lower court did not abuse its discretion in lifting the stay so that the 1993 action can proceed.

Citation: Allied Irish Bank v. Ashford Hotels Ltd., Court of Appeal (Civil Division), 8 May 1997 (Smith Bernal Trans.).

SECURITY FOR COSTS

In malpractice action against German lawyers, Hamburg district court decides, based on civil procedure rules and reciprocity, that U.S. plaintiff need not post bond to cover attorneys' fees

The plaintiff in the District Court (Landgericht) in Hamburg, Germany, is a trading company headquartered in New York.  It brought a malpractice suit against its attorneys in Germany and paid the required court expenses.  The defendants, in turn, requested the court to order the plaintiff to post a bond for non-judicial expenses (here: the defendants' attorneys fees).

The Court rejects the defendants' request.  German law classifies juridical persons and individually-held trading companies located abroad as "foreigners."  Generally, foreign plaintiffs suing in German courts have to post a bond (Ausländersicherheit) upon the defendant's request [see § 110 I 1 Zivilprozessordnung (ZPO)].  This requirement does not apply, however, if a German plaintiff would not have to post a bond in the plaintiff's country [§ 110 II Nr. 1 ZPO].

The main purpose of § 110 ZPO is to encourage foreign states to waive such bonds for German plaintiffs.  Another purpose is to ensure that a German defendant can recover court costs that would otherwise be hard to obtain abroad.  This bond, however, provides little protection to German defendants sued by U.S. plaintiffs.  Even when a German court awards judicial expenses to a German defendant, enforcement in the U.S. is inadequate because it would not include attorneys' fees. [Editors' Note:  As a general rule, the loser in German court proceedings pays the winner's court costs and attorneys' fees].

The question of reciprocity depends on the German‑U.S. Treaty of Friendship, Commerce and Navigation of October 29, 1954 [7 U.S.T. 1839, T.I.A.S. No. 3593, 273 U.N.T.S. 3943].  Article VI of the Treaty relieves a person or company from the bond requirement if he, she, or it resides in the judicial district where the action is pending, or has a representative office or sufficient real estate there.  In this case, the U.S. plaintiff does not have a representative office or sufficient real estate in Germany.

On the other hand, the ZPO does not demand perfect reciprocity; partial reciprocity is enough [§ 328 I Nr. 5 ZPO].  A finding of reciprocity depends on a variety of factors, for example (1) whether the foreign plaintiff must post a bond at all court levels or only in a particular instance; (2) the personal situation of the plaintiff such as possession of real estate or residence in the judicial district; and (3) whether the amount of the bond includes only court costs or attorneys' fees as well.

In U.S.-German relations, several special factors appear.  In the U.S., the bond requirement is a matter of state law.  Therefore, to determine whether there is reciprocity, a German court must determine whether a bond requirement would apply to German plaintiffs in the U.S. plaintiff's state of residence.  German courts have already decided the reciprocity issue for California, Colorado, Illinois and New York (there is only limited reciprocity between Germany and New York).

A complicating factor is the relationship between U.S. state law and federal law.  U.S. federal courts do not generally require foreign plaintiffs to post a bond.  If a federal court would have jurisdiction over the cause of action, a German court should find reciprocity even though the law of the U.S. State where the federal court is situated would require a bond.  It is sufficient if there would be one possibility of enforcing the cause of action in the U.S. plaintiff's home state.  A final factor is that U.S. law generally does not permit the prevailing party to recover court and attorneys' fees from the defeated party.

The present action is not one that would allow a plaintiff to recover court costs and attorneys' fees if brought in the U.S.  Furthermore, New York law does not permit the prevailing party to recover attorneys' fees.  Therefore, a New York bond does not cover attorneys' fees but only court costs [§ 8501 New York Civil Law and Practice Rules].  Because German plaintiffs do not have to pay a bond for attorneys fees in New York, there is partial reciprocity.  In sum, the U.S. plaintiff does not have to post a bond for attorneys' fees in the present proceeding.

[Submitted by John Wolff, Adjunct Professor of Law at Georgetown University Law Center in Washington, D.C.].

Citation:  LG Hamburg, Urteil vom 29.1.1997 - 302 O 100/96.  Reported in 1997 RIW, Heft 4, Internationales Wirtschaftsrecht, page 331.  [For a more detailed discussion of bonds in U.S.-German legal relations, see Schütze, Zur Verbürgung der Gegenseitigkeit bei der Prozesskostensicherheit im deutsch-amerikanischen Verhältnis, 1996 RIW, page 479.]

TRADE

India issues regulatory "safeguards" to protect domestic industry

On July 29, 1997, the India Department of Revenue issued detailed rules for "safeguard" duties under Section 8 B of the Customs Act.  The purpose of the duties, in light of India's phasing-out of the import-licensing system, is to protect the domestic industry from foreign competition.

Such "safeguards" are triggered once a "serious injury" to the domestic industry due to increased imports has been established before the designated government authority in the Ministry of Commerce.  The safeguards will apply only to a few products at a time.  [Article 8(1) of the WTO agreement on safeguards envisions adequate compensation for the adverse effects of safeguards duties suffered by the affected countries.  The new Indian regulations, however, do not provide for such compensation].

The implementation of the new rules is expected to take some time because the infrastructure for the enforcement of the rules, such as an appropriate administrative unit, is not yet in place.

Citation:  Customs Notification (Non-Tariff) No. 35 (July 29, 1997), published in 1997 India Gazette (extraordinary), Part II, Section 3A, Sub-section (i) (July 29, 1997); information received from 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

- Asia-Pacific tariffs available on the internet.  The new Taiwanese "Customs Import Tariff and Classification of Import and Export Commodities" is in force since June 1, 1997.  It complies with the "Harmonized Commodity Description and Coding System." -- Information on Asia Pacific Economic Cooperation (APEC) tariff schedules and customs manuals is now on the internet, free of charge.  The address is http://www.apectariff.org.  It contains complete tariff schedules, as well as some customs manuals in English, for Australia, Canada, China, Hong Kong, Indonesia, Japan, South Korea, Mexico, New Zealand, Papua New Guinea, Philippines, Singapore, Taiwan, and the U.S.  Users may search for tariff rates by Harmonized System Tariff (HTS) (or Schedule B number) and keyword.  Citation:  Information received from the U.S. Department of Commerce, Asia Business Center, Phone: (202) 482-2522.

- EU no longer opposes Boeing-McDonnell Douglas merger.  After initial opposition, the Commission of the European Communities has finally accepted the merger of Boeing and McDonnell Douglas.  [Editors' Note: Boeing's only major competitor is the European Airbus consortium. The merger falls within the scope of EU competition law because its joint annual sales exceed ECU 250 million].  The EU had especially objected to the long-term supply contracts that Boeing has concluded with several airlines [see Süddeutsche Zeitung (Germany), July 7, 1997].  In a statement issued on July 23, 1997, the Commission acknowledged Boeing's actions to address EU concerns.  Boeing, for example, agreed to

- renounce exclusive aircraft supply contracts, including contracts already in force; and

- maintain McDonnell civil aircraft operations as a separate legal entity within the merged company.  Citation:  European Union New press release, Number 50/97 (July 23, 1997); The New York Times, July 24, 1997, page A1; The Washington Post, July 24, 1997, page E1.

- U.S. Department of Commerce publishes NAFTA report. On July 11, 1997, the U.S. Depart of Commerce released a Study on the Operation and Effect of the North American Free Trade Agreement (NAFTA).  The study assesses NAFTA's economic effects in aggregate and selected manufacturing sectors and agriculture, as well as the implementation of the NAFTA environmental and labor agreements.  The study is based on a variety of outside studies and Mexican and U.S. data.  Citation:  Department of Commerce News Release via ITA Pressroom (July 11, 1997). The report is available on the internet at http://www.ustr.gov/reports/index.html (in Adobe Acrobat format).  For further information, call Mr. Jim Desler, ITA Office of Media Affairs, at (202) 482-3809.

- State Department will no longer bar defense articles destined for Mongolia.  The U.S. Department of State will amend the International Traffic in Arms Regulations (ITAR) [22 C.F.R. part 126] to no longer deny licenses, approvals, exports and imports of defense articles and services destined for, or originating in, Mongolia.  The effective date was June 30, 1997.  Citation:  62 Federal Register 37133 (July 11, 1997).

- U.S. and Japan release interim report on their joint defense guidelines.  On June 7, 1997, the U.S. and Japan released the interim report on the new Japan-U.S. Defense Cooperation.  The defense cooperation will include the use of Japanese airfields by U.S. warplanes in times of conflict, Japanese involvement in minesweeping, as well as Japanese peace-keeping duties.  The guidelines would have Japan assist the U.S. if U.S. troops are acting in emergencies in areas around Japan.   A final report is expected in the Fall of this year.  Citation:  Japan Now (published by the Japan Information and Culture Center, Embassy of Japan in Washington, DC), July 1997 (Number 7), page 4.

- EU publishes 1997 report on U.S. trade barriers.  On July 29, 1997, the Commission of the European Communities issued its 13th annual report on U.S. trade barriers, the Report on Barriers to Trade and Investment in the United States.  The Report addresses tariff barriers, non-tariff barriers, investment-related measures, intellectual property rights, and services.  In particular, the Report criticizes the U.S. use of domestic legislation with extraterritorial application.  Two examples of that are the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996, and the Iran-Libya Sanctions Act.  In the public procurement area, the Report discusses the sub-federal selective purchasing laws that restrict the activities of EU companies in U.S. states and cities.  One example is the Massachusetts "Burma Law," which restricts the state's business with Burma (Myanmar) or companies that have extensive activities there [Mass. Ann. Laws ch. 7, § 22G et seq. (1996)].  Citation:  European Union News press release, Number 52/97 (July 29, 1997).  Readers may obtain the 50-page report by requesting it by FAX from the Delegation of the European Communities in Washington, D.C., FAX: (202) 429-1766, or by downloading it from the internet, either from the EC Commission's Market Access Database [http://mkaccdb.eu.int] or the EU-U.S. Relations home page [http://europa.eu.int/en/comm/dg01/eu-us.htm].

- EU prepares new guidelines for food from genetically modified organisms.  The Commission of the European Communities has agreed on guidelines for the labelling of products produced from genetically modified organisms (GMOs).  The guidelines will eventually affect GMOs throughout the entire food chain, from animal feed to final food products containing GMOs.  In essence, the guidelines provide for voluntary labelling ("this does not contain ...") for products free of GMOs, and mandatory labelling ("this contains ...") for products that are derived from GMOs or may contain such products.  Citation:  European Union News press release, Number 51/97 (July 25, 1997).

- U.S., Russia and 28 European countries agree on new treaty to reduce military forces throughout Europe.  On July 23, 1997, negotiators for the U.S., Russia, and 28 European countries agreed on a treaty to replace the 1990 Conventional Forces in Europe Treaty (CFE).  The 1990 Treaty established a basic balance in conventional weapons between NATO and the Warsaw Pact.  The new agreement, to be finalized next year, will further reduce military forces in Europe.  It will set limits for U.S. forces in Europe, as well as for each European country.  Citation:  The White House, Office of the Press Secretary, Press Briefing (July 23, 1997); The Washington Post, July 24, 1997, page A1.