ACT
OF STATE DOCTRINE
In
action by victims of human rights violations to levy on assets of former
Philippine dictator, Ninth Circuit dismisses because requested interference
with Swiss freeze of Marcos assets would violate Act of State Doctrine
In a
Multi-District Litigation [Case No. 840 (D. Hawaii)], 9,539 victims of human
rights violations in the Philippines won a $1,964,005,859.90 award against the
Estate of Ferdinand Marcos. The judgment enjoined the Estate and its agents
from transferring any funds pending satisfaction of the judgment.
The
plaintiffs then registered their judgment in the Central District of California
and served notices of levy on the California offices of Credit Suisse and Swiss
Bank Corp. (jointly “Credit Suisse”), incorporated and headquartered in Switzerland. On appeal, the Ninth Circuit held that the post-judgment enforcement must
comply with California law. This required “personal service” at the Swiss
office where the bank carried the account. The plaintiffs then filed an action
in California district court directly against Credit Suisse, seeking to enjoin
any transfer on behalf of the Marcos Estate (the "Rosales action").
Credit Suisse unsuccessfully argued in district court that the Rosales action
violated the Act of State Doctrine. It
then petitioned the Court of Appeals for a writ of mandamus to dismiss the
case.
The
U.S. Court of Appeals for the Ninth Circuit grants the petition to dismiss the
Rosales action on Act of State grounds.
The Act of State Doctrine bars an action if (1) there is an official act
of a foreign sovereign performed within its own territory, and (2) the relief
sought or the defense interposed in the action would require a U.S. court to
invalidate the foreign sovereign’s official act.
First,
the Swiss Federal Council, the governing body of the Swiss Executive Branch,
had frozen Marcos’ Swiss assets in 1986.
The Cantons where Marcos’ assets are held -- Geneva, Fribourg and Zürich
-- later issued cantonal freeze orders that superseded the federal freeze and
remain in effect today. These acts are
clearly official acts of a foreign sovereign performed within its own
territory.
Second,
the injunction sought by the plaintiffs would compel Credit Suisse to subject Marcos’ assets to
the district court’s orders, even though Swiss orders have kept the assets
frozen. Therefore, subjecting the frozen assets to U.S. court orders would
allow a U.S. court to question and, in fact, declare invalid the official act
of a foreign sovereign. The writ of mandamus directs the district court to
dismiss the case and to refrain from taking further action regarding the Marcos
Estate.
Citation:
Legal Commentary by Attorney Mike Meier. Credit Suisse v. U.S. District Court for the Central District of
California, No. 97-70193 (9th Cir. December 3, 1997).
ARBITRATION
Second
Circuit enforces clause requiring arbitration in Italy because plaintiff failed
to show specifically that defendants had fraudulently induced plaintiff to
accept arbitration abroad
In
1974, Saporiti Italia S.p.A. signed an agreement with Campaniello Imports, Ltd.
under which the latter would act as the exclusive North American distributor
for the former's furniture. Business went well until the 1990s. By January 1994, however, Saporiti fell upon
hard times and went into liquidation in Italy.
Two months later, Campaniello filed a fraud and breach of contract suit
against Saporiti in New York federal court.
The suit sought compensatory and punitive damages. Saporiti then petitioned the local Italian
tribunal for a Concordato Preventivo, a mode of relief under Italian law
similar to Chapter 11 restructuring under U.S. law. The Tribunal authorized
another Italian furniture company, Gidatex S.R.L., to see if it could take over
Saporiti operations for ten months. This
might keep Saporiti afloat so as to elude final liquidation.
Gidatex
then proposed to Campaniello an agreement whereby the latter could remain a
Saporiti distributor for ten months if it dismissed its New York lawsuit. The two sides met in Italy and finalized this
“Gidatex” agreement in June 1994. In July
the parties finalized a separate “Settlement Agreement” under which Campaniello
would drop its U.S. law suit “with prejudice.”
The Italian provincial court approved it. The parties then amended the Gidatex
agreement to fine tune the business relationships. The amendments contained the following
arbitration-in-Italy clause that said: “any controversy between the two parties
regarding the above agreement will be resolved by arbitration.” The agreement, however, did not work out and,
in April 1995, Gidatex gave notice of termination to Campaniello.
In
September 1995, Campaniello filed the instant action in New York federal court,
alleging that Gidatex had fraudulently induced them to enter into the
Settlement Agreement. It sought
rescission and damages. Defendants moved
to dismiss, inter alia, on the grounds that the agreement demanded arbitration
of contract disputes. The district court
granted the motion.
The
U.S. Court of Appeals for the Second Circuit affirms. The Court first examines whether the parties
had actually agreed to arbitrate and, secondly, whether the scope of the
agreement included the claims asserted below.
Though plaintiff admits the presence of the clause, it contends that
defendants had fraudulently induced plaintiff to enter into the contract that
bore it. Citing Prima Paint Corp. v.
Flood & Conklin Mfg. Co., 388 U.S. 395, 403‑04 (1967), the Court points out
that plaintiff must show that the alleged fraud went fairly specifically to the
arbitration clause and not merely to the contract as a whole. As to this, plaintiffs argued that part of
the fraud was to make sure that contract disputes would not go before the
American courts with its wider range of remedies but to the Italian
arbitrator. The Court, however, rejects
plaintiff’s effort as one to metamorphose general contract fraud into
arbitration fraud.
“In
Prima Paint, the Supreme Court clearly distinguished between fraud in the inducement
of the arbitration clause itself, which may be considered by the federal court,
and fraud in the inducement of the contract generally. This distinction would
be eviscerated if a claimant could transform a general fraud claim into fraud
in the inducement of the arbitration clause merely by stating that the
arbitration clause is an element of the scheme to defraud. This fact becomes
evident if one considers the evidentiary trial that would have to be conducted
in this case to determine if there was fraud in the inducement of the
arbitration clause. Since there is no fraud or misrepresentation that relates
directly to the arbitration clause, the District Court would have to determine
whether the appellees defrauded appellants into settling their case and
accepting a sham contract with an arbitration clause; in short, the District
Court would have to adjudicate the entire fraud claim. Similarly, in every
instance where there is a fraud going to the contract generally and an
allegation that the arbitration clause was ‘part of the scheme to defraud,’ the
court would have to adjudicate the entire scheme to defraud. Consequently,
there would never be an instance where a claim of fraud going to a contract
generally would be sent to arbitration by a federal court.” [667]
Citation:
Legal Commentary by Attorney Mike Meier. Campaniello Imports Ltd. v. Saporiti Italia S.P.A., 117 F.3d 655 (2d
Cir. 1997).
CHOICE
OF LAW
In
litigation over Saskatchewan accident, British Columbia Court of Appeal
retrospectively applies later Canadian Supreme Court ruling that statutes of
limitations were no longer "procedural" for choice-of-law purposes
In
Saskatchewan, Ms. Stewart, a resident of British Columbia was injured in May
1993 while riding as a passenger with her father, Daniel Stewart, in a company
car. Fifteen months later, she sued her
father and the corporate owner in a B.C. court.
Both defendants "resided" in Saskatchewan.
Saskatchewan
law provided for a one‑year limitation period in tort cases, but B.C. law had a
two‑year period. As the law stood in May
1993 and in October, 1994, when plaintiff filed her suit, the B.C. courts were
entitled to apply their longer limitation period. The theory was that the statute constituted a
"procedural" matter in which the forum can apply its own law.
In
December, 1994, however, the Supreme Court of Canada handed down Tolofson v.
Jensen, [1994] 3 S.C.R. 1022, 100 B.C.L.R. (2d) 1, 120 D.L.R. (4th) 289. Tolofson held (1) that, in
multijurisdictional tort cases, the substantive law of the place of the wrong
(lex loci delicti) governed, and (2) that courts should classify limitation
periods as "substantive."
Plaintiff,
however, relied upon § 13 of the B.C. Limitation Act. It said that, if the law of a jurisdiction
other than B.C. is applicable and if private international law would classify
the limitation law of that jurisdiction as procedural, the B.C. court has two
options. It may apply its own limitation
law or it may apply the limitation law of the other jurisdiction if this
produces a more just result. After unsuccessfully
moving to dismiss the action on the ground that Saskatchewan law barred the
action, defendants took an appeal.
The British Columbia Court of Appeal allows
the appeal. In the Court's view, § 13
did not apply. In light of Tolofson, the
B.C. courts could no longer characterize the Saskatchewan limitation law as
"procedural." In Canadian
jurisprudence, judicial decisions are usually retrospective in effect. The theory is that when a court overrules
prior decisions, it does not change the law.
Rather, it merely reveals the true law as it always existed and corrects
past errors. As Blackstone indicates, it
is not that the overturned law was bad; it was not law at all. Thus, the Saskatchewan limitation period
barred the action although plaintiff had filed her suit relying upon the legal
regime that existed before Tolofson.
Citation:
Legal Commentary by Attorney Mike Meier. Stewart v. Stewart, 145 D.L.R.4th 228 (B.C.C.A. 1997).
EVIDENCE
In
case of first impression, First Circuit approves admission of English
deposition of prosecution witness as evidence against accused despite claim of
incompatibility with Confrontation Clause
David
McKeeve and his business partner, both UK citizens, ran a Scottish company
through which they acquired U.S. computer equipment for the Libyan
Government. Even though McKeeve was
aware of the U.S. restrictions on trade with Libya, he bought the equipment in
Massachusetts. The U.S. Customs Service held the shipment at port though
“Cyprus” was the stated destination. It is allegedly a notorious clearinghouse
for goods being shipped to embargoed countries.
McKeeve
was convicted of violating the International Emergency and Economic Powers Act
(IEEPA) [50 U.S.C. §§ 1701-1706 (1994)] and related Executive Orders and
regulations. His conviction rested in
part on the deposition testimony of Alex Redpath, the British shipping agent,
taken in the UK. Redpath testified that
McKeeve had told him to forward the computer equipment from Cyprus to Libya.
McKeeve’s main argument on appeal was that use of the foreign deposition
against him had violated the Confrontation Clause.
The
U.S. Court of Appeals for the First Circuit affirms. Redpath had given his deposition before a British
magistrate in a Court in Birmingham, England.
McKeeve monitored the proceedings through a live telephone link. A
solicitor prepared a transcript of the deposition.
“When
the government conducts a [Fed.R.Crim.P.] Rule 15 deposition in a foreign land
with a view toward introducing it at trial, the Confrontation Clause requires,
at a minimum, that the government undertake diligent efforts to facilitate the
defendant’s presence. ... We caution,
however, that although such efforts must be undertaken in good faith, they need
not be heroic, and the possibility of using a deposition does not evaporate
even if those efforts prove fruitless.
In that event the district court must determine, on a case-specific
basis, whether reasonable alternative measures can preserve adequately the
values that underpin the defendant’s confrontation rights. In cases where actions by, or the laws of, a
foreign nation effectively preclude the defendant’s presence, furnishing the
defendant with the capability for live monitoring of the deposition, as well as
a separate (private) telephone line for consultation with counsel, usually will
satisfy the demands of the Confrontation
Clause.” [slip op., 12-13]
Such
extrajudicial statements are admissible as long as they possess sufficient
indicia of reliability. Fed.R.Evid.
804(b)(1) provides a hearsay exception for the former testimony of an
unavailable witness. Based on this
“firmly-rooted” hearsay exception, the Court finds no violation of the
Confrontation Clause by admitting the foreign deposition testimony. To pass
muster under Rule 804(b)(1), the witness must be unavailable, and the
deposition must constitute former testimony.
“The
standard test for unavailability is whether the witness’s attendance could be
procured ‘by process or other reasonable means.’ Fed.R.Evid. 804(a)(5). In a criminal context, however, Confrontation
Clause concerns color the Rule 804 availability inquiry and heighten the
government’s burden. ... Thus, the prosecution must actively attempt to secure
the witness’s presence at trial. ... Here, ... the government made an assiduous
effort to convince Redpath to attend the trial ... The remaining question is
whether Redpath’s deposition amounted to ‘former testimony’ within the purview
of Fed.R.Evid. 804(b)(1). ... To be sure, the deposition did not comport in all
respects with American practice, but that circumstance alone does not render
the testimony not ‘in compliance with law’ and therefore beyond the reach of
Rule 804(b)(1). ... ‘[U]nless the manner of examination required by the law of
the host nation is so incompatible with our fundamental principles of fairness
or so prone to inaccuracy or bias as to render the testimony inherently
unreliable, ... a deposition taken ... in accordance with the law of the host
nation is taken ‘in compliance with law’ for purposes of Rule 804(b)(1).’”
[slip op., 16-18]
Among
the indicia of reliability cited by the Court are the administration of the
oath, oversight by a judicial officer, unlimited direct and cross-examination,
as well as linguistic compatibility.
Citation:
Legal Commentary by Attorney Mike Meier. United States v. McKeeve, No. 96-2273 (1st Cir. December 5, 1997).
EVIDENCE
In
prosecution for exports of banned U.S. technologies to Libya, Second Circuit
holds that Malta Customs documents are inadmissible under exceptions to hearsay
rule if government did not follow procedure for admission of foreign documents
under 1984 Crime Control Act
A
federal jury convicted Thomas Doyle and Robert Vance of illegally exporting
fuel pumps to Libya. They appeal their
convictions for conspiracy and selling U.S. equipment to Libya in violation of
the trade embargo against Libya [International Emergency Economic Powers Act,
50 U.S.C. §§ 1701, 1702, 1705(b); 31 C.F.R. Part 550].
The
background facts are as follows. A 1986
Executive Order of the U.S. President [Exec. Order No. 12,543, 51 Federal
Register 875 (1986)] prohibited trade with Libya. Libya’s national oil company nevertheless
sought to purchase spare parts for American-made oil field technologies. Doyle, who had connections within U.S. army
intelligence, and his nephew Vance, sold fuel pumps and other parts to a German
company, declaring them as "auto spares" in the shipping papers. The German company, in turn, sold them to
Libya. Some of the items were shipped to
Libya with a stopover in Malta.
The
U.S. Government requested, and the district court issued, international letters
rogatory to the Maltese government as part of the investigation. One letter asked for official Maltese records
dealing with the defendants' shipments of fuel pumps to Libya. In response, a Maltese government official
signed and certified several customs
documents as authentic. The Malta
Customs Department had generated some of the documents. Private companies had filed others with the
Department. A Senior Malta Customs Official appended a sworn statement of
authenticity. The U.S. Consul on Malta
received and transmitted the documents to U.S authorities. The government introduced them as "foreign
government public documents" at trial.
The
U.S. Court of Appeals for the Second Circuit reverses and remands because of
erroneous instructions to the jury. The
Court, however, also discusses various evidentiary issues in its opinion.
The
Appellants challenge, among other things, the admission of the Malta Customs
documents as authentic under Federal Rule of Evidence 902(3)
[self-authentication of government records].
They particularly object to the documents generated by private parties
and filed with the Malta Customs Department.
Their complaint was (1) that Rule 902(3) applied only to the
authentication of government documents, and (2) that the documents were also
hearsay.
The
Court explains. "The requirement
that the document be 'certified as correct' means only that the authenticating
official certify that the copy delivered to the court is an accurate copy of
the government record. To satisfy Rule
903, the official does not need to attest to the truth or trustworthiness of
the facts contained in the document; accuracy of its contents is the concern of
other Federal Rules, such as the many rules concerning hearsay in Rules 801, et
seq. The only concern of Rules 901, et
seq. is assuring that evidence is what it purports to be. The certification of the Maltese officials
was clearly adequate to show that these were the records of the Customs
Department. We therefore rule that all
documents delivered to the district court by Malta were properly
self-authenticated pursuant to Rule 903(3) and (4)." [71-72]
As
for the hearsay issue, the documents could be admissible under Rule 803(6), the
hearsay exceptions for business records, or Rule 803(8), the exception for
government records. The government did not lay a proper foundation, however,
for the business records provision. For
example, the Maltese Senior Customs Official could not testify as to the
record-keeping practices of the private businesses involved.
The
Rule 803(8) question is a closer one. "Rule 803(8)(B) can encompass
statements of non-governmental parties who act as agents for the government
under duties imposed by law. ... The
Senior Inspector's sworn statement stated that the documents he delivered 'set
forth matters which are required by the laws of Malta to be recorded and
filed.' In this case, however, there was
no showing of procedures that assure the documents are reliable, of any
standards applied to the recordation of the documents, or of any monitoring by
Malta of their accuracy. Malta may, in
some fashion, punish the making of false statements to the customs agency, but
the Government has pointed us to no authority saying that it does so. Furthermore, we doubt that a legal 'request'
for filing records with a government agency would alone qualify the records for
the hearsay exception without some showing that the records were reliable, such
as a showing that the private party was acting as an agent of the
government." [slip op., 77-78]
[The
Crime Control Act of 1984 sets forth a procedure for establishing a foundation
for foreign documents for purposes of complying with the business records
exception. The Government, however, did
not provide a foreign certification based on the Act, and did not notify the
Appellants or the court of its intention to rely on this procedure.]
The
Court concludes that the admission of privately-generated, business records
without further foundation, even though in the possession of a foreign
government agency, is improper. If there
is other evidence that the documents recorded with the Maltese Customs
Department are verified or otherwise reliable, they may be admissible.
Citation:
Legal Commentary by Attorney Mike Meier. United States v. Doyle, No. 96-1542 (2d Cir., December 4, 1997).
INVESTMENT
DISPUTES
ICSID
panel rules in favor of U.S. corporation and awards it $9,000,000 in its claim
that soldiers of Zaire had looted and destroyed one of its local manufacturing
complexes
In
January 1993, American Manufacturing & Trading, Inc. (AMT), a Delaware
corporation, began a proceeding against the Republic of Zaire in the
International Centre for the Settlement of Investment Disputes (ICSID). It
alleged that Zaire had breached AMT's rights under a 1984 U.S.‑Zaire bilateral
investment treaty (BIT). According to
AMT, Zaire failed to compensate AMT for property damage and losses caused by
elements of Zaire's armed forces in September 1991 and January 1993.
AMT
claimed that, on two occasions, Zaire soldiers destroyed property in a local
industrial complex run by SINZA, S.P.R.L.
AMT owned 94% of SINZA stock. The
complex had been producing automotive
and dry cell batteries. Specifically,
the soldiers broke into the complex and demolished it. They then hauled away all finished goods,
nearly all raw materials and other valuable objects. After the second set of incursions, AMT had
to shut the SINZA complex down permanently.
AMT sought $14,300,000 as the fair market value of its losses,
reimbursement for loss of profits (lucrum cessans), 8% interest and the costs
of the arbitral proceedings. The Centre appointed three arbitrators to the
panel.
Zaire
did not disavow the damages nor did it appear at the oral hearing. Instead, it contended that the Tribunal
lacked jurisdiction and that the AMT claim was inadmissible for several
procedural reasons. For example, Zaire
questioned whether there was a legal dispute (ratione materiae); whether there
was a controversy between a State and a national of another State (ratione
personae); and whether both of the Parties have consented (ratione
voluntatis). Zaire also contended that
the most‑favored‑nation and national-treatment provisions excused it from
paying damages to AMT and that Zaire domestic law, that bars claims like AMT's,
preempts the BIT. The Tribunal rebuffed
all of Zaire's reasoning.
The
Tribunal ultimately ruled for AMT and entered an award for $ 9,000,000 along with 7.5% overdue interest after 60
days and $ 104,828 to cover one half of costs advanced by AMT.
Citation:
Legal Commentary by Attorney Mike Meier. American Manufacturing & Trading, Inc. v. Republic of Zaire, ICSID
Case Arb/93/1, released February 21, 1997, 36 I.L.M. 1531. [According to an
I.L.M. editorial note: " [t]his is the first award ever given under the
law of a bilateral investment treaty to which the United States is a
contracting party."]
JUDICIAL
ASSISTANCE
Despite
major efforts of plaintiffs and Minnesota Court in complex tobacco litigation
to develop requests for oral testimony abroad that comply with English law,
English Court of Appeal concludes that they fail to pass muster
The
State of Minnesota and that state's Blue Cross and Blue Shield filed suit in a
Minnesota state court against a number of tobacco companies including
British-American Tobacco Company (BAT) and its associated companies. The complex action sought substantial damages
to compensate plaintiffs for the expenses of treating tobacco-related
diseases. It also asked for punitive
damages because of defendants' conspiracy to cover up evidence of the addictive
nature of tobacco and of the lethal nature of cigarettes. The English companies denied liability and
also the jurisdiction of the Minnesota courts.
At
plaintiffs' behest, the state judge issued a request for the taking of
testimony by videotape in England from four former high officials of BAT, not
for pretrial discovery purposes but for use at the trial. On July 8, 1997 an English trial judge
narrowed the request considerably and then ordered the witnesses to
testify. He acted pursuant to the Evidence
(Proceedings in Other Jurisdictions) Act of 1975 which had implemented the
Hague Evidence Convention. From this
order, defendants appealed. The English Court of Appeal (Civil Division) allows
the appeal.
In
his opinion, Lord Woolf, Master of the Rolls, first points out that traditional
oral discovery American style, especially of non-parties, is far broader than
that allowed in the U.K. Although the
1975 Evidence Act does not let English courts help American courts to carry out
pretrial "discovery" in the sense of a "fishing
expedition," the present matter involves a request for admissible trial
evidence.
In
that context, English courts describe "fishing" as amounting to
"a roving inquiry, by means of the examination and cross‑examination of
witnesses, which is not designed to establish by means of their evidence
allegations of fact which have been raised bona fide with adequate particulars,
but to obtain information which may lead to obtaining evidence in general
support of a party's case."
Noting
that the inquiry extends back 40 years, Lord Woolf concludes that the 1975 Act
does not authorize international judicial cooperation here. Excessively "wide and uncertain"
requests remain despite the American court's conscientious efforts and the
lower court's pruning actions. It is
unfair to disable the witnesses from being able to get ready to respond and
from protecting themselves against irrelevant inquiries.
Judge
Gibson agrees. Quoting from the Minnesota rules, he stresses the pervasive use
of costly oral depositions in American practice in contrast with English
procedure. Though plaintiffs did try to
designate the documents to which they would refer the witnesses, there were
literally millions of potential documents to ask about. This made the
designation task impracticable and of little or no help to the witnesses. Nor could or should the English judge try to
"blue pencil" the request to make it acceptable.
Judge
Otton essentially concurs with the above reasoning.
Citation:
Legal Commentary by Attorney Mike Meier. State of Minnesota v. Philip Morris Inc., 30 July 1997 [Ct. App. (Civ.
Div.)] [Transcript: Smith Bernal].
JURISDICTION
(PERSONAL)
New
Jersey federal court dismisses injury suit against Italian hotel company for
lack of general jurisdiction over it based merely upon state citizens’ access
to its internet site
Itajolly
Compagnia Italiana Dei Jolly Hotels operates 32 hotels in Italy as an Italian
subsidiary of Jolly Hotels, Inc. It had
an arrangement to make available to Grand Circle Travel certain rooms in the
Jolly Diodoro Hotel in Taormina, Sicily.
Eileen Weber was a frequent user of GCT and, in 1994, used it to book
several hotels in Italy including the Jolly Diodoro.
On
December 7, 1994, Weber fell and injured herself in that hotel and filed suit
against Itajolly and Jolly Hotels in New Jersey state court. She claimed that defendant Itajolly should
have known of the dangerous condition that led to her fall. Defendants removed it to federal court based
on diversity of citizenship. Itajolly
moved to dismiss for lack of personal jurisdiction over it. The U.S. District
Court for the District of New Jersey grants the motion.
The
Court finds that defendant does not personally conduct any business in New
Jersey. It does, however, have a web
site on the Internet. The site provides
photographs of hotel rooms, summaries of hotel facilities, as well as data
about numbers of rooms and telephone numbers. Plaintiff argued there was
“general” jurisdiction in that the web site constituted advertising and hence
doing business in New Jersey. The Court
sees no merit in this argument.
The Court divides the cases dealing with
this issue into three categories. “The
first category includes cases where defendants actively do business on the
Internet. In those instances, personal jurisdiction is found because defendants
‘enter into contracts with residents of a foreign jurisdiction that involve the
knowing and repeated transmission of computer files over the Internet.’ The
second category deals with situations ‘where a user can exchange information
with the host computer. In these cases, the exercise of jurisdiction is
determined by examining the level of interactivity and commercial nature of the
exchange of information that occurs on the Web site.’ ... The third category
involves passive Web sites; i.e., sites that merely provide information or
advertisements to users. ... Districts courts do not exercise jurisdiction
in the latter cases because ‘a finding
of jurisdiction . . . based on an Internet web site would mean that there would
be nationwide (indeed, worldwide) personal jurisdiction over anyone and
everyone who establishes an Internet web site. Such nationwide
jurisdiction
is not consistent with traditional personal jurisdiction case law . ...’” [Slip
op. 14-15]
In the Court’s view, this case clearly falls
into category three. Defendant placed information about its hotels on the
Internet to advertise and not to conduct business. “Thus, the Court finds that
exercising jurisdiction over a defendant who merely advertises its services or
product on the Internet would violate the Due Process Clause of the Fourteenth
Amendment. Exercising jurisdiction in such a case would be unjust and would
disrespect the principles established by International Shoe and its progeny.”
[Slip op. 17]
Citation:
Legal Commentary by Attorney Mike Meier. Weber v. Jolly Hotels, Inc., 977 F. Supp. 327 (D.N.J. 1997).
TECHNOLOGY
U.S.
and EU sign Science & Technology Agreement providing for joint research and
training operations as well as personnel exchanges
On
December 5, prior to the opening of the U.S.-EU Summit in Washington, D.C., the
U.S. and the EU signed a Science and Technology Agreement. The Agreement sets
up a framework for expanding U.S.-EU scientific cooperation through joint
endeavors. It also looks to the
protection of intellectual property rights resulting from joint research.
The
sectors for joint activities include the environment, biomedicine and health
(including AIDS research), biotechnology, and social sciences (Article 4). The
joint activities will include, for example, joint research, seminars, training
activities, sharing of equipment, and exchange of scientific personnel between
EU scientific institutions and U.S. government agencies [including the
Environmental Protection Agency (EPA) and the national Institutes of Health
(NIH)]. A joint Consultative Group (JCG) will monitor the activities pursuant
to the Agreement (Article 6). A specific
Annex determines the intellectual property rights in the resulting research
results. Basically, each party has a
non-exclusive, irrevocable, royalty-free license in all countries to reproduce,
distribute and use the written research (Annex, Paragraph II.A.). Other intellectual property will be
administered according to a joint “technology management plan.” (Annex,
Paragraph II.B.2(a)).
The
Agreement is valid for 5 years, and the parties may extend it for additional
5-year periods. It will enter into force
once the parties have notified each other that they have properly implemented
the Agreement into national law.
Citation:
Legal Commentary by Attorney Mike Meier. Agreement for Scientific and Technological Cooperation between the
European Community and the Government of the United States of America,
available at the website of the EC Commission in Washington DC at
http://www.eurunion.org/ partner/science.htm;
European Union News press release No. 81/97 (December 5, 1997); U.S.
Department of State Press Briefing (December 5, 1997).
TELECOMMUNICATIONS
U.S.
and EU conclude Agreement on Global Electronic Commerce
On
December 5, 1997, at the U.S.-EU Summit on Guidelines for Future Work on Trade
in Global Electronic Commerce (GEC), the U.S. and the EU concluded an Agreement
on GEC trade including a commitment to “duty free cyberspace.” The parties issued a joint statement to this
effect.
With
the “Joint EU-U.S. Statement on Electronic Commerce,” both parties agree that:
-
When parties order goods electronically and deliver them physically, there will
be no additional import duties because of the electronic communications
(Section 4.(i)).
-
They will support self-regulatory codes of conduct and technologies to gain
consumer confidence, involving all market players including consumer advocates
(Section 5.(i)), and
-
They will cooperate in R&D and electronic commerce technologies within the
framework of the EU-U.S. Science and Technology Agreement (Section 5.(iv)).
Citation:
Legal Commentary by Attorney Mike Meier. U.S. Trade Representative press
release 97-103 (December 9, 1997), available through the USTR Fax Retrieval
System at (202) 395-4809, or at the USTR website www.ustr.gov.
TELECOMMUNICATIONS
U.S.
implements market-opening commitment of WTO Basic Telecom Agreement by adopting
new standard for foreign participation in U.S. satellite services market
The
U.S. Federal Communications Commission (FCC) has issued a Report and Order
adopting a new standard for allowing foreign companies to take part in the U.S.
satellite services market. The Report and Order carry out the market-opening
commitments of the WTO Agreement on Basic Telecommunications Services [WTO
Basic Telecom Agreement] [incorporated into the General Agreement on Trade in
Services (GATS) by the Fourth Protocol of GATS, 36 I.L.M. 336 (1997)]. Under
the WTO Basic Telecom Agreement, the U.S. must let foreign suppliers provide
basic telecommunications services, including satellite services, in the
U.S. Some 68 other WTO Members have made
similar commitments.
The
regulatory changes provide a framework for evaluating requests by non-U.S.
licensed satellites for access to the U.S. economy. The FCC will review the applications to
decide whether a grant of authority comports with the public interest,
convenience, and necessity [47 U.S.C. 301].
It will take into account such public interest factors as the effect on
competition in the U.S., spectrum availability, eligibility and operating
requirements, as well as national security, law enforcement, and foreign policy
concerns. The FCC presumes that WTO
Member access promotes competition in the U.S. satellites market.
The
Commission will publish the effective date of the changes once the Office of
Management and Budget has approved the information collection requirements for
participating businesses.
Citation:
Legal Commentary by Attorney Mike Meier. 62 Federal Register 64167 (December 4, 1997).
TRADE
U.S.
prevails before WTO panel in dispute over Argentina’s ad valorem import tax and
duties
A WTO
Dispute Settlement Panel has upheld the U.S. challenge to Argentina’s duties
and taxes on imports. The underlying
facts are as follows. Most of Argentina’s import tariffs are determined in ad
valorem terms. For textiles, apparel,
and footwear, however, it used “minimum specific import duties” (Derechos de
Importación Específicos Mínimos, DIEM). For each textile, apparel and footwear
tariff categories, Argentina established an average import price. Argentina
then multiplied that price by the bound rate of 35% to determine the specific
minimum duty for all products in that category.
Argentina then applied either the specific minimum duty or the ad
valorem rate, whichever was higher. In
addition, Argentina applied a 3% tax on imported products.
The
U.S. had requested a WTO dispute settlement panel on January 9, 1997. The Panel Report became available on November
25, 1997.
In
brief, the panel considered Argentina’s specific duties on textiles and apparel
excessive, and Argentina’s 3% tax on almost all imports impermissible.
Specifically, Argentina’s duties on textiles and apparel violate GATT Article
II. Argentina may not impose specific
duties where it bases its tariffs exclusively in ad valorem terms.
Furthermore,
Argentina’s 3% statistical tax violates GATT Article VIII. Non-tariff charges
on imports must approximate the cost of any service rendered to the individual
importer or shipment at issue. The Panel
rejected Argentina’s argument that it needs to levy the tax to meet general
fiscal requirements imposed by the IMF.
Article VIII mandates that non-tariff charges may recoup only the cost
of providing services to a particular importer.
Citation:
Legal Commentary by Attorney Mike Meier. Argentina - Measures Affecting Imports of Footwear, Textiles, Apparel
and Other Item, Report of the Panel (WT/DS56/R, 25 November 1997), available at
the WTO website www.wto.org; U.S. Trade Representative press release 97-99
(November 25, 1997), available through the USTR Fax-on-Demand system at (202)
395-4809, or the USTR website www.ustr.gov.
TRADE
U.S.
Federal Trade Commission decides to continue "all or virtually all"
standard for "Made in USA" products
For
purposes of advertising and labeling, the Federal Trade Commission (FTC) has
decided to keep the "all or virtually all" standard for products
designated "Made in USA." It
has published an Enforcement Policy Statement to this effect.
In
the past, the FTC has held that a product must be wholly domestic or all or
virtually all made in the U.S. to be called "Made in USA." In 1995, the FTC issued "Proposed
Guides" for the use of U.S. origin claims, which would have required a
"reasonable basis" for making a "Made in USA" claim. After reviewing comments from interested
parties, the FTC decided to continue the current "all or virtually
all" standard because consumers are likely to understand the claim
"Made in USA" in such a way.
The
FTC explains that "all or virtually all" ordinarily means that all
significant parts of the product and processing are of U.S. origin. The foreign content of the product should be
de minimis. In making this
determination, the Commission will focus on several factors. Examples include the place of final assembly
or processing, manufacturing costs imputable to U.S. parts, and the distance of
the finished product from any foreign content.
The effective date of the Enforcement Policy was December 1, 1997.
Citation:
Legal Commentary by Attorney Mike Meier. 62 Federal Register 63756 (December 2, 1997).
TRADE
U.S.
Treasury Department issues “Reasonable Care List” to aid importers to comply
with customs rules
To
provide guidance to importers, the U.S. Department of the Treasury has
published a “Reasonable Care Checklist” to simplify compliance with customs rules. Section 484 of the Tariff Act, as amended,
requires an importer of record to use “reasonable care” in filing information
with the Customs Service. Since the
circumstances of every import transaction differ, it has been difficult to
define what “reasonable care” means in practice.
Therefore,
the “Reasonable Care List” provides checklists that the importer should review
for each transaction. The “General
Questions for all Transactions” include two questions of special interest. The first is whether a knowledgeable
individual has reviewed the Customs Regulations, the Harmonized Tariff
Schedule, and the GPO publication “Customs Bulletin and Decisions.” The second asks whether different ports or
customs offices handle identical transactions or merchandise differently.
The
list arranges additional questions by topic, for example “Merchandise
Description & Tariff Classification, “Valuation,” and “Intellectual
Property Rights.” The effective date was
December 4, 1997.
Citation:
Legal Commentary by Attorney Mike Meier. 62 Federal Register 64248 (December 4, 1997).
IN
BRIEF
- WTO
Panel finds against U.S. in dispute with Japan over whether latter unfairly
excludes foreign photographic film and paper from its market. On December 5, 1997, a Dispute Settlement
Panel of the WTO ruled that Japan has not unfairly excluded Kodak film from the
Japanese market. The U.S. had alleged
that informal barriers exist in the Japanese market because of close networks
among Japanese manufacturers, distributors, and government agencies [keiretsu]
(in this case favoring Fuji Photo Film Co.). -- This is the first WTO case that
the U.S. has lost. Citation: Legal Commentary by Attorney Mike Meier. Japan
- Measures Affecting Consumer Photographic Film and Paper (WT/DS44); U.S. Trade
Representative press release 97-102 (December 5, 1997); World Trade Panel Sides
with Japan in Kodak Sales Dispute, Washington Post (December 6, 1997), page A1.
[The Japanese Ministry of Trade and Industry (MITI) has made its government's
submissions to the Panel available on its website: www.miti.go.jp. Also, MITI summarized a survey of the Japan
Fair Trade Commission on Transactions Among Firms in the Consumer Color
Photographic Film and Paper Markets (July 23, 1997), available from Mr.
Masabumi Suzuki, Americas Division, International Trade Policy Bureau, Phone:
(81)(3) 3501-1094.]
