International Litigation Outline

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International Litigation Outline Spring 2013 Professor Kimmelman Brooklyn Law School

Part I. Jurisdiction:

-‐ When exercising diversity or alienage jurisdiction, federal courts apply the substantive law of the state in which the court is sitting, including that state’s choice of law-‐rules-‐ See Eerie doctrine

§ Klaxon Co case extended Eerie doctrine to state choice-‐of-‐law of rules.

-‐ When determining “procedural issues, federal courts exercise federal rules of civil procedure or case law. (This relates to topics such as forum non-‐convieniens, etc)

Personal Jurisdiction:

-‐ Personal Jurisdiction is integration to every single instance of international litigation

-‐ If you timely challenge Jurisdiction (as a foreign defendant) and the court agrees that there is no jurisdiction, you can raise that defense years down the road.

-‐ Chances are if you can beat Personal Jurisdiction as a foreign defendant, you are likely to have your case heard in your home forum o Note: In civil law system, evidence is required at the initial stage of

filing the summons and complaint. Thus having a case thrown from U.S. jurisdiction into a foreign (civil law) forum can likely be the determining factor whether a suit goes forward or not.

-‐ Specific Jurisdiction: o Three Requirements for Specific Jurisdiction:

§ 1.) Defendant must purposefully avail themselves of the privilege of conducting activities in the state

§ 2.) the cause of action must arise out of or be related to these activities

§ 3.) the exercise of jurisdiction must be reasonable under factor enumerated in Asahi Metal Industry

• Asahi Factors: o 1.) Defendant’s burden in litigiating in the forum o 2.) the reasonable interest of the plaintiff in

being able to litigate in the forum o 3.)the interest of the forum in opening its courts

to the litigation -‐ General Jurisdiction:

o Requirements: § Defendant’s contacts with the forum state so continuous and

systematic that plaintiff can sue defendant there although the

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cause of action is not related to the defendant’s acitvities in the state.

• Ex: contacts between defendant and a state that permit General Jurisdiction:

o Domicile o Incorporation o Principal Place of Business

§ Plaintiff may obtain General Jurisdiction over a person by serving defendant while def is temporarily in the forum

§ Plaintiff may obtain general jurisdiction over defendant even if def not domiciled in jurisdiction if the defendants contacts are continuous and systematic.

• See Helicopertos

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Personal Jurisdiction: General Jurisdiction

HELICOPERTEROS NACIONALES de COLOMBIA, S.A. v. HALL (466. U.S. 408 1984): FACTS:

-‐ Petitioner, Helicopertos is a Colombian corp with its principal place of business in the city of Bologna, Colombia.

-‐ Petitioner engaged in the business of helicopter transportation -‐ Helicopter owned by petitioner crashed in Peru

o Four U.S. citizens among those who died in crash o Respondents are the estate of the deceased Americans

-‐ At the time of the crash, americans were employed by a Peruvian company working on a Pipeline in Peru o Peruvian company is an “alter-‐ego” of a joint venture who was HQ was

in Texas. o Joint venture created in order to facilitate a contract with Peruvian

state owned oil company -‐ Peruvian company needed helicopters to transport perssonel and

equipment to and from construction area -‐ Chief exec officer flew to Texas and signed contract with Heliocopteros

which provided disputes subject to Peruvian courts but payments made to New york city bank account for services.

-‐ Helio contacts with U.S. o Purchased helicopters, spare parts and accessories in excess of 4M in

Fort Worth TX o Helicol sent prospective pilots to train in Fort Worth o Sent management personnel for training in Fort Worth o Helio held bank accounts in New York City and Panama City FL

recieivng payments in excess of 5M drawn from TX bank. § Note: Helio never auth to do business in TX and never had an

agent fro service of process there. No real property owned in TX and never maintained an office in TX

§ None of the deceased were domiciled in TX but all were hired in Houston by Peruvian Co. to work on state owned Peruvian pipeline co project.

Procedural: -‐ District Court there was personal jurisdiction -‐ TX Court of Appeals reversed district court ruling on in personam

jurisdiction -‐ TX Supreme Court initially affirmed court of appeals but after a motion

for rehearing the court ruled there was in personam jurisdiction.

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o TX Supreme Court held that its long arm statute comported with the Due Process Clause of of the C and the 14th A.

Issue: -‐ Whether there are sufficient contacts to satisfy the due process of the 14th

A. between a foreign defendant and a forum court when those contacts consist of a contract signed in the forum state, purchase of aeronautical planes and training of staff?

Held: -‐ Since it is conceded that the COA is unrelated to the defendant’s (Helio)

activities within the State of Texas, the plaintiffs (respondents) had to establish there was General Jurisdiction

-‐ In order to prove General Jurisdiction, the defendant’s (Helio) activities in the state must be so “continuous and systematic” as to constitute a physical presence in the state.

-‐ Here, mere transactional activities with occasional training as part of those transactions are insufficient to constitute General Jurisdiction

-‐ Moreover, having checks drafted in one bank in the forum state is insufficient to establish or bolster General Jurisdiciton.

Reasoning: -‐ Even when the COA does not relate to the activities of a def in a state, a

forum can still haul them into the state if their activitiy is so continuous and systematic as to constitute physical presence.

-‐ See Perkins v. Benguet o In Perkins, during the Japanese occupation of the Phillipine Islands,

the president and GM of the Philip. Co maintained an office in OH, held meetings there, conducted all bank activities in OH, (including payroll) kept files and held director’s meetings in OH

o The Philip Co through its president “had been carrying on in OH a continuous and systematic, but limited part of its general business.

o Exercise of jurisdiction by OH court over Philip. Co was “reasonable and just.”

-‐ Parties concede COA unrelated to Helio activities in TX and Helio does not have a place of business in TX

-‐ One trip by Helio exec to TX cannot be described or regarded as a contact of a “continuous and systematic” nature.

-‐ Similarly, rare checks drawn on TX bank account insufficient to constitute continuous and systematic.

-‐ Purchases and the related trainings trips insufficiengt to establish GJ o Note: U.S. held filed amicus brief arguing that holding foreign

companies liable for U.S. courts on the sole premises of purchases in U.S. would discourage foreign markets to engage in business within the U.S.

-‐ Mere purchases, even if occurring at regular intervals are not enough to warrant a State’s assertion of in personam jursidiciton over a nonresident corp in COA not related to the purchases.

Notes:

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-‐ Personal Jurisdiction: Specific Jurisdiction

ASAHI METAL INDUSTRY CO. V. SUPERIOR COURT (480 U.S. 102 1987):

FACTS: -‐ Plaintiff Zurcher severely injured and wife (passenger) killed when he

lost control of motorcycle and crashed. -‐ Plaintiff filed product liability suit against defendant Cheng Shin Rubber

Corp alleging defective tires (Tawainese company) -‐ Cheng Shin then filed cross complaint against Asahi – (Japanese corp)

who manufactured the tire valve assembly § Asahi manufactures valves in Japan and sold them to Cheng

Shin Rubber § Approx 20% of Cheng Shin sales are in the U.S. § Asashi stated only 1.24% of its sales were sold to Cheng Shin § Manager at Cheng Shin submitted affidavit alleging that Asahi

was aware that its products were being sold in the United States

§ President of Asahi submitted affidavit stating it never thought it would be subject to litigation in U.S. on the basis of providing parts to Cheng Shin

-‐ At time of appeal, all parties settled except the cross claim between Asashi and Cheng Shin

-‐ Asashi sought a motion to quash Cheng Shin summons alleging that the court lacked personal jurisdiction.

§ Trial court denied motion § Appeals court granted § CA Supreme Court held: Asahi Metal’s intentional act of placing

its assemblies into the stream of commerce, together with its awareness that some of them would eventually reach California, were sufficient to support state court jurisdiction under the Due Process Clause. Asahi Metal appealed and the United States Supreme Court granted certiorari.

ISSUE: -‐ Whether the mere awareness on the part of a foreign defendant that the

components it manufactured, sold, and delivered outside of the United States would reach the forum State in the “stream of commerce” constitutes “minimum contacts” between the defendant and the forum state as to justify the exercise of jurisdiction?

-‐ HELD:

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-‐ 1. Asahi Factors: There is a five factor test when determining whether “traditional notions of fair play and substantial justice” (International Shoe supra) would permit the exercise of personal jurisdiction over a foreign defendant

§ 1.) What is the burden on the defendant § 2.) What is the interests of the forum state in litigation § 3.) What is the interest of the plaintiff in litigating in the forum

state § 4.) Does the allowance of jurisdiction serve interstate

efficiency § 5.) Does the allowance of jurisdiction serve interstate policy

interests -‐ The burden upon the defendant in this case is extremely severe. -‐ 2. There is an alternate plurality decision regarding stream of

commerce § Court split on stream of commerce

o Plurality opinion holds”: § There must be a substantial connection between the defendant

and the forum state necessary for finding of minimum contacts § Defendant must have “purposefully availed” themselves to the

forum state § The placement of a product into a stream of commerce,

without more, is not an act of purposeful availment. • Additional conduct may be advertising, designing a

product for marketability within that forum, using distrubotrs in the forum or establishing channels for customer communication

• However, mere awareness is not sufficient. § Even when min contacts found, must go through traditional

notions of fairplay and substantial justice analysis. NOTES: -‐

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Personal Jurisdiction: Specific Jurisdiction

YAHOO INCORP. V. LA LIQUE (9th Circuit en banc 2006) FACTS:

-‐ On December 21, 2000 Yahoo US filed suit in federal court against LICRA and UEJF seeking a dec judgment stating that the orders of a foreign french court are not enforceable in the United States for the following reasons:

-‐ Yahoo a Delaware Corp with principal place of business in California. -‐ Yahoo an internet service and in relevant part hosts web boards, auction

sites and web hosting service where users create and maintain their own websites on Yahoo servers

-‐ Yahoo does not monitor the content of its users -‐ Yahoo has the same services in Yahoo India, Yahoo France, Yahoo U.K. -‐ Internet addresses of these foreign subsidiaries contain two letter

country code such as “fr.yahoo.com” or uk.yahoo.com” -‐ Yahoo foreign subsidiaries target local audiences, comply with local law

and customs -‐ However, users in any country can access websites of the foreign

subsidiary by simply typing in the country code into the web url o Thus anyone in us can view French site and vice versa

-‐ LICRA president sent cease and desist letter to Yahoo in Santa Clara CA alleging that it keeps presenting nazi paraphernalia items for sale on its US servers.

§ Letter states that such items are prohibited by French law and they will commence litigation w/i 8 days if no compliance

-‐ 5 (not 8) days later LICRA filed suit against Yahoo and Yahoo FR in French Court

-‐ LICRA and UEJF used marshals to file suit against Yahoo US in CA PROCEDURAL:

-‐ On May 15 2000, French Court issued an interm order requiring Yahoo to limit acess to US site from French IP addresses to Yahoo sites abroad that were positing those items for sale o Order stated thay Yahoo required to “take all necessary measures to

dissuade and render impossible any acess from French territory …” o Order required among other things that Yahoo cease hosting nazi

paraphernalia sites in French territories o Order stated Yahoo and Yahoo FR subject to a 10,000K Euro penalty

per day if non compliant

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-‐ Dispute Yahoo’s protest of the technological barriers, court held another hearing regarding the technological feasibility and reaffirmed its May Order in November 2000. o Court did find that Yaho france did comply in large part with May 22,

2000 order -‐ French court did not impose penalties for violations of either the May or

November orders o Neither LICRA or UEJF has sought enforcement of those orders for

penalties o Both plaintiffs argue it has no intention of pursuing enforcement so as

long as Yahoo maintains same level of compliance but refuses to vacate order in case it needs to enforce at some future time.

-‐ SMJ based on diversity Jurisdiction in 1330(a) -‐ District Court concluded it had Personal Jurisdiction over LICRA and UEJF

o Discout court also held suit was ripe and first amendment prevented French court orders from being enforced in the United States

§ District court held PJ sufficient because of cease and desist letters sent to Yahoo USA and the service of process for the French action on Yahoo US

o LICRA Appeals both rulings ISSUE:

-‐ 1.) Whether the exercise of Specific Personal Jurisdiction is sufficient in a declaratory judgment action against foreign defendants who obtained foreign court orders in order to prevent said foreign defendants from potentially enforcing those foreign orders in a U.S. court?

HELD: -‐ There is a Three Prong Test for Specific Personal Jurisdiction

o 1.) § Non-‐res defendant must purposefully avail themselves to the

forum state with some type of activity directed to that forum • Or avail themselves to privileges or protections of that

forum • This prong entails another Test – Calder Effect Analysis:

o Def committed an intentional act o Expreslly aimed at forum state o Causing harm that defendant knows is likely to

be suffered in the forum state § Court notes that the “brunt” of the harm

need not be felt in the forum state o 2.)

§ Cause of Action must be related to those activities with the forum state

o 3.)

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§ Exercise of Jurisdiction must comport with notions of substantial justice and fair play – must be reasonable (See Asahi factors)

-‐ Because service of process has effects in CA, there is personal jurisdiction, even if it were the sole or ocassional contact directed at the forum state.

§ in International Shoe, in which there are very few contacts but in which those few contacts are directly related to the suit. See 326 U.S. at 318, 66 S.Ct. 154 ("[S]ome single or occasional acts of the corporate agent in a state ... because o f their nature and quality and the circumstances of their commission, may be deemed sufficient to render the corporation liable to suit."). All of the contacts with the forum state in this case are either the interim orders themselves or contacts directly related to those orders.

-‐ Since the orders required Yahoo to take affirmative actions on their servers within the State of CA, and:

§ The threat of future enforcement was still pervasive § The effects test of Calder were satisfied in order to trigger

specific personal jurisdiction. REASONING:

-‐ In applying the three-‐prong test, this case weighs heavily on the first prong of the analysis.

-‐ Only two real instances of contact with the forum state. – cease and desist letter and service of process for French proceedings.

-‐ In order for a cease and desist letter to trigger Specific PJ, must look at the context. Generally, cease and desist without more is insufficient, but there are circumstances when the letter have an eye towards litigation in the forum where it is warranted. However, in this case it is not the case. Need more than cease and desist.

-‐ Court then looked at the actual court orders: § Since the orders required Yahoo to take affirmative actions on

their servers within the State of CA, and: § The threat of future enforcement was still pervasive § The effects test of Calder was satisfied in order to trigger

specific personal jurisdiction.

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Personal Jurisdiction General Jurisdiction

Corporate Veil and Agency MEIER v. SUN INTERNATIONAL HOTELS, LTD (11th Circuit 2002) Pg 47

FACTS: -‐ Meiers family on vacation in the Bahamas -‐ Meiers family went snorkeling and a motor boat owned and operated by a

Boheminian foreign subsidiary of Sun Int’l struck and killed a child in the Meiers family

-‐ Meiers family brings suit against Bohemian foreign subsidiary and its parent U.S. company alleging negligence and personal injury on the part of parent US corp through the actions of its own foreign subsidiary through vicarious liability

-‐ Plaintiffs are residents of UT, they were vacationing in the Bahamas. -‐ Defendants are Bahamain corp that own and operate various hotels in the

Bahamas § Co that owned and operated the boat that struck Meier son

conducte business at the Atlantis Hotel and Casino (Atlantis), one of defendant’s hotels.

PROCEDURAL: -‐ Defendant’s filed suit to dismiss based on lack of personal jurisdiction or

in the alternative, forum non convieniens. -‐ District Court granted, 11th circuit reversed and remanded on forum non

convieniens ISSUE:

-‐ Whether a plaintiff may assert a corporate agency relationship as to collapse the corporate structure in order to assert personal jurisdiction over a domestic subsidiary through the actions of its parent corporation?

HELD: -‐ -‐ If the subsidiary is merely an agent through which the parent

company conducts business in a particular jurisdiction or its separate corporate status is formal only and without any semblance of individual identity, then the subsidiary’s business will be viewed as that of the parents and deemed to be doing business in the jurisdiction for the purposes of personal jurisdiction

-‐ Evidence submitted strongly suggests that Florida subsidiaries were mere instrumentalities of the Sun defendants. Consequently, plaintiff has

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met its prima facie case of establishing jurisdiction over the Sun Defendants under Florida Long Arm Statute – next analysis is Due Process of 14th A

§ Held that it comported with due process b/c of minimum contacts were sufficient

§ Then went through sub justice and fairplay analysis, found those to exist as well

-‐ Court found activities to be systematic and continuous as to assert General Jurisdiction because of the activities -‐ See page 50

-‐ For purposes of jurisdiction, court must render all inferences of fact in favor of the plaintiff o As a result, reasonable to infer that the creation of Flordia subsidiaries

is a mere corporate formaility -‐ Case does not offend notions of substantial justice and fairplay b/c

o UT plaintiffs unable to afford litigation overseas o Corporate defendants well equipped financially to litigate in Florida o Insigificant burden on defendants compared to plaintiffs o Florida has strong interest in litigating this in its court – millions of

tourists travel from FL to Carribeean – Questionable logic REASONING:

-‐ Generally a foreign parent corp is not subject to the jurisdiction of a forum state merely b/c a subsidiary is doing business there

-‐ However: § If the subsidiary is merely an agent through which the

parent company conducts business in a particular jurisdiction or its separate corporate status is formal only and without any sembalcne of individual identity, then the subsidiary’s business will be viewed as that of the parents and deemed to be doing business in the jurisdiction for the purposes of personal jurisdiction

-‐ In Universal v. Brand, 4th circuit found that a domestic subsidiary, acting exclusively as a booking agent for a foreign parent hotel corp, was an agent of the foreign parent hotel

§ This is b/c of the exclusive booking nature of the subsidiary o The relationship btw Sun defendants and the Florida subsidiaries are

akin to the case in the 4th circuit -‐ Court found “systematic and continuous” contacts btw def and Forum

through its Florida Subsidiaries: o Florida subsidiaries render service on behalf of Sun defendants

§ Financial ties and marketing between subsidiary and parent are almost as if the corporate was acting on its own

§ Affdavits of personnel that admit that the contracts between the parent and subsidiary are essentially like “sending invoices to themselves.”

§ Personnel working for subsidiary is the same personnel working for parent

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§ Sun trust pays itself from subsidiary accounts § Advertising, marketing, exclusively on behalf of parent by

subsidiary • THESE ACTIVITIES SO STRONG IN FLORIDA THAT IT

CONSTITUTED CONTINOUS AND SYSTEMATIC ACTIVTIES SO THERE IS GENERAL JURISDICTION

-‐ Agency not limited to parent-‐sub relationship. Personal Jurisdiction over affiliated parties, whether parent or another related subsid is warranted when the resident corp acts on behalf of those foreign affiliates

-‐ NOTES:

-‐ Essentially here the plaintiff used discovery to pierce the corporate veil and expose defendant’s internal workings in order to assert jurisdiction

-‐ Under veil or agency doctrine, you can find jurisdiction through the “shareholder”

-‐ Corp and subsidiary are separate entities & common ownership does not make them the same à Acts of one, not the acts of the others

-‐ This test in order to collapse the corporate is very difficult to meet and not many corporations and their subsidiaries are structured this way

-‐ On a final exam, on its face the relationship btw a parent and its corp may not seem sufficient to establish personal jurisdiction, but a closer reading of the facts could make out an argument for such under the Meier analysis.

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TOYS R US, INC. v. STEP TWO, S.A. (3rd Circuit 2003) Pg 53 FACTS:

-‐ Imaginarium Toy Centers, Inc. was a United States toy company in the 1980s and 1990s that owned US trademarks for the name "Imaginarium".

-‐ Step Two, a Spanish educational toy company, independently owned and operated a franchise of toy stores called Imaginarium throughout Spain

§ Step Two also owned the "Imaginarium" trademark, albeit in Spain as well as the other countries where their stores were located.

-‐ During the mid-‐nineties, Imaginarium Toy Centers and Step Two began registering domains that advertised and sold toys in their respective Imaginarium lines. o By 2000 Step Two had registered the domain names imaginarium.es,

imaginariumworld.com, imaginarium-‐world.com, imaginariumnet.com, imaginariumnet.net, imaginariumnet.org.

§ In August 1999, Toys "R" Us purchased Imaginarium Toy Centers, acquiring all of the trademarks and web domains they had previously registered.

-‐ While Step Two maintained no advertising, franchises, or businesses in the United States, similarities existed in logo design and the line of products offered by Toys "R" Us and Step Two under their respective Imaginarium trademarks,

§ such as the similarity of the blue rectangular logo at the website imaginarium.es.

§ Also, Step Two's stores allegedly had the same “unique facade” as Toys R Us’ Imaginarium stores.

§ However step two only sold in euro or Spanish currency § Purchasing delivery addresses were limited only to Spanish

delivery addresses – allegedly -‐ Step Two Contacts with the Forum:

§ Step Two did have contact with the United States since some of the toys sold in their stores were bought from American vendors. Additionally, Step Two's president, Felix Tena, traveled annually to New York for the New York Toy Fair. Step Two also maintained a set of websites based on their Imaginarium trademark.

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§ Toys R Us strategically initiated two transactions to have products from Step Two’s website delivered to residential addresses in the State of NJ

• According to Toys R Us, this constituted sufficient personal jurisdiction

-‐ On February 7, 2001, Toys "R" Us filed a complaint alleging that Step Two's Imaginarium websites infringed upon Toys "R" Us' US trademark for Imaginarium in federal district court under Lanham Act

PROCEDURAL: -‐ Step two moved to dismiss on lack of jurisdiction

§ Toys countered seeking discovery on the jurisdictional issue -‐ District court denied Toys discovery request and granted Step Two’s

motion to dismiss -‐ Third circuit reversed district court ruling and remanded for limited

jurisdictional discovery and reconsideration of jurisdiction in light of discovery

ISSUE: -‐ 1.) Whether the operation of a commercially interactive web site

accessible in the forum state is sufficient to support specific personal jurisdiction, or whether there must be additional evidence that the defendant has “purposefully availed” itself of the privileges of engaging in activity in that state?

-‐ 2.) Should the court grant additional jurisdictional discovery? RULE OF LAW:

-‐ The mere operation of a commercially interactive web site should not subject the operator to jurisdiction anywhere in the world. Rather, there must be evidence that the def purposefully availed itself of conducting activity w/i the forum, by:

§ Directly targeting its web site to the state § Knowingly interacting w/ residents of the forum state via web

site § Or through sufficient other related contacts.

• i.e. non-‐internet contacts HELD:

-‐ Pg 54: Three Categories of Internet Activity: Zippo Mfg. Co. v. Zippo Dot Com 1997

§ 1.) Cases where defendants actively do business on the Internet

§ 2.) cases in which a user can exchange information with the host computer

• In the second group, jurisdiction depends on the level of interactivity and commercial nature of the exchange of information that occurs on the Web Site.

§ 3.) Cases involving “Passive Web Sites.”

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• Sites that merely provide information or advertisements to users.

-‐ Court may consider non-‐internet in addition to internet contacts to establish jurisidiction – that determination case-‐by-‐case

§ In Euro v. Crate and Barrell: mix of internet and non-‐internet contact est Personal Juris even though defendant could not ship items to the forum.

§ However: • Non-‐internet contacts may establish something more:

such as serial business trips to the forum state, telephone and fax commubications directed to the forum state, purchase contracts with forum state residents, contracts that apply the rule of the forum state, and advertisments in local papers may form the “something more” required to est personal jurisdiction.

REASONING: -‐ Purposeful Availment Requirement in Internet Cases:

o Zippo Mfg Co. v. Zippo Dot Com: 1997: Pg 54 § Seminole authority on the attachment of jurisdiction in

internet cases § Determines personal jurisdiction of web sites based on a

sliding scale of interactivity with the forum state § In Zippo, def purposefully availed itself by repeadetly and

consciously processed applications and assigned them passwords to PA residents -‐ thus knowing it would result in business relaitons with PA residents

§ When defendant makes a conscious choice to conduct business in the forum state, it has clear notice it is subject to suit there…”

-‐ Court may consider non-‐internet in addition to internet contacts to establish jurisidiction – that determination case-‐by-‐case

§ In Euro v. Crate and Barrell: mix of internet and non-‐internet contact est Personal Juris even though defendant could not ship items to the forum.

§ However: • Non-‐internet contacts may establish something more:

such as serial business trips to the forum state, telephone and fax commubications directed to the forum state, purchase contracts with forum state residents, contracts that apply the rule of the forum state, and advertisments in local papers may form the “something more” required to est personal jurisdiction.

-‐ Here, Step Two has not met “Purposeful Availment” Requirement (despite web site being interactive and commercial)

§ web site not purposefully targeting state of NJ

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§ not designed or intended for English users § prices for merchandise or in pesos or Euros § None of the portions of Step Two website designed to

accommodate addresses within the United States § Possible to sign up for e-‐mail newsletters – address portions

not designed to accodmate US addresses. § Two sales insufficient to establish PJ

• Sales were orchestrated by Toys -‐ Regarding Jurisdiction Discovery

§ Step Two has given indications that jurisdictional discovery might lead to sufficient non-‐internet or a mix of internet and non-‐internet contacts to est personal jurisdiction

• Step Two concedes that a portion of the merchandise sold are purchased through vendors in the United States

• Step Two directors activities may shed light on intent of corp to engage US market

• Discovery may also reveal whether US trips part of conduct that sought to intentionally exploit Toys products, trademarks, and marketing techniques in order to export them overseas

NOTES: -‐ In order to establish Personal Jurisdiction:

§ Try to establish sufficient contacts § In a case like Meiers try to get information sufficient to

establish agency or piercing the corporate veil. • As a result, defendant is put in a detrimental position • Risk to defendant is very high if plaintiff can achieve

this through discovery process b/c the defendant’s internal working are exposed and further litigation by other plaintiffs may ensue.

-‐ For some defendants it is a risker proposition to have to go through the discovery process than to be subject to jurisdiction. (Better to deal with litigation in the forum than expose it self to numerous other lawsuits).

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Jurisdiction

Quasi In Rem Jurisdiction Out-‐of-‐State Defendants and their Property in Other Jurisdictions

-‐(See Notes Page 69) SHAFFER V. HEITNER (433 U.S. 186 1977)

FACTS: -‐ Greyhound, a Delaware corporation, lost a large antitrust judgment -‐ Heitner (P) initiated a shareholder derivative suit in Delaware against 28

officers and directors of the corporation (i.e. Shaffer, D). – breach of fiduciary duty essentially

§ Hietner is a non-‐res of Deleware § Heitner owned one share of Greyhound stock and was a

nonresident of Delaware. § Heitner filed a motion for sequestration of stock owned by 21

of the defendants in order to obtain quasi-‐in-‐rem jurisdiction. • Pursuant to Delaware Statute which held that property

located in Delaware subjected the owner to jurisdiction there

• Corporate stock located in the situs of where the Corporation is incorporated

o All shares of DE Corp. are located in DE pursuant to Delaware Statute

o You can sequester them by applying them for “No Transfer Order.”

• Consequence of not showing up and litigating results in all of the stocks being forfeited

§ Thus the entire company stock could be forfeited to Heitner if Corp owner didn’t show up.

-‐ The legal situs of the stock was deemed to be in Delaware. -‐ The Delaware sequestration statute allowed property within the state to

be seized to allow the Delaware court to obtain personal jurisdiction over the owner.

-‐ Shaffer et al. made a special appearance to challenge the court’s jurisdiction on the grounds that the statute was unconstitutional.

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§ Shaffer also asserted that there were insufficient contacts to confer jurisdiction.

PROCEDURAL: -‐ The District Court found that the statute was valid, and did not address

the minimum contacts argument due to the finding that the legal presence of the stock in Delaware conferred quasi-‐in rem jurisdiction.

-‐ Defendants made special appearance contesting DE Statute alleging that it violated the Due process clause

ISSUE:

-‐ 1.) Whether the standards of International Shoe (fairness and substantial justice) govern Quasi In Rem jurisdiction actions (in rem and in personam actions as well) not just specific or general jurisdiction?

-‐ 2.) Can a state obtain personal jurisdiction over a party based on that party’s ownership of property in the state?

HELD/ RULE OF LAW: -‐ All assertions of state-‐court jurisdiction are subject to the standard set

forth in International Shoe (substantial justice and fairplay -‐ No, a state cannot base personal jurisdiction merely on that party’s

ownership in property located within the state REASONING:

-‐ Where, as in this case, the property serving as the basis for jurisdiction is completely unrelated to the plaintiff’s cause of action, the presence of the property alone, i.e., absent other ties among the defendant, the State, and the litigation, would not support the State’s jurisdiction. o Note: if the action were related to the property, then yes personal

jurisdiction would suffice, but this derivative action is unrelated to the stock shares itself, but Shaffer’s alleged negligence in their fiduciary responsibilities.

-‐ Substantial Justice and Fair Play Considerations: § Delaware’s assertion of jurisdiction over appellants, based

solely as it is on the statutory presence of appellants’ property in Delaware, violates the Due Process Clause, which does not contemplate that a state may make binding a judgment against an individual or corporate defendant with which the state has no contacts, ties, or relations. Appellants’ holdings in the corporation do not provide contacts with Delaware sufficient to support jurisdiction of that State’s courts over appellants.

§ Delaware state-‐court jurisdiction is not supported by that State’s interest in supervising the management of a Delaware corporation and defining the obligations of its officers and directors, since Delaware bases jurisdiction, not on appellants’ status as corporate fiduciaries, but on the presence of their property in the State.

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§ Though it may be appropriate for Delaware law to govern the obligations of appellants to the corporation and stockholders, this does not mean that appellants have purposefully availed themselves of the privilege of conducting activities within the forum State.

• This is because although corp officers receive the benefits and protection of the State of DE

§ It only establishes that DE may govern their fiduciary undertakings, not est jurisdiction solely on property

§ Corporate officers have never set foot in the State of DE

NOTE:

-‐ Dissent takes the position that since the Corp officers purposefully availed themselves to the benefits and protection of the state of DE then they should held accountable via quasi in rem jurisdiction

-‐ The State of DE is protecting the stock through its property laws -‐ Note that there are other actions that are property related that are not

affected by the court’s holding: § Cases where the property itself is the cause of action § Absentee owner claims where the ownership of the property is

the cause of action § In Rem cases

-‐ Although Shaffer states that it is constitutional to sieze property in one jurisdiction while the def is in another, rules of procedure at the situs of the property may prohibit that from occurring. – Brittingham v. Ayala

-‐ *Important: Footnote 36:* § Once is has been determined by the court of a competent

jurisdiction that the defendant is a debtor of the plaintiff, there would seem to be no unfairness in allowing an action to realize on that debt in a State where the defendant has property, whether or not that State would have jurisdiction to determine the existence of the debt as an original matter

• the better reading of the footnote is that of the Lenchyshyn Court, which interpreted the footnote as holding that no jurisdictional basis is required as a predicate to the recognition or enforcement of a foreign judgment

• I read it as, as long as some competent court originally determined there was a valid, it matters not that the instant court would have had jurisdiction to hear the debtor action – all that matter is that there is property in that court’s jurisdiction and there has been a competently adjudicated valid claim for that debt.

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• Collection process is an ancillary process that is not equivalent to the original action where the rights of the party have not been fully and finally litigated

• The court does not hold that the presence of property is never sufficient to establish jurisdiction

-‐ Important: Footnote 37: § We do not decide and therefore do not consider whether the

presence of a defendants property in a State is a sufficient basis for jurisdiction when no other form forum is available to the plaintiff – Louring seems to answer this

Jurisdiction

Quasi in Rem Jurisdiction Answering Footnote 37 from Shaeffer

Tenuous Legal Reasoning at Best in the Instant Case

LOURING V. KUWAIT BOULDER SHIPPING (D. Conn 1977) Pg 71 FACTS:

-‐ Plaintiff a citizen of the United States -‐ Defendant a corp incorporated in the Country Kuwait -‐ Plaintiff commenced suit in CT state court b/c of dispute with Defendant

over non payment of money -‐ In order to obtain jurisdiction over defendant, (– whose principal place of

business is Safat, Kuwait) plaintiff prepared an app for a pre-‐judgment remedy w/ the intention of garnishing a debt owed to defendant by Boulder Shipping Company, a CT corp, which maintained an office in Greenwhich o Such a procedure authorized by CT State Statute

§ Essentially, I owe you money, but you can’t collect from me b/c I’m in a totally different country. However, a guy in your country owes me money. Instead of getting the money from me, you’re looking to get the money the guy in your state owes me.

§ Plaintiff seeks to garnish debt owed to Kuwait defendant from local CT defendant

PROCEDURAL: -‐ Case was removed from State Court to federal court -‐ Defendant seeks to dissolve the garnishment and dismiss this action for

lack of jurisdiction -‐ Plaintiff moved for judgment on the ground that def had submitted itself

to the Court’s jurisdiction ISSUE:

-‐ Whether in an quasi in rem situation, in which plaintiff is seeking to garnish a debt owed to a foreign defendant by a local party and collect on

21

that debt instead of the debt being exchanged to the foreign defendant, and no other forum available for plaintiff to collect on the debt owed to it by the defendant, (Shaeffer footnote 37) – where the def is outside any jurisdiction of the United States, is the minimum contacts analysis required to establish jurisdiction?

HELD: -‐ Since defendant makes no claim that it is subject to the jurisdiction of the

fifty states, it leaves the plaintiff without an available forum to collect on its debt

-‐ The activity of the defendant has given it “fair warning” that it may be subhect to suit in the U.S.

-‐ By transacting with the garnishee, defendant took rish that debts owed would be enough to assert jurisdiction

-‐ Even if def could be more substantially found in another jurisdiction, no harm in bringing jurisdiction in CT which is the original instance of the debt itself

REASONING:

-‐ Under due process requirements of Shaeffer this would not normally pass muster

-‐ However, district read footnote 37 very liberally to mean “no other forum in the United States” not, “no other forum available anywhere”

-‐ Even if min contacts not established to satisfy International Shoe, there is sufficient quasi in rem jurisdiction: o –depositon testimony reavels that garnishee was acting as agent for

the defendant in CT and the CEO of the defendant has been rpesent in the CT offices of the garnishee on a number of occasions.

NOTE: -‐ Under Louring rationale, it is extremely easy to satisfy Shaeffer footnote

and bypass the whole rationale of Shaeffer itself § Louring stands for the proposition that if there is no other

forum available in the United States then you can find somewhere that defendant’s property is located and attach quasi in rem jurisdiction just on that basis

§ “Exception would eat up the rule.” -‐ Is this what Shaeffer really meant? Did the court mean “no other forum in

the world?” Which is the better reading?

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Part II Forum Selection Clause

Forum Selection Clause:

-‐ Shortest Provision of the Contract (usually) -‐ Agreement between parties that they will resolve some or all differences

within a specific jurisdiction or court § Parties usually settle on a neutral court

BRENNAN V. ZAPATA OFF-‐SHORE COMPANY (407 U.S. 1. 1972)

FACTS: -‐ Contract between an American party and a German Foreign Corporation

to ship oil rig to Italy -‐ Zapata is the American party respondent who is based in Houston, TX -‐ Petitioner is Unterweser, a German -‐ American company signed contract with German company for German

company to tow American companys oil rig from Louisana to a point off the coast of Italy – Zapata agreed to drill wells there

-‐ Contract contained the following forum selction clause: § “Any dispute arising must be treated before the London Court

of Justice.” o Additionally, K contained two clauses purporting to exculpate

-‐ Contract was signed after review by Zapata VP without any changes to FSC and Exculpatory clauses

-‐ While German co was transporting oil rig in international waters off the coast of Mexico it encountered a severe storm

§ Storm caused significant damage to the oil rig § In this emergency situation, Zapata instructed German

company to tow oil rig to Tampa FL, the nearest point of refuge -‐ Zapata then commenced suit in Federal Court in Tampa seeking 3.5M in

damages against German co in personam and the Bremen (towing ship) in rem, alleging neg towage and breach of K

PROCEDURAL: à EXTRMELY IMPORTANT -‐ After American Co. filed suit in Tampa:

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-‐ German moved to dismiss on lack of jurisdiction, invoked the forum selection clause, forum non conveniens, or in the alternative to stay the action pending submission of the dispute to the London Court of Justice

§ Prior to District Ct ruling in German Co’s motion to stay or dismiss, German Co commenced suit against Zapata seeking damages for breach of towage K in the London Court of Justice

• Zapata appeared in London court to contest jurisdiction, but its challenge was denied • English court held the FSC conferred jurisdiction

-‐ Faced with a 6 month time limit in the US Court to limit its liability to Zapata and other claimants, and the district court not yet ruling on its Motion to Stay or Dismiss:

§ German co filed an action to limit its liability in Tampa District Court

• District court then filed customary proceedings • Zapata (American co) then refilled its action in the German limitation claim

-‐ Only after German co filed its limitation claim and Zapata filed for its claim in that action did district court decide German co’s initial motion to dismiss o District court denied German co’s motion to dismiss Holding:

§ District court held: agreements to litigate in forums outside the US are against public policy and will not be enforced

• Carbon v. Black Export supra § Court gave no weight to FSC and instead decided on forum non convieniens ground in absence of such a clause

o District court denied another motion by German Co to stay limitation action pending determination by London High Court

§ District court ruled that German Co submitted to court’s jurisdiction when it filed limitation action.

-‐ On appeal, Court of Appeals affirmed o Court of appeals relied once again on Carbon decision

§ Also: absent FSC, towing ship never truly escaped Tampa’s jurisdiction off the coast of Mexico (Mare Nostrum) and close proximity of incident to court

§ Cnsiderable number of witnesses including Zapata crewmen resided in Gulf Coast area

§ Preparation for voyage and repair work performed in Gulf coast

§ Testimony of Bremen crew (towing ship) available by deposition § England had no interest in adjudicating claim other than FSC

o All these reasons culiminated in being against public policy ISSUE:

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-‐ What level of weight should a court give to Forum Selection Clauses in a contract that both parties were aware of and signed when adjudicating a contract dispute that results in the dispute being decided outside the jurisdiction of the United States when one of the parties to the contract is an American party and the other is a foreign party?

HELD / RULE OF LAW: -‐ Far too little weight was given to FSC at the District and Court of Appeals

levels -‐ Forum Selection Clauses are prima facie valid and should be enforced

unless enforcement is show by the resisting part to be “unreasonable” under the circumstances.” à RULE OF LAW

REASONING: -‐ Absent a FSC, the reasons given by the Court of Appeals would have been

sufficient, however, since there is a FSC, they must consider that -‐ Court states that the world is moving “beyond the Carbon” decision -‐ “We cannot have trade and commerce in world markets and

international waters exclusively on our terms, governed by our laws, and resolved in our courts”

-‐ In light of present day commercial realities and expanding international trade, we conclude that the forum clause should control absent a strong showing that it should be set aside

-‐ Citing National Equipment Rental Decision: § “it is settled…that parties to a contract may agree in advance to

submit to the jurisdiction of a given court to permit notice to be served by the opposing party or even to waive notice altogether.”

-‐ Court creates a rebuttal presumption of validity of Forum Selection Clauses

§ Party resisting the clause must show burden is unreasonable -‐ Court distinguished Bisso decision as resting solely on American water’s

concern – see page 77 (AMERICAN WATERS -‐ Case remanded for re-‐consideration

NOTES: -‐ Court cites that ruling by the Court of appeals would hamper American business expansion in a global marketplace if FSC were disregarded in such a manner -‐ Zapata decision rested on considerations of Federal Admiralty law -‐ Definition of Unreasonable:

§ According to Prof: forum located in country where factors such as political upheaval dramatically alter the legal landscape of the forum

-‐ There is no uniformity among nations regarding nuances of enforceability -‐ Note: countries continually passing legis bypassing min contacts to be selected as neutral parties for FSC. -‐ There is a split among circuits on what to do with forum selection clauses

25

§ Although Carnival Cruise decision held arb clause in Florida enforceable for plaintiffs who were residents of Washington state

• New York 2nd circuit held enforceable a cruise ticket with FSC in Greece

• Texas 4th Circuit refused to enforce a cruise ticket FSC requiring plaintiffs to sue in Florida

o See Notes on Page 79 for further discussion. Part III Treaties

Self Exec vs Non Self Exec MEDELLIN V. TEXAS (552 U.S.491 2008)

BACKGROUND: -‐ The United States ratified the United Nations Charter on October 24, 1945.

§ Article 92 of the Charter established the International Court of Justice. The ICJ Statute, which established the procedures and jurisdiction of the ICJ and was attached to the U.N. Charter, delineates two ways in which a nation may consent to ICJ jurisdiction:

• It may consent generally to jurisdiction on any question arising under a treaty or general international law, or it may consent specifically to jurisdiction over a particular category of cases or disputes pursuant to a separate treaty.

-‐ In 1969, the United States ratified the Vienna Convention on Consular Relations of April 24, 1963, and the Optional Protocol Concerning the Compulsory Settlement of Disputes to the Vienna Convention of April 24, 1963.

§ Article 36 of the Vienna Convention requires that foreign nationals who are arrested or detained be given notice "without delay" of their right to have their embassy or consulate notified of that arrest. The Optional Protocol provides that disputes arising out of the interpretation or application of the Vienna Convention "shall lie within the compulsory jurisdiction of the International Court of Justice".

-‐ The United States withdrew from general ICJ jurisdiction on October 7, 1985. (Much in part to the Nicaragua pending ICJ decision)

FACTS: -‐ On June 24, 1993, José Ernesto Medellín (an 18-year-old Mexican citizen)

and several other gang members participated in the murder of Jennifer Ertman and Elizabeth Peña, when they raped a 14-year-old and 16-year-old girl for an hour in Houston, Texas.

-‐ Both girls were killed to prevent them from identifying their assailants. § Medellín strangled one of the girls to death with her own

shoelaces. -‐ Hours after Medellin's arrest he admitted to his part in the crime and boasted

of having "virgin blood" on his underpants.

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-‐ Medellín was arrested five days later, and signed a confession after being given his Miranda warning.

§ Texas authorities did not, however, advise him of his right to contact his consulate under the terms of the Vienna Convention.

PROCEDURAL: -‐ Medellín was convicted of rape and murder, and sentenced to death in 1997. -‐ He appealed, and raised the issue of his Vienna Convention rights as part of

his appeal, but his conviction was upheld by the trial court and by the Texas Court of Criminal Appeals.

-‐ In 2003, Medellín filed a petition for habeas corpus in United States district court. The district court denied relief, holding that Medellín's Vienna Convention claim should have been raised at trial (not on appeal) and he had failed to show prejudice against his case arising from the Vienna Convention violation.

-‐ Also in 2003, Mexico brought suit against the United States in the ICJ, claiming that the United States had failed to notify 51 defendants (all Mexican citizens having been accused in state courts of committing crimes in the U.S.) of their Vienna Convention right to notify their consulate. Medellín was one of the 51 Mexican nationals named in the suit.

§ The following year, the ICJ ruled in Case Concerning Avena and Other Mexican Nationals (Mex. v. U. S.), 2004 I.C.J. 12 (Judgment of March 31) (Avena) that the 51 Mexican nationals were entitled to review and reconsideration of their convictions and sentences.

-‐ Medellín's appeal now found its way to the Fifth Circuit Court of Appeals. Medellín raised the ICJ's ruling in Avena before the Fifth Circuit, but the federal appellate court denied relief.

-‐ On March 7, 2005, after the ICJ's judgment in Avena, the United States withdrew from the Optional Protocol.

-‐ Medellín now appealed to the U.S. Supreme Court, which granted a writ of certiorari.[18]

-‐ Before the Supreme Court could hear the case, however, President George W. Bush issued a Memorandum to the United States Attorney General.[19] In the Memorandum, President Bush asserted authority under the Constitution and the various laws of the United States to order states to review the convictions and sentences of foreign nationals who had not been advised of their Vienna Convention rights.

§ Because of the President's Memorandum, Medellín filed a second case in state court for habeas corpus.

• The U.S. Supreme Court then dismissed Medellín's first petition for certiorari in a per curiam decision, Medellín v. Dretke, 544 U.S. 660 (2005) (Medellín I).[21]

-‐ The Texas Court of Criminal Appeals dismissed Medellín's second appeal,[20] and the U.S. Supreme Court granted certiorari a second time.[22]

§ As Medellín's second appeal was under consideration in Texas, the U.S. Supreme Court decided Sanchez-Llamas v. Oregon, 548 U.S. 331 (2006).

Basis of Issue

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§ Although the decision did not involve individuals named in the Avena judgment, the Court held the ICJ's ruling in Avena to be in error.

§ Absent a clear and express statement to the contrary in either the Vienna Convention and the Optional Protocol, the Court held:

• in Sanchez-Llamas, the procedural rules of each nation govern the implementation of the treaty. Since Sanchez-Llamas' rights had been observed under both state and federal law as well as various rulings of the Supreme Court, the High Court upheld his conviction.

ISSUE:

1. -‐ Did the President act within his constitutional and statutory foreign affairs authority when he determined that states must comply with the U.S. treaty obligation under the Vienna Convention by enforcing a decision of the International Court of Justice?

2. Does the Constitution require state courts to honor the treaty obligation of the U.S. by enforcing a decision of the International Court of Justice? More specifically, did the Optional Protocol, the UN Charter, or the ICJ Statute provide binding effect of ICJ decisions on domestic courts?

HELD: -‐ No, the President only acts when he is acting pursuant to his

Constitutional authority or directed by Congress. § Unless a Treaty contains self-‐executing language, the President

is not acting within his C authority when attempting to implement a non-‐self exec treaty without congressional authority

§ The Presidential memos are an attempt to enforce a non-‐self executing treaty.

-‐ No, since the Optional Protocol is not “self executing” the ICJ decision is not binding on domestic courts.

-‐ Courts shall look to the “intent” of the treaty to determine if the language is to be self-‐executing

REASONING: -‐ This court has long recognized the distinction between treaties that

automatically have effect as domestic law, and those that while they constitute international law commitments, they do not by themselves function as binding federal law

§ Those non-‐binding treaties require implementation by Congress

§ “A treaty is equivalent to an act of legislature and hence self executing when it operates of itself without any the aid of any legislation.”

-‐ The language of the Protocol held that “the United States shall undertake to comply”

§ This language is non-‐self executing

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o Unless a treaty states the United States shall shall or must -‐ UN Charter is a “pact” between Nations not binding.

§ UN Charter holds an express diplomatic remedy which exhibits that ICJ judgments are not binding on domestic courts à QUESTIONABLE LOGIC

-‐ -‐ “Even when treaties are self executing, in the sense that they create

federal law, the background presumption is that ‘international agreements even those directly benefiting private persons generally do not create private rights or private cause of action in domestic courts.”

§ Absent express language in the treaty, private rights and private COAs are not self executing

DISSENT: -‐ The relevant treaty provisions should be found to be self executing, because:

(1) the language supports direct" judicial enforceability, (2) the Optional Protocol applies to disputes about the meaning of a provision that is itself self-‐executing and judicially enforceable, (3) logic requires a conclusion that the provision is self-‐executing since it is "final" and "binding," (4) the majority's decision has negative practical implications, (5) the I.C.J. judgment is well suited to direct judicial enforcement, (6) such a holding would not threaten constitutional conflict with other branches, and (7) neither the President nor Congress has expressed concern about direct judicial enforcement of the I.C.J. decision

NOTES: -‐ Language that is non-‐self executing:

§

29

INSERT MEDELLION DECISION HERE

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PART IV SERVICE OF PROCESS

Service of Process Convention Page 137 See Notes for Inter-‐American Convention on Letters Rogatory

HAGUE CONVENTION ON THE SERVICE ABROAD OF JUDICIAL AND EXTRAJUDICIAL

DOCUMENTS IN CIVIL OR COMMERCIAL MATTERS -‐ Contains self executing language (Article 1)

§ Since it is self-‐executing, it supersdes any other statutes and is considered the Supreme Law of the Land pursuant to the C.

-‐ United States is a Party since 1964 -‐ 25 signatories (currently) -‐ Party must be located within country that is a signatory to the Convention -‐ Gives specific guidelines to effect judicial service of process for foreign

parties residing within these signatory countries

BLUEPRINT OF SERVICE PROCESS UNDER HAGUE CONVENTION ON SERVICE -‐ 1.) Each state shall designate a central authority to receive service of

process requests § Article 2

• U.S. has a federal agency whereby Germany is broken down by province.

-‐ 2.) Follow guidelines established by each Central Authority which is publicly available information

§ Strict adherence is essential to enforcement of judgment -‐ 3.) Central Authority serves legal document themselves or in accordance

w/ local law, they follow instructions of the plaintiff’ § Article 5

-‐ 4.) Central Authority prepares a Certificate of Service of Process and provides it to the Plaintiff

§ If served document will state so and by which means § If not served, document will state such and what methods were

attempted § Article 6

-‐ 5.) Other Available Methods – Diplomatic Channels and other available methods of service

§ Article 8-‐12 -‐ 6.) Default Judgment – Methods for Establshing Default Judgment (Article

15 & 16) § Must show service effectuated in accordance w/ local law § Show service was actually delivered to defendant

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§ May show default judgment withstanding the above when: • Document transmitted w/i one of the provisions set

forth in the Convention • 6 months has transpired since transmission of

document • no certificate rec’d even though every reasonable effort

has been made to obtain it through competent authorities of the State addressed

-‐ 7.) When Default Judgment ordered: Article 16 § Judge may relieve defendant if shown no knowledge of

litigation proceeding against him/her/them § Defendant disclosed a prima facie defense on the mertis prior

to reopening default judgment (Article 16(1)(b)) § Application of this nature must be made w/i reasonable time

after defendant obtained knowledge of suit • Time limit for this

NOTES: -‐ In order to serve non signatory countries, State dept website provides

some procedures § Best to hire local lawyers within jurisdiction you seek to effect

service to provide instruction on how to serve -‐ Article 16(1)(b) and Article 15 Paragraph 2 provide due process

protections as interpreted by Mullane v. Central Hanover (notice and opportunity to be heard)

-‐ Letter Rogatory: § A letter rogatory or letter of request is a formal request from a

court to a foreign court for some type of judicial assistance. The most common remedies sought by letters rogatory are service of process and taking of evidence.

o Nuances for Letters Rogatory w/ Central and South American countries.

§ See Page 143 notes § Kreimerman v. Casa § Morgenthau v. Avion Resources

• Inter-‐American Convention one of many processes allowed to serve Letters Rogatory

• Inter-‐American Convention allowed but not mandated process to serve Letters Rogatory.

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Hague Service Convention VOLKSWAGENWERK AKTIENGESELLSCHAFT V. SCHLUNK ( 486 U.S. 694 1988) Pg

145 FACTS:

-‐ Parents of respondent Schlunk were killed in motor vehicle accident in 1983

-‐ Schlunk filed wrongful death action on behalf of parents in IL district court.

-‐ Schlunk alleges that the motor vehicle driven by his parents which was designed and manufactured by Volkswagen America (VWofA) caused or contributed to their death o Schlunk also alleged negligence of the other driver. That driver did not

appear and Schlunk obtained a default judgment and that party is not a part of this cause of action.

-‐ VWoA denied assembling the product § As a result Schlunk amended suit to include petitioner (VWAG) § VWAG is a German Corp and has it perm place of business in

Germany § VWoA is a wholly owned subsidiary of VWAG

-‐ Schlunk attempted to effect service of its amended complaint on VWAG (German Company) through VWoA (American company) as VWAG’s agent

PROCEDURAL: -‐ VAWG filed a special appearance to quash service -‐ VWAG stated it could only be served in accordance with the Hague

Service Convention and Schlunk had not complied with its provisions -‐ District Court denied VWAG’s motion reasoning that VAWG and VWoA

are so close in legal nature that VWoA is essentially an agent for service of process for VWAG even if VWAG didn’t appoint VWoA.

§ District purportedly collapsed the corporate veil (using similar analysis from Meier)

§ German corp wholly owned subsidiary and and majority of board members are members of the board of American subsidiary

§ Exclusive contract btw American Corp and German Corp § Under IL Law, service on subsidiary is considered service upon

Parent Company § Thus, since service properly effected in US, then no need for

Hague Service Convention §

ISSUE: -‐ Whether in effecting service on a foreign corporation that has a United

States subsidiary, and the local law of the United States subsidiary

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provides that service on a subsidiary is in effect service upon its parent corp require that the plaintiff still serve suit in accordance with the Hague Service Convention?

HELD: -‐ No, the law of the forum jurisdiction determines when you have to effect

service abroad. If you have met the requirements of local service, then no need to proceed under Hague Service Convention

-‐ In this case, service under IL law is sufficient for service upon its parent company and complies w/ Due Process so plaintiff need not also serve papers in accordance w/ Hague Service Conv.

§ Note: that according to IL law, service on a subsidiary is considered service upon its parents corporation.

RULE OF LAW: -‐ Where service on a domestic agent is valid and complete under both

state law and the Due process clause, our inquiry ends and the Convention has no further implications. Whatever internal, private communications take place btw the agent and a foreign principal are beyond the concerns of this case.

-‐ The only transmittal to which the convention applies is a transmittal abroad that is required as a necessary part of service.

REASONING: -‐ Look to the text and the context of the treaty to determine its application -‐ Convention does not specify which circumstances are necessary to

“transmit a complaint for service abroad § Service of Process does have a technical meaning:

• “Service of Process refers to a formal delivery of documents that is legally sufficient to change the defendant with notice of a pending action.

-‐ German corp raises argument that local forum laws can circumvent Hague Service Convention by simply passing legislation that bypass the convention

§ Notably, this has already been done in certain jurisdiction § Confernece of Conv particulary concerned about this in

negotiating history – notification au parquet o Court refuses to answer this dilemma

-‐ Court holds that the Convention is silent whether the convention applies when service on a subsidiary is considered service of the parent in accordance w/ forum’s internal law.

-‐ In this case IL long-‐arm statute authorized Plaintiff to serve German Corp (VWAG) by substituted service on its local subsdiairy (American copr – VWoA)

§ Defendant did not raise on appeal whether the substitute service was proper under IL Law. Def only raised whether service should be in accordance w/ Hague Service Convention

-‐ Where service on a domestic agent is valid and complete under both state law and the Due process clause, our inquiry ends and the

34

Convention has no further implications. Whatever internal, private communications take place btw the agent and a foreign principal are beyond the concerns of this case.

-‐ The only transmittal to which the convention applies is a transmittal abroad that is required as a necessary part of service.

NOTES: -‐ Note the reoccurring theme in the service of process is the Mullane v.

Central Bank decision o This decision which held that service must be “reasonably calculated

to afford notice and opportunity to be heard…” is the Seminole authority on the Due Process requirement of Notice of Service

-‐ Some American courts have seemingly created an end around Hague Service Convention

§ See Note 3 on Page 152 § Melia v. Les Grands Chais de France (Rhode Island District) § Kawasaki v. Superior Court of Guam

• These decisions held that service completed when made on a local official

• Essentially created an American form of “notification au parquet”

-‐ Significant resistance to giving the Hague Service Convention mandatory effect by numerous scholars and judges in the United States

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PART V EVIDENCE

HAGUE CONVENTION ON THE TAKING OF EVIDENCE ABROAD IN CIVIL OR

COMMERCIAL MATTERS

-‐ Ratified by United States in 1972 -‐ Purpose of Discovery

o Evidence o Sworn Testimony o Interrogatories – Sworn Answers by Attorneys o Summary Judgment Motion

EVIDENCE CONVENTION PROCESS: -‐ 1.) Each State designates Central Authority -‐ 2.) Central Authority receives request:

§ receives the request from the Court of a foreign state § reviews request and objects if inappropriate

• legal reasons, etc -‐ 3.) Central Authority executes request if there are no issues

§ Note: Central Authority cannot compel production § Discovery limited to scope of discovery allowed under law of

defendant’s home state (Article 9)

-‐ When Discovery Documents and/or Parties are located outside U.S.: o Interrogatories are usually not an issue o You make the request first – always

§ Send Notice Federal Rule 34 § If party objects

• You make motion seeking production order § Sometimes when party objects, they object by making

protection order o Defendant can argue that under local foreign law, discovery is not

required (or production of docs asked for not required) o Defendant can further argue that production of the requested

discovery documents may require them to violate their own foreign law jurisdictional rules on production of certain documents

§ Uranium Case § Anti Trust Litigation § US plaintiffs sued many many foreign uranium producers § Certain countries passed legislation specifically directed at

protecting companies and foreclose being sued in US

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§ Policies in place in foreign countries – Secrecy Laws § Banks in particular and other financial insituttions must keep

their records confidential § Foreign law may attach criminal sanctions when that

information is disclosed • Problematic for US securities and law enforcement

§ Laws that protect certain economic records from disclosure • Essential to economic activity in a certain country

Objections by Foreign Defendants to Discovery In United States: o No Jurisdiction o Objections to request itself o No Control:

§ See cases: In re Uranium, Societe Nationale § require plaintiff to seek disc through alternative mechanism § i.e. rules of the Hague Convention § If you are parent corp and documents in possession of a sub

you can argue no control • Plaintiff will likely argue and counter that parent has

access to sub documents or power to acquire documents from subsidiary

• Parent co owns more than 50% of stock in subsidiary so they can have controlling authority

• Parent co owns more than 50% so they are therefore owners of the sub as well

§ If suit against local subsidiary but documents are in control of a foreign parent subsidiary

• Local sub can say they have no control • Plaintiff is likely to counter: sub has access to the same

docs as parents so they have control o Issue of control is essentially of a factual issue, so it always dependent

on the issue of relationship btw parent and subsidiary – Very Fact Intensive

§ Sharing officers § Sharing facilities § Subsidiary acts as agent of parent

• Principal-‐agent relationship § Piercing corporate veil

• Essentially one business w/ two different names o General Atomic v. Exxon (S.D. Cal 1981)

§ A court is likely to impose severe sanctions for failure to comply w/ discovery order if the court finds that although discovery is barred by the law of the country where records are stored, the party refusing to make discovery deliberately

37

stored the records there to take advange of the law preventing disclosure.

SEE NEXT PAGE FOR FURTHER OBJECTIONS

o Comity Objection § Ask court on basis of the comity to set aside request due to

defendant’s foreign law implications § Inconsistent irreconcilable jurisdictional laws (between US and

foreign law) § Due to respect of other system, U.S. court should not order

production – or not impose severe sanction for non-‐production § Can come up in the context of a production order § Can come up in the context of a non-‐compliance sanction issue

38

Hague Env Convention

AREOSPATIALE V. UNITED STATE DISTRICT COURT

482 U.S. 522 1987 FACTS:

-‐ two petitioners are corporations owned by the Republic of France. (Government owned entities)

-‐ Petitioners engaged in business of designing, manufacture, and marketing aircraft.

-‐ Of their aircraft, one in particular the Rallye model was allegedly advertises in American aviation publications as “the worlds safest and ecnomonimcal STOL aircraft”

-‐ The Rallye was involved in a plane crash in Iowa where the pilot and passenger suffered injuries

-‐ Plaintiffs filed several suits against French corp in District Court for product liability (defect in plane) and negligence and breach of warranty

PROCEDURAL: -‐ Petitioners answered without questioning jurisdiction

o Important oversight so they couldn’t object to US style discovery -‐ Cases were consolidated and discovery ordered -‐ Initital discovery conducted via Federal Rules without objection from

either side -‐ Plaintiffs then served a new set of discovery request seeking

interrogatories, disc docs and admissions pursuation to Rules 34,36 and 33.

-‐ Defendant (French petitiotners) countered with a motion for protective order

§ Petitioners assert that they are French corporations and the disc sought can only be found in a foreign state

§ Petitioners argued that Hague Convention on Discovery and Evidence stated the exclusive procedures to obtain overseas docs

§ Motion argued that under French law the petitioners could not reply to discovery requests that did not comply with Ev. Convention

o Motion was denied and held: § Hague Convention cannot override Federal Rules of Evidence… § Court held that French law was made specifically to frustrate

US discovery efforts § Also balanced the need to protect US citizens from harmful

products overseas

39

-‐ Inconsistent application of Ev Conv in District Courts § 1.) Hague Env exclusive auth § 2.) Hague Env mandatory first resort but not exclusive § 3.) Hague Env supplemental and optional but comity requires

as first resort § 4.) American courts deem to resort to it when Courts feel that

action is more appropriate while balancing the needs of each party – in effect supplementing federal rules.

ISSUE: -‐ To what, if any, extent do federal courts have to comply with the

procedures set forth in the Evidence convention when litigants seek answers to interrogatories, the productions of docs, and admissions from a French advisory whom the Court has personal jurisdiction over? Does it override/supplement the federal rules of evidence?

HELD:

-‐ Hague Convention is not the exclusive and mandatory authority for procedures to obtain documents and information located within the territory of a foreign signatory.

-‐ Court holds that the Hague Ev Convention supplements the Federal Rules of Evidence and Courts by either doctrine of Comity or balancing the needs and interests of each party may resort to the Hague Env Convention when appropriate

REASONING: -‐ Chapeter III clauses that point to convention being optional:

o Article 23 expressly authorizes party to declare it will not execute any letter of request…

o Article 27 does not prevent state from using more liberal methods of rendering evidence that those authorized by Convention à Questionable logic

-‐ An interpretation making the Hague Convention exclusive would effectively render every American court case involving foreign national subject to the internal laws of that foreign state

-‐ American courts in supervisisng pretrial proceedings should excerise special vigilance towards discovery of foreign litigants from unnecessary or unduly burdemsome discovery

-‐ Court will not announce a specific rigid formula to balance these interests NOTES:

-‐ USC 1782 o Congress amended Judicial code to grant foreign litigants w/o any

requirement of reciprocity special assistance in obtaining ev in the US o Attempt by congress to ease burdens on obtaining international

discovery o Grants court broad discretion to grant discovery under convention

pursuant to foreign law or US Federal Rules

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o Allows grant to an expansive list of states, international agencies, international tribunaland foreign regulatory agencies

§ Specific wording is “International Tribunal” -‐ See Restatement Third on Page 176 for Summation of this Rule

28 USC 1782

INTEL CORP V. ADVANCED MICRO DEVICES (524 U.S. 241 2004) FACTS:

-‐ AMD filed an antitrust suit against Intel w/ an EU regulatory agency -‐ AMD then applied to a CA federal district for discovery under USC 1782 -‐ Dis Ct denied app holding that 1782 did not authorize disc under these

circumstances -‐ 9th circuit reversed and ordered consideration of the request on its merits

ISSUE: -‐ What constitutes whether a foreign regulatory agency is a valid

“International Tribunal” pursuant to the meaning of18 USC 1782 in order to allow discovery sought by a foreign litigant?

HELD: -‐ The court must take into account the following factors:

§ The nature of the foreign tribunal § Character of proceedings underway abroad § Receptivity of the foreign agency or tribunal to US federal court

judicial assistance § The nature of the litigation itself

-‐ Court also held discovery not limited to materials that could be discovered in the foreign jurisdiction if the materials are located there

-‐ Court ultimately held EU regulatory agency is a valid international tribunal.

1782 NOTES: -‐ Al Fayed v. CIA

§ Held the US not a person within the maning of 28 USC 1782 § Court affirmed district court holding to quash a subpoena to

compel the CIA to produce documents for use in French proceedings

-‐ In re Application of Malev Hungarian Airlines: (2nd circuit 1992) § Held that foreign party defending a suit brought in Hungary

allowed depose employees of the American plaintiffs and obtain documents

§ Further held that it was not nec that the 1782 applicant first request this discovery from Hungarian court.

-‐ National Broadcasting v. Bear Sterns (2nd circuit 1999) § Held a private arb panel in Mexico not an international

tribunal within meaning of 1782

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Case is Pre Hague Ev Convention Issue of “Control”

SOCIETE INTERNAITONAL POUR PARTICIPATIONS INDUSTRIELLES ET COMMERCIALS S.A. V. ROGERS

357 U.S. 197 1958 FACTS:

-‐ Section 5(b) of the Trading w/ Enemy Act sets forth the conditions under which the United States during a period of war may seize assets or property of any foreign country or national

-‐ Under this law, the U.S. seized assets of I.G. Farbenindustrie – a German firm and thus an enemy national

§ Valuation of property seized were more than 100K in cash § 90% of stock owned in DE General Aniline corporation

-‐ In 1948, another company (Swiss Corp) brought suit pursuant to subdivisions in Trading w/ Enemy Act to recover these assets from Attorney General

§ Act authorizes recovery of seized assets by any person: • Not any enemy or ally to the extent of such person’s

interest in the asset • Petitioner claimed that it had owned the General Aniline

stock and cash at the time of vesting and hence, as the national of a neutral power, was entitle to recovery

-‐ Gov’t challenged petitioner’s claim of ownership and also asserted that petitioner was an “enemy” within the meaning of the Act b/c it was intimately connected w/ I.G. Farben and was affected w/ “enemy taint.”

§ Gov’t specifically argued that the Swiss Corp conspired w/ the German Corp to concel camouflage and cloak the ownership of I.G. Farben assets located in the U.S. in order to avoid seizure and confiscation.

-‐ Gov’t sought discovery under Rule 34 of FRCP for an order requiring petitioner to produce certain disc documents

§ Gov’t contends disc sought is to reveal the true ownership of stock and that documents were in petitioners control b/c of their close relationship w/ I.G. Farben

-‐ Petitioner did not contest relevance but denied those documents being in its control

-‐ District court granted gov’ts request and that gov’t established a prima facie showing of ownership and issued production orders

-‐ Petitioner argued production would expose it to criminal sanctions under Swiss Penal law and made motion for protective order

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§ During pendency of action, Swiss authorities seized the documents acting pursuant to its local law in order to maintain secrecy of banking records

-‐ District court denied protective order and when petitioner failed to comply with production order, upon Gov’ts motion, district court granted motion to dismiss pursuant to FRCP 37(b)(2)

§ Prior to ruling on Motion to dismiss, Dis Court referred the matter for consideration by Swiss authorities to ascertain whether plaintiff and german i.g. farben colluded to have documents seized and whether petitioner sought as reasonable as they could to comply w/ production orde

§ Swiss Report held no collusion and petitioner did meet their burden of proof in a reasonable manner in attempting to obtain documents

• District court affirmed the Swiss report but granted motion to dismiss nevertheless

ISSUE: -‐ Whether the district court properly acted pursuant to FRCP 37(b) in

granting motion to dismiss complaint for failure to produce court ordered discovery when an international litigant is unable to provide such discovery due to its seizure by foreign law or criminal sanctions imposed by foreign law and render the documents out of their control

-‐ Whether the Fifth Amendment due process is violated by the striking of a complaint because of a plaintiff’s inability, despite good faith efforts to comply w/ a pretrial production order?

HELD: -‐ District court acted properly in respect to the production order (reasons

set forth in reasoning section -‐ For purposes of subdivision (b)(2) (dismissal for failure to obey) court

finds that “failure to obey” is found when, for any reason the party fails to comply w/ court production order.

RULE OF LAW: -‐ Rule 37 should not be construed to authorize dismissal of this

complaint b/c petitioners noncompliance was not fault of their own and there was no bad faith attempt to dodge law and the failure to produce is due to inability. RATIONALE LIMITED IN RE URANIUM (but not a Supreme Court decision)

-‐ 3 Principles derived from Societe Nationale: o Decision for a court to exercise discretionary production power is

informed by: o 1.)

§ the importance of the polciies underlying the United States statute which forms the basis for plaintiff’s claims

o 2. § The important of the requested documents in illuminating key

elements of the claims

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o 3. § The degree of flexibility in the forein nationa’s application of its

nondisclosure laws. REASONING:

-‐ To categorically hold that production orders cannot be compelled against foreign litigants who hold records in foreign jurisdictions that prohibit their disclosure would in effect “invite efforts to place ownership of American assets in persons or firms who sovereign assures secrecy of the records.”

-‐ Petitioner is in the most advantageous position to petition its foreign jurisdiction to allow some production related to the production order

§ U.S. Courts may compel production of documents even when litigants face sanctions

-‐ Special nature of the Trading w/ Enemy Act and proof required by petitioners claim justified the production order

-‐ For purposes of subdivision (b)(2) (dismissal for failure to obey) court finds that “failure to obey” is found when, for any reason the party fails to comply w/ court production order.

-‐ Rule 37 should not be construed to authorize dismissal of this complaint b/c petitioners noncompliance was not fault of their own and there was no bad faith attempt to dodge law and the failure to produce is due to inability. – RATIONALE LIMITED IN RE URANIUM (but not a Supreme Court decision)

-‐ IMPORTANT: District court still allowed to draw negative inferences for failure to produce, just not allowed to dismiss in this situation

§ District also allowed to many things – proceed to trial with what evidence is before the court

§ Draw inferences § Shift burden of proof, etc


informed by: o 1.)



elements of the claims o 3.

§ The degree of flexibility in the forein nationa’s application of its nondisclosure laws.

NOTES: -‐ General Atomic v. Exxon (S.D. Cal 1981)

o A court is likely to impose severe sanctions for failure to comply w/ discovery order if the court finds that although discovery is barred by the law of the country where records are stored, the party refusing to

44

make discovery deliberately stored the records there to take advange of the law preventing disclosure.

Factor Based Analysis to Production Discovery

Order IN RE: URANIUM ANTITRUST LITIGATION

480 F. SUPP 1138 N.D. ILL 1979 FACTS:

-‐ Anti-‐trust litigation against numerous defendants, many of whom are foreign defendants with internal documents located in foreign jurisdictions

-‐ Plaintiff’ Westinghouse sought to compel disclosure of discovery related to uranium output of defendants located in foreign countries.

REASONING:

-‐ Case lays down important precedents and principles: -‐

§ 1.) General Rule that Court has power to order a person subject to its jurisdiction to perform act in another state : subject to 2 preconditions

• A.) Court must have personal jurisdiction over person • B.) The person must have “Control” over the documents

§ 2.) In order to establish whether a multinational or corporation has “control” (through its subsidiaries)

• Test for when a court can order an American parent company to order production of documents of its foreign subsidiary

• “if a corporation has power, either directly or indreictly, through another corporation or series of corporations, to elect a majority of the directors of another corporation, such corporation may be deemed a parent corporation and in control of the corporation whose directors it has to power to elect to office

• thus, if the parents owns more than 50% of the foreign subsidiary’s stock, it possess the necessary control”

§ 3.) Test is less clear when an order is direction to the American subsidiary of a foreign corporation to produce documents from its parent company located abroad:

• One court held a subpoena duces tecum enforceable if it was serves on the subsidiary’s offices in the United States

o even though the corp board of directors had passed a resolution prohibiting removal of the requested records from Canada and

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o all of the board of directors resided in Canada • Theory rests on the proposition that it was sufficeitn

that the documents were in the posssesi on of the corporation and that a subpoena had been served on some of its officers.

• Test is fact specific o Whether through the interlocked web of

corporate organization, management and fiancé there runs the thread of fundamental identity of individuals in the pattern of control

§ Determination of whether the defendant has practical and actual managerial control over, or shares such control with, its affiliate, regardless of the formalities corporate organization.

-‐ The existence of a conflicting foreign law which prohibits the disclosure of the requested documents does not prevent an American Court’s power to order disclosure of those documents


informed by: o 1.)



elements of the claims o 3.

§ The degree of flexibility in the forein nationa’s application of its nondisclosure laws.

-‐ In applying the Societe Nationale principles: o 1.) The court weighed congress’ strong polciiy underlying the

statute behind anti-‐trust litigation § Disc would shed light on plaintiff’s allegations if true, would

constitute massive violations of U.S. anti-‐trust law o 2.) Consideration whether the request docs are crucial to

determination on a key issue § plaintiff’s showing on this factor is simply overwhelming

o 3.) Appraisal of the chances for flexibility in a country’s application of its non-‐disc laws

§ defendant’s home jurisdictions in this case remain astutely resound in their resistance to providing leniency on the discovery of these docuemtns

§ this is taken into account at the stage of sanctions

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o On balance, court held plaintiff entitled to Production Order in order to show their right to this discovery. If there is non-‐compliance court will administer another balancing proposition on sanctions

o Notes of case state this is explicitly not a balancing test à Hmmm…

Balancing Approach To Court Ordered

Discovery UNITED STATES V. FIRST NATIONAL BANK OF CHICAGO

7th Circuit 1993 FACTS:

-‐ IRS issued a summons to First National Bank of Chicago to disclose the bank statements of customer – Christ and Helen Panos and the balance of their funds in their account at the Athens Greece Branch

-‐ Panos now reside in Greece -‐ First Chicago refused to furnish the records stating:

§ Greek counsel has informed them that under Greek Bank Secrecy Act, any and all employees whether in Greece or elsewhere who reveal exact acct info about depositors of accounts in Greek branch to any third party is subject to criminal penalties – including imprisonment

§ Further provided two recent Greek court decisions that held that the Greek law applies to branches of foreign banks doing business in Greece

-‐ In an effort to provide maximation cooperation, First National did provide IRS that:

§ Panoses only had one account, and § That during the month of June 1978, the balance was “in the

range of 40,000” Greek drachmas • Approx. 1,100 USD.

-‐ IRS filed a motion to enforce the summons upon First National for their faulire to respond timely to court ordered compliance

-‐ First National filed a motion to vacate the enforcement order arguing that such disclosure would expose its employees to criminal sanctions

ISSUE: -‐ What approach may a court use to determine whether an order for

disclosure may be mitigated when the disclosure of such documents relate to documents located in a foreign country and disclosure of those documents would result in criminal sanctions pursuant to the foreign jurisdiction’s law?

HELD: -‐ Court issued a balancing test approach

§ This is unlike previous court decisions (such as the factor based approach in In Re: Uranium)

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-‐ Case remanded to conduct further investigation consistent with this balancing approach.

-‐ SEE REASONING ON NEXT PAGE: REASONING:

-‐ The fact that foreign law may subject a person to criminal sanctions in the foreign country if he produces certain information does not automatically bar a domestic court from compelling production

§ However, domestic court is required to undertake a sensitive balancing test

-‐ BALANCING TEST: § A.) Vital national interest of each of the states § B.) the extent and the nature of the hardship that inconsistent

enforcement actions would impose upon the person § C.) the extent to which the required conduct is to take place in

the territory of the other state § D.) the nationality of person § E.) the extent to which enforcement by action of either state

can reasonably be expected to achieve with the rule prescribed by that state.

-‐ Court held applying the above analysis and in light of the fact that the lower court issued no rationale – that issuing a compel order in this case was erroneous

-‐ Clear that initial act of conveying information would take place in Greece (factor C)

-‐ Highly proably that persons of Greek nationality would make the initial disclosure (factor D)

-‐ Extent and hardship of compliance bears great weight (factor b) -‐ Although strong interest of US policy to collect tax, Greece bank secrecy

laws also important (factor a) -‐ In determing whether to refrain from exercising jurisdiction, a state must

give special weight to the nature of the penalty thatm ay be imposted by the other state. A state will be less likely to refrain from exercising its jurisdiction when the consequence of obedience to its order will be a civil liability abroad. Similarly a state will be less likely to exercise jurisdiction when the consequences of obedience is a criminal liability of a foreign national in a foreign country

-‐ Case remanded to conduct further investigation consistent with this balancing approach.

NOTE:

-‐ General Atomic v. Exxon (S.D. Cal 1981)

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o A court is likely to impose severe sanctions for failure to comply w/ discovery order if the court finds that although discovery is barred by the law of the country where records are stored, the party refusing to make discovery deliberately stored the records there to take advange of the law preventing disclosure.

-‐

Evidence AMD CASE

Worthwhile exercise to compare this case to In Re Asbestos US Statute 1872

IN RE ABESTOS INS. COVERAGE 1985 House of Lords (United Kingdom

FACTS: -‐ Case ready to go to trial – on the eve of trial in San Fran -‐ Evidence was needed both docs and testimony (req’d in UK) -‐ Plaintiff sought to obtain that evidence -‐ Appellate decision (House of Lords) -‐ US plaintiff’s seeking deposition and documentary evidence to ascertain

the existence of insurance policies and their respective terms from England Courts (declatory judgment)

ISSUE: -‐ 3 Categories of Documents in Dispute

§ Written instruction from plaintiff or their agents to Sedgwick to obtain the insurance policies

§ Written instructions from plaintiff (or agents) to obtain the insurance policies

§ Examples of Price, Forbes&Co excess comp personal inj and property damage umbrella liability policies

§ Oral testimony -‐ Witness Testimony is granted, however the others are denied

HELD: -‐ Court held that documents must already exist and the plaintiff must be

more specific in their requests -‐ Specificity is key to not run afoul of “any and all” -‐ Court held that you have to know what you are looking for before you can

get it and -‐ Must know it is likely to exist before you request it

REASONING: -‐ Note: Exception to Hague Evidence Convention: -‐ Reservation of most signatories to common law jurisdictions to not

engage in pretrial discovery. (Very much directed at United States) -‐ United Kingdom did take this reservation -‐ Gave effect to prevent the convention from being used as a method to

obtain pretrial discovery

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-‐ UK also implemented statute authorizing convention in local law -‐ Case is primarily about how this statute applies to the instant case -‐ However case is not about pre-‐trial discovery b/c this case is about disc

to be used at trial and only at trial since it is occurring on the eve of trial

PART VI Forum Non Conveniens

-‐ Motion made by defendant -‐ Made early on in the case – if you don’t make it, presumption that you waived

right (just like a jurisdictional objection) -‐ Invoked Against Plaintiff

§ Presumption in favor of plaintiff’s selected forum § Presumption is lessened when dealing with a Foreign Plaintiff

-‐ Discretionary doctrine committed to discretion to the District court -‐ Fact intensive analysis -‐ Can be utilized as a method to strategically “buy time” -‐ Instant case is dismissed without prejudice -‐ No adjudication on the merits -‐ Dismissed on premise that plaintiff will simply refile in available alternate

forum o Note: not every case gets refilled

§ Could effectively be the end of litigation if strategically used -‐ Courts perspective is that it is more efficient to litigate in another forum -‐ Eliminates discovery/evidentiary/choice of law problems

§ Dealing w/ foreign law and choice of law issues -‐ Balance of:

o Private interests that relate principally to the defendant o Public Interests that relate to the Court and the Administration of

Justice o All of these are incredibly fact intensive

-‐ If the remedy provided by the alternative forum is so cleary inadequate or unsatisfactory that it is no remedy at all, the unfavorable change in law may be given substantial weight; the district court may conclude that dismissal would not be in the interest of justice – Reyno v. Piper

-‐ Usually not appealable b/c it is not an adjudication on the merits (only until after disposition of a final result in the case)

-‐ It is interlocutory order -‐ Deference to plaintiff when suing in his home forum

§ Presumption does not operate when there is a foreign plaintiff -‐ Assumption:

o That the same issue can be heard in a different foreign § Must be shown from the outset by the defendant

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§ Must be an available alternative foreign § Differences in law does not influence as long as there some sort

of relief in the alternative forum so as long as there is no egregious miscarriage of justice. – Reyno v. Piper

FORUM NON CONVIENIENS (CONTINUED): -‐ Where is the safest place to sue someone?

§ In their home country -‐ Secures the ability to obtain a foreign judgment -‐ The biggest risk one faces when enforcing foreign judgments is that a

court decides you did not properly obtain PJ over the defendant -‐ Plaintiffs tend to favor US jurisdiction because of our jury and discovery

system -‐ As a result there is an incentive to find and name a U.S. party -‐ Perverse incentive? Maybe -‐ Does the United States as a matter of policy want to be the haven for

litigation for plaintiffs around the world?

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Forum Non Convieniens PIPER AIRCRAFT CO. v. REYNO (SUPREME COURT 1981)

FACTS: -‐ Plane crash occurred in Scottland -‐ Decedents estate (planitiffs) filed suit against Manufacturing company of

aircraft in California -‐ Defendants sought to dismiss case based on FNC doctrine since plane crash

occurred in Scottland and most of witnesses resided there -‐ Aircraft rubble and evidence also located in Scottland -‐ Scottland gov’t investigation into aircraft also located in Scottland -‐ Plaintiff argued removal improper b/c litigating in Scottland would not give

them proper relief -‐ Plaintiff argued Scottland Forum would be more advantageous to defendants

o Liability not available in Scottland only wrongful death cause of action § Socttland forum would result in fewer plaintiffs and less

evidence would have been allowed PROCEDURAL:

-‐ US Manufacturing defendants removed to PA where the defendants are domiciled

-‐ Defendants petitions PA Federal Court to dismiss based on FNC doctrine -‐ District Court held granted and reasoned:

o Due to choice of law and mix of law considerations, litigating action in PA would be hopelessly confusing and complex for jury

o Court unfamiliar w/ Scottish law and would have to rely on experts from that country

-‐ On appeal, Third Circuit Appellate Court held that if the foreign court would have been more difficult to litigate in, removal not warranted

§ Court spends much of its decision negating this position by the Third Circuit court of appeals

ISSUE: -‐ Whether a change in substantive law between venues is a sufficient reason

for denying a motion to dismiss on grounds of forum non conveniens. What is the standard of review of a trial court’s ruling on a motion to dismiss via forum non conveniens.

HELD: -‐ Only in cases where the remedy provided by the alternative forum is so

cleary inadequate or unsatisfactory that it is no remedy at all, the

52

unfavorable change in law may be given substantial weight; the district court may conclude that dismissal would not be in the interest of justice –

-‐ Otherwise, court must look at the facts of the case and weigh whether the interests of justice and the interests of each party, including the court are better served in an alternative forum.

§ There is a rebuttal presumption in favor of the plaintiff’s forum selection

§ This presumption is especially lowered in cases involving foreign plaintiffs

§ At this stage, defendant must only produce enough information to enable the District Court to balance the parties’ interests

• Defendant need undertake an intensive investigation and provide a list of witnesses or documents it seeks to produce that are located a far off.

-‐ Private factors include the relative ease of access to sources of proof, availability of compulsory process for the attendance of unwilling witnesses, the cost of attendance of witnesses, the possibility of viewing the scene if appropriate to the action, and other practical matters related to making the trial easy, expeditious, and inexpensive.

-‐ Public factors include administrative difficulties of the courts, interest in having local controversies adjudicated at home, the interest in having the trial in a forum that is familiar with the law governing the action, the avoidance of unnecessary problems in conflict of laws or the application of foreign law, and the unfairness of burdening citizens in an unrelated forum with jury duty.

-‐ The court held that private factors favored Scotland because the wreckage of the plane and witnesses were there. The court also held that public factors favored Scotland because Scotland had a greater interesting in hearing a case that concerned Scottish citizens.

-‐ REASONING:

-‐ 3rd Circuit was erroneous to base decsision solely on whether plaintiff would receive less favorable outcome in the Scottish forum

§ if the possibility of a change in law was given substantial weight, deciding motions to dismiss on FNC grounds would become problematic:

§ Choice of law analysis would be extremely important and would require courts to interpret the law of foreign jurisdictions

-‐ There is ordinarily a strong presumption in favor of litigation in the plaintiff’s choice of forum

§ This presumption applies with less force when the plaintiffs are foreign litigants. – this shows up in the next case.

§ A distinction between resident or citizen plaintiff and a foreign plaintiff are justified

§ When plaintiff is forum, presumption is less reasonable

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§ A FNC analysis is to determine convinence, a foreign plaintiff’s choice deserves less deference. (may be more convient to litigate in plaintiff’s home forum but instead plaintiff chose forum in order to take advangate of U.S. system or available causes of actions.

-‐ Private factors include the relative ease of access to sources of proof, availability of compulsory process for the attendance of unwilling witnesses, the cost of attendance of witnesses, the possibility of viewing the scene if appropriate to the action, and other practical matters related to making the trial easy, expeditious, and inexpensive.

-‐ Public factors include administrative difficulties of the courts, interest in having local controversies adjudicated at home, the interest in having the trial in a forum that is familiar with the law governing the action, the avoidance of unnecessary problems in conflict of laws or the application of foreign law, and the unfairness of burdening citizens in an unrelated forum with jury duty.

-‐ The court held that private factors favored Scotland because the wreckage of the plane and witnesses were there. The court also held that public factors favored Scotland because Scotland had a greater interesting in hearing a case that concerned Scottish citizens.

-‐ Notes: Conditions on Dismissal: 1.) Defendants consents to jurisdiction on alternative forum 2.) Defendant waives any SOL that has run prior to commencement of suit in the alternative forum Conditions are sough to ensure that there is an alternative forum available

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Acceptable Stips To FNC Motion

HARRISON V. WYETH LAB DIV OF AMERICAN HOMES 3rd Cir 1992

FACTS:

-‐ Plaintiffs in this action are all residents and citizens of the UK -‐ Plaintiffs allege they used oral contraceptives within the UK that were

marketed manufactured and designed by the American counterpart of a British company located in Penn. United States

-‐ Plaintiffs allege the product was defective and even though they used them in accordance with their directions, it resulted in serious injury, harm and death

§ Plaintiffs allege that defendant caused the marketing sale and distribution of the drugs in the UK and either actually did the marketing and distribution themselves or did so through others by agency license or otherwise

§ Thurst of plaintiff’s arg is that defendants were negligent in its conduct of these activities and failed to give reasonable or adequate warning concerning the serious risk it known to be associated with the drugs

-‐ Defendants submitted affidavit by John Wyeth Corp – incorporated under UK laws and wholly owned by its American counterpart AHPC

§ Affidavit states JW is a sub-‐licensee of AHPC and pays royalties to AHPC for use of contraceptives for which AHPC holds the exclusive license

§ Further states that all drugs are manufactured, packaged and labeled in the UK on behalf of JW for UK and Ireland consumers

§ Furhter states JW rec’d product license from UK authorizing sale in UK

PROCEDURAL: -‐ Defendant filed a Motion for Forum Non Convieniens arguing:

§ Litigation more convenient and appropriate in UK since: • Plaintiffs are all citizens of UK • UK is the situs of licensing • Packinging and distrubition occurred in UK • Ingestion of drugs and UK regulatory licenses involved • Plaintiffs COA did not occur in Penn but instead in UK

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• PA has no interest in regulating consumer activity beyond its borders

• Marketing decisions made in respect to British law and should be judged by that standard, not US

-‐ Plaintiff countered FNC Motion by stating: § Defendant conducted consisted of marketing the drugs and

placing them in the stream of commerce knowing that the warning accompanying the drug was inadequate thereby creating unreasonable harm wherever in the world the drug was sold and ingested

§ Plaintiffs allege that the purposeful withholding of this information was a decision made by AHPC in Pennsylvania

§ Also allege that the formula and marketing were all originated in Pennsylvania

-‐ District Court granted def FNC motion arguing that the balance of interests tip the scale towards litigation in UK and defendant must waive certain jurisdictional and discovery defenses in accepting motion for FNC

ISSUE: -‐ What procedures or stipulations may accompany a dismissal based on

FNC considerations? -‐ May a district court entertain a cause of action in the Untied States by

plaintiiffs who are foreign citizens and the COA involves the consumption of drugs regulated by a foreign forum when there is an allegation of tortious marketing, distributing, conduct of an American company’s license to a foreign corporation and an alternative forum is available where the events actually occurred?

HELD: -‐ In granting an FNC motion, a court may order defendants to engage in

certain activity in the alternate forum such as waiving a jurisdictional defense, State of Limitations defense or order the production of certain discovery that is located in the United States

-‐ Cannot order arbitrary and unreasonable conditions on FNC dismissal -‐ The balance of interests weigh in favor if ltigiation in the UK forum since

PA has no interest in regulating conduct beyond its borders or adjudicating the standards of the UK regulatory drug laws.

REASONING: -‐ Upon engaging in a Gilbert (see Reyno v. Piper) and Piper analysis, Court

held: § Pennsylvania interest in the regulation of the conduct of drug

manufactureers and the safety of drugs produced and distributed within its borders does not extend so far as to include such regulation of conduct produced or distributed in foreign countries

§ Questions re: the safety of drugs marketed in a foreign country are not suitable for adjudication in US courts

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§ US should not impose its view of the safety, warning, and duty of care required of drugs sold in foreign countries

• UK is a society with similar standards and values as our own

• Better example is India with different living standards etc

• If India wanted to regulate their population growth in a certain way, US cannot interfere

-‐ PA adopted “most significant relationship” test for deciding which law to apply ( Gilbert supra) o As a result, the UK law is the best law to apply to this case

-‐ On the question of Conditions Allowed in granting the FNC Motion: o Proper to order defendants submit to UK jurisdiction

§ Court does not agree that JW should be only defendant in UK action

§ Defendant AHPC should also submit to UK jurisdiction because their alleged tortious misconduct is also at issue

§ Court not persuaded that suit solely against JW constitutes an adequate alternative forum

o In dismissing an action for convienience, court should not insulate a defendant from jurisdiction abroad and judicial determination of its alleged liability

§ AHPC def must submit to foreign jurisdiction, produce evidence in the US and pay any judgments originating from UK jurisdiction brought for execution in the US.

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Arbitrary Cond On FNC Motion Grant

IN RE UNION CARBIDE CORPORATION GAS PLANT DISASTER AT BHOPAL INDIA

(2nd Circuit, 1987) cert denied FACTS:

-‐ Chemical accident in which winds blew deadly gas from plant operated by UCIL in densly populated city of Bhopal India

-‐ Gas explosion caused toxic fumes all over Indian city -‐ Over 2000 death and 200,000K injured -‐ Corporate structure of Gas Companies

§ UCIL incorporated under Indian Law • 50.9% of its stock owned by UCC • 22% owned or controlled by gov’t of India • balance of stock held by approx. 23k indian citizens

-‐ After incident, Indian gov’t passed act giving UOI exlcusive rights to represent the victims in India or elsewhere in the world

-‐ UOI filed suit in SDNY b/c Indian Courts apparently lacked jurisdiction over UCC (I cannot see how that is even possible that it doesn’t have jurisdiction over UCC)

§ There are more than 6500 suits filed in India pending for the same COA

PROCEDURAL: -‐ UCC moved for a motion for FNC which was granted by District Court with

the following conditions: o Conditions Imposed on FNC Order from District Court:

§ 1.) UCC consent to jurisdiction of foreign court § 2.) UCC agree to satisfy any judgment rendered by Indian court

against it and upheld on appeal, provided the judgment and affirmance “comport with the minimal requirements of due process”

• Conditioned to prevent corruption in India § 3.) UCC be subject to discovery under the Federal Rules of Civil

Procedure of the United States in the Indian courts • Essentially mandating US style pre-‐trial discovery

which was limited in Indian Court -‐ Note: conditions 2 and 3 were stricken from final disposition

ISSUE:

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-‐ Whether the conditions imposed on UCC by the court’s granting of the FNC Motion are arbitrary and unreasonable and should be stricken from the FNC order HELD:

-‐ Cannot impose arbitrary conditions of 2 and 3 o Either you dismiss or you don’t

REASONING:

-‐ Court reasoned that the private interests weigh substantially in favor of litigating in India

§ See Top of Page 233 for reasons, irrelevant to this analysis -‐ Subject of Conditions imposed on FNC Order

o 1.) US Style Pre Trial Discovery Unfair to UCC § Creates inequality in Indian Courts disfavoring defendant b/c

Plaintiff is not subject to the same discovery rules as defendant would be in Indian Court

§ Although some decisions warrant the discovery condition, this case is not one of them b/c

• The inherent inequality this court’s condition makes with respect to disc. Creates scale of balance in favor of plaintiff

o 2.) Erroneous assumption that if judgment awarded in Indian court, plaintiffs could not enforce judgment in US

§ UCC consent to enforcement of judgment in India is an erroneous understanding that judgment may possibly not be enforced in US

§ Minimal requirements of due process language of Order invites risk that it be interpreted by some other std (although Court likely referring to money judgment act)

NOTES: -‐ Money Judgment Act:

o Grounds for Non-‐Recognition if a Foreign Judgment § 1.) foreign court did not have jurisdiction over subject atter § 2.) def in the proceedings in the foreign court did not receive

proper notice § 3.) Judgment obtained by fraud § 4.) the COA on which the judgment is based is repugnant to the

public policy of the US § 5.) the judgment conflicts with another final and conclusive

judgment § 6.) the [proceeding in the foreign court was contrary to an

agreement for a Forum Selection Clause § 7.) in the case of jurisdiction based solely on personal service,

the foreign court was a seriously inconvenient forum for the trial of the action

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PART VII ANTI-‐SUIT INJUNCTIONS

QAAK V. KLYVELD PEAT MARWICK

(1ST Circuit 2004) Pg 125 FACTS:

-‐ Litigation in US involving securities fraud -‐ Involves claims against Belgiun accounting firm

§ Affiliate of defendant KPMG -‐ Deals with the issue of documents

o Plaintiffs seek to produce auditing records of KPMG as provided for its customers

-‐ Defendant KPMG argues that producing such documents would lead to sanctions as a result of violation of Belgium law

PROCEDURAL: -‐ Plaintiff seeks order to compel and district court ordered KPMG to

produce documents -‐ KPMG then filed suit in Belgium to impose sanction on anyone producing

documents to US plaintiff relating to district court order § Plaintiff then sought Anti Suit Injunction suit in District Court

to prevent defendant KPMG from continuing its litigation to prevent production of docs in Belgium

ISSUE: -‐ Can U.S. Court issue an injunction preventing a party in a domestic action

to proceed in litigation in a foreign Court? If so, under what circumstances?

HELD: -‐ KPMG Anti suit injunction is blatantly attempting to frustrate order of the

district court -‐ Therefore anti suit injunction allowed

REASONING: -‐ 1st Principles: (General Rules) -‐ Must have personal jurisdiction over the defendant -‐ Presumption against allowing anti-‐suit injunctions -‐ Presumption in favor of parallel litigation subject to res judicata

considerations § No sovereign interferes with the other § Antisuit injunctions are exceptions to these general rules

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-‐ Court weighs the utility of the two current approaches that circuit courts are split on o Liberal Approach:

§ Anti suit injunction appropriate when • Duplication of parties • Duplication of issues • Simultaneous prosecution would frustrate speedy

efficiency of • Less deference to international comity

-‐ Conservative Approach: § Whether foreign action imperils the jurisdiction of the forum

court or § Threatens some strong national policy § Greater weight attributed to international comity § Recognized rebuttal presumption against allowing anti suit

injunctions § Compels an inquiry to balance competing policy considerations

of all interested parties -‐ Court does not unilaterally adopts conservative approach but adopts the

balancing approach and recognitions of rebuttal presumption of anti suit injunction and recognition of deference to international comity

§ Court favors considerations -‐ Court reasoned however that defendant is blatantly attempt to frustrate

the district court order and suit in Belgium is solely for the purpose of evading discovery

Notes: As this type of case is unsettled by Supreme Court, the answer to anti suit injunctions are dependent on which jurisdiction you are in

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Comity Approach To Resolve

Anti Suit Injunctive Relief

SMITH KLINE & FRENCH LAB V. BLOCH U.K. Court of Appeals 1983

FACTS:

-‐ American defendant in American lawsuit (plaintiff here) seeks an anti-‐injunction order that orders foreign English plaintiff in American suit (defendant here) from pursuing anti-‐injunction suit from English court to enjoin Bloch’s U.S. lawsuit

-‐ Bloch lives in England, contracted with English company which is a wholly owned sub of an American corp o Contact made btw Bloch and English corp (their names only) o According to English court nothing to warrant English Corp and

American corp guiltyof fraud o Emotional distress claims have no substance

§ Bloch claims English and American corp colluded to defraud of him

§ Bloch sues for breach of contract § Bloch alleges false promises by parties § Bloch alleges emotional distress

-‐ Had Bloch sued English corp alone in US he would have been unsuccessful to get jurisdiction over English corp in U.S. o Bloch needed American Parent hook for jurisdiction over English

corp. PROCEDURAL:

-‐ Bloch files suit in the United States against American parent corp and wholly owned English Subsidiary o American corp filed motion to dismiss (not sure on FNC or

jurisdiction) o American court denied

-‐ American parent corp filed suit in British Court to have an injunction against Bloch bringing suit in the United States

-‐ Bloch then filed suit in the American court to enjoin American corp from seeking anti-‐injunction suit in English courts o American Court issued the order enjoining American corp from

seeking anti-‐injunction suit in british Court ISSUE:

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HELD:

-‐ English used the balance of interests from Reyno and a parallel UK decision o Held suit should be brought in England o Granted American corp anti-‐suit order against Bloch

REASONING:

-‐ British court holds that this case belong in the UK o Cites Reyno v. Piper and a parallel british court ruling

-‐ Usually, plaintiff allowed to bring suit in two or more jurisdictions and proceed in litigation. o Once any one of those cases comes to a final conclusion, the principal

of res judicata precludes any other cases from going forward. -‐ British court holds that Reyno v. Piper now states plaintiff no longer has

an absolute right to choose their own forum – that right is now qualified by a myriad of factors

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PART VIII JUDGMENTS

1. There is no treaty between the U.S. and any other country requiring the

recognition of judgments, decrees, or orders (collectively “judgments”) in the U.S. rendered by non-‐U.S. courts. Moreover, there is neither a constitutional basis nor federal statute requiring a non-‐U.S. court judgment to be given full faith and credit. Nor can enforcement be accomplished by means of a letter rogatory in the U.S. under 28 U.S.C. §§ 1781, 1782.

2. In Hilton v. Guyot, 159 U.S. 113 (1895), the Supreme Court treated the enforceability of non-‐U.S. judgments as a matter of “comity of nations,” and concluded that comity called for enforcement of judgments rendered in another state in favor of a citizen of that state against a non-‐citizen on the basis of reciprocity.

1. Justice Gray set forth the foundation for modern law by stating that: “[W]here there has been opportunity for a full and fair trial abroad before a court of competent jurisdiction, conducting the trial upon regular proceedings, after due citation or voluntary appearance of the defendant, and under a system of jurisprudence likely to secure an impartial administration of justice between the citizens of its own country and those of other countries, and there is nothing to show either prejudice in the court, or in the system of laws under which it was sitting, or fraud in procuring the judgment, or any other special reason why the comity of this nation should not allow it full effect, the merits of the case should not, in an action brought in this country upon the judgment, be tried afresh . . . . Id. at 202-‐03.

2. However, in Hilton, the Supreme Court declined to enforce the judgment of a French court in favor of a French citizen against two U.S. citizens, on the ground that French courts, if the facts were reversed, would not enforce the judgment of a court in the U.S. Id.

3. Notwithstanding that decision, the great majority of courts in the U.S. have since rejected the requirement of reciprocity. The reciprocity requirement has long been viewed as unfair because the judgment holder is effectively being punished for a policy of his or her national government. Also, the requirement was thought to hinder the effort to have other nations recognize U.S. judgments. De la Mata v. American Life Ins. Co., 771 F. Supp. 1375 (1991), not followed on State law grounds, (NO. CIV.A. 90-‐173 MMS); abrogated by McCord v. Jet Spray Intern. Corp., 874 F. Supp. 436 (1994) (D. Mass.) (NO. C.A. 93-‐11375-‐JLT); disagreement recognized by In re Joint Eastern and Southern Dist. Asbestos Litigation, 129 B.R. 710 (1991) (E.D.N.Y.); Biggelaar v.

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Wagner, 978 F. Supp. 848 (1997) (N.D. Ind.); Hilkmann v. Hilkmann, 579 Pa. 563 (2004);

3. Because the U.S. has not enacted any federal legislation with respect to enforcing non-‐U.S. judgments, and because the U.S. has not acceded to any treaties with other nations concerning judgment-‐recognition or enforcement, the recognition and enforcement of judgments issued by non-‐U.S. courts in the U.S. is governed by the laws of the various states. See Restatement (Third) Foreign Relations Law § 481a (1987).

4. Accordingly, a party seeking to enforce such a judgment in the U.S. must file suit before a competent court and seek enforcement under state law. That court will determine whether to give effect to the judgment.

1. Federal courts in diversity cases apply state law for recognition and enforcement under the Erie doctrine. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938) (“[e]xcept in matters governed by the Federal Constitution or by Acts of Congress, the law to be applied in any case is the law of the State.”)

5. In determining to what extent to recognize and enforce a non-‐U.S. court judgment, U.S. courts follow the principle of international comity. In Hilton, the Supreme Court described comity as “the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other persons who are under the protection of its laws.” Hilton, 159 U.S. at 164.

6. If a U.S. court is reasonably convinced that the non-‐U.S. judgment comports with the U.S. concept of due process, comity will be afforded. See, e.g., Kohn v. American Metal Climax, Inc., 458 F.2d 255, 303-‐05 (3d Cir.), cert. denied, 409 U.S. 874 (1972).

1. Factors suggesting that a U.S. court will recognize and enforce a non-‐U.S. court judgment (see Hilton, 159 U.S. at 202):

1. Demonstrated opportunity for a full and fair trial abroad; 1. Defendant has to have been provided adequate notice of

the suit See Koster v. Automark Industries, Inc., 640 F.2d 77 (7th Cir. 1981); Mata v. American Life Insurance Co., 771 F. Supp. 1375 (D. Del. 1991).

2. However, U.S. courts do not require adherence to the Federal Rules of Civil Procedure (“Fed. R. Civ. P.”)

2. Trial conducted before a court of competent jurisdiction; 3. Court engaged in regular proceedings; 4. Jurisdiction over the defendant established by “minimum

contacts” test (see Koster v. Automark Industries, Inc., 640 F.2d 77 (7th Cir. 1981)); and

5. System of jurisprudence likely to secure the impartial administration of justice between litigants of different countries, no showing of prejudice in the court or the system of laws, and no fraud in procuring the judgment.

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2. Where U.S. courts have no experience with non-‐U.S. court’s procedures or proceedings, reasonable discovery should be provided to party seeking to avoid comity being followed.

3. Judgments rendered by a judicial system that fails to provide due process are not enforceable. See Int’l Transactions, Ltd. v. Embotelladora Agral Regiomontana, S.A., 347 F.3d 589, 593-‐97 (5th Cir. 2003).

4. A non-‐U.S. court judgment will not be enforced if it violates U.S. public policy. The “standard is high, and infrequently met.” Ackerman v. Levine, 788 F.2d 830, 841 (2d Cir. 1986).

7. Default judgments. The rationale underlying the Full Faith and Credit Clause of the U.S. Constitution, Article IV, Section 1, which guarantees that judgments rendered in one state of the U.S. will be enforced in other States of the U.S., has led most courts in the U.S. to enforce default judgments rendered by non-‐U.S. courts, provided basic jurisdictional requirements have been met. If, however, the exercise of jurisdiction by the state of origin was unreasonable, the judgment will be denied recognition. In general, recognition of default judgments is effective only between the parties, and no collateral estoppel or other preclusive effect is accorded to a default judgment. See Restatement, Second, Judgments § § 27 and 28.

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Definition of Comity HILTON V. GUYOT 159 U.S. 113 (1895)

FACTS: -‐ Hilton a citizen of United States and New York, conducting business in

Paris FR under the business name AT Stewart & Co (Stewart) -‐ A french firm contracting w/ Stewart was Charles Fortin & Co (Fortin) -‐ Fortin sued Stewart in French Tribunal of Commerce

o Stewart appeared with a special appearance (to protect assets in FR from being seized) and contested action

o Tribunal awarded Fortin a money award o Judgment affirmed by Paris Court of Appeals o Hilton did not pay award

-‐ Fortin obtained Guyot, acting as a liquidator. o Guyot brought suit in federal court in New York to sieze assets of

Hilton in the United States PROCEDURAL:

-‐ Hilton answered complaint by alleging various inconsistencies w/ French Tribunal o Specifically alleging that:

§ French court allowed inadmissible hearsay evidence § Fortin was only recently a member of such tribunal § Hilton only answered French Tribunal to prevent assets in a

storage container in Paris from being seized by way of default ISSUE: -‐ Under what standards should an American court honor a foreign judgment? HELD:

-‐ Supreme Court is satisfied Hilton had an opportunity for a full and fair trial aboard in the French court o Court held that the French court was of competent jurisdiction

-‐ Nothing to show either prejudice in the court, or in the system of laws under which it was sitting or fraud in procuring the judgment or any other reason why the comity of this nation should allow it full effect

-‐ Definition of Comity: -‐ -‐ “the recognition which one nation allows within its territory to the

legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other persons who are under the protection of its laws.”

-‐ Hilton did not show French court lacked personal jurisdiction

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-‐ Hilton did not show that the French tribunal was so inadequate that its procedures did not warrant recognition of its Judgment

-‐ Court did not examine Hilton’s claim of Fraud § Fraud can be shown by showing that award based on fale and

fraudulent documents and that the foreign tribunal was deceived or misled

o Court held another reason not to honor Judgment -‐ Comity Analysis:

o Since French courts do not honor US judgments, the US will not honor French judgments

§ Reasoning is that foreign judgments do not automatically establish full faith and credit, but instead establish a prima facie showing of the justice of planitiff’s claim.

NOTES: -‐ U.S. courts have been quite liberal in their recognition and enforcement of foreign judgments. As a result, once the party seeking recognition of a foreign judgment has established the judgment’s existence, the burden is generally on the party resisting recognition to prove grounds for non-‐ recognition.

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SOMPORTEX LTD V. PHILADELPHIA CHEWING GUM CORP 3rd Circuit 1971

FACTS: -‐ Somportex is a British corp and Philadelphia is an American Corp -‐ The two entered an agreement to merchandise gum in under Somportex’

trade name in UK o The transaction fell through

-‐ Somportex filed an action against Philadelphia for breach of contract in the UK

-‐ Phila was served via English long-‐arm statute o Phila initialy made a conditional appearance to set aside verdict o However, Phila apparently then made a calculated decision to

withdraw their appearance, not contest jurisdiction and allow a default judgment

-‐ English court proceeded through litigation without Phila (essentially ordering the English equivalent to an Inquest)

PROCEDURAL: -‐ English court granted a judgment award to Somportex -‐ Somportex then filed diversity action in federal court to enforce the

judgment -‐ Defendan (Phila) answered and argued its validity

§ Def argued English court failed to examine case on its mertis • Court strongly disagreed

ISSUE: HELD: -‐ REASONING:

-‐ “Comity is a recognition which one nation extends within its own territory to the legislative, executive or judicial acts of another. It is not a rule of law, but one of practice, convienience, and expediency. Although more than mere courtesy and accommodation, comity does not achieve the force of an imperative or obligation. Rather, it is a nation’s expression of understanding which demonstrates due regard both to international duty and convienence and to the rights of persons protected by its own laws. Comity should be withheld only when its acceptance would be contrary or prejudicial to the interest of the nation called upon to give it effect.”

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-‐ Court strongly disagreed with defendant’s contention that the English court did not examine the case on the merits

§ UK Court of Appeals specifically afforded Phila another opportunity to lay the case on its merits and Phila resolved to do nothing

-‐ In the absence of fraud or collusion, a default judgment is as conclusive as an adjudication betweeh the parties as when rendered after answer and complete contest in open court.

-‐ Defendant argues that certain items in English are not recoverable in PA and since federal court must apply law of the forum it sits (Erie) the judgment is unenforable

§ It is true that federal courts must apply the substantive law of the forum they sit in, hwoever

§ The English awards that are not part of PA law is not so egregious that it inflames public resentment and needs judicial supervision to prevent it from offending the public morals.

-‐ Defendant finally contends that English Court did not have Personal Jurisdiction b/c its standards of due process did not meet the standards set forth in International Shoe: -‐ Essentially defendant did not purposefully avail itself to English Jurisdiction

§ Court disagreed, it held that it assumed the proper constitutional agency b/c the Defendant did not explicitly contest that in the foreign action.

NOTES: -‐ The principal case permits the defendant to make a collateral attack on

the jurisdiction of the English court à this seemingly was the defendant’s plan here

§ Collateral attack in Hilton even though the objection to jurisdiction had failed in the English court

-‐ In the U.S. if a defendant makes a special appearance in a state of the United States and the court finds that it has jurisdiction, other states are require to give full faith and credit to that jurisdictional finding

-‐ In the instant case, defendant never litigated the jurisdictional argument in England – thus his collateral attack was fruitless b/c they didn’t lay the groundwork in the English action

-‐ Botom Line: § In order to make the collateral attack – fight jurisdiction! If you

lose, you can raise it again when an award is brought for enforcement

§ Think back to the beginning of the class, this is an essential theme.

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JET HOLDINGS, INC. V. PATEL Ct of Appeals United Kingdom

Pg 285.

The Position in England The leading English authority is the Court of Appeal decision in Abouloff v Oppenheimer (1882) 10 QBD 295 which laid down the principle that a foreign judgment could be impeached for fraud even though no fresh evidence of the fraud had been discovered and despite the allegation of fraud having been dealt with in the foreign proceedings. This principle was subsequently upheld in Vadala v Lawes (1890) 25 QBD 310 and in Syal v Heyward [1948] 2 KB 443.

More recently, the Court of Appeal in Jet Holdings Inc v Patel [1990] 1 QB 335 has reaffirmed the old English authorities and the position on the fraud exception. The House of Lords in Owens Bank Ltd v Bracco [1992] 2 AC 443 took a similar view, considering itself bound by the decisions of Abouloff v Oppenheimer and Vadala v Lawes. Lord Bridge held, in relation to the fraud exception, that 'if the law is now in need of reform, it is for the legislature, not the judiciary to effect it' (at 489).

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Uniform Foreign Money Act

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SUNG HWAN v. RITE AID CORPORATION New York Court of Appeals 2006

FACTS: -‐ Plaintiffs seek enforcement of a money judgment against defendant that

was awarded in Seoul South Korea -‐ Defendant argues that the Korean court was without jurisdiction, as the

judgment was based on a cause of action that, although cast in terms of tort, would be considered a breach of contract claim in New York and would therefore not qualify as a basis for CPLR 302 long-‐arm jurisdiction. The fact that a foreign country's substantive law differs from New York law, plaintiff counters, is not a sufficient basis for the non recognition of its judgments, and the principles of comity warrant mutual respect of such judgments if jurisdiction is otherwise proper. We agree with plain-‐ tiff that defendant failed to demonstrate that the Ko-‐ rean court's exercise of jurisdiction is not entitled to comity. We therefore reinstate the complaint.

ISSUE:

-‐ Thus, the inquiry turns on whether exercise of jurisdiction by the foreign court comports with New York's concept of personal jurisdiction, and if so, whether that foreign jurisdiction shares our notions of procedure and due process of law.

REASONING: -‐ New York has traditionally been a generous forum in which to enforce

judgments for money damages rendered by foreign courts" -‐ Historically, New York courts have accorded "recognition to the

judgments rendered in a foreign country under the doctrine of comity ... § [a]bsent some showing of fraud in the procurement of the

foreign country judgment or § that recognition of the judgment would do violence to some

strong public policy ofthis Statc" • The public policy inquiry rarely results in refusal to

enforce a judgment unless it is "inherently vicious, wicked or immoral, and shocking to the prevailing moral sense"

-‐ As relevant here, CPLR 5304(a)( I) articulates our common-‐law juris-‐ prudence that a foreign judgment is not conclusive if o it "was rendered under a system which does not provide impartial

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tribunals or procedures compatible with the requirements of due process of law,"

o and CPLR 5304(a)(2) states that a foreign judgment will not be recognized if the foreign court did not have personal jurisdiction over the judgment debtor

-‐ Under CP1.R 5305(b) courts have recognized the validity of a foreign judgment using any of the jurisdictional bases New York recognizes. One such basis is CPLR 302(a), which states: o "a court may exercise personal jurisdictionover any non-‐domiciliary ...

who in person or through an agent: ... o "3. commits a tortious act without the state causing injury to person

or property within the state ... if he § "(i) regularly does or solicits business or engages in any other

persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or

§ "(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce

-‐ In applying the jurisdictional basis, the court found the defendant committed a tortious act out of the state that has effects within the state and Korea’s jurisdiction over defendant is consistent with New York Due process.

-‐ For purposes of establishing long-‐arm jurisdiction, a tort should be broadly defined to encompass one that causes economic injury. Certainly such recovery, although not recognized in New York, is neither repugnant to our public policy nor offensive to our notions of fairness The argument that New York generally fails to recognize economic loss as a basis for damages in proceedings based on tort is immaterial-‐ If a foreign statute gives the right, the mere fact that we do not give a like right is no reason for refusing to help the plaintiff in getting what belongs to him. We are not so provincial as to say that every solution of a problem is wrong because we deal with it otherwise at home". To hold otherwise would undermine the fundamental principles of comity by interfering with the acts of a foreign jurisdiction’s legislature or judicial body Here, although Korean law appears more expansive than New York law in im-‐ posing liability for economic loss under a tort theory, we see no reason to foreclose the use of CPLR ill(aX3) as a basis for Korea's exercise of personal jurisdiction over Rite Aid merely because of **653 ***606 this difference in the substantive tort law of the two jurisdictions.

-‐

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ROYAL BANK OF CANADA V. TRENTHAM CORP. 5th Circuit 1981

FACTS: -‐ Royal bank brought suit for recognition and enforcement in the US of a DJ

of 250K plus interest entered in the Canadian court. -‐ Canadian suit concerned a contract btw Defendant and Royal Bank -‐ Litigation based on diversity of citizenship between the two parties

o Suit brought in Federal court PROCEDURAL:

-‐ Defendant asserted that b/c the Canadian court would not honor a default judgment issued by a Texas court based on the specific facts of this case, that under the doctrine of reciprocity, the Texas court should not honor the specific Canadian’s courts judgment

-‐ District court concluded on the basis of “the modern ternd of the common law in the state courts that Texas would not apply the doctrine of reciprocity

§ According to the district court, reciprocity has come under increasing criticism from courts and commentators

ISSUE: -‐ Whether a state’s common law doctrine of reciprocity should a

determining factor in deciding when a foreign judgment should be obtained if it is evidenced that the foreign tribunal would not honor the default judgment from the forum court under the same facts?

HELD: -‐ Texas adopted the Uniform Foreign Country Money Judgment

Recognition Act § The act does not include the doctrine of reciprocity as a factor

in deciding whether to honor the foreign judgment -‐ However, the State of Texas enacted the Act with modifications that

inserted a section that regarding the reciprocity doctrine. -‐ Since the Act was passed, prior to judgment delivered, the Texas district

court is ordered to reconsider the judgment consistent with the provisions of the Texas Uniform Foreign Money Act

-‐ Plaintiff’s argument that the reciprocity theory is discretionary according to the act and irrelevant in light of the district court theory is merited but, to no avail since the court must consider the relevance of reciprocity consistent with the Act.

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PART IX ACT OF STATE DOCTRINE

1. The “Act of State Doctrine” is a doctrine developed through caselaw, executive-‐branch actions, and, more recently, federal legislation. The doctrine limits the ability of U.S. courts, in certain instances, from determining the legality of the acts of a sovereign state within that sovereign’s own territory.

2. The Act of State doctrine’s applicability has been limited since 1990 (see below). However, there still may be instances in which the Act of State doctrine applies to limit the power of a U.S. court to pass on a particular issue, even where the court otherwise has plenary jurisdiction over the dispute under the FSIA. Thus, although related, the FSIA and Act of State doctrines require separate analyses.

3. Limited Applicability of the doctrine: 1. Although older caselaw suggested that the doctrine applied more

broadly, in 1990, the Supreme Court strictly limited its application to cases in which a court is required to squarely determine the legality of a sovereign state’s official acts under that sovereign’s own laws. W.S. Kirkpatrick Co. v. Environ. Tectonics Corp., Int’l, 493 U.S. 400 (1990).

2. In Kirkpatrick, the Court reconfirmed that “Courts in the United States have the power, and ordinarily the obligation, to decide cases and controversies properly presented to them.” Id. at 409.

3. To the extent that a case involves the “official act of a foreign sovereign,” the Act of State doctrine applies only when a U.S. court must declare such official act “invalid, and thus ineffective as ‘a rule of decision for the courts of this country.’” Id. at 405.

1. The fact that the issues in the U.S. proceeding may touch on or relate to the acts of a sovereign state are not enough to oust U.S. courts of jurisdiction.

2. The fact that the issues may be embarrassing to a sovereign is not enough to warrant application of the Act of State doctrine.

3. Nor is it enough that the facts to be found in the U.S. proceeding would also establish that a sovereign’s acts were illegal. For example, in Kilpatrick, the Court held that the Act of State doctrine was not applicable even though the plaintiff intended to show that the defendant had acquired its contract with the Nigerian government through bribery, which everyone agreed was unlawful under Nigerian law.

4. The Act of State doctrine merely requires that, to the extent that a U.S. proceeding involves the acts of a sovereign taken

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within its own territory, those acts shall “be deemed valid” under the sovereign’s own law. Kilpatrick, 493 U.S. at 409.

4. Burden of Proof: the party asserting the Act of State doctrine bears the burden of proving its applicability. Daventree Ltd. v. Republic of Azerbaijan, 349 F.Supp.2d 736, 754 (S.D.N.Y. 2004).

5. Defense is treated as a “substantive” defense, not jurisdictional. “As a substantive rather than a jurisdictional defense, the Act of State doctrine is more appropriately raised in a motion for summary judgment than in a motion to dismiss.” Daventree, 349 F.Supp.2d at 755.

6. Limited to Official Acts Within the Sovereign’s Territory 1. The doctrine applies only to the “official” or “public” acts of a

sovereign. E.g. Kilpatrick, 493 U.S. at 409-‐10 1. Typically, “official” acts include passage of laws, decrees,

creation of government agencies, military actions, police actions, etc. that are both official and governmental in nature.

2. Isolated acts of an official may or may not be “official” acts depending on whether the official was authorized to act for and “bind” the state. Elements to examine (or prove) include clear authorization for the act or ratification by a governing body.

3. Whether the action is uniquely governmental in nature or could just as easily be performed by a private actor also is a factor to consider. See, e.g., Malewicz v. City of Amsterdam, 2007 WL 1847851 D.D.C. June 27, 2007) (acquisition of painting by City official not a public act for purposes of Act of State doctrine). See also discussion infra re: Commercial Activity exception to doctrine.

4. Interpretation of law by an official, for example, might not be an “official act.” In re Riggs Nat’’l Corp. v. Comm’n of IRS, 163 F.3d 1363 (D.C. Cir. 1999).

5. Repudiation of a debt might not be an “official act” depending on whether it reflects a sovereign decision or policy to repudiate a class of debts or flows from seizure of property by a sovereign. Alfred Dunhill v. Cuba, 425 U.S. 682, 694 (1976).

2. The doctrine also applies only where the act in question took place within the sovereign’s own territory. Acts outside the territory – e.g. tort in the U.S. or seizure of property outside the sovereign’s territory – are subject to ordinary choice of law principles.

3. Practice Tip: The location of intangible property (e.g. debts) can involve considerable dispute both legally and factually. Considerations include the connection of the debt to any particular locale, the place and currency of payment, governing law provisions in the instruments, etc.

7. Exceptions to Act of State doctrine

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1. Even where otherwise applicable under Kilpatrick’s limitations, the Act of State doctrine has certain exceptions based in case law, executive actions, and federal legislation.

2. Treaties: Because the Act of State doctrine is, in some sense, a choice of law issue, it will not apply where a U.S. court can look to a treaty or other “unambiguous agreement regarding controlling legal principles.” Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 428 (1964); American Intern. Group, Inc. v. Islamic Republic of Iran, 493 F. Supp. 522, 525 (D.D.C. 1980) (the doctrine does not apply where a treaty establishes applicable rule of law).

3. State Department Intervention: In certain instances, the State Department may indicate, by letter to the Court, that U.S. interests favor or disfavor application of the Act of State doctrine to a particular case or issue affecting a group of cases. The use and effect of such letters are sometimes referred to as the Bernstein and reverse-‐Bernstein exceptions – the former involving a letter indicating that the doctrine (otherwise applicable) should not apply and the latter involving a statement that, in the view of the State Department, courts should presume that the doctrine does not apply to certain categories of cases unless the State Department affirmatively says so.

Practice Tip: Counsel may want to consider whether and when to seek the views of the State Department in connection with Act of State issues, although the role of such letters is unclear post-‐Klipatrick since that case stresses the Article III duties of the federal courts.

4. Commercial Activity: Just as the FSIA has an exception for commercial actions, so too certain cases indicate that there is a “commercial activity” exception to the Act of State doctrine (or, alternatively, that a commercial action is not an “official,” governmental action to which the doctrine applies).

1. The Supreme Court has not squarely passed on the issue. Kirkpatrick, 493 U.S. at 404-‐05 (“some Justices have suggested” a possible exception for commercial activity, but finding it unnecessary to consider the question to resolve the case); Alfred Dunhill v. Cuba, 425 U.S. 682, 695 (1976) (plurality opinion of White, J., adopting commercial activity exception). The state of the law concerning this exception varies from jurisdiction to jurisdiction:

2. Actions that are “commercial-‐not governmental, and are not immune under the act of state doctrine.” U.S. v. Giffen, 326 F.Supp.2d 497 (S.D.N.Y. 2004) (citing Lyondell-‐Citgo Refining, LP v. Petroleos de Venezuela, S.A., 2003 WL 21878798, at *8-‐9 (S.D.N.Y. Aug.8, 2003) (declining to apply the act of state doctrine where parties' contract made transactions commercial, as opposed to governmental)).

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3. Recognizing that acts non-‐governmental in nature do not trigger the doctrine. See, e.g., Malewicz v. City of Amsterdam, 2007 WL 1847851 (D.D.C. June 27, 2007) (acquisition of painting by City official not a public act for purposes of Act of State doctrine).

4. “The act of state doctrine does not cover private and commercial acts of sovereign states.” Government of Dominican Republic v. AES Corp., 466 F.Supp.2d 680, 695 (E.D.Va. 2006.).

5. “The Supreme Court requires a balancing approach when commercial conduct is involved and the act of state doctrine is alleged. Oceanic Exploration Co. v. ConocoPhillips, Inc., 2006 WL 2711527 (D.D.C. Sept. 21, 2006) (citing Banco Nacionale de Cuba v. Sabbatino, 376 U.S. 398, 428 (1964). “It is necessary to balance a judiciary's interest in hearing a case involving a commercial activity with its desire to avoid matters of foreign affairs controlled by the executive or legislative branches. When balancing, a court is to be mindful that the decision to deny judicial relief to a party should not be made lightly.” Id. (citation omitted).

6. No commercial activity exception to doctrine. Glen v. Club Mediterranee, S.A., 450 F.3d 1251, 1254 n.2 (11th Cir. 2006)

5. Arbitration exception: The Federal Arbitration Act expressly provides that “[e]nforcement of arbitration agreements ... shall not be refused on the basis of the Act of State doctrine.” 9 U.S.C.A. § 15. This provision applies equally to actions brought under the New York and Inter-‐American Conventions. Republic of Ecuador v. ChevronTexaco Corp., 376 F.Supp.2d 334, 367 (S.D.N.Y. 2005).

6. Hickenlooper Amendment (Expropriations in Violation of International Law)

1. In Sabbatino, the Supreme Court held that the Act of State doctrine barred U.S. courts from holding invalid an official act of expropriation by a sovereign state within the sovereign’s own territory.

2. In response, Congress passed the so-‐called “Hickenlooper Amendment,” 22 U.S.C. § 2370(e)(2), which generally provides that the Act of State doctrine shall not apply to claims concerning alleged expropriations in violation of international law, “including principles of compensation.”

3. The Hickenlooper Amendment can be overcome by executive-‐branch intervention, however.

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Application and Exceptions

BANCO NACIONAL de CUBA v. SABBATINO: 376 U.S. 398 1964 Pg 311

FACTS: -‐ U.S. sugar distributor corp Farr Whitlock, contracted w/ C.A.V. (a U.S.

owned sugar producer in Cuba) to import sugar into the US. -‐ Congress passes sugar act to reduce Cuba import/export -‐ Cuba responds by passing legislation nationalizing American property in

Cuba – including sugar plantations § As a result, Cuba sezed assets of CAV and nationalized

plantation § Banco Nationale is an instrumentatlity of Cuban gov’t taking

over sugar assets -‐ Farr entered contract w/ Banco to send shipment of sugar after Cuba

nationalized in order to make its delivery schedule w/ its clients § Farr had no other choice but to contract w/ Banco in order to

make its shipping schedule – boats wouldn’t have left Cuba without this

-‐ CAV still made shipment, but instead of paying Cuban gov’t, Forest Whitlock paid Sabbatino (CAV legal representative in United States)

PROCEDURAL: -‐ Banco sues in Federal Court to recover money paid from Farr to

Sabbatino -‐ Sabbatino counters that Banco violated international law by nationalizing

and they are not legally entitled to Farr’s payment ISSUE:

-‐ Does the Act of State doctrine apply to situations where a foreign government expropriates the assets of American citizens abroad without notice ?

HELD: -‐ Yes, Cuba acted within the Act of State doctrine. -‐ Not for the Court to question the sovereign authority of another nation’s

governmental action -‐ The Court refused to hold that the expropriation violated international

law, because there was no clear unity of international opinion disapproving the seizure of land or property in a country by the government of that country. It noted also that interposition of the Executive was unnecessary to prevent the courts from interfering in affairs of state, as a single court could upset delicate international negotiations through the assertion of U.S. law in another country. Finally,

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the Court found no bar to application of the doctrine should be imposed by the fact that Cuba had brought the suit, comparing this to the sovereign immunity enjoyed by U.S. States which can sue, but can not be sued.

-‐ ACT OF STATE DOCTRINE: -‐ U.S. court will not examine the validity of a taking by a recognized foreign

government, within in the foreign government’s own territory § Foreign government must be recognized § There must be an absence of a controlling federal legislation

and international law or treaty o Even if taking is alleged that the taking is a violation of Customary

International Law – the doctrine applies o A foreign plaintiff can invoke the Act of State doctrine in the U.S.

Courts o Not based purely on doctrine, but also involves a mix of policy and

political reasoning § More concerned w/ separation of powers and comity § Not the court’s role to interfere w/ the foreign affairs power of

the Executive • Unless the executive confers the power to the Court to

do so o Doctrine not mandated by Constitution or International law

-‐ Bernstein exception allows Court to decide when delegated by Executive NOTE:

-‐ After Sabbatino decision, Congress enacted Hickenlooper amendment which stated:

§ Courts not allowed to entertain Act of State doctrine as a bar to hear expropriation cases of American assets by a foreign government in their territories

§ See Page 321 o On Remand, District Court applied Hickenloper Amendment and

removed presumption of Act of State Doctrine § As a result, CAV won case and Cuba lost.

-‐ Glen v. Club Mediterranee, SA (11th Circuit 2006) o Cuban gov’t expropriated beach front assets of two Cuban citizen

plaintiffs o 11th Circuit held that the Act of State doctrine precluded federal courts

from deciding the plaintffs’ trespass and unjust enrichment claims agains the defendant

§ Note : no mention of Hickenlooper Amendment since case is not dealing w/ American citizens

-‐ Some cases have developed to show that there is a need to determine as a threshold issue of whether an Act was actually by a foreign government.

§ Alfred Dunhill v. Republic of Cuba § Galu v. Swissair – See Page 322-‐323

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-‐ Although there is a “commercial” exception to the Foreign Service Immunity Act, there is no such exception to the “Act of State” doctrine

§ Honduras Aircraft v. Government of Honduras – limited app see pg 78 of this outline

Intangible Property

ALLIIED BANK INTERNATIONAL V. BANCO CREDITO 2nd Circuit 1985

FACTS: -‐ Allied is the agent for a syndicate of 39 creditor banks -‐ Defendant are three Costa Rican banks that are wholly owned and subject

to control of Costa Rica -‐ Allied brought this action to recover on promissory notes issued by Costa

Rican banks -‐ The notes were in default , were payable in USD in New York City -‐ The Parties agreements acknwoeldge that the obligations were

resgistered w/ tCentral bank which was supposed to provide necessary dollars for payment

-‐ Default due solely to Costa Rican government o Due to escalating economic issues, Costa Rica passed legislation

suspending all external payments o Allied subsequently sued for the full amount of the outstanding

principal PROCEDURAL:

-‐ Allied moved for Summary Judgment -‐ Defendant raised the Act of State doctrine as a defense

ISSUE:

-‐ Does the Act of State doctrine apply in cases with commercial effects within the borders of the United States?

HELD: -‐ The act of State doctrine depends on where the situs of the property is

taken. -‐ Since the situs of property in this case is not property in Costa Rica, but

property within the United States, then the Act of State doctrine does not apply

§ NOTE: Payments were to be made in USD in New York, not Costa Rica

RULE OF LAW: -‐ -‐ Acts of foreign governments purporting to have extraterritorial effect –

and consequently by definition, falling outside of the scope of the act of state doctrine – should be recognized by courts only if

§ They are consistent with the law and policy of the United States. § This case is not within the law and policy of the United States

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REASONING:

-‐ Supreme court careful to avoid creating an inflexible and all encompassing rule to govern the act of state doctrine

§ The less important the implications of an issue are for foreign relations, the weaker the justification for the exclusivity in the political branches

§ Doctrines demands case-‐by-‐case analysis o Doctrine does not necessarily preclude judicial resolution of all

commercial consequences that result from acts of foreign sovereigns performed within their own territory

o Obviously, where the taking is wholly accomplished within the foreign sovereigns territory, it would be an affront to such foreign gov’t for US courts to hold that act as nullity.

-‐ The primary test rests on where the situs of the property is located § Act of State will only be valid when the decrees were

promulaated, the situs of the debt was in Costa Rica § However the situs of the debt is in American banks

-‐ Since the situs of the debt was in the United States, not in Costa Rica, this was not a “taking of property within its own territory by Costa Rica,”

-‐ Acts of foreign governments purporting to have extraterritorial effect – and consequently by definition, falling outside of the scope of the act of state doctrine – should be recognized by courts only if

§ They are consistent with the law and policy of the United States. § This case is not within the law and policy of the United States

NOTES: -‐ 5TH Circuit Ruling:

§ situs of intaligible property is the situs of the garnishee (Pg 332)

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PART X FOREIGN SOVEREIGN IMMUNITIES ACT

BACKGROUND

-‐ If a Foreign Sov. has immunity, there is no Subject Matter Jurisdiction (Section 1330)

-‐ There is personal jurisdiction over a foreign state: o where there is subject matter jurisdiction o and personal service in accordance under 1608

§ Minimum contacts is not a requirement for Personal Jurisdiction

• not accidental -‐ Foreign states are immune to suit in U.S. Courts

§ Applies to States & their instrumentalities • See Dole decision regarding this

-‐ Much stronger than Act of State doctrine because it completely immunes a part from suit, not just their actions

-‐ Applies in both State and Federal Court -‐ Invoked b/c of “Who the Party Is” , not according to what they do (what

they do is the Act of State doctrine)

1. The FSIA provides the “sole basis” to bring claims in the U.S. against a foreign state. Argentine Republic v. Amerada Hess, 488 U.S. 428, 434 (1989). It is important to understand that the FSIA affects many aspects of litigation against a foreign state, not just the question of sovereign immunity.

-‐ Subject matter jurisdiction: The FSIA provides a basis for original jurisdiction in federal court and also a basis to remove an action from state court. See Part VII below.

-‐ Service of process: The FSIA governs service of process on foreign states. See Part VIII below.

-‐ Personal jurisdiction: The FSIA also provides a basis for personal jurisdiction in the U.S. over a foreign state. See Part IX below.

-‐ Venue: The FSIA has its own venue provisions. See Part X below. -‐ Exceptions to sovereign immunity: The FSIA provides multiple exceptions

to the general doctrine of sovereign immunity. See Part XI below. -‐ Jury trial: The FSIA affects the right to a jury trial. See Part XII below. -‐ Extent and Collection of judgment: The FSIA may restrict enforcement of

a judgment against sovereign assets. See Part XIII below.

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2. The FSIA purposefully restricts sovereign immunity so that private parties dealing with or injured by foreign states, particularly in commercial transactions, may obtain judicial relief. See, e.g. Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 487 (1983); See also H.R. Rep. 94-‐1487, reprinted in 1976 U.S.C.C.A.N. 6604, 6605 (Sep. 9. 1976) (FSIA “codif[ies]” principle that immunity “does not extend to suits based on its commercial or private acts (jure gestionis).”).

3 Importantly, unlike other types of immunity, since 1976, the FSIA places immunity decisions solely in the hands of the courts and solely as a matter of statutory interpretation. See, e.g., Dole Food v. Patickson, 538 U.S. 468, 479 (2003) (rejecting policy-‐based arguments in favor of ordinary application of statute).

4. The shift to statutory-‐based immunity provides an argument that diplomatic and foreign policy considerations are irrelevant.

FOREIGN SOVEREIGN IMMUNITY ACT PAGE 337 -‐ Covers all cases involving foreign sovereigns -‐ Section 1330(a)

§ If a foreign sovereign has immunity, no case can be against it pursuant to FSIA

o Section 1330(b) § If there is an exception that allows suit against foreign

sovereign, then personal jurisdiction found pursuant to Section 1605

• Section 1605 has general exceptions -‐ Doctrine adopts Restritive Theory of Sovereign Immunity

§ Prior to this, courts followed Executive doctrines § Statute set forth standards, now it is judicially not politically

determined • The shift to statutory-‐based immunity provides an

argument that diplomatic and foreign policy considerations are irrelevant.

-‐ Section 1604: § There is a rebuttal presumption of immunity

-‐ Sections 1605-‐1607 § Exceptions to FISA Pages 338-‐343

Expansive Definition of what Consitutes a Foreign Sovereign:

§ A “foreign state” includes not just the country itself but also: § Political subdivisions – e.g. The City of Amsterdam is a

“political subdivision” of the Netherlands. Malewicz v. City of Amsterdam, 362 F. Supp. 2d 298 (D.D.C.2005).

§ “Agencies or Instrumentalities”: This is a key category that should not be overlooked. The definition of “agency or

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instrumentality” is fairly broad and sweeps in many foreign commercial enterprises.

o An “agency or instrumentality” is defined as “any entity” that: § is a separate legal person “corporate or otherwise;” and § is an “organ” of the state or of a “political subdivision” of the

state OR is majority owned by the state or by a political subdivision of the state; and

§ is not a citizen of the U.S. and is not “created under the laws” of still a third country – i.e. is created under the laws of the country that owns a majority interest or of which it is an “organ.”

• Practice Tip: By negative implication, an entity is not entitled to claim sovereign immunity where the government is only a minority owner or where the entity is created under another country’s laws – i.e. no sovereign immunity for a Dominican corporation majority-‐owned by the Dutch government.

• The “majority owned” prong requires proof of direct ownership by the state or by a political subdivision of a state. Dole Food, 538 U.S. at 474.

o Disputes therefore may arise as to (a) who actually owns the enterprise and (b) whether the owner is itself merely an organ or instrumentality, which is not enough to make the owned-‐entity an “agency or instrumentality” for purposes of the FSIA.

o E.g., Filler v. Hanvit Bank, 378 F.3d 213 (2d Cir. 2004) (organ’s ownership of two banks did not, in turn, make the banks organs or instrumentalities of foreign state).

o Practice Tip: There are certain important differences in application of the FSIA to “states” v. “agencies and instrumentalities” with respect to service of process, venue, and limitations on damages. See discussions below.

o Whether an entity is a “political subdivision” of the state or, instead, an “organ,” “agency,” or “instrumentality” is an area ripe for factual and legal disputes. E.g. In re Terrorist Attacks on September 11, 2001, 349 F.Supp.2d 765 (S.D.N.Y. 2005) (disputed issues of fact concerning whether owner was political subdivision of Saudi Arabia or merely an organ of the state).

§ The legal standards are unsettled. See, e.g., In re Terrorist Attacks on September 11, 2001, 349 F. Supp.2d at 790-‐91 (comparing “legal characteristics” and “core functions” tests); see also Murphy v. Korea Asset Management Corp., 421 F. Supp. 2d 627, 641 (S.D.N.Y. 2005) (test for “organ” unsettled).

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§ Issues to consider include: who created and controls the entity, does it contract or own property in its own name, are its functions principally commercial or governmental in nature, does the entity perform a “core function” of a sovereign (e.g. is it the army or taxing authority?)

§ Of these, the commercial v. governmental nature of the work may be most important. See, e.g., Supra Medical Corp. v. McGonigle, 955 F.Supp. 374 (E.D. Pa. 1997) (medical and dental schools established by British government served commercial purpose and, therefore, not subject to FSIA).

Exceptions To Immunity Under FSIA:

-‐ Waiver (§ 1605(a)(1)): No immunity where there is an express or implied waiver. o Express waivers:

§ These most often arise where there is a contract or agreement – such as a loan agreement – that expressly states that sovereign immunity is waived.

§ Note: Contractual waivers may also bind successors, related entities, etc. under applicable principles of contract, agency, and corporate relations.

§ Express waivers may also arise from express language in an applicable international agreement. See, e.g., Harris Corp. v. Nat’l Iranian Radio & Television, 691 F.2d 1344 (11th Cir. 1982).

o Implicit waivers evidencing agreement to be sued in the U.S.: § Choice of law clause: Agreement to be “governed by” U.S. law

may be an implied waiver. See, e.g., Marlowe v. Argentine Naval Commission, 604 F.2d 703 (D.D.C. 1985).

§ Conduct within the lawsuit: Filing a responsive pleading without raising an immunity defense. See, e.g., Drexel Burnham Lambert v. Committee of Receivers, 12 F.3d 317 (2d Cir. 1993).

§ Agreeing to arbitration with an expectation of enforcement of award in the U.S. Creighton v. Qatar, 181 F.3d 118 (D.C. Cir. 1999).

§ Signing an international convention permitting enforcement of award in the U.S. Seetransport Wiking Trader v. Navimpex Centrala Navala, 989 F.2d 572 (2d Cir. 1993).

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o Practice Tip: Even an express waiver of immunity from suit might not be sufficient to constitute a waiver from immunity from execution or attachment of property. Prudence suggests expressly stating the full scope of the waiver to avoid later disputes.

-‐ Commercial Activities (§ 1605(a)(2)): o After waiver, this is perhaps the most widely-‐applicable exception in

commercial litigation. o Three prongs for claims “based upon”

§ Commercial activity by the foreign state in the U.S.; § An act performed in the U.S. in connection with commercial

activity of the foreign state elsewhere; OR § An act outside the U.S. in connection with ex-‐U.S. commercial

activity where the act “causes a direct effect” in the U.S. o What constitutes commercial activity?

§ Commercial conduct is determined by reference to “the nature” of the conduct, transaction, or act, “rather than by reference to its purpose.” 28 U.S.C. § 1603(d).

§ Thus, if the nature of the conduct is commercial, it is irrelevant that it may be serving an inherently sovereign purpose. Example: A contract to purchase boots is commercial activity even if the boots are for the army. Or, a bond offering is commercial activity, even if used to raise funds to build state schools or roads.

§ Common examples of commercial conduct: • Loan agreements • Securities offerings • Contracts for sale or purchase of goods, although

disputes may arise with respect to the sale of natural resources such as oil, timber, etc.

• Potentially employment agreements o U.S. connections of the commercial activity

§ Existence of some commercial activity in the U.S. may not be enough unless there is a sufficient nexus between that activity and the claims being made. The commercial conduct must form some aspect of the basic elements of the claim. See Saudi Arabia, supra.

§ U.S. conduct in “connection with” foreign commercial activity might include solicitation of offers, extension of offers, provision of prospectus for a foreign transaction.

§ To use the “direct effect” in the U.S. prong, must only show that effect in the U.S. was an “immediate consequence” of the ex-‐U.S. commercial conduct. Republic of Argentina v. Weltover, 504 U.S. 607 (1992).

• The “direct effect” requirement has been described as “breathtakingly broad.” Amerada Hess Shipping Corp. v.

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Argentine Republic, 638 F. Supp. 73, 75 (S.D.N.Y. 1986) rev’d on other grounds, 830 F.2d 421 (2d Cir. 1987), rev’d 488 U.S. 428 (1989); accord Crimson Semiconductor, Inc. v. Electronum, 629 F. Supp. 903 (S.D.N.Y. 1986)

• Failure to pay bonds or loans payable in the U.S. is a “direct effect.” Weltover, supra. So long as the U.S. is the place of payment, it is irrelevant where any other place of performance may be (Hanil Bank v. Pt. Bank Negara Indonesia, 148 F.3d 127, 132 (2d Cir. 1998)), whether the creditor was permitted to unilaterally designate the place of payment (id.), and whether the payment was made to an agent’s account for the benefit of non-‐U.S. creditors. See Commercial Bank of Kuwait v. Rafidain Bank, 15 F.3d 238 (2d Cir. 1994) (“direct effect” in the U.S. where payments were made to New York lead banks that eventually passed payments to non-‐U.S. principals).

• Merely suffering some loss in the U.S. may not be sufficient to constitute a direct effect if the loss is not immediate enough to the challenged action.

o Jurisdiction turns on what the claims are “based upon,” meaning “those elements of a claim that, if proven, would entitle a plaintiff to relief under his theory of the case.” Saudi Arabia v. Nelson, 507 U.S. 349, 357 (1993).

§ Careful pleading of the connection between the commercial activity and the claim may avoid the need for jurisdictional discovery and the consequent delay.

§ On the flipside, the defendant should carefully examine the claims and how they are connected to the alleged commercial activity to see whether a basis exists to move to dismiss. See, e.g., Saudi Arabia, supra (claims dismissed where the commercial activity of the foreign state was unrelated to the basis for the claims (torture and unlawful detention)).

-‐ Expropriation (§ 1605(a)(3)): o The FSIA also provides an exception to sovereign immunity for “any

case: (1) “in which rights in property taken in violation of international law are in issue;” (2) “that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state;” and (3) “that agency or instrumentality is engaged in commercial activity in the United States.” 28 U.S.C. § 1605(a)(3).

§ A “taking violates international law” if it is done “without payment of the prompt adequate and effective compensation required by international law” or is “arbitrary or

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discriminatory in nature.” H.R. Rep. 94-‐1487, reprinted in 1976 U.S.C.C.A.N. 6604, 6618.

§ “At the jurisdictional stage,” “substantial and non-‐frivolous” allegations provide “a sufficient basis for the exercise of [] jurisdiction” under the FSIA. Siderman de Blake v. Republic of Argentina, 965 F.2d 699, 711 (9th Cir. 1992) (finding FSIA jurisdiction over claim by U.S. citizen that Argentina expropriated property in violation of international law).

-‐ Gifts/Immovable property (§ 1605(a)(4)): o No immunity for claims involving real or immovable property in the

U.S. § This provision had been strictly interpreted to be limited to

claims for rights in the property, not nuisance or breach of contract/leases claims. See MacArthur Area Citizen’s Ass’n v. Republic of Peru, 809 F.2d 918 (D.C. Cir. 1987) (does not apply to nuisance claims); Rodriguez v. Rep. of Costa Rica, 139 F. Supp. 2d 173 (D. P. R. 2001) (does not apply to claims for breach of lease).

§ However, the Supreme Court held in June 2007 that the exception broadly encompasses any claim where "rights in immovable property" are in issue. Permanent Mission of India to the US v. City of New York, 551 U.S. (2007). Thus, the FSIA does not provide immunity, for example, from a suit to enforce a tax lien.

o No immunity for claims involving property acquired by gift or bequest or inheritance (as opposed to acquired by corporate succession or commercial transaction). 767 Third Avenue Assocs. v. Consulate General of Yugoslavia, 218 F.3d 152 (2d Cir. 2000) (does not apply to real property acquired by non-‐testamentary succession).

-‐ Tort (§ 1605(a)(5)): No immunity for claims for money damages for tort. o Tort must involve a non-‐discretionary act. A discretionary act is one

that involves “an element of choice or judgment based on considerations of public policy” reflecting acts “performed at the planning level of government, as opposed to the operational level.” In re Terrorist Attacks on September 11, 2001, 349 F.Supp.2d 765 (S.D.N.Y. 2005)

o Provision does not apply to certain categories of tort: “malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights.”

§ However, there may be other exceptions to immunity, such as the commercial activity exception, that apply to such tort claims.

-‐ Enforcement of arbitration award (§ 1605(a)(6)): Three possibilities: o The arbitration occurs in the U.S.; o There is an applicable treaty or international agreement concerning

recognition and enforcement of the award; OR

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o The underlying claim could have been brought in the U.S. but for the arbitration agreement.

-‐ Terrorist act (§ 1605(a)(7)): As of 1996, no immunity for claims for “money damages” for “personal injury or death” caused by torture, extrajudicial killing, aircraft sabotage, hostage taking, or the provision of material support for the same. o Defendant must be an officially designated “state sponsor of

terrorism;” o Arbitration must have been exhausted if available; and o Either the victim or the claimant must have been a U.S. national.

-‐ Maritime liens (§ 1605(a)(8)): Permits enforcement of a maritime lien against the vessel or cargo of a foreign state. o Lien itself must arise from commercial activity of the state. o If considering such a claim, attention should be paid to the complex

procedural requirements. -‐ Counterclaims (§ 1607): If a foreign state brings a suit or intervenes in an

action, it has no immunity against counterclaims (a) as to which it otherwise would not be immune under § 1605, (b) that arise out of the same transaction or occurrence as the foreign state’s claim; or (c) the counterclaim seeks relief that does not exceed the amount of the relief sought by the foreign state or differing in kind from that sought by the foreign state.

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See Next Page for Concise Explanation of Most Important Exceptions

The most important exception to sovereign immunity is the commercial activity exception, 28 U.S.C. § 1605(a)(2). That section provides three bases on which a plaintiff can sue a foreign state:

1. When the plaintiff's claim is based upon a commercial activity carried on in the U.S. by the foreign state.

2. When the plaintiff's claim is based upon an act by the foreign state which is performed in the U.S. in connection with commercial activity outside the U.S.

3. When the plaintiff's claim is based upon an act by the foreign state which is performed outside the U.S. in connection with commercial activity outside the U.S. and which causes a direct effect in the U.S.

In determining whether the Foreign State's activities are commercial, the FSIA requires that courts look to the nature of the act itself, rather than the purpose for which the foreign sovereign engaged in the act. 28 U.S.C. 1603(d). For example, the operation of a fee-‐based transportation system would likely be a commercial act, while imposing fines for parking tickets would be a public act, even if the former was undertaken to provide a public service, and the latter was initiated to raise revenue.

Republic of Argentina v. Weltover, 504 U.S. 607 (1992), concerned a breach of contract claim asserted by bondholder (two Panamanian corporations and a Swiss bank) against the government (Argentina) that issued the bonds arising from Argentina's default on the bond payments. Under the terms of the bonds, the bond-‐holders were given the option of having the bonds paid in London, Frankfurt, Zurich, or New York. Because the case concerned a default in Argentina on bonds issued in Argentina (i.e. an act performed outside the U.S in connection with activity outside the U.S.), in order to establish jurisdiction, the plaintiff's could only rely on the third basis to sue Argentina under the commercial activity exception. Argentina made two primary arguments as to why the FSIA commercial activity exception should not apply: (1) the issuance of sovereign debt to investors was not a "commercial" activity and (2) the alleged default could not be considered to have had a "direct effect" in the United States. In a unanimous opinion, written by Justice Antonin

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Scalia, the Supreme Court held that Argentina was not entitled to sovereign immunity. Reasoning that "when foreign government acts, not as regulator of a market, but in the manner of a private player within it, the foreign sovereign's actions are 'commercial,'" the Court concluded that Argentina's issuance of the bonds was of a commercial character. As for the "direct effect" in the U.S., the Court rejected the suggestion that under the FSIA the effect in the U.S. necessarily needed to be "substantial" or "foreseeable" and instead concluded that in order to be "direct," the effect need only "follow as an immediate consequence" of the defendant's activity. Because New York was the place where payment was supposed to be made, the Court concluded that the effect was direct, notwithstanding the fact that none of the plaintiffs were situated in New York.

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Arising Under Jurisdiciton

VERLINDEN B.V v. CENTRAL BANK OF NIGERIA 461 U.S. 48 1983

FACTS: -‐ Dutch company entered into a contract with Nigeria for cement; the Nigerian government established, through the Central Bank of Nigeria, a letter of credit through a bank in NYC; Central Bank then failed to pay -‐ Dutch company brought suit in US court for breach of contract under the FISA -‐ (note: It is moot whether the US has prescriptive jurisdiction here because the US was not bringing the suit) ISSUE 1: -‐ Can foreign plaintiffs sue foreign states under the FSIA? -‐ If you recall in IL Civ Pro, can’t have two foreign plaintiffs, must have one U.S. resident -‐ The 2nd circuit ruled section 1330(a) an unconstitutional grant of federal court jurisdiction ISSUE 2:

Must a federal court apply the FSIA in a suit against a foreign state, even if the foreign state doesn’t raise the issue of immunity? Issue 3: Since 2nd circuit held that the FSIA under section 1330(a) was unconstitutional, the chief question is whether congress may confer jurisdiction over any case that might involve or call for application of federal law? HELD: This case says yes.

• Why might this be a question? o If anyone, anywhere can bring a suit in US courts against a foreign

state, there is a concern that the US will become a sort of universal claims court

o However, the FISA has a way of preventing the US from becoming a universal claims court: each exception requires some kind of nexus to the United States (except the waiver exception)

§ The nexus to the US here is the credit that the US bank extended to Nigeria

• Footnote, Even if the foreign state doesn’t plead immunity under the FSIA, the court must make a determination whether one of the exception to immunity applies in order to have jurisdiction over the foreign state (a state can’t waive immunity by not pleading it)

• Issue 3 – Yes, since Court had to determine whether FSIA claim existed, this would be sufficient to be “arising under” jurisdiction pursuant to 1331 -‐ In the instant case, the court found that the entity being sued was indeed a state: the Bank was an instrumentality of Nigeria

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Retroactive Application

Of FSIA REPUBLIC OF AUSTRIA V. ALTMANN

541 U.S. 677 (2004) FACTS:

-‐ Plaintiff brought suit against Austria and state owned Austrian Gallery to recover paintings seized from plaintiff’s Jewish ancestors during the Nazi regime o under FSIA 1605(a)(3) – expropriation of personal property located

w/i United States -‐ Ninth circuit held that distributions of books and other publications

exploiting the paintings in issue satisfied 1605(a)(3) requirement of commercial activity

-‐ Ninth Circuit also held that Austria had no reasonable expectation of immunity for acts closely associated w/ Nazi atrocities

-‐ Supreme Court affirmed Ninth Circuit’s SMJ reasoning but reversed on 9th Circuit’s temporal application of the FSIA

ISSUE: -‐ Does the Foreign Sovereign Immunities Act protect foreign sovereign

from actions undertaken prior to the passing of the Statute but where claims are brought after the passing of the act?

HELD/REASONING: -‐ Yes, Preamble of the Congressional Act expresses congress’

understanding that the FSIA would apply to all post enactment claim of sovereign immunity o Section provides:

§ Claims of foreign states to immunity should henceforth be decided by Courts of the United States and of the States in conformity with the principles set forth…

-‐ In applying FSIA to all pending cases regardless of when the conduct occurred is most consistent with two of the Act’s principal purposes:

§ Clarifying the rules that judges should apply in resolving foreign sovereign immunity claims

§ Eliminating political participation in the resolution of such claims

-‐ Congress’ intent would be frustrated w/ inconsistent application of FSIA for pre and post application/non application of the statute.

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Corp Structur Under FSIA

DOLE V. PATRICKSON 538 U.S. 468 2003

FACTS: -‐ Patrickson (plaintiff) and a group of farm workers from Costa Rica,

Ecuador, Guatemala, and Panama, filed suit against Dole Food Company (Dole) (defendant) o Plaintiffs wereseeking relief for injuries allegedly caused by pesticides

used in their home countries. Dole impleaded two other corporations, Dead Sea Bromine Co., Ltd., and Bromine Compounds, Ltd. (collectively, the Dead Sea Companies) (defendants).

-‐ The farm workers filed suit in state court in Hawaii. -‐ The defendants sought removal of the case to federal court under 28

U.S.C. § 1441(d), o which governs removal actions against foreign States and provides

that “any civil action brought in a state court against a foreign State as defined [under § 1603(a) of the Foreign State Immunities Act (FSIA)] may be removed by the foreign state to the district court of the United States for the district and division embracing the place where such action is pending.”

-‐ Section 1603(a) of the FSIA defines “foreign State” to include an “agency or instrumentality of a foreign State.” o Additionally, “agency or instrumentality of a foreign State” is defined

as an entity which is a separate legal person, corporate or otherwise; § and which is an organ of a foreign State or political subdivision

thereof, or a majority of whose shares or other ownership interest is owned by a foreign State or political subdivision thereof; and which is neither a citizen of a state of the United States nor created under the laws of any third country.

-‐ The Dead Sea Companies argued that they were at all times instrumentalities of the State of Israel, and thus were entitled to the same sovereign immunity and removal rights as Israel under the FSIA.

-‐ The court of appeals held that The Dead Sea Companies were merely a “subsidiary” of an instrumentality (Dole), and were not themselves entitled to instrumentality status.

-‐ The United States Supreme Court granted certiorari. ISSUE:

-‐ What method may the court use to determine at what level of coroproate structuring constitutes whether a subsidiary corporation is an agent or instrumentality under the control of foreign state in order to render it a foreign sovereign or other under the FSIA

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HELD: -‐ The State of Israel did not have direct ownership of shares in either of the

Dead Sea Companies at any time pertinent to this suit. Rather, these companies were, at various times, separated from the State of Israel by one or more intermediate corporate tiers. For example, from 1984-‐1985, Israel wholly owned a company called Israeli Chemicals, Ltd.; which owned a majority of shares in another company called Dead Sea Works, Ltd.; which owned a majority of shares in Dead Sea Bromine Co., Ltd.; which owned a majority of shares in Bromine Compounds, Ltd.

-‐

REASONING: -‐ A foreign state must itself own a majority of a corporation's shares if the

corporation is to be deemed an instrumentality of the state under the FSIA

-‐ Only direct ownership satisfies the statutory requirement. In issues of corporate law structure often matters. The statutory reference to ownership of "shares" shows that Congress intended coverage to turn on formal corporate ownership. As a corporation and its shareholders are distinct entities, a corporate parent which owns a subsidiary's shares does not, for that reason alone, own or have legal title to the subsidiary's assets; and, it follows with even greater force, the parent does not own or

-‐ have legal title to the subsidiary's subsidiaries. -‐ Instrumentality status is determined at the time of the filing of the

complaint. Construing § I603(b)(2) so that the present tense in the provision "a majority of whose shares ... is owned by a foreign state" has real significance is consistent with the longstanding principle **1658 that the Court's jurisdiction depends upon the stale o f thing s at the time the action is brought.

-‐ The veil separating corporations and their shareholders may be pierced in some circumstances, and the Dead Sea Companies essentially urge us to interpret the FSIA as piercing the veil in all cases. The doctrine of piercing the corporate veil, however, is the rare exception, applied in the case of fraud or certain other exceptional circumstances,

-‐ NOTES: Corporate Structure Tiering and the FSIA Definition of Foreign Sovereign:

-‐ Sovereign 100% owns o à Corporation 1

§ Corporation 1 100% owns • à Corporation 2

o Corporation 2 85% owns § à Corporation 3

-‐ What is an acceptable level of tiering to show “Ownership” under FSIA definition of Foreign Sovereign?

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o Treatment of Sovereign and Treatment of Instrumentality are not the same under the FSIA statute

-‐ Ownership defined at the time the suit was commenced (Dole)

INSERT DOLE DECISION HERE

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Definition Of

Foreign Official FSIA

SAMANTAR V. YOSUF

FACTS: Natives of Somalia filed suit against Mohamed Ali Samantar in a Virginia

federal district court under the Torture Victim Protection Act ("TVPA") and the Alien Tort Statute ("ATS"). Plaintiffs alleged that Mr. Samantar committed torture and other human rights violations while he commanded Somali government agents under the regime of Mohamed Siad Barre. The district court dismissed the case, holding that Mr. Samantar was immune to suit under the Foreign Sovereign Immunities Act ("FSIA").

On appeal, the U.S. Court of Appeals for the Fourth Circuit reversed, holding

that the FSIA did not render Mr. Samantar immune to suit. The court reasoned that the FSIA does not apply to foreign government officials. The court further reasoned that even if the FSIA does apply to foreign government officials, it does not apply to former foreign government officials.

ISSUE:

1) Does a foreign state's FSIA immunity from suit extend to an individual acting in his official capacity on behalf of the foreign state?

2) Does an individual who is no longer a government official of a foreign state

at the time suit is filed retain FSIA immunity for acts taken in that individual's former capacity as a government official acting on behalf of a foreign state? HELD: No. No.

The Supreme Court held that the FSIA does not govern Mr. Samantar's claim of immunity. With Justice John Paul Stevens writing for the majority, the Court reasoned that there is nothing to suggest that "foreign state" within the FSIA should be read to include an official acting on behalf of that state. The Court further reasoned that the FSIA's legislative history did not indicate that Congress intended to codify official immunity within the FSIA.

Justices Samuel A. Alito, Clarence Thomas, and Antonin G. Scalia, writing in separate opinions, noted that the legislative history of the FSIA should not have been evaluated in reaching the Court's conclusion. Decision includes framing of who qualifies as a foreign official

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INSERT SAMANTAR DECISION HERE

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Commercial Activity

Republic of Argentina v. Weltover 504 U.S. 607 (1992),

Case concerned a breach of contract claim asserted by bondholder (two Panamanian corporations and a Swiss bank) against the government (Argentina) that issued the bonds arising from Argentina's default on the bond payments. Under the terms of the bonds, the bond-‐holders were given the option of having the bonds paid in London, Frankfurt, Zurich, or New York. Because the case concerned a default in Argentina on bonds issued in Argentina (i.e. an act performed outside the U.S in connection with activity outside the U.S.), in order to establish jurisdiction, the plaintiff's could only rely on the third basis to sue Argentina under the commercial activity exception. Argentina made two primary arguments as to why the FSIA commercial activity exception should not apply: (1) the issuance of sovereign debt to investors was not a "commercial" activity and (2) the alleged default could not be considered to have had a "direct effect" in the United States. In a unanimous opinion, written by Justice Antonin Scalia, the Supreme Court held that Argentina was not entitled to sovereign immunity. Reasoning that "when foreign government acts, not as regulator of a market, but in the manner of a private player within it, the foreign sovereign's actions are 'commercial,'" the Court concluded that Argentina's issuance of the bonds was of a commercial character. As for the "direct effect" in the U.S., the Court rejected the suggestion that under the FSIA the effect in the U.S. necessarily needed to be "substantial" or "foreseeable" and instead concluded that in order to be "direct," the effect need only "follow as an immediate consequence" of the defendant's activity. Because New York was the place where payment was supposed to be made, the Court concluded that the effect was direct, notwithstanding the fact that none of the plaintiffs were situated in New York.

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FSIA 1605(a)(2)

SAUDI ARABIA V. NELSON 507 U.S. 349 1993

Pg 371 FACTS:

-‐ Medical institutions owned and operated by Saudi Arabia -‐ Nelson held and tortuted by medical institution and Saudi police

§ Nelson alleges this was done because he began to do his job by reporting faulty engineering at Saudi hospital

• Nelson was hired an inspector • Wasn’t told that he was supposed to “rubber stamp” the

inspections § Claims of Nelson:

• Neglignet claim on failure to warn • Deritvies claim

o Note: No breach of Contrct claim –suprisingly § However there is a Forum Sel Clause in his employment

contract attributing all Breach of contract claims to be adjudicated in Saudi courts

-‐ Nelson claims Saudi commercial activity was the recruiting company’s failure to warn him of Saudi response to whistleblowers when hiring him the United States.

ISSUE: -‐ Does Nelson claims of Saudi failure to warn (negligence) fall within

section 1605(a)(2) commercial exception of the FSIA o 1605(a)(2):

§ Activity carried on in the United States , commercial in nature by the foreign state

HELD: -‐ Failure to warn could be every international tort and therefore fall

outside of 1605(a)(2) NOTES: Foreign states are entitled to immunity from the jurisdiction of courts in the United States, unless the action is based upon a commercial activity in the manner of a private player in the market. -‐Saudi Arabia’s (D) tortious conduct in this case fails to qualify as “commercial activity” within the meaning of the Foreign Sovereign Immunities Act of 1976. Its conduct boils down to abuse of the power of its police by the Saudi government (D). A foreign state’s exercise of the power of its police is peculiarly sovereign in nature and is not the sort of activity engaged in by private parties.

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-‐Furthermore, Nelson’s (P) failure to warn claim must also fail; sovereign nations have no duty to warn of their propensity for tortious conduct.

OPEC RESOURCES

INTEL ASSOCITION OF MACHINISTS v. OPEC 9th Circuit 1981

Pg. 378

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Monkeys And Natural Resources

MOL, INC. v. THE PEOPLES REPUBLIC OF BANGLADESH

9th Circuit 1984 FACTS:

-‐ Contract btw MOL and Bangladesh that req’d MOL to build a breeding farm in Bangladesh for rare monkeys which were native to Bangladesh

-‐ Arbitration clause within contract btw two parties -‐ MOL provided monkeys for U.S. Army research in the United States -‐ For external reasons, MOL failed to build breeding farms

o Bangladesh cancelled contrasct for breach and it disagreed w/ MOL handling of monkeys (namely shipping to US for research)

o Breeding of monkeys required license from Bangladesh government ISSUE:

-‐ 1605(a)(2) : o Act outside U.S., commercial in nature, by foreign sovereign, which

holds a direct effect in United States § Act outside US = termination of contract § Commercial Act = contract for monkeys

HELD: -‐ Because monkeys required a license from Bangladesh government, court

concluded that the bread was a way the sovereign was regulating its natural resources

-‐ Presence of a license usually infers notion that government is regulating, not acting a private individual in the market – Altman

NOTES: -‐ 1605(a)(6)

o Presence of Arbitration clause in contract is deemed a waiver of immunity with respect to Arbitration clause

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Assasination In

Washington DC

LETELIER V. REPUBLIC OF CHILE 2nd Circuit 1984

Pg 385 FACTS: Letelier, a former Chilean official, was killed by a car bomb planted by Cubans hired by Pinochet’s government in Sheridan Circle, in Washington. -‐ Defendants: Republic of Chile, Intelligence Agency, individual officials.

• Do the defendants constitute “governments”? o Chile – yes o Intelligence agency – agency o Individual officials -‐ yes

-‐ Default rule: defendants are immune unless exception applies. -‐ Exception applied: noncommercial tort exception. -‐ Chilean government argues that this is an inherently sovereign act (see exception (A) above), a public act.

• Court responds that there is no distinction in the noncommercial tort exception between illegal private and illegal public activities

-‐ Court also says that political assassination is such a heinous crime that the court must have jurisdiction

• The court will not read into the legislation a permit for states to exercise their discretion in such a way that they can assassinate individuals – this is clearly contrary to the precepts of humanity

-‐ After they won, the plaintiffs tried to attach a Chilean airline to recover damages; the court said no because the airline was considered to have a separate identity from the state

• So the plaintiffs got an award, but they couldn’t enforce it in the United States • However, the US and Chile went into intense negotiations…a commission was

established which concluded that Chile had to pay the Letelier and Moffit families the money that they were awarded

Newest Addition to the FSIA: Terrorist Acts Exception -‐ Applies only to suits brought by Americans. -‐ applies only to those states which have been designated a state sponsor of terror. -‐ Right without remedy case

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PART XI EXTRATERRITORIAL APPLICATION

LAKER V. SABENA, BELGIAN

D.C. Circuit 1984 Pg 415

One of the seminal cases on anti-suit injunctions, Laker Airways Ltd. v. Sabena Belgian World Airlines, 235 U.S. App. D.C. 207, 731 F.2d 909 (D.C. Cir. 1984), provides a detailed analysis of comity. Laker filed an antitrust action in the United States against several defendants, including domestic, British, and other foreign airlines. The defendants filed suit in the United Kingdom seeking an anti-suit injunction barring Laker from proceeding with its action in the United States. Meanwhile, the district court granted Laker an injunction barring the defendants from proceeding in the United Kingdom. The D.C. Circuit upheld the importance of comity, stating that "comity serves our international system like the mortar which cements together a brick house." Id. at 937. However, the D.C. Circuit affirmed the district court: "Comity" summarizes in a brief word a complex and elusive concept -- the degree of deference that a domestic forum must pay to the act of a foreign government not otherwise binding on the forum. . . . However, there are limitations to the application of comity. When the foreign act is inherently inconsistent with the policies underlying comity, domestic recognition could tend either to legitimize the aberration or to encourage retaliation, undercutting the realization of the goals served by comity. No nation is under an unremitting obligation to enforce foreign interests which are fundamentally prejudicial to those of the domestic forum. Thus, from the earliest times, authorities have recognized that the obligation of comity expires when the strong public policies of the forum are vitiated by the foreign act. Id. There may be different views among circuits as to the relative importance to be given to comity in deciding whether to file an anti-suit injunction. Compare Quaak, 361 F.3d at 17 ("We deem international comity an important integer in the decisional calculus"), and Laker Airways, 731 F.2d at 927 (anti-suit injunctions should be granted "only in the most compelling circumstances"), with Kaepa, Inc. v. Achilles Corp., 76 F.3d 624, 627 (5th Cir. 1996) ("We decline . . . to require a district court to genuflect before a vague and omnipotent notion of comity every time that it must decide whether to enjoin a foreign action"). Laker Airways, 731 F.2d at 927 also states that courts "have a duty to protect their legitimately conferred jurisdiction to the extent necessary to provide full justice to litigants. Thus, when the action of a litigant in another forum threatens to paralyze the

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jurisdiction of the court, the court may consider the effectiveness and propriety of issuing an [anti-suit] injunction".

Sherman Act

HARTFORD FIRE INSURANCE CO. v. CALIFORNIA 509 U.S. 764 (1993)

• Defendants, acting in London, were charged with conspiring to restrict the terms of certain kinds of insurance available in the US, in violation of the Sherman Act

• Issue: is there prescriptive jurisdiction to apply the Sherman Act, or any US law, to conduct that occurs in another country?

o The Sherman Act has typically been interpreted according to the objective territorial principle – it deals with conduct that occurs outside the US but has a substantial and harmful effect inside the United States

o Previous decisions found that he Sherman Act extended overseas; the new question was how far the Sherman Act extended

• Majority Opinion (Souter): the Sherman Act does apply to the acts in question o Does not address international law in depth; he merely addresses comity

§ He frames the question as whether principles of comity ought to lead the court to exercise judicial restraint and not exercise jurisdiction over the London insurance companies

o He says that there is only an issue where the laws of two states conflict in such a way that one cannot comply with the laws of one country without violating the laws of the other country: “The only substantial question in this case is whether ‘there is in fact a true conflict between domestic and foreign law’.”

§ He finds that there is no conflict between US and British law (seems though he almost jumps right to the third part of the Restatement test in Section 403)

§ Though the US made illegal what was legal in England, compliance with US law would not require violation of British law, so it’s ok

o Is Souter right in suggesting that this is the only question that needs to be addressed?

§ The Restatement reasonableness test says no – you still have to establish 1) that there is a recognized basis for prescriptive jurisdiction, and then 2) that it is reasonable for the state to exercise jurisdiction in the given case (look to reasonableness factors in Restatement); then you would perform Souter’s analysis

• Dissent: Scalia o The principle question is whether the Sherman Act reaches the conduct in

question o First, he looks at two cannons of statutory construction in American law:

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§ 1) “legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States”

• Sherman Act was already found to apply extraterritorially § 2) “an act of Congress ought never to be construed to violate the

laws of nations if any other construction remains” (Charming Betsy)

• prescriptive jurisdiction o He then performs the analysis Souter should have performed to determine

if the Sherman act applies to the case at hand: § you have to establish 1) that there is a recognized basis for

prescriptive jurisdiction, and then 2) that it is reasonable for your state to exercise jurisdiction in the given case (look to reasonableness factors in Restatement); then perform an analysis similar to Souter’s analysis (can you apply the law of your state without requiring the defendant to violate the laws of the other state?)

§ Reasonableness analysis: • He recognizes that the UK has a great interest in

maintaining jurisdiction over this issue • He also says that the US interest in regulating here is slight,

because of another act that allowed for the Sherman Act to be overridden (if the Sherman Act can be overridden, it can’t be that important)

• Scalia concludes that it is unreasonable for the United States to apply its law here

o Is it really unreasonable for the US to apply its law in this situation, given that the act in question was intended to have a negative effect on the United States?

§ Why did Scalia reach this result? Are there any advantages to the result he reached?

• It may be better to be certain which country gets to regulate the actions of companies

• It may be easier for US companies to compete on a level playing field in the UK if they aren’t subject to US regulation

• Flip the sides – do we want the UK to be able to do this to the US

• Whose opinion was better – Souter or Scalia? o We think Souter’s outcome might have been better, but Scalia’s analysis

was definitely better – follow this analysis

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MORRISON V. NATIONAL AUSTRIAL BANK, LTD 130 S. Ct. 2869 (2010)

Facts of the Case

In 1998 National Australia Bank (NAB), an Australian company, acquired Homeside Lending Inc. (Homeside), an American company. In 2001, NAB announced that it would incur a $450 million write-down for inaccurately calculating the fees Homeside would generate for servicing mortgages, which had been calculated as present assets. Its stock price then dropped 5 percent. Later that year, NAB announced a second write-down of $1.75 billion to amend for other inaccurate calculations that had been booked as present assets. NAB's stock price tumbled an additional 13 percent. Subsequently, four owners of NAB stock filed suit against NAB and Homeside in a New York federal district court alleging violations of the Securities and Exchange Act of 1934. Three of the plaintiffs purported to represent a class of non-American purchasers of NAB stock because they bought their shares abroad. The district court held that it lacked subject matter jurisdiction over the class of non-American purchasers.

On appeal, the U.S. Court of Appeals for the Second Circuit affirmed. The court reasoned that subject matter jurisdiction exists over claims only "if the defendant's conduct in the United States was more than merely preparatory to fraud, and particular acts or culpable failures to act with the United States directly caused losses to foreign investors abroad." Here, the court noted that (1) the issuance of fraudulent statements from NAB's corporate headquarters in Australia were more central to the fraud than Homeside's manipulation of financial data on which NAB based its statements, (2) there was no effect on U.S. capital markets, and (3) the lengthy chain of causation from NAB receiving inaccurate information from Homeside before passing the information along to its investors suggested that the district court lacked subject matter jurisdiction.

Question 1) Do anti-fraud provisions of the U.S. securities laws extend to transnational fraud? 2) Did the Second Circuit apply the appropriate standard for determining whether subject matter jurisdiction exists? Conclusion Decision: 8 votes for National Australia Bank, 0 vote(s) against Legal provision: Securities Exchange Act of 1934

No. Not answered. The Supreme Court affirmed the Second Circuit, but held that it erred when it raised the question of subject matter over the case. Instead, the Court held that the Securities and Exchange Act does not provide a cause of action to foreign plaintiffs suing foreign and American defendants for misconduct in connection with securities traded on foreign stock exchanges. With Justice Antonin Scalia writing for the majority, the Court reasoned that "longstanding principle" dictated that the legislation of Congress, unless expressly stated otherwise, only applies within the territorial jurisdiction of the United States. Here, the Court further reasoned that the section of the Securities and Exchange Act in question dealt with transactions in securities listed on domestic exchanges and domestic transactions which was not present in this case.

Justice John Paul Stevens, joined by Justice Ruth Bader Ginsburg, concurred in the judgment. He agreed with Court's conclusion but disagreed that the Court employed a new test to determine the reach of the Securities and Exchange Act – only extending to "transactions in securities listed on domestic exchanges

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and domestic transactions." He stated that the federal courts have been construing the Act's scope under a different test which did not warrant abandonment.

PART XII ALIEN TORT STATUTE

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SOSA V. ALVAREZ-‐MACHAIN 542 U.S. 692 2004

Facts of the Case

A U.S. Drug Enforcement Agency (DEA) special agent was kidnapped and murdered by a Mexican drug cartel in 1985. After an investigation, the DEA concluded that Humberto Alvarez-Machain had participated in the murder. A warrant for his arrest was issued by a federal district court. The DEA, however, was unable to convince Mexico to extradite Alvarez-Machain, so they hired several Mexican nationals to capture him and bring him back to the United States. His subsequent trial went all the way to the Supreme Court, which found that the government could try a person who had been forcibly abducted, but that the abduction itself might violate international and provide grounds for a civil suit. When the case went back to the district court for trial, Alvarez-Machain was found not guilty for lack of evidence.

Alvarez-Machain then filed a group of civil suits in federal court against the United States and the Mexican nationals who had captured him under the Federal Tort Claims Act (FTCA), which allows the federal government to be sued on tort claims, and the Alien Tort Statute (ATS), which permits suits against foreign citizens in American courts. The government argued that the FTCA applied only to claims arising from actions that took place in the United States and therefore did not cover Alvarez-Machain's case because the arrest took place in Mexico. Further, the government and the Mexican nationals argued that the ATS gave federal courts jurisdiction to hear tort claims against foreign citizens, but did not allow private individuals to bring those suits.

The federal district court disagreed with the government's contention that the FCTA claim did not apply, finding that plan to capture Alvarez-Machain was developed on U.S. soil and therefore covered. However, the court then ruled that the DEA had acted lawfully when they arrested Alvarez-Machain and was therefore not liable. On the ATS claims, the court rejected the argument that private individuals could not bring suit under the Act. The court found that Jose Francisco Sosa, one of the Mexican nationals who kidnapped Alvarez- Machain, had violated international law and was therefore liable under the ATS.

On appeal, the Ninth Circuit Court of Appeals overturned the district court's FTCA decision, ruling that the DEA could not authorize a citizen's arrest of Alvarez-Machain in another country and was therefore liable. The appeals court did, however, affirm the lower court's finding on the ATS claim, upholding the judgment against Sosa.

Question

Does the Alien Tort Statute permit private individuals to bring suit against foreign citizens for crimes committed in other countries in violation of the law of nations or treaties of the United States? May an individual bring suit under the Federal Tort Claims Act for a false arrest that was planned in the United States but carried out in a foreign country?

Conclusion Decision: 6 votes for Sosa, 3 vote(s) against Legal provision: Federal Tort Claims, or Alien Tort Statute

No and No. On the Alien Tort Statute claim, the Court unanimously ruled that the ATS did not create a separate ground of suit for violations of the law of nations. Instead, it was intended only to give courts

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jurisdiction over traditional law of nations cases - those involving ambassadors, for example, or piracy. Because Alvarez-Machain's claim did not fall into one of these traditional categories, it was not permitted by the ATS. On the FTCA claim, the Court ruled that the arrest had taken place outside the United States and therefore was exempted from the Act. It rejected Alvarez-Machain's argument that the exemption should not apply because the arrest had been planned in the United States.

Acceptable Stips, 55, See Harrison v. Wyeth

ACT OF STATE DOCTRINE, 76 ACT OF STATE DOCTRINE:, 81 Agency, 11 ALIEN TORT STATUTE, 110 ALLIIED BANK INTERNATIONAL V. BANCO CREDITO, 82

AMERICAN WATERS, 25 Arbitrary Cond, 58, See In Re Union Carbide

Asahi, 2 Asahi Factors:, 2, 6 ASAHI METAL INDUSTRY CO. V. SUPERIOR COURT, 6

Balancing Approach, 47, See United States v. First National Bank of Chicago

BANCO NACIONAL de CUBA v. SABBATINO, 80, See Act of State Doctrine

BRENNAN V. ZAPATA OFF-‐SHORE COMPANY, 23, See Forum Selection Clause

Calder Effect Analysis, 9 Comity, 67 Comity Approach, 62, See Anti Suit Injunction, See Smith Kline

Control, 42 Corporate Veil, 11 Definition of what Consitutes a Foreign Sovereign, 85

DOLE V. PATRICKSON, 96, See FSIA Corporate Structure

Exceptions To Immunity Under FSIA, 87

Exceptions To Immunity Under FSIA:, 87

Express waivers:, 87, See Foreign Sovereign Immunity

EXTRATERRITORIAL APPLICATION, 106, 113

Factor Based Analysis to, 45, See In RE URANIUM

Factors suggesting that a U.S. court will recognize and enforce a non-‐U.S. court judgment, 65, See Hilton v. Guyot

FOREIGN SOVEREIGN IMMUNITIES ACT, 84

Forum Non Conveniens, 50 Forum Selection Clause, 23, See Part II

General Atomic v. Exxon, 37, See Evidence deliberately stored outside US

General Jurisdiction:, 2 Grounds for Non-‐Recognition if a Foreign Judgment, 59

HAGUE CONVENTION ON THE TAKING OF EVIDENCE ABROAD IN CIVIL OR COMMERCIAL MATTERS, 36

HARRISON V. WYETH LAB DIV OF AMERICAN HOMES, 55

HARTFORD FIRE INSURANCE CO. v. CALIFORNIA, 107

HELICOPERTEROS, 4, See General Jurisdiction

Helicopertos, 3 HILTON V. GUYOT, 67, See Comity, See Judgment

Implicit waivers, 87, See Foreign Sovereign Immunities Act

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IN RE UNION CARBIDE CORPORATION GAS PLANT DISASTER AT BHOPAL INDIA, 58

IN RE: URANIUM ANTITRUST LITIGATION, 45, See Control

Intangible, 82, See Act of State Doctrine

INTEL ASSOCITION OF MACHINISTS v. OPEC, 103

INTEL CORP V. ADVANCED MICRO DEVICES, 41

JET HOLDINGS, INC. V. PATEL, 71, See Judgments

JUDGMENTS, 64 LAKER V. SABENA, BELGIAN, 106 LETELIER V. REPUBLIC OF CHILE, 105, See Foreign Sovereing Immunities Act

Letter Rogatory, 32 Letters Rogatory, 32, See Hague Service Convention

LOURING V. KUWAIT BOULDER SHIPPING, 21, See Quasi in Rem Jurisdiction

MEDELLIN, 26 MEDELLION, 30 MEIER v. SUN INTERNATIONAL HOTELS, 11

MOL, INC. v. THE PEOPLES REPUBLIC OF BANGLADESH, 104

MORRISON V. NATIONAL AUSTRIAL BANK, LTD, 109

Objections by Foreign Defendants to Discovery In United States:, 37

Part II, 23 Personal Jurisdiction, 2 QAAK V. KLYVELD PEAT MARWICK, 60, See Anti Suit Injunction Purposeful Evasion

Quasi in Rem Jurisdiction, 21 Republic of Argentina v. Weltover, 101 Republic of Argentina v. Weltover,, 92, 101, See Foreign Sovereign

Immunity Exception, See Foreign Sovereign Immunity Exception

REPUBLIC OF AUSTRIA V. ALTMANN, 95, See FSIA Retroactive

ROYAL BANK OF CANADA V. TRENTHAM CORP, 75, See Judgments

SAMANTAR V. YOSUF, 99 SAUDI ARABIA V. NELSON, 102 Self Exec vs Non Self Exec, 26 SHAFFER V. HEITNER, 18, See Quasi in Rem Jurisdiction

SMITH KLINE & FRENCH LAB V. BLOCH, 62

SOCIETE INTERNAITONAL POUR PARTICIPATIONS INDUSTRIELLES ET COMMERCIALS S.A. V. ROGERS, 42

SOMPORTEX LTD V. PHILADELPHIA CHEWING GUM CORP, 69, See Judgment

SOSA V. ALVAREZ-‐MACHAIN, 111 Specific Jurisdiction, 2 stream of commerce, 7 SUNG HWAN v. RITE AID CORPORATION, 73, See Judgments

SYLLABUS, 1 Three Prong Test for Specific Personal Jurisdiction, 9

TOYS R US, INC. v. STEP TWO, S.A., 14 UNITED STATES V. FIRST NATIONAL BANK OF CHICAGO, 47

USC 1782, 41 VERLINDEN B.V v. CENTRAL BANK OF NIGERIA, 94

VOLKSWAGENWERK AKTIENGESELLSCHAFT V. SCHLUNK, 33

YAHOO INCORP. V. LA LIQUE, 8, See Three Prong Test Specific Jurisdiction

Zippo Mfg Co. v. Zippo Dot Com, 16 Zippo Mfg. Co. v. Zippo Dot, 15

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