An important concern for foreign sovereigns as well as diplomatic and consular officials is whether a United States court will enforce a notice of deposition against them. In the context of the recognition and enforcement of a foreign arbitral award and the judgment of a London court, the United States District Court for the District of Columbia approached the issue on January 27, 2015.
In the matter Continental Transfert Technique Ltd. v. Government of Nigeria, the foreign state had moved to strike a notice of deposition pursuant to Rules 30(b)(6) and 69(a)(2) of the Federal Rules of Civil Procedure, in which the plaintiff sought to discover information regarding the defendant state's assets that could be used to satisfy the judgment. The defendant argued both that its sovereign immunity barred the discovery effort, as well as that the notice was overbroad:
First, it contends that sovereign immunity protects foreign sovereigns from the burden of discovery, insofar as Continental’s Rule 30(b)(6) notice of deposition would subject Nigeria to "arrest" and "execution." … Second, Nigeria maintains that Continental's notice is overbroad, as it "does not identify any specific property or assets targeted for execution." Nigeria raises a third argument in its reply memorandum, arguing that as a foreign sovereign it is not the proper subject of Continental's deposition notice for two further reasons: (1) the language of Rule 30(b)(6) of the Federal Rules of Civil Procedure does not include foreign sovereigns within the class of entities to whom such a deposition notice may be addressed; and (2) any deponent whom Nigeria might identify as possessing knowledge of the subject matters sought to be discovered would be either a "high government official" or a diplomat of Nigeria, and these potential deponents therefore would enjoy foreign official immunity or diplomatic immunity. Id. at 3-4.While the court noted that foreign sovereign immunity is not a bar to discovery in this context, it importantly raised as unresolved the issue of what kind of discovery is permissible and how the information may be obtained.
On December 23, 2014, the United States Court of Appeals for the Second Circuit in New York City dumped an ice bucket over Argentina's renewed sovereign immunity claims against efforts to explore its assets in response to various post-judgment discovery actions. In NML Capital, Ltd. v. Republic of Argentina, the court upheld the lower court but closed with this advice on the management of the process:
Although we affirm the district court's order in all respects, we stress that Argentina--like all foreign sovereigns--is entitled to a degree of grace and comity. Cf. Republic of Austria v. Altmann, 541 U.S. 677, 689 (2004). These considerations are of particular weight when it comes to a foreign sovereign’s diplomatic and military affairs. Accordingly, we urge the district court to closely consider Argentina’s sovereign interests in managing discovery, and to prioritize discovery of those documents that are unlikely to prove invasive of sovereign dignity.Despite the adverse outcome for Argentina, the reasoning of the appellate court provides a useful introduction into the various immunity issues arising in the post-judgment discovery process. Argentina had raised objections based on the Foreign Sovereign Immunities Act as well the two Vienna conventions on diplomatic and consular immunity of 1961 and 1963 and on international law. The court addressed these claims from several perspectives, including information held by third parties affiliated with, or independent of, Argentina, military assets and inviolable documents. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.
Just as sovereign states enjoy immunity through the Foreign Sovereign Immunities Act, so do certain international organizations of which the United States is a member. Under the International Organizations Immunity Act, codified in 22 U.S.C. §288, immunity and privileges are provided to public international organizations in which the U.S. participates under a treaty or an Act of Congress. In addition to other exceptions to the FSIA, if a sovereign state expressly waives its immunity in contracts or other in another manner, a district court can establish jurisdiction. An international organization's waiver of immunity would also warrant jurisdiction in a U.S. court.
Relying upon this exception, the plaintiff in Nyambal v. International Monetary Fund filed suit against the IMF for assault and false imprisonment after an incident at the IMF's Bank-Fund Staff Credit Union. The plaintiff had been recently terminated after alleging corruption within the IMF.
In its decision of November 25, 2014, the U.S. Court of Appeals for the District of Columbia Circuit reversed the district court's granting of jurisdictional discovery. The granting of discovery against an immune defendant allowed the Court collateral review of the case. Despite the plaintiff’s request for the Court to revisit and narrow the scope of the IOIA immunity in Atkinson v. Inter-American Development Bank, the Court refused, citing Atkinson's explicit ruling that international organizations share the same immunity as foreign sovereigns, unless it is waived.
In its amended complaint, the plaintiff relied upon a subclause of the IMF's Articles of Agreement with the Credit Union, claiming that it purportedly waived the IMF's immunity. The Court begged to differ, noting that discovery in a case with an immune party can be called only when specific facts require verification; the IMF's discovery production of the Articles of Agreement demonstrated the explicit non-waiver of immunity -- and the inapplicability of the subclause.
The Court also rejected the plaintiff's alternative argument that the contract between the IMF and its Credit Union created a framework for the IMF to waive its immunity. Just as with the FSIA, an examination of IMF's immunity must not only demonstrate an explicit and express waiver, but the plaintiff must allege specific facts as to the waiver of immunity -- none of which were fulfilled in this case. -- Camila Ryder, Legal Assistant, Berliner Corcoran & Rowe LLP, Washington, DC.
An attack by the Columbian air force on a village led to a complaint in California, pitting villagers against two U.S. companies, but the United States Court of Appeals for the Ninth Circuit in San Francisco rejected the case with an 88-page long set of opinions. In Mujica v. Airscan Inc., it examined claims under the Torture Victims Protection Act, the Alien Tort Statute and comity under Californian law. On November 12, 2014, the court published its decision and a dissenting opinion.
The TVPA claim fails under Mohamad v. Palestinian Authority because the defendants are corporations. The ATS claim fails under Kiobel v. Royal Dutch Petroleum Co.. Finally, the State Department's statement of interest sways the comity decision against proceedings in the United States. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.
According to the U.S. Court of Appeals for the Second Circuit, a sovereign entity cannot separate itself from its past government or leaders, even if the government committed illegal acts or violated international law.
In its decision on September 18, 2014, the Court affirmed the district court ruling in Republic of Iraq v. ABB AG that Iraq was equally at fault as the defendants in the alleged conspiracy to corrupt a United Nations humanitarian program created during the Hussein Regime.
Iraq had sought recovery from various business entities under the Racketeer Influenced and Corrupt Organizations Act, 18 USC §1961, the Foreign Corrupt Practices Act, 15 USC §78, and also state common law. The Court determined that RICO was inapplicable to extraterritorial actions, and that the FCPA does not provide private parties right of action.
Iraq's complaint stated that Hussein and Iraqi ministry officials orchestrated the exploitation of funds from the UN Oil-for-Food Program that were meant to provide humanitarian aid to the Iraqi people. It posited that certain corporations conspired with the Regime, while others were coerced by Hussein. Despite Iraq's argument that the Hussein-led government was illegitimate and that its actions were detrimental to the Iraqi people, the Court determined that the actions of a government are representative of its sovereign entity. Although the district court suggested the obvious distinctions between state and government, a sovereign cannot skirt responsibility for the acts committed by past, albeit corrupt, governmental leaders.
For a prior report on the case in German, see Kochinke, Erst korrupt, dann so sauber: Irak, Schadensersatz für vormals bestechlichen Staat?, German American Law Journal--US-Recht auf Deutsch, Sept. 19, 2014. -- Camila Ryder, Legal Assistant, Berliner Corcoran & Rowe LLP, Washington, DC.
Fresh off the United States Supreme Court decision in Republic of Argentina v. NML Capital, Ltd., see No Discovery Immunity Under FSIA, the United States Court of Appeals for the Second Circuit in New York City held on September 9, 2014 that a foreign sovereign state's assets around the world are not immune from discovery, even if a majority of the assets in question are considered outside of the commercial activity exception to the Foreign Sovereign Immunities Act, Export-Import Bank of the Republic of China v. Grenada.
In the Southern District Court of New York, Export-Import Bank had sought a $21 million judgment in defaulted loans made to Grenada, based on Grenada's waiver of immunity in loan documents between the two entities. Any property of Grenada used for commercial activity within the U.S. is no longer immune from attachment, according to FSIA. Yet even a sovereign state's waiver of immunity does not always result in a favorable judgment for the other party.
The Second Circuit affirmed the District Court's decision that the two sets of funds in question were immune. Following Argentina v. NML, though, the FSIA does not afford Grenada immunity from discovery of its assets. The Court questions a subset of funds that passed through the International Air Transport Association, which has operations in the United States. Export-Import Bank can now further its efforts in the district court to determine whether any Grenadian property face attachment. If funds are used at any point within the U.S., Export-Import Bank could possibly execute a judgment in their favor.
While both Argentina and Grenada waived immunity in their respective contracts, Argentina took legislative action to avoid payment to particular creditors, while Grenada has defaulted on payments to many of their bondholders. The Second Circuit's ruling allows the District Court jurisdiction to search all foreign assets of Grenada -- an act that could affect foreign relations with the United States. While the Supreme Court's opinion in Argentina suggested that possibility, Justice Antonin Scalia pointed to other foreign statutes that could hinder a lower court's granting of discovery. -- Camila Ryder, Legal Assistant, Berliner Corcoran & Rowe LLP, Washington, DC.
In Art Law: S.D.N.Y on Picasso’s Madame Soler and Bavaria's Sovereign Immunity -- Update, the German Dispute Resolution Journal explained and discussed, in English, a June 27, 2014 ruling in the United States District Court for the Southern District of New York. The July 28, 2014 contribution by Michael Schulz of Frankfurt University provides links and analysis, in particular of the immunity of the Free State of Bavaria under the Foreign Sovereign Immunities Act. The facts in Schoeps v. Freistaat Bayern are distinguishable from arts cases involving expropriation because the defendant state purchased the art at issue and did not expropriate it. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
Foreign nations enjoy some immunities under the Foreign Sovereign Immunities Act but there are limitations. On June 16, 2014, the Supreme Court of the United States in Washington clarified that discovery immunity for global assets of a foreign state does not exist in the context of the execution of a judgment against the state: Republic of Argentina v. NML Capital, Ltd..
The case involved bonds which by their nature are contracts and, in this case, included immunity waivers which permitted the bondholder to litigate. While the FSIA provides immunity of a foreign state's assets in the United States, discovery may be had in American courts to identify assets held globally into which execution may be permitted under foreign rules, the court held.
The issue for lawyers advising foreign sovereign immunities in contract matters, then, becomes one of drafting the jurisdictional, choice of law as well a mediation and arbitration provisions to limit discovery in ways that are compatible with the new decision. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
Three hot topics of international private law in relation to U.S. litigation against a foreign government lead to a useful decision in the matter GDG Acquisitions LLC v. Government of Belize decided by the United States Court of Appeals for the Eleventh Circuit on April 22, 2014.
The dispute involves lease payments owed by the defendant government under an agreement that provided for litigation in Florida. The defendant claimed immunity but lost because of a waiver in the agreement. Its motion for dismissal on forum non convenience grounds succeeded in the district court, but failed on appeal because the lower court had not considered the precedent set by the U.S. Supreme Court in Atlantic Marine Constr. Co. v. U.S. Dist. Court for the W. Dist. of Texas on December 3, 2013: If the parties agree on a forum, their decision becomes an important factor in balancing the competing interests.
The decision mostly relies on a probably influential discussion by the court of the principle of international comity. The court explores both prospective international comity, and retrospective international comity which applies to past conduct, for example a decision rendered by a foreign court submitted for enforcement to a court in the United States. The applicable principle in this case is prospective international comity, which is rare.
Examples are the German foundation cases involving mass reparations, as in Ungaro-Benages v. Dresdner Bank AG, 379 F.3d 1227, 1238 (11th Cir. 2004), and the Indian Bhopal mass disaster cases. In both scenarios, the foreign nations had established overwhelming interests in the resolution of these matters under their legal systems and had taken appropriate action to implement such policies.
The mere interest of a foreign government to have simple lease payments adjudicated in its own courts do not rise to a similar level, the Atlanta court determined. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
In its April 11, 2014 dismissal of a complaint against an embassy, the United States District Court for the District of Columbia reiterates the requirement of strict adherence to the service of process rules for service on an embassy under section 1608(a) of the Foreign Sovereign Immunities Act. The matter Barot v. Embassy of Zambia is an instructive example of the application of the law and the futility of almost correct attempts made in good faith to effectuate service. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
An arbitration clause in a bilateral investment treaty is to be read, according to the Supreme Court of the United States in the matter BG Group plc v. Republic of Argentina, decided on March 5, 2014, like a contract for purposes of determining that a dispute belongs to the arbitral tribunal. Argentina had challenged arbitral jurisdiction under the treaty between the United States and herself on the basis that the arbitration clause required a domestic proceeding before the courts in that country.
The arbitration tribunal agreed that the condition existed, but also that Argentina had precluded an meaningful review by changing its laws. The Supreme Court held that this determination was properly within the domain of the tribunal as a threshold matter.
The tribunal's conclusion that Argentina's actions made it absurd and unreasonable to read [the treaty] to require an investor in BG Group's position to bring its grievance in a domestic court deserves deference, the court reasoned in its 45-page ruling. Its treatment of treaties builds on that developed and continually strenghthened in recent years for domestic contracts. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
In an abundance of caution, the United States District Court for the District of Columbia on December 10, 2013 examined the foreign sovereign immunity claim made by the defendant in the matter Belize Social Development Ltd. v. Government of Belize. The dispute involves a run-of-the-mill confirmation of an arbitral award under the New York Convention which had also occupied courts in Belize and the United States Court of Appeals for the District of Columbia. Although the defendant argued that the award was void ab initio under its laws and the D.C. court lacked subject-matter jurisdiction under the Foreign Sovereign Immunities Act to adjudicate the award, the court ultimately relied on the recent announcement that there is no authority for a claim that the Court must conduct  an independent, de novo determination of the arbitrability of a dispute to satisfy the FSIA's arbitration exception. Chevron Corp. v. Republic of Ecuador, _ F. Supp.2d _, 2013 WL 2449172 (DDC June 6, 2013). The court found no immunity bar to enforcement and granted the motion to confirm the award. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
The denial of summary judgment in favor of an embassy in the matter Ashraf-Hassan v. Embassy of France sheds light on the factors for discrimination of local hires evaluated by the United States District Court for the District of Columbia. The court in Washington, DC, found against the embassy on November 20, 2013.
The employee found her position after studying in the United States, was not seconded to the embassy by the Foreign Ministry, and worked on an extendable contract with responsibilities for cultural exchange and internship matters. She suffered under a hostile supervisor who equated her with terrorists based on her religion, race and headscarf worn only outside the embassy. In addition, her supervisor lectured her on birth control when she became pregnant and did not similarly lecture two white pregnant French employees.
The plaintiff local hire had sought the intervention of various French official but eventually her contract ran out without a renewal. The court denied the embassy's motion to dismiss the case on the grounds that:
(1) no reasonable jury would find the evidence in this case sufficient to constitute a hostile work environment under Title VII;The court considered the supervisors' conduct frequent, severe and offensive, affecting the employee's performance: A reasonable jury could find the conduct so "extreme [as] to amount to a change in the terms and condictions of employment." Id. at 13. The former embassy employee may proceed with her case. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
(2) Ashraf Hassan's testimony should not be believed;
(3) [The supervisors'] actions were nondiscriminatory or the result of business necessity; and
(4) even if there were a viable claim for harassment here, the Embassy should not be held liable for the discriminatory acts of its employees. Id at 9.
In construction matters, many legal pitfalls await embassies and consulates. A dispute over architectural designs should not be one of them. That is, however, the gist of the decades-old action before the United States District Court for the District of Columbia in the matter Sturdza v. United Arab Emirates.
On November 5, 2013, the UAE embassy won an important battle. The plaintiff architect, who accuses the embassy of having given her architectural plans to the winner of a bid who then based his plans on hers, produced two expert witnesses. The experts' reports favor her allegation of a similarity of the plans in violation of American copyright law. The embassy opposed the use of the reports.
The court concurred in a 12-page decision. The plaintiff had failed to meet the deadlines under Rule 26 of the Federal Rules of Civil Procedure in producing the reports. The court explained, in reliance on precedent from the United States Court of Appeals for the Second Circuit, that the comparison of basic architectural elements can be performed by a jury without the aid of expert witnesses. As a result, the plaintiff may proceed with her case. However, she may not rely on the favorable reports which would likely influence the jury. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
As details become known about the German discovery of likely expropriated or stolen art valued by some at a billion dollars or more, the United States has reportedly encouraged Germany to reveal more information about the trove. Treaties and complex details of German civil, criminal and administrative law have become important factors in the handling of the art which the Third Reich called degenerated. In the past, Germany has made meticulous efforts to return art from public possessors, such as public museums, to owners. These efforts were often deemed too meticulous, burdensome and not transparent. In light of an investigation into tax, customs or other offenses by the current private possessor of the art and the accompanying data protection issues under German and European law, the German authorities need to avoid pitfalls that could prejudice claims from owners of the lost art. In U.S. Pushes Germany for Details of Art Cache, Mary Lane and Harriet Torry of the Wall Street Journal delve into many of the legal issues. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
The four-step approach to service of process on a foreign state under the Foreign Sovereign Immunities Act is well explained in an October 22, 2013 order issued by the United States District Court for the District of Columbia.
In the matter Monica Opati v. Republic of Sudan, the plaintiffs obtained the court's permission to add two alleged victims to an amended complaint but lost their quest to bypass the stict statutory rules for service of the complaint and summons on the Republic of Sudan. Since the initial steps required by the FSIA, service under special arrangement or international agreement, were unavailable, they had attempted service by transmission from the court via mail with a return receipt which the Republic refused to provide.
The court advised the plaintiffs to strictly comply with the requirements of 28 USC §1608--no shortcuts. Without service properly obtained, the court would not be able to exercize its jurisdiction over the foreign state defendant.
Foreign states and their instrumentalities are well advised to examine the decision and statute as well as to carefully analyze all service documents in the event of a lawsuit filed against them in a United States court. The legal adviser to the embassy in Washington, DC, or the consulate receiving such court documents should be familiar with these rules. They are a staple of embassy law. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
The libel suit by Presidential kin in the matter Abbas v. Foreign Policy Group LLC involved an amicus brief from the District of Columbia but none from the plaintiff's embassy, in this case the PLO Delegation in Washington, DC. The United States District Court for the District of Columbia decided on an early motion invoked under the new District of Columbia anti-SLAPP statute against the plaintiff.
The plaintiff raised concerns with statements in a foreign policy magazine, available on the internet, that questioned the propriety of gains by the Presidential family, one of whose members sued the publication. The court granted the defendants' special motion to dismiss the case under the statute designed to protect freedom of speech under the First Amendment to the United States Constitution on these grounds:
[T]he Court concludes that the defendants have made a prima facie showing that Mr. Abbas's defamation claim arises from an act in furtherance of the right of advocacy on issues of the public interest, and that Mr. Abbas has failed to demonstrate a likelihood of success on the merits of his defamation claim because the contested statements are either not capable of defamatory meaning or are protected statements of opinion.The 37-page opinion dated September 27, 2013 contains a valuable analysis of the new anti-SLAPP statute, the private and public roles of the plaintiff as they affect libel and the qualification of questions on matter of public concern as defamatory. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
Today, the coverage of embassy law completes ten years. Topics in the first internet journal devoted to the law relating to embassies and consulates have been varied. Sovereign immunity, in particular the defense of embassies, consulates and diplomats in litigation in host country courts, is a main topic.
Other issues revolve around property, tax, construction, leases and local hires at embassies and consulates. Some embassies assign responsibility for all issues to consuls. Others devide them among to administrative attaches and legal counsellors and consuls. Issues of embassy law relating to cultural matters, from the exchange of antiques to modern art, or intellectual property matters in the distribution of country information, fall into the realm of cultural or PR departments.
Embassy Law will continue to inform in these sometimes routine and often exciting fields, with gratitude to its faithful readers and contributors. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
The Republic of Cuba tortured the plaintiff, and the victim won a default judgment in a Florida court. When attempting to enforce it into Cuban trademarks, the United States District Court for the District of Columbia examined the foreign sovereign immunity issues.
On August 29, 2013, the court discussed the two possible exceptions from immunity claimed by the plaintiff. It found 28 USC §1605(a)(5) for non-commercial torts to not apply. The exception is principally directed at liability from traffic accidents involving diplomats, the court explained, and requires a tort in the United States. The fact that the plaintiff's illness became noticed in the United States and resulted from the torture in Cuba does not meet the required statutory standard, the court ruled in Jerez v. Republic of Cuba.
The exception for sponsors of terrorism in 28 USC §1605(a)(7) also does not apply, the court decided. At the time Cuba tortured the plaintiff, the Republic was not a designated sponsor of terrorism. The 19-page opinion is very informative and concludes that American courts lack subject-matter jurisdiction under the Foreign Sovereign Immunities Act. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
On August 19, 2013, the United States Court of Appeals for the Second Circuit decided two issues in the matter Blue Ridge Investments, LLC v. Republic of Argentina and ruled twice against the Republic. At issue is the confirmation of an ICSID award which the Republic opposed on sovereign immunity grounds.
After dismissal of its motion in the District Court, the Republic appealed. The appellate court agreed with the lower court and explained in detail that two immunity exceptions apply:
(1) the so-called implied waiver exception, described in 28 U.S.C. §1605(a)(1), andWhile it held that it could exercise under jurisdiction under the collateral order doctrine to review the immunity issue, the court ruled against Argentina in determining that it had no pendent appellate jurisdiction to examine whether the plaintiff, an assignee of the ICSCID award, had properly raised a claim. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
(2) the so-called arbitral award exception, described in 28 U.S.C. §1605(a)(6).