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).
On August 12, 2013, the United States Court of Appeals for the First Circuit in Boston ruled in the matter Universal Trading & Investment Co., Inc. v. Bureau for Representing Ukrainian Interests in International and Foreign Courts et al. in favor of an asset recovery service company. Through its prosecutorial agency, the Ukraine had engaged the company to assist her in her international investigations. The company sued the agency in the United States, to collect the fees earned for services provided. As government entities, the defendants believed in their sovereign immunity under the Foreign Sovereign Immunities Act and claimed not to have waived the immunity defense. The court examined the three core arguments of the defendants against the application of the commercial exception to FSIA immunity. The decision ends with the court's determination that the foreign government's commercial activities caused sufficient effects in the United States. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
Favorable mutually granted tax treatment for diplomatic missions follows from the principle that such missions are those of another sovereign and do not owe tribute to the host sovereign. The principle is embedded in Article 23 of the 1961 Vienna Convention on Diplomatic Relations. That stirs up a ruckus in the Canadian province of Ontario where liquor stores notice a change in the tax treatment of diplomats and clamor for equally favorable tax treatment. An article by Dean Beeby, LCBO Asked By Ontario Restaurants To Extend 'Diplomat' Discount, dated July 30, 2013 explains the scenario and lays out the law quite well. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
Jeffrey Goldberg, a national correspondent for the The Atlantic Monthly Group, Inc. wrote two separate articles for the company's monthly magazine commenting about alleged warlord George Boley's former service as a Liberian public official. In the articles published in January of 2010 and February of 2011, Mr. Goldberg mentioned the arrest of and charges against Mr. Boley by the U.S. Immigrations and Customs Service in regard to his involvement in human rights violations in Liberia and lying in order to gain entry into the United States. Mr. Goldberg also noted that he knew from firsthand observation that Mr. Boley, as chairman of the Liberian Peace Council during the Liberian Civil War in the early 1990s, had recruited and armed child soldiers; fed them drugs; and ordered them to rape and kill. In response, Mr. Boley filed a defamation claim against Mr. Goldberg and the Atlantic Group for their statements in the United States.
In turn, the defendants filed a motion to dismiss in Boley v. Atlantic Monthly Group, pursuant to Federal Rule of Civil Prodcedure 12(b)(6) and special motion to dismiss under the District of Columbia Anti-Strategic Lawsuits Against Public Participation Act of 2010. The Anti-SLAPP Act allows for dismissal of groundless defamation lawsuits that infringe on public interest matters and concerns.
The United States District Court for the District of Columbia held, on June 25, 2013, that Mr. Boley failed to demonstrate that Mr. Goldberg's alleged defamatory statements do not arise from advocacy on issues of public interest. Rather, Mr. Goldberg's statements about Mr. Boley concern an issue of public interest because Mr. Boley is a public figure, specifically a former public servant who had several high level positions in the Liberian government. In regards to the defamatory statements specifically, Goldberg's account of ICE's arrest, investigation, and detainment of Mr. Boley are a fair and accurate report of an ongoing review under an executive body, the court found.
Likewise, Mr. Goldberg's statements regarding Mr. Boley's time in the Liberian Peace Council were taken out of context and are only describing an affidavit Mr. Goldberg submitted in an official proceeding and are protected under the fair report privilege. Finally, the court ruled that Mr. Goldberg's comments portraying Boley as evil are not capable of verification and, therefore, cannot be acted upon. Following these reasons, the court granted the motion to dismiss under the Anti-SLAPP Act on behalf of the defendants. -- Caroline Covington, legal assistant, Berliner, Corcoran& Rowe
The Foreign Missions Act governing the location of embassies in Washington, DC--as well as other matters involving embassies and other missions--could serve as a model for Australia's capital, an Australian member of parliament argued on May 27, 2013, according to a Noel Towell report in the Canberra Times, Canberra should look to US for embassy plans: Brodtmann. The MP submitted a joint standing committee report to the Parliament in Canberra: The committee was impressed with the level of planning and co-ordination in the Washington model and its substantial use of free market methods in its allocation of land to diplomatic missions. She also expressed her concern of a lack for a long-term strategy or plan for diplomatic estates in Canberra. In Washington, DC, the Foreign Missions Act sets the framework for operations of missions and the Office of Foreign Missions at the United States Department of State.-- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.
After seeing an advertisement posted by the Kenyan Revenue Authority, Charterhouse Bank employee Peter Odhiambo supplied information to the KRA about tax evading customers in exchange for KRA's advertised reward of 1% of the identified taxes and 3% of recovered taxes collected. In addition, the advertisement promised strict confidentiality of those providing information. In June of 2005, the KRA paid 250,279.20 Kenyan shillings to Odhiambo as his reward for recovered taxes from one of his disclosed accounts. In May of 2006, the Central Bank of Kenya released information to the Minister of Finance that their investigation into Charterhouse bank revealed substantial tax evasion. In the months that followed, Odhiambo received anonymous threats, police harassment, and was under hostile surveillances. Fearing for his safety, Odhiambo filed for asylum in the United States and arrived as a refugee in September of 2006. Despite discussions with the KRA in New York and continued acts of compliance in their investigation of Charterhouse, Odhiambo alleges that the KRA committed a breach of contract by failing to pay the full award amount of $24,533,683 and by exposing Odhiambo's role as a whistleblower.
Defendants in Peter George Odhiambo v. Republic of Kenya moved to dismiss claims of breach of contract for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) on the grounds that Kenya is immune under the Foreign Sovereign Immunity Act. The Plaintiff makes two breach of contract claims against Defendants Republic of Kenya, the Kenya Ministry of Finance, the Kenya Revenue Authority, and the current and former KRA Commissioner Generals. Count I contends that the defendants did not pay him the reward agreed upon in the KRA's offer for a reward in exchange for information he provided about tax evasion. Count II alleges that the defendants revealed his identity as a whistleblower which forced him into hiding and to seek asylum in the United States.
The Plaintiff asserts that the defendants are subject to arbitration under two of the exceptions of the FSIA: 1) the defendants' implicit waiving of immunity through their assistance in his search for asylum, and 2) through their participation in commercial activity under all three clauses. Odhiambo failed to present evidence that any of the specific exceptions under the FSIA applied to this case by lack of subject matter jurisdiction on the basis of sovereign immunity. The Court concluded that the FSIA does apply to all defendants; therefore it dismissed all actions against them. --Caroline Covington, legal assistant, Berliner, Corcoran & Rowe.