Embassy Law Web Log   
Washington, DC, USA      




Complaint Against Russia and Trump Sycophants

The complaint against the Trump family and his sycophants as well as Russia in Democratic Na­ti­o­nal Committee v. Fede­ra­ti­on of Rus­si­a followed closely the revelation of the Comey memoranda on his disturbing meetings and calls with Trump. It was filed with the United States Court for the Sou­thern District of New York on April 19, 2018 and makes for interesting reading in the areas of computer law and sovereign immunity law. The plaintiff argues that Russia should not benefit from sovereign immunity under the Foreign Sovereign Immunities Act. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

FSIA Dispute Over 142-Year-Old Bonds

In a case whose main events dated as far back as 1875, the Court of Appeals for the Second Circuit dismissed a consultants’ suit against a foreign government for lack of subject-matter jurisdiction. The point-at-issue in MMA Consultants 1 Inc. v. Republic of Peru began when Peru signed and executed fourteen bonds and left them in MMA’s possession without payment. In 2015, 140 years after the fact, MMA sent three demand letters to the Peruvian embassy in Washington D.C. for payment on the Bonds, then sued to collect principal and interest. This was not, however, the first time legal issues related to these bonds had arisen, as one of the pieces of evidence the district court considered was an Arbitration Tribunal award from 1901.

Since Peru is a foreign state, the only method of judging whether or not the case was entitled to subject-matter jurisdiction in a United States district court arises under the Foreign Sovereign Immunities Act. The burden rested on the plaintiff to prove that this particular case should be permitted under an exception of the FSIA. MMA claimed the case fell under the FSIA's commercial activity exception: A foreign country may be entitled to jurisdiction if the action in question is based upon either a commercial activity carried on in the United States by the foreign state or an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere that causes a direct effect in the United States.

Since the act was Peru's failure to redeem the bonds, MMA had to prove that this failure either took place in the United States or caused a direct effect in the United States. According to case law, a foreign government’s decision not to redeem a bond is an act that occurs in the foreign country, not in the United States. Therefore, Peru’s failure to redeem the bonds did not take place in the United States and the first exception does not apply. Furthermore, simply because the plaintiff is an American corporation does not mean that direct effect was caused in the United States, thus the second exception does not apply. Accordingly, the case was correctly dismissed by the district court for lack of subject-matter jurisdiction, the appellate court in New York City determined on December 19, 2017. -- Madeline Henshaw-Greene, Legal Assistant, Berliner Corcoran & Rowe LLP , Washington, DC.

U.S. Federal Courts and Subject-Matter Jurisdiction

On November 30, 2017, the United States District Court for the District of Columbia dis­missed the case Jimenez v. Colombian State for lack of subject matter jurisdiction. The plaintiffs consist of three Ecuadorian citizens who filed a complaint against Co­lom­bia, accusing the government of Columbia of denying the fundamental human rights of Plaintiffs Prado Alava and Vera Calderón in violation of a peace deal between the government and the allgedly subversive group FARC-EP. The plaintiffs asked that the court study and evaluate this case.

United States federal courts have limited jurisdiction and are only able to hear cases based on whether or not the court has subject-matter jurisdiction. Therefore, the court was unable to review this case. The court does not have the ability to enforce the peace treaty that the plaintiffs referred to, and thus could not rule in either par­ty's favour. The only means by which subject-matter jurisdiction can arise is under the Foreign Sovereign Immunities Act. However, it noted, the plaintiffs have cited no applicable exception under the FSIA.

The court stated that the complaint was therefore patently insubstantial, presenting no federal question suitable for decision. The case was dismissed following precedent from Evans v. Suter, 2010 WL 1632902(D.C. Cir. 2010), which states that a district court may dismiss a complaint sua sponte prior to service on the defendants pur­su­ant to Fed. R. Civ. P. 12(h)(3) when, as here, it is evident that the court lacks sub­ject-matter jurisdiction. -- Madeline Henshaw-Greene, Legal Assistant, Berliner Corcoran & Rowe LLP, Washington, DC.

Free Speech Under the FSIA During Arbitration

On November 13, 2017, Judge James E. Boasberg of the U.S. District Court for the District of Columbia issued a memorandum opinion in Sharp Electronics Corporation v. Hisense USA Corporations and Hisense International (Hong Kong) America Investment Co. Ltd. In May 2017, the Japanese-owned Sharp Corporation moved to terminate a licensing agreement under which the Chinese-owned Hisense Corporation was to make and market television sets under the Sharp name becuase of regulatory concerns. Sharp took the case before the US DC District Court, challenging the enforcability of an injunctive request by the third-party arbitration center compelling Sharp to abide with the licensing agreement while the arbitration was pending, and preventing the company from violating the confidentiality agreement by making disparaging statements about Hisense or the dispute. Judge Boasberg dismissed Sharp's complaint on both substantive -- the absence of a First Amendment violation -- and procedural -- lack of personal jurisdiction -- grounds.

As a government-owned entity, Hisense also presented a defense under the Foreign Sovereign Immunities Act.

One of the procedural questions the Court considered was whether the two defendants in the case, Hisense Intl. and Hisense USA, are instrumentalities of a foreign government under the FSIA.

The FSIA generally states that a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States. It also, however, articulates specific conditions under which plaintiffs may sue foreign states and their instrumentalities in U.S. courts. One such condition concerns commercial activity. A foreign state or its instrumentality is not immune from the jurisdiction of U.S. courts in any case in which the action is based upon a commercial activity carried on in the United States by the foreign state. Selling the TV sets per the terms of the licensing agreement constitutes such commercial activity.

However, foreign states, like U.S. states, do not constitute persons under the Fifth Amendment's Due Process Clause. In First Nationall City Bank v. Banco Para El Comercio Exterior De Cuba, however, the Court determined that foreign state instrumentalities, unless they are primarily controlled by a foreign sovereign, such as through a principal-agent relationship, should be treated as distinct juridical entities from governments. Thus, just because foreign governments do not constitute persons for due process purposes, does not mean that foreign companies also do not. Foreign companies may in fact be persons in the U.S. for due process purposes, and those that qualify as persons may in fact raise a personal jurisdiction defense before a U.S. court.

In the end, the subject-matter inquiry under the FSIA was not determinative of the outcome, the court decided, but its discussion is nonetheless instructive. -- Zarine Kharazian, Legal Assistant, Berliner Corcoran & Rowe LLP, Washington, DC, and Assistant Editor of the International Enforcement Law Reporter.

How to Address the Ambassador? Protocol, not Law

Protocol lays down rules, as does the law, but they are not the same. A frequently asked question is how to address diplomats, from the ambassador down the ranks to junior attaches, and the most important persons who can decide over access and level of attention, the assistants and secretaries. Related is the issue of different sty­les for diplomats from different countries.

At the State Department and Foreign Offices abroad, these are no small matters. While diplomats appear to have a special gene that enables them to recall na­mes, titles and etiquette, even they look up guidance, such as internal memos on pro­to­col found in missions as well as in international organizations, or the State De­part­ment's online manual Protocol for the Modern Diplomat.

In a pinch, go with the the recommendation in the Wikipedia of His Excellency or Her Excellency.; and use Your Excellency in direct address. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

Limited Review of NAFTA Arbitration Award

In Mesa Energy Group LLC v. Government of Canada, the United States District Court for the District of Columbia explored numerous challenges to an adverse arbitral award issued in Miami under NAFTA rules. The plaintiff had entered into an energy supply contract with Canada and assumed it had won a regional exclusivity. Canada supposedly breached the contract, and arbitration followed. The panel decided against the plaintiff, supported by its finding that the plaintiff misunderstood the contract and had been aware of other supply arrangements.

Canada argued unsuccessfully that the court in Washington, DC, should apply the precedent developed in the Eleventh Circuit where Miami is located. The district court analyzed the requirements of the Federal Arbitration Act as well as general procedural rules and precedent. On June 15, 2017, it found that while precedent in the Eleventh Circuit would be less favorable to the plaintiff than that in the D.C. Circuit, the outcome would be identical.

Bound by its limited powers of review, which the court discussed in detail, as well as its analysis of alleged errors, it determined that the arbitral award must stand. In addition to the type of mistakes and errors in arbitration, its opinion explores also the deference afforded governments in procurement matters and generally under NAFTA. The court granted Canada's counter-petition to affirm the award but did not grant Canada's request for an award of attorneys' fees because Mesa's arguments that these three grounds justify vacating the award are not meritorious, they are not so lacking in merit to be described as frivolous or as evidence of bad faith. Id. 22. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

District Court Limits Sovereignty in Expropriation Matter

The United States District Court for the District of Columbia in Washington, DC, limited in Philipp v. Federal Republic of Germany the defendant's sovereign immunity in a clear separation of claims related to alleged takings by Nazi Germany:

[T]he Court GRANTS Defendants' request that the Court dismiss five non-property based claims because Defendants are entitled to sovereign immunity on the following claims: fraud in the inducement …; breach of fiduciary duty …; breach of the covenant of good faith and fair dealing …; civil conspiracy …; and tortious interference …. The Court DENIES Defendants' request for dismissal on the remaining five claims: declaratory relief …; replevin …; conversion …; unjust enrichment …; and bailment …. Specifically, the Court finds that Plaintiffs have sufficiently pled these five claims under the expropriation exception to the FSIA pursuant to 28 U.S.C. § 1605(a)(3). The Court further finds that these five claims are not preempted or non-justiciable, nor should they be dismissed under the doctrine of forum non conveniens.
While the March 31, 2017 decision will likely become the subject of an appeal to the United States Court of Appeals for the District of Columbia in Washington, DC, the 42-page opinion illustrates the court's perception of immunity issues for various types of claims in the expropriation context. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

Rulings on Sovereigns in U.S. District Court

The United States District Court for the District of Columbia in Washington, DC, handles numerous disputes involving foreign missions, such as embassies, consulates and international organizations, and of foreign nations, whether or not they maintain mission offices in the capital, and their instrumentalities. The following table lists linked rulings published so far in 2017:

04/19/2017Karcher v. Islamic Republic of Iran Judge Kollar-Kotelly
04/13/2017Science Applications International Corporation v. Hellenic Republic Judge Kessler
04/13/2017Foley v. Syrian Arab Republic Judge Kollar-Kotelly
04/06/2017Gill v. Islamic Republic of Iran Judge Walton
03/31/2017Fraenkel v. Islamic Republic of Iran Judge Collyer
03/31/2017Philipp v. Federal Republic of Germany Judge Kollar-Kotelly
03/30/2017EIG Energy Fund v. Petroleo Brasileiro SA Judge Metha
03/25/2017Crystallex International Corporation v. Bolivarian Republic of Venezuela Judge Contreras
03/22/2017Miango v. Democratic Republic of Congo Judge Berman Jackson
03/21/2017SACE S.p.a. v. Republic of Paraguay Judge Brown Jackson
03/01/2017Cohen v. Islamic Republic of Iran Et Al Judge Cooper
02/27/2017Nnaka v. Federal Republic of Nigeria Judge Bates
02/17/2017Continental Transfert Technique Ltd. v. Federal Government of Nigeria Judge Friedman
02/10/2017Salini Costruttori SPA v. Kingdom of Morocco Judge Chutkan
02/06/2017BCB Holdings Ltd. v. Government of Belize Judge Kollar-Kotelly
01/25/2017Schermerhorn v. State of Israel Judge Berman Jackson
01/25/2017Estate of Yonadav Hirshfeld v. Islamic Republic of Iran Judge Kollar-Kotelly
01/09/2017De Sousa v. Embassy of The Republic of Angola Chief Judge Howell
01/09/2017Braun v. Islamic Republic of Iran Et Al Chief Judge Howell
01/05/2017Science Applications International Corporation v. Hellenic Republic Judge Kessler

-- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

Conditions on Diplomacy: Executive Order

The White House established a new condition precedent to diplomatic efforts and negotiations in its Executive Order of Janury 25, 2017, titled Executive Order: Enhancing Public Safety in the Interior of the United States. Nominally, the precondition applies to Recalcitant Countries. The order does not defined the term.

Sec. 12. Recalcitrant Countries. The Secretary of Homeland Security and the Secretary of State shall cooperate to effectively implement the sanctions provided by section 243(d) of the INA (8 U.S.C. 1253(d)), as appropriate. The Secretary of State shall, to the maximum extent permitted by law, ensure that diplomatic efforts and negotiations with foreign states include as a condition precedent the acceptance by those foreign states of their nationals who are subject to removal from the United States.
Another new executive order that affects foreign relations to some degree deals with ethics commitments of senior executive branch staff in the Trump administration. The January 28, 2017 ethics order ensures compliance, inter alia, with the Foreign Agents Registration Act but also grants, in §3, extreme latitude in waiving the ethics requirements. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

Expropriation Exception to the FSIA

On December 7, 2016, the United States District Court for the District of Columbia found in favor of the defendants in Schubarth v. Federal Republic of Germany & BVVG, citing a lack of subject-matter jurisdiction under the Foreign Sovereign Immunities Act. In its memorandum opinion, the Court stated that the plaintiff had not pled facts establishing the requirements of the expropriation exception to the FSIA Immunity and set forth its analysis to the expropriation exception, 28 U.S.C. § 1605(a)(3).

In 1991, the plaintiff applied to a German state agency for restitution of inherited property that had been expropriated by the East German government in 1945. Although the plaintiff had received an award for the estate from the agency, she considered it to be only a fraction of the estate's worth. She then claimed entitlement under the German-American 1956 Treaty of Friendship, Commerce and Navigation to the full, fair market value of the property as of the date of expropriation. However, without reference to the Treaty, the award of € 35,279 was finalized by the state agency in November 2014.

Following the finalization of the award, the plaintiff sued the Federal Republic of Germany and BVVG Bodenverwertungs- und -verwaltungs GmbH, its state-owned entity responsible for expropriated properties located in East Germany. The plaintiff asserted that Germany and BVVG had failed their obligations under the FCN Treaty by refusing her the full compensation of her estate.

In order to proceed with the suit, the plaintiff needed to prove jurisdictional grounds via the FSIA's expropriation exception, 28 U.S.C. § 1605(a)(3), which applies to a case

in which rights in property taken in violation of international law are in issue and [either][1] that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state; or [2] that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in commercial activity in the United States. Id. at 3-4

To prove that BVVG was engaged in U.S. commercial activity, which is defined by the FSIA as either a regular course of commercial conduct or a particular commercial transaction or act, the plaintiff alleged that the existence of BVVG's predecessor's office in New York in the early 1990s and BVVG's online marketing efforts were indicators thereof. However, these allegations did not meet the substantial contact requirement of clause [1] of 28 U.S.C. § 1605(a)(3), as they did not plausibly show any direct commercial activity linked to the United States; the offices that existed two decades prior to the filing of the initial complaint did not reveal any present-day commercial engagement, and the online marketing efforts in the English language appealed to the international community generally, not specifically to the United States. Thus, the Court concluded that the FSIA's expropriation exception to immunity is unavailable and that it does not have subject matter jurisdiction over the plaintiff's claims. The Court thereby dismissed the case. -- Kathryn Campbell, Legal Assistant, Berliner Corcoran & Rowe LLP, Washington, DC.