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Ruhrgas, FSIA and Discretion
On December 1, 2005, the Fourth Circuit approved the exercise of discretion by the lower court in dismissing a matter for lacking personal jurisdiction without examining in full the more complex issues of subject matter jurisdiction.
In the matter Mattie Lolavar et al. v. Ferndando de Santibanes et al., docket number 04-1901, the
District Court realized that the subject matter jurisdiction in the complaint against an Argentinian intelligence official involves
the Foreign Sovereign Immunities Act and decided not to resolve that question. Instead it relied on the clear facts that support a dismissal for lack of personal jurisdiction.
In their appeal, plaintiffs argued that the court should have ruled on the subject matter jurisdiction before dismissing the case. The Supreme Court of the United States granted the lower courts in Ruhrgas AG v. Marathan Oil Co., 526 US 574, 588 (1999), the discretion that the court properly applied here, the court of appeals found.
- Clemens Kochinke, Berliner, Corcoran & Rowe, LLP, Washington, DC.
Sun, / Embassy Law Link
U.S. Ticket Sale Creates FSIA Nexus
The United States Court of Appeals for the District of Columbia found subject
matter jurisdiction in Kirkham v. Société Air
France allowing the case against the foreign government-owned airline to proceed in the United States. On November 22, 2005, the
court decided that the purchase of an airline ticket in the United States was sufficient to invoke
the commercial activities exception under the Foreign Sovereign Immunities Act
(FSIA) against an airline owned by a foreign nation, even without other activity in the United States relative to the substance of the complaint.
The District Court's analysis of jurisdictional facts included the merits of the plaintiff's claim
including breach, causation and duty of care, while the Court of Appeals reduced the scope of
jurisdictional facts to those facts that would establish a claim at all. Relying on Saudi
Arabia v. Nelson, 507 U.S. 349, 357 (1993), the Court of Appeals interprets Nelson's
standard of elements contributing to claims to be each fact necessary to establish a claim, rather
than the facts without which the plaintiff will lose.
Allowing this single element of commercial
activity to constitute a sufficient nexus for subject matter jurisdiction under the FSIA will have far
reaching consequences and bring into question what constitutes state control of commercial
entities in the future. - by Sally Laing, Legal Assistant, Berliner, Corcoran & Rowe, LLP, Washington, DC.
Wed, / Embassy Law Link
FSIA: Jurisdictional Discovery
In Robert Lee Beecham et al. v. Socialist People's Libyan Arab Jamahiriya et al., No. 04-7037, the United States Court of Appeals for the District of Columbia on
September 30, 2005, ruled on the case of representatives of those killed in the 1986 bombing of a discotheque in Germany who had brought suit against Libya invoking the terrorist exception to foreign sovereign immunity, 28 USC 1605(a)(7). Libya moved to dismiss arguing that plaintiffs had presented insufficient evidence to establish subject matter jurisdiction under the terrorist exception.
The district court ordered the parties to meet and confer and submit a joint report proposing a plan for conducting jurisdictional discovery. Libya appealed arguing that the court of appeals had jurisdiction to review the district court's order pursuant to the collateral order doctrine.
The court of appeals, in an opinion by Judge Randolph, dismissed the appeal for lack of jurisdiction. There was no prior case in which a court had exercised appellate jurisdiction over such an order. An order to participate in a discovery conference did not "by any stretch" resolve important issues in the case nor did it "conclusively determine" the scope of jurisdicitonal discovery. The order, just requiring Libya's lawyer to meet and confer, imposed no significant burden on Libya.
In response to Libya's argument that it should not be required to violate the district court's order and be held in contempt to establish appellate jurisdiction, the court of appeals wrote that it was not clear the district court would hold Libya in contempt as other sactions were available under Civil Rule 37(b). In any event, the law of the circuit was that a civil contempt order was not appealable as a final order.
The appeal was premature because there was a possibility that the parties might agree to a discovery plan at the conference. Only if the district court were to order jurisdictional discovery and clearly abused its discretion could there be appellate review. Such review, the opinion suggests, could only be by mandamus.
- Thomas G. Corcoran, Jr., Berliner, Corcoran & Rowe, LLP, Washington, DC.
Sat, / Embassy Law Link
Consular Notification Case Proceeds
On the basis of the Alien Tort Statute, 28 USC §1350, the Indian citizen plaintiff claimed in the matter Tejpaul S. Jogi v. Tim Voges et al., docket number 01-1657, that his incarceration in the United States violated the Vienna Convention on Consular Relations of April 24, 1963, 21 UST 77, TIAS 6820, 596 UNTS 261, which requires consular notification of his arrest.
On September 27, 2005, the United States Court of Appeals for the Seventh Circuit determined that jurisdiction could lay on the Alien Tort Statute and remanded the case for further proceedings to the lower court.
- Clemens Kochinke, Berliner, Corcoran & Rowe, LLP, Washington, DC.
Sun, / Embassy Law Link
FSIA and Trade Secrets
Visits by numerous employees of a wholly-owned business entity of a foreign government to various places of business in the United States in conjunction with commercial transactions for American equipment protected by trade secrets can mean a sufficient nexus for jurisdictional purposes under the Foreign Sovereign Immunities Act, the United States Court of Appeals for the Eighth Circuit held on August 25, 2005 in BP Chemicals Ltd. v. Jiangsu SOPO Corporation (Group) Ltd., docket number 04-1814.
In passing, the court noted that the nexus required by the commercial activities exception to the FSIA, defined in 28 USC §1603(e) as substantial contact, may imply personal jurisdiction under the constitutional minimum contacts doctrine.
The court also confirmed that the plaintiff needs to demonstrate an American nexus only with one element of the allegations of violations of a trade secret which constitutes the substance of BP's complaint against the Chinese business entity. See also Akihiro Matsui, Intellectual Property Litigation and Foreign Sovereign Immunity: International Law Limit to the Jurisdiction over the Infringement of Intellectual Property.
- Clemens Kochinke, Berliner, Corcoran & Rowe, LLP, Washington, DC.
Wed, / Embassy Law Link
Arbitration with State Entity
In a matter involving a foreign state entity and arbitration between such an entity and a commercial enterprise, the Federal Arbitration Act, treaties and the issue of foreign sovereign immunity come into play.
The decision of the United States Court of Appeals for the District of Columbia Circuit of June 17, 2005, in the matter of TMR Energy Limited v. State Property Fund of Ukraine, docket 03-7191, involves such circumstances.
The appellate court rejected the Fund's jurisdictional arguments that apply to the Cyprian plaintiff's action for the enforcement in the United States of a Swedish arbitral award, as well as the contention that the arbitrators' determination of liability exceeded the scope of the arbitration agreement and violated public policy. - Clemens Kochinke, Berliner, Corcoran & Rowe, LLP, Washington, DC.
Sat, / Embassy Law Link
FSIA Protects Afghanistan
In a lawsuit by victims of the terror bombings in Nairobi, Kenya,
Odilla Mutaka Mwani et al. v. Osama bin Laden and Afghanistan, no. 04-5266, the U.S. Court of Appeals for the D.C. Circuit granted Afghanistan's FSIA immunity claim on August 5, 2005 while it held in favor of the plaintiffs' claims that
the co-defendants bin Laden and al Qaeda submitted themselves to the jurisdiction of American courts because they engaged in unabashedly malignant actions director at [and] felt here. - Clemens Kochinke, Berliner, Corcoran & Rowe, LLP, Washington, DC.
Mon, / Embassy Law Link
Peace Treaty Bars Third Parties
The peace treaty between Japan and the United States of America bars
not only law suits before American courts by Americans against Japan for wrongs suffered during World War II but also by third parties.
This is the result of the decision by the United States Court of Appeals for the
District of Columbia Circuit in the matter Hwang Geum Joo et al. v. Japan, Minister Yohei Kono, Minister of Foreign Affairs, No. 01-7169, of June 28, 2005.
The U.S. government supported the decision with an amicus curiae brief.
The court held that the political solution of a peace treaty had exhausted the available avenues for redress of wrongs in the system of justice and left remaining issues in the political sphere which falls outside of the jurisdiction of the courts.
Relying on Ruhrgas AG v. Marathon Oil Co., 526 US 574 (1999), the court held that courts are free to address the political question issue for their jurisdictional analysis before turning to other jurisdictional issues such as the commercial activity exception to the immunity rules of the
Fri, / Embassy Law Link
FSIA and Implicit Waiver
In the matter of Pedro Gilly Calzadilla v. Banco Latino International, Fondo de Guarantia, No. 04-10730, the U.S. Court of Appeals for the Eleventh Circuit on June 21, 2005, addressed the plaintiff's claim of an implied waiver by the defendant Venezuelan bank reinsurer, a government entity. After its collapse, the defendant sued the plaintiff, its former director, in United States courts and lost.
Calzadilla argued in his subsequent case against the agency--when he claimed damages for malicious prosecution--that the agency had implicitly waived its immunity under the Foreign Sovereign Immunities Act, 28 USC §1602 et seq., by litigating its case in the United States.
Although the agency had maintained a Florida subsidiary under the Edge Act, 12 USC §611 et seq., the court rejected Calzadilla's argument, relying on the express FSIA language in 28 USC §1605(a)(5)(B) which specifically rejects implied waivers in the case of any claim arising out of malicious prosecution.
- Clemens Kochinke, Berliner, Corcoran & Rowe, LLP, Washington, DC.
Tue, / Embassy Law Link
Plunder, Expropriation and Global Business
Michael D. Murray's article Jurisdiction Under the Foreign Sovereign Immunities Act for Nazi War Crimes of Plunder and Expropriation of November 23, 2004 is now online. It details the history of sovereign immunity in the United States and the specific issues that Nazi war crimes triggered and are encountered in comparable world events.
Also, Mark S. Blodgett and Vincent A. Carrafiello's 2002 article Commercial Activity under the Foreign Sovereign Immunity Act: Gateway to Global Business and Ethics, 2 ALSBI Nt'L Bus.L.J. 65, is online in PDF format.
- Clemens Kochinke, Berliner, Corcoran & Rowe, LLP, Washington, DC.
Wed, / Embassy Law Link
Embassy Counsel to Pay Punitive Damages
On May 27, 2005, the number two court in the United States confirmed the assessment of punitive damages against an attorney who had agreed to represent Rwanda in a lobby matter shortly before the Rwandan embassy in Washington was closed and the diplomats were sent home by note verbale. Under a new agreement, the lawyer was to assist embassy personnel with immigration issues. The new Rwandan government demanded a refund of advances paid and later sued the lawyer to recover its payments.
The court confirmed the lower decision which held that the lawyer improperly refused the refund, ignored a conflict of interest in representing the diplomats personally when their government was the client, misrepresented the work performed and fees earned and participated in the violation of fiduciary duties.
While the court confirmed the assessment of punitive damages and the requirement to refund fees, its decision in the matter of The Government of Rwanda v. Robert Winthrop Johnson II, 04-7044, 04-7067, appears lenient.
- by Clemens Kochinke, Berliner, Corcoran & Rowe, LLP, Washington, DC.
Sat, / Embassy Law Link
Dretke Dismissed
On Monday, May 23, 2005, the Supreme Court of the United States dismissed as improvidently granted the pending review of Medellin v. Dretke, docket 04-5928.
Thus, the court declined to get involved in a showdown between the state and federal governments over the presidential power to instruct state governments to abide by international treaties. SCotUS published a detailed analysis.
- by Clemens Kochinke, Berliner, Corcoran & Rowe, LLP, Washington, DC.
Thu, / Embassy Law Link
Diplomatic Driver in Accident
In New York, the owner of a motor vehicle is vicariously responsible for damages that another party suffers as a result of an accident. Other states, such as Michigan, have similar rules. The common law absolves the owner in most instances of such liability. Recently, the federal court of appeals for the third circuit held that the interest of New York in its vicarious liability rules is strong enough to subject out of state owners to its laws even if a car rental and an accident occur outside of New York. On May 5, 2005, the highest court of New York arrived at the same result in a matter involving a driver who is a diplomat.
In the matter of Svetlana Tikhonova v. Ford Motor Company, docket number 54, the court held the owner vicariously liable for the damages suffered by a passenger in the car driven by a Russian diplomat who enjoyed immunity from suit under 22 USC §254d. Ford argued that the owner could not be vicariouly liable if the driver was immune. The passenger would be limited to collecting damages from the driver's or embassy's insurer, under 28 USC §1364.
The court held otherwise, relying on the language of §388 of the New York Vehicle and Traffic Law and dismissing Ford's argument that the exceptions carved out by courts to the rule should apply, such as those for co-employees or emergency workers.
- by Clemens Kochinke, Berliner, Corcoran & Rowe, LLP, Washington, DC.
Sat, / Embassy Law Link
Consular Notification
The State Department site continues to provide detailed information on consular notification in the United States of foreign consuls under the Vienna Convention on Consular Relations and Optional Protocols, U.N.T.S. Nos. 8638-8640, vol. 596, p. 262-512, dated April 24, 1963, but nothing on the retraction of its accession to the optional protocol.
The key issue today is whether the United States would continue to apply the contested notification rules in the event of arrests of foreign nationals in the United States. At Voice of America, David Gollust reports in Bush Administration Defends Decision to Withdraw from International Legal Protocol, on March11, 2005, that the United States believes that its application of the protocol in the case of US citizens held by Iran was proper while foreign insistence on its application in the United States amounts to improper interference. After all, the American legal system is a good one, many Americans believe. There appears to exist some concern over misuse of the optional protocol by foreign nations, or the International Court of Justice in cases such as Avena and Other Mexican Nationals, because of their opposition to the death penalty, statements by Secretary of State Rice and a departmental spokesman, Adam Ereli, seem to indicate.
Is the view expressed by Amnesty International accurate? USA: another "double standard" on consular rights?, says its press release. The true impact will likely depend on the wording of the note from the State Department. Rice had indicated that the consular notification process will continue. And the United States will want consular notification in the event of arrests by Americans abroad.
- by Clemens Kochinke, Berliner, Corcoran & Rowe, LLP, Washington, DC.
Sun, / Embassy Law Link
Fortune's Fate
On February 22, 2005 U.S. District Court in Washington, D.C. decided the case of Augustin B. Jombo v. Commissioner of Internal Revenue Service. The decision further clarifies the concept of constructive receipt of income in the United States income tax code.
In 1989 Mr. Jombo, then a clerk at the Nigerian Consulate in New York , won a $26 million lottery jackpot. New York state law at the time prohibited lump sum payouts and Mr. Jombo won the right to receive $1.2 million a year for 20 years. In 1996, Mr. Jombo, who had since become a permanent U.S. resident and a cash account method tax payer, contested the inclusion of the $1.2 million payment in his annual income. He claimed the full $26 million was constructively received in 1989 when he still had diplomatic tax status. The court, unconvinced, found that the date of constructive receipt could not be considered 1989, as the winnings were still subject to substantial constraints preventing him from drawing on the income. Additionally, the court relied on 26 C.F.R. 1.446-1 (c) (1) (1) which states that all income received constructively or actively in a year is taxable as gross income. The court ruled that the annual payments of $1.2 million were gambling winning which could be taxed annually as part of gross income.
- by Sally Laing, legal assistant, Berliner, Corcoran & Rowe, LLP in Washington.
Thu, / Embassy Law Link
Breach of Contract Claim Against Honduras Dismissed
In the matter Samco Global Arms, Inc. v. Carlos Arita, Procuraduria General de la Republica, Republic of Honduras, docket numbers 03-15283 & 03-16297, the United States Court of Appeals for the Eleventh Circuit ruled on January 5, 2005 on the claim of the plaintiff arms dealer against the foreign state for breach of contract which the lower court had dismissed without prejudice under the Foreign Sovereign Immunities Act, 28 USC §1602 et seq., and which it also found to be barred by the Act of State doctrine.
Samco had purchased the arms from a foreign dealer which had stored them with the armed forces of Honduras. During a criminal investigation, the arms could not be retrieved; they also became the subject of an attachment for attorneys fees. These factors as well as damage to the arms while in storage caused Samco to claim damages for breach of contract.
The appellate court affirmed, although it determined that the storage contract as a contract for the sale of goods or services constituted a commercial activity excepted from FSIA immunity. The commercial acts of the state did not constitute, however, acts that caused a direct effect in the United States under 28 USC §1605(a)(2). - by Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP in Washington.
Mon, / Embassy Law Link
Act of State Mandamus
A rare mandamus action triggered a discussion of the reach of the Act of State doctrine enuanciated in Underhill v. Hernandez, 168 US 250, 252 (1897), In re: Philippine National Bank, docket Number 04-71843, decided February 4, 2005 by the United States Court of Appeals for the Ninth Circuit.
In American litigation over Marcos assets, the lower court wanted to hold the bank in contempt in a proceeding to which the bank was not a party, and to depose its officers. The bank applied for the writ of mandamus.
The appellate court found that a ruling on the assets by the Philippine Supreme Court which the lower court effectively overruled enjoys the protection of the Act of State doctrine. Classically, the Act of State doctrine is directed at the executive and legislative branches. The Court held, however, that there is no inflexible rule preventing a judgment sought by a foreign government from qualifying as an act of state, referring to Liu v. Republic of China, 892 F.2d 1419 (9th Cir. 1989) and the Restatement (Second) of Foreign Relations of the United State §41 cmt. d (1965).
As a result, the Court held that the district court's error qualifies for correction by a writ of mandamus, supra at 1573. - by Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP in Washington.
Sun, / Embassy Law Link
Russian Tit for Tat
On January 17, 2005, Russian new agency Novosti reports in its German-language internet edition on a bill to introduce a statute similar to the American
Wed, / Embassy Law Link