Embassy Law Web Log   
Washington, DC, USA      

Unconventional Tax Envy

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.

Warlord or Politician: Defamation

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

Foreign Missions Act Model for Australia

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.

FSIA and Foreign Tax Wistleblower

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.

Tax Issues for International Organization Staff

Americans employed by international organizations in the United States are subject to U.S., state and local taxes, almost like everybody else. But their employeers do not contribute to the social security payments normally shared between employer and employee, so that the Internal Revenue Code requires such IO personnel to pay self-employment tax in order to make the full contribution. A common pitfall is that such employees are not, however, self-employed in the sense that they may deduct expenses that a self-employed business person can take. This and other special tax issues relating to Americans and foreigners employed by international organisations are the topic of Common Tax Mistakes Made by U.S. Citizens Working for International Organizations in the TWG Newsletter: Issue 11 [Mar. 2013]. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.

United Nations - Haiti Cholera Dispute

The United Nations in a statement entitled Haiti: fight against cholera continues, but claims against UN 'not receivable' and AlJazeera in Haiti: Victimising the victims? UN claims legal immunity and refuses to compensate Haitians over 2010 cholera outbreak, blamed on its peacekeepers. shed light on aspects of the immunities and human needs issues surrounding the cholera outbreak in Haiti during United Nations assistance operations to the catastrophe-struck country in and after 2010.

While there is mounting evidence that the outbreak followed the arrival of U.N. assistance, and claims for the compensation of victims and survivors are being made, the international organization refuses to accept such claims, but offers reinforced efforts to fight the disease and assist victims and the country.

Section 29 of the Convention on the Privileges and Immunities of the United Nations appears to supports the U.N. legal position. Haiti joined the U.N. on August 6, 1947. The Convention entered into force on September 17, 1946. In the U.N. treaty documentation, August Reinisch describes the Section 29 immunity as somewhat less than absolute:

The de facto "absolute" immunity of the United Nations is mitigated by the fact that article VIII, section 29, of the Convention requires the United Nations to "make provisions for appropriate modes of settlement of: (a) disputes arising out of contracts or other disputes of a private law character to which the United Nations is a party". The General Convention's obligation to provide for alternative dispute settlement in case of the Organization's immunity from legal process can be regarded as an acknowledgment of the right of access to court as contained in all major human rights instruments. http://untreaty.­un.org/­cod/avl/ha/cpiun-cpisa/­cpiun-cpisa.html, Codification Division, Office of Legal Affairs, United Nations.
-- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.

Diplomacy Without Legal Risks

On January 30, 2013, the White House released a new Memorandum to Executive Departments reaffirming the U.S. Government's commitment to the promotion of gender equality and the advancement of the status of women and girls worldwide. The memorandum Coordination on Policies and Programs to Promote Gender Equality and Empower Women and Girls Globally provides increased support for the advancement of women and girls in society by institutionalizing past efforts in gender equality across U.S. agencies.

Section 2 of this Memorandum mitigates the risk of legal action for failed efforts by stating that the policy directivity …does not create any rights or benefits, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officer, employees, or agents, or any other person. In this provision, the Memorandum insulates diplomatic efforts and private sector involvement from the fear of litigation. -- Caroline Covington, legal assistant, Berliner, Corcoran & Rowe LLP Washington D.C.

Contracts for Local Hires: Compatible With Local Law?

An evaluation this week of two sets of employment agreements for local hires at missions in the United States confirms a pattern not always obvious in media reports about such positions: Contracts at embassies, consulates and missions tend to be compatible with local law, much better than minimum legal standards and sometimes strange.

The strangeness often results from employers' efforts to adapt tougher foreign standards, such as those governing human rights and special benefits for certain groups, to American standards.

Importing special benefits for disabled, pregnant, older or dismissed employees can conflict with American discrimination laws. Flex-time, often permitted by embassies and desired by local hires, can be difficult or impossible to mesh with local law.

An area of concern are also the security-induced rules for the resolution of conflicts, such as by arbitration. Cost and evidentiary limitations may worry the employee; the inviolability of diplomatic missions and documents draws the line for the employer. On February 1, 2013, the United States District Court for the District of Columbia provided both sides with a useful analysis of an arbitration clause in an employment agreement in the matter Fox v. Computer World Services Corp., docket number 12-0374. The private-sector contract raised numerous issues which the court analyzed and which should be helpful in drafting and administering dispute resolution provisions in employment contracts for local hires at embassies as well. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.

Textbook on International Criminal Law

Mr. Bruce Zagaris is one of the authors of International Criminal Law: Cases and Materials, now in its revised fourth edition 213 at Carolina Academic Press, 952 pp. ISBN: 978-1-59460-905-3 $100.00 2012. The other authors are Jordan J. Paust, M. Cherif Bassiouni, Michael P. Scharf, Leila Sadat and Jimmy Gurule. He notes that the book also has an International Criminal Law Documents Supplement, 2013, 626 pp, paper, ISBN: 978-1-61163-365-8 $55.00. He recommends it to counsel at and for embassies because it covers in Part One - the General Nature, Responsibilities, and State Competencies to Enforce, the general nature of international criminal law, the individual, state, and other responsibilities, and state competencies; in Part Two, Incorporation and Enforcement the following: U.S. incorporation, competencies and fora, obtaining persons abroad, international prosecutorial efforts and tribunals; and in Part Three - Offenses, offenses against peace, war crimes, crimes against humanity, genocide, human rights, and terrorism.