Embassy Law

FSIA and Foreign Tax Wistleblower

Fri, 22 Mar 2013 11:34:03 EDT

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

Tue, 19 Mar 2013 21:42:44 EDT

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

Sat, 23 Feb 2013 11:44:20 EST

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

Fri, 15 Feb 2013 09:56:17 EST

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?

Sat, 02 Feb 2013 11:27:22 EST

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

Fri, 18 Jan 2013 18:08:34 EST

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.

Default Confirmation of Arbitral Award Against State

Sat, 22 Dec 2012 18:16:23 EST

An ICC arbitral award against the Dominican Republic lies at the heart of an enforcement action in the United States District Court for the District of Columbia in its December 20, 2012 decision in the matter Concesionaria Dominicana de Autopistas y Carreteras, S.A. v. Dominican State. The Republic failed to appear, despite proper service of the action to confirm an arbitral award, the court holds.

The Foreign Sovereign Immunities Act confers subject matter jurisdiction for such a post-arbitration suit, 28 USC §1605(a)(6)(B). It also supports personal jurisdiction, given appropriately effected service, 28 USC §1608: More simply put, "under the FSIA, subject matter jurisdiction plus service of process equals personal jurisdiction." … Practical Concepts, Inc. v. Republic of Bolivia, 811 F.2d 1543, 1548 n.11 (D.C. Cir. 1987) id. at 6.

Without any defense undertaken by the foreign state, the court considers possible grounds for refusing to confirm the arbitral award, after determining that the petitioner presented satisfactory evidence to justify the default judgment. Finding no defenses available to the state, the court confirms the award. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.

Corporate Standard for Foreign States

Wed, 12 Dec 2012 20:59:35 EST

The statute of frauds requires a writing to memorialize the sale of real estate. In Republic of Benin v. Mezei, docket number 11-4423, parties to a real estate transaction with the Republic of Benin claimed an exception for acts of corporate officers under N.Y. Gen. Oblig. Law §5-703(2).

In New York City, the United States Court of Appeals for the Second Circuit explained that the corporate officers exception does not apply to foreign governments. They continue to benefit from the same protection as non-entities, the court noted on December 11, 2012. In the decided case, the other parties could have relied only on a written authorization of the real estate transaction. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.

Arbitral Award Again Confirmed

Sun, 25 Nov 2012 21:51:58 EST

The Republic of Peru lost a motion to vacate an ICSID arbitral award, see ICSID Award Against Peru Confirmed, on September 14, 2012. The republic then pursued a second motion to deny confirmation of interest on the award on grounds of ambiguity of the appropriate interest rate. In Duke Energy International Peru Investments No. 1 Ltd. V. Republic of Peru, docket number 11-1602, DEI argues again that the United States District Court for the District of Columbia should confirm its previous confirmation.

The court granted Peru an additional briefing, and Peru contended that the amended Article 38 of its Tax Code does not apply to the award, and the previously confirmed interest rate is invalid. On November 19, 2012, the court found the state's argument for the application of Peruvian tax law irrelevant and explained that a remand of the award would be warranted only in cases of ambiguity. Because Peru failed to prove any ambiguity, the court reaffirmed the previous award in favor of DEI. -- Caroline Covington, legal assistant, Berliner, Corcoran & Rowe, LLP, Washington, DC.

State Sued Over Flight Stopover

Thu, 08 Nov 2012 18:13:50 EST

Flying from New Jersey to Nigeria via Ethiopia, the plaintiff had funds confiscated in Addis Abbeba and was allegedly unlawfully detained there for 40 days. He sues Ethiopia, the Ethiopian airline and its insurer. Under the Foreign Sovereign Immunities Act, the court dismissed the complaint for lack of subject-matter jurisdiction.

On November 8, 2012, the United States Court of Appeals for the Second Circuit affirmed in the matter Edem v. Ethiopian Airlines Enterprise, docket number 11-3770. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.

Suggestion of Immunity Binds Courts

Mon, 15 Oct 2012 20:50:51 EDT

The immunity of foreign states, their instrumentalities and officials is governed in the United States, in large part, by the Foreign Sovereign Immunities Act, 28 USC §1330. The Act establishes when United States court may exercise subject matter jurisdiction over claims of sovereign immunity.

A practical consideration is also the weight that the Executive in exercising its powers over foreign relations give to claims of immunity of foreign entities and persons. The State Department's practice of offering courts a "Suggestion of Immunity" to express its views came under review by the United States Court of Appeals for the Tenth Circuit in the matter Habyarimana v. Kagame, docket number 11-6315.

On October 10, 2012, the court confirmed the long-practiced tradition of such evaluations and the conclusive effect they may have, in a matter involving a suit under the Alien Torts Claims Act, 28 USC §1350, the Torture Act, 18 USC §2340A and the Racketeeer Influenced and Corrupt Organization Act, 18 USC §1962 filed by widows of two former presidents against the current president of Rwanda whom they consider responsible for their husbands' assassinations. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.

Government-Owned Railroad and FSIA

Wed, 26 Sep 2012 16:45:00 EDT

If falling through platform cracks under a train is bad, and having both legs amputated as a result is inconceivably tragic, what is running into a court that cannot exercise its jurisdiction over the defendant railroad?

The plaintiff in Carol Sachs v. Republic Of Austria, docket number 11-15458, suffered her accident in Austria on a Eurail journey, filed suit in the United States and lost again on September 26, 2012 because the federal courts lack subject matter jurisdiction under the Foreign Sovereign Immunities Act, 28 USC § 1602, over the defendant railroad and the foreign nation that owns it.

The United States Court of Appeals for the Ninth Circuit explains in great detail and much clarity why the commercial exception claimed by the plaintiff does not apply, even considering the fact that the Eurail pass was purchased in the United States. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe LLP, Washington, DC.

State Foregoes Appearance, Wins

Sat, 22 Sep 2012 17:49:14 EDT

In Rahim v. Government of People's Republic of Bangladesh, docket number 11-3458, the foreign state made no appearance but won anyway, on September 21, 2012.

Both the United States District Court and the appellate court in New York City found the discrimination complaint so deficient that they (1) upheld Bangladesh's immunity under the Foreign Sovereign Immunities Act, and (2) would not permit the plaintiff who had been employed by Bangladesh to amend the complaint. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP, Washington, DC.

Victory in Fact Only

Fri, 21 Sep 2012 18:05:06 EDT

A victory in the United States District Court left Argentina with a loss of legal certainty. After winning against a party seeking to confirm an attachment into property of Argentina, Argentina removed the property from the country while the loser sought a reconsideration of the decision.

Both parties appealed. The United States Court of Appeals for the Second Circuit ordered the lower court to vacate the decision, thus leaving both parties without precedent for their respective claims.

The appellate review in the matter NML Capital, Ltd. v. Republic of Argentina, docket number 11-4248, resulted in a finding of mootness, and on September 20, 2012 the court fought off attempts by both parties to obtain a final decision on the merits with persuasive arguments. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP, Washington, DC.

ICSID Award Against Peru Confirmed

Sat, 15 Sep 2012 14:57:48 EDT

The confirmation of an arbitral award against a state and allegations of ambiguity characterize the case of Duke Energy International Peru Investments No.1 Ltd. v. Republic of Peru, docket number 11-1602, before the United States District Court for the District of Columbia. Peru lost before International Centre for Settlement of Investment Disputes.

The winner seeks confirmation of the award. Peru has paid the principal award but disputes the interest sought in the confirmation proceeding. Among other things, the state argues that the interest determination in the award is ambiguous and that the case needs to be referred to the courts of Peru under the forum non conveniens doctrine.

On September 14, 2012, the court finds in favor of the winner and persuasively explains its rationale in a ten-page decision. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP, Washington, DC.

Domain "Embassy of …" no Trademark

Sat, 08 Sep 2012 21:27:12 EDT

Lawyers at embassies in the United States may be surprised to discover that non-embassies can legally own domains like EmbassyOf....com. Some nations flat out prohibit misleading designations, whether as companies names, domain names, trademarks or otherwise. Under United States law, such lawyers' attention would focus on federal trademark law, the Lanham Act, 15 USC §1125(a)(1)(A), (B), and the AntiCybersquatting Consumer Protection Act, 15 USC §1125(d).

In a dispute with the Libyan embassy in Washington, DC, however, the owner of such domains won before the United States District Court for the District of Columbia. In its September 6, 2012 decision in the matter Great Socialist People's Libyan Arab Jamahiriya v. Miski, docket number 06-2046, the court carefully analyzed the facts and law underlying Libya's claim to the domains and found the term embassy in conjunction with a country descriptive.

In turn, that determination meant Libya needed to prove a secondary meaning attached to the descriptive designation. Absent such evidence, Libya suffered a well-reasoned defeat, and the non-embassy owner of the domains may continue its misleading use. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP, Washington, DC.

Exceptions to Immunity under Terror Laws

Fri, 07 Sep 2012 20:56:34 EDT

The sovereign immunity of nations is subject to many exceptions. In the United States, they are governed by the Foreign Sovereign Immunities Act. The act has been amended frequently in order to permit victims of foreign terrorism to pierce the immunity of state sponsors of terrorism by giving the federal courts subject matter jurisdiction over foreign states and their instrumentalities, both for the principal litigation and for the enforcement of judgments, including default judgments, against states linked to terrorists.

The complex network of statutory opportunities for victims is explained in the August 31, 2012 decision in the matter Heiser v. Islamic Republic of Iran, docket number 00-2329, from the United States District Court for the District of Columbia.

Chief Judge Lamberth discusses the means of piercing sovereign immunity in a ruling on motions by banks holding state-owned funds where the banks seek to interplead third parties with claims to bank-held funds that partially involve OFAC-blocked EFT transfers. These pose their own problems which the court also addresses. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP, Washington, DC.

Award Against Bulgaria not Confirmed in U.S. Court

Fri, 24 Aug 2012 21:05:47 EDT

An arbitration clause in a contract with Bulgaria provides for the execution of an eventual award in Bulgaria under its laws. The United States Court of Appeals for the Second Circuit in New York City agreed with the lower court that the confirmation of the award must also be sought in Bulgaria, not in the United States under Article V of the Convention on the Recognation and Enforcement of Foreign Arbitral Awards of 1958. The August 24, 2012 decision on venue for the confirmation, when the clause uses the term execution and is silent on confirmation, under the New York Convention in the matter Zeevi Holdings Ltd. v. Republic of Bulgaria, docket number 11-1705, approves the lower court's analysis of the arbitration clause. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP, Washington, DC.

Bilateral Investment Treaty: Arbitration

Wed, 08 Aug 2012 21:21:48 EDT

Was the district court required to make an independent determination of the arbitrability of an investment dispute under the Germany - Thailand bilateral investment treaty in the matter Schneider v. The Kingdom of Thailand , docket number 11-1458, the United States Court of Appeals for the Second Circuit in New York City explored in great detail, on August 8, 2012.

Thailand had opposed the arbitration initiated by a German construction company for a tollway project in Thailand. It argued the BIT arbitration clause required an approved investment which the tollway project were not. The tribunal determined, however, that the project had been approved and certified under the treaty by various Thai government agencies, and proceeded with the arbitration.

The Kingdom sought review of the same issue in the recognition proceeding in the United States and lost when the United States District Court applied a deferential review. The appellate court noted that the lower court should have initially assessed whether there was clear and unmistakable evidence of an agreement in favor of the tribunal's authority to find its own jurisdiction. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP, Washington, DC.

Local Hires: The Relativity of Salaries

Sat, 04 Aug 2012 03:45:00 EDT

A great salary in the host nation may not seem that good to an expatriate. The relativity of salaries for local hires at diplomatic mission is evident in a report from India. In Indian staff may sue Italy embassy over bias in wages, Dhananjay Mahapatra of the Times of India reports on the stark contrast in pay for local hires at the Italian embassy to India, some of whom are Italian expatriates, while others are nationals of India.

The disparity in pay leads to allegations of discrimination on the basis of nationality and race. The report quotes the Indian nationals' attorney as believing that the only option available to his clients is a law suit in the Delhi high court. Mediation or consensual arbitration may also be options, all of which raise foreign sovereign immunity issues. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP, Washington, DC.