Embassy Law Web Log   
Washington, DC, USA      

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.

Immunity of Minister of Defense in U.S. Courts

On October 13, 2016 the United States District Court for the Central District of California ruled in favor of former Israeli Minister of Defense Ehud Barak in the matter Doğan v. Barak. Plaintiffs Ahmet and Himet Doğan, both Turkish nationals, filed suit against Mr. Barak on behalf of their son Furkan Doğan, who was killed during the Marmara Raid by Israeli Defense Force personnel in May 2010. In an effort to halt the Gaza Freedom Flotilla's attempt to run a blockade of Gaza, IDF officials raided the vessel and killed nine people including Furkan Doğan.

The Doğan party allege that Barak's direct authorization of the use of force on the day of the raid was in violation of the Alien Tort Claims Act, 28 U.S.C. § 1350, the Torture Victims Protection Act, 28 U.S.C. § 1350, and the Anti-Terrorism Act 18 U.S.C. § 2333. Plaintiffs believe that the killing of their son constitutes torture and extra-judicial killing in violation of federal and international law. Because it was Mr. Barak who ordered the dispatch of IDF troops to halt the flotilla raid, plaintiffs argue that Israel's former Minister of Defense is personally responsible for the death of their son. With the support of the United States government, Mr. Barak moved to dismiss the accusations and filed a suggestion of immunity.

Despite the claims of the Doğan party, Judge Otis D. Wright II upheld the U.S. and Israeli recommendation of immunity and dismissed the plaintiff complaints. Relying on precedent surrounding the separation of powers, the Court explains that under the doctrine of foreign official immunity and in the event that the State Department makes a suggestion of immunity, courts consistently defer to the executive and often dismiss the case because of the Executive's dominant role in the area of foreign policy. Under precedent, a party may move to dismiss an action for a lack of subject matter jurisdiction. Moreover, Judge Wright affirms that Barak's actions are irrefutably official public acts via the state of Israel that entitle him to immunity. -- Rachel Weinstein, Legal Assistant, Berliner Corcoran & Rowe LLP Washington, D.C.

Implied State Waiver of Immunity

The defendant state in Stati v. Republic of Kazakhstan, a D.C. case to enforce a Swedish arbitral award under the Energy Charter Treaty, argued that it did not consent to arbitration by implication under the Foreign Sovereign Immunities Act. It took the position that the Treaty's cooling-off period had not been observed. Therefore, the United States District Court for the District of Columbia would need to respect its sovereign immunity and lack subject-matter jurisdiction.

Among numerous elements of the Federal Arbitration Act, which codifies the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of Jun3 10, 1958, and the FSIA, the court analyzed the waiver by implication element in 28 USC § 1605(a)(1). On August 5, 2016, it issed a 22-page opinion in which it found sufficient bases under the FAA and the FSIA to exercize its jurisdiction. In the end, it suspended the matter because of an ongoing petition to set aside the award in the Svea Court of Appeal. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

Embassies and Banking: No End to Concerns

As many administrators at embassies and consulates know, banks are de-risking -- eliminating risk they perceive in international transactions. The prestige of servicing mission accounts is outweighted, many bankers believe, by the risk of mostly corruption-related exposures, known as Politically Exposed Persons. A Washington, DC, bank that was known as the go-to bank for embassies had to plead guilty for its representation of two country accounts.

The work my partner Bruce Zagaris, an international financial compliance expert, has been performing for various ambassadors and countries relates to de-risking. Today, the World Bank is having a special meeting with small countries because United States, Canadian and European banks are closing many of their correspondent banks with indigenous banks in the Caribbean.

Simultaneously, French banks are considering de-risking some of their U.S. correspondent accounts because of the disproportionate fines and convictions resulting from sanctions violations.

Hence, banks and missions are faced with a very fluid situation, and most banks are shedding risks, in part because on May 6, 2016, FinCEN issued new Customer Due Diligence final rules and in Sept. 2015 the Yates memo requires prosecutors and corporations to focus on criminal liability of executives. In addition, national and international politics move towards more criminal liability for banks and their executives, as also reflected in stump speeches of the leading Presidential candidates, or movies, such as Money Monster. Therefore, banks are having to develop more rigorous anti-money-laundering due diligence and, when they do, simultaneously re-evaluate the risk of new and current clients. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

Central Bank Funds Subject to Collection in U.S. Courts

The United States Supreme Court ruled on April 20, 2016 that the American legislative body has the constitutional authority to change the law in the midst of post-litigation proceedings to ensure that a winning party can collect from a foreign nation's central bank even if the law did not permit such collection during the litigation. The decision in Bank Markazi v. Peterson is read as permitting Congress to pick a winner:

Article III of the Constitution establishes an independent Judiciary with the province and duty … to say what the law is in particular cases and controversies. Marbury v. Madison, 1 Cranch 137, 177. Necessarily, that endowment of authority blocks Congress from requir[ing] federal courts to exercise the judicial power in a manner that Article III forbids. Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 218. Although Article III bars Congress from telling a court how to apply pre-existing law to particular circumstances, Robertson v. Seattle Audubon Soc., 503 U.S. 429, 438–439, Congress may amend a law and make the amended prescription retroactively applicable in pending cases, Landgraf v. USI Film Products, 511 U.S. 244, 267–268; United States v. Schooner Peggy, 1 Cranch 103, 110.
The Iran Threat Reduction and Syria Human Rights Act of 2012 "makes a designated set of assets available to satisfy the judgments underlying a consolidated enforcement proceeding which the statute identifies by the District Court’s docket number. 22 U.S.C. §8772," the court explained when it considered the new statute constitutional. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.