Deck 31: International Law in a Global Economy

Question 1

ISSUE SPOTTERS
Café Rojo, Ltd., an Ecuadoran firm, agrees to sell coffee beans to Dark Roast Coffee Company, a U.S. firm. Dark Roast accepts the beans but refuses to pay. Café Rojo sues Dark Roast in an Ecuadoran court and is awarded damages, but Dark Roast's assets are in the United States. Under what circumstances would a U.S. court enforce the judgment of the Ecuadoran court? (See pages 714-715.)

Answer 1

The principle of comity states that the jurisdiction of one nation defers to and gives effect to the foreign nation's laws and judicial decrees.
Thus, if the U.S. court confirms that the laws and decisions of Ecuadoran court are consistent with its national law and public policy, U.S. would defer to foreign laws and judicial decrees.

Question 2

Sovereign Immunity. Bell Helicopter Textron, Inc., designs, makes, and sells helicopters with distinctive and famous trade dress that identifies them as Bell aircraft. Bell also owns the helicopters' design patents. Bell's Model 206 Series includes the Jet Ranger. Thirty-six years after Bell developed the Jet Ranger, the Islamic Republic of Iran began to make and sell counterfeit Model 206 Series helicopters and parts. Iran's counterfeit versions-the Shahed 278 and the Shahed 285-used Bell's trade dress. The Shahed aircraft was promoted at an international air show in Iran to aircraft customers. Bell filed a suit in a U.S. district court against Iran, alleging violations of trademark and patent laws. Is Iran-a foreign nation-exempt in these circumstances from the jurisdiction of U.S. courts? Explain. [ Bell Helicopter Textron, Inc. v. Islamic Republic of Iran, 892 F.Supp.2d 219 (D.D.C. 2012)] (See International Law.)

Answer 2

Sovereign Immunity:
It is a doctrine which states that the foreign nations will be immunized from the jurisdiction of U.S. Courts given that certain terms are satisfied.
Sovereign Immunity is a doctrine which is legal according to which state or sovereign cannot do a legally wrong act. Under sovereign immunity, country is immuned from criminal prosecution under certain limitations.
According to Federal Tort Claims Act, U.S. is immuned to a limited extent which ceases the immunity if an act (tort) of a federal employee causes certain damage. In this case, Iran used B's trade dress which is an illegal action. So, Iran will not be immuned from any criminal prosecution.
Hence, Iran will not be exempted from jurisdiction under this situation from U.S. Court.

Question 3

The five Learning Objectives below are designed to help improve your understanding of the chapter. After reading this chapter, you should be able to answer the following questions:
What is the principle of comity, and why do courts deciding disputes involving a foreign law or judicial decree apply this principle?

Answer 3

International principle:
In recent times number of doctrines and principles have been emanated and utilized by the court of different countries in order to reduce or avoid the conflicts that includes foreign elements.
Principle of comity:
The principle of comity state that as long as the laws and decrees of one country is in consistency with public law of one accommodating country, the respective country will be different and will have impact on the laws and decrees of other country.
In simple words it can be understood as the principle that can be extended to the other countries or to the jurisdiction of same country.
The principle is utilized by the court in order to balance the interest of both the parties and to respect the laws of every nation.

Question 4

Commercial Activity Exception. Technology Incubation and Entrepreneurship Training Society (TIETS) entered into a joint-venture agreement with Mandana Farhang and M.A. Mobile to develop and market certain technology for commercial purposes. Farhang and M.A. Mobile filed a suit in a federal district court in California, where they both were based, alleging claims under the joint-venture agreement and a related nondisclosure agreement. The parties agreed that TIETS was a "foreign state" covered by the Foreign Sovereign Immunities Act because it was a part of the Indian government. Nevertheless, Farhang and M.A. Mobile argued that TIETS did not enjoy sovereign immunity because it had engaged in a commercial activity that had a direct effect in the United States. Could TIETS still be subject to the jurisdiction of U.S. courts under the commercial activity exception even though the joint venture was to take place outside the United States? If so, how? [ Farhang v. Indian Institute of Technology, Kharagpur, 2012 WL 113739 (N.D.Cal. 2012)] (See International Law.)

Question 5

Robco, Inc., was a Florida arms dealer. The armed forces of Honduras contracted to purchase weapons from Robco over a sixyear period. After the government was replaced and a democracy installed, the Honduran government sought to reduce the size of its military, and its relationship with Robco deteriorated. Honduras refused to honor the contract by purchasing the inventory of arms, which Robco could sell only at a much lower price. Robco filed a suit in a federal district court in the United States to recover damages for this breach of contract by the government of Honduras. Using the information provided in the chapter, answer the following questions.
1. Should the Foreign Sovereign Immunities Act preclude this lawsuit? Why or why not?
2. Does the act of state doctrine bar Robco from seeking to enforce the contract? Explain.
3. Suppose that prior to this lawsuit, the new government of Honduras had enacted a law making it illegal to purchase weapons from foreign arms dealers. What doctrine might lead a U.S. court to dismiss Robco's case in that situation?
4. Now suppose that the U.S. court hears the case and awards damages to Robco, but the government of Honduras has no assets in the United States that can be used to satisfy the judgment. Under which doctrine might Robco be able to collect the damages by asking another nation's court to enforce the U.S. judgment?
DEBATE THIS The U.S. federal courts are accepting too many lawsuits initiated by foreigners that concern matters not relevant to this country.

Question 6

Sovereign Immunity. In 1954, the government of Bolivia began expropriating land from Francisco Loza for a public project that included an international airport. The government directed the payment of compensation in exchange for at least some of his land for the airport. The government, however, never paid the full amount. Decades later, his heirs, Genoveva and Marcel Loza, who were both U.S. citizens, filed a suit in a U.S. federal district court against the government of Bolivia, seeking damages for the taking. Can the court exercise jurisdiction? Explain. [ Santivanez v. Estado Plurinacional de Bolivia, 2013 WL 879983 (11th Cir. 2013)] (See International Law.)

Question 7

Question with Sample Answer-Dumping. U.S. pineapple producers alleged that producers of canned pineapple from the Philippines were selling their canned pineapple in the United States for less than its fair market value (dumping). The Philippine producers also exported other products, such as pineapple juice and juice concentrate, which used separate parts of the same fresh pineapple, so they shared raw material costs, according to the producers' own financial records. To determine fair value and antidumping duties, the plaintiffs argued that a court should calculate the Philippine producers' cost of production and allocate a portion of the shared fruit costs to the canned fruit. The result of this allocation showed that more than 90 percent of the canned fruit sales were below the cost of production. Is this a reasonable approach to determining the production costs and fair market value of canned pineapple in the United States? Why or why not? (See page 720.)

Question 8

Antidumping Duties. The Wind Tower Trade Coalition is an association of domestic manufacturers of utility-scale wind towers. The Coalition filed a suit in the U.S. Court of International Trade against the U.S. Department of Commerce, challenging its decision to impose only prospective antidumping duties-rather than retrospective (retroactive) duties-on imports of utility-scale wind towers from China and Vietnam. The U.S. Commerce Department concluded that the domestic industry had not suffered any "material injury" or "threat of material injury" from such imports and that it would be protected by a prospective assessment. Can an antidumping duty be assessed retrospectively? If so, should it be assessed here? Discuss. [ Wind Tower Trade Coalition v. United States, 741 F.3d 89 (Fed.Cir. 2014)] (See Specific Business Activities.)

Question 9

Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text.
What is the act of state doctrine? In what circumstances is this doctrine applied?

Question 10

A Question of Ethics-Terrorism. On December 21, 1988, Pan Am Flight 103 exploded 31,000 feet in the air over Lockerbie, Scotland, killing all 259 passengers and crew on board and 11 people on the ground. Among those killed was Roger Hurst, a U.S. citizen. An investigation determined that a portable radio-cassette player packed in a brown Samsonite suitcase smuggled onto the plane was the source of the explosion. The explosive device was constructed with a digital timer specially made for, and bought by, Libya. Abdel Basset Ali Al-Megrahi, a Libyan government official and an employee of the Libyan Arab Airline (LAA), was convicted by the Scottish High Court of Justiciary on criminal charges that he planned and executed the bombing in association with members of the Jamahiriya Security Organization (JSO)-an agency of the former Libyan government that performed security and intelligence functions-or the Libyan military. Members of the victims' families filed a suit in a U.S. federal district court against the JSO, the LAA, Al-Megrahi, and others. The plaintiffs claimed violations of U.S. federal law, including the Anti-Terrorism Act, and state law, including the intentional infliction of emotional distress. [Hurst v. Socialist People's Libyan Arab Jamahiriya, 474 F.Supp.2d 19 (D.D.C. 2007)] (See pages 728-729.)
1. Under what doctrine, codified in which federal statute, might the defendants have claimed to be immune from the jurisdiction of a U.S. court? Should this law include an exception for "state-sponsored terrorism"? Why or why not?
2. The defendants agreed to pay $2.7 billion, or $10 million per victim, to settle all claims for "compensatory death damages." The families of eleven victims, including Hurst, were excluded from the settlement because they were "not wrongful death beneficiaries under applicable state law." These plaintiffs continued the suit. The defendants filed a motion to dismiss. Should the motion have been granted on the ground that the settlement barred the plaintiffs' claims? Explain.

Question 11

ISSUE SPOTTERS
Gems International, Ltd., is a foreign firm that has a 12 percent share of the U.S. market for diamonds. To capture a larger share, Gems offers its products at a below-cost discount to U.S. buyers (and inflates the prices in its own country to make up the difference). How can this attempt to undersell U.S. businesses be defeated? (See page 720.)

Question 12

FACTS Arab Bank, PLC, is one of the largest financial institutions in the Middle East, providing modern banking services and facilitating development and trade throughout the region. Victims of terrorist attacks that were committed in Israel between 1995 and 2004-during a period commonly referred to as the Second Intifada-filed a suit in a federal district court against Arab Bank, seeking damages under the Anti-Terrorism Act and the Alien Tort Claims Act.
According to the plaintiffs, including Courtney Linde, Arab Bank provided financial services and support to the terrorists. Over several years, and despite multiple discovery orders, the bank failed to produce certain documents relevant to the case. As a result, the court issued an order imposing sanctions. Arab Bank appealed, arguing that the order was an abuse of discretion.
ISSUE Does the need to impede terrorism through the imposition of tort remedies provided by U.S. law outweigh the interest of other nations in enforcing bank secrecy laws?
DECISION Yes. The U.S. Court of Appeals for the Second Circuit affirmed the lower court's decision and order.
REASON Arab Bank argued that foreign bank secrecy laws covered the documents that the plaintiffs were asking for, and as such, their disclosure would subject the bank to criminal prosecution in several foreign jurisdictions. The trial court noted that the documents that the plaintiffs had already obtained through discovery "tended to support the inference that Arab Bank knew that its services benefitted terrorists." Therefore, the court reasoned that the lower court had not abused its discretion in concluding that the interest of other nations in enforcing bank secrecy laws are outweighed by the need to impede terrorism.
Arab Bank further argued that the trial court's order to produce the documents should be vacated because they offended "international comity." The court noted that, "This argument derives from the notion that the sanctions force foreign authorities either to waive enforcement of their bank secrecy laws or to enforce those laws, and in so doing create an allegedly devastating financial liability for the leading financial institutions in their region."
The reviewing court stated that international comity "requires a particularized analysis of the respective interests of the foreign nation and the requesting nation." Therefore, the analysis requires weighing all of the relevant interests of all of the nations affected by the court's decision. The reviewing court pointed out that the trial court did take into account the United States' interests in the effective prosecution of civil claims under the Anti-Terrorism Act and such an analysis did not "so obviously offend international comity."
FOR CRITICAL ANALYSIS -Legal Environment Consideration What interests were at stake in the dispute at the heart of this case?

Question 13

The five Learning Objectives below are designed to help improve your understanding of the chapter. After reading this chapter, you should be able to answer the following questions:
What is the act of state doctrine? In what circumstances is this doctrine applied?

Question 14

FACTS Juridica Investments, Ltd. (JIL), entered into a financing contract with S T Oil Equipment Machinery, Ltd., a U.S. company. The contract included an arbitration provision stating that any disputes would be arbitrated in Guernsey, which is one in a group of British islands in the English Channel. The contract also stated that it was executed in Guernsey and that it would be fully performed there. When a dispute arose between the parties, JIL initiated arbitration in Guernsey.
Nevertheless, S T filed a suit in federal district court in the United States. When JIL filed a motion to dismiss in favor of arbitration, the court granted the motion and compelled arbitration under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards-an international agreement also known as the New York Convention. S T appealed.
ISSUE Was arbitration required under the New York Convention?
DECISION Yes. The U.S. Court of Appeals for the Fifth Circuit affirmed the district court's judgment compelling arbitration.
REASON The court explained that the New York Convention requires arbitration if "(1) there is a written agreement to arbitrate the matter; (2) the agreement provides for arbitration in a Convention signatory nation; (3) the agreement arises out of a commercial legal relationship; and (4) a party to the agreement is not an American citizen." Here, the first three requirements were clearly satisfied, but there was some question about whether JIL was an American citizen based on its principal place of business. Nevertheless, under the statute implementing the Convention, an arbitration agreement between U.S. citizens is enforceable if it "involves property abroad, envisages performance or enforcement abroad, or has some other reasonable relation with one or more foreign states."
In this case, JIL and S T executed their contract in Guernsey and agreed that it would be fully performed there. Thus, the parties had a reasonable relation with a foreign state beyond the arbitration agreement itself. Arbitration was therefore required under the Convention.
FOR CRITICAL ANALYSIS-Global Consideration What would happen if Congress did not require a reasonable relationship with a foreign state for arbitration agreements between U.S. citizens? Would there be more or fewer agreements to arbitrate disputes abroad ? Explain your answers.

Question 15

Case Problem with Sample Answer-Comity. Jan Voda, M.D., a resident of Oklahoma City, Oklahoma, owns three U.S. patents related to guiding catheters for use in interventional cardiology, as well as corresponding foreign patents issued by the European Patent Office, Canada, France, Germany, and Great Britain. Voda filed a suit in a federal district court against Cordis Corp., a U.S. firm, alleging infringement of the U.S. patents under U.S. patent law and of the corresponding foreign patents under the patent law of the various foreign countries. Cordis admitted, "[T]he XB catheters have been sold domestically and internationally since 1994. The XB catheters were manufactured in Miami Lakes, Florida, from 1993 to 2001 and have been manufactured in Juarez, Mexico, since 2001." Cordis argued, however, that Voda could not assert infringement claims under foreign patent law because the court did not have jurisdiction over such claims. Which of the important international legal principles discussed in this chapter would be most likely to apply in this case? How should the court apply it? Explain. [Voda v. Cordis Corp., 476 F.3d 887 (Fed.Cir. 2007)] (See pages 714-715.)

Question 16

FACTS Barbara Bauman and twenty-one other residents of Argentina filed a suit in a federal district court in California against Daimler AG, a German company. They alleged that Mercedes-Benz (MB) Argentina, a subsidiary of Daimler, had collaborated with state security forces to kidnap, detain, torture, and kill certain MB Argentina workers. These workers included the plaintiffs and some of their relatives. Their claims were asserted under the Alien Tort Claims Act.
Personal jurisdiction was based on the California contacts of Mercedes-Benz USA (MBUSA), a Daimler subsidiary incorporated in Delaware with its principal place of business in New Jersey. MBUSA distributes Daimler-made vehicles to dealerships throughout the United States, including California. The court dismissed the suit for lack of jurisdiction. The U.S. Court of Appeals for the Ninth Circuit reversed this ruling. Daimler appealed to the United States Supreme Court.
ISSUE Is there a limit to the authority of a U.S. court to decide a case brought by foreign plaintiffs against a foreign defendant based on events occurring entirely outside of the United States?
DECISION Yes. The United States Supreme Court reversed the decision of the lower court. The federal district court in California could not exercise jurisdiction over Daimler in this case, given the absence of any California connection to the atrocities, perpetrators, or victims described in the complaint.
REASON The Court explained that only a limited set of connections to a state render a defendant subject to jurisdiction there. For a corporation, "The paradigm forum" for the exercise of jurisdiction is the state in which the corporation is "fairly regarded as at home." A corporation may be regarded as at home in the state in which it incorporated and the state in which it has its principal place of business. Both places are unique and easily located. These bases give plaintiffs at least "one clear and certain forum" in which to sue a corporate defendant.
This does not mean that a corporation is subject to jurisdiction only in its state of incorporation or principal place of business. In this case, however, the plaintiffs argued for the exercise of jurisdiction in every state in which a corporation engages in "continuous and systematic" business. That argument went too far, according to the Court. Instead, the appropriate question is whether a corporation's connections with a state are so continuous and systematic as to render it at home there. Here, neither Daimler nor MBUSA was incorporated in California, and neither had its principal place of business there.
FOR CRITICAL ANALYSIS-Global Consideration If the Court had adopted the plaintiffs' argument, how might U.S. citizens have been affected?

Question 17

Under the Foreign Sovereign Immunities Act, in what situations is a foreign state subject to the jurisdiction of U.S. courts?

Question 18

The five Learning Objectives below are designed to help improve your understanding of the chapter. After reading this chapter, you should be able to answer the following questions:
Under the Foreign Sovereign Immunities Act, in what situations is a foreign state subject to the jurisdiction of U.S. courts?

Question 19

Sovereign Immunity. When Ferdinand Marcos was president of the Republic of the Philippines, he put assets into a company called Arelma. Its holdings are in New York. A group of plaintiffs, referred to as the Pimentel class, brought a class-action suit in a U.S. district court for human rights violations by Marcos. They won a judgment of $2 billion and sought to attach Arelma's assets to help pay the judgment. At the same time, the Republic of the Philippines established a commission to recover property wrongfully taken by Marcos. A court in the Philippines was determining whether Marcos's property, including Arelma, should be forfeited to the Republic or to other parties. The Philippine government, in opposition to the Pimentel judgment, moved to dismiss the U.S. court proceedings. The district court refused, and the U.S. Court of Appeals for the Ninth Circuit agreed that the Pimentel class should take the assets. The Republic of the Philippines appealed. What are the key international legal issues? [Republic of the Philippines v. Pimentel, 553 U.S. 851, 128 S.Ct. 2180, 171 L.Ed.2d 131 (2008)] (See pages 716-717.)

Question 20

What are three clauses commonly included in international business contracts?

Question 21

The five Learning Objectives below are designed to help improve your understanding of the chapter. After reading this chapter, you should be able to answer the following questions:
What are three clauses commonly included in international business contracts?

Question 22

International Agreements and Jurisdiction. U.S. citizens who were descendants of victims of the Holocaust (the mass murder of 6 million Jews by the Nazis during World War II) in Europe filed a claim for breach of contract in the United States against an Italian insurance company, Assicurazioni Generali, S.P.A. (Generali). Before the Holocaust, the plaintiffs' ancestors had purchased insurance policies from Generali, but Generali refused to pay them benefits under the policies. Due to certain agreements among nations after World War II, such lawsuits could not be filed for many years. In 2000, however, the United States agreed that Germany could establish a foundation-the International Commission on Holocaust- Era Insurance Claims, or ICHEIC-that would compensate victims who had suffered losses at the hands of the Germans during the war. Whenever a German company was sued in a U.S. court based on a Holocaust-era claim, the U.S. government would inform the court that the matter should be referred to the ICHEIC as the exclusive forum and remedy for the resolution. There was no such agreement with Italy, however, so the federal district court dismissed the suit. The plaintiffs appealed. Did the plaintiffs have to take their claim to the ICHEIC rather than sue in a U.S. court? Why or why not? [ In re Assicurazioni Generali, S.P.A., 592 F.3d 113 (2d Cir. 2010)] (See International Contracts.)

Question 23

Letters of Credit. Antex Industries, a Japanese firm, agreed to purchase 92,000 electronic integrated circuits from Electronic Arrays. The Swiss Credit Bank issued a letter of credit to cover the transaction. The letter of credit specified that the chips would be transported to Tokyo by ship. Electronic Arrays shipped the circuits by air. Payment on the letter of credit was dishonored because the shipment by air did not fulfill the precise terms of the letter of credit. Should a court compel payment? Explain. (See Payment Methods.)

Question 24

What federal law allows U.S. citizens, as well as citizens of foreign nations, to file civil actions in U.S. courts for torts that were committed overseas?

Question 25

Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text.
What is the principle of comity, and why do courts deciding disputes involving a foreign law or judicial decree apply this principle?

Question 26

The five Learning Objectives below are designed to help improve your understanding of the chapter. After reading this chapter, you should be able to answer the following questions:
What federal law allows U.S. citizens, as well as citizens of foreign nations, to file civil actions in U.S. courts for torts that were committed overseas?