International Judicial Monitor
Published by the International Judicial Academy, Washington, D.C., with assistance from the
American Society of International Law

Fall 2009 Issue
 

cases of note

The United States and Swiss government to Settle Bank Secrecy Case (August 1, 2009)

http://www.asil.org/ilib090807.cfm#bn1

Click here for press release (approximately 2 pages); click here for Department of Justice press release (approximately 2 pages)

The Washington Post reports that the United States and the Swiss government have “‘reached an agreement in principle on the major issues’ and expect to resolve remaining points over the next week” over a “legal dispute in which the U.S. government was demanding the names of thousands of Americans suspected of using Swiss bank accounts to hide money from the Internal Revenue Service.” While the terms of the agreement remain secret, this development is significant especially since the “dispute had escalated into a serious confrontation between the two countries, pitting U.S. law enforcement and tax collection efforts against Swiss economic interests.”

In February of this year, the U.S. government filed a lawsuit in a Miami federal court against Swiss bank UBS AG, asking the court to order the international bank to disclose to the Internal Revenue Service (IRS) the identities of the bank’s U.S. customers with secret Swiss accounts. According to the U.S. government, as many as 52,000 U.S. customers have been hiding their UBS accounts from the government in violation of the tax laws. The U.S. government alleged that “as of the mid-2000s, those secret accounts held about $14.8 billion in assets” and “UBS engaged in cross-border securities transactions in the United States that it knew violated U.S. security laws.” Furthermore, UBS allegedly “helped hundreds of U.S. taxpayers set up dummy offshore companies, to make it easier for those taxpayers to avoid their reporting obligations under U.S. tax laws.”


Movsesian et al. v. Victoria Versicherung AG et al. (August 20, 2009)

http://www.asil.org/ilib090910.cfm#j1

Click here for document (approximately 23 pages)

The U.S. Court of Appeals for the 9th Circuit recently ruled that Section 354.4 of the California Code of Civil Procedure, which extended the statute of limitations until 2010 for claims arising out of life insurance policies issued to Armenian Genocide victims “interfere[d] with the national government’s conduct of foreign relations” and was therefore “preempted.”

The California Legislature had enacted Senate Bill 1915 in 2003, amending California’s Code of Civil Procedure and providing California courts with jurisdiction over certain classes of claims arising out of insurance policies that were held by Armenian Genocide victims, and “extend[ed] the statute of limitations for such claims until December 31, 2010.” 

Vazken Movsesian (“Movsesian” or “Plaintiff”) and other class members of Armenian descent, filed a class action against Victoria Verisherung AG (“Victoria”), Ergo Verischerungsgruppe AG (“Ergo”), and Munchener Ruckverischerungs-Gesellschaft Aktiengesellschaft (“Munich Re”) seeking “damages from all three companies for breach of written contract, breach of the covenant of good faith and fair dealing, unjust enrichment, and other related claims.” Munich Re, the parent company of Victoria and Ergo, filed a motion to dismiss arguing, inter alia, that the class members lacked standing, that Section 354.4 was unconstitutional and that it violated its due process rights. The district court found that the Plaintiffs had standing, rejected the Defendants’ constitutionality and due process arguments, and “held that § 354.4 was not preempted under the foreign affairs doctrine.”

The Court of Appeals was asked to determine “first, whether § 354.4 is preempted under the foreign affairs doctrine; second, whether Munich Re is a proper defendant; and third, whether the Plaintiff-Appellees have standing to bring these claims.” Defendants argued “that § 354.4 is preempted under the foreign affairs doctrine in two ways: first, that it is preempted by the Claims Agreement of 1922, and the War Claims Act of 1928; and second, that it conflicts with the Executive Branch’s policy prohibiting legislative recognition of an ‘Armenian Genocide.’” As evidence for its second argument, Munich Re “point[ed] to several failed House Resolutions… [where] [e]ach time, the Administrations of President Bush and President Clinton took specific action, privately and publicly, to defeat these measures.” 

Without analyzing the first argument implicating the Claims Agreement and War Claims Act, the Court held that “§ 354.4 conflicts with Executive Branch foreign policy, and thus, is preempted.”

The Court reviewed the legislative history of the resolutions mentioned and concluded that “[t]he foregoing account of negotiations between the Executive Branch and Congress, and the public statements and letters of two Presidents, clearly establish a presidential foreign policy preference against providing legislative recognition to an “Armenian Genocide.”

Once the Court concluded that there was an executive foreign policy rejecting the recognition of the Armenian Genocide, the Court had to determine whether §354.4 was in conflict with that policy. The Section itself defined Armenian Genocide in words similar to the House Resolutions, a fact the Court found detrimental. The Plaintiffs argued that this subsection could be severed from the remainder of the statute, an argument the Court rejected, holding that the remainder of the law still included the words “Armenian Genocide.” 

The Court also noted that the recognition of Armenian Genocide could endanger the nation as a whole and generally undermined the President’s diplomatic authority. And while the states are not prohibited from using the term “Armenian Genocide,” the Court stressed that states could not impede the foreign policy aims of the executive branch.


Presbyterian Church of Sudan et al. v. Talisman Energy, Inc. et al. (October 2, 2009)

http://www.asil.org/ilib091030.cfm#j1

Click here for Second Circuit decision (approximately 68 pages); click here for district court decision (approximately 111 pages)

The United States Court of Appeals for the Second Circuit upheld the lower court’s grant of summary judgment in favor of Talisman Energy, Inc., a Canadian oil corporation doing business in Sudan, finding that the Sudanese plaintiffs “failed to establish Talisman’s purposeful complicity in human rights abuses” as required under the Alien Tort Statute (ATS). The district court had dismissed the suit, holding “that to establish accessorial liability for violations of the international norms prohibiting genocide, war crimes, and crimes against humanity, plaintiffs were required to prove, inter alia, that Talisman provided substantial assistance to the Government of the Sudan with the purpose of aiding its unlawful conduct.” 

The plaintiffs had commenced suit in United States District Court for the Southern District of New York, alleging that they were victims of human rights abuses committed by the Sudanese government and that Talisman “aided and abetted or conspired with the government to advance those abuses that facilitated the development of Sudanese oil concessions by Talisman affiliates.” The Second Circuit, recognizing that while the “standard for aiding and abetting liability under the ATS” has been recognized as a possible theory under the ATS by a prior panel in the case of Khulumani v. Barclay National Bank Ltd. (2d Cir. 2007), the same panel failed to determine the proper “standard for pleading such liability.” The court was thus faced with an “unusual circumstance” to decide what this standard should be. 

The Second Circuit—agreeing with Judge Katzmann, who had issued a concurring opinion in Khulumani—noted that the “scope of the ATS’s jurisdictional grant should be determined by reference to international law.” Judge Katzman had suggested that the proper international instrument to be applied is the Rome Statute, which provides that a defendant may be held liable under international law for aiding and abetting the violation of that law by another when the defendant (1) provides practical assistance to the principal which has a substantial effect on the perpetration of the crime, and (2) does so with the purpose of facilitating the commission of that crime.

Applying this rule, the Second Circuit noted that “the mens rea standard for aiding and abetting liability in ATS actions is purpose rather than knowledge alone.” It then analyzed the alleged acts perpetrated by Talisman and concluded that “plaintiffs presented no evidence that the company acted with the purpose of harming civilians living in southern Sudan.” As a result, the Second Circuit affirmed the district court’s dismissal.


Memorandum of Understanding on Antitrust Cooperation Between United States Federal Trade Commission, the United States Department of Justice and the Russian Federal Anti-monopoly Service

http://www.asil.org/ilib091113.cfm#r2

Click here for document (approximately 3 pages); click here for press release (approximately 1 page)

On November 10, 2009, the Federal Trade Commission (FTC) and U.S. Department of Justice signed a Memorandum of Understanding (MOU) with the Federal Antimonopoly Service, the Russian antitrust agency, agreeing to strengthen antitrust cooperation between the agencies. 

The two key provisions relate to cooperation, with the parties agreeing to share information on competition policy and enforcement developments; and to communications, committing the parties to consult and provide advice on enforcement and policy. 

Notably, while MOUs are common practice for the U.S. government, according to the FTC press release, “this is the first antitrust cooperation MOU entered into on a direct agency-to-agency basis.”

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© 2009 – The International Judicial Academy with assistance from the American Society of International Law.

Editor: James G. Apple.
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