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Sovereignty, Jurisdiction, and Reasonableness: A Reply to A. V. Lowe

Published online by Cambridge University Press:  27 February 2017

Andreas F. Lowenfeld
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Type
Editorial Comment
Information
American Journal of International Law , Volume 75 , Issue 3 , July 1981 , pp. 629 - 638
Copyright
Copyright © The American Society of International Law 1981

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Footnotes

*

On March 3, 1981, the UK Secretary of State for Trade issued an order under section 2 of the Protection of Trading Interests Act to a London coffee trader, the Alan J. Ridge Co. Ltd., directing it not to respond to a request for documents issued by the U.S. Commodities Futures Trading Commission. The Enforcement Division of the Commission had issued a so-called Special Call to the trader in connection with an investigation of possible manipulation of futures trading on the New York Coffee, Sugar and Cocoa Exchange. The Commission’s Division of Enforcement has applied to the Commission itself for an order prohibiting the company from trading on all U.S. contract markets and requiring all such markets to refuse the company all trading privileges. The application was pending as this comment went to press.

References

1 Lowe, , Blocking Extraterritorial Jurisdiction: The British Protection of Trading Interests Act, 1980, 79 AJIL 257 (1981)CrossRefGoogle Scholar [hereinafter cited as Lowe].

2 Restatement of the Foreign Relations Law of the United States (Revised), Tent. Draft No. 2, esp. §§401–18 (1981).

3 Lowe at 281. *

4 Ibid.

5 1964, c. 87.

6 Id., §l(l)(b); §2(l)(b).

7 I.e., conference ships that do not have guns, but that follow independent ships into ports and offer to undercut the independent’s prices until he either goes out of business or applies to join the conference. Deferred rebates and loyalty contracts are devices to require shippers to patronize only conference members if they want to patronize any of them in a given period.

8 American Banana Co. v. United Fruit Co., 213 U.S. 347 (1909).

9 973 Parl. Deb., H.C. (5th ser.) 1535 (1979) [hereinafter cited as H.C. Deb.].

10 United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir. 1945).

11 H.C. Deb. 1535.

12 A possible suggestion would be to give the Justice Department an opportunity (or even an obligation) to advise the court if the U.S. Government has reached the decision that it has evaluated the relative interests of applying U.S. or foreign law to a transaction and has concluded that the latter is to be preferred.

13 The Secretary mentioned, for instance, the attempt to apply U.S. legislation prohibiting certain compliance with the Arab League boycott of Israel. H.C. Deb. at 1554.

14 For an interesting recent illustration of the latter, see Bulova Watch Co., Inc. v. K. Hattori & Co., Ltd., 508 F. Supp. 1322 (E.D.N.Y. 1981).

15 Lowe at 267 n.51.

16 The litigation, which involved a large number of legal questions unrelated to the present comment, is reported in a series of decisions entitled In re Ampicillin Antitrust Litigation, 1970–1980, some published in the Federal Reporter, some in trade reporters such as the CCH Trade Regulation Reporter and the BN A Antitrust and Trade Regulation Report. For a brief history of the litigation, see, e.g., 81 F.R.D. 395, 398–400 (D.D.C. 1978), and also United States v. Bristol- Myers Co., 82 F.R.D. 655 (D.D.C. 1979), describing the eventual settlement with the Beecham Group. So far as I am aware, the orders with which this comment is concerned have not been published. The litigation against Bristol-Myers was in the process of being settled after 2 weeks of trial as this comment went to press.

17 In re Ampicillin Antitrust Litigation, Misc. 45–70, M.D.L. Docket No. 50 (D.D.C. order of Nov. 20, 1972).

18 The correspondence supplied to the court by Beecham seems to bear out its contention that it tried to dissuade the Minister from intervening. Judge Sirica, however, seems to have been more persuaded by the opportunity for oral contacts. In his order of May 25,1973 (step 4 in the text), he wrote:

Although Beecham states generally that it protested the entry of the DTI Order, the Court notes, inter alia, that Beecham has made no effort to seek reconsideration, modification or review of the DTI Order and has made no effort to negotiate with the British government in order to achieve compliance with this Court’s orders.

19 The order was published in the BNA Antitrust and Trade Reg. Rep., Jan. 9, 1973, at A–5 . Other information for this comment was obtained from or checked with counsel for Beecham, for the “CCS” plaintiffs, and for the U.S. Department of Justice. See also Note, Discovery of Documents Located Abroad in U.S. Antitrust Litigation: Recent Developments in the Law Concerning the Foreign Illegality Excuse for Non-Production, 14 Va. J. Int’l L. 747 (1974).

20 See, e.g., Federal Maritime Commission v. De Smedt, 268 F. Supp. 972 (S.D.N.Y. 1967).

21 In re Ampicillin Antitrust Litigation, Misc. 45–70, M.D.L. Docket No. 50 (order of May 25, 1973).

22 Letter of June 20, 1973 from Managing Director, Beecham Pharmaceuticals Division to Sir Geoffrey Howe. The letter states:

As a result of the Court order of May 25th Beecham faces the prospect of having the Court make findings of fact which cannot later be contradicted by other evidence and which might seriously jeopardize Beecham’s ability to win the litigation which it believes it should otherwise be able to do.

Accordingly I request, on behalf of the Beecham group, that the Department of Trade and Industry revoke its Direction despite the obvious infringement of the jurisdiction of the U.K. under well established principles of international law, in order to save Beecham from unwarranted and unfair penalties which in our view would jeopardize not only the strength of the company but also the interests of the United Kingdom.

23 The Times (London), Sept. 17, 1973, at 24, cols. 3–4.

24 Direction by the Secretary of State for the Department of Trade and Industry under section 2 of the Shipping Controls and Commercial Documents Act, 1964 of August 17, 1973.

25 See United States v. Bristol Myers Co., 82 F.R.D. at 659. As the court pointed out, once Beecham was dismissed from the case as a party, compelling its employees outside the United States to give testimony would have been difficult, in the absence of the arrangement made at the time of the settlement.

26 See the De Smedt case, 268 F. Supp. 972 (S.D.N.Y. 1967). See also Société Internationale pour Participations Industrielles et Commerciales, S.A. v. Rogers, 357 U.S. 197, esp. at 201–03, 211–12(1958).

27 In a recent tax case in which the U.S. taxpayer was charged with using Swiss subsidiaries for tax avoidance purposes, the IRS issued summonses to the U.S. company to produce the records of its Swiss subsidiary. In upholding the summonses, the Court of Appeals for the Ninth Circuit cited an affidavit from a representative of the Swiss Federal Attorney suggesting that there was no strong Swiss interest in the case and that the U.S. court’s order might be a defense to prosecution under the Swiss business secrets act. United States v. Vetco Inc., 644 F.2d 1324 (9th Cir. 1981).

28 Fed. R. Civ. P. 37(b)(2)(A).

29 See Société Internationale v. Rogers (357 U.S. 197 (1958)), in which the harsher sanction of dismissal under Rule 37(b)(2)(C) meted out by the lower court was reversed.

30 In a letter to Beecham covering the direction cited in note 24 supra, the Minister’s assistant wrote:

In general the Minister remains of the view that the requirement to reply to a number of the interrogatories concerned constitutes . . . an infringement of jurisdiction which in international law belongs to Her Majesty’s Government. However, in the light of the examination of the documents which you have submitted to the Department during the last few weeks [sic] and of a reconsideration of these interrogatories, and in the light of the request made by you on 20 June, . . . he has decided to vary the direction which he originally gave. He is concerned to give all possible help to the court in this matter consistent with the maintenance of U.K. jurisdiction.

31 See the French Law relating to the Communication of Economic, Commercial, Industrial, Financial or Technical Documents or Information to Foreign Natural or Legal Persons of July 16,1980, L. No. 80–538, [1980] J.O. 1799, reproduced and discussed in 75 AJIL 382 (1981).

32 See, e.g., Government of India v. Taylor ([1955] A.C. 491), in which the House of Lords declined to enforce an Indian tax assessment. See also A. Dicey, & Morris, J., The Conflict of Laws, Rules 190, 194 (10th ed. 1980)Google Scholar.

33 The provisions regarding documents are essentially the same in the 1964 and the 1980 Acts. The provisions regarding “measures” were limited in the 1964 Act to shipping and are applicable under the 1980 Act to all international trade.

34 With respect to document production, the drafters could not quite escape the mold. Section 2(2) of the Act makes a requirement to disclose inadmissible “if it infringes the jurisdiction of the United Kingdom or is otherwise prejudicial to the sovereignty of the United Kingdom.”

35 See Lowe at 274.

36 Section 5(2)(b) and (4).

37 Lowe at 277.

38 Section 6(2). To be precise, the provision does not apply if the British company has its principal place of business in state B or if it carries on business in B and the judgment grows out of activities exclusively carried on in that country. See §6(3) and (4). An effort to make recovery of excess damages available from the British subsidiary of a successful American plaintiff on the devotion of the British bar to the sanctity of the corporate veil. See 405 Parl. Deb., H.L. (5th ser.) 938–43 (1980).

39 Lowe at 280.

40 For Mansfield’s view of foreign judgments—not quite full faith and credit but certainly respect—see Walker v. Witter, 1 Doug. 1, 99 Eng. Rep. 1 (1778).

41 There is not space here to go into the uranium litigation, which may in any event be too complicated for any single individual to understand. No doubt a number of initiatives connected with the uranium suits were poorly thought through in the United States, and were seen as provocative and overreaching in half a dozen other countries, including Great Britain. See, e.g., Inre Westinghouse Uranium Contract, [1978] A.C. 547. But even if the House of Lords was correct in shielding a British company not doing business in the United States from U.S. discovery requests, that is a far cry from a general blocking statute designed to resist final judgments of U.S. courts and discovery requests made in U.S. courts to parties doing business in the United States.

42 For the small list of defenses to enforcement of foreign judgments in the United States, see the Uniform Foreign Country Money Judgments Recognition Act adopted in New York, Illinois, California, and 9 other states of the United States, e.g., N.Y. Civ. Prac. Law & R. §§5301–09; Cal. C.C.P. §1713–1713.8.

43 See Exodus 21:24.

44 Restatement of Foreign Relations Law (Revised), supra note 2, Tent. Draft No. 2, §402.