Chapter 1 Cases

Chapter 1 Introduction to International and Comparative Law Case 1-1. IGNACIO SEQUIHUA V. TEXACO INC. ET AL.
United States District Court for the Southern District of Texas, 1994. FACTS: Plaintiffs, Ecuador residents, filed suit in Texas over alleged environmental damage in Ecuador. Plaintiffs pray for money damages, an injunction to clean up, and a court-administered trust fund. Defendants bring motions to dismiss. ISSUE: Should the court decline to exercise jurisdiction based on the doctrine of comity of nations? HOLDING: Yes. LAW: Section 403(3) of the Restatement (Third) of the Foreign Relations Law of the United States sets out numerous factors in deciding whether comity of nations deference should be applied. EXPLANATION: The alleged activities and harm occurred in Ecuador; plaintiffs all reside in Ecuador; defendants are not Texas residents; the Republic of Ecuador has objected to the courts jurisdiction and would probably not enforce any judgment it issued; and jurisdiction would interfere with Ecuadors sovereign right to control its own environment. ORDER: The case is dismissed under the doctrine of comity of nations.

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Chapter 1 Cases

Case 1-2. SEI FUJII v. STATE

United States, Supreme Court of California, 1952. FACTS: A California law made land purchased by a Japanese who was ineligible for citizenship escheat to the state. ISSUES: (1) Does Californias alien land law violate the UN Charter? (2) If it does, is the UN Charter automatically applicable? (3) Does the California law violate the US Constitution? HOLDING: The law violates the UN Charter and the US Constitution. The UN Charter is not self-executing, but the US Constitution is. LAWS: (1) At the time, there was no US-Japan treaty giving Japanese the right to own land in the US. (2) The UN Charter requires nations to promote human rights (including non-discrimination based on national origin). (3) Treaties (such as the UN Charter) are part of American law and must be observed. (4) Treaties do not supersede inconsistent local laws unless they are self-executing. (5) To determine if a treaty is self-executing, one looks at the intent of the parties. That is, for a treaty provision to be operative without the aid of implementing legislation, it must appear that its authors meant to prescribe a rule that, standing alone, would be enforceable in the courts. (6) The US Constitutions Fourteenth Amendment prohibits racial discrimination. EXPLANATION: The UN Charter provisions on human rights set out goals and aspirations, not self-executing provisions. They were not meant to become rules of law. This is in contrast to the rules in the Charter dealing with rights and privileges of the officers and employees of the UN, which signatories are required to observe. American states are bound to observe the US Constitution. The California law, which is based on racial discrimination, violates the US Constitution. ORDER: The land does not escheat to California.

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Chapter 1 Cases

Case 1-3. MATIMAK TRADING CO. v. KHALILY and D.A.Y. KIDS SPORTSWEAR INC.
United States, Second Circuit Court of Appeals, 1997. FACTS: Plaintiff, Matimak, a Hong Kong company, seeks to sue Khalily and D.A.Y., two New York corporations, in a US federal court. Matimak seeks to invoke the federal courts diversity jurisdiction in US Code, title 28, 1332(a)(2) to hear civil disputes between citizens of a State and citizens of a foreign state. The district court dismissed plaintiffs suit on the grounds that it was not the citizen of a foreign State, because Hong Kong was not at the time recognized as being a foreign state by the United States government. ISSUES: (1) Is Hong Kong a state? (2) Is Matimak a citizen of the United Kingdom? (3) Does US Code, title 28, 1332(a)(2) allow stateless persons to sue in a US federal court? HOLDINGS: (1) No. (2) No. (3) No. LAW: (1) As a general rule, a foreign state is one that is formally recognized by the US. A foreign territory may also be recognized as a de facto state, but this requires some statement from the executive branch indicating that the executive wishes for the courts to treat the territory as a state. (2) The law under which a corporate entity is created establishes that entitys nationality. (3) Precedent and the plain language of 1332(a)(2) require that an alien bringing suit in a US federal court must be a citizen or national of a foreign state. EXPLANATION: (1) Hong Kong is not recognized as a foreign state and the US State Department has told the court that the US executive does not regard it as a state. (2) Matimak was created as a company according to Hong Kong law. Even though this law is based on a UK law, that is not enough of a connection with the UK to say that Matimak is a UK company. (3) Precedent and the plain language of the 1332(a)(2) exclude stateless persons from bringing suits in US federal courts. ORDER: District courts dismissal of the suit is affirmed.

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Chapter 1 Cases

Case 1-4. THE TRAIL SMELTER ARBITRATION

(United States v. Canada) Canadian-United States International Joint Commission, Arbitral Tribunal, 1938 and 1941. FACTS: A Canadian lead and zinc smelter at Trail, British Columbia, was polluting the waters of the Columbia River that then ran into the state of Washington. After negotiations between the US and Canada, the latter agreed to refer the matter to an International Joint Commission. The Commissions Arbitral Tribunal awarded the US $350,000 in damages, but did not order the smelter to cease operating. In 1941, the US sought to have the operation of the smelter enjoined. ISSUE: Can Canada be enjoined from causing harm to a US river? HOLDING: Canada may be enjoined from polluting US rivers. LAW: International law establishes that A state owes at all times a duty to protect other states against injurious acts by individuals from within its jurisdiction. In a case decided by the Federal Court of Switzerland between two Swiss cantons, it enjoined the use of a shooting establishment that had endangered the territory of the other. It said: This right [sovereignty] excludes ... not only the usurpation and exercise of sovereign rights [of another state] ... but also an actual encroachment which might prejudice the natural use of the territory and the free movement of its inhabitants. Cases decided by the US Supreme Court (which may by analogy be applied in the international arena) have held that no state has the right to use or permit the use of its territory in such a manner as to cause injury by fumes in or to the territory of another or the properties or persons therein, when the consequences are serious and the injury is established by clear and convincing evidence. EXPLANATION: Canada is responsible in international law for the conduct of the Trail Smelter. ORDER: Canada must undertake to stop the pollution caused by the smelter at Trail, British Columbia.

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Chapter 1 Cases

Case 1-5. COMMISSION OF THE EUROPEAN COMMUNITIES V. FEDERAL REPUBLIC OF GERMANY

Court of Justice of the European Communities, Case 274/87. FACTS: Commission of the European Communities brought suit for a declaration that Germanys Meat Regulation, prohibiting the importation and marketing of meat products which contain ingredients other than meat, fails to fulfil Germanys obligation under Article 30 of the EEC Treaty. ISSUE: Do any of the justifications advanced by Germany allow the Meat Regulation to be upheld as a valid restraint on trade? HOLDING: No. LAW: Import restrictions to protect human life and health are allowed if that objective cannot be achieved by measures less restrictive of intraCommunity trade. Council Directive 79/112 allows Member States to have detailed rules for the labelling of foodstuffs offered for sale to the ultimate consumer without pre-packaging for purposes of consumer protection and avoiding confusion. [N]ational measures may not conflict with the fundamental principles of the Communityin this case of the free movement of goodsunless they are justified by reasons recognized by Community law. EXPLANATION: Germanys explanations for the Meat Regulation are rejected as not complying with its treaty obligations under Article 30 of the EEC Treaty, which provides, Quantitative restrictions on imports and all measures having equivalent effect shall, without prejudice to the following provisions, be prohibited between member States. ORDER: The declaration is made that Germany failed to fulfil its EEC Treaty obligations under Article 30.

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Chapter 1 Cases

Case 1-6. DE SANCHEZ v. BANCO CENTRAL DE NICARAGUA

United States, Court of Appeals, Fifth Circuit, 1985. FACTS: Mrs. Sanchez, the wife of the then foreign minister of the Somoza government in Nicaragua, was the payee on a check issued by the Central Bank of Nicaragua. Following the fall of the Somoza government, Mrs. Sanchez was unable to cash the check because the new government put a stop-payment order on it. Mrs. Sanchez than brought in suit to force the Banco Central to honor the check (which was drawn on a US bank). When the trial court dismissed Mrs. Somozas suit, she appealed. ISSUE: May an individual who is a national of a foreign state sue an agency of that foreign state in another states courts for an alleged contractual breach? HOLDING: No. LAW: As long as a state injures only its own nationals, then no other states interest is involved, and the matter is regarded in international law as a purely domestic affair. EXPLANATION: Government expropriation is not so universally abhorred that its prohibition commands the general assent of civilized nations. This doctrine rests on the fundamental principle that one state will not inquire into the internal affairs of another, otherwise there might be no internal matter that would not be immune from foreign scrutiny. ORDER: Decision dismissing the case is affirmed.

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Chapter 1 Cases

Case 1-7. LIBYAN AMERICAN OIL COMPANY (LIAMCO) v. GOVERNMENT OF THE LIBYAN ARAB REPUBLIC
Dr. Sobhi Mahmassani, Sole Arbitrator, 1977. FACTS: The Libyan American Oil Companys (LIAMCOs) oil concessions in Libya were nationalized in 1973. When no compensation was received (despite promises), LIAMCO took the matter to arbitration, seeking compensation for its lost properties. Libya, meanwhile, informed all its concessionaires that it rejected arbitration as an affront to its sovereignty and it refused to participate in this proceeding. ISSUE: Is a sovereign bound by its contractual commitments? HOLDING: A sovereign is bound by its contractual commitments. LAW: International law and Libyan law are similar in the sources of authority they look to. Both recognize arbitration. Both recognize the sanctity of contracts. EXPLANATION: The concession agreement provided that the law of Libya (not in conflict with international law) was to govern. Both international law and Libyan law recognize statutes, custom, and equity as sources of law. Customary international law recognizes that states can be bound to an arbitration agreement (see the Convention creating ICSID for example). Islamic law also recognizes arbitration (the Prophet Muhammad having served as an arbitrator and having used arbitration to resolve a dispute during his lifetime). Similarly, both systems of law recognize the sanctity of contracts. International law obeys the Latin maxim pacta sunt servanda (pacts are to be observed) and a tradition of the Prophet provides that Muslims are bound by their stipulations. Islamic law also provides that cancellation of a contract is not valid except by mutual consent. ORDER: Libya had breached its concession contract. LIAMCO was entitled to US $80,085,677 in damages.

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