U.S.-Japan Agreement on Lockheed Matter

On March 23, 1976, the U.S. Department of Justice and the Ministry of Justice of Japan signed an agreement on procedures for mutual assistance in the administration of justice in connection with the Lockheed Aircraft Corporation matter (TIAS 8233; 27 UST 946; entered into force March 23, 1976). The Lockheed matter involved alleged illicit acts pertaining to sales activities abroad of Lockheed and its subsidiaries and affiliates. The agreement provides for exchange of information between the law enforcement agencies of the two countries under conditions intended to protect the integrity of ongoing U.S. investigations and the rights of the individuals involved. The substantive provisions of the agreement follow:

Procedures for Mutual Assistance in Administration of Justice in Connection With the Lockheed Aircraft Corporation Matter The United States Department of Justice and the Ministry of Justice of Japan, hereinafter referred to as "the parties," confirm the following procedures in regard to mutual assistance to be rendered to agencies with law enforcement responsibilities in their respective countries with respect to alleged illicit acts pertaining to the sales activities in Japan of the Lockheed Aircraft Corporation and its subsidiaries or affiliates.

1. All requests for assistance shall be communicated directly between the parties.

2. Upon request, the parties shall use their best efforts to make available to each other relevant and material information, such as statements, depositions, documents, business records, correspondence or other materials, available to them concerning alleged illicit acts pertaining to the sales activities in Japan of the Lockheed Aircraft Corporation and its subsidiaries or affiliates.

3. Such information shall be used exclusively for purposes of investigation conducted by agencies with law enforcement responsibilities and in ensuing legal proceedings, criminal, civil and administrative.

4. Except as provided in paragraph 5, all such information made available by the parties pursuant to these procedures, and all correspondence between the parties relating to such information and to the implementation of these procedures, shall be kept confidential and shall not be disclosed to third parties or to government agencies having no law enforcement responsibilities. Disclosure to other agencies having law enforcement responsibilities shall be conditioned on the recipient agency's acceptance of the terms set forth herein.

In the event of breach of confidentiality, the other party may discontinue cooperation under these procedures.

5. Information made available pursuant to these procedures may be used freely in ensuing legal proceedings, criminal, civil and administrative, in the requesting state in which an agency of the requesting state having law enforcement responsibilities is a party, and the parties shall use their best efforts to furnish the information for purposes of such legal proceedings in such form as

to render it admissible pursuant to the rules of evidence in existence in the requesting state, including, but not limited to, certifications, authentications, and such other assistance as may be necessary to provide the foundation for the admissibility of evidence.

6. The parties shall give advance notice prior to the institution of legal proceedings, criminal, civil and administrative, in which information made available pursuant to these procedures is intended to be used.

7. The parties shall use their best efforts to assist in the expeditious execution of letters rogatory issued by the judicial authorities of their respective countries in connection with legal proceedings, criminal, civil and administrative, which may ensue in their respective countries.

8. The assistance to be rendered to a requesting state shall not be required to extend to such acts by the authorities of the requested state as might result in the immunization of any person from prosecution in the requested state.

9. All actions to be taken by a requested state will be performed subject to all limitations imposed by its domestic law. Execution of a request for assistance may be postponed or denied if execution would interfere with ongoing investigations or legal proceedings, criminal, civil and administrative, in the requested state.

10. Nothing contained herein shall limit the rights of the parties to utilize for any purpose information which is obtained by the parties independent of these procedures.

11. The mutual assistance to be rendered by the parties pursuant to these procedures is designed solely for the benefit of their respective agencies having law enforcement responsibilities and is not intended or designed to benefit third parties, or to affect the admissibility of evidence under the laws of either the United States or Japan.

In a memorandum dated March 19, 1976, Elizabeth G. Verville, Assistant Legal Adviser for East Asian and Pacific Affairs, stated, in part:

Authority for participation in arrangements for cooperation and exchange of law enforcement information between the Department of Justice and other governments derives from both the President's foreign relations power under article II, section 2 of the Constitution, and the statutory authority of the Attorney General, 28 U.S.C. 516 and 517. Section 516 provides that "the conduct of litigation in which the United States, an agency, or officer thereof is a party, or is interested, is reserved to officers of the Department of Justice under the direction of the Attorney General." Section 517 authorizes the Attorney General to send any officer of the Department of Justice "to attend to the interests of the United States in a suit pending in a court of the United States . . . or to attend to any other interests of the United States." Entering into cooperative arrangements with appropriate agencies of foreign governments for the exchange of law enforcement information and

other assistance for the mutual benefit of both parties is encompassed in the broad statutory authority of the Attorney General to conduct litigation to enforce Federal criminal law, and to attend to the legal interests of the United States.

Dept. of State File No. P76 0055-0002.

Other Agreements on Lockheed Matter

Essentially similar agreements were concluded with other requesting countries on the Lockheed matter, as follows:

The agreement between the United States and Turkey (TIAS 8371) set forth procedures for mutual assistance in the administration of justice in connection with both the Lockheed Aircraft Corporation and the McDonnell Douglas Corporation matters.

U.S.-Mexico

The United States and Mexico concluded an agreement on June 23, 1976 (TIAS 8533; 28 UST; entered into force June 23, 1976), establishing procedures for exchange of information between the U.S. Department of Justice and law enforcement agencies of Mexico concerning alleged illegal acts pertaining to the sales activities in Mexico of the General Tire & Rubber Company and the Firestone Tire & Rubber Company and their subsidiaries or affiliates. The agreement, which was signed by representatives of the Department of Justice and the Procurador General of the Republic of Mexico, is similar to those reached with other countries concerning exchanges of information for law enforcement purposes in the Lockheed matter, supra.

Essentially the agreement provides that the law enforcement authorities of each country will use their best efforts to make available to each other material information they have compiled

relating to sales activities in Mexico of the two companies. The agreement further provides that information made available will be used solely for law enforcement purposes and will not be disclosed to third parties or to government agencies having no law enforcement responsibilities. However, information may be used freely in legal proceedings.

Recognition of Foreign Judgments and Decrees

Foreign creditors appealed from a judgment of the U.S. District Court for the District of Colorado upholding the legality of the election of a trustee in bankruptcy in Matter of Colorado Corp., 531 F.2d 463 (1976). The U.S. Court of Appeals for the Tenth Circuit held, inter alia, on February 20, 1976, that the bankruptcy court abused its discretion in denying comity to decrees of Luxembourg and the Netherlands Antilles. The appellee had argued that comity should not be given to those decrees because Canadian and United Kingdom courts had not given comity to orders of the bankruptcy court in Colorado. The Appeals Court opinion quoted from Hilton v. Guyot, 159 U.S. 113 (1895):

"Comity," in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other persons who are under the protection of its laws.

The opinion continued:

Reciprocity has been a consideration in the granting or withholding of comity, Hilton, supra, although it has been abandoned by some courts. .

Here we are asked to take reciprocity one step further and deny comity to the Netherlands Antilles decree because of actions by citizens of a country which was not giving comity to American court orders. Denying comity to the Netherlands Antilles order because of lack of reciprocity in Canada is such a misdirected use of the reciprocity consideration as to constitute an abuse of discretion. No equitable considerations support that result. Comity is withheld when the granting of recognition of foreign laws would prejudice the rights of the forum's own citizens. 16 Am. Jur. 2d Conflict of Laws § 6 (1964). We cannot see how allowing foreign creditors to vote for a trustee subject to duties imposed by American law, see, e.g., 11 U.S.C. 75, can prejudice American citizens.

In Clarkson Co., Ltd. v. Shaheen, 544 F.2d 624 (1976), suit was brought by a Canadian trustee in bankruptcy to obtain records

located in the New York offices of the trustee's two Canadian bankrupt corporations and in the possession of their officials. The U.S. District Court for the Southern District of New York granted a preliminary injunction requiring that the records be turned over and restraining the disbursement or secretion of any corporate property in, or coming into, the hands of such officials. The officials appealed. The U.S. Court of Appeals for the Second Circuit affirmed on November 1, 1976. It held that the District Court did not abuse its discretion in declining to stay proceedings until determination of pending state court proceedings. Turning to the central issue in the case, whether the Canadian bankruptcy proceeding might be collaterally attacked in that Court, it stated:

The doctrine of comity, Hilton v. Guyot, 159 U.S. 113, 163-64 . . (1895), applies in the State of New York. . . . Under it, New York courts recognize the statutory title of an alien trustee in bankruptcy, as long as the foreign court had jurisdiction over the bankrupt and the foreign proceeding has not resulted in injustice to New York citizens, prejudice to creditors' New York statutory remedies, or violation of the laws or public policy of the State.... These exceptions are construed especially narrowly when the alien jurisdiction is, like Canada, a sister common law jurisdiction with procedures akin to our own. Canadian trustees in bankruptcy with appropriate authority have been held entitled to recognition, . . . and Canadian judgments have been held entitled to credit. New York courts have given foreign trustees injunctive or related relief to obtain possession of property, . . . and Canadian courts have also given this form of relief to a trustee appointed in the United States ...

Appellants do not argue that the Newfoundland court lacked jurisdiction over the bankrupts or that there is any conflict between the alien trustee and domestic creditors. They assert, however, that comity should not be given the Newfoundland court's designation of appellee as trustee both because it was "tainted with fraud" and therefore was not cognizable as a foreign judgment in New York, and because the public policies of New York in favor of forum selection clauses and against assignments for the purpose of litigation have been violated. We find no merit in either of these contentions.

A foreign judgment may not be collaterally attacked "upon the mere assertion of the party that the judgment was erroneous in law or in fact," Hilton v. Guyot, supra, 159 U.S. at 203, . . . much less upon a mere assertion of fraud. Clear and convincing evidence of fraud is required in order successfully to attack a foreign judgment, just as such proof is necessary before a court will set aside its own judgment. . . . While appellants are free to introduce additional proof at a trial on the merits of this action, they have not shown enough at this stage to cast doubt on the Canadian judgment.