Page images
PDF
EPUB

There is no greater force to appellants' next suggestion, that New York public policy has been violated because the Canadian court did not give sufficient weight to New York Judiciary Law § 489 (the champerty statute) and to a forum selection clause in the "agency agreement” between the bankrupts and Ataka America, Inc. (a sister corporation of Atlantic Trading (Delaware), Inc., which was the petitioning creditor in the Newfoundland proceeding as a result of being assignee of certain bills of exchange issued pursuant to the agency agreement). ... Both of these arguments were duly presented to the bankruptcy court, with conflicting expert testimony as to the relevant New York law.... ÝT]here is no indication that the Newfoundland court gave appellants less than a full opportunity to present these questions, or less than full consideration to those aspects of New York law and public policy which were presented. We think that it would contravene the public policy of New York and the doctrine of comity not to recognize the Canadian judgment in these circumstances, and we therefore recognize it for present purposes.

Letters Rogatory

Request by Japan in Lockheed Matter

Following signature of the U.S.-Japan agreement on mutual judicial assistance in the Lockheed matter, supra, the Tokyo District Court, on May 28, 1976, requested immediate assistance in the taking of in camera depositions of three former officials of the Lockheed Corporation. The depositions were to be used in criminal investigations and possible future criminal trials in Japan. The Japanese letters rogatory were presented ex parte to the District Court for the Central District of California, at Los Angeles. The Court appointed three commissioners (one to preside over the depositions and two to conduct the questioning)and issued subpoenas duces tecum directed to the witnesses.

On June 4, 1976, the witnesses moved to quash the subpoenas on numerous grounds. They challenged the authenticity of the letters rogatory, their ex parte presentation to the Court as violating due process, and the authority of Federal courts to render assistance to foreign criminal tribunals. They also raised doubts about the witnesses' immunity from prosecution in Japan.

The District Court denied the motion to quash the subpoenas and directed the examination of witnesses to proceed. On appeal from the order, the U.S. Court of Appeals for the Ninth Circuit held on June 23, 1976, that the District Court properly exercised its discretion in issuing subpoenas. In re Letters Rogatory from Tokyo District, Tokyo, Japan, 539 F.2d 1216 (1976). The following day Mr. Justice Rehnquist of the Supreme Court denied an application for stay of the Circuit Court's order.

The Ninth Circuit's opinion, in upholding the District Court's discretion in determining whether letters rogatory from foreign or international tribunals should be honored under 28 U.S.C. 1782, pointed out that the purpose of the 1964 amendment to that statute was to broaden prior law and permit extension of international assistance to bodies of a quasi-judicial or administrative nature, including foreign investigating magistrates. The opinion added:

We do not find any of the other objections raised by the witnesses to be persuasive. Letters rogatory are customarily received and appropriate action taken with respect thereto ex parte. The witnesses can and have raised objections and exercised their due process rights by motions to quash the subpoenas .... The issuance of letters rogatory by the Tokyo District Court and the reference to their possible issuance in the mutual assistance agreement rebuts the unsupported objection of the witnesses that letters rogatory are not authorized under Japanese law. It is premature to examine whether the witnesses have been granted immunity from prosecution in Japan and the effect of any such grants. Similarly, it is not now appropriate to consider the possibility that they may claim their Fifth Amendment privileges against testifying, as no witness has yet made any claim of privilege. The use to which the depositions are put in Japan does not appear presently to deserve this court's concern since the witnesses are neither defendants nor subjects of investigation in Japan. Nor can the witnesses object to the District Court's action on the ground that the testimony to be taken may not be admissible in a Japanese trial. Such evidence may still be acceptable for preliminary stages in the Japanese procedure just as American grand juries can consider evidence not admissible in a trial. That the Securities and Exchange Commission is conducting a similar investigation does not bar the Japanese proceedings, and no rights of the witnesses in regards to the SEC activities are limited by this action. The subpoenas do not appear overly broad, and specific objections may be raised at the time of the testimony.

*

On July 6, 1976, the District Court proceeded to examine the witnesses but directed that the testimony be sealed and not transmitted to the Japanese Tribunal pending receipt of assurances from the Japanese authorities that the witnesses would not be subject to criminal prosecution in Japan based on their testimony in the United States. The District Court order specified that the assurances from Japan must be “either an order or a rule of the Supreme Court of Japan which states, without any equivocation, that the witnesses will not be subject to prosecution in the Territory of Japan by reason of any information declared by them in their depositions or any information which may be obtained as the result of their giving testimony under the letters rogatory."

On July 24, 1976, the Supreme Court of Japan issued a declaration to the above effect, and this was presented to the District Court. Thereafter the District Court released the testimony and directed that the transcript of the testimony be transmitted forthwith to the Tokyo District Court.

For the declaration of the Supreme Court of Japan of July 24, 1976, and a letter of declaration of July 21, 1976, from the Attorney General of the Supreme Public Prosecutor's Office, Japan, addressed to the Supreme Court of Japan, see XV International Legal Materials 1014-1016.

a

87 Sovereign Immunity

Foreign Sovereign Immunities Act The Foreign Sovereign Immunities Act of 1976 (P.L. 94-583; 90 Stat. 2891; 28 U.S.C. 1330, 1332, 1602-1611, 1391, 1441) was signed into law on October 21, 1976, to take effect on January 19, 1977. The purpose of the Act is to provide a firm basis for determining when and how parties can maintain a lawsuit against a foreign state or its entities in the courts of the United States and when a foreign state is entitled to sovereign immunity.

The bill H. R. 11315 was introduced in the 94th Congress on the basis of a draft recommended jointly by the Departments of State and Justice and submitted to the Congress on October 31, 1975 (see the 1975 Digest, pp. 347-368), revising an earlier bill introduced in 1973 (S.566, H. R. 3493, 93d Cong., 1st Sess.). The reports of the Senate and House Committees on the Judiciary summarized the need for the legislation, as well as its objectives and background, as follows:

American citizens are increasingly coming into contact with foreign states and entities owned by foreign states. These interactions arise in a variety of circumstances, and they call into question whether our citizens will have access to the courts in order to resolve ordinary legal disputes. Instances of such contact occur when U.S. businessmen sell goods to a foreign state trading company, and disputes may arise concerning the purchase price. Another is when an American property owner agrees to sell land to a real estate investor that turns out to be a foreign government entity and conditions in the contract of sale may become a subject of contention. Still another example occurs when a citizen crossing the street may be struck by an automobile owned by a foreign embassy.

At present, there are no comprehensive provisions in our law available to inform parties when they can have recourse to the courts to assert a legal claim against a foreign state. Unlike other legal systems, U.S. Iaw does not afford plaintiffs and their counsel with a means to commence a suit that is specifically addressed to foreign state defendants. It does not provide firm standards as to when a foreign state may validly assert the defense of sovereign immunity; and, in the event a plaintiff should obtain a final

judgment against a foreign state or one of its trading companies, our law does not provide the plaintiff with any means to obtain satisfaction of that judgment through execution against ordinary commercial assets.

In a modern world where foreign state enterprises are every day participants in commercial activities, H.R. 11315 is urgently needed legislation. The bill...would accomplish four objectives:

First, the bill would codify the so-called "restrictive" principle of sovereign immunity, as presently recognized in international law. Under this principle, the immunity of a foreign state is “restricted” to suits involving a foreign state's public acts (jure imperii) and does not extend to suits based on its commercial or private acts (jure gestionis). This principle was adopted by the Department of State in 1952 and has been followed by the courts and by the executive branch ever since. Moreover, it is regularly applied against the United States in suits against the U.S. Government in foreign courts.

Second, the bill would insure that this restrictive principle of immunity is applied in litigation before U.S.courts. At present, this is not always the case. Today, when a foreign state wishes to assert immunity, it will often request the Department of State to make a formal suggestion of immunity to the court. Although the State Department espouses the restrictive principle of immunity, the foreign state may attempt to bring diplomatic influences to bear upon the State Department's determination. A principal purpose of this bill is to transfer the determination of sovereign immunity from the executive branch to the judicial branch, thereby reducing the foreign policy implications of immunity determinations and assuring litigants that these often crucial decisions are made on purely legal grounds and under procedures that insure due process. The Department of State would be freed from pressures from foreign governments to recognize their immunity from suit and from any adverse consequences resulting from an unwillingness of the Department to support that immunity. . . . U.S. immunity practice would conform to the practice in virtually every other country-where sovereign immunity decisions are made exclusively by the courts and not by a foreign affairs agency.

Third, this bill would for the first time in U.S. law, provide a statutory procedure for making service upon, and obtaining in personam jurisdiction over, a foreign state. This would render unnecessary the practice of seizing and attaching the property of a foreign government for the purpose of obtaining jurisdiction.

Fourth, the bill would remedy, in part, the present predicament of a plaintiff who has obtained a judgment against a foreign state. Under existing law, a foreign state in our courts enjoys absolute immunity from execution, even in ordinary commercial litigation where commercial assets are available for the satisfaction of a judgment. H.R. 11315 seeks to restrict this broad immunity from execution. It would conform the execution immunity rules more closely to the jurisdiction immunity rules. It would provide the judgment creditor some remedy if, after a reasonable period, a

a foreign state or its enterprise failed to satisfy a final judgment.

BACKGROUND Sovereign immunity is a doctrine of international law under which domestic courts, in appropriate cases, relinquish jurisdiction over a foreign state. It differs from diplomatic immunity (which is drawn into issue when an individual diplomat is sued). H.R. 11315 deals solely with sovereign immunity.

Sovereign immunity as a doctrine of international law was first recognized in our courts in the landmark case of The Schooner Exchange v. M'Faddon, 7 Cranch 116 (1812). There, Chief Justice Marshall upheld a plea of immunity, supported by an executive branch suggestion, by noting that a recognition of immunity was supported by the law and practice of nations. In the early part of this century, the Supreme Court began to place less emphasis on whether immunity was supported by the law and practice of nations, and relied instead on the practices and policies of the State Department. This trend reached its culmination in Ex Parte Peru, 318 U.S. 578 (1943) and Mexico v. Hoffman, 324 U.S. 30 (1945).

Partly in response to these decisions and partly in response to developments in international law, the Department of State adopted the restrictive principle of sovereign immunity in its “Tate Letter" of 1952, 26 Department of State Bulletin 984. Thus, under the Tate letter, the Department undertook, in future sovereign immunity determinations, to recognize immunity in cases based on a foreign state's public acts, but not in cases based on commercial or private acts. The Tate letter, however, has posed a number of difficulties. From a legal standpoint, if the Department applies the restrictive principle in a given case, it is in the awkward position of a political institution trying to apply a legal standard to litigation already before the courts. Moreover, it does not have the machinery to take evidence, to hear witnesses, or to afford appellate review.

From a foreign relations standpoint, the initiative is left to the foreign state. The foreign state chooses which sovereign immunity determinations it will leave to the courts, and which it will take to the State Department. The foreign state also decides when it will attempt to exert diplomatic influences, thereby making it more difficult for the State Department to apply the Tate letter criteria.

From the standpoint of the private litigant, considerable uncertainty results. A private party who deals with a foreign government entity cannot be certain that his legal dispute with a foreign state will not be decided on the basis of nonlegal considerations through the foreign government's intercession with the Department of State.

THE UNITED STATES IN FOREIGN COURTS Since World War II, the United States has increasingly become involved in litigation in foreign courts. This litigation has involved such diverse activities as the purchase of goods and services by our embassies, employment of local personnel by our military bases, the construction or lease of buildings for our foreign missions, and traffic accidents involving U.S. Government-owned vehicles.

In the mid-1950's, when the United States first became involved in foreign suits on a large scale, foreign counsel retained by the Department of Justice were instructed to plead sovereign immuni

« PreviousContinue »