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FUNDAMENTALS OF PUBLIC AND PRIVATE INTERNATIONAL LAW By: Edzyl Josef G. Magante I. A.

Public International Law Sources of Public International Law

Article 38 of the Statute of the International Court of Justice (ICJ) provides: (WFDA IL SDAA STI) The Court, whose function is to decide in accordance with international law such disputes as are submitted to it, shall apply: a. international conventions, whether general or particular, establishing rules expressly recognized by the contesting states; b. international custom, as evidenced by a general practice accepted as law; c. the general principles of law recognized by civilized nations;

d. subject to the provisions of Article 59, judicial decisions and the teachings of the most highly qualified publicists of the various nations, as subsidiary means for determination of the rules of law. This provision shall not prejudice the power of the Court to decide a case ex aequo et bono, if the parties agree thereon.1 The significance of the enumeration lies in its exclusiveness.2 Article 38(1) subparagraphs (a)-(c) of the ICJ Statute deal with the formal sources of international law (that from which a rule of law derives its force and validity) and are otherwise known as law-creating processes, while Article 38(1) subparagraph (d) refers to subsidiary sources of international law or other means resorted to in order to determine whether a norm has crystallized into a custom or a general principle of law.3

1.
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Treaty
Statute of the International Court of Justice, art. 38, 1945, 3 Bevans 1179; 59 Stat. 1031; T.S. No. 993 (Emphasis supplied). SCHWARZENBERGER, INTERNATIONAL LAW 26-27 (1957), as reproduced in D.J. HARRIS, CASES AND MATERIAL IN PUBLIC INTERNATIONAL LAW 21-22 (1998). See Statute of the International Court of Justice, supra note 1, art. 38 (1) (d).

A treaty is an international agreement conducted between states in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever particular designation they may be given.4 There are no substantive requirements of form.5 In Qatar v. Bahrain,6 the exchange of notes between two heads of state was considered an international agreement. Even unilateral declarations concerning a legal or factual situation may create legal obligations.7 When it is the intention of the state to become bound according to its terms, that intention confers on the declaration the character of a legal undertaking, the state being thenceforth legally required to follow a course of conduct consistent with the declaration.8 Negotiation: The person representing a state must possess full powers.9 The following persons, however, do not need to present evidence of full powers: (1) heads of state, heads of government and ministers of foreign affairs; (2) heads of diplomatic missions (only for adoption); and (3) representatives to an international conference or to an international organization or one of its organs (only for adoption). 10 Adoption: All states participating must consent, except in an international conference where a vote of 2/3 is required unless the same majority shall decide to apply a different rule.11 The relevant provisions of the constitution are: Art. VII, Sec. 20 (foreign loans with Monetary Board concurrence); Art. VII, Sec. 21 (treaty- 2/3 Senate vote); Art. VIII, Sec. 4 (2) (constitutionality of the treaty is heard by the Supreme Court en banc); Art. XVIII, Sec. 25 (treaty on military bases, troops and military facilities).12
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Vienna Convention on the Law of Treaties, art. 2(1)(a), May 23, 1969, 1155 U.N.T.S. 331 [hereinafter VCLT]; [1962] 2 Y.B. Intl L. Commn 161. 5 IAN BROWNLIE, PRINCIPLES OF PUBLIC INTERNATIONAL LAW 581 (2003), citing Maritime Delimitation and Territorial Questions (Qatar v. Bahrain), 1994 I.C.J. 112, 120-22; VCLT, supra note 4, art. 2(1)(a); JOAQUIN BERNAS, AN INTRODUCTION TO PUBLIC INTERNATIONAL LAW 24 (2002). 6 1994 I.C.J. 112. 7 Nuclear Test (Australia v. France)(New Zealand v. France), 1974 I.C.J. 253. In this case, France was a signatory to the nuclear Test Ban Treaty but continued to conduct tests in the South Pacific. Australia and New Zealand filed protests when France conducted several tests in 1972 and 1973. The case was taken off of the Courts list without a decision when France announced by a series of unilateral announcements that it would conduct no further test in 1973. 8 Id. 9 VCLT, supra note 4, art. 7 (1). 10 Id at art. 7 (2). 11 Id. at art. 9. 12 Art. VII, Sec. 20 states: The President may contract or guarantee foreign loans on behalf of the Republic of the Philippines with the prior concurrence of the Monetary Board, and subject to such limitations as may be provided by law. The Monetary Board shall, within thirty days from the end of every quarter of the calendar year, submit to the Congress a complete report of its decisions on applications for loans to be contracted or guaranteed by the Government or government-owned and controlled corporations which would have the effect of increasing the foreign debt, and containing other matters as may be provided by law. Article VI, Sec. 21 states: No treaty or international agreement shall be valid and effective unless concurred in by at least two-thirds of the

Consent: Consent may be expressed by signature, exchange of instruments, ratification, acceptance, approval or accession, or by any other means if so agreed.13 It is this consent which is formally expressed through writing that shows the willingness of a state to be bound by a treaty. Article 34 of the Vienna Convention on the Law of Treaties (VCLT) adds that a treaty does not create rights or obligations for a third state without its consent. Even if a state is not party to a treaty, however, it may be bound by a treaty when it contains a stipulation pour autrui, but the consent of such third state may be required.14 Also, the treaty may serve as evidence of customary international law.15 The convention may serve as an authoritative guide for the practice of States faced with the relevant new legal problems, and its provisions thus become the nucleus around which a new set of generally recognized legal rules may crystallize.16 An example of this is the recognition and codification of human rights in several human rights treaties such as the International Convention on Civil and Political Rights and the International Convention on Economic, Social and Cultural Rights. Article 38 of the VCLT recognizes this back-door means by which a treaty may become binding on non-parties. Reservation: A reservation is a unilateral statement, however phrased or named, made by a state when signing, ratifying, accepting, approving, or acceding to a treaty, whereby it purports to exclude or modify the legal effect of certain provisions of the treaty in their application to that state.17 Generally, a state may formulate a reservation unless: (a) the reservation is prohibited by the treaty; (b) the treaty provides only specified reservations; and (c) in cases not falling under (a) and (b), the reservation is incompatible with the object and purpose of the treaty.18 A reservation must be formulated in writing and communicated to the contracting states and other states entitled to become parties to
Members of the Senate. Art. VIII, Sec. 4 (2) states: All cases involving the constitutionality of a treaty, international or executive agreement, or law, which shall be heard by the Supreme Court en banc, and all other cases which under the Rules of Court are required to heard en banc, including those involving the constitutionality, application, or operation of presidential decrees, proclamations, orders, instructions, ordinances, and other regulations, shall be decided with the concurrence of a majority of the members who actually took part in the deliberations on the issues in the case and voted thereon. Article XVIII, Sec. 25 states: After the expiration in 1991 of the Agreement between the Republic of the Philippines and the United States of America concerning the Military Bases, foreign military bases, troops, or facilities shall not be allowed in the Philippines except under a treaty duly concurred in by the Senate and, when the Congress so requires, ratified by a majority of the votes cast by the people in a national referendum held for that purpose, and recognized as a treaty by the other contracting State.
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16 17 18

VCLT, supra note 4, art. 11-16. Id. art. 36. The ICJ has also recognized this possibility in the North Sea Continental Shelf (Germany v. Denmark), 1969 I.C.J. 1. North Sea Continental Shelf, 1969 I.C.J. at 244. VCLT, supra note 4, art. 2. See also VCLT, arts. 19-23. Id. art. 19.

the treaty.19 It need not, however, be consented to by all the parties to be effective.20 A state can be regarded as a party if the reservation is not incompatible with the object and purpose of the treaty and the ICJ has held that compatibility could be decided by states individually since, if a party objects, they can consider the state as not a party to the treaty.21 Thus, it is possible for different legal relationships to arise among the parties to one treaty. Application: The fundamental principle of pacta sunt servanda requires that every treaty in force is binding upon the parties to it and must be performed by them in good faith.22 Art. 46 of the Vienna Convention on the Law of Treaties, A state party may not invoke the provisions of its internal law as justification for failure to perform an obligation under a treaty.23 Interpretation: Article 31 of the VCLT contains the rules for the interpretation of treaties. The general rule is to interpret the treaty in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.24 The exception to this rule is where the parties intended to give a special meaning to the terms.25 Invalidity of Treaties: (ERCDJc) Several grounds can invalidate treaties, to wit: error,26 fraud,27 corruption,28 duress,29 and violation of ius cogens (a peremptory norm of general international law from which no derogation is permitted and which can be modified only by a subsequent norm having the same character).30 Termination or Withdrawal: (MB SIP RSS) A treaty may be terminated or a party may withdraw in conformity with the provisions of the treaty or at any time by consent of all the parties after consultation with the other contracting states.31 Material breach,32 supervening impossibility of performance,33 and rebus sic stantibus34 will also terminate the treaty. As a rule, an unforeseen fundamental change of circumstances or the doctrine of rebus sic stantibus may not be invoked as a ground for terminating or
19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

Id. art. 23. Reservations to the Genocide Convention, 1951 I.C.J. 15. Id. VCLT, supra note 4, art. 26. Id. art. 46. Id. art. 31 (1). Id. art. 31 (2). See also art. 32 on the supplementary means of interpretation. Id. art. 48. Id. art. 49. Id. art. 50. Id. art. 51-52. Id. art. 53. See also art. 64. Id. art. 54. Id. art. 60. Id. art. 61. Id. art. 62.

withdrawing from the treaty, unless it was the essential basis of the consent and the obligation is transformed radically.35 Even if it was so, however, no termination will be allowed if the treaty establishes a boundary or the fundamental change was the result of a breach by the invoking party.36 Cases on Termination or Withdrawal: Fisheries Jurisdiction (U.K. v. Iceland) (Jurisdiction), 1973 I.C.J. 3 Facts: The United Kingdom applied to the ICJ claiming that Icelands proposed extension of their exclusive fisheries jurisdiction was a breach their agreement. Iceland contended that the agreement was no longer binding due to a fundamental change of circumstances referring to the increased exploitation of fishery resources in the seas. Held: One of the basic requirements embodied in Article 62 of the VCLT, which reflects the doctrine of rebus sic stantibus, is that the change of circumstances must have been a fundamental one. In this respect, Iceland has referred to increased exploitation of fishery resources in the seas surrounding Iceland and the danger of further exploitation because of an increase in the catching capacity of fishing fleets. The Icelandic statements recall the exceptional dependence of that country on fishing for its existence and economic development. The invocation by Iceland of its vital interests must be interpreted, in the context of the assertion of changed circumstances, as an indication by Iceland of the reason why it regards as fundamental the changes which in its view have taken place in previously existing fishing techniques. This interpretation would correspond to the traditional view that the changes of circumstances which must be regarded as fundamental or vital are those which imperil the existence or vital development of one of the parties. If, as contended by Iceland, there have been any fundamental changes in fishing techniques in the waters around Iceland, those changes might be relevant for the decision on the merits of the dispute, and the Court might need to examine the contention at that stage, together with any other arguments that Iceland might advance in support of the validity of the extension of its fisheries jurisdiction beyond what was agreed upon in the 1961 Exchange of Notes. But the alleged changes could not affect in the least the obligation to submit to the Court's jurisdiction, which is the only issue at the present stage of the proceedings. It follows that the apprehended dangers to the vital interests of Iceland, resulting from changes in fishing techniques, cannot constitute a fundamental change with respect to the lapse or subsistence of the compromissory clause establishing the Court's jurisdiction.
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Gabkovo-Nagymaros Project (Hung. v. Slovk.), 1997 I.C.J. 7. Id.

Moreover, in order that a change of circumstances may give rise to a ground for invoking the termination of a treaty, it is necessary that it should have resulted in a radical transformation of the extent of the obligations still to be performed. The change must have increased the burden of the obligations to be executed to the extent of rendering the performance something essentially different from that originally undertaken. This condition is wholly unsatisfied. The change of circumstances alleged by Iceland cannot be said to have transformed radically the extent of the jurisdictional obligation which is imposed in the 1961 Exchange of Notes. The compromissory clause enabled either of the parties to submit to the Court any dispute between them relating to an extension of Icelandic fisheries jurisdiction in the waters above its continental shelf beyond the 12-mile limit. The present dispute is exactly of the character anticipated in the compromissory clause of the Exchange of Notes. Not only has the jurisdictional obligation not been radically transformed in its extent; it has remained precisely what it was in 1961. Namibia (Advisory Opinion), 1971 I.C.J. 16 Facts: The General Assembly adopted Resolution 2145 (XXI) whereby it decided that South Africas Mandate over Namibia was terminated and that South Africa had no other right to administer the territory. Subsequently, the Security Council adopted various resolutions including resolution 276 (1970) declaring the continued presence of South Africa in Namibia illegal. Held: In examining this action of the General Assembly, it is appropriate to have regard to the general principles of international law regulating termination of a treaty relationship on account of breach. For even if the mandate is viewed as having the character of an institution, as is maintained, it depends on those international agreements which created the system and regulated its application. As the Court indicated in 1962, this Mandate, like practically all other similar Mandates was a special type of instrument composite in nature and instituting a novel international regime. It incorporates a definite agreement. The Court stated conclusively in that Judgment that the Mandate '... in fact and in law, is an international agreement having the character of a treaty or convention' The rules laid down by the VCLT concerning the termination of a treaty relationship on account of breach (adopted without a dissenting vote) may, in many respects, be considered as a codification of existing customary law on the subject. In light of the rules, only a material breach of a treaty justifies termination, such breach being defined as: (a) a repudiation of a treaty not sanctioned by the present Convention; or (b) the violation of a provision essential to the accomplishment of the object or purpose of the treaty. General Assembly (G.A.) Resolution 2145 (XXI) determines that both forms of material breach had occurred in this case. By stressing that South Africa has in fact disavowed the Mandate, the G.A. declared that it had repudiated it. The resolution in question is, therefore, to be viewed as the exercise of a right to terminate a relationship in

case of a deliberate and persistent violation of obligations which destroys the very object and purpose of that relationship. The silence of a treaty as to the existence of such right cannot be interpreted as implying the exclusion of a right which has its source outside the treaty, in general international law, and is dependent on the occurrence of circumstances which are not normally envisaged when a treaty is concluded. To say that the power of revocation of the Mandate could not have been exercised unilaterally, but only in cooperation with South Africa, would postulate an impossibility. For obvious reasons, the consent of the wrongdoers to such a form of termination cannot be required. Gabcikovo-Nagymaros Project (Hungary v. Slovakia), 1997 I.C.J. 7. Facts: Hungary and Czechoslovakia entered into a treaty to facilitate the construction of dams on the Danube. Hungary later suspended the works due to environmental concerns, in response to which Czechoslovakia carried out unilateral measures. Hungary claims the right to terminate the treaty since Czechoslovakia violated the treaty by undertaking unilateral measures. Hungary invoked state of ecological necessity, supervening impossibility of performance, rebus sic stantibus and material breach. Held: The existence of a state of necessity is a ground recognized by customary international law for precluding the wrongfulness of an act not in conformity with an international obligation. This can only be invoked under certain strictly defined conditions which must be cumulatively satisfied; and the state concerned is not the sole judge of whether those conditions have been met. For a state of necessity to exist, the following basic conditions set forth in Draft Article 33 (now Article 25 of Articles on State Responsibility) are relevant: it must have been occasioned by an essential interest of the state which is the author of the act conflicting with one of its international obligations; that interest must have been threatened by a grave and imminent peril; the act being challenged must have been the only means of safeguarding that interest; that act must not have seriously impaired an essential interest of the state towards which the obligation existed; and the state which is the author of that act must not have contributed to the occurrence of the state of necessity. The Hungarian argument on the state of necessity could not convince the Court unless it was at least proven that a real, grave and imminent peril existed in 1989 and that the measures taken by Hungary were the only possible response to it. Even if a state of necessity is found to exist, it is not a ground for the termination of a treaty. It may only be invoked to exonerate a state which has failed to implement a treaty. Even if found justified, it does not terminate a treaty; the treaty may be ineffective as long

as the condition of necessity continues to exist; it may in fact be dormant, but - unless the parties by mutual agreement terminate the treaty - it continues to exist. As soon as the state of necessity ceases to exist, the duty to comply with treaty obligations revives. Impossibility of performance may not be invoked for the termination of a treaty by a party to that treaty when it results from that partys own breach of an obligation under the treaty. Hungary cannot invoke this because it did not carry out most of the works for which it was responsible. Hungary further argued that it was entitled to invoke a number of events which, cumulatively, would have constituted a fundamental change of circumstances (i.e., changes of political nature, reduced economic viability of the Project, and the progress of environmental knowledge and international environmental law). The changed circumstances advanced by Hungary, however, are not of such a nature that their effect would radically transform the extent of the obligations still to be performed in order to accomplish the project. It is only a material breach of the treaty itself which entitles the other party to rely on it as a ground for terminating the treaty. The violation of other treaty rules or of rules of general international law may justify the taking of certain measures, but it does not constitute a ground for termination under the law of treaties. Czechoslovakia violated the treaty only when it diverted the waters of the Danube into the bypass canal in October 1992. In constructing the works which would lead to the putting into operation of the unilateral measure, Czechoslovakia did not act unlawfully. The notification of termination by Hungary was premature. No breach of the treaty by Czechoslovakia had yet taken place and consequently Hungary was not entitled to invoke any such breach of the treaty as a ground for terminating it when it did. Rules on conflict between a treaty and a local law: Article 46 of the VCLT states that when a constitutional violation is manifest and concerns a rule of internal law of fundamental importance, a state may deviate from a treaty obligation.37 But it must also be considered that, under the dualist theory, unconstitutionality of a treaty is a purely domestic matter. Thus, a state faces the risk of international sanction. As to general domestic legislation, it depends on which court is deciding. If it is an international court, it will uphold the treaty obligation in general. But if it is a domestic court, it should always try to give effect to both. If there is an inconsistency, the later in date will control, provided that the treaty stipulation is self-executing.38 But the rule only
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See also VCLT, supra note 4, art.27 (A party may not invoke the provisions of internal law as justification for its failure to perform a treaty.). See Sei Fuji v. California, 242 P.2d 617 (1952).

applies in the domestic sphere. A treaty, even if contrary to a later statute, is binding in international law.39 2. Custom

Article 38 of the ICJ Statute refers to custom as an evidence of a general practice accepted as law. In contrast to treaty law, a rule of customary international law is binding upon a state whether or not it has affirmatively assented to that rule. The Restatement (Third) of Foreign Relations Law of the United States also defines custom as a general and consistent practice of states followed by them from a sense of legal obligation. From this definition, two elements are constituted: (1) widespread state practice and (2) opinio juris (or a sense of legal obligation). State practice is the material element, and simply means that a sufficient number of states behave in a regular and repeated manner consistent with the customary norm.40 State practice requires duration, uniformity and generality.41 Evidence of state practice may include a codificatory treaty, if a sufficient number of states sign, ratify, and accede to a convention.42 The following are also material sources of custom: diplomatic correspondence, policy statements, press releases, opinions of legal advisers, official manuals on legal questions, executive decisions and practices, orders to naval forces, comments by governments on drafts produced by the International Law Commission, international and national judicial decisions, recitals in treaties and other international instruments, a pattern of treaties in the same form, practice of international organs, and resolutions relating to legal questions by the United Nations General Assembly.43 Opinio juris is the psychological or subjective element of customary international law. It requires that the state action in question be taken out of a sense of legal obligation, as opposed to mere expediency.44 Put another way, opinio juris is the conviction of a state that it is following a certain practice as a matter of law and that, were it to depart from the practice, some form of sanction would, or ought to, fall on it. 45 Cases: North Sea Continental Shelf (Germany. v. Denmark & Netherlands), 1969 I.C.J. 1 Facts: Bilateral agreements between (1) the Netherlands and Germany and (2) Denmark and Germany were made drawing lateral or median lines delimiting the North Sea
39 40 41 42 43 44 45

VCLT, supra note 4, art. 46. See BROWNLIE, supra note 5, at 6-12. Id. at 7. See HARRIS, supra note 2, at 39. BROWNLIE, supra note 5, at 6; See also [1950] 2 Y.B. Intl L. Commn 368-72. Id. at 8. MARK E. VILLIGER, CUSTOMARY INTERNATIONAL LAW AND TREATIES 4 (1985).

continental shelves of adjacent and opposite sides. These agreements, however, did no more than draw a dividing line for a short distance from the coast beginning at the point at which the land boundary of the two states concerned was located. Held: Although the passage of only a short period of time is not necessarily, or itself, a bar to the formation of a new rule of customary international law on the basis of what was purely a conventional rule, an indispensable requirement would be that within the period in question, short though it might be, state practice, including that of states whose interests are specially affected, should have been both extensive and virtually uniform in the sense of the provision invokedand should moreover have occurred in such a way as to show a general recognition that a rule of law or legal obligation is involved. The use of the equidistance method is not to be regarded as a rule of law as it would not be consistent with opinio juris in the matter of delimitation. Delimitation is to be effected by agreement in accordance with equitable principles. Asylum (Colombia v. Peru), 1950 I.C.J. 266 Facts: After an unsuccessful rebellion in Peru, a warrant was issued for the arrest on a criminal charge arising out of the rebellion of Haya de la Torre. De la Torre was granted asylum by Colombia. Colombia sought for safe conduct to allow De la Torre out of the country. Peru refused. Colombia asserted that it was competent to qualify the offense for the purposes of asylum (unilateral qualification). Held: The party which relies on a custom must prove that such custom is established in such a manner that it has become binding on the other party. The Colombian Government must prove that the rule invoked by it is in accordance with a constant and uniform usage practiced by the states in question, and that this usage is the expression of a right appertaining to the state granting asylum and a duty incumbent on the territorial state and not merely for reasons of political expediency. The facts brought to the knowledge of the court disclose so much uncertainty and contradiction, so much fluctuation and discrepancy in the exercise of diplomatic asylum and in the official views expressed on various occasions. There has been so much inconsistency in the rapid succession of conventions on asylum, ratified by some States and rejected by others, and the practice has been so much influenced by considerations of political expediency in the various cases, that it is not possible to discern in all this any constant and uniform usage, accepted as law, with regard to the alleged rule. But even if it could be supposed that such a custom existed between certain LatinAmerican states only, it could not be invoked against Peru which, far from having by its attitude adhered to it, has, on the contrary, repudiated it by refraining from ratifying the Montevideo Conventions, which were the first to include a rule concerning the qualification of the offense in matters of diplomatic asylum. Peru was considered by the Court as a persistent objector.

A persistent objector is a state that has persistently objected to a rule of customary international law and may thus contract out of a custom in the process of formation.46 Evidence of objection must be clear and there is probably a presumption of acceptance which is to be rebutted.47 3. General Principles of Law

These are principles of municipal law common to the legal systems of the world.48 Such principles are gap-filler provisions: on occasion, the ICJ must have recourse to rules typically found in domestic courts and domestic legal systems in order to address procedural and other issues. The bulk of recognized general principles are procedural in nature, for example, the laws regarding burden of proof and admissibility of circumstantial evidence, estoppel, waiver, unclean hands, necessity, and force majeure.49 The principle of general equity in the interpretation of legal documents and relationships is one of the most widely cited general principles of international law.50 General principles may also include commercial principles. Even the Iran-U.S. Claims Tribunal has used general principles to find general principles of commercial and contract law, including doctrines concerning contract formation, unjust enrichment, and conflicts of laws. 51 As pointed out by Lord McNair, former President of the ICJ, in South West Africa,52 it is never a question of importing into international law private law institutions lock, stock and barrel, ready made and fully equipped with a set of rules. It is rather a question of finding in the private law institutions indications of legal policy and principles appropriate to the solution of the international problem at hand. It is not the concrete manifestations of a principle in different national systems which are anyhow likely to vary but the general concept of law underlying them that the international judge is entitled to apply under Article 38 (c) of the ICJ Statute.53 It is important to note, however, that equity in this sense is a source of international law, brought before the court under Article 38(1)(c) of the ICJ Statute.54 It is an inter legem (within the case) application of equitable principles, and not a power of the
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50 51

52 53 54

BROWNLIE, supra note 5, at 11. Id. Statute of the International Court of Justice, supra note 1, art. 38 (1) (c). See generally BIN CHENG, GENERAL PRINCIPLES OF LAW AS APPLIED BY INTERNATIONAL COURTS AND TRIBUNALS (1953). Restatement (Third) of Foreign Relations Law of the United States (1987), section 102, cmt. 1. John R. Crook, Applicable Law in International Arbitration: The Iran-U.S. Claims Tribunal Experience, 83 AM.J. INT'L L. 278, 292-297. 1950 I.C.J. 148. HARRIS, supra note 2, at 48-49. BROWNLIE, supra note 5, at 25.

Court to decide the merits of the case ex aequo et bono (that is, to simply decide the case based upon a balancing of the equities), a separate matter treated under Article 38(2) of the Statute.55 The power to decide ex aequo et bono involves elements of compromise and conciliation whereas equity is applied as a part of normal judicial function.56 Case on ex aequo et bono: Diversion of Water from the Meuse, 1973 P.C.I.J. (ser.A/B) No. 70, at 77 (separate opinion of Judge Hudson) The Court has not been expressly authorized by its Statute to apply equity as distinguished from law. The Courts recognition of equity as a part of international law is in no way restricted by the special power conferred upon it to decide a case ex aequo et bono, if the parties agree thereto. It must be concluded, therefore, that under Article 38 of the Statute, if not independently of that Article, the Court has some freedom to consider principles of equity as part of the international law which it must apply. It would seem to be an important principle of equity that where two parties have assumed an identical or a reciprocal obligation, one party which is engaged in a continuing non-performance of that obligation should not be permitted to take advantage of a similar non-performance of that obligation by the other party. 4. Judicial Decisions and Teachings of the Most Highly Qualified Publicists

Judicial decisions and teachings of the most highly qualified publicists are a subsidiary means of finding the law.57 Judicial decisions and scholarly writings are, in essence, research aids for the ICJ, used for example to support or refute the existence of a customary norm, to clarify the bounds of a general principle or customary rule, or to demonstrate state practice under a treaty. Judicial decisions, whether from international tribunals or from domestic courts, as well as arbitral tribunals, are useful to the extent that they address international law directly or demonstrate a general principle.58 Teachings refers simply to the writings of learned scholars. These teachings are expressly limited to teachings of the most highly qualified publicists. For international law generally, this is a very short list, and includes names like Grotius, Lauterpacht, and Brownlie. Within the context of a specific field for example, environmental law there are additional scholars who would be regarded as highly qualified publicists.

55 56 57 58

Id. at 25-26. Id. at 26. Statute of the International Court of Justice, supra note 1, art. 38 (1) (d). BROWNLIE, supra note 5, at 19.

B. Subjects and Objects of International Law A subject of international law is an entity capable of possessing international rights and duties and having the capacity to maintain its rights by bringing international claims.59 States remain the predominant subjects although international organizations may also have personality. 60 Objects of international law, on the other hand, are those who indirectly have rights under, or are beneficiaries of, international law through subjects of international law. Individuals and corporations are regarded as objects of international law. However, with the progression of human rights, individuals in some instances are regarded as subjects of international law. Also, internationalized contracts between a state and a foreign corporation give the latter a limited capacity by invoking in international law the rights derived from the contract.61 C. Jurisdiction and Enforcement Jurisdiction refers to particular aspects of the general legal competence of states often referred to as sovereignty such as judicial, legislative and executive.62 One of the fundamental principles is that jurisdiction is territorial.63 In this aspect, the power to make decisions or rules (prescriptive or legislative jurisdiction) is distinct from the power to take executive action in pursuit of or consequent to the making of decisions or rules (enforcement or prerogative jurisdiction).64 In terms of civil jurisdiction, a State must in normal circumstances maintain a system of courts empowered to decide civil cases and, in doing so, be prepared to apply private international law where appropriate in cases concerning a foreign element.65 Excessive and abusive assertion of civil jurisdiction could lead to international responsibility and protests as ultra vires acts.66 As to criminal jurisdiction, several principles have received varying degrees of practice and support, to wit: territorial principle, nationality principle, passive nationality principle, protective principle, and universal jurisdiction.67 The principle that the courts of the place where the crime is committed may exercise jurisdiction has received universal recognition, and is but a single application of the essential territoriality of the sovereignty, the sum of legal competences, which a state has.68 Also, generally accepted and often applied is the objective territorial principle, according to which jurisdiction is founded
59 60 61 62 63 64 65 66 67 68

Id. at 57 citing Reparation for Injuries, 1949 I.C.J. 179. Reparation for Injuries, 1949 I.C.J. 179. Texaco Overseas Petroleum Co. v. Government of the Libyan Arab Republic, 77 I.L.M. 1978 (1977). BROWNLIE, supra note 5, at 297. Id. Id. Id. at 298. Id. See id. at 299-305. Id. at 299.

when any essential constituent element of a crime is consummated on the states territory.69 As to the nationality principle, nationality, as a mark of allegiance and an aspect of sovereignty, is also generally recognized as a basis for jurisdiction over extra-territorial acts.70 According to the passive nationality principle, aliens may be punished for acts harmful to the nationals of the forum. The protective principle provides that all states assume jurisdiction over aliens for acts done abroad which affect the security of the state. The universal principle allows for jurisdiction over acts of non-nationals where the circumstances, including the nature of the crime, justify the repression of some types of crimes as a matter of international public policy like crimes against humanity or genocide.71 Under international law, the governing principle is that a state cannot take measures on the territory of another state by way of enforcement of national laws without the consent of the latter.72 Persons may not be arrested, summons may not be served, police or tax investigations may not be mounted, orders for production of documents may not be executed on the territory of another state, except under the terms of a treaty or other consent given.73 B. Immunity Immunity from jurisdiction is enjoyed by both the head of state and by the state itself. Acts of state carried out within its own territory cannot be challenged in the courts of other states. This is based on the sovereign equality of states. However, this immunity is reserved only for acts jure imperii (governmental acts), but not for acts jure gestionis (trading and commercial acts).74 Ambassadors and other diplomatic agents are also given immunities and privileges when they are within the territory of another state. Diplomatic agents have immunity from criminal and, in most cases, civil jurisdiction of the host state.75 In particular, diplomatic agents may not be arrested or otherwise detained by the host state.76 Moreover, the premises of the mission are inviolable.77 Unless waived, these immunities must be observed. C. State Responsibility v. Individual Responsibility

69 70 71 72 73 74

75 76 77

Id. Id. at 301; see also Lotus, 1927 P.C.I.J. (ser. A) No. 10, at 92 (separate opinion of Judge Moore). BROWNLIE, supra note 5, at 303. Id. at 306. Id. citing Lotus, 1927 P.C.I.J. (ser. A) No. 10, at 18. See Syquia v. Lopez, 84 Phil. 312 (1949); United States v. Ruiz, 136 SCRA 487 (1987); Sanders v. Veridiano, 162 SCRA 88 (1988); United States v. Guinto, 182 SCRA 644 (1990). Vienna Convention on Diplomatic Relations, art. 31, 1961, 500 U.N.T.S. 95. Id. art. 29. Id. art. 22.

Breach of international law by a state entails its international responsibility.78 International responsibility covers the relations which arise under international law from the internationally wrongful act of a state, whether such relations are limited to the wrongdoing state and one injured state or whether they extend also to other states or indeed to other subjects of international law, and whether they are centered on obligations of restitution or compensation or also give the injured state the possibility of responding by way of countermeasures.79 Two elements are required to establish the existence of an internationally wrongful act of the state.80 First, the conduct in question must be attributable to the state under international law.81 The acts which may be attributed to the state may be acts of state organs, the acts of other persons (empowered by the government to exercise governmental authority,82 or is acting on the instructions of, or under the direction or control of, the state83), or the acts of revolutionaries.84 Secondly, for responsibility to attach to the act of the state, the conduct must constitute a breach of an international legal obligation in force for that state at that time.85 Generally speaking, the actions of private parties are not attributable to states.86 The principle that individuals, including state officials, may be responsible under international law has primarily operated in the field of criminal responsibility, but it is not excluded that developments may occur in the field of individual civil responsibility.87 Where crimes against international law are committed by state officials, it will often be the case that the state itself is responsible for the acts in question or for failure to prevent or punish them.88 The state is not exempted from its own responsibility for internationally wrongful conduct by the prosecution and punishment of the state officials who carried it out.89 Neither may those officials hide behind the state in respect of their own responsibility for conduct which is contrary to rules of international law applicable to them.90 D. Damages and Reparations
78

79 80 81 82 83 84 85 86

87

88 89 90

Responsibility of States for Internationally Wrongful Acts, G.A. Res. 56/83, art. 1, U.N. GAOR, 56th Sess., Annex, Agenda Item 162 at 3, U.N. Doc. A/RES/56/83 (2001) [hereinafter Articles on State Responsibility]; Report of the International Law Commission, U.N. GAOR, 55th Sess., Supp. No. 10, at 63, U.N. Doc. A/56/10 (2001) [hereinafter Commentary]. Commentary, supra note 70, at 67. Articles on State Responsibility, supra note 78, art. 2; Commentary, supra note 78, at 68. Articles on State Responsibility, supra note 78, art. 2; Commentary, supra note 78, at 68. Articles on State Responsibility, supra note 78, art. 5. Id. art. 8. See id. arts. 4-10. Articles on State Responsibility, supra note 78, art. 2; Commentary, supra note 78, at 68. JAMES CRAWFORD , THE INTERNATIONAL LAW COMMISSION'S ARTICLES ON STATE RESPONSIBILITY: INTRODUCTION, TEXT & COMMENTARIES 110 (2002). Commentary, supra note 78, at 364, citing Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, 1465 U.N.T.S. 112, art. 14, dealing with compensation for victims of torture. Commentary, supra note 78, at 364. Id. Id. See also Rome Statute of the International Criminal Court, July 17, 1998, A/CONF.183/9, arts. 25 (2), 27.

The principle is that there are legal consequences for a states internationally wrongful act.91 Aside from the obligation of cessation and assurances or guarantees of nonrepetition,92 the consequence of a commission of an internationally wrongful act involves an obligation to make reparation in an adequate form. 93 Reparation must, so far as possible, wipe out all the consequences of the illegal act and re-establish the situation which would, in all probability, have existed if the wrongful act had not been committed.94 Restitution is in kind, or, if this is not possible, payment of a sum corresponding to the value which a restitution in kind would bear; there is an award of damages for loss sustained which would not be covered by restitution in kind or payment in place of it.95 There is no general requirement that a state should have suffered material harm or damage before it can seek reparation for a breach.96 The existence of actual damage will be highly relevant to the form and quantum of reparation.97

II. A.

Private International Law Jurisdiction

The court has to determine first whether it has jurisdiction over the case.98 If it has no jurisdiction, the case should be dismissed on that ground.99 If it has jurisdiction, the court will determine whether it should assume jurisdiction over the case or dismiss it on the ground of forum non conveniens.100 It is the law of the forum that determines whether the court has jurisdiction over the case.101
91 92 93 94 95 96 97 98 99 100

101

Articles on State Responsibility, supra note 78, art. 28. Id .art. 30. Id .art. 31. See also Chorzow Factory, 1927 P.C.I.J. (ser. A) No. 9, at 21. Chorzow Factory, 1927 P.C.I.J. (ser. A) No. 9, at 47; Commentary, supra note 78, at 223-24. Chorzow Factory, 1927 P.C.I.J. (ser. A) No. 9, at 47; Commentary, supra note 78, at 224. Commentary, supra note 78, at 226. Id. ALICIA SEMPIO-DIY, HANDBOOK ON CONFLICT OF LAWS 4 (2004). Id. Id.; JORGE COQUIA & ELIZABETH AGUILING-PANGALANGAN, CONFLICT OF LAWS: CASES, MATERIALS AND COMMENTS 39 (2000). SEMPIO-DIY, supra note 98, at 4.

Once the court has determined whether it has jurisdiction over the case, it will next determine whether to apply the internal law of the forum or the proper foreign law, considering the attendant circumstances.102 Doctrine of Forum Non Conveniens Even if the court assumes jurisdiction over the parties and the subject matter, it may decline to try the case on the ground that there is another available and more appropriate forum in which the ends of justice would be better served in view of the interests of all parties, by eliminating the vexatious or oppressive character of the pending proceedings and by removing any unfairness to either party which would result from trial in the forum seized of the case.103 American courts have also applied the doctrine in order to prevent abuse of the courts process, i.e., when plaintiff made the choice of the forum primarily to harass defendant by pursuing the remedy, or where a non-resident plaintiff chose the forum because he felt that jury verdicts were larger there than in another forum.104 Another reason for the rule is to avoid global forum shopping, which is the filing of repetitious suits in courts of different jurisdiction.105

Assume Jurisdiction The presence of any one of the following factors would justify the application of internal law: 1. a specific law of the forum decrees that internal law should apply; 2. the proper foreign law was not properly pleaded and proved; or 3. the case falls under any of the exceptions to the application of foreign law.106 Notably, forum law is also applied when there is failure to plead and prove the pertinent law because it leads to the presumption that it is the same as forum law.107
102 103

104 105 106 107

Id.; COQUIA & AGUILING-PANGALANGAN, supra note 100, at 51. COQUIA & AGUILING-PANGALANGAN, supra note 100, at 40-41, quoting Joseph Dainov, The Inappropriate Forum, 29 ILL.L.REV. 867 (1934). Id. at 40. Id. at 41. Id. at 51-52. Id. at 52.

Forum law should also be applied if the case falls under the exceptions to the application of the foreign law. They are: 1. 2. 3. 4. 5. when the foreign law is contrary to an important public policy of the forum; when the foreign law is penal in nature; when the foreign law is procedural in nature; when the foreign law is purely fiscal or administrative; when the application of foreign law will work undeniable injustice to the citizens of the forum; 6. when the case involves real or personal property situated in the forum; 7. when the application of the foreign law might endanger the vital interest of the state; and 8. when the foreign law is contrary to good morals.108 Doctrine of Lex Loci Contractus As a general rule, the law of the place where a contract is made or entered into governs with respect to its nature and validity, as well as obligation and interpretation. This has been said to be the rule even though the place where the contract was made is different from the place where it is to be performed, and particularly so if the place of the making and the place of performance are the same. Hence, the court should apply the law of the place where the airline ticket was issued, when the passengers are residents and nationals of the forum and the ticket is issued in such state by the defendant airline.

Jurisdiction over the person Jurisdiction over the person is acquired by the voluntary appearance of a party and his submission to authority.109 The court also acquires jurisdiction over the person of the plaintiff the moment he invokes the aid of the court by filing a suit.110 Jurisdiction over the defendant may be had by personal service or substituted service of summons.111 Jurisdiction over subject matter

108 109 110 111

Id. at 57. Id. at 21. Id. See RULES OF COURT, Rule 14, secs. 6-7.

Jurisdiction over the subject matter is more than the general power conferred by law to take cognizance of cases of a general class to which the case belongs. It is not enough that a court has power in abstract to try and decide that class of litigation to which a case belongs; it is necessary that said power be properly invoked by filing a petition.112 It cannot be conferred by the consent of the parties and a decision may be set aside where the court exceeds its jurisdiction. 113 Jurisdiction over the res or property Jurisdiction over the property which is the subject matter of litigation results either from the seizure of the property under legal process or from the institution of legal proceedings wherein the courts power over the property is recognized and made effective.114 Cases: Carnival Cruise Lines v. Schute, 499 U.S. 585 (1991) Facts: After the spouses Schute (Washington) purchased passage for a 7-day cruise on the ship Tropicale owned by Carnival Cruise (Florida-based line) thru an agent, Carnival Cruise sent them tickets containing a forum selection clause designating courts in Florida as the agreed-upon fora. Mrs. Shute suffered injuries when she slipped on a deck mat during a guided tour of the ships gallery. The Shutes filed suit in Washington. Is the stipulation limiting the fora to Florida courts valid? Was the case improperly filed in Washington as it was within the jurisdiction of Florida courts? Held: YES, the appellate court erred in refusing to enforce the forum selection clause. Since the facts in the case of Bremen are different from the facts of this case, Bremen is inapplicable to negate the application of the forum selection clause in the case at bar. The statement the serious inconvenience of the contractual forum to one or both of the parties might carry great weight in determining the reasonableness of the forum clause was made in the context of a hypothetical agreement between two Americans to resolve their essentially local disputes in a remote alien forum. Here, in contrast, Florida is not such a forum, nor given the location of Mrs. Shutes accident is this dispute an essentially local one inherently more suited to resolution in Washington than in Florida. In the light of these distinctions, and because the Shutes do not claim lack of notice of the forum clause, nor was there any finding by the Washington court that the Shutes were financially incapable of pursuing litigation in Florida. They have not satisfied the heavy burden of proof required to set aside the clause on grounds of inconvenience. Although forum selection clauses contained in form passage contracts are subject to judicial scrutiny for
112 113 114

Caluag v. Pecson, 82 Phil. 8 (1948). COQUIA & AGUILING-PANGALANGAN, supra note100, at 37, citing Caluag v. Pecson, 82 Phil. at 8. Id. at 23, citing Banco Espanol-Filipino v. Palanca, 37 Phil. 921 (1918).

fundamental fairness, there is no indication that Carnival Cruise Lines selected Florida to discourage cruise passengers from pursuing legitimate claims or obtained the Shutes accession to the forum clause by fraud or overreaching. Burger King v. Rudzewicz, 471 U.S. 462 (1985) Facts: Rudzevicz (Michigan) entered into a twenty-year franchise contract with Burger King [BK] (Florida) to operate a restaurant in Michigan. The contract provides that the franchise relationship is established in Miami and governed by Florida law. It calls for payment of a $40,000 franchise fee and all required monthly royalties and fees; forwarding of all relevant notices to the Miami headquarters. The Miami headquarters set policies and work directly with the franchisees in attempting to resolve major problems. Day-to-day monitoring of franchises, however, is conducted through district offices that in turn report to Miami headquarters. Subsequently, when the restaurants patronage declined, the franchisees fell behind their monthly payments. Headquarters terminated the franchise and ordered the franchisees to vacate the premises. They refused and continued to operate the restaurant. BK then brought a diversity action in Florida. Franchisees claimed that because they were Michigan residents and because BKs claim did not arise within Florida, the district court lacked personal jurisdiction over them. Held: Florida court has jurisdiction. A forum may assert specific jurisdiction over a nonresident defendant where an alleged injury arises out of or relates to actions by the defendant himself that are purposefully directed toward forum residents and where jurisdiction would not otherwise offend fair play and substantial justice. Jurisdiction in these circumstances may not be avoided merely because the defendant did not physically enter the forum. So long as a commercial actors efforts are purposefully directed toward residents of another state, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there. The Bremen v. Zapata Offshore Co., 407 U.S. 1 (1972) Facts: Unterweser (German) entered into an agreement to tow Zapatas (US) drilling rig from Louisiana to Italy. The contract contained a forum-selection clause providing for the litigation of any dispute in the High Court of Justice in London. The contract was executed by Zapata at Houston and was sent and accepted by Unterweser in Germany. When the rig under tow was damaged in a storm, Zapata instructed Unterweser to tow the rig to Tampa, the nearest port of refuge. There, Zapata brought suit in admiralty against Bremen. Unterweser invoked the forum clause in moving for dismissal for want of jurisdiction and brought suit in an English court, which ruled it had jurisdiction under the contractual forum provision. Held: London court has jurisdiction. Forum selection clauses are prima facie VALID and should be enforced, unless enforcement is shown by the resisting party to be

unreasonable under the circumstances. The threshold question is whether that court should have exercised its jurisdiction to do more than give effect to the legitimate expectations of the parties, manifested in their freely negotiated agreement, by specifically enforcing the forum clause. Forum selection is valid UNLESS it (1) contravenes a strong public policy of the forum and (2) is seriously inconvenient for the trial of the action. The forum selection clause, which was a vital part of the towing contract, is BINDING on the parties, unless Zapata off-shore can meet the heavy burden of showing that its enforcement would be unreasonable, unfair, or unjust. Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981) Facts: A small commercial aircraft crashed in Scotland. 5 passengers died, they were all Scottish. The aircraft was manufactured by Piper (US). Reyno, representative of the heirs, instituted an action in the US. Reyno sought to recover from Piper Aircraft on the basis of negligence or strict liability (NOT recognized by Scottish law), and admitted that the action was filed in the US because its laws regarding liability, capacity to sue, and damages are more favorable to Reynos/heirs position than those of Scotland. Held: The Scottish court has jurisdiction. Reyno may not defeat a motion to dismiss on the ground of forum non conveniens merely by showing that the substantive law that would be applied in the alternative forum is less favorable to them than that of the chosen forum. The possibility of a change in substantive law should ordinarily not be given conclusive or even substantial weight in the forum non conveniens inquiry. But if the remedy provided by the alternative forum is so clearly inadequate or unsatisfactory, that is no remedy at all, the unfavorable change in law may be given substantial weight; the district court may conclude that dismissal would not be in the interests of justice. Scottish laws do not deprive the heirs of any remedy. The District Court properly decided that the presumption in favor of the plaintiffs forum choice applied with less than maximum force when the plaintiffs are foreign. When the plaintiff has chosen the home forum, it is reasonable to assume that the choice is convenient; but when the plaintiffs are foreign this assumption is much less reasonable and the plaintiffs choice deserves less deference. National Rental v. Szukhent, 375 U.S. 311 (1964) Facts: National Rental (New York) sued Szukhent, et al. (Michigan) in a federal court in New York, claiming that Szukhent had defaulted in payments due under a farm equipment lease. The last paragraph of the lease provided that the lessee hereby designates Florence Weinberg as agent for the purpose of accepting service of any process within the state of New York. Szukhent, et al. were NOT acquainted with Florence and she had not

expressly undertaken to transmit notice to them. The Marshall delivered two copies of the summons and complaint to Florence. That same day, she mailed the summons and complaint to Szukhent, together with a letter stating that the documents had been served upon her as Szukhents agent for the purpose of accepting service of process in New York, in accordance with the agreement contained in the lease. Held: The service of processes was validly made, thereby vesting jurisdiction in the New York court. Parties to a contract may agree in advance to submit to the jurisdiction of a given court, to permit notice to be served by the opposing party, or even to waive notice altogether. The purpose underlying the contractual provision is to assure that any litigation under the lease should be conducted in the state of New York. Weinbergs prompt acceptance and transmittal to Szukhent of the summons and complaint pursuant to the authorization was itself sufficient to validate the agency, even though there was no explicit previous promise on her part to do so. The fact that the designated agent was not personally known to Szukhent at the time of her appointment, and that she may be related to an officer of National Rental, did not invalidate the agency. United Airlines v. Court of Appeals, 357 SCRA 99 (2001) Facts: The Fontanillas bought tickets from United Airlines through its agent in Manila. When in Washington, they rewrote their tickets. They were bumped off their flight and three caucasians were allowed to board instead of them. They were also rudely insulted by an employee of United Airlines so they sued for damages. Which law applies: US Code of Federal Regulation or Philippine law? Held: The Court of Appeals erred in applying the US Code of Federal Regulation. Philippine law applies. Although the contract of carriage was to be performed in the United States, the tickets were purchased thru United Airlines agent in Manila. Pakistan International Airlines v. Ople, 190 SCRA 90 (1990) Facts: Pakistan International Airways [PIA] (Pakistan and is licensed to do business under Philippine laws) hired 2 Filipino flight attendants. The contract of employment was entered into in the Philippines and their base station was in the Philippines. The contract stipulated that laws of Pakistan would apply and Pakistani courts have jurisdiction. When PIA terminated their contracts, the flight attendants filed an action for illegal dismissal in the Philippines. Which laws apply, Pakistani or Philippine? Held: Philippine laws apply. Parties may not contract away applicable provisions of law especially peremptory provisions dealing with matters heavily impressed with public

interest. PIA CANNOT take refuge in paragraph 10 of its employment agreement which specifies, firstly, the law of Pakistan as the applicable law of the agreement and, secondly, lays the venue for settlement of any dispute arising out of or in connection with the agreement "only [in] courts of Karachi, Pakistan". PIA did NOT undertake to plead and prove the contents of Pakistan law on the matter; it must therefore be presumed that the applicable provisions of the law of Pakistan are the same as the applicable provisions of Philippine law. Cadalin v. POEA, 238 SCRA 721 (1994) Facts: Brown and Root International Inc. (BRII) (Texas) employed Filipino OCWs through its recruiting agent in the Philippines to work in the Middle East. The Contract stipulated that the employees were entitled to benefits under Bahrain law which provides for a prescriptive period of merely 1 year. They filed an action in the Philippines. Which law will apply, Labor Code or Bahrain Law? Held: As a general rule, a foreign procedural law will not be applied in the forum. A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be viewed either as procedural or substantive, depending on the characterization given such a law. However, the characterization of a statute into a procedural or substantive law becomes irrelevant when the country of the forum has a borrowing statute. Said statute has the practical effect of treating the foreign statute of limitation as one of substance. A borrowing statute directs the state of the forum to apply the foreign statute of limitations to the pending claims based on a foreign law. Sec 48 of the Rules of Civil Procedure provide: If by the laws of the state or country where the cause of action arose, the action is barred, it is also barred in the Philippines Islands. However, since their prescriptive period was unconstitutional and against the public policy of protecting labor, the Labor Code will be applied. Sweet Lines v. Teves, 83 SCRA 361 (1978) Facts: Attys. Tandog and Tiro bought two tickets from the main office of Sweet Lines. They were to board M/S Sweet Hope bound for Tagbilaran. Upon learning that the vessel was not proceeding to Bohol, Attys. Tandog and Tiro went to the branch office for proper relocation to M/S Sweet Town. Because the said vessel was already filled to capacity, they were forced to hide at the cargo section to avoid inspection of the officers of the Philippine Coastguard. They sued Sweet Lines in the Court of First Instance of Misamis Oriental for breach of contract of carriage. Sweet Lines moved to dismiss the complaint on the ground of improper venue. The motion was premised on the condition printed at the back of the tickets that actions arising from the provisions of this ticket shall be filed in the competent courts in the City of Cebu.

Is the condition valid and enforceable? Held: NO, venue was proper. The condition is VOID. Reasons: (1) under circumstances obtaining in the inter-island shipping industry, it is not just and fair to bind passengers to the terms of the conditions printed at the back of the passage tickets printed in fine letters, and (2) the condition subverts the public policy on transfer of venue since the same will prejudice rights and interests of innumerable passengers in different parts of the country. The Court may declare the agreement as to venue to be in effect contrary to public policy despite that, in general, changes and transfers of venue by written agreement of the parties are allowable whenever it is shown that a stipulation as to venue works injustice by practically denying to the party concerned the remedy provided by the rules. Hongkong and Shanghai Banking Corp. (HSBC) v. Sherman, 176 SCRA 331 (1989) Facts: Eastern Book & Supply Service (Singapore) was granted by HSBC Singapore an overdraft facility. Sherman, et. al. and directors of Eastern Book executed a Joint and Several Guarantee in favor of HSBC. Eastern Book defaulted. Hence, HSBC filed a suit for collection against them before the Regional Trial Court of Quezon City. Sherman filed a Motion to Dismiss on the ground of lack of jurisdiction over the complaint and persons of the defendants. The guarantee provides: This guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore. Held: Philippine courts have jurisdiction over the suit. The stipulation shall be liberally construed. A stipulation as to venue does not preclude the filing of suits in the residence of plaintiff or defendant under Sec 2 (b), Rule 4 of the Rules of Court, in the absence of qualifying or restrictive words in the agreement which indicate that the place named is the only venue agreed upon by the parties. The parties did not thereby stipulate that only the courts of Singapore, to the exclusion of all the rest, have jurisdiction. Neither did the clause in question operate to divest Philippine courts of jurisdiction. In International Law, jurisdiction is often defined as the right of a state to exercise authority over persons and things within its boundaries subject to certain exceptions. This authority, which finds its source in the concept of sovereignty, is exclusive within and throughout the domain of the state. A state is competent to take hold of any judicial matter it sees fit by making its courts and agencies assume jurisdiction over all kinds of cases brought before them. International Shoe Co. v. Washington, 326 U.S. 310 (1945) Facts: International Shoe is a Delaware Corporation with principal office in Missouri. International Shoe has no sales outlets or offices in Washington but its salesmen reside and solicit orders in Washington. Only display rooms are in Washington and sales are made in

places other than Washington. A suit for tax liability is filed in Washington against International Shoe. Held: The Washington court has jurisdiction over International Shoe. Regular and systematic solicitation of orders in Washington was sufficient to constitute doing business in Washington so as to make International Shoe amenable to suits in its courts. There were sufficient additional activities which constitute doing business such as display of samples in permanent display rooms and continuous maintenance of salesmen residence in Washington. Due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he should have certain minimum contacts with it such that the maintenance of the suit does not offend the traditional notions of fair play and substantial justice. The corporations presence can be manifested only by activities carried on in its behalf by those who are authorized to act for it. Thus, service of summons on the salesmen and service by registered mail at its home office are sufficient to bind International Shoe. Perkins v. Benguet Consolidated Mining, 93 Phil. 1034 (1954) Facts: Perkins filed an action for recovery of dividends due her as a stockholder of Benguet Consolidated Mining (BCM). BCM has been carrying on in Ohio a continuous and systematic but limited part of its general business. Its president, while engaged in doing such business in Ohio, has been served with summons in this proceeding. The cause of action did not arise in Ohio and does not relate to the corporations activities there. Thus, the trial court sustained a motion to quash service of summons on BCM. Held: Ohio court has jurisdiction. The service of summons is valid. If an authorized representative of a foreign corporation is physically present in the state of forum and be there engaged in activities appropriate to accepting service or receiving notice on its behalf, there is no unfairness in subjecting the corporation to the jurisdiction of courts of that state through such service of process upon the representative. This has been squarely held to be so in a proceeding in personam against such a corporation, at least in relation to a cause of action arising out of the corporations activities within the state of the forum. The amount and kind of activities, however, which must be carried on by the foreign corporation in the state of the forum so as to make it reasonable and just to subject the corporation to the jurisdiction of that state are to be determined in each case. Philsec Investment Corp. v. Court of Appeals, 274 SCRA 102 (1997) Facts: Ducat obtained loans from Ayala International Finance and Philsec secured by shares of stock. 1488 Inc. assumed Ducats obligation. 1488 sold to Athona Holdings a parcel of land in Harris County, Texas while Philsec and Ayala extended a loan to Athona

to finance payment of the purchase price. Thus, Ducat was released from the obligation. As Athona failed to pay the balance of the purchase price, the entire debt became due and demandable. 1488 sued Philsec, Ayala and Athona in the US for payment of the balance plus damages. While the case was pending, Philsec filed a complaint against Ducat, et al. in the Regional Trial Court of Makati. Ducat filed a motion to dismiss on the ground of litis pendentia and forum non conveniens. The trial court granted Ducats motion even as it noted that Ducat was not a party in the US case. Held: The dismissal of the case was improper. The case was arbitrarily dismissed. While this court has given the effect of res judicata to foreign judgments in several cases, it was after the parties opposed to the judgment had been given ample opportunity to repel them on grounds allowed under the law. Neither the trial court nor the appellate court was even furnished copies of the pleadings in the US Court or apprised of the evidence presented thereat, to assure a proper determination of whether the issues then being litigated in the US court were exactly the issues raised in this case such that the judgment that might be rendered would constitute res judicata. The trial court arbitrarily dismissed the case even after finding that Ducat was not a party in the US case. World Wide Volkswagen v. Woodson, 444 U.S. 286 (1980) Facts: The Robinsons (New York [NY]) purchased a new Audi automobile from Seaway Volkswagen (NY). The following year the Robinson family, who resided in NY, left that State for a new home in Arizona. As they passed through the State of Oklahoma, another car struck their Audi in the rear, causing a fire which severely burned Kay and her 2 kids. Thus, the Robinsons brought a products liability action against the retailer Seaway Volkswagen and its wholesale distributor Worldwide Volkswagen (NY), among others, in an Oklahoma court. Held: Oklahoma court does not have jurisdiction. The only connection to Oklahoma is that the accident occurred there. Consistently with the Due Process Clause, the Oklahoma trial court may NOT exercise in personam jurisdiction over Seaway and WW Volkswagen. Oklahoma courts exercise of in personam jurisdiction, under the Long-Arm Statute, over the NY auto retailer and wholesale distributor for products liability action arising from an automobile accident in Oklahoma, is violative of due process. A state court may exercise personal jurisdiction over a non-resident defendant only so long as there exist minimum contacts between the defendant and the forum state. There are no such contacts here. The defendants contacts with the forum State must be such that maintenance of the suit does not offend traditional notions of fair play and substantial justice and the relationship between the defendant and the forum must be such that it is reasonable to require the corporation to defend the particular suit which is brought there. The due process clause does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts,

ties, or relations. Calder v. Jones, 465 U.S. 783 (1984) Facts: Jones (California) brought suit in California, claiming that she had been libeled in an article written and edited by Calder and South in Florida, and published in the National Enquirer, a national magazine having its largest circulation in California. Calder and South, both residents of Florida, were served with process by mail in Florida and, on special appearances, moved to quash the service of process for lack of personal jurisdiction. Held: California court has jurisdiction. Jurisdiction over Calder and South in California is proper because of their intentional conduct in Florida allegedly calculated to cause injury to Jones in California. The Due Process Clause permits personal jurisdiction over a defendant in any state with which the defendant has certain minimum contacts such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. In judging minimum contracts, a court properly focuses on the relationship among the defendant, the forum, and the litigation. The plaintiffs lack of contacts will not defeat otherwise proper jurisdiction, but the plaintiffs contacts may be so manifold as to permit jurisdiction when it would not exist in their absence. Here, California is the focal point of both the allegedly libelous article and of the harm suffered. Jurisdiction over Calder and South is therefore proper in California based on the effects of their Florida conduct in California. Calder and South are not charged with mere untargeted negligence, but rather their intentional, and allegedly tortuous, actions expressly aimed at California. They wrote and edited an article that they knew would have a potentially devastating impact upon Jones, and they knew that the brunt of that injury would be felt by Jones in the state in which she lives and works, and in which the magazine has its largest circulation. Under these circumstances, Calder and South must reasonably anticipate being haled into court there to answer for the truth of the statements made in the article. Compuserve v. Patterson, 89 F.3d 1257 (6th Cir. 1996) Facts: Patterson (Texas) entered into contracts with Compuserve (Ohio) wherein he would use its services to sell his software programs to others. These contracts provide that they are entered into in Ohio and would be governed by Ohio laws. Compuserve started coming out with its own programs which were like those of Patterson. Patterson demanded at least $100,000 to settle. Compuserve filed a declaratory judgment action in Ohio. Held: Ohio has jurisdiction. To determine whether personal jurisdiction exists over a defendant, federal courts apply the law of the forum state, subject to the limits of the Due Process Clause. The Ohio long-arm statute allows an Ohio court to exercise personal jurisdiction over non-residents of Ohio on claims arising from the non-residents transacting

any business in Ohio. Also, the following requisites were present: 1.) Purposeful availment (physical presence not necessary. He entered into a contract with Compuserve and injected his software product into the stream of commerce these together are enough); 2.) Claim arises out of forum-related activities; and 3.) Reasonableness: whether exercise of personal jurisdiction would comport with the traditional notions of fair play and substantial justice. A court must consider several factors including: 1.) 2.) 3.) 4.) the burden of the defendant; the interest of the forum state; the plaintiffs interest in obtaining relief; and the interest of other states in securing the most efficient resolution of controversies.

Although burdensome for Patterson to defend a suit in Ohio, he knowingly made an effort and in fact, purposefully contracted to market a product in other states, with Ohio-based Compuserve operating, in effect, as his distribution center. Thus, it is reasonable to subject Patterson to suit in Ohio, the State which is home to the computer network service he chose to employ. Rush v. Savchuk, 444 U.S. 320 (1980) Facts: While a resident of Indiana, Savchuk was injured in an accident in Indiana while riding as a passenger in a car driven by Rush, also an Indiana resident. After moving to Minnesota, Savchuk commenced this action against Rush in a Minnesota state court, alleging negligence and seeking damages. As Rush had no contacts with Minnesota that would support in personam jurisdiction, Savchuk attempted to obtain quasi in rem jurisdiction by garnishing the contractual obligation of State Farm Mutual Automobile Insurance to defend and indemnify Rush in connection with such a suit. Held: Indiana has jurisdiction. A state may not constitutionally exercise quasi in rem jurisdiction over a defendant who has no forum contacts by attaching the contractual obligation of an insurer licensed to do business in the state to defend and indemnify him in connection with the suit. A state may exercise jurisdiction over an absent defendant only if the defendant has certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. The mere presence of property in a state does not establish a sufficient relationship between the owner of the property and the state to support the exercise of jurisdiction over

an unrelated cause of action, and it cannot be said that the defendant engaged in any purposeful activity related to the forum that would make the exercise of jurisdiction fair, just, or reasonable merely because his insurer does business there. Neither does the policy provide significant contacts between the litigation and the forum, for the policy obligations pertain only to the conduct, not the substance, of the litigation. Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947) Facts: Gilbert (Virginia) sued Gulf Oil (Virginia and New York) for damages for allegedly being careless in handling a delivery of gasoline to his warehouse (in Virginia) thereby causing an explosion and fire destroying his warehouse. Gulf Oil, invoking the doctrine of forum non conveniens, claimed that the appropriate place for trial is Virginia where Gilbert lives and Gulf Oil does business, where all events in litigation took place, where most of the witnesses reside, and where both state and federal courts are available to Gilbert and are able to obtain jurisdiction over Gulf Oil. Held: Virginia court has jurisdiction but not on the ground of forum non conveniens. The doctrine of forum non conveniens can never apply if there is absence of jurisdiction or mistake of venue. Everything happened in Virginia and all witnesses are there. It is Gilberts residence and Gulf Oil does business there. Apparently, Gilbert only wanted to file the case in NY because NY juries are accustomed to large awards of damages. NY court lacks jurisdiction. Virginia court is competent to take cognizance of the case. Manila Hotel v. NLRC, G. R. No. 120077, 13 October 2000 Facts: Santos worked at Palace Hotel but was terminated due to political upheaval. He filed a complaint for illegal dismissal in the Philippines. Forum non conveniens is invoked by defendants. Held: NLRC lacks jurisdiction. NLRC was a seriously inconvenient forum. The main aspects of the case transpired in two foreign jurisdictions and the case involves purely foreign elements. The only link that the Philippines has with the case is that Santos is a Filipino citizen. The Palace Hotel and Manila Hotel International are foreign corporations. Not all cases involving our citizens can be tried here. Santos was hired by Palace Hotel (foreign employer) thru correspondence sent to the Sultanate of Oman. Santos was hired without the intervention of POEA or any authorized recruitment agency of the government. Under the rule of forum non conveniens, a Philippine court may assume jurisdiction over the case if it chooses to do so provided: 1.) That the Philippine court is one to which the parties may conveniently resort; 2.) That the Philippine court is in a position to make an intelligent decision as to the law and the facts;

3.) That the Philippine court has or is likely to have power to enforce its decision. The conditions are unavailing in this case. IF Santos were an OCW, a Philippine forum, especifically the POEA, not the NLRC would protect him. He is NOT, however, an OCW, a fact which he admits with conviction. K. K. Shell v. Court of Appeals, 188 SCRA 145 (1990) Facts: Kumagai (Japan) filed a complaint for collection of sum of money against Atlantic Venus (Panama / M/V Estella owner ), the vessel M/V Estella & Crestamonte Shipping Corporation (Philippines) with the Manila Regional Trial Court (RTC). The complaint alleged that Crestamonte, as bareboat charterer of M/V Estella, appointed NS Shipping Corp. (Japan) as its general agent in Japan. NS Shipping appointed Kumagai as its local agent in Osaka, Japan. Kumagai supplied the M/V Estella with supplies and services, but, despite repeated demands, Crestamonte failed to pay the amounts due. Fu Hing Oil (Hongkong) filed a motion for leave to intervene alleging that it supplied marine diesel oil to M/V Estella & incurred barge expenses but has remained unpaid. KK Shell (Japan) also filed a Motion to Intervene alleging that it also provided M/V Estella with marine diesel. The RTC allowed the intervention. The Court of Appeals (CA) REVERSED. The CA held that Fu Hing and KK Shell were not suppliers but subagents of NS Shipping, hence, they were bound by the Agency Agreement between Crestamonte and NS Shipping, particularly, the choice of forum clause which provides that Japanese courts would have jurisdiction. Held: Manila RTC has jurisdiction. A reading of the Agency Agreement fails to support the conclusion that KK Shell is a sub-agent of NS Shipping and is therefore bound by the agreement. As the choice of forum clause has not been conclusively shown to be binding upon KK Shell, additional evidence would have to be presented to establish this defense. KK Shell cannot therefore, as of yet, be barred from instituting an action in the Philippines. The Supreme Court is not ready to rule on Crestamontes invocation of forum non conveniens, as the exact nature of the relationship of the parties is still to be established. The Supreme Court leaves the matter to the sound discretion of the trial court judge who is in the best position, after some vital facts are established, to determine whether special circumstances require that his court desist from assuming jurisdiction over the suit. Communication Materials v. Court of Appeals, 260 SCRA 673 (1996) Facts: International Inc. (ITEC) (Alabama) entered into a Representative Agreement with ASPAC Multi-trade, Inc. (ASPAC) (Philippines). Pursuant to the contract, ITEC engaged ASPAC as its exclusive representative in the Philippines for the sale of its products, in consideration of which ASPAC was paid a stipulated commission. ITEC decided to terminate the contract because ASPAC allegedly violated its contractual commitment. ITEC charges ASPAC and Digital Base Communications (Philippines), whose presidents

are the same, of using knowledge and information on ITECs product specs to develop their own line of equipment and product support which are similar to ITECs own & offering them to ITECs former customer. ITEC filed its complaint with the Regional Trial Court of Makati. Defendants filed a Motion to Dismiss on the grounds of (1) lack of ITECs legal capacity to sue and (2) forum non conveniens. Held: Makati RTC has jurisdiction. Forum non conveniens is not applicable. Through forum non conveniens, the Philippine court may refuse to assume jurisdiction in spite of its having acquired jurisdiction. Conversely, the court may assume jurisdiction over the case if it chooses to do so, provided, that the following requisites are met: 1.) That the Philippine court is one to which the parties may conveniently resort to; 2.) That the Philippine court is in a position to make an intelligent decision as to the law and the facts; and 3.) That the Philippine court has or is likely to have power to enforce its decision. The aforesaid requirements having been met, and in view of the courts disposition to give due course to the questioned action, the matter of the present forum not being the most convenient as ground for the suits dismissal deserves scant consideration.

Aznar v. Garcia, 117 Phil. 96 (1963) Facts: Edward (US) died leaving a will. Helen, natural acknowledged child, opposed the project of partition saying she was deprived of her legitime. She says that the distribution should be governed by the laws of the Philppines, and that the distribution would deprive her of her legitime. It was alleged that the law that should govern the estate should not be the internal law of California alone, but the entire law thereof because several foreign elements are involved, that the forum is the Philippines and even if the case were decided in California, Section 946 of the California Code of Commerce, which requires that the domicile of the decedent apply, should be applicable. Held: Philippine courts have jurisdiction. Being a non-resident Californian citizen, Philippine laws apply as provided by the California Civil Code. The conflict of law rule in California, Article 946, Civil Code, refers back the case, when a decedent is not domiciled in California, to the law of his domicile, the Philippines in the case at bar. The court of domicile should refer the case back to California, as the action would leave the issue incapable of determination, because the case will then be tossed back and forth between the two states (renvoi), that is, between the country of which the decedent was a citizen and the country of his domicile. The Philippine court must apply its own law as directed in the conflict of laws rule of the state of the decedent, if the question has to be decided, especially as the application of the internal law of California provides no legitime for

children while Philippine law, Articles 887(4) and 894 of the Civil Code of the Philippines, makes natural children legally acknowledged forced heirs of the parent recognizing them. As the domicile of the deceased, who was a citizen of California, was the Philippines, the validity of the provisions of his will depriving his acknowledged natural child of the latter's legacy, should be governed by Philippine law, pursuant to Article 946 of the Civil Code of California, not by the law of California. Lueck v. Sunstrand, 99-15961 (9th Cir. Jan. 8, 2001) Facts: Ansett New Zealand flight crashed allegedly due to faulty altimeter. Plane crash victims sued Sunstrand for damages. The sole American passenger in the crash settled his claims. To get higher damages, victims still pursued the case in Arizona. Held: Arizona has jurisdiction. In dismissing an action on forum non conveniens grounds the court must examine: 1.) Whether an adequate alternative forum exists; and 2.) Whether the balance of private & public interest factors favors the dismissal. The district court was not required to ask whether plaintiffs could bring this lawsuit in New Zealand, but rather, whether New Zealand offers a remedy for their losses. The District Court did not abuse its discretion in finding that an adequate remedy is available in New Zealand. The foreign forum must provide the plaintiff with some remedy for his wrong in order for the alternative forum to be adequate. Ordinarily, a plaintiffs choice of forum will not be disturbed unless the private interest and public interest factors strongly favor trial in a foreign country. If the balance of convenience suggests that trial in the chosen forum would be unnecessarily burdensome for the defendant or the court, dismissal is proper. Both private and public factors weigh against having the suit in Arizona. PRIVATE INTEREST FACTORS (1) residence of the parties and witnesses (2) forums convenience to the litigants (3) access to physical evidence and other sources of proof (4) unwilling witnesses can be compelled to testify (5) cost of bringing witnesses to trial (6) enforceability of the judgment (7) all other practical problems that make trial of a case easy, expeditious, and inexpensive PUBLIC INTEREST FACTORS

(1) local interest of lawsuit (2) courts familiarity with the governing law (3) burden on local courts & juries (4) congestion in the court (5) costs of resolving a dispute unrelated to this forum Monegro v. Rosa, 211 F.3d 509 (9th Cir. 2000) Facts: Monegro and others (Dominican Republic) are aspiring professional baseball players and were recruited by Luis Rosa (California), the Giants (California) former Latin American scout. At Rosas instigation, each signed a 7-yearr Minor League Contract. Rosa expressly conditioned their continued employment to US teams upon their submitting to his sexual advances. They allege that the Giants management knew or had reason to know of Rosas misconduct. So Monegro filed suit in California. Suit was also filed in the Dominican Republic. Noting the pendency of this parallel proceeding, Rosa filed motion to dismiss on the alternative grounds of forum non conveniens. The case was dismissed. Hence, this appeal. Held: California court has jurisdiction. This case is unlike Piper in a number of respects. (1) Unlike Piper, plaintiffs chosen forum is more than merely the American defendants home forum. It is also a forum with substantial relation to the action. (2) Unlike Piper, there are no possible co-defendants or third-party defendants who could not be made to appear in the American forum. (3) Unlike Piper, there is no showing that access to proof, even aside from Rosas testimony, would be easier in the Dominican Republic. Travelers Health Association v. Virginia, 339 U.S. 643 (1950) Facts: Travelers Health Association (Nebraska) conducts a mail-order health insurance business. After being served by registered mail in Nebraska, it was enjoined by the Virginia State Corporation Commission to cease and desist from further solicitation or sale of its certificates of insurance to Virginia residents. The Virginia Blue Sky Law provides that, as a condition for obtaining a permit to sell or offer securities, including certificates of insurance, a foreign corporation must appoint the secretary of state as its agent for service of process. It authorizes the State Corporation Commission to restrain violations of the act, and provides for service by registered mail where other kinds of service are unavailable. Is the Virginia Blue Sky Law violative of due process? Does the Virginia court have power to subject Travelers Health to the jurisdiction of the Commission?

Held: YES, Travelers Heatlh has sufficient contacts in Virginia. The jurisdiction of Virginia to serve the association by registered mail outside Virginia was upheld on the ground that its contacts with Virginia were sufficient to sustain such jurisdiction. The association systematically soliciting new members, usually through unpaid activities of Virginia residents who are already members, delivering insurance certificates through the mail, and investigating benefit claims in Virginia are deemed sufficient contacts. Due process is not violated by Virginias subjection of the association to the jurisdiction of the Commission, at least for the purpose of enforcing the statutory provision which requires the association to accept service of process on the secretary of state. Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964) Facts: Farr, Whitlock & Co. [FW (US)] contracted to purchase Cuban sugar from Compania Azucarera Vertientes-Camaguey de Cuba [CAV (Cuban)] whose capital stock was principally owned by US residents. US Congress then amended the Sugar Act of 1948 to permit a presidentially directed reduction of the sugar quota for Cuba. Cuba took this as an act of aggression justifying the taking of countermeasures. Thus, it enacted a law giving the Cuban President and Prime Minister discretionary power to nationalize by forced expropriation property or enterprises in which American Nationals had an interest. Thereafter, Cuba expropriated the property of the Cuban corporation and Banco Nacional was assigned the bills of lading. Banco Nacional instructed its agent in New York to deliver the bills and a sight draft to FW in return for payment. The agents initial tender of the documents was refused by FW, which on the same day was notified by CAV of its claim that as rightful owner of the sugar it was entitled to the proceeds. It refused to hand over the proceeds to Banco Nacionals agent. Shortly thereafter, FW was served with an order of the New York Supreme Court, which appointed Sabbatino as temporary receiver of CAVs NY Assets. Thus, FW transferred the funds to Sabbatino. Banco Nacional then instituted this action in NY seeking to recover the proceeds of the conversion of the bills of lading. The District Court granted summary judgment against Banco Nacional on the basis that the Cuban expropriatioin decree violated international law. The Court of Appeals affirmed. Held: New York court has no jurisdiction. The act of state doctrine, in its traditional formulation, precludes the courts of the US from inquiring into the validity of the public acts a recognized foreign sovereign power committed within its territory. The judiciary will not examine the validity of a taking of property within its own territory by a foreign sovereign government recognized by the US at the time of suit, in the absence of a treaty or other unambiguous agreement regarding controlling legal principles, even if the complaint alleges that the taking violates customary international law.

Hassan El Fadl v. Central Bank of Jordan, 75 F.3d 668 (D.C. Cir. 1996) Facts: El Fadl is a Lebanese national who has lived in Jordan since 1982. He was employed by Petra International Banking Corporation (PIBC), a subsidiary in the District of Columbia of Petra Bank. Later, he was assigned in PIBC Jordan where he signed a contract under which he would be permanently employed for life as senior manager of PIBC. Still, it was PIBC and NOT Petra Bank which employed El Fadl. Later, the Central Bank of Jordan announced that it had uncovered widespread financial improprieties at Petra Bank and placed Petra Bank in receivership. Since then, Petra Bank has been run by a Liquidation Committee appointed by the Jordanian government. Thereafter, El Fadls employment was terminated by Marto, Petra Banks Administrator. As part of the investigation of the Petra Bank Scandal, El Fadl was arrested, tortured and declared innocent by the military courts. Thereafter, El-Fadl filed suit in the District of Columbia. The case was DISMISSED pursuant to the Federal Sovereign Immunities Act. Held: Columbia has no jurisdiction. The Central Bank of Jordan was a foreign state under the Federal Sovereign Immunities Act and had not waived its sovereign immunity. The act of state doctrine applies. Nabulsi and Marto were also immune because they were being sued in their official capacities as agents of the Central Bank. Holy See v. Judge Rosario, 238 SCRA 524 (1994) Facts: Msgr. Cirilos, Jr., on behalf of the Holy See and the Philippine Realty Corporation (PRC) agreed to sell to Licup 3 parcels of land located in Paraaque. The agreement to sell was made on the condition that earnest money be paid by Licup to the sellers, and that the sellers clear the said lots of squatters. Licup assigned his rights over the property to Starbright Sales Enterprises. Thereafter, Starbright demanded that the sellers fulfill their undertaking and clear the property of squatters. Msgr. Cirilos informed Starbright of the squatters' refusal to vacate, proposing instead either that Starbright undertake the eviction or that the earnest money be returned to the latter. Starbright counterproposed that if it would undertake the eviction of the squatters, the purchase price of the lots should be reduced. Msgr. Cirilos returned the earnest money and wrote Starbright giving it 7 days from receipt of the letter to pay the original purchase price in cash. Starbright sent the earnest money back to the sellers, but later discovered that the Holy See and the PRC sold the lots to Tropicana, so it filed a complaint for annulment of sale, specific performance and damages. The Holy See and Msgr. Cirilos separately moved to dismiss the complaint for lack of jurisdiction based on sovereign immunity from suit. Held: The Holy See has sovereign immunity. The Republic of the Philippines has accorded the Holy See the status of a foreign sovereign. This Court has considered the following transactions by a foreign state with private parties as acts jure imperii: (1) lease by a foreign government of apartment buildings for

the use of its military officers (Syquia v. Lopez, 84 Phil. 312 [1949]; (2) conduct of public bidding for the repair of a wharf at a United States Naval Station (United States of America v. Ruiz, supra.); and (3) change of employment status of base employees (Sanders v. Veridiano, 162 SCRA 88 [1988]). On the other hand, this Court has considered the following transactions by a foreign state with private parties as acts jure gestionis: (1) hiring of a cook in the recreation center, consisting of three restaurants, a cafeteria, a bakery, a store, and a coffee and pastry shop at the John Hay Air Station in Baguio City, to cater to American servicemen and the general public (United States of America v. Rodrigo, 182 SCRA 644 [1990]); and (2) bidding for the operation of barber shops in Clark Air Base in Angeles City (United States of America v. Guinto, 182 SCRA 644 [1990]). The operation of the restaurants and other facilities open to the general public is undoubtedly for profit as a commercial and not a governmental activity. By entering into the employment contract with the cook in the discharge of its proprietary function, the United States government impliedly divested itself of its sovereign immunity from suit. In the absence of legislation defining what activities and transactions shall be considered "commercial" and as constituting acts jure gestionis, we have to come out with our own guidelines, tentative they may be. Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not undertaken for gain or profit. If the Holy See had bought and sold lands in the ordinary course of a real estate business, surely the said transaction can be categorized as an act jure gestionis. However, the Holy See did not acquire or dispose of property for profit. It had acquired the property for the site of its mission or the Apostolic Nunciature in the Philippines. Republic of Indonesia v. Vinzon, 405 SCRA 126 (2003) Facts: The Republic of Indonesia entered into a Maintenance Agreement with Vinzon, wherein he would, for consideration, maintain specified equipment at the Embassy. When the Indonesian Embassy terminated the agreement, Vinzon filed a complaint against Indonesia with the Makati Regional Trial Court. The Republic of Indonesia filed a Motion to Dismiss claiming sovereign immunity from suit. Vinzon alleged that Indonesia has expressly waived its immunity from suit. He based this claim on the provision: Any legal action arising out of this Maintenance Agreement shall be settled according to the laws of

the Philippines and by the proper court of Makati City, Philippines. The motion to dismiss was denied. Held: Indonesias immunity from suit was not expressly waived. The existence alone of the said stipulation is NOT necessarily a waiver of sovereign immunity from suit. The aforesaid provision contains language NOT necessarily inconsistent with sovereign immunity. Submission by a foreign state to local jurisdiction must be clear & unequivocal. It must be given explicitly or by necessary implication. We find no such waiver in this case. The establishment of a diplomatic mission is an act jure imperii. A sovereign state does not merely establish a diplomatic mission and leave it at that. The establishment of a diplomatic mission encompasses its maintenance and upkeep. Thus, Indonesia was acting in pursuit of a sovereign activity when it entered into a contract with Vinzon for the upkeep of specified equipment. Choice Of Law Cases: Huntington v. Attrill, 146 U.S. 657 (1892) Facts: Collis Huntington secured a favorable judgment against Atrill in the court of New York. Since Atrill acquired a large amount of stock in Equitable Gas Light Company of Baltimore (Maryland Corp) and held the same in trust for his wife and three daughters, (residents of Canada), Huntington filed a bill in equity in Baltimore to set aside the said transfer of stock. Attrill contends that the New York judgment is unenforceable in the Maryland court because the law in question is penal in nature. The Baltimore court granted the bill of equity. The Court of Appeals of Maryland reversed and refused to enforce the New York judgment. Held: The New York judgment is enforceable in Maryland. As the statute imposes a burdensome liability on officers for their wrongful act, it may well be considered penal, in the sense that it should be strictly construed. But as it gives a civil remedy, at the private suit of the creditor only, and measured by the amount of his debt, it is as to him clearly remedial. To maintain such suit is not to administer a punishment imposed upon an offender against the state, but simply to enforce a private right secured under its laws to an individual. The statute of New York making the officers of a corporation who sign and record a false certificate of the amount of its capital stock liable for all its debts is not a penal law in the sense that it cannot be enforced in a foreign state or country. Bellis v. Bellis, 126 Phil. 726 (1967) Facts: Amos Bellis, born in Texas, was a citizen of the state of Texas. With his first wife,

he had 5 legitimate kids. With his second wife, he had 3 legitimate kids. Finally, he had 3 illegitimate kids. Bellis executed a will in the Philippines. Later, Bellis died, a resident of San Antonio, Texas, U.S.A.. His will was admitted to probate in the Court of First Instance of Manila. Later, Maria Cristina and Miriam Palma Bellis filed their oppositions to the project of partition on the ground that they were deprived of their legitimes as illegitimate children and compulsory heirs of the deceased. Held: Texas law applies. They are not entitled to legitimes. The doctrine of renvoi is usually pertinent where the decedent is a national of one country, and a domicile of another. In the present case, it is not disputed that the decedent was both a national of Texas and a domicile thereof at the time of his death, so that even assuming Texas has a conflict of law rule providing that the domiciliary system (law of the domicile) should govern, the same would not result in a reference back (renvoi) to Philippine law, but would still refer to Texas law. The parties admit that the decedent was a citizen of the state of Texas, U.S.A., and that under the laws of Texas, there are no forced heirs or legitimates. Accordingly, since the intrinsic validity of the provision of the will and the amount of successional rights are to be determined under Texas law, the Philippine law on legitimes cannot be applied to the testacy of Amos Bellis. Zalamea v. Court of Appeals, 228 SCRA 23 (1993) Facts: Despite confirming their tickets for a flight from New York to Los Angeles with TransWorld Airlines, Inc., the Zalameas were waitlisted when they checked in due to overbooking. The Regional Trial Court awarded moral damages finding bad faith in overbooking. The Court of Appeals reversed. Held: There was bad faith in overbooking. In this jurisdiction, jurisprudence states that overbooking amounts to bad faith, entitling passengers to an award of moral damages. The U.S. law or regulation allegedly authorizing overbooking has never been proved. Foreign laws do not prove themselves nor can the courts take judicial notice of them. Like any other fact, they must be alleged and proved. Even if the claimed U.S. Code of Federal Regulations does exist, the same is not applicable to the case at bar in accordance with the principle of lex loci contractus which requires that the law of the place where the airline ticket was issued should be applied by the court where the passengers are residents and nationals of the forum and the ticket is issued in such state by the defendant airline. Since the tickets were sold and issued in the Philippines, the applicable law in this case would be Philippine law. Garcia v. Recio, 418 Phil. 723 (2001)

Facts: Recio (Filipino) married Samson (Australian) in Malabon, Rizal. A decree of divorce was issued by an Australian court. Thereafter, Recio became an Australian citizen. Later, Garcia (Filipina) and Recio were married in Cabanatuan City. Garcia filed a complaint for declaration of nullity of marriage on the ground of bigamy. Recio says that his prior marriage had been validly dissolved and that he was legally capacitated to marry Garcia. While the suit for declaration of nullity was pending, Recio was able to secure a divorce decree from a family court in Australia. Thus, Recio prayed in his Answer that the complaint be dismissed on the ground that it stated no cause of action. The Regional Trial Court dissolved the marriage between Garcia and Recio NOT on the ground of Recios lack of legal capacity to remarry BUT on the basis of the divorce decree from Australia. Hence, this petition. Held: Recio was legally capacitated to marry Garcia. Divorce of the first marriage was proven. The case should be remanded to determine if Recio is capacitated to remarry. Philippine law does not provide for absolute divorce for its citizens even if they are abroad but aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law. A divorce decree does not raise a disputable presumption or presumptive evidence as to the civil status of the person presenting it where no proof has been presented on the legal effects of the divorce decree obtained under the foreign law. The legal capacity to contract marriage is determined by the national law of the party concerned. A divorce decree does not ipso facto clothe a divorcee with the legal capacity to remarry. He must still adduce sufficient evidence to show the foreign states personal law governing his status, or at the very least, he should still prove his legal capacity to contract the second marriage. The court may not declare the second marriage of a divorcee null and void on the ground of bigamy where there is a possibility that, under the foreign law, the divorcee was really capacitated to remarry as a result of the divorce decree. The most judicious course is to remand the case to the trial court to receive evidence, if any, which shows the divorcees legal capacity to remarry. Asiavest Merchant Bankers v. Court of Appeals, 361 SCRA 489 (2001) Facts: Asiavest (Malaysia) initiated a suit for collection against Philippine National Construction Corporation (PNCC) (Philippines) before a Malaysian Court for the payment of the latters outstanding obligations. Judgment was rendered in favor of Asiavest. Asiavest initiated a complaint before the Pasig Regional Trial Court to enforce the judgment. PNCC contends that the judgment is tainted with want of jurisdiction, want of notice to PNCC, fraud and clear mistake of law.

Held: The Malaysian judgment is enforceable in the Philippines. A foreign judgment is presumed to be valid and binding in the country from which it comes, until a contrary showing, on the basis of a presumption of regularity of proceedings and the giving of due notice in the foreign forum. The recognition to be accorded a foreign judgment is not necessarily affected by the fact that the procedure in the courts of the country in which the judgment was rendered differs from that of the courts of the country in which the judgment relied on. Matters of remedy and procedure, such as those relating to the service of summons or court process upon the defendant, the authority of counsel to appear and represent a defendant, and the formal requirements in a decision, are governed by the lex fori or the internal law of the forum i.e., the law of Malaysia in this case. In this case, it is the procedural law of Malaysia where the judgment was rendered that determines the validity of the service of court process on private respondent as well as other matters raised by it. As to what the Malaysian procedural law is remains a question of fact not of law. It may not be taken judicial notice of and must be pleaded and proved like any other fact. Sections 24 and 25 of Rule 132 of the Revised Rules of Court provide that it may be evidenced by an official publication or by a duly attested or authenticated copy thereof. It was then incumbent upon private respondent to present evidence as to what that Malaysian procedural law is and to show that, under it, the assailed service of summons upon a financial officer of a corporation, as alleged by it, is invalid. It did not. Accordingly, the presumption of validity and regularity of service of summons and the decision thereafter rendered by the High Court of Malaya must stand. Where under the procedural rules of another state a valid judgment may be rendered even without stating in the judgment every fact and law upon which the judgment is based, then the same must be accorded respect and the courts in this jurisdiction cannot invalidate the judgment of the foreign court simply because our rules provide otherwise. It is not for the party seeking enforcement of a foreign judgment to prove the validity of the same but for the opposing party to demonstrate the alleged invalidity of such foreign judgment, otherwise a contrary rule would render meaningless the presumption of validity accorded a foreign judgment. B. ENFORCEMENT A local court may refuse to recognize or enforce a foreign judgment when:115
1.

The requisite proof of the foreign judgment may not have been
116

presented;
115 116

SEMPIO-DIY, supra note 98, at 152. RULES OF COURT, Rule 132, sec. 5.

2. The foreign judgment may contravene a recognized and established policy in the country; or 3. The administration of justice in the country where the foreign judgment came from may be shockingly corrupt or not beyond reproach. Enforcement includes recognition, while recognition does not necessarily include enforcement, where no affirmative relief is claimed.117 A foreign judgment may be recognized and enforced in the Philippines only when the losing party is in the Philippines or he has property in the Philippines against which the judgment may be executed.118

117

118

RUBEN AGPALO, CONFLICT OF LAWS 579 (2004), citing Perkins v. Benguet Consolidated Mining Co., 93 Phil. 1034, 1053 (1954). Id.