Professional Documents
Culture Documents
ANSWERS TO QUESTIONS
AT THE ENDS OF THE CASES
1
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2 UNIT TWO: THE PUBLIC AND INTERNATIONAL ENVIRONMENT
2A. What considerations can take precedence over comity? A nation’s own laws and
public policies take precedence over the principle of comity. If an executive, legislative, or
judicial act of another country is inconsistent with the law and public policy of the nation being
asked to give it effect, the nation is not likely to defer to it.
And, as the court in the Linde case, stated, “International comity calls for more than an
examination of only some of the interests of some foreign states. Rather, the concept of
international comity requires a particularized analysis of the respective interests of the foreign
nation and the requesting nation. In other words, the analysis invites a weighing of all of the
relevant interests of all of the nations affected by the court's decision.”
3A. What interests were at stake at the heart of the dispute of this case? In the Linde
case, the court was asked to balance interests that were significant and serious to all of the
parties. Among those interests was the conflict that the defendant Arab Bank faced between
complying with the discovery orders of a U.S. court and the bank secrecy laws of its host
countries. The interests of those nations, (Jordan and Lebanon) in enforcing their secrecy laws
conflicted with their own interest in deterring financial support for terrorism. Other interests
include the plaintiffs' and the United States' interests in seeking relief for and deterring acts of
terrorism. The bank also had interests in avoiding liability for damages and an impaired
reputation at being labeled a supporter of terror. And the U.S. courts that heard the Linde case
and its appeal were faced with comity concerns in balancing all of these interests.
4A. Did this court apply the principle of comity? Why or why not? The trial court in the
Linde case recognized that an interest in deterring the financial support of terrorism has often
outweighed the enforcement of bank secrecy laws, even in foreign states. And the court took
into account U.S. interests in the effective prosecution of civil claims under the federal Anti–
Terrorism Act and the Alien Tort Claims Act. With these considerations in mind, the court
concluded that “the interests of other sovereigns in enforcing bank secrecy laws are outweighed
by the need to impede terrorism financing as embodied in the tort remedies provided by U.S.
civil law and the stated commitments of the foreign nations.” The court did not apply the
principle of comity and give effect to the other nations’ bank secrecy laws, but imposed
sanctions on the defendant Arab Bank for failing to comply with the court’s order to disclose
certain documents.
In the words of the U.S. Court of Appeals for the Second Circuit, to which the lower
court’s decision and order was appealed, “This type of holistic, multi-factored analysis does not
so obviously offend international comity.” The appellate court affirmed the judgment of the lower
court.
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CHAPTER 8: INTERNATIONAL LAW IN A GLOBAL ECONOMY 3
disputes abroad. Under the Convention’s implementing legislation, the parties must have some
connection to a foreign country to arbitrate disputes outside the United States. Without such a
requirement, more parties would choose to arbitrate disputes in countries with which they have
no real relationships, meaning that more disputes would be arbitrated abroad.
ANSWERS TO QUESTIONS
IN THE REVIEWING FEATURE AT THE END OF THE CHAPTER
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4 UNIT TWO: THE PUBLIC AND INTERNATIONAL ENVIRONMENT
The U.S. federal courts are accepting too many lawsuits initiated by foreigners that
concern matters not relevant to this country. Our federal courts are already overwhelmed by
normal lawsuits that concern purported wrongs committed on U.S. soil that involve residents of
this country. Why should we become the preferred jurisdiction for lawsuits that involve human
rights issues in other countries? Why should we become the preferred jurisdiction for purported
employment discrimination that might have taken place outside of the U.S.? We are not the
world’s conscience.
The U.S. has one of the best-run and most fair federal judiciaries in the world. We still
support freedom and democracy. Therefore, it is appropriate that when, for example, human
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CHAPTER 8: INTERNATIONAL LAW IN A GLOBAL ECONOMY 5
rights are violated by companies that operate in other countries, the aggrieved can avail
themselves of our federal courts. Also, if a U.S. company that operates abroad violates our
employment discrimination or antitrust laws, then that company should be sued in the
U.S. Obviously, other countries do not have the same high standards that we have in these
matters.
1A. Café Rojo, Ltd., an Ecuadoran firm, agrees to sell coffee beans to Dark Roast
Coffee Company, a U.S. firm. Dark Roast accepts the beans but refuses to pay. Café Rojo
sues Dark Roast in an Ecuadoran court and is awarded dam ages, but Dark Roast’s as
sets are in the United States. Under what circumstances would a U.S. court enforce the
judgment of the Ecuadoran court? Under the principle of comity, a U.S court would defer and
give effect to foreign laws and judicial decrees that are consistent with U.S. law and public
policy.
2A. Gems International, Ltd., is a foreign firm that has a 12 percent share of the U.S.
market for diamonds. To capture a larger share, Gems offers its products at a below-cost
discount to U.S. buyers (and inflates the prices in its own country to make up the
difference). How can this attempt to undersell U.S. businesses be defeated? The practice
described in this problem is known as dumping, which is regarded as an unfair international
trade practice. Dumping is the sale of imported goods at “less than fair value.” Based on the
price of those goods in the exporting country, an extra tariff—known as an antidumping duty—
can be imposed on the imports.
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6 UNIT TWO: THE PUBLIC AND INTERNATIONAL ENVIRONMENT
demand for its products. Franchising is a form of licensing that generally involves trademarks
more than patented products. If Macrotech had not obtained a patent on its chip but had
trademarked the brand name “Flash,” for example, the firm could license Nitron to use the mark,
probably under certain conditions or limitations, in exchange for a fee, based on a percentage of
sales. Another way to expand into the Pacifica market would be to establish a wholly-owned
subsidiary in Pacifica. Macrotech would own the facility, and could maintain authority and
control over all phases of the operation. Macrotech might alternatively enter into a joint venture
with Nitron. In a joint venture, Macrotech and Nitron would each own only part of the operation,
and they would both share responsibilities, profits, and liabilities.
8-2A. Dumping
(Chapter 8—Page 175)
Yes, it is a reasonable approach to rely on the producers’ financial re-cords, which are
reasonably reflective of their costs because their normal allocation methodologies were used for
a number of years. These records are historically re-lied upon to present important financial
information to share-holders, lenders, tax authorities, auditors, and other third parties. Provided
that the producers’ records and books comply with generally accepted accounting principles and
were verified by independent auditors, it is reasonable to use them to determine the production
costs and fair market value of canned pineapple in the United States.
8–4A. Dumping
(Chapter 8—Page 175)
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CHAPTER 8: INTERNATIONAL LAW IN A GLOBAL ECONOMY 7
Dumping is the sale of imported goods at “less than fair value.” “Fair value” can be determined
from the price of the goods in the exporting country. (The goal is to undersell the businesses in
the importing country to obtain a larger share of its markets.) In the United States, an added
tariff, known as an antidumping duty, is sometimes assessed on the imported goods. The pivotal
question is whether the SWU contracts should be considered contracts for sales of goods or for
provisions of services (to which the dumping concept does not apply). Because the feed
uranium delivered by a utility to an enricher was not always returned as LEU to the utility and
the contracts did not provide for the tracking of unenriched uranium that the utility delivered to
the enricher, but treated it as fungible commodity, it seems most reasonable to interpret the
transactions as sales of goods. Under that interpretation, given the other facts—the enrichers
are foreign, the LEU is imported, its price is “less than fair value”—this situation constitutes
dumping. An antidumping duty could be assessed on the LEU.
In the events on which this problem is based, the U.S. Commerce Department interpreted
the SWU contracts as contracts for sales of goods and determined that the LEU the domestic
utilities received under their SWU contracts with foreign enrichers was being sold at “less than
fair value” and thus subject to the antidumping provision. Federal courts reversed this ruling, but
the United States Supreme Court reversed these judgments and remanded the case.
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8 UNIT TWO: THE PUBLIC AND INTERNATIONAL ENVIRONMENT
private party engages in commerce, the state’s actions are likewise commercial.
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CHAPTER 8: INTERNATIONAL LAW IN A GLOBAL ECONOMY 9
In the facts of this problem, Iran engaged in commercial activity outside the United States
by making and marketing its counterfeit versions of Bell’s Model 206 Series helicopters. This
activity caused a direct effect in the United States by the consumer confusion that will likely
result from Iran’s unauthorized use of Bell’s trade dress. Thus, the court can exercise jurisdiction
in these circumstances, and Iran may be as liable as a private party would be for the same acts.
In the actual case on which this problem is based, Iran did not respond to Bell’s
complaint. The court held that it had jurisdiction under the FSIA’s commercial activity exception,
as explained above. The court entered a default judgment against Iran and awarded damages
and an injunction to Bell.
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10 UNIT TWO: THE PUBLIC AND INTERNATIONAL ENVIRONMENT
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CHAPTER 8: INTERNATIONAL LAW IN A GLOBAL ECONOMY 11
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