Legal Defenses in International Law and Practice - Assignment Example

Open Memo Assignment Introduction With the intention of providing assistance for the host government and its money-making entities above the home government and its complainants in jurisdictional struggles, definite legal defenses have developed up in and about international law and practice weighing in favor of the host government or its private defendants fighting back foreign jurisdiction in certain situations (Wallance 3). When a foreign government is directly involved in a jurisdiction lawsuit, one of three main defenses may be available to it or to a private defendant; ‘Act of state’, ‘sovereign immunity’ or ‘sovereign compulsion’(Wallance 4-7). These defenses have led to conflicts hindering foreign relations resulting to passing of blocking statutes in some states by some nations, for instance England, France, Canada and Australia. In the breakthrough verdict of, United States versus Aluminum Company of America, the second circuit apprehended that U.S courts have substance matter jurisdiction on antitrust action committed abroad it exaggerated, and was intentionally projected to affect trade in the United States. This resolution is the foundation of implementation antitrust laws on the global scale (Wallance 8). Act of State An act of state, is articulated in Underhill versus Hernandez, is the principle that, “…..the courts of one country will not sit in judgment of the acts of the government of another done within its territory”. Regardless of this ruling, there have been various attempts to make exemptions for cases where the government itself is engaged in the commercial activity in question. The grounds for such exemptions are not clearly leading to inconsistences in court practices. For instance, in International Association of Machinists and Aerospace Workers versus OPEC, a commercial activity was dismissed on the basis of the act of state. This necessitated the courts to differentiate amongst sovereign immunity, which scrutinizes the nature reasonably than the drive of the state doings, and an act of state, which concentrates on the drive of the acting state (Wallance 17-37). Though distinguishable on the grounds of the presence a pure contract, the contrary of this doctrine was upheld in Alfred Dunhil of London, Inc versus Cuba, where the court held that the act of state principle did not apply to a foreign sovereign acting in a commercial capacity. In seeking to enhance understanding of this principal, The United State supreme courts stated that,’…act of state issues only arise when a court must decide,-that is, when the outcome of the case turns upon- the effect of official action by a foreign sovereign. When that question is not the case, neither is the act of state doctrine’. This principal has resulted to conflicts in ruling in most instances resulting to wide criticism with many arguing it should be abolished all together (Wallance 45-68). Sovereign Immunity This international law principal stems from the unconditional immunity for the conduct of anindependent state to one for a more limiting interpretation. It seeks guidance on what constitutes commercial activity. The definition was enhanced in the case of Republic of Argentina versus Weltover, In which the court stated that, ‘……when a foreign government acts not as a regulator of a market, but in the manner of a private player within it’…then such a state will be considered to be a commercial entity in legal terms. The consequences of such an occurrence are imposition of significant penalties or the denial of specific substantial benefits along with the unprecented restrictions (Wallance 89-112). Discussion This paper recognizes that the globalization of the economy and the complexity of international economic transactions cannot accommodate the application of the above doctrines in a rigid manner. It also acknowledges that jurisdictional requests must differ somewhat among unlike subject mattersthus; an exercising state is a constituting element of an act in a legal battle. Intangible effects such as economic injury are important considerations regardless of the invocation of principle requirement (Wallance 204-378). United States has the longest history of extraterritorial conflicts enforcements and most of other approaches to extraterritorial dispute handling stems from United State practice. In Lodos case, invocation of act of state doctrine requires the evaluation of the purpose of the company activity. This involves two dimension; purpose from Lodos point of interest and purpose from Alphas point of interest. It is evident that Lodo Company is a commercial entity from the description of its construction of oilrigs. Its motivation on the negotiation stage is profit making. This is accordance to commercial entities core motive. The contractual agreement of Lodo company are pure and in accordance to business contract requirements (Wallance 317-456). With the government owning more than half of the Alpha company stock, it conduct is that of commercial descriptions in relation to business contract. This act is thus applicable by the plaintiffon the basis that the defendant is not an independent state rather than it is a commercial entity. This is in relation to the ruling in Alfred Dunhill of London, Inc versus Cuba where the court held that with sovereign nation acting in a commercial capacity, act of state doctrine is not applicable in its defense. The motivation behind the actions of a commercial entity, are completely different from the motivation behind the action of a sovereign state. On the basis of this ruling, the plaintiff has an avenue for legal case inspite of recognition of Taralas a country as a sovereign state by international bodies (Wallance 459). In relation to the act of state doctrine, the courts of one country are not allowed to sit in judgment of the acts of the government of another done within its territory has concluded in Underhill versus Hernandez case. This creates an avenue for the plaintiff to sue Alpha for breach of contract and trust. Absence of exit clause on the contract gives no room for Alpha to terminate the contract. Under this doctrine, the plaintiff is free to exploits all avenues in relation to past rulings in his favor (Wallance 461). Principle of sovereign immunity offers that a foreign state is completely immune as of the jurisdiction of the courts of another sovereign state. This doctrine has its roots in the Schooner Exchange versus McFadden, where the plaintiffs, claiming to the rightful owner of a French ship sought the execution of the vessel supporting their claims on international customs. Justice Marshall determined this state of absolute immunity referring on the importance of maintaining friendly relations with other nations and at the time drawing a clear distinction between an armed public vessel and private merchant vessels of foreign nations entering the United States. His decision was endorsed by the supreme courts laying grounds for absolute state immunity (Wallance 467). However, with increasing interacting activities of different nations, absolute immunity is an unfair judicial response and favors the host state. This contributes to the developing doctrine of restrictive sovereign immunity. These developments have led to international arbitrations regimes in protection of both plaintiff and defendants’ rights because of complications in exemption provision by restrictive immunity (Wallance 478). Claiming sovereign immunity will not be an efficient way of Alpha to avoid satisfactory claims. An illustration is in the case of LETCO versus ship-owners and agents in Liberia where in an attempt to find government assets to raise claim against them, the plaintiff ended up incurring four separate litigations with no favor in outcome. LETCO, a French entity had entered into contract with the Liberian government in which the Liberian government failed to make satisfactory rewards. LETCO filed a suit against the government in New York seeking execution of the contract. The Liberian government moved a motion against execution of its property arguing that collected by the government, its assets and taxes were in contract with the citizens, which constituted its assets as sovereign and not commercial. The ruling was made in favor of the Liberian government (Wallance 502-507). In the case of sedelmayer versus Russia, a dispute emerged between Germany and Russia after sedelmayer, a German company worn an award amounting to 2,350,000 dollars in the Russian federation. Sedelmayer compensation however required him to locate more than one asset in Russian state enforcement, filling multiple claims in order to bring the award into satisfaction. The plaintiff located the use of German airspace by the Russian as the grounds for the awards. When brought before the courts, they courts denied the execution, ruling the award was immune because they were intended for sovereign, not commercial purposes. In clarity, the judge explained that usage of German airspace by the Russian was a matter of sovereign purposes and not commercial purposes. In the manner as the earlier ruling in LETCO case, the defendant was given immunity as a sovereign state (Wallance 701). As evidenced in the above two scenario, sovereign immunity is a wide principal leaving a wide are for a state to be awarded absolute immunity in matters relating to government transactions. In our case, Alpha Company though acting as a commercial entity is able to invoke the principle of sovereign immunity through arguing that, though the government owned more than half of the stock in the company, government actions were in contracts with it citizens as observed in LETCO case (Wallance 708). Where the government actions are in contracts with its citizens, it means that all its activities including, profits, economic stability, business contracts, taxes among others are sovereign. Thus no legal is above the motive behind such contracts. If the plaintiff were to be awarded in this case, the defendant under sovereign veil will require the plaintiff to identify government assets and activities from which award is to be satisfied. As observed in Sedelmayor case, all government activities and assets are sovereign in the outcome or profit generated from them is meant for the citizens (Wallance 715). Conclusion This paper concludes that, Alpha acting as a commercial entity or a government body is able to receive absolute immunity in any proceedings brought against it. According to section 1603(b), the foreign jurisdiction act, the actdoes not define whether it governs individual or company contracts between investors and sovereign nations. This creates ambiguity which leaves the plaintiff in this case scenario at the ruling of the court regarding its ability to institute claim against a sovereign state. This paper concludes that, the plaintiff is exposed to vague avenues in seeking compensation for the breach of the contract. The defendant is adequately covered by sovereign immunity doctrine and is able to pursue it in any legal proceeding brought against him. Work Cited Wallance D. Cythia. ‘The Multinational Enterprise and Legal Control: Host State Sovereignty in an Era of Economic Globalization’. MartinusNijhoff Publishers (2002): 3-715 Read More