Online Scholarship

I. INTRODUCTION*

U.S. courts face a difficult challenge when considering whether to hear a case brought by foreign plaintiffs for alleged tort injuries that have occurred abroad. In opposing motions to dismiss based on forum non conveniens, foreign  plaintiffs have argued that a dismissal would effectively leave them without a remedy. They reason that the courts of countries where the tort occurred are so grossly and explicitly biased against the defendants, typically U.S.  corporations, that a foreign judgment would be unenforceable in the U.S. courts. This is potentially the case with Law 364 in Nicaragua, which establishes enormous advantages for local plaintiffs—such as establishing an irrefutable presumption of causation based on minimal standards of proof—as well as disadvantages for the foreign defendants—such as requiring them to deposit large bonds with the court just to gain access to the proceedings.

Foreign plaintiffs in the United States hope to either force U.S.-based corporate defendants to litigate cases in the U.S. or bootstrap these bad foreign laws into judgments that are enforceable in U.S. courts. Indeed, it is no surprise that foreign plaintiffs, with the support of their U.S. lawyers, appear to be behind the efforts to enact some of these laws. The strategy is clear and cunning—foreign laws that discriminate against U.S. defendants (hereinafter “discriminatory foreign laws” or “DFLs”) can be the predicate for U.S. jurisdiction for foreign plaintiffs.

A variation on this theme is DFLs that render local courts unavailable to plaintiffs once a case has been merely filed in the United States. Here, the message to the U.S. court is that dismissal of the case will mean plaintiff has no forum at home. In the case of Nicaragua, the foreign plaintiffs often do not even have to make these arguments. They can rely on the defendants not asking for a dismissal for fear that such dismissal—based on forum non conveniens—will lead to an unfair foreign judgment that might later be enforced in the United States. It is too risky to take that chance.

This paper argues that U.S. courts should dismiss cases premised on DFLs under forum non conveniens, while continuing to refuse to enforce any judgments obtained under such laws. The long-standing position of U.S. law has been that the parameters of dispute resolution—level of damages, choice of law, types of proceedings—should take place in the jurisdiction where the dispute arose. This paper further suggests that a federal statute is necessary to achieve this result.

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* This excerpt does not include citations. To read the entire article, including supporting notes, please download the PDF.

I. INTRODUCTION*

The most prominent example of the economic impact that competitive federalism has had in the United States is without question the State of Delaware. Delaware, the third smallest state of the country, is the leading legal residence for both U.S. and international corporations. Over 50% of all publicly traded companies in the United States, including 60% of the Fortune 500 companies, have chosen Delaware as their place of incorporation. As a result, Delaware represents an important potential model for furthering competition among member states of the European Union, a model that gains more practical relevance with every decision of the European Court of Justice (ECJ) regarding freedom of establishment and freedom of movement. This article does not directly discuss the potential advantages of a European market for incorporations. Rather it seeks to demonstrate that a national market for incorporations can be established in Germany, the EU’s largest economy, thereby adding the sixteen German federal states as individual participants to a (future) European market and creating opportunities for less prosperous German states to improve their financial situation through an attractive regulatory framework.

In 2002, the German Federal Constitutional Court’s decision in the Altenpflegeurteil case enabled states for the first time to regulate corporate law so long as the constitution’s “necessity clause” did not apply. The necessity clause, derived from Art. 72 II of the German Constitution (GG), applies if federal legislation is necessary either to ensure the equality of living conditions throughout Germany or to safeguard the economic and legal unity of the nation. However, even if the 16 states passed different legislation regulating corporate charters, it would neither affect the living conditions of the German people to the extent that they become unequal nor represent a threat to the legal or economic unity of the country. Therefore, the necessity clause is not applicable in this case, and federal legislative authority regarding corporate charters is unnecessary. Even though the states have not yet taken advantage of their ability to pass corporate law, the Altenpflegegesetz decision provides the opportunity for German states to establish a competitive market for incorporations.

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* This excerpt does not include citations. To read the entire article, including supporting notes, please download the PDF.

I. Introduction*

The United States is currently finalizing the process of negotiating a set of agreements to define the long-term relationship between the United States and Iraq. This process, which began in the fall of 2007, currently envisions both a status of forces agreement and a long-term security arrangement, which the parties have termed the Strategic Framework Agreement. As of August 2008, near final drafts of both agreements had been reached, although neither had been formally approved by the Iraqi government. While recent negotiations have focused primarily on technical details of the status of forces agreement, such as basing arrangements and immunity for contractors, the Strategic Framework Agreement raises serious constitutional concerns. The Bush administration has consistently maintained that no part of the agreements currently under negotiation requires congressional approval. In this, it is mistaken.

The Administration’s position misunderstands both the nature of commitments in international law and the constitutional requirement of legislative participation in such agreements. The absence of an explicitly binding security commitment to Iraq in the proposed agreement does not, as the Administration claims, resolve the issue. Even absent an explicit security commitment, an implicit security commitment can exist as a matter of international law—and, in fact, will exist—if the President proceeds to put in place the security arrangement that is currently under negotiation. International law does not strictly distinguish between formal agreements and tacit agreements, which are understandings arising from conduct that may be equally binding. Nor are the constitutional requirements of Senate advice and consent limited to agreements that are explicitly binding. Tacit commitments have been an area of long-standing concern to the Senate. Those concerns are directly applicable to the proposed agreement with Iraq, which exhibits every one of the factors giving rise to such a commitment.

This article will examine the background and justifications for the Strategic Framework Agreement currently under negotiation. It will then explain why as a matter of international law the mere designation of an agreement as nonbinding is insufficient. Further, it will examine the Senate’s history of constitutional concern with the creation of tacit commitments by the Executive and will compare this concern to the Founders’ understanding of the role of the legislature in the formation of international agreements. Finally, it will conclude that the proposed Strategic Framework Agreement would create a tacit commitment to the security of Iraq and is constitutionally required to be submitted to the Senate as a treaty.

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* This excerpt does not include citations. To read the entire article, including supporting notes, please download the PDF.