2016 Year-End Transnational Litigation Update

April 18, 2017

There were several significant developments in the transnational litigation sphere in 2016.  On August 8, 2016, a unanimous panel of the Second Circuit affirmed the judgment against New York lawyer Steven Donziger and two of his Ecuadorian clients, which granted Chevron equitable relief under the federal Racketeer Influenced and Corrupt Organizations Act ("RICO") and New York common law respecting a fraudulently procured $9.5 billion Ecuadorian judgment.[1]  The Second Circuit’s much-anticipated opinion represents a resounding victory for Chevron and other companies facing fraudulent litigation abroad.[2]  Throughout 2016, courts in the United States continued to address key issues relating to their jurisdiction over transnational disputes and the extraterritorial reach of U.S. laws.  Developments in transnational litigation were not confined to the borders of the United States, however.  Accordingly, this annual update also captures key transnational litigation developments in foreign jurisdictions, as well as other developments of interest to transnational practitioners in the United States and around the globe.

I. Developments in Transnational Jurisdiction.  Daimler AG v. Bauman, 134 S. Ct. 746 (2014), continues to have profound impacts on the development of the law regarding personal jurisdiction.  While litigants continue to search for methods to secure jurisdiction over foreign defendants, courts have further applied and developed the doctrine set forth in Daimler in a manner that has allowed many defendants–both foreign and domestic–to successfully move to dismiss actions on personal jurisdiction grounds. 

II. The Continued Evolution of Extraterritoriality.  In 2016, United States courts continued to analyze whether and when U.S. laws apply extraterritorially.  On June 20, 2016, the Supreme Court issued its opinion in RJR Nabisco, Inc. v. European Community.[3]  In RJR, the Court held that the RICO Act’s substantive provisions apply extraterritorially only to the extent that the predicate criminal offenses required to establish a RICO claim may apply to extraterritorial conduct.[4]  Most notably, however, RJR established a "two-step framework" to determine whether a statute applies extraterritorially:  the court must first ask whether the normal "presumption against extraterritoriality" has been rebutted by a "clear, affirmative indication that [the statute] applies extraterritorially," and only if there is no such indication, then the court must ask whether the case otherwise involves a domestic application of the statute by looking to the statute’s "focus."[5]  In the second half of 2016, lower courts have struggled to interpret and apply the Court’s "two-step framework," both in and outside the context of RICO claims. 

III. Cross-Border Discovery.  The number of petitions in U.S. federal courts seeking discovery in aid of foreign proceedings filed under 28 U.S.C. § 1782 increased in 2016.  While the standard for obtaining discovery under Section 1782 remains liberal, some recent decisions reinforce the limits on such discovery.  In addition, U.S. counsel for foreign corporations have been targeted for Section 1782 discovery for use in foreign proceedings against their clients.  Internet service providers and social media companies have similarly been targeted for discovery related to their users. 

IV. Transnational Supply Chain Liability:  A Continued Threat.  One issue, in particular, related to Transnational Supply Chain Liability is worth highlighting as an area to know and watch.  Recently, corporate social responsibility has been increasingly important to companies and companies have looked to expand their role in this area.  Such action, however, does carry with it some risk.  Gibson Dunn analyzed this issue in a recent Client Alert, which can be found here.   

V. Targeting Transnational Fraud.  The Second Circuit’s decision in Chevron Corporation v. Donziger represents a major victory for litigants fighting to expose transnational fraud.  A growing area of transnational fraud, however, involves the online sale of counterfeit goods.  In recent years, litigants have turned to courts in the United States and Europe to track down counterfeiters and prevent them from engaging in further infringing activity.  In addition, the United States and foreign governments have enacted legislation and regulations targeting international counterfeiting.

VI. Foreign Judgment Recognition and Enforcement.  Foreign judgment recognition and enforcement–and defenses thereto–are bedrock issues in transnational litigation.  This section discusses key developments in this area, including developments in U.S. recognition and enforcement, international arbitration award recognition and enforcement, and international recognition and enforcement.

VII. Key Developments in EuropeThis section discusses key transnational litigation developments in European countries with respect to jurisdiction, recognition and enforcement, and clarifications in law applicable to non-contractual and contractual obligations.

VIII. Trends in International Arbitration.  This section examines three top trends in international arbitration in 2016, international arbitration cases to know and watch from 2016, and region-specific advances related to third-party funding for arbitration in Asia and recognition of arbitral awards in the Middle East.

I.     Developments in Transnational Jurisdiction:  Daimler AG v. Bauman Continues to Thwart Improper Forum Shopping, but Plaintiffs Continue to Seek Alternatives

Daimler AG v. Bauman, 134 S. Ct. 746 (2014), decided nearly three years ago, continues to have profound impacts on the law of personal jurisdiction and therefore gets the lead in this annual update.  Daimler has curtailed the ability of plaintiffs to forum shop, with defendants often winning quick dismissals on personal jurisdiction grounds.  While litigants continue to search for methods to secure jurisdiction over defendants, courts have continued to enforce the holdings of Daimler and other cases and dismissed actions on personal jurisdiction grounds.  This remains true over the past year, and an analysis of lower courts’ treatment of Daimler and other personal jurisdiction cases reveals several trends. 

A.    Courts Continue to Apply Daimler to Limit General Personal Jurisdiction

Courts continue to apply Daimler to restrict the exercise of personal jurisdictions over corporate defendants.  As one federal district court noted, "lower courts have recognized that it is now incredibly difficult to establish general jurisdiction in a forum other than the place where a defendant is incorporated or has its principal place of business."[6]  This trend continued over the past year, with courts routinely holding that unless one of these two "paradigm" bases for general jurisdiction was present, corporate defendants were not "essentially at home" in a forum and could not be subject to general personal jurisdiction there.[7]  Recent examples include:   

In First National Bank of Pennsylvania v. Transamerica Life Insurance Company, the Western District of Pennsylvania held that plaintiffs failed to demonstrate that an "exceptional circumstance" existed that would justify exercising general jurisdiction over JP Morgan Chase Bank ("JPMC").[8]  Though JPMC had an office in Pennsylvania, brought hundreds of lawsuits there, and extended hundreds of millions of dollars in loans there, those contacts were not so significant when compared to the other states JPMC operated within to render it essentially at home in Pennsylvania.[9]  Because JPMC was neither incorporated nor headquartered in Pennsylvania, and because the plaintiffs could not demonstrate an "exceptional" case for general jurisdiction, the court dismissed the action on personal jurisdiction grounds.[10]   

In Brown v. Lockheed Martin Corporation, the defendant was neither incorporated in Connecticut nor headquartered there, but it had operated in the state for 30 years, employed dozens of employees, leased multiple offices, and generated hundreds of millions of dollars in revenue there.[11]  Nevertheless, while describing the defendant’s contacts with the forum as "continuous and systematic," the Second Circuit held that those contacts did not amount to an "exceptional case" warranting the exercise of personal jurisdiction.[12]  Demonstrating the scope of Daimler‘s reach, the court noted that the defendant’s contacts with the forum fell "well below the high level needed to place the corporation ‘essentially at home’ in the state," and explained that "when a corporation is neither incorporated nor maintains its principal place of business in a state, mere contacts, no matter how ‘systematic and continuous,’ are extraordinarily unlikely to add up to an ‘exceptional case.’"[13] 

B.     Daimler‘s Developing Impact on Discovery

Daimler has not only had a marked impact on the exercise of general jurisdiction over defendants, it also appears to have limited the circumstances in which courts will grant jurisdictional discovery.  When deciding whether to grant jurisdictional discovery, courts generally look to whether a plaintiff has established a "colorable or prima facie showing of personal jurisdiction."[14]  Because Daimler made the requirements for general jurisdiction stricter, courts have correspondingly been less likely to find that a plaintiff made the requisite prima facie showing and to allow jurisdictional discovery.  For instance, in Firefighters’ Retirement System v. Royal Bank of Scotland PLC, the plaintiff argued that general jurisdiction existed because the defendant had registered to conduct business in Louisiana and paid taxes in the state for several years.[15]  The court declined to grant discovery and held that, even if plaintiff’s allegations relating to general jurisdiction were true, they would still not render the defendant "at home" under Daimler.[16]  Similarly, the court denied jurisdictional discovery in Weaver v. Johnson & Johnson, Ethicon, Inc., where it found that "discovery would not assist in revealing facts sufficient to constitute a basis for general jurisdiction" because the defendant was neither incorporated nor headquartered in the state.[17]  On the other hand, some courts have allowed limited jurisdictional discovery where the plaintiff has "come forward with some evidence tending to establish [general] personal jurisdiction."[18]   

C.  Questions Regarding the Viability of Relying on Corporate Registration Statutes as a Basis for General Jurisdiction

Faced with the continuing restrictions of Daimler, plaintiffs have tried to establish general jurisdiction over corporate defendants based on their registration to do business in a state, arguing that registration and the appointment of an agent for service of process constitute consent to general jurisdiction.  Such a strategy, if successful, could have far-reaching implications, as every state in the country has a business registration statute.[19]  Over the past year, however, absent an express statement in the statute that registration constitutes consent to general jurisdiction or an interpretation of the statute by the state’s highest court to that effect, courts increasingly are rejecting plaintiffs’ attempts to equate corporate registration with implied consent to general jurisdiction as inconsistent with Daimler.

In Genuine Parts Company v. Cepec, the Delaware Supreme Court revisited its prior holding that compliance with the state’s corporate registration statute constituted consent to general jurisdiction in the state.[20]  The court held that "[a]fter Daimler, . . . Delaware’s registration statutes must be read as a requirement that a foreign corporation must appoint a registered agent to accept service of process, but not as a broad consent to personal jurisdiction in any cause of action, however unrelated to the foreign corporation’s activities in Delaware."[21]  Rather, the court explained, the exercise of general jurisdiction over an out-of-state corporation "must involve an exercise of personal jurisdiction consistent with the Due Process Clause of the Fourteenth Amendment."[22]  Genuine Parts is the first decision of a state supreme court post-Daimler in which the court explicitly held–and in this case, reversed an earlier decision–that registering to do business in the state and appointing an agent for service of process could not, without more, subject the corporation to general jurisdiction in the state.  

In the mode of Genuine Parts, many federal courts over the past year have held that merely complying with a state’s corporate registration statute is insufficient to confer general jurisdiction.  In Leibovitch v. Islamic Republic of Iran, for example, the Northern District of Illinois rejected the argument that general jurisdiction over a corporation existed based on the corporation’s compliance with Illinois’s registration statute and appointment of an agent for the service of process.[23]  Similarly, the Middle District of Louisiana recently held that, "in light of Daimler, interpreting a registration statute as giving consent to general jurisdiction is untenable."[24]  The court explained that "treating business registration as consent to general jurisdiction would have the effect of subjecting a foreign corporation to general jurisdiction in every jurisdiction in which it did business," a result "Daimler explicitly rejected."[25]   

The Second Circuit also recently considered this issue in Brown v. Lockheed Martin Corporation, in which it analyzed Connecticut’s long-arm statute and concluded that registering to do business and appointing an agent for the service of process were insufficient under Daimler to confer general jurisdiction.[26]  After Daimler, the court explained, "federal due process rights likely constrain an interpretation that transforms a run-of-the-mill registration and appointment statute into a corporate ‘consent’–perhaps unwitting–to the exercise of general jurisdiction by state courts, particularly in circumstances where the state’s interests seem limited."[27]  Because such an interpretation would mean that "every corporation would be subject to general jurisdiction in every state in which it registered . . . Daimler‘s ruling would be robbed of meaning by a back-door thief."[28]  Such an expansive reading of Connecticut’s statute, the court concluded, was irreconcilable with constitutional limitations on general jurisdiction.[29]

While multiple courts have held that mere compliance with a registration statute that is silent on the issue of consent is not enough for general jurisdiction, the result may be different for statutes expressly stating that registration constitutes consent to general jurisdiction (or a judicial interpretation to that effect).[30]  The court in Genuine Parts recognized this potential distinction, noting that the result in that case turned in part on the fact that "[n]othing in the registration statutes explicitly says that a foreign corporation registering thereby consents to the personal jurisdiction of this state."[31]  The court expressed doubt, however, as to whether explicit consent was still valid after Daimler, describing as a "grasping assertion of state authority [that] is inconsistent with principles of due process and impliedly, with interstate commerce" the notion that "a business somehow must agree to being subject to general jurisdiction in every state in our nation, as a condition to doing business nationally."[32]  "[A] foreign corporation’s consent to personal jurisdiction," the court explained, "cannot be coerced or conditioned on the corporation waiving its right not to be subject to all-purpose jurisdiction in all but a few places where it has sufficient contacts."[33]  The Second Circuit likewise recognized that it would have been "confronted with a more difficult constitutional question" if the Connecticut statute had provided for express consent to general jurisdiction.[34]  The court noted that the "reach of [a state’s] coercive power, even when exercised pursuant to a corporation’s purported ‘consent,’ may be limited by the Due Process clause," but ultimately declined to reach the issue.[35]  Despite these reservations, however, other courts have upheld the exercise of general jurisdiction where there is an explicit authorization in the registration statute or an interpretation of the state’s highest court to that effect.[36] 

D.        Supreme Court Cases to Know and Watch This Term

The Supreme Court of the United States has granted certiorari in two cases this term that have potential implications for the scope of general and personal jurisdiction law.  These cases are Tyrrell v. BNSF Railway Co., 373 P.3d 1 (Mont. 2016),[37] which exposed a potential split as to whether Daimler applies solely to transnational litigation, and the Supreme Court of California’s decision in Bristol-Myers Squibb Co. v. San Francisco County, 377 P.3d 874 (Cal. 2016), which raised questions about the proper scope of specific personal jurisdiction and the extent to which it can be used where general jurisdiction is not appropriate.[38] 

II.     The Continued Evolution of Extraterritoriality

In 2010, the Supreme Court limited the extraterritorial reach of United States securities laws in Morrison v. National Australia Bank.[39]  In the ensuing years, U.S. courts have interpreted and applied Morrison primarily to curtail the extraterritorial application of U.S. statutes and common law claims.[40]  On June 20, 2016, the Supreme Court issued another significant opinion on the extraterritorial reach of U.S. laws.  In RJR Nabisco, Inc. v. European Community, the Court held that the substantive provisions of the Racketeering Influenced and Corrupt Organizations ("RICO") Act[41] apply extraterritorially only to the extent that the predicate criminal offenses required to establish a RICO claim apply to extraterritorial conduct.[42]  The Court also established a "two-step framework" to determine whether a statute applies extraterritorially.[43]  In the second half of 2016, lower courts have grappled with interpreting and applying the Court’s "two-step framework," both in and outside the context of RICO claims.

A.    Developments in the Extraterritorial Reach of RICO 

In RJR, the Court held that RICO can apply extraterritorially to the extent that the predicate statutes on which the RICO violations are based have extraterritorial reach.[44]  But the Court also held that RICO’s private right of action does not apply extraterritorially and thus "[a] private RICO plaintiff . . . must allege and prove a domestic injury to its business or property."[45]  The Court predicted that "[t]he application of this [domestic injury] rule in any given case will not always be self-evident, as disputes may arise as to whether a particular alleged injury is ‘foreign’ or ‘domestic,’" but did not address that issue because it was undisputed that the claims there "rest[ed] entirely on injury suffered abroad."[46] 

Since RJR was decided, district courts have grappled with drawing the line between domestic and foreign injuries, much as the Supreme Court predicted. 

1.      Bascuñan v. Daniel Yarur Elsaca, No. 15-cv-2009 (GBD), 2016 WL 5475998 (S.D.N.Y. Sept. 28, 2016)

In a September 2016 decision, the Southern District of New York held that under RJR, a Chilean citizen who suffered heavy financial losses in his home country could not maintain a private RICO suit against those allegedly responsible.[47]  Both the plaintiff and the defendants relied on New York law to determine whether the plaintiff had suffered a domestic injury.  The defendants contended that, under New York law, "to determine where an economic injury accrued, courts typically ask two common-sense questions:  [1] who became poorer, and [2] where did they become poorer."[48]  The defendants thus argued that an economic injury should be assessed based on "where the plaintiff suffered the injury alleged."[49]  The plaintiff by contrast relied on New York’s personal jurisdiction long-arm statute to argue that "the location of the defendant[s’] conduct and contacts" should govern the inquiry of where an injury was suffered.[50]

The court adopted the defendants’ proposed test, "which focuses on the plaintiff and where the alleged injury was suffered."[51]  Closely parsing RJR, the court reasoned that determining whether an injury was domestic must be "independent of the inquiry determining the location of a defendant’s conduct."[52]  Plaintiff’s proposed test, "which focuses on whether the defendant’s contacts with the forum are sufficient to comport with due process," could not be reconciled with RJR.[53]  At least two other district courts have likewise concluded that whether an injury is domestic depends on the location where the RICO plaintiff suffered injury.[54]  

2.      Tatung Co. v. Shu Tze Hsu, No. SA CV 13-1743 (DOC) (ANx), 2016 WL 6683201 (C.D. Cal. Nov. 14, 2016)

The Central District of California recently refused to follow the "Bascuñan rule," and instead held that "RJR Nabisco does not bar foreign plaintiffs who have suffered only economic injuries from bringing suit pursuant to civil RICO’s private right of action."[55]  The court expressed concern "that the Bascuñan rule amounts to immunity for U.S. corporations who, acting entirely in the United States, violate civil RICO at the expense of foreign corporations doing business in this country" and reasoned that "[i]t cannot be the case that the mere fact that a loss is economic means that foreign corporations are unable to avail themselves of the protections of civil RICO, even in cases where all of the actions causing the injury took place in the United States."[56] 

The court focused on the fact that the plaintiff foreign corporation was doing business in the United States and that defendants’ allegedly fraudulent activity occurred domestically, concluding that because the plaintiff maintained a "’hub’ in the United States" and "many of the actions that constitute[d] part of the RICO scheme took place" there, the plaintiff had suffered a domestic injury.[57] 

* * *

As Bascuñan and Tatung demonstrate, courts have reached conflicting interpretations of RJR‘s domestic injury requirement for civil RICO in a short time.  We will continue to monitor case law as it develops.   

B.     Developments in the Extraterritorial Reach of the Alien Tort Statute

The 2015 Year-End Update reported on courts’ continued reliance on Kiobel v. Royal Dutch Shell Petroleum Co., 133 S. Ct. 1659 (2013), to dismiss actions based on the Alien Tort Statute ("ATS").  RJR also indicates that Morrison‘s "focus" test is the appropriate test for analyzing whether the plaintiffs have alleged a domestic application of the ATS.[58]  This ruling arguably displaces decisions from the lower courts that Kiobel did not adopt the "focus" test.[59]  The following circuit court decisions address the extraterritorial reach of the ATS post-RJR

1.      Adhikari v. Kellogg Brown & Root, Inc., 845 F.3d 184 (5th Cir. 2017)

In Adhikari v. Kellogg Brown & Root, Inc., the Fifth Circuit affirmed dismissal of ATS claims because the record was "devoid" of any domestic conduct relevant to their claims.[60]  The Fifth Circuit grappled with what test it would apply to "determine whether [p]laintiffs ha[d] sought a domestic application of the statute."[61]  The plaintiffs argued that the court should determine whether the claims "touched and concerned" the U.S. with sufficient force to displace the presumption against extraterritorial application, taken from dicta in the Supreme Court’s Kiobel decision.[62]  The defendant urged the court to apply Morrison‘s focus test, citing RJR.[63]  The court agreed with the defendant.[64]   

Applying Morrison, the Fifth Circuit concluded that because the alleged conduct primarily took place overseas, the case did not involve a domestic application of the ATS.[65]  It rejected the plaintiffs’ argument that application of the ATS was domestic because some of the alleged conduct occurred on Al Asad, a U.S. military base, and within the United States.[66]  With respect to conduct on Al Asad, the plaintiffs "failed to establish that the United States controlled [the military base when the alleged conduct occurred] such that it constituted the territory of the United States."[67]  That the military base had been open for only a year when the conduct occurred and closed in 2011 suggested the base did not constitute "de facto territory of the United States."[68]  With respect to conduct that occurred in the United States, the plaintiffs pointed to, among other things, the defendant’s financial transactions through various U.S. banks.[69]  The plaintiffs, however, failed to "connect" these alleged transactions to the trafficking violations they claimed under the ATS, and hence, failed to establish that the ATS should apply domestically in their case.[70] 

2.      In re Arab Bank, PLC Alien Tort Statute Litig., 822 F.3d 34 (2d Cir. 2016) (en banc)

On April 3, 2017, the Supreme Court granted plaintiffs’ petition for a writ of certiorari challenging the Second Circuit’s dismissal of their ATS claims on the basis that corporations cannot be liable under the ATS.[71]

In In re Arab Bank, PLC Alien Tort Statute Litig.,[72] the Second Circuit had denied rehearing en banc of its holding that corporations could not be liable under the ATS,[73] in reliance on its prior decision in Kiobel, 621 F.3d. 111 (2d Cir. 2010) ("Kiobel I").[74] 

Four judges joined an opinion by Judge Jacobs reasoning that denial of rehearing was appropriate because the plaintiffs’ claims "could have been resolved under Kiobel II,"[75] as not "touching and concerning" the United States with sufficient force to displace the presumption against extraterritorial application.  Judge Jacobs noted, however, that "a case may one day arise that cannot be disposed of under Kiobel II [Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659, 1669 (2013)], at a time when a circuit split has opened, and when the prospect looms of many such cases.  If and when that comes to pass, it may be worth our time to consider the issue in banc."[76]  Judge Pooler, joined by Judges Chin and Carney, dissented, arguing that "Kiobel I was wrong.  Every circuit to address the matter agrees that it is wrong.  It is a disservice to the litigants in this case, and every other litigant with a potentially viable ATS case against corporate defendants, to rely on the Supreme Court to fix our error."[77]  

In granting certiorari, at least four justices of the Supreme Court evidently agreed that it was time to address the circuit split on whether corporations may be liable under the ATS. 

3.      Warfaa v. Ali, 811 F.3d 653 (4th Cir. 2016)

In Warfaa v. Ali, decided before the Supreme Court’s decision in RJR, the Fourth Circuit held that ATS claims against a former colonel in the Somali Army, who was allegedly responsible for the kidnapping and torture of the plaintiff in Somalia by the Somali Army, were impermissibly extraterritorial under Kiobel II.[78]  The court distinguished its prior decision in Al Shimari v. CACI Premier Tech., Inc.,[79] where it had permitted ATS claims based on alleged torture by American military contractors in the Abu Ghraib prison in Iraq, noting that given the extensive conduct that occurred in the U.S. in Al Shimari, it was "best read to note that the presumption against ATS extraterritorial application is not irrefutable."[80]  In contrast, "[a]n ATS claim," such as that alleged in Warfaa, in which the only connection to the U.S. was the "happenstance of [defendant’s] after-acquired residence in the United States" "will fit within the heartland of cases to which the extraterritoriality presumption applies."[81]  The court permitted plaintiff’s claim under the Torture Victim Protection Act ("TVPA") to proceed, finding that the defendant was not protected by foreign official immunity for "jus cogens" (universally accepted) violations of international law.[82] 

4.      Licci et al. v. Lebanese Canadian Bank, SAL, No. 15‐1580, 2016 WL 4470977 (2d Cir. Aug. 24, 2016)

In a decision whose implications may ultimately be revisited depending on how the Supreme Court resolves Arab Bank, the Second Circuit affirmed the district court’s dismissal of plaintiffs’ ATS claims against a Lebanese bank that the plaintiffs alleged aided and abetted terrorist attacks in Licci et al. v. Lebanese Canadian Bank, SAL,[83] though on different grounds.  In Licci, the plaintiffs alleged that defendant Lebanese Canadian Bank, SAL ("LCB") used a correspondent New York bank account to conduct dozens of international wire transfers on behalf of Shahid (Martyrs) Foundation ("Shahid"), an entity that maintained bank accounts with LCB and that plaintiffs alleged was an "integral part" of Hezbollah and "part of [its] financial arm."[84]  The plaintiffs alleged that these wire transfers, totaling millions of dollars, substantially assisted Hezbollah in carrying out war crimes, crimes against humanity, and acts of genocide in Israel through rocket attacks that killed or injured the plaintiffs or their family members.[85]  The district court dismissed the claims on the basis that the presumption against extraterritorial application of the ATS was not rebutted and because plaintiffs had not adequately alleged aiding and abetting liability under the ATS.  However, the Second Circuit found that the plaintiffs’ allegations that LCB "used a correspondent banking account at a New York bank to facilitate wire transfers between Hezbollah’s bank accounts in the months leading up to the rocket attacks" sufficiently "touched and concerned" the United States to dispel the presumption against extraterritoriality as long as it sufficiently alleged a violation of the law of nations.[86]  As to that inquiry, the Second Circuit held that the domestic conduct alleged adequately stated a claim for aiding and abetting Hezbollah’s violations of the law of nations because it substantially assisted with those violations and that "LCB acted intentionally, and pursuant to its official policy, in assisting Hezbollah in carrying out the rocket attacks by carrying out the wire transfers, and . . . knew that the bank accounts between which it facilitated transfers were owned and controlled by Shahid, an integral part of Hezbollah," which was sufficient to allege purpose.[87]  The Second Circuit nonetheless affirmed dismissal on the basis that the corporate defendant could not be liable for aiding and abetting violations of international law because "the law of nations, while imposing civil liability on individuals for torts that qualify under the ATS, immunizes corporations from liability."[88]  

5.      Ntsebeza v. Ford Motor Co. (15-1020)

Finally, on June 20, 2016, the Supreme Court denied certiorari in Ntsebeza v. Ford Motor Co. (15-1020), leaving in place a Second Circuit decision that reaffirmed the limited scope of actions under the Alien Tort Statute.  Gibson Dunn published a detailed review of the decision in a recent article.[89] 

In affirming the district court’s denial of the plaintiffs’ motion for leave to amend, the Second Circuit precluded the plaintiffs from seeking relief based on claims that the defendants, U.S.-based multinational companies, aided and abetted violations of international law by the South African apartheid regime.  Determining whether plaintiffs alleged relevant domestic conduct necessary to overcome the ATS’s presumption against extraterritoriality, the Second Circuit concluded that "the ‘focus’ of the ATS inquiry is on the nature and location of the conduct constituting the alleged offenses under the law of nations," here, the alleged aiding and abetting of the South African government’s violations of international law.[90]  Plaintiffs alleged, inter alia, that defendants Ford and IBM had provided specialized vehicles and technology to the South African apartheid regime, but the Second Circuit held that nearly all of the alleged relevant conduct related to the defendants’ South African subsidiaries and occurred in South Africa.  The court rejected plaintiffs’ attempt to pierce the corporate veil, holding that plaintiffs could not attribute the conduct of the companies’ South African subsidiaries to the parents for purposes of rebutting the presumption against extraterritoriality.[91] 

The court held that plaintiffs alleged one form of relevant domestic conduct:  that IBM had designed in the U.S. an identification system that allegedly was used to further apartheid.  But the court held that aiding and abetting under the ATS requires that the defendant have acted with purpose and that the plaintiffs failed plausibly to allege that IBM acted with the requisite purpose:  "the plaintiffs do not–and cannot–plausibly allege that by developing hardware and software to collect innocuous population data, IBM’s purpose was to denationalize black South Africans and further the aims of a brutal regime."[92]   

C.    Cases to Know and Watch Regarding the Extraterritorial Application of Other U.S. Statutes and Laws

1.      The Extraterritorial Reach of the Lanham Act:  Trader Joe’s Company v. Hallat, 835 F.3d 960 (9th Cir. 2016)    

In August 2016, the Ninth Circuit considered the extraterritorial application of the Lanham Act in a trademark infringement case where the defendant’s allegedly infringing activity occurred in Canada.[93]  The plaintiff, Trader Joe’s, claimed the defendant was buying its products in America and reselling them at inflated prices in a Canadian store called Pirate Joe’s.[94]  The court applied RJR‘s two-step framework to conclude that the Lanham Act reached the defendant’s illicit activity and reversed the district court for dismissing the plaintiff’s Lanham Act claims.[95] 

At "step one" of the inquiry, the Ninth Circuit considered "’whether the [Lanham Act] [gave] a clear, affirmative indication that it [applied] extraterritorially.’"[96]  As the Supreme Court had held previously, the Lanham Act’s "’use in commerce’ element and broad definition of ‘commerce’ clearly indicate[d] Congress’s intent that the Act should apply extraterritorially," the Ninth Circuit found the statute rebutted the presumption against extraterritoriality and proceeded to step two of the RJR analysis.[97]   

When a statute applies extraterritorially by its terms, "step two" requires the court to consider "’the limits Congress has (or has not) imposed on the statute’s foreign application.’"[98]  These limits are defined by a "three-part test" the Ninth Circuit developed in a case involving the Sherman Act.[99]  Under the Timberlane test, the Lanham Act applies extraterritorially if "(1) the alleged violations . . . create some effect on American foreign commerce; (2) the effect [is] sufficiently great to present a cognizable injury to the plaintiffs under the Lanham Act; and (3) the interests of and links to American foreign commerce [are] sufficiently strong in relation to those of other nations to justify an assertion of extraterritorial authority."[100] 

To satisfy the first two prongs of the Timberlane test, Trader Joe’s argued that the defendant’s "poor quality control practices" in Canada could result in consumers becoming ill.[101]  If "news of such illness travel[led] across the border" into the United States, Trader Joe’s could suffer reputational harm that, in turn, could result in lost sales.[102]  Trader Joe’s "allege[d] . . . it [was] aware of at least one customer who became sick after consuming food sold by Pirate Joe’s," and the Ninth Circuit found these concerns persuasive.[103]  What is more, the Ninth Circuit noted that the defendant’s "alleged attempt to pass as an authorized Trader Joe’s retailer could [also] harm Trader Joe’s’ domestic reputation" because the defendant allegedly sold the company’s products at inflated prices and provided "inferior customer service."[104]  The Ninth Circuit concluded that Trader Joe’s had met its burden as to the first two Timberlane prongs.[105] 

With respect to the last prong–"international comity"–the Ninth Circuit considered various factors, including "the degree of conflict with foreign law or policy," "the extent to which enforcement by either state [could] be expected to achieve compliance," "the extent to which there is explicit purpose to harm or affect American commerce," and "the relative importance to the violations charged of conduct within the United States as compared with conduct abroad."[106]  Here, there were no pending cases in Canada concerning the defendant’s activities, which weighed in favor of extraterritorial application.[107]  Moreover, because he obtained all his goods from the United States, a district court could enjoin the defendant from selling his products in Canada.[108]  Moreover, defendant’s infringement appeared intentional, given that he named his store "Pirate Joe’s" and "engage[d] in subterfuge" to purchase the plaintiff’s goods even after the plaintiff demanded he stop reselling its products.[109]  Because most of these factors weighed in favor of extraterritorial application, the court did not find it significant that "most of [the defendant’s] infringing activity occur[red] abroad."[110]  Accordingly, the Lanham Act was found to reach the defendant’s allegedly infringing activity in Canada.[111] 

2.      The Extraterritorial Reach of U.S. Criminal Laws:  United States v. Epskamp, 832 F.3d 154 (2d Cir. 2016)

In United States v. Epskamp, the Second Circuit addressed the extraterritorial reach of 21 U.S.C. § 959(b)(2), which outlaws possession of a controlled substance with intent to distribute on board a U.S.-registered aircraft.[112]  Defendant was arrested by Dominican police for attempting to transport 1,000 bricks of cocaine in an airplane registered in the United States.[113]  He was later transferred to the United States and found guilty of violating Section 959(b)(2).[114] 

On appeal, Defendant contended that Section 959(b)(2) did not apply extraterritorially–and hence, did not reach his conduct–because subsection (c), which governed "[a]cts committed outside [the] territorial jurisdiction of [the] United States," stated Section 959 was "intended to reach acts of manufacture or distribution committed outside . . . the United States."[115]  As subsection (c) "omit[ted] reference to possession with intent to distribute," the defendant claimed he could not be guilty under subsection (b)(2).[116]  

In considering his argument, the Second Circuit first noted the proscriptions in Section 959 are "broad," as they apply to "any person" onboard an aircraft owned by a U.S. citizen or registered in the United States and "any United States citizen aboard any aircraft."[117]  The Court, however, was "mindful that, in the typical case, ‘generic terms like "any" or "every" do not rebut the presumption against extraterritoriality.’"[118]   

The Court next considered the language in subsection (c), which stated that those who violated Section 959 would "be tried in the United States district court at the point of entry where such person enters the United States, or in the United States District Court for the District of Columbia."[119]  As this venue provision clearly envisioned violators of subsection (b)(2) would be "tried at their ‘point of entry’ into the United States," the Court found this weighed in favor of applying the subsection extraterritorially.[120] 

In finding extraterritoriality, the Second Circuit ultimately rested its analysis on RJR and the principle that a court may look to a statute’s context to determine whether extraterritorial application is proper.[121]  As Section 959 was "aimed at combatting international narcotics smuggling," it would be nonsensical to limit application of subsection (b)(2) to crimes committed within the United States.[122] 

Epskamp confirms the presumption against extraterritoriality established in RJR applies to criminal statutes and that courts may look beyond the literal text of the statute to determine whether extraterritorial application is proper.[123] 

3.      The Extraterritorial Reach of the Stored Communications Act:  In re Warrant to Search a Certain E-Mail Account Controlled and Maintained by Microsoft Corporation, 829 F.3d 197, 200 (2d Cir. 2016)

The Second Circuit analyzed whether and when retrieving data stored outside of the United States constitutes an extraterritorial application of law.  In In re Warrant to Search a Certain E-Mail Account Controlled and Maintained by Microsoft Corporation, the government obtained a warrant under the Stored Communications Act ("SCA") directing Microsoft to seize and produce the contents of a customer’s email account.[124]  Microsoft determined that the contents of the e-mail account were stored in Dublin, Ireland, and that in order to comply, it would need to import data from abroad.[125]  Rather than comply, Microsoft moved to quash the warrant, contending that it was an impermissible extraterritorial application of the SCA.  After the magistrate judge denied the motion, and the district court affirmed, Microsoft appealed.

The parties agreed that the SCA does not apply extraterritorially, but framed the question as whether retrieval of data stored outside the United States, but retrieved from within the U.S., would constitute an impermissible extraterritorial application of the statute.  The government’s position was that, because Microsoft could access the data from the United States without any employee ever needing to set foot outside the country, extraterritoriality was not at issue.  In its view, the warrant demanded production of documents, like a subpoena, and "[n]othing in the SCA’s text, structure, purpose, or legislative history indicates that compelled production of records is limited to those stored domestically."[126]

The Second Circuit was not persuaded, concluding that the government’s argument "stands the presumption against extraterritoriality on its head."[127]  It concluded that Microsoft’s retrieval of data would take place where the data is stored–in Dublin, Ireland–and consequently that enforcing the warrant would require applying it extraterritorially.[128]  But a recent District Court decision indicates that some courts may disagree.[129]  

4.      The Extraterritorial Reach of the Commodity Exchange Act:  U.S. Commodity Futures Exchange Commission v. Vision Financial Partners, 190 F. Supp. 3d 1126 (S.D. Fla. 2016)

In Morrison, the Court strictly limited the extraterritorial reach of Section 10(b) of the Securities Exchange Act to claims involving securities listed on domestic exchanges and domestic transactions in other securities (the transactional test).  Given the Security Exchange Act’s similarities to the Commodity Exchange Act ("CEA"), one might guess that the CEA would be interpreted in a similarly restrictive manner.  Indeed, a number of courts have so held.[130]

But in U.S. Commodity Futures Exchange Commission v. Vision Financial Partners, a decision predating RJR, the district court distinguished Morrison and applied a more expansive rule to the CEA–at least when suit is brought by the Securities and Exchange Commission itself.[131]  In contrast to Morrison, which observed that there is no affirmative indication Congress intended the Securities Exchange Act to apply extraterritorially, the district court concluded that the CEA "does contain an affirmative indication that it applies to extraterritorial transactions" in suits brought by the S.E.C.[132]  The court observed that the CEA permits the S.E.C. to adopt rules even if they concern instruments or transactions made in a market located outside the United States, so long as the "regulated behavior is committed by any person located in the United States."[133]  Because the S.E.C. is allowed to sue over violations of any of its rules, the court concluded that it must be able to sue for a broader range of conduct than the transactional test would permit.[134]

III.     Cross-Border Discovery:  Increased Reliance on 28 U.S.C. § 1782

We have previously written about 28 U.S.C. § 1782, which allows litigants to collect discovery in the United States for use in foreign proceedings.  While 2015 experienced a drop in the number of petitions filed under Section 1782, 2016 saw that number increase, with approximately 242 applications for discovery pursuant to Section 1782 filed in federal district courts across the country.[135]  

While the standard for seeking discovery for use in a foreign proceeding remains liberal, in 2016 some courts enforced limitations on Section 1782 discovery, noting that it does not entitle foreign litigants to "unbridled discovery."  The following cases to know and watch from 2016 touch on these and other key trends.

As discussed in the Transnational Litigation Mid-Year Update, in Andover Healthcare v. 3M Co., 817 F.3d 621 (8th Cir. 2016), the Eighth Circuit affirmed a 2014 district court opinion that denied Section 1782 discovery that (1) could be sought and/or obtained in the foreign proceeding and (2) sought highly sensitive trade secrets. 

In 2013, Andover sued 3M in Germany, asserting that 3M violated Andover’s European patent.  Andover sought discovery of highly confidential trade secrets from 3M in the United States despite the fact that 3M was a party to the German suit and the German court indicated it would grant Andover’s discovery request if necessary to resolve the case.  Although the court found that Andover had satisfied the statutory requirements to obtain Section 1782 discovery,[136] it denied leave to take discovery based on the discretionary factors outlined in Intel Corp. v. Advanced Micro Devices, Inc.[137]  The Eighth Circuit affirmed the district court, finding "[t]he German court is in a position to order the requested discovery if the information is needed, and . . . the German court is best positioned to assess whether any disclosure can be accomplished without jeopardizing the sensitive trade secrets involved."[138]

As in Andover, the district court rejected a petition for Section 1782 discovery after evaluating the discretionary Intel factors in In re King.com Ltd., No. 16-mc-80070-JCS, 2016 WL 4364286 (N.D. Cal. Aug. 16, 2016).  In In re King.com, two U.S. companies requested leave to take discovery related to a trademark infringement action pending in Malta.  The court quashed the subpoenas because the parties’ participation in the Maltese litigation lessened the need for the discovery.[139]  In addition, the fact that the Maltese proceedings were stayed weighed in favor of quashing the subpoena because the "Maltese court is presently unreceptive to discovery" and allowing it would circumvent the stay order.[140]  Finally, the court found that the discovery requests were unduly burdensome, and sought information unrelated to the Maltese proceedings.[141]  This ruling is currently on appeal to the Ninth Circuit.

In Salcido-Romo v. Southern Copper Corporation, No. CV-16-01639-PHX-DLR, 2016 WL 3213212 (D. Ariz. June 10, 2016), petitioners–residents of agricultural communities in Sonora, Mexico–sought discovery from Southern Copper Corporation–a copper mining company headquartered in Phoenix, Arizona, the parent of Mexican subsidiaries that had been sued in Mexico in connection with an alleged chemical spill due to mining operations.[142] 

The District of Arizona granted the petitioners’ request for Section 1782 discovery, but only in part.  The court permitted discovery of materials "readily accessible to [Southern Copper] employees in the United States."[143]  The court, however, rejected petitioners’ attempts to use Section 1782 to seek documents from its Mexican subsidiaries on the basis that the requests "suggest that Petitioners’ request might be motivated, at least in part, by a desire to circumvent less favorable or more onerous proof-gathering restrictions in Mexico."[144] 

In In re Application of TJAC Waterloo, LLC, No. 3:16-mc-9-CAN, 2016 WL 1700001 (N.D. Ind. Apr. 27, 2016), the Northern District of Indiana also reinforced the limits of Section 1782 discovery by granting a motion to quash a Section 1782 subpoena that sought discovery in aid of an English Expert Determination proceeding.  Relying on precedent in the Seventh Circuit, the court determined that the Expert Determination, a private arbitral body, was not a "foreign or international tribunal" because it was not state-sponsored and the scope of judicial review was narrowly limited to procedural matters.[145]  Although the Section 1782 petition could have been denied on this basis alone, the court went on to find that the discovery request was untimely, prejudicial, and irrelevant to the proceeding.[146] 

In In re Kiobel, No. 16 CIV. 7992 (AKH), 2017 WL 354183 (S.D.N.Y. Jan. 24, 2017), counsel for the plaintiff revived attempts to collect discovery under Section 1782 from a foreign company’s U.S. counsel, there Cravath, Swaine & Moore LLP.[147]  The plaintiff sought the discovery for use in a future civil action in the Netherlands based on the same tortious conduct that had been the subject of prior U.S. proceedings in which Cravath represented the company, Royal Dutch Shell Petroleum.[148]  The plaintiff argued that the documents were needed in order to present sufficient evidence at the outset of the Dutch proceeding.[149]

The Southern District of New York granted the request, rejecting Cravath’s argument that it was merely a custodian of documents that belong to Shell (the "real ‘person from whom discovery is sought’"):

The question is whether Cravath is in possession of the documents, not whom the documents "belong" to.  Unless a court instructs otherwise, document productions made in response to a Section 1782 petition are governed by the Federal Rules of Civil Procedure. . . . Under those rules, relevant documents within the "possession, custody, or control" of the recipient of a discovery request are generally discoverable, regardless of who owns or created those documents. . . . This is true notwithstanding Cravath’s attorney-client relationship with Shell.  "[D]ocuments held by an attorney in the United States on behalf of a foreign client, absent privilege, are as susceptible to subpoena as those stored in a warehouse within the district court’s jurisdiction.  Documents obtain no special protection because they are housed in a law firm; ‘[a]ny other rule would permit a person to prevent disclosure of any of his papers by the simple expedient of keeping them in the possession of his attorney.’" . . . Here, there is no concern that privileged materials will be disclosed because Kiobel seeks only documents that Cravath has previously produced, which therefore have already been vetted for privilege.[150]

Finding Section 1782 discovery appropriate when foreign proceedings are "within reasonable contemplation," the district court also rejected Cravath’s argument that the discovery was not "for use" in a foreign proceeding.[151]  Finally, despite noting that "[s]ection 1782 assistance may not be warranted in all situations where the respondent is a law firm representing a foreign client that is a defendant in the foreign proceeding," the court found that the discretionary Intel factors weighed in favor of granting discovery here because:  (1) the documents may be unobtainable from Shell in the foreign proceeding; (2) Cravath offered no authoritative proof that the Dutch courts were unreceptive to discovery assistance; (3) Cravath offered no evidence that the Section 1782 request was an attempt to circumvent foreign proof gathering restrictions; and (4) Cravath offered no proof that the requested discovery would violate any foreign privilege.[152]  This decision is currently on appeal to the Second Circuit.

Finally, as reported in the Mid-Year Transnational Litigation Update, foreign governments are increasingly relying on Section 1782 to discover information regarding IP addresses.  In In re Request for International Judicial Assistance, the Northern District of California granted a request from the Turkish Ministry of Justice, acting through the U.S. Attorney’s office, seeking non-content information, or IP address information, from a foreign litigant’s Facebook account.[153]  The Northern District of California granted a similar request from the plaintiffs in a Canadian defamation suit who sought discovery from Glassdoor.com after a former employee posted allegedly defamatory statements to the site.[154]

IV.     Transnational Supply Chain Liability

One issue, in particular, related to Transnational Supply Chain Liability is worth highlighting as an area to know and watch.  As corporate social responsibility has become increasingly important, companies have looked to expand their role in this area.  Such action carries with it some risk.  Gibson Dunn analyzed this issue in a recent Client Alert, which can be found here.                                                                                                             

V.     Targeting Transnational Fraud

A.    Chevron’s Continued Success Prosecuting a Corrupt Scheme to Obtain a $9.5 Billion Judgment Through Bribery and Fraud

On August 8, 2016, in Chevron Corp. v. Donziger, a unanimous panel of the Second Circuit affirmed the district court’s judgment against New York lawyer Steven Donziger and two of his Ecuadorian clients, granting Chevron equitable relief under the federal RICO statute and New York common law from a fraudulently procured $9.5 billion Ecuadorian judgment.  The Second Circuit affirmed in full the relief granted by the district court, including an injunction preventing Donziger and his Ecuadorian clients from attempting to enforce the judgment in any court in the United States, and the imposition of a constructive trust over any proceeds they successfully collect from the judgment.  The ruling represented a resounding victory for Chevron and Gibson Dunn, who represented Chevron at trial and on appeal.

In an opinion authored by Circuit Judge Amalya L. Kearse and joined by Circuit Judges Barrington D. Parker and Richard C. Wesley, the Second Circuit repeatedly underscored that the defendants had not challenged the district court’s extensive factual findings.  The district court chronicled over hundreds of pages how New York plaintiffs’ attorney Steven Donziger and his co-conspirators orchestrated an extortionate scheme by procuring a multibillion-dollar Ecuadorian judgment against Chevron through corrupt means and then attempting to leverage it to extract a massive payment from the company.  Observing that the "record in the present case reveals a parade of corrupt actions by the [Ecuadorians’] legal team," the Second Circuit noted that the defendants’ wrongful conduct included fabricating evidence, bribing foreign officials in violation of the Foreign Corrupt Practices Act, and ghostwriting the multibillion-dollar judgment against Chevron and bribing the Ecuadorian judge to issue it.  The Second Circuit upheld the injunction entered by the district court as supported by New York common law, which "has long recognized that equitable relief may be granted to a person victimized by the procurement of a judgment through fraud that is extrinsic to the gravamen of the cause of action."  The defendants have petitioned for certiorari to the Supreme Court.

Chevron secured another victory in January 2017.  On January 20, 2017, the Ontario Superior Court of Justice granted summary judgment in favor of Chevron Canada Limited ("Chevron Canada") and partial summary judgment in favor of Chevron Corporation in Yaiguaje v. Chevron Corporation.  In Canada, the Ecuadorian plaintiffs sought to recognize and enforce the fraudulent judgment obtained in Ecuador against Chevron Corporation.  To collect on that judgment, the plaintiffs were attempting to seize the assets of Chevron Corporation’s seventh-level subsidiary, Chevron Canada.  Finding that Chevron Corporation and Chevron Canada are "separate legal entities with separate rights and obligations," however, the court dismissed the plaintiffs’ attempts to hold Chevron Canada liable.  Indeed, the court recognized that the plaintiffs had not alleged any wrongdoing against Chevron Canada.  In a related decision, the court rejected the plaintiffs’ attempts to prohibit Chevron Corporation from demonstrating that the Ecuadorian judgment was procured through fraudulent and corrupt means.  The decisions represent a victory for Chevron, the principles of corporate separateness, and the rule of law.  It should have important implications for other companies and individuals faced with similar corrupt shakedown schemes. 

B.     Targeting the Transnational Sale of Counterfeit Goods

The sale of counterfeit goods is a growing, global problem.  A 2016 study estimated that international trade in counterfeit goods represented up to 2.5%, or $461 billion, of world trade in 2013–nearly two times the estimate in 2008.[155]    

The rise of e-commerce has exacerbated the problem.[156]  As counterfeits move online, it has become increasingly difficult to hold the counterfeiters accountable.[157]  In recent years, however, courts in the United States and in Europe have developed new tools to track down counterfeiters and prevent them from further infringing activity.  In addition, the United States and foreign governments have enacted legislation and regulations targeting international counterfeiting.  Finally, e-commerce sites such as Amazon.com, Inc., have also taken legal action against counterfeiters. 

1.   Developments in Remedies for Brand Owners

Brand owners in the United States and elsewhere are using courts to combat international counterfeiting.  In 2014, in Gucci America, Inc. v. Bank of China, the Second Circuit held that the district court could freeze counterfeiters’ assets wherever they were held and ordered banks that do business in New York to produce the records of bank accounts used in connection with the counterfeiting, as long as the district court had personal jurisdiction over the counterfeiters.[158]  On remand, the district court concluded that it had personal jurisdiction over the Bank of China, and ordered it to produce records concerning the counterfeiters’ Chinese bank accounts.[159]  The court held that the Bank of China conducted business in New York because, inter alia, the Bank of China’s head office had opened a correspondent account at a New York-based bank to facilitate transfers directly from the New York bank’s customers to Bank of China customers, and because the Bank of China had marketed itself as "the first choice of U.S. dollar wire transfers to and from China."[160]  In 2016, the district court held the Bank of China in civil contempt for failing to comply with the court’s orders, levying a $50,000 fine for each subsequent day of noncompliance.[161]  The Bank of China ultimately surrendered the counterfeiters’ bank records.[162]  

The law is also developing overseas.  In Europe, for example, courts allow certain remedies for rights holders "against intermediaries whose services are used by a third party to infringe an intellectual property right."[163]  While this provision had often been applied to online intermediaries that facilitate the sale of counterfeits, in 2016, the European Court of Justice applied the same principles to enjoin the tenant of a physical market in Prague that sublet property to tenants that sold counterfeit goods in Tommy Hilfiger Licensing LLC v. Delta Center a.s., 2016 (C-494/15).

The United Kingdom provides for the same remedies against intermediaries.  In Cartier Int’l AG v. British Sky Broad. Ltd., the U.K. Court of Appeal affirmed orders requiring Internet service providers ("ISPs") to block access to websites that sold counterfeit goods.[164]  While the court recognized that the ISPs were "not guilty of any wrongdoing,"[165] it held that the injunction was proper because "the ISPs are . . . inevitable and essential actors in th[e] infringing activities."[166] 

This area of law is also getting attention in Canada, where the Supreme Court is set to determine whether Canadian courts have the authority to require a search engine to de-index (i.e., block) entire websites found to traffic in counterfeit goods.[167]  In this case, Equustek, an industrial networking company, sued Datalink, a former distributor of Equustek’s product, in the Supreme Court of British Columbia, alleging that Datalink had infringed Equustek’s intellectual property rights by designing and selling counterfeit versions of Equustek’s product.[168]  The court ordered Datalink to stop selling the products, but Datalink did not comply.[169]  Equustek then sought an injunction to force Google to de-index Datalink’s entire site.[170]  Google voluntarily de-indexed approximately 345 URLs from the Google.ca search engine, but took no further action.[171]  Plaintiffs argued this was insufficient–the defendants simply moved objectionable content to new pages within their websites–and "described the effect as being like a game of ‘Whack-A-Mole.’"[172]  In addition, plaintiffs took issue with the fact that Google’s voluntary efforts only applied to searches on Google.ca, when Datalink sold counterfeit Equustek to buyers outside of the country.[173]  On plaintiffs’ application, the Supreme Court of British Columbia ordered Google to comply with Equustek’s requests to de-index the entire web site as opposed to specific URLs.[174]  On appeal, the Court of Appeal for British Columbia affirmed the lower court’s decision, finding that the injunction "was the only practical way to impede the defendants from flouting the court’s orders" and that it applied extraterritorially.[175]  The case is now before the Supreme Court of Canada.

2.   Recent Actions by Online Marketplaces

E-commerce sites have also taken legal action against counterfeiters.  On November 14, 2016, Amazon.com, Inc., filed two lawsuits in Washington state court against retailers on its site allegedly selling counterfeit Forearm Forklift and TRX workout products.[176]  Amazon accused the retailers of breaching its Business Solutions Agreement, which prohibits the sale of counterfeit goods, as well as violating the False Advertising provisions of the Lanham Act.[177]  Amazon asked the court to permanently enjoin defendants from using their site, noting that "it is not uncommon for sellers of counterfeit goods blocked by Amazon to attempt to create new seller identities to obtain access to the Amazon marketplace."[178]  

3.   New Legislation and Regulations to Know and Watch

In 2016, the U.S. government enacted legislation and regulations aimed at combatting international counterfeiting.  For example:

  • On February 24, 2016, Congress enacted The Trade Facilitation and Trade Enforcement Act of 2015,[179] which creates monitoring tools to help protect intellectual property rights holders, including a process for U.S. Customs and Border Protection ("CBP") to provide them with samples of potentially illicit goods when CBP suspects that incoming merchandise is illicit and determines that an examination by the rightful intellectual property owners would assist its investigation.[180]  
  • On August 2, 2016, the U.S. Department of Defense ("DoD") issued a final rule aimed at detecting and avoiding counterfeit electronic parts in the DoD supply chain.[181]  The new rule requires contractors to obtain electronic parts either from the original manufacturer, from a business authorized by the original manufacturer to produce the part, or from a reseller who supplies the part directly from an original or authorized manufacturer.[182] 
  • Last year, the Federal Energy Regulatory Commission ("FERC") directed the North American Electric Reliability Corporation ("NERC") to develop a new or modified Reliability Standard to address supply chain risks in the electric industry, including counterfeit parts.[183]  

More recently, however, the United States withdrew from the Trans-Pacific Partnership ("TPP").  The TPP provides for strong intellectual property protection and new remedies for intellectual property owners, as well as raised enforcement standards.[184]  Because these remedies are not required under the internationally agreed standards of the World Trade Organization, withdrawal from the TPP will eliminate these options for intellectual property owners.[185]    

Outside the United States, many countries are likewise strengthening their intellectual property laws to better protect owners’ rights and provide clear enforcement mechanisms.  For example:

  • The European Union recently issued a new trademark rule, which provides for the right to take action against counterfeit goods at any European Union border, even when they are in transit somewhere else and are not destined for the European Union.[186]    
  • A new law in the United Arab Emirates increases the maximum penalty for involvement in counterfeiting.  These increased penalties can double in cases of repeat violations.[187] 
  • Thailand recently became a party to the International Convention on the Simplification and Harmonization of Customs Procedures, resulting in Royal Thai Customs Department Notifications Nos. 210/2558 and 211/2558, which establish procedures related to goods in transit.[188]  Customs officers can search goods without a search warrant if the officers have a reason to believe that the goods are related to terrorism, violate national security, are falsely declared, or otherwise illegal.[189]  While the term "illegal" is not expressly defined to include counterfeit goods, a recent Thai Customs action found that counterfeit goods may be considered illegal under the notification.[190]

4.   Romag Fasteners, Inc. v. Fossil, Inc., 817 F.3d 782 (Fed. Cir. 2016)

In Romag Fasteners, Inc. v. Fossil, Inc., the Federal Circuit considered whether, under Section 35 of the Lanham Act, a finding of willful infringement is required in order to award plaintiff the infringer’s profits.  The case was on appeal from the Second Circuit, and the Federal Circuit, which had jurisdiction because of a separate patent issue, applied Second Circuit law in holding that a finding of willfulness was required.[191]  At the same time, however, the court acknowledged that other Circuits disagreed.[192]  On August 12, 2016, Romag filed its petition for a writ of certiorari.  On March 27, 2017, the Supreme Court granted Romag’s petition; however, the Court vacated the judgment and remanded for reconsideration of a separate patent issue, in light of SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 580 U.S. ___ (2017), which held that laches cannot be a defense in many patent infringement cases.  The Supreme Court did not address whether a finding of willfulness is required in order to award a trademark owner an infringer’s profits, so there remains a circuit split on this issue. 

VI.     Foreign Judgment Recognition and Enforcement:  Cases to Know and Watch

This section of the annual review sets forth the latest developments in this area of law from several aspects of recognition and enforcement of foreign judgments:  (1) U.S. recognition and enforcement; (2) international arbitration award recognition and enforcement; and (3) international recognition and enforcement.

A.    U.S. Recognition & Enforcement

In the United States, the process of recognition and enforcement of foreign judgments is governed by the laws of the state where recognition and enforcement is sought.  Although the state-specific inquiries vary, there are significant commonalities given the prevalence of States that have adopted the Foreign-Country Money Judgments Recognition Act, which is itself based on common law.  

In de Fontbrune v. Wofsy, the holder of photocopy copyrights to Pablo Picasso’s artworks brought action against an art editor who had reproduced the photographic images, seeking to enforce, under the California Uniform Foreign-Court Monetary Judgment Recognition Act (the "Uniform Recognition Act"), a French judgment that awarded an astreinte (a French judicial device), against the editor for copyright violations.[193] 

The district court granted the editor’s motion to dismiss, holding that the astreinte was a penalty and was thus not cognizable under the Uniform Recognition Act–which "does not apply to a foreign-country judgment, even if the judgment grants or denies recovery of a sum of money," if the judgment is a "fine or other penalty."[194]  In reaching this conclusion, the district court considered the parties’ expert declarations on the nature of the French judicial device.[195]  The Ninth Circuit reversed, noting that the enforceability of the French award turned on whether the French judicial device "function[ed] as a fine or penalty–which the Uniform Recognition Act does not recognize–or as a grant of monetary recovery–which is statutorily cognizable"; the Ninth Circuit held that the district court erred in concluding that the astreinte functioned as a penalty.[196]  Rather, the astreinte was compensatory in nature and thus enforceable under California’s Uniform Recognition Act:  "In all, the astreinte was not essentially ‘a punishment of an offense against the public;’ rather, it ‘afford[ed] a private remedy to [de Fontbrune,] a person injured by the wrongful act.’"[197]  

B.     International Arbitration Award Recognition & Enforcement

Unlike foreign money judgments, the enforcement of international arbitration awards is governed by Section 207 of the Federal Arbitration Act.[198]  In a recent decision by the U.S. District Court for the District of Columbia, Africard Co., Ltd. v. Republic of Niger, the district court considered the implications of the intersection between award confirmation under the Federal Arbitration Act and the Foreign Sovereign Immunities Act ("FSIA").[199]   

Africard filed a petition to confirm an arbitration award against the Republic of Niger that arose from "Niger’s 2011 contract with Africard to produce biometric and electronic passports."[200]  Niger was served with the petition to confirm but failed to timely file an answer and an entry of default was entered against it.[201]  Africard filed a motion for entry of a default judgment, and the district court considered whether it could enter a default judgment against the Republic of Niger under the FSIA.[202]   

Under the FSIA, 28 U.S.C. § 1602 et seq., "a foreign state is presumptively immune from the jurisdiction of United States courts," and "unless a specified exception applies, a federal court lacks subject-matter jurisdiction over a claim against a foreign state."[203]  The district court held that arbitration awards subject to the Federal Arbitration Act (or New York Convention) come under the treaty exception to the FSIA.[204] 

After finding that it had jurisdiction under both the Federal Arbitration Act and the FSIA,[205] the district court granted Africard’s motion for a default judgment because "[g]iven [its] lack of appearance," Niger had failed to bear the "heavy burden" of establishing that one of the five enumerated grounds for denying confirmation under the FAA should apply.[206]  The court also noted that the two additional grounds for denying recognition of an arbitral award–that the subject matter of the award is not capable of settlement by arbitration and that recognition would be contrary to public policy (both of which are to be considered whether they are asserted by the resisting party or not)–were also not at issue.[207]   

C.    International Recognition & Enforcement

In non-U.S. jurisdictions, the recognition and enforcement of foreign judgments can be governed by statute, treaty or some other form of legislation (e.g., European Union legislation for E.U. member states).  In the United Kingdom, for example, common law rules continue to apply to recognition of judgments for which there is no treaty or other arrangement for reciprocal enforcement. 

In Vizcaya Partners Ltd v. Picard, on an appeal from the Court of Appeal of Gibraltar, the Judicial Committee of the Privy Council considered the content and scope of the rule that a foreign default judgment is enforceable against a judgment debtor who has made a prior submission to the jurisdiction of the foreign court (as distinct from a submission by appearance in the proceedings), whether the agreement to submit is express or implied.[208]   

The dispute arose out of the Madoff Ponzi scheme operated by Bernie Madoff through his company Bernard L. Madoff Investment Securities LLC (BLMIS).[209]  The BLMIS trustee commenced proceedings in the U.S. Bankruptcy Court for the Southern District of New York under the anti-avoidance provisions of the U.S. Bankruptcy Code against Vizcaya Partners, a BVI company, and obtained a judgment in default of appearance.[210]  The BLMIS trustee applied to enforce the judgment in Gibraltar where part of the money from BLMIS had been transferred.[211] 

The issue on appeal was whether there was an actual agreement (or consent) to submit to the jurisdiction of the foreign court, which agreement could arise through an express or implied term of the contract.[212]  The Privy Council explained that "[t]erms implied as a matter of fact depend on construction of the contract in [] light of the circumstances."[213]  "Where the applicable law of the contract is foreign law, questions of interpretation are governed by the applicable law"–i.e., the foreign law.[214]  Terms implied as a matter of law also depend on the foreign law.[215] 

The Privy Council stated that in this case: 

[T]here is no suggestion that there is a term implied as a matter of fact or as a matter of law that Vizcaya consented to the jurisdiction of the New York court.  For a term to be implied as a matter of fact, the trustee would have to adduce evidence of New York law, not on what the contract means, but that there is a rule of interpretation or construction, on the basis of which the Gibraltar court could conclude that clause 10 in the context of the choice of law and the deemed place of contracting amounts to a choice of jurisdiction.  For a term to be implied as a matter of law, the expert would have to show what relevant terms are implied under New York law.  There is no relevant evidence under either head.  The statements that Vizcaya agreed to the jurisdiction of the New York court by agreeing to New York as the governing law and by transacting business in New York say no more than that these factors justified the assumption of jurisdiction under New York CPLR, section 302.[216]

Thus, the Privy Council concluded that Vizcaya had not consented to the jurisdiction of the New York court and advised the Queen to allow the appeal. 

The Privy Council also noted that, even if a jurisdiction agreement could be implied as a matter of fact or law, it would not apply to these proceedings because they were insolvency proceedings:

In this case, of course, the jurisdiction agreement would be governed by New York law, and what disputes to which it is applicable would be a question of interpretation governed by the applicable law.  But there is no evidence of any rules of interpretation under New York law which could lead the Gibraltar court to the conclusion that any implied submission under clause 10 would apply to avoidance proceedings.[217]

VII.     Key Transnational Litigation Developments in Europe

This section presents key developments in transnational litigation in Europe from 2016, focusing on the following key areas:  (1) developments in jurisdiction; (2) developments in recognition and enforcement; and (3) clarifications in law applicable to non-contractual and contractual obligations.

A.        Developments in Jurisdiction 

In 2016, the Court of Justice of the European Union ("CJEU") shed light on the application of Council Regulation (EC) No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters ("Brussels I").  Among other things, the CJEU held that:

  • disputes concerning rights in rem in immovable property, in particular, must generally be decided by applying the rules of the State in which the property is situated[218]
  • "an action for damages founded on an abrupt termination of a long-standing business relationship, such as the termination at issue in the main proceedings, is not a matter relating to tort, delict or quasi-delict within the meaning of that regulation if a tacit contractual relationship existed between the parties"[219];
  • "an action for recovery of sums […] which has its origin in the repayment of a fine imposed in competition law proceedings does not fall within ‘civil and commercial matters’ within the meaning of [Brussels I]"[220]; and 
  • French Courts have jurisdiction to decide on a dispute over the online sale of Samsung products on websites based outside of France, such as Amazon, because such sales may harm French bricks-and-mortar retailers.[221]

B.        Developments in Recognition and Enforcement 

The CJEU held that "recognition and enforcement of an order issued by a court of a Member State, without a prior hearing of a third person whose rights may be affected by that order, cannot be regarded as manifestly contrary to public policy in the Member State in which enforcement is sought or manifestly contrary to the right to a fair trial […], in so far as that third person is entitled to assert his rights before that court."[222] 

C.        Clarifications in Law Applicable to Non-Contractual and Contractual Obligations

Furthermore, the CJEU clarified the meaning of certain provisions of Regulation No. 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations ("Rome II") and Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations ("Rome I").  Among other things, the CJEU held that: 

  • the place where the direct damage occurs is the factor to use for determining the applicable law, even when the damage was an indirect damage suffered by family members as a result of a relative’s death[223]; and
  • "the law applicable to an action for indemnity between the insurer of a tractor unit, which has compensated the victims of an accident caused by the driver of that vehicle, against the insurer of the trailer coupled to it at the time of that accident, is to be determined in accordance with [Rome I] if the rules of liability in tort, delict and quasi-delict applicable to that accident by virtue of [Rome II] provide for an apportionment of the obligation to compensate for the damage."[224] 

VIII.     Trends in International Arbitration

This section discusses the top three trends in international arbitration in 2016, the cases to know and watch from 2016, and region-specific advances related to third-party funding for arbitration in Asia and recognition of arbitral awards in the Middle East.

A.    The Top Three Trends in International Arbitration in 2016

Transparency is the top trend in international arbitration in 2016–in both commercial and investor-state arbitration.  The year also saw a clear push for reintroducing expedition and cost efficiency into arbitration.  Global expansion rounds out the top three trends, with growing global and gender diversity in international arbitration.

1.      Increasing Transparency

2016 was a notable year for advances in transparency in both treaty-based and commercial arbitration.  On the treaty-arbitration front, in 2013, UNCITRAL introduced procedural rules for making information on investor-state arbitrations publicly available ("UNCITRAL Transparency Rules").  In 2014, Professor Catherine Rogers launched the arbitrator intelligence project to make information about arbitrators and their decision-making publicly available.  In 2015, the Mauritius Convention opened for signature.  The Mauritius Convention allows parties to investment treaties concluded before April 2014 to consent to the UNCITRAL Transparency Rules, regardless of the rules (if any) that apply to the arbitration.  Seventeen states signed onto the Mauritius Convention in 2015, including the U.S. and the U.K.  In 2016, Canada became the second state to ratify the Convention.  The Mauritius Convention will come into force six months after the deposit of the third instrument of ratification, acceptance, approval, or accession.  Canada’s ratification is a significant step forward and suggests that the Mauritius Convention may come into force in 2017.

In 2016, the International Chamber of Commerce ("ICC"), which is home to the ICC International Court of Arbitration ("ICC Court"), led the charge for transparency on the commercial arbitration front by:  (1) publishing information on the arbitrators sitting in arbitrations under the ICC Rules; (2) changing its Rules to make clear that, at the request of one party, the ICC Court will provide the reasons for decisions on challenges to arbitrators, prima facie jurisdiction, and consolidation of arbitrations; and (3) providing more information on the ICC’s scrutiny of draft awards.

First, in the vein of Professor Roger’s initiative and the UNCITRAL Transparency Rules, the ICC began publishing the names of the arbitrators sitting in ICC arbitrations registered from January 1, 2016, onwards on its website.  The information the ICC now publishes includes the nationality of arbitrators, their position on the tribunal, and how the arbitrator was appointed (i.e., by the ICC Court or the parties).[225]  The ICC’s list provides parties with free, easily accessible information on arbitrators and should become part of the routine diligence searches performed on potential nominees. 

Second, in November 2016, the ICC announced revisions to its 2012 Rules that will go into effect for arbitration agreements entered into after March 1, 2017 ("2017 ICC Rules").  The 2017 ICC Rules formalize the ICC Court’s offer to provide reasons for its decisions on challenges to arbitrators, prima facie jurisdictional decisions, and consolidation of arbitrations.  A notable 2017 change that was introduced into the ICC Rule is that the ICC Court will now provide reasons upon the request of one party.  The ICC Court’s offer to provide reasons was highly debated and was not included in the 2012 ICC Rules.  Although the ICC Court introduced a practice to provide reasons, it would only do so after seeking the consent of all parties.  While the ICC Court’s reasoning will not be made publicly available, it will provide long sought after insight into the decision-making process of one of the world’s most experienced arbitral institutions. 

Third, the ICC now provides more transparency to parties regarding its scrutiny of arbitral awards, including automatically alerting parties when it receives draft arbitral awards for scrutiny and when awards are approved by the ICC Court, which the Court previously disclosed after the signed award was provided to the parties.  The ICC also spelled out its previously undisclosed policy regarding cuts in arbitrators’ fees for delays relating to arbitral awards and announced that it will cut its own expenses for delays relating to the scrutiny of arbitral awards. 

The collective impact of these changes marks a clear and notable trend towards greater transparency in the private realm of international commercial arbitration.  While confidentiality–or at least the option of confidentiality–remains a hallmark of international arbitration, parties should be aware of the trend towards transparency when considering whether to include confidentiality provisions in their arbitration clauses.

2.      Growing Global Diversity

The year 2016 was a landmark year for diversity in international arbitration.  In addition to institutions announcing a growing number of new arbitrations, those new arbitrations are more diverse.  The ICC announced that out of a record 966 new cases filed in 2016, 137 different countries were represented.  For the first time in the ICC Court’s 94-year history, the number of parties exceeded 3,000, and included a 50% increase in parties from north and sub-Saharan Africa, a 22% increase in the number of parties from South and East Asia, and a 15% increase in parties from Latin America.  While the U.S. and France came in first and second for numbers of parties, Brazil assumed the third position, with Germany and Mexico rounding out the top five.  Brazil’s growing prominence in the world of international arbitration is also marked by the ICC’s announcement that it will open an office in Brazil in 2017.  Korean, Turkish, and Nigerian parties were also involved in a record number of cases.

The year 2016 was also a significant year for progress in gender equality in international arbitration.  The Equal Representation in Arbitration Pledge launched on May 18, 2016, and strives to promote gender equality in international arbitration by advocating for the appointment of women as arbitrators, counsel, and members of the international arbitration community.  While there still is a long way to go, there is a clear and welcome trend towards increasing diversity within the international arbitration community.

3.      New Rules to Know and Watch:  Efforts to Regain Arbitration’s Reputation For Being Faster and Cheaper

In 2016, the leading international arbitration institution in Asia, the Singapore International Arbitration Centre ("SIAC"), introduced new arbitration rules ("2016 SIAC Rules") that include two new provisions designed to expedite arbitrations. 

First, Rule 29 of the 2016 SIAC Rules allows parties to apply for the dismissal of a claim on the basis that the claim is "manifestly without legal merit" or "manifestly outside the tribunal’s jurisdiction."  This rule reflects a similar provision, Rule 41(5), which was introduced into the ICSID Arbitration Rules in 2006.  Once Rule 29 is invoked, tribunals must decide whether the motion can proceed.  If a tribunal allows an application to proceed, it must decide the motion and render an order or award within 60 days, although it may make its decision "in summary form."  This new provision has at least two potential benefits:  (1) allowing parties to narrow the scope of the dispute at an early stage; and (2) discouraging parties from trying to extend an arbitration or make it more expensive by including claims that lack legal merit or are manifestly outside of the tribunal’s jurisdiction. 

Second, the 2016 SIAC Rules also include a new provision designed to expedite procedures in disputes under S$6 million (approximately US$4.2 million).  SIAC’s expedited procedure rule, Rule 5, is designed to allow cases with smaller amounts in dispute to proceed more swiftly.  Rule 5 overrides any contrary provision of the parties’ arbitration agreement and mandates the use of a sole arbitrator unless SIAC’s President determines otherwise.  Rule 5 allows the tribunal to decide, in consultation with the parties, whether the dispute will be decided based on documentary evidence only, if a hearing is required for the examination of witnesses, or if oral argument is required.  When Rule 5 applies, the tribunal must render a final award within six months of its constitution and may do so in "summary form."  If the arbitration develops in a way that makes the expedited procedures inappropriate, Rule 5.4 allows the tribunal to decide, in consultation with SIAC’s Registrar, that the expedited procedure will no longer apply. 

In 2016, the ICC also announced that it was introducing expedited procedures into its Rules that will apply to arbitration agreements entered into after March 1, 2017, when the amount in dispute is under US$2 million.  The ICC’s Expedited Procedure Rules are faster and less expensive than arbitration under the regular ICC Rules.  Similar to SIAC’s Rule 5, under the ICC’s Expedited Procedure Rules, the ICC Court will appoint a sole arbitrator irrespective of the number of arbitrators indicated in the arbitration agreement and require that awards be made within six months of the case management conference.  Under the ICC’s Expedited Procedure Rules, the Terms of Reference–a document that establishes the framework for an ICC arbitration, including the issues in dispute–is not required, and the tribunal will have discretion, after consulting the parties, to decide the case on documents only, with no hearing, no requests to produce documents or no examination of witnesses.  However, there is no modification of the requirement in the ICC Rules that awards contain reasons.  The ICC’s standard process for scrutinizing arbitral awards also will be maintained.  The ICC introduced a new fee scale with significantly reduced costs for arbitrations under its Expedited Procedure Rules.  The ICC also announced that tribunals under its regular rules will now only have one month to establish Terms of Reference–cutting the previous time limit in half. 

This trend will likely continue in 2017, with other international arbitration institutions taking steps to make arbitration faster and less expensive.

B.     International Arbitration Cases to Know and Watch from 2016

1.      Philip Morris Asia Limited v. Australia, PCA Case No. 2012-12, Award on Jurisdiction and Admissibility, 17 December 2015

In a decision made public in May 2016, a tribunal acting under the auspices of the Permanent Court of Arbitration ("PCA") issued an important ruling regarding restructuring of investments to take advantage of investment treaty protections.  The case arose from Australia’s passage of laws requiring that tobacco products be sold in plain, logo-free, drab dark brown packaging.  Critically, when Australia was considering the legislation at issue, Philip Morris’s investment in Australia was structured through a Swiss entity.  Philip Morris restructured its investment, moving it from the Swiss-entity to a Hong Kong entity to take advantage of protections in the bilateral investment treaty ("BIT") between Australia and Hong Kong, which Philip Morris later relied on in bringing a claim against Australia.  Assessing its jurisdiction over the dispute, the tribunal found that Philip Morris’s investment was restructured through Hong Kong after the challenged legislation was expected to pass.  The tribunal concluded that the "main and determinative, if not sole, reason for the restructuring was the intention to bring a claim" under the Hong Kong-Australia BIT.  Accordingly, the tribunal found Philip Morris abused the arbitral process by changing "its corporate structure to gain the protection of an investment treaty at a point in time where a dispute was foreseeable."  Drawing a bright line, the tribunal held that "[a] dispute is foreseeable when there is a reasonable prospect that a measure that may give rise to a treaty claim will materialise."  The tribunal’s ruling is significant for investors considering structuring or restructuring investments to take advantage of the protection of specific investment treaties.

2.      Essar v. Norscot, [2016] EWHC 2361 (Comm)

In September, the English High Court upheld an ICC arbitration award granting Norscot costs, including the costs of Norscot’s litigation funding, which incorporated a fee of 300% of the funding or 35% of the recovery.  The sole arbitrator determined he was entitled to award this additional fee as "other costs" for purposes of Section 59(1)(c) of the 1996 English Arbitration Act.  The arbitrator’s decision to award the funder’s fee as costs stemmed in part from his finding that Essar’s conduct before and during the dispute was exploitative and left Norscot with no other option than to seek third-party funding.  Analyzing the reasoning of the arbitrator’s decision, the law, and precedent, the English High Court held, "as a matter of language, context and logic … that ‘other costs’ can include the costs of obtaining litigation funding" and the arbitrator acted within his discretion to make such an award.  Notably, the ICC Rules provide that the costs of arbitration include "the reasonable legal and other costs incurred by the parties for the arbitration" and give arbitrators the unfettered right to allocate those costs.  While this case supports the use of third-party funding, there is some concern that it may lead to early or intrusive discovery into the presence and involvement of third-party funders.  As the market for innovative funding arrangements continues to grow, the application of Essar v. Norscot and its reasoning could prove critical in determining strategy for both parties and those looking to invest in arbitration claims. 

3.      Crystallex International Corp. v. PDV Holding, Inc.; Petroleos de Venezuela, S.A.; Rosneft Trading, S.A.; and Glas Americas, LLC, CA. No. 16-01007 (D. Del.)

After being awarded nearly US$1.4 billion arising from Venezuela’s expropriation of its investment in a gold mine, Crystallex (represented by Gibson Dunn) is engaged in litigation to protect its ability to enforce its arbitral award.  Having publicly stated its unwillingness to pay, Venezuela, through its state-owned oil company PDVSA and PDVSA’s subsidiaries, orchestrated a series of transactions to remove the value of Citgo, its most valuable asset, from the United States and repatriate the money to Venezuela.  In response, Crystallex is pursuing claims in the U.S. District Court for the District of Delaware ("Delaware District Court") alleging Venezuela and the other defendants’ actions constitute fraudulent transfers.  The Delaware District Court’s denial of defendants’ motions to dismiss Crystallex’s claims is currently under consideration by the Third Circuit Court of Appeals.  The appeal, in part, challenges the application of fraudulent transfer statutes to sovereigns and their instrumentalities in certain circumstances.  If confirmed by the Third Circuit, the Delaware District Court’s holding will uphold the use of an important tool for holders of arbitral awards to protect their right to recover the amounts awarded to them.

4.      Cairn Energy PLC v. India, UNCITRAL Rules, administering institution undisclosed

Cairn Energy has been operating an oil exploration venture in India since 2004.  Cairn sold the majority of its investment in 2011, retaining just under a 10% interest.  In 2014, India informed Cairn of a "draft assessment order" relating to the 2006-2007 tax year.  The tax assessment stems from transactions related to the reorganization of the group prior to Cairn floating its Indian subsidiary on the Mumbai stock exchange.  In an effort to enforce its retroactive tax assessment, India attached Cairn’s interest in its Indian venture.  Following a period of consultation, Cairn formally initiated arbitration proceedings.  Cairn is seeking US$1.6 billion plus interest and penalties.  The arbitration is private and confidential, so its status is unknown.  However, due to the facts known about this arbitration, its outcome could prove critical for determining the proper interaction of sovereign taxation prerogatives with the rights and expectations of foreign investors.  Claims by investors seeking relief from taxation and tax-enforcement actions that amount to indirect expropriation are likely to increase in the near future, making this arbitration an important one to watch.

C.    Region-Specific Developments in International Arbitration

1.      Hong Kong and Singapore:  Growing Acceptance of Third-Party Funding

The biggest news in international arbitration in Hong Kong and Singapore in 2016 is the acceptance of third-party funding.  The use of third-party funding has expanded significantly in recent years in jurisdictions outside Asia, particularly in the U.S. and the U.K.  In 2016, the two major arbitration seats in Asia, Hong Kong and Singapore, made significant progress in their quest to open up their arbitration markets to third-party funding.  On October 12, 2016, the Hong Kong Law Reform Commission released a report ("HKLRC Report") recommending that the law in Hong Kong be amended to incorporate changes concerning third-party funding of arbitration and associated proceedings under the Arbitration Ordinance.  Following the release of the HKLRC Report, the Hong Kong government published the Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill 2016 on December 30, 2016, and introduced the bill into the Legislative Council on January 11, 2017.[226]  The proposed amendments are two-fold:  they (1) clarify that third-party funding of arbitration is not prohibited by the common law doctrines of maintenance and champerty and (2) provide for measures and safeguards relating to third-party funding in arbitration.

The 2016 bill defines arbitration broadly to include related court proceedings, proceedings before an emergency arbitrator, and mediation.  The definition of "third party funding of arbitration" is narrowly defined to exclude the direct or indirect provision of arbitration funding by a person practicing law or providing legal services.  The bill provides that the Secretary of Justice may establish two bodies:  (1) an advisory body to monitor and review the operation of the new legal structure for third-party funding; and (2) an authorized body to issue a code of practice to regulate third-party funding.  The code of practice will apply both to arbitrations that take place in Hong Kong and to arbitrations that are seated outside of Hong Kong, if costs and expenses are provided in Hong Kong.  The code of practice will establish practices and standards related to, among other things, funding agreements, various procedures that should be followed by third-party funders, and information that should be submitted by third-party funders to the advisory body for monitoring purposes.  Although the code of practice will be a soft law instrument that will not be legally binding, it will be admissible as evidence in legal proceedings.

Singapore is one step ahead of Hong Kong in implementing a legal framework for third-party funding of arbitration.  On January 10, 2017, the Singapore Parliament passed the Civil Law (Amendment) Bill to legalize third-party funding of arbitration and related proceedings in Singapore.[227]  Under the Civil Law (Third Party Funding) Regulations, third-party funders must fulfill certain conditions in order to fund an arbitration, such as having ready access to sufficient funds and engaging in third-party funding as a principal business.  The new legislative framework for third-party funding of arbitration in Singapore will be further bolstered by supplementary regulations, subsidiary legislation, best practices, and guidelines soon to be introduced by the Minister of Law.  The Singaporean government has also emphasized that the proposed framework "gives precedence to party autonomy and flexibility" and indicated that it would take a "light touch" approach to regulation of third-party funding.

2.      The Middle East:  Progress in the Recognition of Arbitral Awards

Historical hurdles investors have faced in enforcing arbitral awards in the Middle East are slowly being removed.  A recent decision of the Qatari Court of Cassation marks a positive step forward in the enforcement of foreign arbitral awards.  Qatari courts have been criticized for conflating enforcement under the New York Convention with the local civil procedures for enforcing court judgments.  For example, the courts had previously held that a foreign award could not be enforced because it was not made in the name of the Emir of Qatar.  In a 2016 decision, Case No. 173, the Qatari Court of Cassation overturned the rulings of the lower courts, finding that the absence of the statement that the award was made in the name of the Emir of Qatar was not a basis for refusing to enforce a Paris-seated ICC award when none of the grounds for refusing enforcement under Article V of the New York Convention were present.

A similar trend can be found in the Dubai Court of Cassation, which overturned the Dubai Court of Appeal’s decision in Fluor v. Petrixo Oil & Gas.  In March 2016, the Dubai Court of Appeal held of its own motion, and without consulting the parties, that there was "no evidence before it" that the U.K. had ratified the New York Convention or that the English courts would reciprocally enforce an award issued in Dubai.  It therefore refused to enforce a US$11.8 million arbitral award rendered in London against a UAE oil company.  Rightly, the Dubai Court of Cassation overturned the Court of Appeal’s decision, ruling (as it has done previously) that the UAE is obliged to enforce all foreign awards, subject only to the narrow exceptions identified in the New York Convention.

The Dubai International Financial Centre ("DIFC"), a free-trade zone in Dubai with an independent judiciary that applies common law and operates in English, continues to adopt a pragmatic approach to commercial disputes.  DIFC Courts readily accept jurisdiction in a wide variety of cases–and 2016 saw parties successfully use the DIFC Courts as a jurisdictional gateway to enforce arbitration awards in the UAE.  DIFC Courts accept jurisdiction to recognize foreign arbitral awards even where the dispute has no connection with the DIFC and the party seeking recognition has no intention of seeking to enforce the arbitral award in the DIFC.[228]  Enforcement in the DIFC Courts results in a judgment of the DIFC Courts, which is then capable of reciprocal enforcement in the Dubai courts (or any other court with reciprocal enforcement arrangements in place with the DIFC Courts).  The recent decision in DNB Bank makes it clear that the DIFC Courts can be used as a gateway to enforcement in Dubai and elsewhere–both for international arbitration awards and foreign court judgments.  These recent decisions should help pave the way to greater investor confidence in Middle Eastern markets. 

[1] Chevron Corp. v. Donziger, 833 F.3d 74 (2d Cir. 2016).

[2] See Gibson Dunn Client Alert, Chevron Earns Decisive Victory in Second Circuit Civil RICO Appeal Concerning Corrupt Scheme to Obtain $9.5 Billion Ecuadorian Judgment Through Bribery and Fraud (Aug. 9, 2016), http://gibsondunn.com/publications/Pages/Chevron-Decisive-Victory–Second-Circuit-Civil-RICO-Appeal-Concerning-Corrupt-Ecuadorian-Judgment.aspx.  

[3] RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090 (2016).

[4] Id. at 2103. 

[5] Id. at 2101. 

[6] Torrent Pharm. Ltd. v. Daiichi Sankyo, Inc., No. 16-cv-2988, 2016 WL 3976992, at *4 (N.D. Ill. July 25, 2016) (citation and internal quotation marks omitted) (in which plaintiffs conceded that defendants were not subject to general jurisdiction).

[7] Daimler v. AG Bauman, 134 S. Ct. 746, 761 & n.19, 762.

[8] First Nat’l Bank of Pa. v. Transamerica Life Insur. Co., No. 14-cv-1007, 2016 WL 520965, at *4-7 (W.D. Pa. Feb. 10, 2016).

[9] Id.

[10] Id.

[11] Brown v. Lockheed Martin Corp., 814 F.3d 619, 628 (2d Cir. 2016).

[12] Id. at 623, 628-30.

[13] Id. at 623, 629.

[14] Cent. States, Se. & Sw. Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 946 (7th Cir. 2000).

[15] Firefighters’ Ret. Sys. v. Royal Bank of Scotland PLC, No. 15-cv-482, 2016 WL 1254366 (M.D. La. Mar. 29, 2016).

[16] Id. at *5, *8-9.

[17] Weaver v. Johnson & Johnson, Ethicon, Inc., 16-cv-257, 2016 WL 1668749, at *3, *6 (S.D. Cal. Apr. 27, 2016).

[18] Maple Leaf Adventures Corp. v. Jet Tern Marine Co. Ltd., 15-cv-02504, 2016 WL 3063956, at *9 (S.D. Cal. Mar. 11, 2016) (internal quotations omitted) (allowing plaintiff to depose one corporate representative and subpoena records with regard to jurisdictional facts only).

[19] See Tanya J. Monestier, Registration Statutes, General Jurisdiction, and the Fallacy of Consent, 36 Cardozo L. Rev. 1343, 1363-65 & nn.109-12 (2015).

[20] Genuine Parts Co. v. Cepec, 137 A.3d 123, 125-26 (Del. 2016) (citing Sternberg v. O’Neil, 550 A.2d 1105 (Del. 1988)).

[21] Id. at 127.

[22] Id. 

[23] 188 F. Supp. 3d 734, 748-50 (N.D. Ill. 2016); see also Perez v. Air & Liquid Sys. Corp., No. 16-cv-00842, 2016 WL 7049153, at *9 (S.D. Ill. Dec. 2, 2016).

[24] Gulf Coast Bank & Trust Co. v. Designed Conveyor Sys., LLC, No. 16-cv-412, 2017 WL 120645, at *3-4 (M.D. La. Jan. 12, 2017).

[25] Id. at *6-7.

[26] Brown v. Lockheed Martin Corp., 814 F.3d 619, 623 (2d Cir. 2016).

[27] Id. at 637.

[28] Id. at 640.

[29] Id.

[30] See, e.g., Pa. C.S.A. § 5301 (explicitly authorizing the exercise of general personal jurisdiction).

[31] Genuine Parts, 137 A.3d at 142.

[32] Id. at 147.

[33] Id. 

[34] Lockheed, 814 F.3d at 640 (collecting state statutes and cases authorizing exercise of general jurisdiction). 

[35] Id. at 641; see also Perez, 2016 WL 7049153, at *9; Gulf Coast Bank, 2017 WL 120645, at *3-4.  In a later case, the Second Circuit in non-binding dicta expressed some doubt that states could exercise their coercive power in this way.  See Ritchie Capital Mgmt., L.L.C. v. Costco Wholesale Corp., No. 15-3294, 2016 WL 3583225, at *1 & n.1 (2d Cir. July 1, 2016) (noting that previous interpretations of New York’s statute as authorizing the exercise of general jurisdiction "may no longer be sound in light of the Supreme Court’s decision" in Daimler).

[36] See, e.g., In re Syngenta AG MIR 162 Corn Litig., No. 14-md-2591, 2016 WL 2866166, at *1-3 (D. Kan. May 17, 2016) (noting that "the Kansas Supreme Court has already interpreted the statute to require consent to general jurisdiction").

[37] Gibson Dunn represents BNSF Railway Co. in these proceedings.

[38] See Daimler, 134 S. Ct. at 758 n.10 (highlighting that potential restrictiveness of rule on general jurisdiction may be offset by recourse to specific jurisdiction). 

[39] Morrison v. National Australia Bank, 561 U.S. 247 (2010).

[40] See Gibson Dunn Client Alert, 2015 Year-End Transnational Litigation Update (Feb. 17, 2016), http://gibsondunn.com/publications/Pages/2015-Year-End-Transnational-Litigation-Update.aspx.   

[41] 18 U.S.C. §§ 1961-1968.

[42] RJR Nabisco, 136 S. Ct. at 2103.

[43] Id. at 2101. 

[44] RJR Nabisco, 136 S. Ct. at 2103; see also Gibson Dunn Client Alert, 2016 Mid-Year Transnational Litigation Update, http://www.gibsondunn.com/publications/Pages/2016-Mid-Year-Transnational-Litigation-Update.aspx;  Gibson Dunn Client Alert, U.S. Supreme Court Clarifies Extraterritorial Reach of Civil RICO (June 21, 2016), http://www.gibsondunn.com/publications/Pages/US-Supreme-Court-Clarifies-Extraterritorial-Reach-of-Civil-RICO.aspx.

[45] RJR Nabisco, 136 S. Ct. 2106. 

[46] Id. at 2111.

[47] Bascuñan v. Daniel Yarur Elsaca, No. 15-cv-2009 (GBD), 2016 WL 5475998 (S.D.N.Y. Sept. 28, 2016). 

[48] Id. at *4 (quotation marks and citation omitted).

[49] Id. at *5. 

[50] Id.

[51] Id. at *6. 

[52] Id. at *5. 

[53] Id. at *6. 

[54] See Exeed Indus., LLC v. Younis, No. 15 C 14, 2016 WL 6599949, at *3 (N.D. Ill. Nov. 8, 2016) ("The few cases to address the issue of domestic injury post-RJR Nabsico [sic] have interpreted it to mean that an injury arises where it was initially suffered by the plaintiff."); Uthe Tech. Corp. v. Allen, No. C 95-02377 WHA, 2016 WL 4492580, at *2-3 (N.D. Cal. Aug. 26, 2016).

[55] Tatung Co. v. Shu Tze Hsu, No. SA CV 13-1743 (DOC) (ANx), 2016 WL 6683201, at *6-7 (C.D. Cal. Nov. 14, 2016). 

[56] Id. at *7.

[57] Id. at *7-8.

[58] See Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247 (2010).

[59] See, e.g., Doe I v. Nestlé USA, Inc., 766 F.3d 1013, 1028 (9th Cir. 2014) (concluding that "Kiobel II did not explicitly adopt Morrison‘s focus test").

[60] Adhikari v. Kellogg Brown & Root, Inc., 845 F.3d 184, 192-99 (5th Cir. 2017).

[61] Id. at 195. 

[62] Id. at 193-94. 

[63] Id. (citing RJR Nabisco, 136 S. Ct. at 2101). 

[64] Id. at 195.

[65] Id.

[66] Id.

[67] Id. at 197. 

[68] Id.

[69] Id. at 197-98. 

[70] Id. 

[71] In re Arab Bank, PLC Alien Tort Statute Litig., __ S. Ct. __, 2017 WL 1199472 (U.S. Apr. 3, 2017).

[72] In re Arab Bank, PLC Alien Tort Statute Litig., 822 F.3d 34 (2d Cir. 2016) (en banc).

[73] 808 F.3d 144 (2d Cir. 2015).

[74] In re Arab Bank, 808 F.3d at 151.

[75] 822 F.3d at 36-37. 

[76] Id. at 38.

[77] Id. at 45. 

[78] Warfaa v. Ali, 811 F.3d 653 (4th Cir. 2016).

[79] Al Shimari v. CACI Premier Tech., Inc., 758 F.3d 516 (4th Cir. 2014).

[80] Warfaa, 811 F.3d at 660.

[81] Id. at 660-61.

[82] Id. at 661.

[83] Licci et al. v. Lebanese Canadian Bank, SAL, No. 15‐1580, 2016 WL 4470977 (2d Cir. Aug. 24, 2016).

[84] Id. at *2.

[85] Id. at *7-8.

[86] Id. at *11.

[87] Id. at *11-13.

[88] Id. at *13 (citing Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111, 120 (2d Cir. 2010)).

[89] Gibson Dunn Client Alert, Have Alien Tort Statute Claims Run Their Course?  Law360 (Sept. 16, 2016), http://www.gibsondunn.com/wp-content/uploads/documents/publications/Thomson-Neuman-Champion-Mefford-Have-Alien-Tort-Statute-Claims-Run-Their-Course-Law360-9-16-16.pdf.  

[90] Balintulo v. Ford Motor Co., 796 F.3d 160, 166 (2d Cir. 2015) (quoting Mastafa v. Chevron Corp., 770 F.3d 170, 185-86 (2d Cir. 2014)). 

[91] Balintulo, 796 F.3d at 168-69. 

[92] Id. at 170.

[93] Trader Joe’s Company v. Hallat, 835 F.3d 960, 963, 966 (9th Cir. 2016). 

[94] Id. at 963-64. 

[95] Id. at 966, 975.

[96] Id. at 966 (quoting RJR Nabisco, 136 S. Ct. at 2101).

[97] See id. (quoting Steele v. Bulova Watch Co., 344 U.S. 280, 286 (1952)).

[98] Id. (quoting RJR Nabisco, 136 S. Ct. at 2101).

[99] Id. at 969 (citing Timberlane Lumber Co. v. Bank of Am. Nat’l Trust & Sav. Ass’n, 549 F.2d 597 (9th Cir. 1976), superseded by statute, 15 U.S.C. § 6a).

[100] Id. (citations omitted) (internal quotation marks omitted).

[101] Id. at 971. 

[102] Id.

[103] Id.

[104] Id.

[105] Id. at 971-72.

[106] Id. at 972-73 (citations omitted). 

[107] Id. at 973. 

[108] Id. at 974 (citations omitted). 

[109] Id. 

[110] Id. at 975 (citations omitted). 

[111] Id.

[112] United States v. Epskamp, 832 F.3d 154, 161 (2d Cir. 2016) (citing 21 U.S.C. § 959(b)(2)).

[113] Id. at 160.

[114] Id.

[115] Id. at 161(citing § 959(c)). 

[116] Id.

[117] Id. at 163. 

[118] Id. (citing Kiobel, 133 S. Ct. at 1665).

[119] Id. (citing § 959(c)) (internal quotation marks omitted). 

[120] Id.

[121] Id. at 164 (citing RJR Nabisco, 136 S. Ct. at 2102 ("While the presumption can be overcome only by a clear indication of extraterritorial effect, an express statement of extraterritoriality is not essential," and "context can be consulted as well.") (internal quotation marks omitted)). 

[122] See id.

[123] Accord United States v. Bodye, 172 F. Supp. 3d 15, 20 (D.D.C. 2016).

[124] In re Warrant to Search a Certain E-Mail Account Controlled and Maintained by Microsoft Corporation, 829 F.3d 197, 200 (2d Cir. 2016).  Gibson Dunn submitted an amicus brief in support of Microsoft Corporation on behalf of Infor US, Inc.

[125] Id.

[126] Id. at 211 (alteration and emphasis in original) (quoting the Government’s brief).

[127] Id.

[128] Id. at 220. 

[129] In re Search Warrant No. 16-960-M-01 to Google, No.16-1061, 2017 WL 471564, at *6-9 (E.D. Pa. Feb. 3, 2017).

[130] See, e.g., Myun-Uk Choi v. Tower Research Capital LLC, 165 F. Supp. 3d 42 (S.D.N.Y. 2016) ("Both the Second Circuit and this Court have held that Morrison‘s transactional test applies to the CEA as well.").

[131] U.S. Commodity Futures Exch. Comm’n v. Vision Fin. Partners, 190 F. Supp. 3d 1126, 1131 (S.D. Fla. 2016).

[132] Id.

[133] Id. (internal quotation marks omitted). 

[134] Id. 

[135] To generate this statistic, we searched all federal district court dockets for actions filed in 2016 seeking discovery under 28 U.S.C. § 1782.  This includes actions initiated upon receipt of a letter rogatory from a foreign court. If you exclude actions stemming from letters rogatory, the number of actions initiated pursuant to 28 U.S.C. § 1782 has remained fairly consistent for the past three years, with 86 actions filed in 2014, 94 actions filed in 2015, and 84 actions filed in 2016.

[136] To obtain discovery under Section 1782, three requirements must be met:  (1) the person from whom discovery is sought must reside or be "found" in the district; (2) the discovery must be "for use in a proceeding in a foreign or international tribunal"; and (3) the application is made by "any interested person."  28 U.S.C. § 1782(a).  Even if these requirements are met, granting a petition for discovery is discretionary and courts also consider the following four factors:  (1) whether "the person from whom discovery is sought is a participant in the foreign proceeding"; (2) the nature of the foreign tribunal, the character of the proceedings, and the receptivity of the foreign tribunal to United States court assistance; (3) whether the Section 1782 request is an attempt to "circumvent foreign proof-gathering restrictions"; and (4) whether the documents and testimony sought are unduly intrusive or burdensome.  Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004).

[137] 542 U.S. 241 (2004).

[138] Andover Healthcare v. 3M Co., 817 F.3d 621, 624 (8th Cir. 2016).

[139] In re King.com Ltd., No. 16-mc-80070-JCS, 2016 WL 4364286, at *8 (N.D. Cal. Aug. 16, 2016).

[140] Id.

[141] Id.

[142] Salcido-Romo v. S. Copper Corp., No. CV-16-01639-PHX-DLR, 2016 WL 3213212, at *1 (D. Ariz. June 10, 2016).

[143] Id. at *3.

[144] Id.

[145] In re Applic. of TJAC Waterloo, LLC, No. 3:16-mc-9-CAN, 2016 WL 1700001, at *2 (N.D. Ind. Apr. 27, 2016).

[146] Id. at *2-3.

[147] See In re Applic. of Schmitz, 259 F. Supp. 2d 294, 296 (S.D.N.Y. 2003), aff’d sub nom. Schmitz v. Bernstein Liebhard & Lifshitz, LLP., 376 F.3d 79 (2d Cir. 2004) (rejecting argument that law firm could not be subject to Section 1782 discovery request for use in foreign proceeding against a client).

[148] In re Kiobel, No. 16 CIV. 7992 (AKH), 2017 WL 354183, at *1, *2 (S.D.N.Y. Jan. 24, 2017).

[149] Id. at *2, *5.

[150] Id. at *3 (internal citations omitted).

[151] Id.

[152] Id. at *4-7.

[153] In re Request for Int’l Judicial Assistance, No. 16-mc-80108, 2016 WL 2957032, at *1-2 (N.D. Cal. May 23, 2016). 

[154] In re Ex Parte Applic. of Digital Shape Techs., Inc. and Radomir Nikolajev, No. 16-mc-80150, 2016 WL 3913670, at *1, *4 (N.D. Cal. July 20, 2016).

[155] OECD/EUIPO, Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact 11 (2016).

[156] See Andrea Stroppa, et al., Social Media and Luxury Goods Counterfeit: A Growing Concern for Government, Industry and Consumers Worldwide 3 (May 2016).

[157] Id. at 6. 

[158] Gucci Am., Inc. v. Weixing Li, 768 F.3d 122, 145 (2d Cir. 2014). Gibson Dunn represented Gucci America, Inc., Balenciaga America, Inc., Balenciaga, S.A., Bottega Veneta International S.A.R.L., Bottega Veneta, Inc., Luxury Goods International S.A., and Yves Saint Laurent America, Inc. in these proceedings.

[159] Gucci Am., Inc. v. Weixing Li, 135 F. Supp. 3d 87, 104 (S.D.N.Y. 2015). Gibson Dunn represented Gucci America, Inc., Balenciaga America, Inc., Balenciaga, S.A., Bottega Veneta International S.A.R.L., Bottega Veneta, Inc., Luxury Goods International S.A., and Yves Saint Laurent America, Inc., in these proceedings.

[160] Id. at 94.

[161] Gucci Am. v. Weixing Li, No. 10-cv-4974 (RJS), 2015 WL 7758872, at *6 (S.D.N.Y. Nov. 30, 2015).  Gibson Dunn represented Gucci America, Inc., Balenciaga America, Inc., Balenciaga, S.A., Bottega Veneta International S.A.R.L., Bottega Veneta, Inc., Luxury Goods International S.A., and Yves Saint Laurent America, Inc., in these proceedings.

[162] Sneha Teresa Johnny, Bank of China submits records in Gucci case after fines, Reuters (Jan. 21, 2016), http://www.reuters.com/article/us-bank-of-china-gucci-idUSKCN0UZ0AF.

[163]Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, 2004 O.J. (L 157) Art. 11. 

[164] [2016] EWCA Civ 658 (appeal taken from Eng.).

[165] Id. ¶ 54.

[166] Id. ¶ 56. 

[167] Equustek Sols. v. Google Inc., 2015 BCCA 265 (Court of Appeal for British Columbia).

[168] Id. ¶¶ 16-17. 

[169] Id. ¶¶ 17-18. 

[170] Id. ¶ 24.  

[171] Id.

[172] Id. ¶¶ 24-25. 

[173] Id. ¶ 25.

[174] Id. ¶ 26.

[175] Id. ¶¶ 105, 107.  

[176] Amazon.com, Inc. v. Yung, No. 16-2-27556-7 SEA (Wash. Super. Ct. filed Nov. 14, 2016); Amazon.com, Inc. v. Toysnet, No. 16-2-27563-0 SEA (Wash. Super. Ct. filed Nov. 14, 2016). 

[177] Complaint ¶¶ 74-86, Yung, No. 16-2-27556-7 (SEA); see also Complaint ¶¶ 40-52, Toysnet, No. 16-2-27563-0 SEA.

[178] Complaint at52, Yung, No. 16-2-27556-7 SEA; see also Complaint ¶ 33, Toysnet, No. 16-2-27563-0 SEA. 

[179] 19 U.S.C. §§ 4301-4323 (2016).

[180] Matthew W. Caligur & Casey E. Holder, Customs Bill Facilitates Trade, Strengthens Enforcement, Law360 (Mar. 3, 2016, 11:29 AM), https://www.law360.com/articles/766531/customs-bill-facilitates-trade-strengthens-enforcement.

[181] Defense Federal Acquisition Regulation Supplement: Detection and Avoidance of Counterfeit Electronic Parts–Further Implementation, 81 Fed. Reg. 50,635, 50,649-70 (Aug. 2, 2016) (to be codified at 48 C.F.R. pt. 252) (discussing 252.246-7008, "Sources of Electronic Parts").

[182] See id. at 50, 649-70.

[183] Douglas F. Brent, Cybersecurity Risks in the Supply Chain Federal Energy Regulatory Commission Adopts Rules to Promote Reliability of Electric Power Industry, Lexology (July 29, 2016), http://www.lexology.com/library/detail.aspx?g=e4fd15d6-1a8f-4775-aa11-df2fa02ce549.

[184] See Timothy Trainer, Trainer: TPP a Missed Opportunity for IP Protection & Enforcement, Thomson Reuters Legal Current (Jan. 25, 2017), http://www.legalcurrent.com/key-author-trainer-tpp-a-missed-opportunity-for-ip-protection-enforcement.   

[185] See id.

[186] 2015 O.J. (L. 341) 23; see also Leonie Kroon & Anne Voerman, A Very Important Development For Brand Protection Teamsin the Fight Against Counterfeit–Grab the Momentum, Lexology (Aug. 30, 2016), http://www.lexology.com/library/detail.aspx?g=07251a65-6a9a-4e1d-b2e4-7bc406dc6a42.

[187] Lamiaa Kheir Bek & Paul Allen, New Law to Combat Counterfeiting: What Does It Mean For Businesses and Brand Owners?, Lexology (Jan. 18, 2017), http://www.lexology.com/library/detail.aspx?g=ca67242d-b1bb-41c8-a9d4-95cd1596d459.

[188] See Say Sujintaya & Chansin Tangburanakij, Seizure of IP Infringing Goods in Transit, Lexology (Sept. 28, 2016), http://www.lexology.com/library/detail.aspx?g=c4081abb-52bf-48b1-9a10-d73aa94915b7.  

[189] See id.

[190] See id.

[191] Romag Fasteners, Inc. v. Fossil, Inc., 817 F.3d 782, 784, 791 (Fed. Cir. 2016), vacated, — S. Ct. —, 2017 WL 1114951 (Mem) (U.S. Mar. 27, 2017) (No. 16-202), remanded to Fed. Cir.

[192] Id. at 788 (citing cases from the Third Circuit, Fourth Circuit, Fifth Circuit, and Sixth Circuit finding willfulness was not required). 

[193] de Fontbrune v. Wofsy, 838 F.3d 992, 995 (9th Cir. 2016).

[194] Cal. Civ. Proc. Code § 1715(b), (b)(2) (West 2016).

[195] Wofsy, 838 F.3d at 994-96.

[196] Id. at 994.

[197] Id. at 1005-06 (citing Huntington v. Attrill, 146 U.S. 657, 673–74 (1892)).

[198] See 9 U.S.C. § 207 (2016).

[199] Africard Co., Ltd. v. Republic of Niger, No. 16-00196 (ABJ), — F. Supp. 3d —-, 2016 WL 5396666 (D.D.C. Sept. 27, 2016).

[200] Id. at *1.

[201] Id. 

[202] Id. at *1-2.

[203] Id. at *3 (quoting Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993)).

[204] Id. (citing 28 U.S.C. § 1605); see also Creighton Ltd. v. Gov’t of Qatar, 181 F.3d 118, 123-24 (D.C. Cir. 1999) ("Indeed, it has been said with authority that the New York Convention ‘is exactly the sort of treaty Congress intended to include in the arbitration exception.’") (quoting Cargill Int’l S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1018 (2d Cir. 1993)).

[205] Id. at *2-6.

[206] Id. at *6.

[207] Id. at *6-7. 

[208] Vizcaya Partners Ltd v. Picard, (Gibraltar) [2016] UKPC 5, [1-2].

[209] Id. at [1]. 

[210] Id. 

[211] Id.

[212] Id. at [3-4]. 

[213] Id. at [57]. 

[214] Id. at [31]. 

[215] Id. at [61].

[216] Id. at [70]. 

[217] Id. at [73–74].

[218] Case C-605/14, Komu v. Komu, Celex No. 614CJ0605, ¶ 6 (Dec. 17, 2015) (Westlaw).

[219] Case C-196/15, Grenarolo SpA v. Ambrosi Emmi France SA, Celex No. 615CC0196, ¶ 28 (Dec. 23, 2015) (Westlaw).

[220] Case C-102/15, Versenyhivatal v. Österreich, Celex No. 615CJ0102, ¶ 43 (July 28, 2016) (Westlaw).

[221] Case C-618/15, Concurrence SARL v. Samsung Electronics France SAS, Celex No. 615CJ0618, ¶ 26-27, ¶ 33-35 (Dec. 21, 2016) (Westlaw)

[222] Case C-559/14, Meroni v. Recoletos Ltd., Celex No. 614CJ0559, ¶ 54 (May 25, 2016) (Westlaw).

[223] Case C-350/14, Lazar v. Allianz SpA, Celex No. 614CJ0350, ¶ 25 (Dec. 10, 2015) (Westlaw).

[224] Joined Cases C-359/14 & C-475/14, Ergo Ins. SE v. If P&C Ins. AS, Gjensidige Baltic AAS v. PZU Lietuva UAB DK, Celex No. 614CJ0359, ¶ 64 (Jan. 21, 2016) (Westlaw).

[225] List available at: http://www.iccwbo.org/Products-and-Services/Arbitration-and-ADR/ICC-Arbitral-Tribunals/.

[226] Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill 2016, http://www.legco.gov.hk/yr16-17/english/bills/b201612301.pdf; as introduced into the Legislative Council http://www.info.gov.hk/gia/general/201612/28/P2016122800645p.htm.

[227] Civil Law (Amendment) Bill, https://www.parliament.gov.sg/sites/default/files/Civil%20Law%20(Amendment)%20Bill%2038-2016.pdf.

[228] See, e.g., CA-005-2014-Meydan Group LLC v. Banyan Tree Corporate Pte Ltd; CA-007-2015-DNB Bank v. (1) Gulf Eyadah, (2) Gulf Navigation Holdings Pjsc, available at http://difccourts.ae/11421-2/.


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