Justia International Law Opinion Summaries

The case revolves around EIG, an American investment fund, which lost $221 million after investing in a project to exploit newly discovered oil reserves off the coast of Brazil. The project was led by Petróleo Brasileiro, S.A. (Petrobras), Brazil’s state-owned oil company. A criminal investigation later revealed that Petrobras executives were accepting bribes from contractors and sharing the proceeds among themselves and Brazilian politicians. When this corruption was exposed, the project's lenders withdrew, causing the project to collapse and EIG’s investment to become worthless.The District Court for the District of Columbia had previously denied Petrobras' motion to dismiss the case, arguing that it was immune from liability under the Foreign Sovereign Immunities Act (FSIA). The court held that EIG had sufficiently alleged that Petrobras’ fraud had a "direct effect in the United States" and therefore fell within the direct-effect exception to the FSIA.The United States Court of Appeals for the District of Columbia Circuit affirmed the lower court's decision. The court concluded that Petrobras had caused a direct effect in the United States because it had engaged with EIG in a sustained course of dealing over many months that conveyed its desire to obtain an investment from EIG. The court also found that the direct effect in the United States was not the result of happenstance or coincidence. It was wholly foreseeable, given that Petrobras had contemplated and tried to attract U.S. investment. The court therefore affirmed the district court’s denial of Petrobras’ assertion of foreign sovereign immunity at this stage and remanded for further proceedings. View "EIG Energy Fund XIV, L.P. v. Petroleo Brasileiro, S.A." on Justia Law

The case involves a dispute between GeLab Cosmetics LLC, a New Jersey-based online nail polish retailer, and Zhuhai Aobo Cosmetics, a China-based nail polish manufacturer. The founders of GeLab, Xingwang Chen and Shijian Li, are both Chinese citizens. The dispute centers around the ownership of GeLab and allegations of trade secret theft. According to Chen, he and Li founded GeLab with Chen owning 60% and Li 40%. They entered a joint venture with Zhuhai, which was supposed to invest in GeLab for an 80% ownership stake. However, Chen alleges that Zhuhai never sent the money and instead began using low-quality materials for GeLab's products, selling knock-off versions under its own brand, and fraudulently claiming majority ownership of GeLab. Zhuhai, on the other hand, asserts that Chen was its employee and that it owns 80% of GeLab.The dispute first began in China, where Li sued Chen for embezzlement. Chen then sued Li, Zhuhai, and Zhuhai's owners in New Jersey state court, alleging that he had a 60% controlling interest in GeLab and that Zhuhai had no ownership interest. The state defendants counterclaimed, seeking a declaratory judgment that Zhuhai owns 80% of GeLab. GeLab then filed a second action in New Jersey against Li alone. The state court consolidated the two cases.While the New Jersey proceedings were ongoing, GeLab filed a federal lawsuit in the U.S. District Court for the Northern District of Illinois against Zhuhai and its owners, alleging violations of the federal Defend Trade Secrets Act and the Illinois Trade Secrets Act. The defendants responded that Zhuhai owns GeLab and that it cannot steal trade secrets from itself. The district court stayed the federal case, citing the doctrine of Colorado River Water Conservation District v. United States, reasoning that judicial economy favors waiting for the New Jersey court to determine who owns the company. GeLab appealed the stay.The United States Court of Appeals for the Seventh Circuit affirmed the district court's decision to stay the proceedings. The court found that the federal and state cases were parallel as they involved substantially the same parties litigating substantially the same issues. The court also found that exceptional circumstances warranted abstention, with at least seven factors supporting the district court's decision. These factors included the inconvenience of the federal forum, the desirability of avoiding piecemeal litigation, the order in which jurisdiction was obtained by the concurrent fora, the source of governing law, the adequacy of state-court action to protect the federal plaintiff's rights, the relative progress of state and federal proceedings, and the availability of concurrent jurisdiction. View "GeLab Cosmetics LLC v. Zhuhai Aobo Cosmetics Co., Ltd." on Justia Law

The case involves 21 U.S. citizens and the family of a deceased U.S. citizen who were victims of rocket attacks by the Hizbollah terrorist organization in Israel in 2006. The plaintiffs allege that the Lebanese Canadian Bank (LCB) provided financial services to Hizbollah, including facilitating millions of dollars in wire transfers through a New York-based correspondent bank. In 2011, LCB and Société Générale de Banque au Liban SAL (SGBL), a private company incorporated in Lebanon, executed a purchase agreement where SGBL acquired all of LCB's assets and liabilities. In 2019, the plaintiffs brought similar claims against SGBL, as LCB's successor, in the Eastern District of New York for damages stemming from the 2006 attacks.The federal district court dismissed the action for lack of personal jurisdiction over SGBL. The court interpreted several Appellate Division and federal decisions to allow imputation of jurisdictional status only in the event of a merger, not an acquisition of all assets and liabilities. On appeal, the Second Circuit certified two questions to the New York Court of Appeals, asking whether an entity that acquires all of another entity's liabilities and assets, but does not merge with that entity, inherits the acquired entity's status for purposes of specific personal jurisdiction, and under what circumstances the acquiring entity would be subject to specific personal jurisdiction in New York.The New York Court of Appeals answered the first question affirmatively, stating that where an entity acquires all of another entity's liabilities and assets, but does not merge with that entity, it inherits the acquired entity's status for purposes of specific personal jurisdiction. The court declined to answer the second question as unnecessary. The court reasoned that allowing a successor to acquire all assets and liabilities, but escape jurisdiction in a forum where its predecessor would have been answerable for those liabilities, would allow those assets to be shielded from direct claims for those liabilities in that forum. View "Lelchook v Société Générale de Banque au Liban SAL" on Justia Law

In a case involving cobalt mining in the Democratic Republic of Congo (DRC), the U.S. Court of Appeals for the District of Columbia Circuit held that the plaintiffs, former cobalt miners injured in mining accidents and their representatives, have standing to pursue damages claims, but not injunctive relief, against five American technology companies under the Trafficking Victims Protection Reauthorization Act of 2008 (TVPRA).Plaintiffs argued that the technology companies participated in a venture with their cobalt suppliers by purchasing the metal through the global supply chain, which allegedly involves forced labor. The court ruled that merely purchasing an unspecified amount of cobalt through the global supply chain does not amount to "participation in a venture" within the meaning of the TVPRA, and hence, the plaintiffs failed to state a claim for relief.The court also dismissed the plaintiffs' common law claims for unjust enrichment, negligent supervision, and intentional infliction of emotional distress, as they failed to demonstrate that the technology companies participated in a venture with anyone engaged in forced labor. Therefore, the court affirmed the district court's dismissal of the complaint. View "Doe v. Apple Inc." on Justia Law

In this case, the United States Securities and Exchange Commission (SEC) sought to recover approximately $3.3 million from Raimund Gastauer, a German citizen residing in Germany, alleging that Gastauer received the money from his son, who had obtained the money through securities fraud in the United States. Gastauer challenged the jurisdiction of the United States District Court for the District of Massachusetts over him, contending that he had no relevant contacts with the United States. The district court, however, ruled it could assert jurisdiction over Gastauer because it had jurisdiction over his son, the primary defendant. The judgment ordered Gastauer to pay the $3.3 million, plus prejudgment interest, to the SEC.Gastauer appealed, and the United States Court of Appeals for the First Circuit reversed the district court's decision. The appellate court rejected the SEC's argument that a court may impute the jurisdictional contacts of a primary defendant to a relief defendant who received ill-gotten funds from the primary defendant. It held that such an approach would violate the relief defendant's due process rights, particularly where, as here, the relief defendant had no relevant contacts with the United States and was not accused of any wrongdoing. The appellate court also underscored that the relief defendant's status as a foreign resident further cautioned against an expansive view of the district court's jurisdiction, given the potential risks to international comity. The appellate court remanded the case to the district court for further proceedings consistent with its opinion. View "SEC v. Gastauer" on Justia Law

In 2016, Venezuela's state-owned oil company, Petróleos de Venezuela S.A. (PDVSA), offered a bond swap whereby its noteholders could exchange unsecured notes due in 2017 for new, secured notes due in 2020. PDVSA defaulted in 2019, and the National Assembly of Venezuela passed a resolution declaring the bond swap a "national public contract" requiring its approval under Article 150 of the Venezuelan Constitution. PDVSA, along with its subsidiaries PDVSA Petróleo S.A. and PDV Holding, Inc., initiated a lawsuit seeking a judgment declaring the 2020 Notes and their governing documents "invalid, illegal, null, and void ab initio, and thus unenforceable." The case was taken to the United States Court of Appeals for the Second Circuit, which certified three questions to the New York Court of Appeals.The New York Court of Appeals, in answering the first question, ruled that Venezuelan law governs the validity of the notes under Uniform Commercial Code § 8-110 (a) (1), which encompasses plaintiffs' arguments concerning whether the issuance of the notes was duly authorized by the Venezuelan National Assembly under the Venezuelan Constitution. However, New York law governs the transaction in all other respects, including the consequences if a security was "issued with a defect going to its validity." Given the court's answer to the first certified question, it did not answer the remaining questions. View "Petróleos de Venezuela S.A. v MUFG Union Bank, N.A." on Justia Law

This case involves Vertiv, Inc., Vertiv Capital, Inc., and Gnaritis, Inc., Delaware corporations, who sued Wayne Burt, PTE Ltd., a Singaporean corporation, for defaulting on a loan. Vertiv sought damages and a declaratory judgment. Later, Wayne Burt informed the court that it was in liquidation proceedings in Singapore and moved to vacate the judgments against it. The District Court granted the motion and vacated the judgments, reopening the cases. Wayne Burt then moved to dismiss Vertiv’s claims, either on international comity grounds in deference to the ongoing liquidation proceedings in Singapore, or due to a lack of personal jurisdiction. The District Court granted Wayne Burt’s motion to dismiss, concluding that extending comity to the Singaporean court proceedings was appropriate.On appeal, the United States Court of Appeals for the Third Circuit vacated the District Court's decision and remanded the case. The court clarified the standard to apply when deciding whether to abstain from adjudicating a case in deference to a pending foreign bankruptcy proceeding. The court held that a U.S. civil action is “parallel” to a foreign bankruptcy proceeding when: (1) the foreign bankruptcy proceeding is ongoing in a duly authorized tribunal while the civil action is pending in the U.S. court; and (2) the outcome of the U.S. civil action may affect the debtor’s estate. The court also held that a party seeking the extension of comity must show that (1) “the foreign bankruptcy law shares the U.S. policy of equal distribution of assets,” and (2) “the foreign law mandates the issuance or at least authorizes the request for the stay.” If a party makes a prima facie case for comity, the court should then determine whether extending comity would be prejudicial to U.S. interests. If a U.S. court decides to extend comity to a foreign bankruptcy proceeding, it should ordinarily stay the civil action or dismiss it without prejudice. View "Vertiv Inc. v. Wayne Burt PTE Ltd" on Justia Law

The United States Court of Appeals for the Eighth Circuit ruled in a case brought by the State of Missouri against several Chinese entities, including the government of the People's Republic of China, the Wuhan Institute of Virology, and others. Missouri accused the defendants of negligence in relation to the COVID-19 pandemic, alleging that they allowed the virus to spread worldwide, engaged in a campaign to keep other countries from learning about the virus, and hoarded personal protective equipment (PPE). The court decided that most of Missouri's claims were blocked by the Foreign Sovereign Immunities Act, which generally protects foreign states from lawsuits in U.S. courts. However, the court allowed one claim to proceed: the allegation that China hoarded PPE while the rest of the world was unaware of the extent of the virus. The court held that this claim fell under the "commercial activity" exception of the Foreign Sovereign Immunities Act, as it involved alleged anti-competitive behavior that had a direct effect in the United States. The case was remanded for further proceedings on this claim. View "The State of Missouri v. The Peoples Republic of China" on Justia Law

Defendant-Appellant Petróleos de Venezuela, S.A. (“PDVSA”), an oil company wholly owned by the Bolivarian Republic of Venezuela, entered into two Note Agreements and a Credit Agreement with the predecessor-in-interest to now-Plaintiff-Appellee Red Tree Investments, LLC (“Red Tree”). PDVSA became delinquent on its obligations under the contracts. Red Tree’s predecessor-in-interest accelerated the outstanding debt. Then Red Tree initiated these actions in Supreme Court, New York County, which Defendants removed to district court. PDVSA claimed that any further payment under the Agreements was impossible and should therefore be excused. The district court granted summary judgment against PDVSA on the grounds that PDVSA had failed to provide sufficient evidence that payment was impossible or in the alternative, that any impediment to payment was not reasonably foreseeable. It therefore entered judgment in favor of Red Tree and imposed post-judgment interest. On appeal, PDVSA contends that the district court erred in concluding that no reasonable trier of fact could find that payment was impossible or that U.S. sanctions were unforeseeable. PDVSA further asserts that the district court incorrectly calculated post-judgment interest.   The Second Circuit affirmed. The court agreed with the district court that payment by PDVSA was not impossible. Further, the court concluded that the district court did not err in its calculation of post-judgment interest. The court explained that under the plain language of the Note and Credit Agreements, the outstanding principal and interest that accrued prejudgment—including both default and ordinary interest—are subject to default interest post-judgment. View "Red Tree Investments, LLC v. PDVSA, Petróleo" on Justia Law

In January 2017, Defendant-Appellant Petróleos de Venezuela, S.A. (“PDVSA”), an oil company wholly owned by the Bolivarian Republic of Venezuela, entered into a Note Agreement with then-Plaintiff-Appellee Dresser-Rand Company. PDVSA made two of the twelve payments due under the Note Agreement in April and July 2017 but failed to make any subsequent payments. In February 2019, Dresser-Rand declared PDVSA to be in default, accelerated the debt, and initiated this action in Supreme Court, New York County, which Defendants removed to the district court. PDVSA claimed that any further payment was impossible and should therefore be excused. The district court concluded that PDVSA had failed to prove that repayment was impossible. It therefore entered judgment in favor of Dresser-Rand. On appeal, PDVSA contends that the district court erred in concluding that payment was not impossible. PDVSA further asserts that the district court incorrectly calculated post-judgment interest.   The Second Circuit affirmed. The court agreed with the district court that payment by PDVSA was not impossible, and the court further concluded that PDVSA forfeited any arguments relating to post-judgment interest. The court explained that the evidence demonstrates that PDVSA never attempted payment to a different bank or in an alternative currency, nor did it investigate whether this manner of payment would have been truly impossible. Instead of the evidence shows, did nothing. PDVSA cannot benefit from the impossibility defense on speculation. View "Siemens Energy, Inc. v. PDVSA" on Justia Law