No. 09-980

IN THE

BRITISH AMNRICAN TOBACCO (INVNSTMENTS) LIMITED,

Petitioner,

UNITED STATES OF AMERICA et al.,Respondents.

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATESCOURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF OF THE INTERNATIONAL CHAMBER OFCOMMERCE UNITED KINGDOM AS AMICUS CURIAE

IN SUPPORT OF PETITIONER

GARY W. KUBEK

CARL MICARELLI

Counsel of RecordDEBEVOISE & PLIMPTON LLP

919 Third AvenueNew York, New York 10022(212) 909-6000cmicarelli@debevoise.com

Counsel for Amicus Curiae

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TABLE OF CONTENTS

TABLE OF CONTENTS ..............................................i

TABLE OF AUTHORITIES .......................................ii

INTEREST OF THE AMICUS CURIAE ...................1

SUMMARY OF ARGUMENT ....................................3

ARGUMENT ...............................................................5

I. THE D.C. CIRCUIT’S APPLICATION OF THE

"EFFECTS TEST" IS INCONSISTENT WITH THIS

COURT’S HOLDINGS THAT U.S. STATUTES

SHOULD BE CONSTRUED TO TAKE ACCOUNT

OF FOREIGN SOVEREIGNTY ................................5

II. THE "EFFECTS TEST" CAUSES NEEDLESS

FRICTION WITH FRIENDLY FOREIGN NATIONS ... 8

III. THE "EFFECTS TEST" IS INCONSISTENT WITHU.S. FOREIGN POLICY AND MODERN STATEPRACTICE .........................................................11

A. The OECD Convention on CombatingBribery of Foreign Public Officials inInternational Business Transactions .....11

B. The UN Convention Against Trans-national Organized Crime ......................13

IV. THE "EFFECTS TEST" CAUSES NEEDLESSUNCERTAINTY FOR BUSINESSES AROUND THE

WORLD .............................................................15

CONCLUSION ..........................................................16

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TABLE OF AUTHORITIES

Cases

F. Hoffmann-LaRoche Ltd. v. EmpagranS.A., 542 U.S. 155 (2004) ............................6, 7, 13

Laker Airways Ltd. v. Sabena, Belgian WorldAirlines, 731 F.2d 909 (D.C. Cir. 1984) ................5

United States v. Aluminum Co. of America,148 F.2d 416 (2d Cir. 1945) ...................................9

Statutes

Foreign Corrupt Practices Act, 15 U.S.C.§§ 78dd-1 et seq ..............................................11, 12

Foreign Extraterritorial Measures Act,R.S. 1985, c. F-29 (Canada) .................................10

Foreign Proceedings (Excess of Jurisdiction)Act 1984, Act No. 3 of 1984 (Australia) ..............10

Foreign Trade Antitrust Improvements Actof 1982, 15 U.S.C. § 6a ..........................................6

Law No. 80-538, 1980 J.O. 1799 (France) ................10

Protection of Trading Interests Act 1980(c. 11) (U.K.) .....................................................8, 10

Racketeer Influenced and Corrupt Organiza-tions Act, 18 U.S.C. §§ 1961 et seq ...............passim

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Treaties

OECD Convention on Combating Bribery ofForeign Public Officials in InternationalBusiness Transactions, Senate TreatyDoc. 105-43, KAV 5210 (signed Dec. 17,1997, ratified by U.S. Dec. 8, 1998, en-tered into force for U.S. Feb. 15, 1999)... 11, 12, 13

United Nations Convention Against Trans-national Organized Crime, Senate TreatyDoc. 108-16, KAV 6399 (signed Nov. 13,2000, ratified by U.S. Nov. 4, 2005, en-tered into force for U.S. Dec. 3, 2005) ..... 11, 13, 14

Other Authorities

James R. Atwood & Kingman Brewster,ANTITRUST AND AMERICAN BUSINESS

ABROAD (2d ed. 1981) ............................................8

House of Commons Debate on the Protectionof Trading Interests Bill, statement of theSecretary of State for Trade, Hansard,HC Deb 15 Nov. 1979, Vol. 973, cc 1533-1591 ..............................................................8, 9, 10

International Chamber of Commerce, PolicyStatement on Extraterritoriality and Busi-ness (July 13, 2006) ...............................................2

Organisation for Economic Cooperation andDevelopment, Commentaries on the Con-vention on Combating Bribery of ForeignPublic Officials in International BusinessTransactions (adopted by NegotiatingConference Nov. 21, 1997) ...................................12

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INTEREST OF THE AMICUS CURIAE

The International Chamber of Commerce UnitedKingdom ("ICC United Kingdom") respectfully sub-mits this brief as amicus curiae in support of grant-ing the petition, which raises issues in which ICCUnited Kingdom and its members have a vital inter-est. All parties have been given the required noticeand have consented in writing to the filing of thisbrief, as evidenced by consents on file with the Clerkof this Court.1

ICC United Kingdom is the British NationalCommittee of the International Chamber of Com-merce ("ICC"), the largest and most representativebusiness organization in the world. ICC UnitedKingdom works to promote and facilitate interna-tional trade and investment as a force for economicgrowth, job creation and prosperity.

Among other functions, ICC promotes voluntaryrules governing the conduct of business across bor-ders, which rules are observed in countless thou-sands of transactions every day; it provides essentialtrade-related services such as the ICC InternationalCourt of Arbitration, the world’s leading arbitralinstitution; and it provides a business voice on keyissues related to international trade and investmentin key intergovernmental fora such as the United

1 No portion of this brief was authored by counsel forany party, and no person or entity other than amicus curiaeand its counsel made any monetary contribution to fund thepreparation or submission of this brief.

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Nations, the World Trade Organization and theG-20.

As an ICC national chapter, ICC United Kingdomworks to provide the views of U.K. members in thedevelopment of ICC’s policy positions and rules, aswell as representing the interests of internationalbusiness to U.K. policymakers and regulators. ICCUnited Kingdom’s policy positions are based on theconsensus views of its cross-sectoral membership,which includes major international companies acrossfinancial services, manufacturing, pharmaceuticals,and energy, as well as many small companies, lawfirms, and trade associations.

ICC has been concerned for many years about theadverse effect on international trade and investmentof extraterritorial application of national laws. Itconstituted a Task Force on Extraterritoriality andissued the ICC Policy Statement on Extraterritorial-ity and Business on July 13, 2006.

In the present case, the Court of Appeals heldthat the Racketeer Influenced and Corrupt Organi-zations Act, 18 U.S.C. §§ 1961 et seq. ("RICO"), ap-plied to the petitioner’s foreign conduct, giving RICOexterritorial application, which may infringe on otherStates’ legitimate interests and have an adverseimpact on international business. The circumstancesin which RICO and other U.S. statutes may be givenextraterritorial application presents a critically ira-portant issue for the members of ICC United King-dora, as well as other non-L~.S, business entities.

SUMMARY OF ARGUMENT

The petition presents an important question ofwhether the extraterritorial application of RICO tothe foreign conduct of petitioner and other similarlysituated foreign persons based on tenuous "effects" inthe United States, as envisaged by the Court of Ap-peals for the District of Columbia Circuit, mayinfringe on other nations’ sovereignty. Under recog-nized principles of comity and this Court’s prece-dents, acts of Congress should be construed on theassumption that Congress intended to respect thelegitimate sovereign interests of other states. Thedecision below, however, treats other states’ interestsin regulating conduct within their borders as irrele-vant.

Remarkably, the D.C. Circuit’s decision statesthat application of U.S. law to foreign conduct underthe "effects test" does not even raise an issue of thepresumption against extraterritorial application ofstatutes. That holding ignores not only developmentsin the law in this Court and in other circuits, but alsothe strong reaction of the U.K. and other nations,which have regarded U.S. courts’ adoption and appli-cation of the "effects test" as an invasion of theirsovereign interests and have adopted blocking meas-ures intended to protect their own nationals againstits application.

The United States, too, has recognized that law-enforcement problems transcending national boun-daries are better approached through cooperationthan through the automatic extension of U.S. law toforeign conduct. For example, the United States has

recently subscribed to two treaties that endorse acooperative approach among nations in combatingcorruption and organized crime. These treaties rec-ognize the importance of having each state takeresponsibility for conduct within its own legitimateregulatory sphere.

The resolution of the proper extraterritorialreach, if any, of RICO is important not just for coop-eration among nations but also for the legitimateinterests of international business. Given the unpre-dictable application of the "effects test" and the splitamong circuits on its application, companiesthroughout the world have no clear answer about theextent to which their entirely foreign conduct may bedeemed to subject them to treble damages liability inthe United States. American companies, as well, mayfind themselves subject to regulation by foreignstates for their purely domestic conduct, in the eventthat a broad "effects test" is emulated abroad. As amatter of fundamental fairness, as well as respect forthe sovereignty of other nations, businesses shouldbe able to discern what laws apply to them and notbe arbitrarily subjected to overlapping and possiblyinconsistent legal regimes.

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ARGUMENT

I.THE D.C. CIRCUIT’S APPLICATION OF

THE "EFFECTS TEST" IS INCONSISTENT WITH

THIS COURT’S HOLDINGS THAT U.S. STATUTES

SHOULD BE CONSTRUED TO TAKE ACCOUNT

OF FOREIGN SOVEREIGNTY

This Court has long recognized that, absent aclear expression of contrary intent, acts of Congressare assumed to apply in the United States only. Inthe decision below, however, the Court of Appeals forthe District of Columbia Circuit held that "when astatute is applied to conduct meeting the effects test,the presumption against extraterritoriality does notapply." App. 58a. According to the Court of Appeals,conduct meets the "effects test," and applying UoS.law to it is therefore ’"not an extraterritorial asser-tion of jurisdiction,"’ if the conduct has "substantialdomestic effects." Id. (quoting Laker Airways Ltd. v.Sabena, Belgian World Airlines, 731 F.2d 909, 923(D.C. Cir. 1984)) (emphasis in original).

The Court of Appeals did not limit the term "sub-stantial domestic effects" to actions occurring in ordirected at a person or property in the United States.Rather, in affirming the District Court’s judgmentagainst petitioner British American Tobacco (In-vestments) Limited ("BATCo"), the Court of Appealsapplied U.S. law to BATCo based solely on its (1)participation in international industry organizations,some of whose members were U.So companies, and(2) sharing of research information with a U.S. affili-ate. App. 59a-60a. The court made no finding that

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BATCo itself sold or marketed products in the U.S.,that it misled or intended to mislead U.S. consumers,or that it caused, intended or even expected its U.S.affiliate to use the results of its research in any par-ticular way. Id.

Under any reasonable view of comity among sov-ereign nations, the alleged conduct of BATCo in theUnited Kingdom, aimed at promoting its sale of ciga-rettes in the United Kingdom, should be regarded asa potential concern exclusively of the U.K. Govern-ment, not the U.S. Government. As demonstrated inthe petition, the Court of Appeals’ broad applicationof RICO in this case is inconsistent with decisions ofthe Courts of Appeals in other Circuits. The decisionbelow also disregards this Court’s admonition thatstatutes should be construed with due regard for theauthority of other sovereign nations to regulate con-duct within their borders.

In particular, in F. Hoffmann-LaRoche Ltd. v.Empagran S.A., 542 U.S. 155 (2004), this Court re-versed a decision of the Court of Appeals for theDistrict of Columbia Circuit with respect to the ex-traterritorial application of the U.S. antitrust laws.Amicus’s parent organization, ICC, filed a brief inthat case and welcomed the Court’s clarification ofthat issue. In Empagran, the Court applied theForeign Trade Antitrust Improvements Act of 1982,15 U.S.C. § 6a ("FTAIA"), which Congress enacted torein in the application by the lower courts of the"effects test" in the antitrust context. The Court heldthat the FTAIA barred application of the antitrustlaws to foreign conduct affecting competition in for-eign markets, even if it was part of an alleged global

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price-fixing scheme involving the U.S. as well. In soholding, this Court did not rely simply on the historyof the FTAIA, but reaffirmed the principle that am-biguous statutes should be construed so as "to avoidunreasonable interference with the sovereign author-ity of other nations." Id. at 164. The Court explained,"This rule of statutory construction cautions courts toassume that legislators take account of the legiti-mate sovereign interests of other nations when theywrite American laws." Id.

In the present case, the Court of Appeals disre-garded that principle. Rather than follow or even citethis Court’s decision in Empagran, the Court of Ap-peals drew on its own older precedent in the anti-trust context, and simply assumed without anyconsideration that Congress intended to disregardthe legitimate interests of other governments inregulating conduct within their own sovereign terri-tory based on a mere showing of any U.S. effects ofthe foreign conduct. The difficulties with this ap-proach have been well-stated by an academic com-mentator:

The effects test was debatable enough un-der international law, but the problem wasseriously exacerbated when jurisdictionwas asserted under that theory withoutconsideration for the consequences forother nations. Under recognized principlesof comity, states were obliged to considerand weigh the legitimate interests of otherstates when taking action that could affectthose interests, and were supposed to

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leave the regulation of conduct to the statewith the primary interest.

1 James R. Atwood & Kingman Brewster, ANTITRUST

AND AMERICAN BUSINESS ABROAD 158 (2d ed. 1981).Amicus submits that the Court of Appeals for theDistrict of Columbia Circuit failed in its analysis togive due consideration to the international ramifica-tions of its decision.

II.THE "EFFECTS TEST" CAUSES NEEDLESS

FRICTION WITH FRIENDLY FOREIGN NATIONS

The D.C. Circuit’s statement that application ofU.S. law under the "effects test" is not extraterrito-rial application at all is belied by the reaction ofother nations to the application of the "effects test" inpast cases. Broad claims to extraterritorial jurisdic-tion, especially as asserted by U.S. courts under the"effects" test, have caused widespread internationalconcern and at times have provoked blocking or re-taliatory measures.

These concerns are exemplified by a speech givenby the British Secretary of State for Trade duringdebate in the House of Commons on the Protection ofTrading Interests Bill. See House of Commons De-bate on the Protection of Trading Interests Bill,statement of the Secretary of State for Trade, Han-sard, HC Deb 15 November 1979, Vol. 973, cc 1533-1591 ("Hansard, Vol. 973"). The bill was ultimatelyenacted as the Protection of Trading Interests Act1980, which, among other things, authorizes theU.K. Government to forbid persons in the U.K. from

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complying with extraterritorial measures affectingU.K. trade interests and seeks to counteract theenforcement of judgments for treble or multiple dam-ages, such as arise under the U.S. antitrust laws orRICO. See Protection of Trading Interests Act 1980(c. 11), §§ 1-3, 6~7 (U.K.).

In his speech, the U.K. Secretary of State forTrade made clear that this legislation was motivatedlargely by efforts to apply U.S. laws extraterritoriallyto U.K. businesses, including in no small part the"effects test" adopted by some U.S. courts. Referring,in part, to United States v. Aluminum Co. of Amer-ica, 148 F.2d 416 (2d Cir. 1945), which first adoptedthe "effects test" in the antitrust context, the Secre-tary of State said:

The wide extent and fundamental uncer-tainty of this claimed reach of UnitedStates law through this pernicious extra-territorial effects doctrine has created un-certainty for international industry in thiscountry and elsewhere. The views which Iexpress on this subject are not held just byour Government, they are held and deeplyfelt in Canada, Australia, South Africaand other countries.

Hansard, Vol. 973, at cc 1535. The Secretary of Statemade clear that he was expressing the consideredview of the British Government in this regard, refer-ring to "practices in which successive United King-dom governments have taken exception," id., andstating "[w]e are engaged in a delicate and compli-cated legal matter. I have written down my words

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and am choosing them with great care," id. at cc1538.

In the same speech, the U.K. Secretary of Statefor Trade described the approach favored by theUnited Kingdom:

IT]he increasing volume of internationaltrade, the swiftness of modern communi-cations, the international nature of manyenterprises and increasing specializationon the part of industrial nations meansthat, while trading nations are interde-pendent in a real sense, their economicand commercial policies are bound some-times to come into conflict. We recognizethis, and we believe that the right way tosort out the resulting differences of policyand approach is by intergovernmental dis-cussion and negotiation through estab-lished international organizations.

Hansard, Vol. 973, at cc 1534.

The Protection of Trading Interests Act 1980 wasenacted with the agreement of all the political par-ties in Parliament. Similar statutes have beenbrought into effect in many other countries. See, e.g.,Foreign Extraterritorial Measures Act, R.S. 1985, c.F-29 (Canada); Foreign Proceedings (Excess of Juris-diction) Act 1984, Act No. 3 of 1984 (Australia); LawNo. 80-538, 1980 J.O. 1799 (France). The enactmentof these statutes demonstrates the widespread inter-national opposition to the extraterritorial applicationof U.S. law through the use of the effects test.

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III.THE "EFFECTS TEST" IS INCONSISTENT WITH U.S.FOREIGN POLICY AND MODERN STATE PRACTICE

In recent years, the United States has increas-ingly followed an international consultative approachin dealing with global problems in the fields of crimeand corruption, not the unilateral extension of U.S.law based on tenuous "effects" in the United States.This is exemplified and established by two recentmultilateral conventions successfully pursued by theState Department: the OECD Convention on Com-bating Bribery of Foreign Public Officials in Interna-tional Business Transactions, Senate Treaty Doc.105-43, KAV 5210 (signed Dec. 17, 1997, ratified byU.S. Dec. 8, 1998, entered into force for U.S. Feb. 15,1999) (the "OECD Bribery Convention"); and theUnited Nations Convention Against TransnationalOrganized Crime, Senate Treaty Doc. 108-16, KAV6399 (signed Nov. 13, 2000, ratified by U.S. Nov. 4,2005, entered into force for U.S. Dec. 3, 2005) (the"UN Organized Crime Convention").

A. The OECD Convention on CombatingBribery of Foreign Public Officials inInternational Business Transactions

The OECD Bribery Convention has its roots inthe 1979 enactment of the Foreign Corrupt PracticesAct, 15 U.S.C. §§ 78dd-1 et seqo ("FCPA"), by the U.S.Congress. The FCPA, which was enacted in responseto strong concern about certain corrupt internationalbusiness practices, has had a wide and salutary el-fect. All American companies, foreign multinationalcompanies that have listed their securities on U.S.

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exchanges, and all companies with respect to theiractions within the U.S. are subject to its jurisdictionand are required to comply with its provisions.

Following the enactment of the FCPA, however,the argument was made that American businesseswere at a disadvantage in international operations inrelation to foreign competitors who had not subjectedthemselves to U.S. jurisdiction. But rather than seekto expand the reach of the FCPA to support prosecu-tion of foreign businesses based on supposed "effects"in the United States, the U.S. Government took amore sensitive, and ultimately more effective, ap-proach. The United States initiated negotiations inthe Organisation for Economic Co-operation andDevelopment ("OECD") for a multilateral treatyrequiring adhering states to adopt, as part of theirown law, measures comparable to the FCPA. Thenegotiations were successful, and in 1997 the BriberyConvention was adopted by OECD members. Theamicus’s parent organization, ICC, nominated anexpert who was one of the advisors to the OECDWorking Group that formulated the OECD BriberyConvention.

The OECD Bribery Convention "seeks to assure afunctional equivalence among the measures taken bythe Parties to sanction bribery of foreign public offi-cials without requiring uniformity or changes infundamental principles of a Party’s legal system."Commentaries on the Convention on Combating Brib-ery of Foreign Public Officials in International Busi-ness Transactions ¶ 2 (adopted by Negotiating Con-ference Nov. 21, 1997). The Convention is clear thatjurisdiction is to be territorial or over the nationals of

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a state. OECD Bribery Convention § 4. There is nopurported extraterritorial jurisdiction over non-nationals. Id. § 4(1), (4). The Convention makes pro-vision for consultation when more than one party hasjurisdiction and for mutual legal assistance. Id. § 9.Thus, the U.S. obtained substantially the same, ifnot greater, legal reach for anti-bribery measures asan extraterritorial "effects test" application of theFCPA, but it did so by consent, with the active andwilling participation of foreign states and with fullrespect for the "sovereign authority of other nations."Empagran, 542 U.S. at 164.

B. The UN Convention AgainstTransnational Organized Crime

The United States followed a similar approach inpursuing the UN Organized Crime Convention, thepurpose of which is "to promote cooperation to pre-vent and combat transnational organized crime moreeffectively." UN Organized Crime Convention § 1.Following ratification, the UN Convention becamebinding on the United States on December 3, 2005.

The subject matter and structure of the UN Or-ganized Crime Convention have significant parallelswith RICO. It has similar predicate offences ("seriouscrime," defined to include conduct punishable by atleast four years imprisonment with specific inclu-sions of money laundering, corruption and obstruc-tion of justice). UN Organized Crime Convention §§6, 8, 23. There is the same key element of participa-tion in an organized criminal group. Id. § 5. Legalpersons such as companies are also covered by theUN Convention. Id. § 10.

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As interpreted by the court below, however, RICOextends far beyond what the UN Organized CrimeConvention contemplates. The UN Organized CrimeConvention’s provisions on jurisdiction are carefullyworded and are contained in Articles 4 and 15.Article 4 contains a strong statement of the principleof sovereign equality: "Nothing in this Conventionentitles a State party to undertake in the territory ofanother State the exercise of jurisdiction and per-formance of the functions that are reserved exclu-sively for the authorities of that other State by itsdomestic law." Id. § 4(2). This principle is furthersupported by the statement that jurisdiction is to beterritorial. Id. § 15(1). There is an exception to thisrule, in that the Convention permits a country toassert jurisdiction over an offence committed againstits own national or outside its territory with a viewto commission of a serious crime within the territoryor to launder the proceeds of crime within the terri-tory. Id. § 15(2). This principle, however, is subject tothe principle of respect for other states’ sovereigntywithin their territory set forth in § 4. Id. § 15(2).Further, the Convention permits a state to exercisecriminal jurisdiction "in accordance with its domesticlaw," but provides that this exercise is "[w]ithoutprejudice to norms of general international law." Id.§ 15(6).

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THE "EFFECTS TEST" CAUSES

NEEDLESS UNCERTAINTY FOR

BUSINESSES AROUND THE WORLD.

Lastly, the decision below creates unnecessaryuncertainty for members of ICC United Kingdom andcountless other foreign persons as to whether theymay be subject to liability for treble damages underRICO based on allegations that their purely foreignconduct had some minimal, indirect effect in theUnited States. Because RICO has been so broadlyinterpreted, and because the "effects test" is vagueand unpredictable in its application, the conflict inapplication of that statute in different circuits pro-vides no clear answer for companies throughout theworld about the extent to which their entirely foreignconduct may be deemed to subject them to trebledamages liability in the United States.

Moreover, actions taken by an important tradingnation like the U.S. can influence the behavior ofother nations, not only by provoking retaliation orblocking but also by serving as a model for others. Inrecent years, the European Union and other foreignregulators have become more aggressive in enforcingtheir antitrust laws and other business laws. If ill-considered decisions by U.S. courts are allowed toblur the accepted limits of national regulatory pow-ers, U.S. companies could one day find themselvessubject to enforcement actions by foreign countriesbased on their wholly U.S. actions having an alleged"effect" overseas. To be able to compete fairly, busi-nesses, whether in the U.S., the U.K. or anothercountry, are entitled to know the rules that apply to

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them and should not be unnecessarily subjected tooverlapping and possibly conflicting sets of laws.

CONCLUSION

In sum, actions by Congress, this Court, the U.S.Government and friendly foreign nations over thelast 25 years all point toward a cooperative approachto legal problems arising from international trade.The opinion below, however, is a throwback to earlierdoctrine, which views the world as if the UnitedStates were the only regulator. That approach failsto take account of the interests of comity to foreignnations and the legitimate expectations of companiesdoing business internationally. For these reasons,amicus submits that the Court should grant thepetition to resolve the important questions presentedand put an end to any uncertainty.

Respectfully submitted,

GARY W. KUBEKCARL MICARELLI

Counsel of RecordDEBEVOISE ~ PLIMPTON LLP

919 Third AvenueNew York, NY 10022(212) 909-6000cmicarelli@debevoise.com

March 24,2010