to: past, current and future comrades-in-arms
from: Anton Keller, Geneva (t+f: 022-7400362, 079-6047707, swissbit@solami.com)

conceivable lines of defense against lex americana class actions; Cambridge

The Holocaust-related class actions, those unfolding under the title of Apartheid claims, and future issues – OECD, UN & EU promoted tax harmonization & anti-corruption drives – are like bright lights attracting big flies, i.e. the Fagans, Hausfelds & Gschwends here & there. The policy of minimum exposure to US courts – e.g. by not setting up shop on US territory – has been well advised ever since our former Attorney General Hans Walder spilled the beans with his infamous legal opinion of Oct.26 1981, by formally recommending the creation of a "state of necessity", e.g. by "imprisonment [of a subsidiary’s director] or loss of licence" as a way to force Swiss banks to comply with US demands for lifting bank client secrecy. However solidarity, political & other considerations still caused these more visionary bankers to find themselves obliged to co-shoulder the $1.25 billion blood-letting. Laud & tough words not withstanding, the free flow of things offers little chance to reliably avoid similar effects in the evolving Apartheid cases, and even less in the almost inescapable corruption domain. The latter is particularly serious as it entails a culture clash, with Western society considering as corrupt what in the Near East is normal daily business practice, with future regime changes there sure to cause damage claims à la Marcos, Shah of Iran, etc., and with corresponding pressures to sell out formerly-recognized-as-honorable bank clients, such as members of the Saudi, Kuwaiti or other currently ruling families, under pretext of some OECD, UN or EU moral standard, anti-corruption guideline and/or anti-tax avoidance scheme. All of which indicates a mobilization of resources against the extraterritorial application of US law, to fight lex americana universalis which is ever more readily & easily applied by myopic US judges with a Wild West & bounty hunting mindset, so as to effectively undercut class action suits. If it is to be successful, it must not be limited to traditional non-coordinated ways & means (Economiesuisse, Swiss Bankers Association, Groupement, etc.). And prompt & serious consideration must be given notably to existing, even if forgotten or dormant pathways.

The Apartheid suit filed in US District Court on June 19 2002 by South African citizens against Citigroup, Inc., UBS AG, and Credit Suisse Group and yet-to-be-named Swiss, British and other institutions and firms, presumably including Bär, Ernst, Hentsch, Pictet, Marc Rich, Rothschild, Sarasin, SGS, Volkart, Vontobel, etc. – like the announced similar Hausfeld suit - offers a unique opportunity in the above sense. For the court’s jurisdiction in this matter may effectively be challenged. The Alian Tort Claims Act of 1792 (28 U.S.C. 1350) is seen as a, if not the key alleged jurisdictional basis; it derives directly from British trade law which has indeed a history of – naturally not uncontested – claims of extraterritorial applicability. However, it is understood to have never been intended for cases where the alleged wrongdoing occurred on foreign sovereign territory recognized as such by the British Crown. The same may be invoked for said US act which dates from the time the US was founded, with most of its later territory non-sovereign, i.e. non-recognized & up-for-grabs Wild West. Other arguments which may reasonably be invoked in this suite concern foreign assets and investments which are legally contributing to the strength and growth of the US economy but which, if this suit were not thrown out of court, would be abused as economic hostages, with adverse effects on foreign investors’ willingness to remain and/or invest in the US market. In view of current conditions & economic outlooks, this argument seems to carry weight. Particularly if - on the basis of more legal research - it can & will be legally underpinned with the still valid Swiss-American Friendship and Commerce Treaty of 1850 (SR 0.142.113.361) which explicitly provides for both "reciprocal equality" of each party’s national sovereignty, & non-discrimination of each other’s nationals in everything regarding their persons & assets.

Howard Flight, Lord Hacking, Dan Mitchell, Gilbert Morris, Richard Rahn are scheduled to attend the Cambridge Symposium on Economic Crime; I’ll direct our workshop there 9/10 under heading: "Responses to the OECD Harmful Tax Practices Initiatives" , with the above work in mind and integrated, timely and adequate funds permitting.