The Small Steps of the SPEECH Act

by Bruce Brown & Clarissa Pintado

     It had become the go-to punch line for English lawyers attending libel conferences in the United States. Speaking at a podium or debating on a panel, asked to explain a decade of growing defamation litigation in Britain against American authors and news organizations, they would shrug their shoulders and quip, with a nod to the late, great Johnny Cash, that London had indeed turned into a “town named Sue.”

     For many years, the joke was on us. Foreign libel plaintiffs had a considerable upper hand over American defendants in U.K. courts. By bringing suit in England, they could circumvent "actual malice" rules under New York Times Co. v. Sullivan and other substantive First Amendment rights.  What is more, contrary to the standards in the United States, English courts were willing to assert personal jurisdiction over a defendant publisher who was not deliberately targeting a British audience.

     That jurisdictional practice had a particularly significant impact in the age of online publishing when posting news articles on a domestic website makes the material available instantaneously around the world. Lack of due process added to a lack of free speech protections and made for a lethal combination. Not only did English defamation law tilt the scales dramatically toward plaintiffs, it also encouraged individuals to bring suit in the United Kingdom even if they had tenuous ties to the forum and the defendant virtually none.

     The SPEECH Act was a measured and modest response to a significant problem that had created a tangible chilling effect on publishers in this country. Enacted in 2010, the SPEECH Act held strong against its first challenge in federal court when the Fifth Circuit opted not to enforce a default defamation judgment from Canada against a Mississippi blogger. In Trout Point Lodge v. Handshoe, the plaintiffs failed to prove the two prime elements of the SPEECH Act: that is, that Canadian defamation law is not as protective of free speech as U.S. law and that defend-ant would have been found liable in a Mississippi court. Handshoe had posted content on his Gulf Coast online forum linking Trout Point to a corruption scandal in Jefferson Parish, Louisiana. In its claim, Trout Point did not make sufficient assertions regarding a key element that a plaintiff must show to comport with U.S. Constitutional standards: falsity.

     Although Trout Point Lodge represents the utility of the SPEECH Act against international forum shopping, the legislation has its critics. The Professors David Anderson and Mark Rosen do not always agree with each other on what they believe is wrong with the SPEECH Act, but they are both critical of Congress's modest but important steps in this area. While this article will briefly respond to their criticisms, much credit is due to the professors for giving the legislation - and the issues behind it - some much-needed academic attention. This is the phenomenon of "libel tourism." While England was not the only problematic foreign jurisdiction, it was by far the most notorious - the "libel capital of the world" - with several high-profile cases that resulted in complete capitulation from publishers. For American media companies, the threat of libel tourism had developed into a real concern. Media defendants were settling suits abroad as U.S. enforcement uncertainties loomed.





Are the ICSID Rules Losing Their Appeal? Annulment Committee Decisions Make ICSID Rules a Less Attractive Choice for Resolving Treaty-Based Investor-State Disputes

by Paul B. Maslo

     Most international investment agreements mandate use of the International Centre for Settlement of Investment Disputes (ICSID) rules for resolving treaty-based investor-state disputes. One of the primary advantages to arbitrating under the ICSID rules is efficiency. In arbitration, finality reigns supreme. The remedy of annulment - designed as a severe censure to cure only the most egregious violations of the arbitral process - constitutes a limited exception to the principle of finality under the ICSID rules.

     The review committees' decisions in Sempra Energy International v. Argentine Republic and Enron v. Argentine Republic, appear to have departed from this standard by couching serious errors in the application of the law as complete failures to apply the law, thus providing grounds for annulment based on the tribunals having manifestly exceeded their powers. If annulment committees continue to blur the distinction between misapplication and nonapplication of the law, the ICSID annulment provision could soon be seen as a disadvantage, effectively negating some of the primary benefits of arbitration: expediency and finality.






Should the United States Use Treaties to Make the World "More Like Us"?

by Simon Lester

     After a contentious debate last year, the U.S. Senate rejected an international treaty related to the rights of the disabled. The public discussion of this issue brought to light some important differences in views on whether and how the U.S. should use treaties to spread its values around the world. This essay uses the debate surrounding the disability rights treaty as a basis for exploring the United States’ use of treaties and other international agreements to push other countries to adopt specific domestic policies.Should we try to make the world like us? Are treaties a good way to accomplish this? Are there any negative repercussions from doing so? After considering these questions, the author proposes an alternative approach to spreading our values in the international arena.


Kiobel, Corporate Liability, and the Extraterritorial Reach of the ATS


     On March 5th, after oral arguments had taken place on February 28th, the United States Supreme Court surprisingly directed the parties in Kiobel. v. Royal Dutch Petroleum Co. to address “whether and under what circumstances the Alien Tort Statute [ATS], 28 U.S.C. § 1350, allows courts to recognize a cause of action for violations of the law of nations occurring within the territory of a sovereign other than the United States.”  Previously, the main issue before the Court had been whether corporations can be liable for violations of international law under the ATS, a question that should not lead to controversy among members of the Court.  However, given the Court’s new question, Kiobel promises to become a landmark Supreme Court case with respect to corporate liability for violations of international law occurring abroad that are reachable under the ATS.

    What was not mentioned during oral arguments is the significant and indisputable fact that twenty U.S. Supreme Court cases decided over a period of several decades have already recognized that corporations and companies can have duties and rights under a variety of customary and treaty-based international laws.  One would expect, therefore, that Kiobel will reaffirm the Court’s continual recognition of the fact of corporate liability under international law and then address other relevant issues that might divide the Justices.  As demonstrated in this Essay, the first part of the Court’s new question, whether the ATS can reach violations of international law that occur in another country, should not be among the issues that divide the Justices.  More particularly, this Essay addresses the fact: (1) that universal jurisdiction pertains with respect to violations of international law covered by the ATS; and (2) that varied principles of statutory construction, in addition to overwhelming trends in judicial decisions and relevant Executive and congressional recognitions, uphold universal jurisdiction underlying the ATS and its extraterritorial reach.


The Limits of Multilateralism: Incorporating (Some) Unilateral Free Trade into the Trading System


    There is a fundamental flaw in the nature of the trade negotiations that take place in the world trading system as it exists today. Whereas many, if not most, free trade advocates believe that free trade is the best policy regardless of what a nation's trading partners do, the system tells us otherwise. Each nation offers up trade liberalization, such as promised tariff cuts, as "concessions" to be exchanged for similar "concessions" given by others. The result is an international trade agreement — either multilateral like the World Trade Organization (WTO), or, increasingly, bilateral or plurilateral — involving enforceable promises of free trade. Thus, under this system, free trade will only be adopted if all parties to the negotiations can reach agreement on a proper balance of these "concessions." In order to make further progress on free trade, we need to change the mindset and culture surrounding it. This Essay will make the case for reviving the spirit of the "purist" free traders who believed that free trade was good for its own sake, regardless of what a country's trading partners do. In this regard, the Essay discuss briefly the history of unilateral free trade thought, and offers a proposal for bringing aspects of unilateral free trade into the multilateral trading system. The proposal tries to address this fundamental flaw in the structure of trade negotiations by removing this disincentive to adopt unilateral free trade, and providing instead an incentive to do so.

VOLUME 54 :: No. 1

Keynote: The Man Who Shot Liberty Valance: The Future of Financial Regulation

by Ethiopis Tafara ~ Dec 01, 2013

The recent financial crisis has brought about renewed attention to the differences between banking and securities regulation in a world in which many financial products no longer fit neatly under one of the regulatory silos. And at the same time, the Securities and Exchange Commission (SEC), among other regulators, is paying increasing attention to the plague of bribery and corruption that can accompany global trade, with U.S.-listed companies obviously concerned about how the Foreign Corrupt Practices Act (FCPA) is being enforced.

Over the past fifteen years, the world’s financial system has undergone dramatic change to its structure and principal characteristics. To my mind, the four characteristics of the modern financial market are: (1) its global nature and the resulting mobility of capital; (2) the significantly increased competition among financial services providers; (3) the elimination of differences between historically separate financial products, sectors, and actors; and (4) the development of a large and relatively liquid, unregulated institutional financial market paralleling the regulated markets. These changes, as revealed by the crisis, call for a commensurate change in regulation and supervision.

A People’s History of Collective Action Clauses

by W. Mark C. Weidemaier & Mitu Gulati ~ Dec 01, 2013

After a half-century, Depression-induced slumber, the market for sovereign bonds awakened in the early 1990s. It did so on the heels of a financial crisis triggered by widespread sovereign defaults on commercial bank loans. Under a plan developed by U.S. Secretary of the Treasury Nicholas Brady, these illiquid commercial loans were restructured and replaced by tradable bonds — a process that reinvigorated the bond markets but did not herald a new era of economic security. Between 1995 and 2002, three new crises erupted, and the official sector repeatedly extended unpopular bailouts to debtor nations. A consensus emerged that the international financial architecture was broken. The system required a mechanism to ensure that private lenders bore the cost of their improvident loans, thus discouraging them from making such loans in the first place. Otherwise, the cycle of over-borrowing, default, and bailouts would continue.

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Assessing Transnational Private Regulation of the OTC Derivatives Market: ISDA, the BBA, and the Future of Financial Reform

by Gabriel V. Rauterberg & Andrew Verstein ~ Dec 01, 2013

For the last twenty years, the dominant narrative of the over-the-counter derivatives market has been one of absent regulation, deregulation, and regulatory conflict, predictably resulting in disaster. This Article challenges this narrative, arguing that the global derivatives market has been subject to pervasive and harmonized regulation by what should be recognized as transnational private regulators. Recognizing the reality of widespread transnational private regulation of derivatives has significant implications, which this Article explores. Appreciating the actual regulatory status quo is essential if policymakers are to correctly diagnose problems, avoid past regulatory errors, and plan effective remedies. There are also advantages to relying on private transnational regulation, as increased governmental effort to regulate the OTC derivatives space may undermine and fracture existing regulation. To be sure, private transnational regulation carries risks that have sometimes materialized, such as the manipulation of LIBOR. Thus, this Article also evaluates best practices in regulating through transnational private governance.

Combating FCPA Charges: Is Resistance Futile?

by Richard C. Smith ~ Dec 01, 2013

As the financial and reputational stakes in connection with U.S. Foreign Corrupt Practices Act (FCPA) actions have increased over the past decade, corporate and individual defendants have largely cooperated, to varying degrees, with the U.S. Securities and Exchange Commission (SEC) and U.S. Department of Justice (DOJ) (together, the Government) in their investigations, and shortly thereafter sought to settle the charges before any significant litigation ensued, or even commenced. This strategy has many significant benefits, including the avoidance of protracted, high-profile litigation, the ability to prevent documents from becoming publicly available, and a greater control over the public relations impact of the charges and results. For companies, the appeal of a settlement outweighed the risk of being criminally convicted or found civilly liable for a major FCPA violation. These settlements, however, result in a dearth of litigation that creates a vacuum of case law in the FCPA arena, allowing the Government to put forth its interpretations of various provisions of the statute with little or no challenges. 

As the stakes continue to rise with regard to FCPA enforcement, companies and their counsel should, at the very least, consider varying from the traditional script if the facts and circumstances of a particular case warrant it. In a series of recent cases, individual defendants have opted to fight the charges in court rather than immediately settle with the Government. In various ways, these defendants attacked the Government’s broad interpretation of certain provisions of the FCPA, including jurisdictional and statute of limitations grounds. However, in these cases, and as seen in prior challenges, the courts have consistently sided with the Government, allowing for broad readings of the statute that seemingly provide the Government with expansive reach.

Human Rights Meets Securities Regulation

by Galit A. Sarfaty ~ Dec 01, 2013

Recent domestic legislation is blurring the line between securities regulation and human rights law. Securities law has traditionally regulated corporate disclosure on financial information, such as income statements and investment risks. By contrast, human rights law has traditionally operated in the international sphere and focused on state obligations. 

That all changed in 2010 with the adoption of the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd–Frank Act), which includes sections 1502 and 1504 on non-financial disclosure related to human rights and anti-corruption. Section 1502 imposes a new reporting requirement on publicly traded companies that manufacture products us-ing certain conflict minerals. Companies must identify whether the sourc-ing of the minerals originated in the Democratic Republic of Congo (DRC) and bordering countries. If so, they must submit an independent private sector audit report on due diligence measures taken to determine whether those conflict minerals directly or indirectly financed or benefited armed groups in the covered countries. Section 1504 requires natural re-sources companies to disclose certain payments made to governments for the commercial development of oil, natural gas, or minerals. This provision reinforces the global standard outlined by the Extractive Industries Transparency Initiative, a multi-stakeholder coalition that promotes reve-nue transparency through government legislation. 


In this Article, I take a step back from these recent developments to analyze a critical question: Is securities regulation the appropriate mechanism for achieving human rights compliance? By doing so, I seek to open a dialogue between two disparate streams of scholarship in private and public law and propose policy recommendations for effectively furthering the movement towards corporate accountability. While existing literature on sections 1502 and 1504 addresses the history of the legislation and critiques its efficacy, the main contribution of the Article is to analyze the normative implications of the broader strategy of using securities regulation to hold companies accountable for human rights abuses.

Are Facilitating Payments Legal?

by Phillip M. Nichols ~ Dec 01, 2013

Facilitating payments are bribes paid to obtain nondiscretionary acts from government bureaucrats. These bribes are usually small in size, and might seem inconsequential. The United States’ Foreign Corrupt Practices Act does not even include facilitating payments among the actions that it deems criminal. Indeed, even though facilitating payments are bribes, they have been described as “legal” by scholars, businesses, and even the crowd-sourced repository of common wisdom, Wikipedia. 

Although seemingly inconsequential, the purported legality of facilitating payments provides a useful tour of the legal control of corruption. Persons or entities subject to the law of the United States who pay bribes to foreign government officials are not only bound by the laws of the United States, but are also bound by the laws of the polity in which they pay those bribes. The notion that certain bribes might be acceptable in some places raises questions about the de facto legality of bribes. A person or entity subject to the laws of the United States might be subject to the laws of other jurisdictions as well. Finally, the international community is calling for the elimination of exceptions for facilitating payments, in part because facilitating payments inflict the same sort of moral and structural damage on societies as do other forms of bribery.

This article examines facilitating payments from the perspective of the Foreign Corrupt Practices Act. Because this Act applies to entities with a connection to the United States, this article also adopts the perspective of a business connected to the United States. The article first examines the exception within the Act, and the definitions of the types of bribes that would fall within that exception and thus are not punishable by the Act. The article then asks whether these payments are illegal under local law, and concludes that in most cases the answer is yes. The article then returns to U.S. law, finding that even though these payments are excepted by the Foreign Corrupt Practices Act, they could be found criminal under other statutes. Going beyond U.S. law, the article finds that many U.S. persons and entities are subject to similar laws in other jurisdictions that do not except facilitating payments. The article concludes that facilitating payments are not legal.

Direct Participation in Hostilities from Cyberspace

by Collin Allan ~ Dec 01, 2013

The cyber attacks against Georgia in 2008 and Aramco in 2012 demonstrate that civilians are increasing their participation in armed conflicts through cyber attacks. In 2009, the international Committee of the Red Cross (ICRC) published the Interpretive Guidance on the Notion of Direct Participation in Hostilities Under International Humanitarian Law, a document addressing how to determine when a civilian’s participation in armed conflict reaches the necessary level to render him or her targetable by one of the parties to the conflict. Three years later, the Tallinn Manual was published to provide legal guidance in cyber situations. The Tallinn Manual represents the first time that experts have compiled a manual of rules to indicate how international law applies to cyber situations by including a section on direct participation in hostilities through cyber means. This Note compares and contrasts the ICRC’s approach and the Tallinn Manual’s approach. The author reaches the conclusion that the Tallinn Manual’s approach has the general effect of lowering the standard for civilians’ actions for meeting the bar on direct participation in hostilities, making a civilian participating in hostilities through cyber means targetable in more situations than a civilian participating in hostilities under the ICRC’s famework.


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