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1
CHAPTER 24
INTERNATIONAL AND SPACE LAW
ANSWER TO CRITICAL THINKING QUESTION
IN THE FEATURE
ETHICS TODAY—CRITICAL THINKING
Imported beer is not the only product whose labeling may be misleading. For instance,
although BMW is a German brand, most BMW X3s and X5s purchased in the United
States are actually manufactured in South Carolina. Are there any legal or ethical issues
ANSWERS TO QUESTIONS
AT THE ENDS OF THE CASES
CASE 24.1—LEGAL REASONING QUESTIONS
1. Could Bank Melli have successfully argued that Section 1610(g) does not permit the
attachment and execution of the assets sought by the Bennetts because those assets are
owned by Visa and Franklin, not the bank? No, Bank Melli could not have successfully
maintained that Section 1610(g) does not permit the attachment and execution of the assets
2 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
2. Why did Congress create an exception from immunity under the FSIA for foreign state
sponsors of terrorism? It is clear that Congress’s intent in adding Section 1610(g) to the FSIA
3. The Treaty of Amity between the United States and Iran requires that the United States
respect the legal status of Iranian companies, protect their property in accord with
international law, and not discriminate against them. Does this treaty conflict with
CASE 24.2—CRITICAL THINKING
LEGAL ENVIRONMENT
Would Plaza have been bound to the forum-selection clause if it had signed the
subscription agreement as Moonmouth’s director but had no other relation to the
agreement? Discuss. If Plaza had signed the subscription agreement as Moonmouth's
CHAPTER 24: INTERNATIONAL AND SPACE LAW 3
CASE 24.3—CRITICAL THINKING
LEGAL ENVIRONMENT
What are the consequences for Daimler of the decision in this case? Daimler AG was not
exonerated by the decision in this case, but the corporation did avoid liability under the Court’s
GLOBAL
If the Court had adopted the plaintiffs’ argument, how might U.S. citizens have been
affected? If the Court had adopted the plaintiffs’ argument in the Daimler case, the decision
would have provided the plaintiffs—foreign citizens (Argentinians)—with a cause of action
ANSWERS TO QUESTIONS IN THE REVIEWING FEATURE
AT THE END OF THE CHAPTER
1A. Foreign Sovereign Immunities Act
Because the armed forces of Honduras contracted to purchase weapons from a U.S. company
2A. Act of state doctrine
The act of state doctrine provides that the judicial branch of one country will not examine the
validity of public acts committed by a recognized foreign government within its own territory.
4 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
3A. Doctrine of deference
The principle of comity is a doctrine of deference. Under this principle, one nation will defer and
give effect to the laws and judicial decrees of another country, as long as those laws are
consistent with the law and public policy of the accommodating nation. The principle of comity
4A. Doctrine to collect damages
Under the principle of comity, one nation will defer and give effect to the laws and judicial
decrees of another country, as long as those laws are consistent with the law and public policy
ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE
AT THE END OF THE CHAPTER
The U.S. federal courts are accepting too many lawsuits initiated by foreigners that
concern matters not relevant to this country. Our federal courts are already overwhelmed by
normal lawsuits that concern purported wrongs committed on U.S. soil that involve residents of
this country. Why should we become the preferred jurisdiction for lawsuits that involve human
rights issues in other countries? Why should we become the preferred jurisdiction for purported
employment discrimination that might have taken place outside of the U.S.? We are not the
world’s conscience.
The U.S. has one of the best-run and most fair federal judiciaries in the world. We still
CHAPTER 24: INTERNATIONAL AND SPACE LAW 5
ANSWERS TO ISSUE SPOTTERS
AT THE END OF THE CHAPTER
1A. Café Rojo, Ltd., an Ecuadoran firm, agrees to sell coffee beans to Dark Roast
Coffee Company, a U.S. firm. Dark Roast accepts the beans but refuses to pay. Café Rojo
sues Dark Roast in an Ecuadoran court and is awarded dam ages, but Dark Roast’s as
sets are in the United States. Under what circumstances would a U.S. court enforce the
judgment of the Ecuadoran court? Under the principle of comity, a U.S. court would defer and
2A. Gems International, Ltd., is a foreign firm that has a 12 percent share of the U.S.
market for diamonds. To capture a larger share, Gems offers its products at a below-cost
discount to U.S. buyers (and inflates the prices in its own country to make up the
difference). How can this attempt to undersell U.S. businesses be defeated? The practice
described in this problem is known as dumping, which is regarded as an unfair international
ANSWERS TO BUSINESS SCENARIOS
AT THE END OF THE CHAPTER
24-1A. Doing business internationally
An alternative to exporting is the establishment of foreign manufacturing facilities, which
Macrotech does not want to do in this problem. A U.S. firm can also manufacture goods in other
countries by licensing, franchising, and investing in a wholly-owned subsidiary or joint venture.
Licensing is an attractive alternative to establishing a foreign production facility when a process
or product has been patented, because the patent protects against the possibility that the
6 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
24-2A. Dumping
Yes, it is a reasonable approach to rely on the producers’ financial records, which are
reasonably reflective of their costs because their normal allocation methodologies were used for
a number of years. These records are historically relied upon to present important financial
24-3A. Sovereign immunity
The court denied the motion to dismiss. The doctrine of sovereign immunity immunizes foreign
nations from the jurisdiction of U.S. courts. The Foreign Sovereign Immunity Act (FSIA) of 1976
codified this doctrine. A nation is not immune if it has waived its immunity or if the action against
it is based on a “commercial activity carried on in the United States.” The court recognized that
whether the commercial activity exception applies depends on two factors. “First, the lawsuit
must be based upon commercial activity of the foreign state defendants. Second, that activity
must be carried on in the United States.” A particular act qualifies as commercial activity “when
ANSWERS TO BUSINESS CASE PROBLEMS
AT THE END OF THE CHAPTER
24–4A. Dumping
Dumping is the sale of imported goods at “less than fair value.” “Fair value” can be determined
from the price of the goods in the exporting country. (The goal is to undersell the businesses in
the importing country to obtain a larger share of its markets.) In the United States, an added
CHAPTER 24: INTERNATIONAL AND SPACE LAW 7
24–5A. Sovereign immunity
No, a U.S. court does not have jurisdiction in the Santivanez case. When applicable, the
doctrine of sovereign immunity shields a foreign nation from the jurisdiction of a U.S. court. In
such a case, individuals who own (or owned) property overseas generally have little legal
protection against government actions with resp3ect to their property in those countries. The
federal Foreign Sovereign Immunities Act (FSIA) exclusively governs the circumstances in
which an action may be brought in the United States against a foreign nation, including attempts
to attach a foreign nation’s property. Under the law, a plaintiff generally has the burden of
24–6A. BUSINESS CASE PROBLEM WITH SAMPLE ANSWER—Import controls
Yes, an antidumping duty can be assessed retrospectively (retroactively). But it does not seem
likely that such a duty should be assessed here.
In this problem, the Wind Tower Trade Coalition (an association of domestic
manufacturers of utility-scale wind towers) filed a suit in the U.S. Court of International Trade
8 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
24–7A. The principle of comity
Yes, the principle of comity supports the defendants’ request to dismiss the plaintiffs’ claims.
Under the principle of comity, one nation defers to and gives effect to the laws and judicial
decrees of another country when those are consistent with the laws and public policy of the
accommodating nation.
In the fact of this problem, Holocaust survivors and the heirs of other Holocaust victims
filed a suit in a federal district court in the United States against a variety of entities based in
Hungary—the national railway, the national bank, and several private banks—alleging that the
24–8A. International law
No, the validity of the assignment of the Stolichnaya mark by the Russian Federation to FTE is
not a question to be determined by a U.S. court. Under the international act of state doctrine, the
judicial branch of one country does not review the validity of public acts committed by a
recognized foreign government within the latter’s own boundaries.
Here, the Soviet Union made and sold Stolichnaya vodka, and licensed its trademark for
use in the United States. After the Soviet Union collapsed, the state enterprise that had
24-9A. A QUESTION OF ETHICS—Terrorism
(a) The doctrine of sovereign immunity, which is codified in the Foreign Sovereign
Immunities Act (FSIA), generally provides foreign states with immunity from suit in U.S. courts.
This statute includes a “state-sponsored terrorism exception,” which abrogates a foreign
state’s immunity for personal injuries caused by terrorist acts committed by a state’s officials or
agents. Under this exception, a foreign state is subject to suit if (1) the U.S. Department of State
designated it as a “state sponsor of terrorism” before the incident out of which the suit arises; (2)
(b) The contention that the plaintiffs’ claims should be barred by the settlement
between the defendants and the other plaintiffs “is unavailing,” according to the court in the
10 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
ANSWERS TO LEGAL REASONING GROUP ACTIVITY QUESTIONS
AT THE END OF THE CHAPTER
24–10A. Globalization
(a) Factors to consider when expanding operations into another country by advertising
online include (1) business costs such as Web site design and maintenance; (2) marketing
considerations such as which business model to use; (3) security concerns such as the safety of
(b) A partnership in another country typically requires local participation—nationals of
the other country must own a specific share of the business. Of course, if the partnership
dissolves, the firm’s technology and other expertise may fall into in the hands of a foreign
(c) Problems that may arise when a domestic business company decides to
manufacture its products in a foreign location include the costs and other considerations in
