From: Kevin Smith <[log in to unmask]> Date: Mon, 8 Sep 2014 12:35:19 +0000 I should probably confess upfront that research on this issue has been done by a wonderful intern in my office; a young lawyer now in library school who is much more creative and dogged in her research than I am, or have time to be. I actually do not think the status of the treaty organization would matter very much. Sovereign immunity is less about who the plaintiff is than it is about preventing the federal courts from exercise authority over the states, and especially over state funds. Citizens of other states, foreign or domestic, can get jurisdiction in federal court due to "diversity" -- when the parties are from different jurisdictions, the federal courts can step in (that is, the plaintiff can file the case in federal court) to prevent one party from unfairly benefiting due to "home court advantage." I am confident that the same would be true for an international organization; they could get federal diversity jurisdiction over any defendant that was subject to the diversity rules. But state entities are exempted from that kind of federal jurisdiction. So if a state is the putative defendant, I doubt a treaty organization would be able to bring the case in federal court any more that a citizen from a different state or a different State could. The upshot of the research that our intern did is that sovereign immunity also usually makes it difficult or impossible for a contract party to compel arbitration, even when the contract with a sovereign entity provides for such arbitration. Of particular relevance to the original question is a case called Memphis Biofuels, LLC v. Chickasaw Nation Industries (note that these cases often involve Native American tribal nations, which enjoy similar immunity from the diversity jurisdiction of federal courts). Brunner & O'Connor on Construction Law summarizes the case this way: "[A] bio-diesel refining company sought to compel arbitration against a federally-chartered tribal corporation as a result of disputes that arose out of a diesel fuel and soybean oil supply contract. The agreement contain a provision expressly waiving any sovereign immunity in an arbitration agreement. While both parties signed the agreement, the tribal corporations board did not expressly approve the waiver of immunity. This proved fatal to the supply company's motion to compel arbitration." This summary (the case was from the Sixth Circuit) is instructive to me in two ways. First, it confirms that sovereign immunity might trump an arbitration agreement, even if both sides agreed to the arbitration in the original contract. Conversely, it suggests that agreeing to arbitration may not waive sovereign immunity. Second, going back to the original question, the case illustrates that even a contractual agreement to waive sovereign immunity may not be effective if it does not come from the proper authority. Which reinforces, I believe, my original suggestion to Liane that she consult higher authority before accepting a contract that purports to do this. Fun stuff! Kevin Kevin L. Smith, M.L.S., J.D. Director, Copyright and Scholarly Communication Duke University Libraries Durham, NC 27708 [log in to unmask] -----Original Message----- From: <[log in to unmask]> Date: Fri, 5 Sep 2014 05:36:25 +0000 "The 11th Amendment does explicit deny the federal courts jurisdiction over suits brought against a state by "citizens or subjects of any Foreign State"" - in the specific case of working with an international treaty organisation, I wonder how the law works since, when I'm at work, I am no longer a citizen or subject of any state, I am an official of an international treaty organisation and, as such, have a sort of diplomatic status which comes with various legal immunities that have been agreed to by the Member states (which, in the case of the OECD includes the USA). Moreover, since USA is a member of the OECD (in fact, thanks to JFK, one of our founding fathers), I'm not sure we are a 'foreign vendor' when operating in any of the 34 Member countries. As Kevin says, more research needed - (and no wonder lawyers do well!) Toby Green Head of Publishing OECD > On 5 Sep 2014, at 01:28, "LIBLICENSE" <[log in to unmask]> wrote: > > From: Kevin Smith <[log in to unmask]> > Date: Thu, 4 Sep 2014 12:40:30 +0000 > > I am also not sure how relevant this information is to the specific > question, although it is very interesting. > > Just by way of background, sovereign immunity refers to the idea, > stated in the 11th Amendment to the U.S. Constitution, that the > federal courts do not have jurisdiction over states or state entities, > in most cases. The idea, when the 11th Amendment was adopted, was to > balance the power of the federal government against the independent > prerogatives of the states. The Constitution had struck this balance > pretty carefully in regard to legislative powers, but an early court > case (1793) let people to believe that the balance was not properly > set regarding the judicial power, so the Eleventh Amendment was > written and adopted. > > The 11th Amendment does explicit deny the federal courts jurisdiction > over suits brought against a state by "citizens or subjects of any > Foreign State" as well as suits brought by U.S. citizens. So > presumably a foreign vendor like OECD would have an interest in a > waiver that was the same, but not any more urgent, than that of a > domestic vendor. In both cases the reason for seeking a waiver would > be to gain the ability to sue the customer in federal court, for > alleged violations of federal law or to avoid a "home court advantage" > in state courts. > > Over the years there has been a complex set of rules developed around > waivers of sovereign immunity. I can think of four basic ways it can > be waived. First, Congress can waive this limitation on the > jurisdiction of the federal courts, but only in very limited > situations related to the 14th amendment guarantees of equal > protection of the law and due process. In other situations, including > when Congress tried to waive sovereign immunity in regard to copyright > or patent claims, the Supreme Court said that it lacked the power to > do this. Second, a state can waive its sovereign immunity, either > explicitly or by taking actions that indicate a waiver, such as > initiating a lawsuit in federal court itself. Third, there is the > exception known as Ex Parte Young (from the Supreme Court case on > which it is based), which allows a lawsuit against a state or state > entity in federal court when no monetary damages are sought and the > only remedy is prospective -- an injunction to stop an ongoing > violation of federal law. This is the theory under which the > publisher's lawsuit against Georgia State University has been > proceeding. Finally, there is the possibility that a state entity > could waive sovereign immunity through a private contract, which is > what the vendor Liane is working with wants her to do. I am unaware > of definitive rules about when and how such private waivers are > effective, and who has authority to enter such contracts, which is why > I urged Liane to be careful and seek authorization from a higher state > authority before agreeing to such a contract. > > Sorry if this sounds like a lecture. I am mostly just organizing my > own thoughts to consider whether the Eleventh Amendment prevents a > state entity from agreeing to an arbitration clause. Both as a matter > of explicit language and the policy behind the amendment, I do not see > why a state entity could not agree to binding arbitration. The only > difficulty would be those situations where the parties decline to > accept the decision of the arbitrator. Such cases usually do then go > before the federal courts (if federal jurisdiction is otherwise > established). So I wonder if agreement to an arbitration clause might > somehow or sometimes be interpreted as a waiver of sovereign immunity > by the state or, alternatively, if the other party to such a clause > (i.e. the international treaty organization in Toby's example) would > lack a remedy if the arbitration went against it, because it would be > unable to seek review by the federal courts. > > More research is definitely called for. > > Kevin > > -----Original Message----- > > From: <[log in to unmask]> > Date: Wed, 3 Sep 2014 07:36:12 +0000 > > I'm not sure if this either helpful or relevant, but if the vendor is > an international treaty organisation such as the one I work for, the > OECD, then they will be legally unable to agree to submit themselves > to any national or state law. This is a challenge for us whenever we > engage with customers and suppliers because, unless they know us, > their lawyers will be surprised that such a situation exists. The > solution is to have an arbitration clause (I can supply a boilerplate > clause if anyone is interested) - and this is the twist - stating > clearly where arbitration is to take place. This is because if an > arbitrator has to seek legal guidance on resolving a dispute, s/he > will look first to the laws of the place where arbitration is taking > place. So, if you agree to arbitration in your state and if an > arbitrator needs guidance, your state's laws will be relevant. > > Toby Green > Head of Publishing > OECD