Posts Tagged Subject-matter jurisdiction
Update May 2016 the USSC held in March 2016. It held ‘ For purposes of diversity jurisdiction, Americold’s citizenship is based on the citizenship of its members, which include its shareholders.’. I confess I do not know what that means – no doubt others do.
One night this week I was teaching a taster class to final year secondary school students (17-18yr olds). I decided I should make it challenging enough. This, I surmised, would help all those present. Either they would now run a mile from Law School, never to look back (thus taking away all doubt). Or their curiosity would be tickled enough for them to want to learn more (thus for them, too, taking away all doubt). I settled on CSR and conflicts: the Shell Nigeria case, with links to Kiobel (and Adam Smith, David Ricardo; special purpose vehicles; and the impending merger between Leuven’s AB Inbev and SAB Miller. All very exciting stuff!, in an allocated tome slot of 30 minutes). I hope readers will agree that conflict of laws does just the trick referred to above: scare off the doubters; pull in the doubters.
Anyways, that class was at the back of my mind as I was reading up on Americold Logistics. I am not a US trained or US qualified lawyer hence this posting may not be howler-proof however I understand that one particular avenue to gain access to US federal courts (as opposed to State courts; and over and above the issue being an issue based on federal law), is so-called ‘diversity jurisdiction’. This means the federal courts can hear a case if the citisenship of the parties involved is diverse: i.e. of at least two different US States or one of them being foreign. I also understand that to determine corporate citisenship, reference is made to the principal place of business (not therefore generally co-inciding with place of incorporation).
But how about trusts? What identity does a trust have with a view to diversity jurisdiction? In Americold Logistics, the Tenth Circuit sua sponte queried whether there was full diversity of citizenship among the parties. In particular, the judges challenged whether the citizenship of Americold Realty Trust, a business trust, should be determined by reference to its trustees’ citizenship, or instead by reference to some broader set of factors. This issue has deeply split courts across the country. Joining the minority of courts, the Tenth Circuit held the jurisdictional inquiry extends, at a minimum, to the citizenship of a trust’s beneficiaries in addition to its trustees’ citizenship. In this case, doing so destroyed diversity of citizenship among the parties. The issue is disputed, following relevant (seemingly inconclusive) precedent, summarised by SCOTUS here. The USCC has now granted certiorari.
This judgment will be of quite some relevance to US legal (trust) practice. I think readers will agree that it was wise not to pick it, and the wider issue of trust identity, for lawyers in spe.
Metamorphosis: Can an investment loose such qualification because of its negative externalities? The Philip Morris v Uruguay arbitration
Update 9 July 2016: the panel sided with Uruguay on the merits, in a move which must boost those rejecting criticism that international trade law, including BITs, MITs and TTIP, deny States’ regulatory autonomy.
A very interesting debate in the PMI v Uruguay arbitration on plain packaging. The decision on jurisdiction (which was taken in July this year) rejected the notion that an ‘investment’ under a BIT looses such qualification as a result of, in effect, its negative externalities. Uruguay had argued that PMI’s interests in Uruguay do not constitute a protected investment since not only do they fail to make any contribution to the Country’s development, but they actively prevent and interfere with such development, due to the health impact of tobacco consumption.
The Panel, having to establish its subject-matter jurisdiction, gave the notion ‘investment’ a broad meaning, in the absence of express language to the contrary in the BIT concerned. With reference to ICSID precedent, the tribunal declined to make ex-post economic /financial evaluations determine its jurisdiction – all the more so since such business, economic, financial… ex post evaluation is subject to tit for tat data and figures.
The case will therefore continue on the merits. Interesting material.