Business Law Cases Solved

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Chapter 1
Introduction to International and Comparative Law


United States District Court for the Southern District of Texas, 1994.

FACTS: Plaintiffs, Ecuador residents, filed suit in Texas over alleged environmental damage in Ecuador. Plaintiffs pray for money damages, an injunction to clean up, and a court-administered trust fund. Defendants bring motions to dismiss.

ISSUE: Should the court decline to exercise jurisdiction based on the doctrine of comity of nations?


LAW: Section 403(3) of the Restatement (Third) of the Foreign Relations Law of the United States sets out numerous factors in deciding whether comity of nations deference should be applied.

EXPLANATION: The alleged activities and harm occurred in Ecuador; plaintiffs all reside in Ecuador; defendants are not Texas residents; the Republic of Ecuador has objected to the court’s jurisdiction and would probably not enforce any judgment it issued; and jurisdiction would interfere with Ecuador’s sovereign right to control its own environment.

ORDER: The case is dismissed under the doctrine of comity of nations.

Case 1-2. SEI FUJII v. STATE

United States, Supreme Court of California, 1952.

FACTS: A California law made land purchased by a Japanese who was ineligible for citizenship escheat to the state.

ISSUES: (1) Does California’s alien land law violate the UN Charter? (2) If it does, is the UN Charter automatically applicable? (3) Does the California law violate the US Constitution?

HOLDING: The law violates the UN Charter and the US Constitution. The UN Charter is not self-executing, but the US Constitution is.

LAWS: (1) At the time, there was no US-Japan treaty giving Japanese the right to own land in the US. (2) The UN Charter requires nations to promote human rights (including non-discrimination based on national origin). (3) Treaties (such as the UN Charter) are part of American law and must be observed. (4) Treaties do not supersede inconsistent local laws unless they are self-executing. (5) To determine if a treaty is self-executing, one looks at the intent of the parties. That is, for a treaty provision to be operative without the aid of implementing legislation, it must appear that its authors meant to prescribe a rule that, standing alone, would be enforceable in the courts. (6) The US Constitution’s Fourteenth Amendment prohibits racial discrimination.

EXPLANATION: The UN Charter provisions on human rights set out goals and aspirations, not self-executing provisions. They were not meant to become rules of law. This is in contrast to the rules in the Charter dealing with rights and privileges of the officers and employees of the UN, which signatories are required to observe. American states are bound to observe the US Constitution. The California law, which is based on racial discrimination, violates the US Constitution.

ORDER: The land does not escheat to California.


United States, Second Circuit Court of Appeals, 1997.

FACTS: Plaintiff, Matimak, a Hong Kong company, seeks to sue Khalily and D.A.Y., two New York corporations, in a US federal court. Matimak seeks to invoke the federal court’s diversity jurisdiction in US Code, title 28, § 1332(a)(2) to hear civil disputes between “citizens of a State and citizens of a foreign state.” The district court dismissed plaintiff’s suit on the grounds that it was not the citizen of a foreign State, because Hong Kong was not at the time recognized as being a foreign state by the United States government.

ISSUES: (1) Is Hong Kong a state? (2) Is Matimak a citizen of the United Kingdom? (3) Does US Code, title 28, § 1332(a)(2) allow stateless persons to sue in a US federal court?

HOLDINGS: (1) No. (2) No. (3) No.

LAW: (1) As a general rule, a foreign state is one that is formally recognized by...
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