Will Corporate Sovereignty Disputes Lead To Wars One Day?

from the even-if-they-don't,-they-hardly-promote-peace dept

Last August, we wrote about the most egregious corporate sovereignty award (so far): $50 billion against Russia, under a treaty that it never even ratified, in favor of the major shareholders of the Yukos oil company. Of course, as everyone pointed out, being awarded $50 billion was one thing, collecting it, quite another. Most people probably assumed that it would be practically impossible to squeeze that money out of a recalcitrant Russia, but we now learn that some serious steps towards that goal have recently been taken, as reported by Der Spiegel (original in German). In Belgium, the bank accounts of the Russian embassy were frozen, as were those of Russia's EU and NATO missions, while in France, something similar happened, with Russian accounts blocked at 40 banks.

Understandably, this did not go down well with the Russian government. The country's deputy foreign minister warned, "whoever dares to do that must understand that it will lead to reprisals," something his boss, Sergei Lavrov echoed. Meanwhile, Lavrov's own boss, Vladimir Putin, was also well aware of the situation, and was quoted as saying: "we will defend our interests using legal means."

A story on France 24 reports that Russia has already threatened to retaliate against state-linked foreign firms operating in the country, so that's one way that things could escalate. But more seriously, the relations between Russia and EU nations are extremely strained over the conflict in eastern Ukraine; the last thing the situation needs is additional tension caused by arguments over a massive fine. Even if corporate sovereignty doesn't actually cause a war -- well, let's hope not -- the Yukos award may turn into a hindrance to resolving an existing conflict. That's yet another reason to get rid of the whole deeply-flawed system before it causes more serious damage.

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Filed Under: belgium, corporate sovereignty, france, frozen assets, isds, russia, trade wars, vladimir putin, war
Companies: yukos

Megaupload Asks Hong Kong Court To Drop Restraining Order On Megaupload Assets, Claiming Legal Violations

from the frozen dept

In the continuing global legal fight over Megaupload, the company apparently is asking the Hong Kong high court to set aside the restraining order on the company's assets that was put in place over two years ago, following a request from the US Justice Department. Megaupload was always legally based in Hong Kong, even if the company itself was based in New Zealand. Megaupload appears to be claiming that the Hong Kong Justice Department did not properly follow the law in going along with the US DOJ's request. The main issue, which has been debated back in the US, is that, technically, the DOJ cannot serve Megaupload (the company) since it has no US employees or presence. The DOJ can go after foreign individuals, but when it comes to foreign companies, the law is pretty explicit that they can't. While the DOJ is actively seeking to change that law, it doesn't change the basic problem with the original request.

Megaupload is pointing out that the US DOJ's request to the HK DOJ depended on Megaupload being served the criminal summons. But since that hasn't been satisfied, it argues the HK DOJ has no basis for restraining Megaupload's assets:

The order was granted on the basis of an ex parte application by the HK DOJ made at the request of the US DOJ. The grounds for discharge of the order is the failure by the HK DOJ—acting on the basis of information provided by the US DOJ—to fully and frankly disclose in that ex parte application serious legal issues relating to the US DOJ’s inability to serve Megaupload with a criminal summons in accordance with United States federal law. Among other things, the US DOJ failed to explain how it intended to comply with the service of process requirements imposed by the Federal Rules of Criminal Procedure, which, as argued in Megaupload’s application, are an essential prerequisite to initiating any criminal proceedings against Megaupload and cannot be satisfied for a corporation that has no physical presence or subsidiaries in the United States. Megaupload has submitted those filings with its application to the High Court.

Megaupload claims it's seeking to free the assets in order to attempt to regain control over the leased servers from Carpathia, which the DOJ has been hoping would be destroyed (leading to the destruction of evidence in a criminal case, at the DOJ's urging). While the issue of serving Megaupload is something of a technical snafu, it's one in a rather long line of sloppy lawyering by the DOJ throughout this case.

Filed Under: criminal charges, doj, frozen assets, hkdoj, hong kong, service
Companies: megaupload