text:
COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
Argued and Submitted Aug. 8, 1986.
(4) late filing penalties were valid.
public purpose and confer public benefit.  26 U.S.C.A. s 501(c)(3).
to private individual.  26 U.S.C.A. s 501(c)(3).
net earnings.  26 U.S.C.A. s 501(c)(3).
control over organization's resources.  26 U.S.C.A. s 501(c)(3).
will be resolved in favor of government.
in three different tax years were not excessive.
pay author reasonable compensation in form of royalties for literary works.
control over millions of dollars in money which originated with church.
thus, church's claim to tax exempt status was defeated.
questions of motive implicate constitutional rights, review is de novo.
to any other taxable year.
return.  26 U.S.C.A. s 6651(a)(1).
Eric Lieberman, New York City, for petitioner-appellant.
Steven Frahm, Washington, D.C., for respondent-appellee.
Appeal from a Decision of the Tax Court of the United States.
Before TANG and BRUNETTI, Circuit Judges, and JAMESON, [FN*] District Judge.
District of Montana, sitting by designation.
whether the Commissioner properly revoked the Church's tax exempt status.
FN1. Codified as amended at 26 U.S.C. s 501(c)(3) (1982).
file tax returns under 26 U.S.C. s 6651(a).
Court upheld the penalties for failure to file tax returns.
payments were internal transfers of funds.
with mental images that are frequently the source of irrational behavior.
auditing.  The religion also offers courses to train auditors.
exceptions, services were not given for free.
known as "Flag" offered the highest level of training and auditing.
of auditing geared to help people in crisis.
information, often in statistical form, about the organization's operations.
to help other units or churches experiencing management difficulties.
managerial services to branch organizations around the world for a fixed fee.
trained staff members in salesmanship techniques.
Your People and Peter Gillum wrote the book How to be Successful.
which Mary Sue Hubbard had the only set of keys.
totaling nearly $175,000 to the Central Defense and Dissemination Fund.
operated, exclusively for religious or charitable purposes.  Hall v.
Commissioner, 729 F.2d 632, 634 (9th Cir.1984).
Church by Mail, 765 F.2d at 1391.  Courts have imposed a fourth element.
the operational test and lose its eligibility for tax exempt status.
Harding Hospital, Inc. v. United States, 505 F.2d 1068, 1072 (6th Cir.1974).
for a substantial commercial purpose or whether it violated public policy.
(1969), cert. denied, 397 U.S. 1009, 90 S.Ct. 1237, 25 L.Ed.2d 422 (1970).
F.2d 148, 153 (3d Cir.1984).
412 F.2d at 1200;  Spokane Motorcycle Club v. United States, 222 F.Supp.
be the public at large.  Founding Church, 412 F.2d at 1199.
constitute inurement.  Bubbling Well Church of Universal Love v.
L.Ed.2d 674 (1967);  Kenner v. Commissioner, 318 F.2d 632 (7th Cir.1963).
funneled church income to Reverends Ewing and McElrath.  765 F.2d at 1393.
benefits paid to the family members were reasonable.  670 F.2d at 106.
and Reformed Publishing Co. v. Commissioner, 743 F.2d 148 (3d Cir.1984).
finding for clear error.  Bubbling Well Church, 670 F.2d at 106.
government.  Harding Hospital, 505 F.2d at 1071.
expenses, and royalties.  The covert indicia included "debt repayments" and L.
Ron Hubbard's unfettered control over millions of dollars of Church assets.
the Church was operated for the benefit of L. Ron Hubbard and his family.
logic of the finding that several reasonable payments add up to inurement.
rely on the distribution of church literature to propagate their beliefs.
copyrighted by L. Ron Hubbard were actually written by Church employees.
tax years in question OTC funneled millions of dollars of Church assets to L.
these payments were made to the United States Church of Scientology Trust.  L.
Ron Hubbard was the sole trustee of the Trust during the years in question.
Mary Sue Hubbard were two of the three signatories on the Trust accounts.  L.
The Church disputes that control over assets compels a finding of inurement.
monies to defend Scientology against attack and to propagate the religion.
aboard the Apollo and testified that none of it was missing.
*1319 The Tax Court found that Church income inured to the benefit of L.
also called "LRH RR" or "LRH 10").
high credit rating.  The letter establishes the post of "LRH accounts officer"
to monitor collection of debt repayments.
insufficient to support revocation of tax exemption for all three years.
payments more closely resemble tithes to L. Ron Hubbard than debt repayments.
Tax Court concluded, or the total of all debt repayments made by the Church.
Well Church, 670 F.2d at 106.
L. Ron Hubbard and his family during the tax years 1970, 1971 and 1972.
repayments" strongly demonstrate inurement.  We find no clear error.
government in its dealings with religious organizations.  See Sherbert v.
the type of mixed question of law and fact which we review for clear error.
United States v. McConney, 728 F.2d 1195, 1203 (9th Cir.) (en banc), cert.
(1985);  McConney, 728 F.2d at 1203.
Black United Front, the New Left Movement and the Welfare Rights Organization.
the IRS revoked the Church's exemption based upon legitimate agency concerns.
of deficiency for the tax years 1970, 1971 and 1972.
grounds such as race, religion or the exercise of constitutional rights.
revocation);  Church of Gospel Ministry, Inc. v. United States, 640 F.Supp.
argument that the notice of deficiency was unconstitutional.
The IRS revoked the Church's tax exempt status by letter dated July 18, 1967.
States, 504 F.2d 970 (5th Cir.1974).
question of law which we review de novo.  United States v. Boyle, 469 U.S.
241, 105 S.Ct. 687, 692 n. 8, 83 L.Ed.2d 622 (1985).
to show reasonable cause for failing to file the required return.  Funk v.
return."  83 T.C. at 526.
"reasonable cause" under s 6651(a)(1).  Boyle, 105 S.Ct. at 693-94.
expressly instructed the taxpayer to file a tax return.
imposition of a penalty on the Church for failure to file the proper returns.

matches: v. v. v. v. v. v. v. v. v. v. v.


Theodoretus (2), bp. of Cyrrhus, or Cyrus, in the province of Euphratensis, was born at Antioch probably c. 393 (Tillemont). His parents held a high position at Antioch. His maternal grandmother was a lady of landed property (Relig. Hist. p. 1191, vol. v. ed. Schulze, Halae, 1771). His writings indicate a well-trained and highly cultivated mind, enriched by complete familiarity with the best classical authors. But his chief study was given to the Holy Scriptures and the commentators upon them in several languages. He was master of Greek, Syriac, and Hebrew, but unacquainted with Latin. His chief theological teacher, to whom be never refers without deserved reverence and admiration, was Theodore of Mopsuestia, "the great commentator," as he was called, the luminary and pride of the Antiochene school, but one who undoubtedly prepared the way for the teaching of Nestorius by his desire to provide, in Dorner's words, "for a free moral development in the Saviour's manhood." Theodoret speaks also of Diodorus of Tarsus as his teacher, but this can only have been through his writings.
The parents of Theodoret were both dead when he was 23 years old. Being their sole heir, he immediately proceeded to distribute his inheritance among the poor (Ep. 113), taking up his abode in a monastery, one of two founded in a large village called Nicerte, 3 miles from Apamea, and about 75 from Antioch (Ep. 119).
The critical period in the life of Theodoret was in connexion with the Nestorian controversy, through which he is chiefly known to us. His personal share in it began towards the end of 430, with the receipt by John, the patriarch of Antioch, of the letters of Celestine and Cyril, relative to the condemnation of the doctrines of Nestorius obtained by the Western bishops in Aug. 429. The high-handed behaviour of the patriarchs of Rome and Alexandria towards the bp. of the new Rome, a personal friend of long standing to both of them, was no less offensive to Theodoret than to John. When these documents arrived, Theodoret was at Antioch with other bishops of the province. The admirable letter (see Labbe, iii. 390 seq.; Baluz. col. 445, c. xxi.) despatched in the name of John and his suffragans to Nestorius, exhorting him to give up his objections to the term "Theotokos," seeing that its true sense was part of the Church's faith, and entreating him not to throw the whole of Christendom into confusion for the sake of a word, has been with great show of probability ascribed to the practised pen of Theodoret. The controversy was speedily rendered much fiercer by the publication of Cyril's celebrated twelve "Anathematisms" or "Articles." Designed to crush one form of heretical teaching as regards our Lord's personal nature, these "articles" (detached, against Cyril's intention, from the letter on which they were based) hardly escaped falling into the opposite error. The Godhead of Christ was asserted with such emphasis that to some readers His manhood might seem obscured. John was shocked at what he deemed the positive affinity to Apollinarian doctrine of some of these articles, and applied first to Andreas of Samosata and then to Theodoret to confute them. Theodoret readily replied to the anathematisms seriatim. So completely at variance with orthodoxy did he regard them, that in the letter to John (reckoned as Ep. 150) prefixed to his observations upon them, he expresses a suspicion that some "enemies of the truth" had been sheltering themselves under Cyril's name. For the nature of these documents and for the objections urged by Theodoret and his friends, which, with much that is illogical and inconsistent, contain much that is prima facie Nestorian see CYRILLUS. The documents were prior to the council of Ephesus and to the formal condemnation of Nestorius then passed. At that gathering Theodoret, accompanying his metropolitan, Alexander of Hierapolis, was among the earlier comers, anticipating the Oriental brethren, whose arrival he, with 68 bishops, vainly urged should be waited for before the council opened (Baluz. c. vii. 697–699). On the arrival of John and his Oriental brethren, Theodoret at once united himself to them, and gave his voice for the deposition and excommunication of Cyril, Memnon, and their adherents (Labbe, iii. 597–599). He took part also in the proceedings which ensued, when the "concilium" and the "conciliabulum" launched thunderbolts against each other, deposing and excommunicating. Theodoret was one of the Oriental commissioners to the emperor Theodosius II. at Constantinople, representing his metropolitan Alexander (ib. 728). The deputies not being allowed to enter Constantinople, audiences with the emperor were held at Chalcedon, Sept. 431. Theodoret's name appears in the letters and other documents passing between the Oriental party at Ephesus and their representatives in Chalcedon, in which much was said and written in a bitter spirit (Labbe, vol. iii. 724–746; Theod. ed. Schulze, vol. iv. pp. 1336–1354). Of the five sessions held at Chalcedon the proceedings of the first alone are recorded. We have also a few scanty fragments of speeches and homilies of Theodoret at this period, characterized by distressing acrimony (Theod. ed. Schulze, vol. v. pp. 104–109), and a letter of his to Alexander of Hierapolis, whom he was representing, informing him how matters were going on at Chalcedon, telling him of the popularity of the deputies with the people, who, in spite of the hostility of the clergy and monks by whom they had been repeatedly stoned, flocked to hear them, assembling in a large court surrounded with porticos, the churches being closed against them; but Theodoret laments their ill-success with the emperor. Before the deputies finally left Chalcedon, the Orientals delivered addresses to the adherents of the deposed Nestorius who had crossed the Bosphorus from Constantinople. The first of these was by Theodoret. He and his companions, he said, were shut out from the royal city on account of their fidelity to Christ, but the Heavenly Jerusalem was still open to them. On their way home from Ephesus the Orientals, Theodoret among them, held a synod at Tarsus and renewed the sentence of deposition on Cyril in conjunction with the seven orthodox deputies to Theodosius II., which they published in a circular letter. They engaged also never to abandon Nestorius. Theodoret returned to his diocese, and devoted himself to composing a fresh work assailing the obnoxious anathematisms, entitled Pentalogus, from its division into five books. Only a few fragments remain. Other treatises he wrote then are lost. But we have, in a Latin version, a long letter addressed to the followers of Nestorius at Constantinople, declaring his adherence to the orthodox faith, although he had felt unable to acquiesce in the condemnation of Nestorius, not believing that the doctrines ascribed to him were actually held by him (Baluz. Synod. c. 40, 742). Cyril found it impossible to accept the terms proposed in Theodoret's articles. He explained his objections in a 960long letter to Acacius, which, however, opened a way for pacification by interpretations of some questionable points in his anathematisms which he refused to withdraw. This letter Theodoret regarded as orthodox, but irreconcilable with the anathematisms, which he still regarded as heretical. He was, however, precluded from accepting the terms of peace which John and others were increasingly inclined to acquiesce in, by the demand that he should anathematize the doctrine of Nestorius and Nestorius himself. To do this (Theodoret writes to his friend Andrew of Samosata) would be to anathematize godliness itself. He is ready to anathematize all who assert that Christ was mere man, or who divide Him into two Sons, or who deny His Godhead. But if they anathematized a man of whom they were not the judges, and his doctrine which they knew to be sound, en bloc, "indeterminate," they would act impiously (ib. 766, c. 61). At this epoch, as Hefele remarks (Hist. of Councils, vol. iii. p. 127 Eng. trans.), the Orientals were divided into two great parties: the peace-seeking majority, with John of Antioch and the venerable Acacius at their head, ready to meet Cyril half-way; the violent party of irreconcilables, with Alexander of Hierapolis as their leader, opposed to all reconciliation as treason to the truth; while a third or middle party was led by Theodoret and Andrew of Samosata, anxious for peace, but on terms of their own. Theodoret and his scanty band of adherents failed to secure the confidence of either of the two great parties. His inflexible metropolitan, Alexander, vehemently denounced as treason to the truth any approach to reconciliation with Cyril. Against this reproach and against the suspicion that he had given in to escape persecution or to secure a higher place Theodoret sought to defend himself (ib. c. 72, 775). Though still holding back from reconciliation with Cyril, he was virtually the means of bringing about the long-desired peace. The declaration of faith presented to Cyril by Paul of Emesa, as representing the belief of John, and accepted by Cyril, had been originally drawn up by Theodoret at Ephesus. The paragraphs directed against Cyril's twelve articles were slightly modified, but the main body was unaltered (Cyril. ed. Pusey, vi. 44; Baluz. c. 96, 97, 804; Tillem. Mém. eccl. xiv. 531; Hefele, op. cit. iii. 130 ff.). The reconciliation, however, was by no means acceptable to Theodoret. For it demanded acceptance of the deposition of Nestorius, the anathematizing of Nestorius's doctrines, and the giving up the four metropolitans of his party who had been deposed at Constantinople. Theodoret's protest was in vain. Theodosius insisted on the deposition and expulsion of all bishops who continued opposed to union. Finding his growing isolation more and more intolerable, Theodoret invited the chiefs of the fast-lessening band of his sympathizers, Alexander, Andrew, and others, to take counsel at Zeugma, in reference to the union with Cyril, which had been accepted by John and earnestly pressed upon them by the combined weight of the ecclesiastical and civil power. Alexander refused to attend the synod except on his own terms. The bishops who met, as Theodoret informed John (Baluz. c. 95, 662, 801), accepted the orthodoxy of Cyril's letter and regarded it as a recantation of his obnoxious twelve articles, but would not pronounce an anathema on Nestorius. John, now hopeless of peace otherwise, applied to the secular power. His method proved generally effectual. One by one the recalcitrant prelates yielded, except Alexander and some others. Theodoret was one of the last to yield. The coldness arising between him and John after John's reconciliation with Cyril had been much increased by John's uncanonical intrusion into the province of Alexander in the ordination of bishops. Theodoret, with the other bishops of the province, on this, withdrew from communion with him, and published a synodical letter charging him with ordaining unworthy persons (ib. 831, 850). Long and painful controversy ensued, only crushed at last by John's appealing to the imperial power. All eventually yielded to combined entreaties and menaces save Alexander and a small band of irreconcilables, who were banished from their sees. Theodoret was assailed on his tenderest side by harassing his diocese. The unhappy renewal of strife, concerning the doctrines of Diodorus and Theodoret, brought Theodoret and Cyril once more into collision. For the details of the conflict see CYRILLUS OF ALEXANDRIA; PROCLUS; RABBULAS; IBAS. The long and bitter controversy, in which both parties did and said many regrettable things; was closed by the death of Cyril, June 9 or 27, 444.
The succession of Dioscorus to Cyril's patriarchal throne led to fresh trials for Theodoret. Dioscorus was resolved to bring about Theodoret's overthrow, as Theodoret was one of the first to discern the nascent heresy of Eutyches, and directed the powers of a well-trained intellect and great theological learning to exposing it. The ear of the emperor was gained, and Theodoret was represented as a turbulent busybody, constantly at Antioch and other cities, taking part in councils and assemblies instead of attending to his diocese; a troublesome agitator, stirring up strife wherever he moved (Ep. 79, p. 1135, etc.). He was also accused on theological grounds. Dioscorus, who seems to have regarded himself as "the lawful inheritor of Cyril's guardianship of anti-Nestorian orthodoxy," wrote to Theodoret's patriarch, Domnus, who c. 442 had succeeded his uncle John in the see of Antioch, informing him that Theodoret was creating a crypto-Nestorian party, practically teaching Nestorianism under another name and striking at "the one Nature of the Incarnate." These accusations were accepted at court, and Dioscorus obtained an imperial edict (dated by Tillemont Mar. 30, 449) that as a disturber of the peace of the church Theodoret should keep to his own diocese. Theodoret submitted, leaving the city without bidding his friends farewell (Ep. 80, p. 1137).
From the "Latrocinium" or "Robbers' Synod," at Ephesus (449) [DIOSCORUS; EUTYCHES], Theodoret was excluded by an imperial edict of Mar. 4, unless summoned unanimously by the council itself (Labbe, iv. 100). Theodoret's condemnation was evidently the chief 961purpose in summoning this infamous synod. From his "internement" at Cyrrhus Theodoret calmly watched his enemies' proceedings. He had not long to wait for the confirmation of his worst fears. Dioscorus and his partisans, having by brutal violence obtained the acquittal of Eutyches and the deposition of Flavian, Ibas, Irenaeus, and other sympathizers with Theodoret, proceeded on the third session to deal with him. The indictment was formulated by a presbyter of Antioch named Pelagius, who, in language of the most atrocious violence, proceeded to demand of the council to take the sword of God and, as Samuel dealt with Agag, and Elijah with the priests of Baal, pitilessly destroy those who had introduced strange doctrines into the church. Those who adhered to the poisonous teachings of Nestorius deserved the flames. "Burn them!—burn them!" he cried. Pelagius was allowed to lay before the synod the proofs of his accusation, contained in "The Apology of Theodoret, bp. of Cyrrhus, in behalf of Diodorus and Theodorus, champions of God." The council exclaimed that they had heard enough to warrant the immediate deposition of Theodoret, as the emperor had already ordered. The unanimous sentence was that he should be deposed from the priesthood and deprived of even lay communion. His books were to be committed to the flames (ib. 125, 126, 129; Le Brigandage, pp. 193–195).
Dioscorus was now master of the whole Eastern church; "il règne partout." Theodoret knew that deposition was usually followed by exile, and prepared for the worst. He was allowed to retire to his monastery near Apamea (Ep. 119, p. 1202). An appeal to the West, forbidden him in person by Theodosius, was now prosecuted by letter, which, though addressed to Leo individually, was really meant for the bishops of the West assembled in the synod, to which he begs his cause may be submitted (Mém. eccl. xv. 294). "In this remarkable letter," writes Dr. Bright (Hist. of Church, p. 395), "he traces the primacy of Rome to her civil greatness, her soundness of faith, and her possession of the graves of the apostles Peter and Paul. He eulogizes the exact and comprehensive orthodoxy with which the Tome of Leo conveys the full mind of the Holy Spirit." He entreats Leo "to decide whether he ought to submit to the recent sentence. He awaits his decision. He will acquiesce in it, whatever it be, committing himself to the judgment of his God and Saviour." Theodosius continued to pay no heed to the remonstrances of Leo, asserting that everything had been decided at Ephesus with complete freedom and in accordance with the truth, and that the prelates there deposed merited their fate for innovations in the faith. The interposition of Pulcheria and of the Western princesses was employed in vain. On July 29, 450, Theodosius II. was killed by a fall from his horse, and the imperial dignity passed to the resolute hands of the orthodox Pulcheria and her soldier-husband Marcian. All was now changed. Eutychianism became the losing cause, and the orthodox sufferers were speedily recalled. Theodoret appears to have been mentioned by name in the edict of recall. The stigma of heterodoxy was speedily removed from him. There is no reason to doubt that he was one of the bishops who signed the Tome of Leo, prefixing a short résumé of his own faith regarding the Incarnation, and that on this Leo recognized him as a Catholic bishop (Tillem. xv. 304; Baron. 450, §§ 22–24). Though now at liberty to go where he pleased, Theodoret preferred to remain in his monastery (Ep. 146). His chief desire was to witness the complete triumph of truth, and to convince others of the purity of his own teaching. This desire he saw in part fulfilled. But for his complete satisfaction an oecumenical council was necessary, and to bring that about he laboured with all his might.
The council of Chalcedon met on Oct. 8, 451. Theodoret's entrance was the signal for outrageous violence on the part of the adherents of Dioscorus. The hall re-echoed with cries and counter-cries which interrupted all proceedings. Theodoret sat down "in the midst," not among his brother-bishops. He continued to attend the sessions of the council, but without voting, and taking no part in the deposition of Dioscorus. His own cause came on at the eighth session, Oct. 26. Although his orthodoxy had been acknowledged by Leo and his restoration required by the emperor, the anti-Nestorian section would not hear of his recognition as a bishop until he had in express terms anathematized Nestorius. This step he had repeatedly declared he would never take, and he now tried to satisfy the remonstrants with something short of it, but in vain. Wearied out, at last he yielded to their clamour and pronounced the test words, "Anathema to Nestorius, and to every one who denies that the Holy Virgin Mary is the mother of God, and who divides the one Son, the Only-begotten, into two Sons." The imperial commissioners now declared that all doubt had been removed and that Theodoret should now receive back his bishopric. The whole assembly raised the cry that Theodoret was worthy of his throne, and that the church must receive back her orthodox teacher. The leading bishops voted for his restoration, the rest signified their assent by acclamation, and the commissioners gave sentence that by the decree of the holy council Theodoret should receive again the church of Cyrrhus (Labbe, iv. 619–624).
But few years remained to Theodoret, and of these very little is known. It is not even certain whether he returned to his episcopal duties at Cyrrhus or remained in the quiet Apamean monastery, devoting himself to literary labours. Tillemont thinks that he probably did not live beyond 453. But if the statement of Gennadius (c. 89) be true, that his death took place under the emperor Leo, he must have lived till 457 or 458.
His writings may be divided roughly into I. Exegetical, on the Scriptures of O. and N. T. II. Controversial, dealing with the anathematisms of Cyril, the Eutychian heresy, and, in a work written towards the end of his life, with heresies in general. III. Theological, including the Graecarum affectionum Curatio, Orations on Divine Providence, and sundry orations and lesser treatises. IV. Historical, and V. Epistolary.
I. Exegetical.—These include works on (1) the Octateuch, (2) the books of Sam., Kings, and Chron., (3) the Pss., (4) the Canticles, (5) the Major Prophets, (6) the Twelve Minor Prophets, (7) the Fourteen Epistles of St. Paul, including that to the Hebrews. The work on the Octateuch consists of answers to difficult points, for the most part characterized by the sound common-sense literalism of the Antiochene school, with but little tendency to allegory. He often, instead of his own opinion, cites that of his great masters Diodorus of Tarsus and Theodore of Mopsuestia, and Origen. In Leviticus and Numbers he naturally adopts more of the allegorical method, regarding the whole Levitical ritual and the moral ordinances as typical of the sacrificial and mediatorial work of Christ, and of the new law He came to inaugurate. The commentary on the Canticles was his earliest exegetical work. He controverts the opinion that this book contains the story of the earthly loves of Solomon either with Pharaoh's daughter or with Abishag, or that it is a political allegory, in which the bridegroom represents the monarch and the bride the people, and adopts the spiritual interpretation by which the bridegroom stands for Jesus Christ and the bride for the church. From one passage in the very interesting prologue we learn that Theodoret held the then current opinion, that the whole of the O.T. books having been burnt under Manasseh and other godless kings, or destroyed during the Captivity, Ezra was divinely inspired to rewrite them word for word on the return from the Captivity. He denounces the iniquity of the Jews, who had excluded Daniel from the prophets and placed his book among the Hagiographa, because no prophet had so clearly predicted the advent of Jesus Christ, and the very time of His appearance. The only portions of the N.T. commented on by him are the Epistles of St. Paul, including that to the Hebrews. Of these bp. Lightfoot writes, "His commentaries on St. Paul are superior to his other exegetical writings, and have been assigned the palm over all patristic expositions of Scripture. For appreciation, terseness, and good sense they are perhaps unsurpassed, and if the absence of faults were a just standard of merit, they would deserve the first place; but they have little claim to originality, and he who has read Chrysostom and Theodore of Mopsuestia will find scarcely anything in Theodoret which he has not seen before. It is right to add, however, that Theodoret himself modestly disclaims any such merit. In his preface he apologizes for attempting to interpret St. Paul after two such men who are 'luminaries of the world,' and he professes nothing more than to gather his stores 'from the blessed Fathers."' (Gal. p. 220).
II. Controversial.—(1) The Refutation of the Twelve Anathematisms of Cyril. (2) Eranistes or Polymorphus, "a work of remarkable interest and of permanent value for theological students, to be read in connexion with the Tome of Leo and the definitions of Chalcedon" (Bright, Later Treatises of Athanas. p. 177). It consists of three dialogues between the "Mendicant" 'Ερανίστης who represents Eutychianism, and Theodoret himself as Ὀρθόδοξος. Their respective titles indicate the line adopted in each. These are Ἀτρεπτος, Immutabilis, Ἀσύγχυτος, Inconfusus, and Ἀπαθής, Impatibilis. (3) Λἱρετικῆς Κακομυθίας ἐπιτομή, Haereticarum Fabularum Compendium, a work directed against heresies in general, in five books. The fourth book, the most important as treating of matters with which he was more or less personally acquainted, begins with the heresies of Arius and Eunomius and comes down to those of Nestorius and Eutyches. His disgracefully violent language with regard to his former friend Nestorius—whom he stigmatizes as an instrument of Satan, a man who by his pride had plunged the church into disorders, and under the cloak of orthodoxy introduced the denial of the Divinity and of the Incarnation of the Only-begotten Son, and who at last met with the punishment he deserved, a sign of his future punishment—would warrant the charitable hope that this chapter has been erroneously ascribed to Theodoret. Of this, however, there is no evidence, and we are, though most reluctantly, compelled to accept it as his work, together with the equally atrocious letter to Sporacius on the Nestorian heresy. It is accepted by Photius (Cod. 56) and Leontius of Byzantius (art. 4, de Sectis) (cf. Neander, iv. p. 246, note, Ceillier, Aut. ecclés. x. 84).
III. Theological.—The chief is an apologetic treatise, intended to exhibit the confirmations of the truth of the Christian faith contained in the philosophical systems of the Gentiles, under the title Ἑληνικῶν θεραπευτικὴ παθημάτων, Graecarum Affectionum Curatio, seu Evangelicae Veritatis ex Gentilium Philosophia Cognitio. It is in 12 discourses, and furnishes a very able and eloquent defence of Christianity against the ridicule and ignorant accusations of pagan philosophers, written probably before 437. It was followed by another of a similar character, in ten orations, on Divine Providence, regarded by the best critics as exhibiting Theodoret's literary power in its highest form, as regards the careful selection of thoughts, nobility of language, elegance and purity of style, and the force and sequence of his arguments (Ceillier, p. 88, § 10). To these may be added a discourse on Charity, περὶ θείας καὶ ἁγίας ἀγάπης (Schulze, 14, 1296 seq.) and some fragments of sermons, etc., given by Garnier (Auctarium, ib. t. v. pp. 71 seq.).
IV. Historical.—This class contains two works of very different character and of very different value: (1) the Ecclesiastical History, and (2) the Religious History. (1) The former, in five books, was intended to form a continuation of that of Eusebius. It commences with the rise of Arianism under Constantius and closes with the death of Theodore of Mopsuestia, A.D. 429. From his opening words he has been thought to have had in view the histories of Socrates and Sozomen, and to have written to supply their omissions and correct their mistakes (Valesius). This is questioned by some, and must be regarded as doubtful. He gives more original documents than either of his brother-historians, but is very chary of dates, and writes generally without sufficient chronological exactness. Photius finds fault with his too great fondness for metaphor, while he praises his style as "clear, lofty, and 963free from redundancy" (Cod. 31). The history is learned and generally impartial, "though it is occasionally one-sided and runs off into a theological treatise." An Eng. trans. was pub. by Baxter in 1847. (2) The Religious History, φιλόθεος ἱστορία, is devoted to the lives of 30 celebrated hermits and ascetics, his contemporaries, and was written from personal knowledge and popular report before his Ecclesiastical History. It excites our wonder at what Dr. Newman calls the "easy credence, or as moderns would say large credulousness," which appears more astonishing as he had been brought up in the most matter-of-fact, prosaic, and critical school of ancient Christendom. "What," writes Dr. Newman, "made him drink in with such relish what we reject with such disgust? Was it that, at least, some miracles were brought home so absolutely to his sensible experience that he had no reason for doubting the others which came to him second-hand? This certainly will explain what to most of us is sure to seem the stupid credulity of so well-read, so intellectual an author " (Hist. Sketches, iii. 314). The whole subject presents a very curious intellectual problem.
V. Epistolary.—No portion of Theodoret's literary remains exceeds in interest and value the large collection of his letters. As throwing light on his personal history and character, and as helping us to understand the perplexed relations of the principal actors in that stormy period of theological strife and their various shades of theological opinion, their importance cannot be over-estimated. They give us a heightened esteem of Theodoret himself, his intellectual power, theological precision, warm-hearted affection, and Christian virtues. An Eng. trans. of this remarkable series of letters, arranged according to date and subject, is much to be desired.
The Auctarium of Garnier also contains the following: (1) Prolegomena and Extracts of Commentaries on the Psalms, probably derived from Catenae. (2) A Short Extract from a Commentary on St. Luke. (3) Sermon on the Nativity of S. John Baptist. (4) Homily spoken at Chalcedon in 431. (5) Fifteen additional letters of Theodoret. (6) Seven dialogues composed a little before the council of Ephesus, 2 each against Anomoeans and Apollinarians, and 3 against Macedonians. Their authorship is doubtful; they have been ascribed to Athanasius or Maximus, but Garnier claims them for Theodoret.
Editions.—There are 2 edd. of his complete works in Gk. and Lat.; the first in 4 vols. fol. (Paris, 1642 ), by the Jesuit Jac. Sirmond, to which a 5th vol. was added after Sirmond's death by his fellow-Jesuit, J. Garnier (Paris, 1684), containing an auctarium, comprising fragments of commentaries and sermons and some additional letters, together with Garnier's 5 learned but most one-sided dissertations on (1) the life, (2) the writings, (3) the faith of Theodoret, (4) on the fifth general council, and (5) the cause of Theodoret and the Orientals. This was succeeded by another ed. based on it, with additions and corrections by Lud. Schulze and J. A. Noesselt (Halae Sax. 1769–1774), in 5 vols. and in 10 parts. To this edition our references are made. The ed. of T. Gaisford is pub. by the Clarendon Press. There is a trans. of Theodoret's works in Bohn's Lib. (Bell), and by Blomfield Jackson in Lib. of Post-Nicene Fathers. Cf. N. Ghibokowski, The Blessed Theodoret, bp. of Cyrus (Moscow, 1890, 2vols.); Harnack in Theol. Literatur Zeitung (1890), p. 502.


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-	Reasons for granting the petition I.	The Seventh Circuit's decision that attorneys' fees are not recoverable under Article 74 disregards the contrary decisions of other signatory nations and the plain language of the CISG. A.	The Seventh Circuit's decision improperly disregards the decisions of tribunals in other CISG signatory nations and misapplies the interpretive requirements of CISG Article 7.
B.	The Court of Appeals misapplied the plain language of CISG Article 74 and disregarded applicable "general principles' of the CISG.
C.	Supreme Court guidance over the proper application of the CISG is vital.
1. Whether attorney's fees and litigation expenses qualify as a recoverable form of "loss" under Article 74 of the United Nations Convention on Contracts for the international Sate of Goods where such fees and expenses are foreseeable to the breaching party a possible consequence of the breach at the time of contracting.
A.	The Seventh Circuit's Decision Improperly Disregards The Decisions Of Tribunals In Other CISG Signatory Nations And Misapplies The Interpretative Requirements Of CISG Article 7.
B.	The Court Of Appeals Misapplied The Plain Language Of CISG Article 74 And Disregarded Applicable "General Principles" Of The CISG.
Zapata Hermanos Sucesores, S.A. respectfully petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Seventh Circuit in this case.
The decision of the court of appeals (App., infra, la-l0a) is published at 313 F. 3d 385. The decisions of the district court (App., infra, 11a-32a) are reported at 2001 WL 1000927 and 2002 WL 398521.
The judgment of the court of appeals was entered on November 19, 2002. A timely petition for rehearing and suggestion of rehearing en banc was denied on January 9, 2003. App., infra, 33a-34a. The jurisdiction of this Court is invoked under 28 U.S.C. � 1254(1).
The United Nations Convention on Contracts for the International Sale of Goods, 15 U.S.C.A. App., is reproduced, in pertinent part, at App.1 infra, 35a-36a.
Zapata thus was forced to bring this action seeking payment of the purchase price plus contractually specified interest, pursuant to the United Nations Convention on Contracts for the International Sale of Goods, 15 U.S.C.A. App. ("CISG"). Under Article 74 of the ClSG, which permits the recovery of all "loss[es] suffered *** as a consequence of the breach *** which the party in breach ought to have foreseen at the time of the conclusion of the contract *** as a possible consequence of the breach of contract," Zapata sought recovery of its attorneys' fees and litigation expenses as damages foreseeably caused by Lenell's unjustified refusal to pay.
"Lenell dramatically expanded the scope of this litigation, including discovery and the trial, by forcing Zapata to undertake the difficult and time-consuming task of proving its entitlement to payment for more than 100 invoices that Lenell knew full well it was obligated to pay." Ibid.
Lenell also "hopelessly complicated the litigation" by creating the need to investigate, prepare for and successfully oppose Lenell's late-advanced, convoluted multifarious and (regrettably) baseless defenses and counterclaims." Id. 25a.
Following discovery, the case was tried to a jury. At the close of the evidence, the district court granted Zapata judgment as matter of law as to 93 of the 110 unpaid invoices totaling $857,796.90, rejecting virtually all of Lenell's defenses as a matter of law (rulings that Lenell did not appeal), The court also granted Zapata judgment as a matter of law on all but two of Lenell's counterclaims (rulings that Lenell also did not appeal). The jury then returned a verdict in Zapata' s favor on its claim for contractual interest and against Lenell on its remaining [page 2] counterclaims. The court entered final judgment in Zapata's favor in the amount of $1,176,350.95.
After trial, and by stipulation of the parties, the district court considered the recoverability of Zapata' s attorneys' fees. The court held that these fees were recoverable under CISG Article 74 because Lenell had needlessly forced Zapata to incur them, and Lenell had stipulated that "[a]s of the dates when Lenell issued its purchase orders ****, Lenell foresaw or should have foreseen that if Lenell failed to pay for the tins that it ordered, received and accepted, Zapata would incur litigation costs including attorneys' fees, to seek payment of the invoices for said tins." App., infra, 13a.
The court found that the CISG, as a treaty "defining the relationships between nationals of different signatory countries, calls for uniformity of construction," and mandates "universality rather than a purely home-town rule as to the awardability of attorneys' fees under the Convention." App., infra, 14a. The court thus rejected Lenell's request for "the parochial application of the American rule" that each party bear its own litigation costs. As the court explained, while "the norm in our own judicial system is for each litigant in a purely United-States-based dispute to bear the burden of its own legal expense, that does not at all equate to the notion that public policy (or anything else) forbids a federal court's judicial enforcement of a different rule that is appropriately brought into play." ld., l5a. The court thus held that "when purely parochial considerations are put aside (quite properly so), it cannot be gainsaid that the normal unstrained reading of Article 74 coupled with the above-quoted Stipulation calls for Zapata's recovery of its attorneys' fees as foreseen consequential damages," and that "[w]hen the searchlight of analysis is thus properly focused on the language of the Convention without any inappropriate overlay from the American Rule, the question becomes a simple one." Id., 15a-16a. The court also noted that the contrary position "is c1early refuted by the decisions cited at [page 3] Zapata Mem. 4 from other countries' courts and arbitral tribunals holding that attorneys' fees are recoverable under Art. 74, Id., 16a.
The district court also imposed Zapata's attorneys' fees as a sanction against Lenell pursuant to the court's inherent power, citing Chambers v. NASCO, 501 U.S. 32, 53 (1991). The court found that Lenell had engaged in "extreme bad faith" conduct "both before and during this litigation" by "mak[ing] it as difficult and expensive as possible for Zapata to receive its money in this litigation" and by "dramatically and needlessly expanding the scope of this litigation *** by interposing a host of unwarranted roadblocks" through "late-advanced, convoluted, multifarious and (regrettably) baseless defenses and counterclaims." App., infra. 20a-22a, 23a. 25a. The court found that by asserting this multitude of "baseless" defenses and counterclaims. Lenell succeeded in "dragging out what should have been a relatively simple collection case for goods sold and delivered *** into an enormously time-consuming and expensive lawsuit." Id., 23a.
4. a. The Seventh Circuit, with Judge Posner writing for the panel, affirmed the judgment of liability against Lenell but reversed the district court's award of attorneys' fees. The court of appeals held that the recoverability of attorneys' fees under Article 74 is not a "substantive" question governed by the CISG but rather a "procedural" question controlled by domestic law (in this case the "American rule" that each party bear its own litigation costs). According to the court of appeals, the CISG "is about contracts, not about procedure," and the recoverability of attorneys' fees is exclusively a "'procedural" issue because "[t]he principles for determining when a losing party must reimburse the winner for the latter's expense of litigation are usually not a part of a substantive body of law such as contract law, but a part of procedural law." App., infra, 3a.
Without addressing any of the more than 275 decisions by courts and arbitral tribunals in other CISG signatory nations [page 4] interpreting Article 74  decisions that Zapata cited and the district court relied upon -- the court of appeals found that "[t]here is no suggestion in the background of the Convention or the cases under it that 'loss' was intended to include attorneys' fees, but no suggestion to the contrary either." The court also found that "the question of attorneys' fees [is] not 'expressly settled' in the Convention," and that "there are no 'principles' that can be drawn out of the provisions of the Convention for determining whether 'loss' includes attorneys' fees; so by the terms of the Convention itself the matter must be left to domestic law." App., infra, 2a.-3 a. Thus, relying solely on domestic cases applying the American rule, the court held that " 'loss' does not include attorneys' fees incurred in the litigation of a suit for breach of contract." App., infra, 2a.
I.	THE SEVENTH CIRCUIT'S DECISION THAT ATTORNEYS' FEES ARE NOT RECOVERABLE UNDER ARTICLE 74 DISREGARDS THE CONTRARY DECISIONS OF OTHER SIGNATORY NATIONS AND THE PLAIN LANGUAGE OF THE CISG.
This case presents the Court with an opportunity to address for the first time the United Nations Convention on Contracts for the International Sale of Goods. As an international uniform commercial rode ratified by the United States in 1986, the CISG "applies to contracts of sale of goods between parties whose places of business are in different States: (a) when the States are Contracting States; or (b) when the rules of private international law lead to the application of the law of a Contracting State." Art. 1(1). With 62 signatory nations, including most of the major commercial jurisdictions of the world, the CISG today is one of the most dominant sources of private international law, with a rapidly developing jurisprudence involving thousands of judicial and arbitral [page 6] decisions worldwide. See generally Schlechtriem, COMMENTARY ON THE UN CONVENTION ON THE INTERNATIONAL SALE OF GOODS (Oxford 2d ed. 1998).
"[q]uestions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law."
The question presented here is whether attorneys' fees are a recoverable form of consequential "loss" under CISG Article 74, where such fees are foreseen by a breaching party at the time of contracting as a possible consequence of the breach. The Seventh Circuit held that because attorneys' fees are not explicitly mentioned in Article 74, their recoverability is not "expressly settled" by the CISG and is governed by domestic law, i.e., the "American rule" of attorneys' fees.
As we demonstrate below, the court of appeals' decision cannot be squared with the plain language of the CISG and disregards numerous decisions of other CISG signatory nations consistently holding that attorneys' fees are recoverable under [page 7] Article 74. In conflict with decisions of other circuits, the court also disregarded the interpretive requirements of CISG Article 7(1) by utilizing a rule of domestic law (i.e., the "American rule" of attorneys' fees) to interpret Article 74 while ignoring general principles of the CISG that inexorably lead to the contrary reading of Article 74 adopted by the district court.
The international significance of the Seventh Circuit's decision cannot be overstated. It already has generated worldwide controversy and attention, including foreign requests for Supreme Court review. This Court's review in fact is vitally needed not only to resolve the international split of authority created by the Seventh Circuit over the meaning of Article 74 -- "perhaps the most important remedy available under the Convention" (Felemegas (Australia), An Interpretation of Article 74 CISG by the U.S. Circuit Court of Appeals, to be published in l5 PACE INT'L L. REV. (Spring 2003) (available at [page 8] <http://cisgw3.law.pace.edu/cisg/biblio/felemegas4.html>) (collecting decisions) -- but also to clarify more generally the interpretive principles that courts must follow in construing the CISG, including the extent to which courts may rely on domestic law to interpret the CISG 's express terms (in this case the word "loss" in Article 74). This case presents an ideal opportunity for this Court to resolve these significant controversies and bring needed clarity to this important area of private international law.
This Court held in Air France v. Saks, 470 U.S. 392, 399-404 (1985), that in cases involving international treaties, "considerable weight" must be given to decisions of foreign tribunals so as "to give the specific words of the treaty a meaning consistent with the shared expectations of the contracting parties." That holding applies with particular force to the CISG which was created for the "expressly stated goal of developing uniform international contract law to promote international trade" (Asante Tech. lnc. v. PMC-Sierra. Inc., 164 F. Supp. 2d 1142, 1151 (N.D. Cal. 2001)), and to provide greater legal certainty to the international sale of goods -- transactions where "uncertainty will almost inevitably exist." Scherk v. Alberto-Culver Co., 417 U.S. 506, 515 (1974).
The CISG mandates "uniformity in its application," requiring that unaddressed questions be "settled in conformity with the general principles" of the CISG and, alternatively, according to principles of private international law. Art. 7. This Court's jurisprudence and the CISG thus require, at a bare minimum, that courts applying the CISG consider decisions in other signatory nations. See Cook, The U.N. Convention on Contracts for the International Sale of Goods: A Mandate to Abandon Legal Ethnocentricity, 16 J.L. & COMM. 2:257, 261 (1997) [page 9] [also available at <http://cisgw3.law.pace.edu/cisg/biblio/1cook.html>] ("Article 7(2) *** directs courts to be guided by 'the laws applicable by virtue of the rules of private international law,' a gap filling mechanism that permits, even requires, review of relevant U.S. and foreign decisions"); Flechtner, The Several Texts of the CISG in a Decentralized System: Observations on Translations, Reservations and Other Challenges to the Uniformity Principle in Article 7(1), 17 J.L, & COMM. 187, 215 (1998) [also available at <http://cisgw3.law.pace.edu/cisg/biblio/flecht1.html>] ("The key to honoring the mandate of the uniformity principle in Article 7(1) is ensuring that the deliberations of decision-makers are informed by knowledge of how pertinent issues have been handled by others, particularly courts and commentators representing different legal tradition").
These express uniformity requirements and related concerns "of international comity, respect for the capacities of foreign and transnational tribunals, and sensitivity to the need of the international commercial system for predictability," all require that signatories abide by the CISG's international rules and principles "even assuming that a contrary result would be forthcoming in a domestic context." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 413 U.S. 614, 629 (1985).
In this case, the court of appeals ignored these obligations, disregarding multiple decisions of judicial and arbitral tribunals outside the United States that not only were cited by Zapata but were relied upon by the district court, all of which consistently hold that attorneys' fees are recoverable under Article 74.
For instance, the German Court of Appeal in Case No. 17 U 146/93 (OLG Düsseldorf Jan. 14, 1994) [available in English translation at <http://cisgw3.law.pace.edu/cases/940114g1.html>], held that attorneys' "fees in general could be recovered under Article 74 CISG)," including attorneys' fees that were not recoverable under local law. Similarly, the Commercial Court of Switzerland has held that under Article 74, "all costs incurred in the reasonable pursuit of a claim are refundable" and that [page 10] "pre-procedural legal costs are part of recoverable damages as long as the breach of contract gave sufficient rise for such." No. OR.97.00056 (Dec. 19, 1997) [available in English translation at <http://cisgw3.law.pace.edu/cases/971219s1.html>] (citing Schlechtriem/Stoll, Art. 74, at 14). Accord Decision of German District Court (Amtsgericht) Viechtach in Case No. 1 C 419/01 (Apr. 11, 2002) [available in English translation at <http://cisgw3.law.pace.edu/cases/020411g1.html>] (holding that "[t]he term 'loss' in Art. 74 sent. 1 CISG, encompasses the cost of pursuing one's rights," and that the seller there "was entitled to commission an attorney, because the [buyer] persistently refused payment"). See also Felemegas, 15 PACE. INT'L L. REV. [also available at <http://cisgw3.law.pace.edu/cisg/biblio/felemegas4.html>] ("There is international case law and arbitral support for recovery of losses incurred as legal fees prior to or during litigation by a successful plaintiff in a contractual dispute by the CISG pursuant to the substantive law provisions of Art. 74"). This weight of international authority is also confirmed by the fact that Lenell has never cited a single decision by any tribunal anywhere in the world even suggesting, let alone holding, that attorneys' fees are not recoverable under Article 74.
There also is strong support in the literature for the recoverability of attorneys' fees under Artic1e 74. For instance, Professor Schrechtriem, perhaps the leading international scholar on the history and meaning of the CISG, agrees with the district court below that under Article 74, "the costs of attorneys" fees is certainly foreseeable at the time of conclusion of the contract and thus a part of the risk undertaken." [page 11] Schlechtriem, 14 PACE INT'L L. REV. at 205 [also available at <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem4.html>]. Accord Felemegas, 6 VINDOBONA J. INT'L COMM. L. & ARB. at 39 [also available at <http://cisgw3.law.pace.edu/cisg/biblio/felemegas1.html>] (concluding that the district court in Zapata correctly treated the recovery of counsel's fees (as part of damages under the Convention) as a substantive issue governed by the agreement of the parties to the contract and supplemented by the provisions of the Convention").
Consistent with the mandate of Article 7, the district court properly considered the international precedent described above. The court of appeals, by contrast, simply ignored it. See Felemegas, 15 PACE INT'L L. REV. [also available at <http://cisgw3.law.pace.edu/cisg/biblio/felemegas4.html>] (criticizing the Seventh Circuit below because it "made no reference at all to CISG jurisprudence"). The Seventh Circuit thus not only created an international split of authority where none had previously existed, but also laid the groundwork for further conflict by holding that the substantive scope of Article 74 -- and in particular the meaning of "loss" is to be governed by domestic law. Such disregard of the interpretive mandates of Article 7 must not be tolerated. As the district court held, Article 7 "mandate[s] universality rather than a purely home-town rule as to the awardability of attorneys' fees under the Convention." App., infra, 14a. Indeed, its very purpose was to provide "a means for interpreters to develop the law under an international convention in a manner entirely free from the influence of domestic legal norms." Van Alstine, Dynamic Treaty Interpretation, 146 U. PA. L. REV. 687, 733 (1998) [also available at <http://cisgw3.law.pace.edu/cisg/biblio/alstine2.html>].
It may be that in a purely domestic case the American rule of attorneys' fees would govern. But this is not a domestic case, and a local preference for the American rule cannot override the U.S. obligation to adhere to and promote the international legal standards of the CISG. See Vienna Convention on the Law of Treaties, Art. 27, 26 UNTS 1155, at 331 (1980) ("[a] Party may not invoke the provisions of its internal law as justification for its failure to perform a treaty"). As this Court recognized long ago, "[w]e cannot have trade and commerce in world markets [page 12] and international waters exclusively on our terms, governed by our laws, and resolved in our courts." M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 9 (1972).
The CISG was crafted as a "floodgate against an all too broad recourse to domestic law," and to "prevent an all too hasty resort to domestic regulations and legal custom." Schlechtriem, UNIFORM SALES LAW: THE UN-CONVENTION ON CONTRACTS FOR THE INTERNATI0NAL SALE OF GOODS 37 (1986) [also available at <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem.html>]. Its "primary goal was to create uniformity in the rules for international sales, in order to supplant the complex and difficult-to-predict system that subjected international sales to the varying provisions of national sales laws." Flechtner , 17 J.L. & COMM. at 187 [also available at <http://cisgw3.law.pace.edu/biblio/flecht1.html>]. The CISG's "very mandate to interpreters is to bring about international uniformity in the regulated field of law." Van Alstine, at 701.
"One of the primary factors motivating the negotiation and adoption of the [Convention] was to provide parties to international contracts for the sale of goods with some degree or certainty as to the principles of law that would govern potential disputes and remove the previous doubt regarding which party's legal system [page 13] might otherwise apply. Courts applying the [Convention] cannot, therefore, upset the parties' reliance on the Convention by substituting familiar principles of domestic law when the Convention requires a different result. We may only achieve the directives of good faith and uniformity in contracts under the [Convention] by interpreting and applying the plain language of article 8(3) as written *** ."
Similarly) in Geneva Pharmaceuticals Technology Corp. v. Barr Laboratories, 201 F. Supp. 2d 236, 287 (S.D.N.Y. 2002), the court recognized that the CISG adopted a different form of promissory estoppel than that of U.S. law, but refused to apply the U.S. rule because "to apply an American or other version of promissory estoppel * * * would contradict the CISG and stymie its goal of uniformity." The court of appea1s below erred for precisely this reason.
In short, the Seventh Circuit's decision "failed in its approach to the interpretation of the CISG because it did not evidence any attention at all to the several hundred available international cases on CISG Art. 74, citing solely U.S. domestic case law in support of the conclusion that 'loss' does not include attorneys' fees." Felemegas, 15 PACE INT'L L. REV. [also available at <http://cisgw3.law.pace.edu/cisg/biblio/felemegas4.html>]. This patent misapplication of the CISG must be reversed.
Lenell refused to pay for $950,000 in specially manufactured goods that it received, accepted and used, knowing full well that Zapata would have no choice but to file suit to obtain payment. Lenell even stipulated that at the time of contracting it "foresaw or should have foreseen that if Lenell failed to pay for the tins that it ordered, received and accepted, Zapata would incur litigation costs including attorneys fees, to seek payment of the invoices for said tins."App., infra, 13a. As the district court correctly held. "when pure1y parochial considerations are put aside (quite properly so), it cannot be gainsaid that the normal unstrained reading of Article 74 coup1ed with the above-quoted Stipulation calls for Zapata's recovery of its attorneys' fees as foreseen consequential damages," App" infra, 15a-16a.
The court of appeals reversed, holding simply that because "attorneys' fees" are not specifically mentioned in Article 74, their recoverability under Article 74 is not "expressly settled" by the CISG and is therefore a "procedural" question governed by "domestic law." App., infra, 3a. Thus, applying the "American rule," the court held that attorneys' fees are not a recoverab1e form of "loss" under Article 74. As we demonstrate below, this reasoning is fundamentally flawed.
To begin with, the Seventh Circuit erred in holding that the recoverability of attorneys' fees under Article 74 is not "expressly settled" by the CISG. Article 74 broadly provides for the recovery of all foreseeable loss[es]," "using simple, non-nation specific language." St. Paul Guardian Ins. Co. v. Neuromed Med. Sys. & Support, 2002 WL 465312, *3 (S.D.N.Y. Mar. 26, 2002). As the Austria Supreme Court has held, "[u]nder the second sentence of Art. 74, a claim for damages is only limited by the foreseeability of the loss for the party in breach." Case No. 1 Ob 292/99v (Apr. 28, 2000) (emphasis added). Accord Delchi Carrier S.p.A. v. Rotorex Carp. , 71 F.3d 1024, 1030 (2d Cir. 1995) (holding that Article 74 "provides that a contract plaintiff may collect damages to compensate for the full loss," "subject only to the familiar [page 15] limitation that the breaching party must have foreseen, or should have foreseen, the loss as a probable consequence") (emphasis added). As the Seventh Circuit itself acknowledged, nothing in the text or history of Article 74 suggests that attorneys' fees or any other category of loss is excluded from its scope. See Vanto, 15 PACE INT'L L. REV. [also available at <http://cisgw3.law.pace.edu/cisg/biblio/vanto1.html>] (while Article 74 does not mention attorneys' fees, "it does not rule out attorneys' fees as damages either").
"does not expressly mention any category of loss - apart from 'loss of profit." The nature of the provision in Article 74 CISG is inclusive, not exhaustive. Furthermore, the voluminous case law on Article 74 documents the fact that there are many different categories of loss recoverable as damages, none of which is specifically mentioned in the text of Article 74. Thus, it is questionable whether it is proper for a court to single out one non-specific mention of a category of loss (in this case, 'attorneys' fees') when the general approach of Article 74 CISG is not to specifically mention any of the categories of loss encompassed by its express language." Felemegas, 15 PACE INT'L L. REV. [also available at <http://cisgw3.law.pace.edu/cisg/biblio/felemegas4.html>].
Thus, Article 74 addresses attorneys' fees as a foreseeable form of loss as explicitly as it addresses any other type of loss.
The Seventh Circuit's holding that the recoverability of attorneys' fees under Article 74 is not "expressly settled" within the meaning of CISG Article 7 also makes no sense because the question turns entirely on the meaning of a word used in the Convention itself, i.e., "loss." Regardless of any ambiguity in its meaning (and there is none), the definition of such an express term cannot possibly be regarded as falling outside the scope of the Convention. After all, how can it be that the meaning of a Convention term could be governed by the divergent domestic [page 16] laws of each signatory nation! Article 74 would have 62 different meanings and it would be impossible to achieve any "uniform" understanding of its scope -- as the CISG requires.
The question here is not whether attorneys' fees are automatically recoverable as a "procedural" matter,  No one is suggesting that Article 74 is a fee-shifting statute. The question is whether attorneys' fees qualify as a recoverable form as damages where the foreseeability requirements of Article 74 are met. There can only be one uniform answer to that question, and it was incumbent upon the court of appeals to find that answer based on the text and principles of the Convention -- not by resorting to local law. Indeed, "even where the inevitable substantive gaps appear, article 7(2) directs an adjudicator to seek answers on an international level, specifically in the values reflected in the Convention itself." Van Alstine, at 733.
"[b]y anybody's account, the "general principles" on which the Convention is based invoke broad concepts such as the requirement to interpret the Convention in "good faith" and to generally act "reasonabl[y]." In the context of the international character of the Convention, "good faith" mandates an interpretation that takes account of non-U.S. principles and interpretations developed by the other Contracting States to the Convention." Cook, at 261.
In this case, the decisions of other Contracting States consistently lead to the conclusion that foreseeable attorneys' fees are recoverable under Article 74. Supra. pp. 10-11 & n.5.
The district court below properly took these general principles into account, as Article 7 requires, in holding that one of the fundamental principles of the CISG is "to provide full relief" and "'make whole" those aggrieved by contractual breaches, and that such "full compensation" can be "'assured only by freeing [a plaintiff's] damages recovery from the burden of attorneys' fees." App., infra. 17a (emphasis in original). But despite the district court's reliance on these general principles and their wide acceptance among other courts, the Seventh Circuit again ignored them. This too was reversible error.
Construing "loss" in Article 74 to include attorneys' fees also advances the CISG's stated goal of promoting "good faith" in international trade by discouraging the sort of brazen contractual breaches that occurred here, and by also ensuring that the costs of litigation do not discourage non-breaching parties from asserting their rights.
In sum, the district court's award of Zapata's attorneys' fees as a recoverable "loss" easily comports with the plain language of Article 74, particularly given the parties' stipulation that those fees and expenses were foreseeable to Lenell at the time of contracting. The Seventh Circuit's reversal of that ruling reflects a fundamental misapplication of the CISG and its text.
There is great confusion over the interpretive standards that courts must apply in construing the CISG. "Unfortunately, the guidance from the Supreme Court has been cryptic on this score." Van Alstine, at 709. "The consequence has been an application of divergent substantive norms precisely in the manner the adoption of the [CISG] was designed to prevent." Id. at 767. The Seventh Circuit's decision typifies this trend, prompting requests for Supreme Court review to "provide the [page 19] appropriate jurisprudential leadership and sound doctrinal clarity necessary for the proper interpretation and application of the Convention's provisions." Felemegas, 15 PACE INT'L L. REV. [also available at <http://cisgw3.law.pace.edu/cisg/text/biblio/felemegas4.html>].
The need for Supreme Court review is compelling not only to resolve the conflict over the meaning of Article 74, but also more generally to clarify the interpretative rules that courts must follow in applying the CISG, including the determination of when a "gap"' exists within the meaning of Article 7, and the extent to which domestic law may be used to fill such gaps.
In the meantime, the Seventh Circuit's message to other CISG signatory nations is clear -- that U.S. courts will continue to rely on rules of local law to interpret the CISG. Indeed, foreign authorities have lamented the Seventh Circuit's "disappointing" decision as revealing the "reflexes of the American judges," and for displaying the "symptoms associated with a narrow, national and, therefore, improper interpretation of the provisions of the Convention" by "trying to fit the body of law that is the CISG onto the bed that is American legal heritage which, by design, does not fit." Felemegas, 15 PACE INT'L L. REV. As other U.S. courts regrettably have done, the Seventh Circuit "consulted exclusively U.S. decisions and U.S. commentators. In its approach, no international trace, such as non-U.S. sources or methods of analysis can be found anywhere." Cook, at 261.
Without Supreme Court intervention, "[t]he process of building a common international framework for understanding contracts, and thus escaping the pull of the 'homeward trend,' is *** likely to be a long and difficult one." Flechtner, 17 J.L. & COMM. at 200, 204 [also available at <http://cisgw3.law.pace.edu/cisg/biblio/flecht1.html>] (citing Honnold DOCUMENTARY HISTORY OF THE UNIFORM LAW FOR INTERNATIONAL SALES 1 (1989)). Immediate intervention is therefore vital, for "[i]t is of utmost importance to the viability of the Convention that national concepts and labels do not hamper the uniformity that is critical for the functioning of the Convention and the [page 20] certainty that is crucial to the functioning of international trade." Vanto, 15 PACE INT'L L. REV. [also available at <http://cisgw3.law.pace.edu/cisg/biblio/vanto1.html>].
Allowing the meaning of terms used in the CISG to be controlled by domestic law will have serious practical consequences. For instance, it will lead to forum shopping by encouraging parties to file suit in countries whose domestic law puts an expansive cast on Article 74. Defendants sued in U.S. courts also would have exclusive immunity against the payment of attorneys' fees as damages since the U.S. is the only CISG signatory to recognize the "American rule," thus encouraging breaching U.S. parties like Lenell to engage in precisely the sort of bad faith conduct that the CISG was meant to discourage.
1. See Felemegas (Australia.), An Interpretation of Article 74 CISG by the U.S. Circuit Court of Appeals, to be published in 15 PACE INT'L L. REV. (Spring 2003) (<http://cisgw3.law.pace.edu/cisg/biblio/felemegas4.html>) (collecting decisions).
2. Decisions applying the CISG are catalogued in a database maintained by Pace University Law School. See < http://www.cisg.law.pace.edu/>.
3. See, e.g., Sechlechtriem (Germany), Attorneys ' Fees as Part of Recoverable Damages, 14 PACE INT'L L. REV. 205, 205 (2002) [also available at <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem4.html>] (noting that the decision below "deserves the greatest attention"); Vanto (Finland), Attorneys' Fees as Damages in International Commercial Litigation, to be published in 15 PACE INT'L L. REV. (Spring 2003) (available at <http://cisgw3.law.pace.edu/cisg/biblio/vanto1.html>) (discussing significance of this case under Finnish law, and noting that internationally this "case has garnered major attention," "possibly *** because the case emanates from the United States, a jurisdiction which so far does not have a large CISG jurisprudence but whose ruIings resonate throughout the commercial community"). See also, e.g., Felemegas, 15 PACE INT'L. REV. (Spring 2003) [also available at <http://cisgw3.law.pace.edu/cisg/biblio/felemegas4.html>] (noting that this case "has generated a healthy academic debate"); Felemegas, The Award of Counsel 's Fees Under Article 74 CISG, in Zapata Hermanos Sucesores v. Hearthside Baking Co. (2001), 6 VINDOBONA J. INT'L COMM. L.& ARB. 30, 39 (2002) [also available at <http://cisgw3.law.pace.edu/cisg/biblio/felemegas1.html>]; Colligan (U.S.), Applying the Genera1 Principles of the United Nations Convention on Contracts for the International Sa1e of Goods to Fill the Article 78 Interest Rate Gap in Zapata v. Hearthside Baking Co. Inc. (2001), 6 VINDOBONA J. INT'L COMM. L. 7 ARB. 40 (2002); Flechtner (U.S.), Recovering Attorneys' Fees as Damages Under the U.N. Sales Convention, 22 NW. J. INT'L L. & BUS. (2002) [also available at <http://cisgw3.law.pace.edu/cisg/biblio/flechtner4.html>]; Lookofsky (Denmark), Zapata Hermanos v. Hearthside Baking, 6 VINDOBONA J. INT'L COMM. L. & ARB. 27 (2002) [also available at <http://cisgw3.law.pace.edu/cisg/biblio/lookofsky5.html>].
4. The foreign authorities cited herein are available on the Internet. Web addresses for these decisions are reproduced in the Table of Authorities.
5. Accord, e.g., Hamburg Arbitration Proceeding (June 21, 1996) [available in English translation at <http://cisgw3.law.pace.edu/cases/960621g1.html>] (holding that "independent" of domestic German law, attorneys' fees are recoverable damages under "Art. 61(1) in connection with Art. 74 CISG"); Case No. A3 1998 153 (District Court of Zug, Switzerland Feb. 25, 1999) (holding that "debt collection costs" are recoverable under Article 74); Case No. 2 C 22/97 (District Court of Berlin-Tiergarten, Germany Mar. 13, 1997) (holding that "damages under article 74 CISG include court and lawyer's fees"), Likewise an Arbitral Tribunal of the International Commercial Arbitration Court of the Russian Federation Chamber of Commerce and Industry has held that attorneys' fees and costs are recoverable under Article 74. See Case No. 227/1996 (Mar. 22, 1999) [available in English translation at <http://cisgw3.law.pace.edu/cases/990322r1.html>].
6. The court or appeals believed that it "would produce anomalies" if a prevailing plaintiff could potentially recover its attorneys' fees under Article 74 while a prevailing defendant would not. App., infra, 4a. In fact, there is no anomaly at all when one considers that Article 74 is a damages provision -- not a fee-shifting statute, It is hardly anomalous that only plaintiffs are entitled to recover damages since it is generally only they who allegedly have suffered harm.
7. The court of appeals also justified its reliance on domestic law by arguing that the recoverability of attorneys' fees is a "procedural" question. In fact, this Court has held at least twice that under federal 1aw the recoverability of attorneys' fees is a substantive question. See Alyeska Pipeline Serv. v. Wilderness Soc' y, 421 U.S. 240, 259 n.31 (1015) (right to attorneys' fees is a "substantive" question for Erie purposes); Chambers v. NASCO, 501 U.S. 32, 53 (1991) (same). Moreover, the mere characterization of a question as "procedural" does not justify the application of domestic law to matters falling within the scope of the CISG. See Felemegas, 6 VINDOBONA J. INT'L COMM. L. & ARB. at 39 [also available at <http://cisgw3.law.pace.edu/cisg/biblio/felemegas1.html>] (treating the recovery of attorneys' fees under Article 74 as "a procedural issue to be settled by reference to either the 1ex fori or the otherwise applicable domestic law *** goes against the plain meaning of the Convention's language and intent, as well as the available international jurisprudence"); Vanto, 15 PACE INT'L L. REV [also available at <http://cisgw3.law.pace.edu/cisg/biblio/vanto1.html>] ("If we *** approach the matter in the context of the CISG, does it really matter if a national law calls an issue 'procedural' or 'material' *** ?").
8. Accord Schlechtriem, COMMENTARY 558 (Article 74 "does not define in more detail which are the losses for which compensation can be obtained. In order to identify the losses for which compensation may be demanded, regard must be had to the principle of full compensation for loss *** in the context of the particular contract concerned"); UNCITRAL Secretariat Commentary to the 1978 Draft of the CISG, Comment No. 8 (endorsing "[t]he principle of recovery of the full amount of damages suffered by the party not in breach," subject only to the important limitation" that the amount recovered "may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract"); Principles of International Commercial Contracts of the International Institute for the Unification of Private Law (UNIDROIT), Article 7.4.2 ("[t]he aggrieved party is entitled to full compensation for harm sustained as a result of the non-performance").

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FindACase | United States v. DNRB, Inc.
Before GRUENDER, MELLOY, and GRASZ, Circuit Judges.
Eric Roach fell thirty-six feet to his death while working at a warehouse construction site in Kansas City, Missouri. Roach was not using fall-protection equipment when he fell. Following a bench trial before the district court,  DNRB was convicted of a Class B misdemeanor for willfully violating two safety regulations and causing Roach's death. See 29 U.S.C. § 666(e); 29 C.F.R. § 1926.760(a)(1) & (b)(1). On appeal, DNRB challenges the sufficiency of the evidence, several evidentiary rulings, and the sentence imposing the statutory maximum fine of $500, 000. We consider each of these issues in turn, and we affirm.
DNRB first argues that the Government did not present sufficient evidence to sustain the guilty verdict. "We review the sufficiency of the evidence after a bench trial in the light most favorable to the verdict, upholding the verdict if a reasonable factfinder could find the offense proved beyond a reasonable doubt." United States v. Iqbal, 869 F.3d 627, 629-30 (8th Cir. 2017). DNRB argues that the Government failed to prove three elements of § 666(e): (1) that the company violated an applicable standard, (2) that it did so willfully, and (3) that the violation caused an employee's death.
First, DNRB argues that it did not violate an applicable standard. Section 666(e) imposes criminal liability on "[a]ny employer who willfully violates . . . [an applicable standard when] that violation caused death to any employee." Applicable regulations require employers to protect employees from fall hazards. In particular, § 1926.760(a)(1) and (b)(1) state that employees who erect steel "shall be protected from fall hazards" by personal fall-arrest systems or certain other means. A personal fall-arrest system consists of a harness and connectors used to secure a worker to an anchorage point. 29 C.F.R. § 1926.751. DNRB maintains that it did not violate § 1926.760 because Roach had a personal fall-arrest harness and connectors, even though he was not using them to secure himself to an anchorage point on the warehouse's frame. But the regulations state that employees "shall be protected" by appropriate equipment, not that they merely be provided with or possess such equipment. See 29 C.F.R. § 1926.760(a)(1) & (b)(1); see also Dakota Underground, Inc. v. Sec'y of Labor, 200 F.3d 564, 568-69 (8th Cir. 2000) (upholding employer liability for a violation of a regulation with similar "shall be protected" language where the employees had available protection they did not use). Because Roach was not connected to an anchorage point, there was sufficient evidence that DNRB violated § 1926.760(a)(1) and (b)(1).
Second, DNRB argues that the Government failed to prove that it willfully violated the standards. The parties agree that this element requires that DNRB "intentionally disregarded or was plainly indifferent to the requirements of the Act." See Valdak Corp. v. OSHA, 73 F.3d 1466, 1468 (8th Cir. 1996). Noting that DNRB had a previous citation for violating § 1926.760, the district court concluded that DNRB was aware of its requirements. Moreover, a supervisor's knowledge can be imputed to his employer, and there was evidence supporting a conclusion that Roach's supervisor Bob Wiechens intentionally disregarded the safety requirements here. See Comprehensive Care Corp. v. RehabCare Corp., 98 F.3d 1063, 1066 (8th Cir. 1996). Wiechens testified that it was his job to know and enforce the applicable safety regulations. The district court found that Wiechens saw Roach walking along the trusses of the warehouse without being connected to an anchorage point. Several witnesses testified that they saw Roach doing so, and a crane operator stated that he expressly warned Wiechens about Roach's failure to use fall-protection equipment. One coworker testified that he and Roach worked without fall protection and that Wiechens observed their work. As a result, the court did not credit Wiechens's testimony that he was unaware that Roach was not using fall-protection equipment. "The district court was in the best position to observe the witnesses' demeanor and assess their credibility, and we will not disturb the district court's reasoned credibility determinations." United States v. Bowie, 618 F.3d 802, 814 (8th Cir. 2010). Because Wiechens's knowledge can be imputed to DNRB, sufficient evidence supported the court's finding of a willful violation by the company.
Third, DNRB argues that the Government failed to prove causation. "When a crime requires not merely conduct but also a specified result of conduct, a defendant generally may not be convicted unless his conduct is both (1) the actual cause, and (2) the legal cause (often called the proximate cause) of the result." Burrage v. United States, 134 S.Ct. 881, 887 (2014) (internal quotation marks omitted). Actual causation typically requires showing that Roach's death would not have occurred "but-for" DNRB's conduct. See id. at 887-88. Legal causation requires showing that there was "some direct relation between the injury asserted and the injurious conduct alleged." Paroline v. United States, 134 S.Ct. 1710, 1719 (2014). Legal causation is often analyzed in terms of foreseeability. Id. Here, the district court found that Roach would not have fallen to his death had he been connected to an anchorage point and that DNRB's failure to make him use required fall-protection equipment was thus a but-for cause of his death. The court also determined that his fall was "a foreseeable and natural result" of working more than thirty feet above the ground without using fall-protection equipment. This finding satisfies legal causation. See id. at 1722 (explaining that a "direct and foreseeable result" establishes legal causation). Together, these findings were sufficient to support a conclusion that DNRB's failure to comply with the safety standards caused Roach's death.
Because a reasonable factfinder could conclude that the Government proved each of the challenged elements of the crime beyond a reasonable doubt, DNRB's challenge to the sufficiency of the evidence fails.
Next, DNRB argues that the district court erred in admitting a variety of what it describes as irrelevant, prejudicial "other-acts" evidence in violation of Federal Rule of Evidence 404(b). In particular, DNRB claims the district court improperly admitted evidence of other violations it committed at the Kansas City construction site, as well as violations from 2007 and 2015 that occurred at other sites. While other-acts evidence is not admissible "to prove a person's character in order to show that on a particular occasion the person acted in accordance with the character," it is admissible for another purpose such as proving intent or knowledge. Fed.R.Evid. 404(b). We review evidence admitted under Rule 404(b) for an abuse of discretion, reversing "only when the evidence clearly had no bearing on the case and was introduced solely to prove the defendant's propensity to commit criminal acts." United States v. Walker, 470 F.3d 1271, 1274 (8th Cir. 2006) (internal quotation marks omitted). To admit evidence under Rule 404(b), it must be "(1) relevant to a material issue; (2) similar in kind and not overly remote in time to the crime charged; (3) supported by sufficient evidence; and (4) higher in probative value than prejudicial effect." Id.


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Yesterday, the European Court of Human Rights (ECHR) issued a Chamber Judgment dismissing allegations from footballer Adrian Mutu and speed skater Claudia Pechstein that the Court of Arbitration for Sport (CAS) is not independent. However, the ECHR confirmed that the CAS’s refusal to hold a public hearing in Peschstein’s case, as requested by her, amounted to an infringement of Article 6 § 1 of the European Convention on Human Rights. The judgment was welcomed by the CAS as recognition that it fulfilled the ECHR’s requirements of independence and impartiality.
However, Mutu and Pechstein have reason to be optimistic about the ECHR judgment. Firstly, two of the seven judges disagreed with the decision to dismiss allegations that the CAS is not independent. Helen Keller and Georgios A. Serghides wrote a lengthly opinion as to why the ECHR should have found that the CAS does not meet the requirements of independence and impartiality required under Article 6 § 1 of the Convention.
Secondly, they argue that although Mutu was judged to have waived his rights under Article 6 § 1 of the Convention, this should not have been considered as voiding his complaint that two of the three of arbitrators who ruled on his case lacked independence. Thirdly, as the ECHR outlined in the first line of its statement, the Chamber Judgment is not final. Under Articles 43 and 44 of the Convention, Mutu and Pechstein are both able to request that the case be referred to the Grand Chamber of the ECHR. Given the powerful dissenting opinion referred to above, this looks likely.
Also, the Summary Judgment appears to raise serious questions about whether the Athlete Agreement can be considered compatible with the European Convention on Human Rights. This is significant because most international federations require athletes to sign such an agreement in order to participate in elite sport. Within most Athlete Agreements is the requirement that athletes agree to resolve all disputes at the CAS.
Before getting to the dissenting opinion, a short recap of what the ECHR is dealing with is perhaps in order. First, let’s consider Mutu’s case.
Mutu’s case involves his 2003 transfer from AC Parma to Chelsea and a 2004 positive test for cocaine. The FA Premier League Appeals Committee (FAPLAC) ruled that this constituted a breach of his contract – scheduled to run until 2008 – and that Chelsea was entitled to seek compensation via the FIFA Dispute Resolution Chamber (DRC). In 2005, the CAS dismissed Mutu’s appeal against the FAPLAC decision.
In 2008, the FIFA DRC ruled that Mutu must pay Chelsea over €17 million. Mutu again appealed to the CAS, which dismissed his appeal. In 2009, he appealed to the Swiss Federal Tribunal, arguing that the CAS had not been independent or impartial in reaching this decision.
He argued that Professor Luigi Fumagalli, President of the CAS Panel that heard his 2008 appeal, had been a Partner in a Milan law firm representing the interests of the owner of Chelsea, Roman Abramovich (Fumagalli refuted this allegation). He also argued that Dirk-Reiner Martens, one of two CAS Arbitrators who heard his appeal against the FIFA DRC ruling, was also a CAS Panel member during his 2005 hearing. The CAS judgment confirms this [Editor’s Note: the ECHR’s statement has this confused].
In a judgment of 10 June 2010 (4A_458/2009), the Swiss Federal Supreme Court dismissed Mutu’s appeal, ruling that the CAS Panel could be considered independent and impartial. An appeal to the ECHR followed.
Pechstein was banned for two years by the International Skating Union (ISU) under Article 2.2 of its Anti-Doping Regulations, after samples of her blood taken during the 2009 ISU Speed Skating Championships showed reticulocytes (immature red blood cells) at 3.49%, 3.54% and 3.38%, returning to 1.37% ten days after the event. These readings were above the ISU’s permitted 2.4% value.
Pechstein found an unlikely ally in her claim that the readings are unreliable. On 27 November 2015, the International Association of Athletics Federations (IAAF) released ‘Response to allegations of blood doping in athletics’ in reply to articles by ARD and the Sunday Times alleging that the IAAF ignored blood doping in athletics from 2001 to 2012.
‘Strenuous exercise leads to a decrease of plasma volume for up to two hours, thereby increasing the HGB [haemoglobin] concentration even though there is no increase in red blood cells, and so causing false positives’, it reads. As it is understood that the the ISU did measure reticulocyte content in haemoglobin immediately after exercise, the IAAF’s statement supported her case.
Setting this potential scientific inaccuracy aside, under the World Anti-Doping Code, a positive sample is not always necessary to establish an anti-doping doping rule violation (ADRV). Comments to Article 2.2 of the 2009 World Anti-Doping Code, which applied at the time, allow ‘use or attempted use of a prohibited substance or method’ to be established ‘by other reliable means, such as…longitudinal profiling, or other analytical information which does not otherwise satisfy all the requirements to establish “Presence” of a Prohibited Substance under Article 2.1’. Such comments are also retained in the 2015 Code, which is currently in force. This allowed the ISU to ban Pechstein based on her 2009 blood values alone.
In 2009, the CAS dismissed her appeal against her two-year ban, a decision which, in 2010, was supported by the Swiss Federal Tribunal. On 15 January 2015, the Munich Court of Appeal (Oberlandesgericht München) declared the Athlete Agreement between Pechstein and the ISU to arbitrate all cases at CAS as void in Germany, due to Pechstein having no choice but to sign in order to compete. It accepted Pechstein’s December 2012 claim for €4.4 million in damages from the ISU, and declared the 2009 CAS decision upholding the ISU’s ban as ineligible in Germany. It also struck out the Swiss Federal Tribunal decision supporting the CAS decision as void in Germany.
However, on 7 June 2016, the Oberlandesgericht München judgment was quashed by the German Federal Constitutional Court. It reasoned that if it were true that the ISU had a monopoly under German competition law, athletes nevertheless accepted and freely subscribed to the agreement to arbitrate cases at the CAS, and such a practice did not constitute abuse of a dominant position. An appeal to the ECHR followed.
Keller and Serghides argue that the ECHR should have upheld Pechstein’s complaint that the CAS does not meet the requirements of independence and impartiality under Article 6 § 1 of the Convention. They state that the independence and impartiality of the CAS raise ‘serious questions’ that merit ‘strict examination’, especially since the CAS ‘is, to a considerable number of professional athletes, the only appeal body’ that has competence to rule on their cases.
‘The majority seems to recognise the “influence” the ICAS [International Council of Arbitration for Sport] exercises on the selection of adjudicators, but at the same time it does not consider that this “influence” could have an impact on the independence and/or impartiality of Arbitrators on the list from which the Arbitration Panels are composed’, reads the dissenting opinion, annexed at the bottom of the Chamber Judgment. ‘The Majority cannot conclude that this “influence” could have an impact on the Arbitrators who decided the dispute in this case. In our opinion, the majority should not have merely justified such reasoning using a simple reference to a Federal Court judgment, which particularly stated: “since the 1994 reform [of the CAS] , the system of lists of adjudicators today satisfies the constitutional requirements of independence and impartiality applicable to arbitral tribunals”.
‘The majority ruling seems to be based on three premises. Firstly, organisations that appoint adjudicators (the International Federations (IFs), the International Olympic Committee (IOC) and National Olympic Committees (NOCs)) all represent a party to the Arbitration; Indeed, they represent sports bodies and non-athletes. The majority itself notes that these organisations are “likely to oppose the athletes during any litigation before the CAS” (paragraph 154 of the judgment). Thus, the majority concedes that there is a divergence of interests between organisations on the one hand and the other athletes.
‘Secondly, the majority of the ICAS and CAS are representatives of these organisations. As for the ICAS, 12 (that is to say three-fifths) of its members are appointed by the organisations. Four additional members (i.e. one fifth of its members) are elected by the 12 members appointed by the organisations. These sixteen members elect, in turn, the four remaining members. It follows from the foregoing that the organisations have a significant influence on the composition of the ICAS (paragraphs 32, 153 and 154 of the judgment).
‘As regards the CAS at the present time, the ICAS elected three-fifths of its members on the basis of a list, which was directly submitted by organisations (the same organisations that have considerable influence on the composition of ICAS). The remaining two-fifths of the CAS members were either charged with representing the interests of athletes (one fifth) were either independent experts (one fifth).
‘Only a fifth of the members of the CAS could therefore at best be considered independent vis-à-vis these organisations, individuals in this fifth being additionally selected by the ICAS, an organ that is under the influence of the aforementioned organisations. This situation calls into question not only the independence and impartiality of the independent experts appointed by the ICAS, but also those of individuals to represent the interests of the athletes.
‘Because of the way members of the CAS and the ICAS are appointed, we agree with the majority that the two bodies are under the influence of organisations. However, we consider the indirect influence of these organisations to be considerable. First, the ICAS controls the stability of CAS members, that is to say that even if these members are appointed for a term of four years, they may be removed at any time by the ICAS on the basis of a decision “summarily motivated” (paragraph 155 of the judgment).
Keller and Serghides are also critical of the fact that the ECHR majority found that as Mutu had voluntarily appealed to the CAS despite having the opportunity to appeal to a State court, his complaints about the impartiality of the CAS must be dismissed. ‘The majority accept that Mr Mutu has not “unequivocally” given up his rights under Article 6 § 1 of the Convention’, it reads. ‘In our opinion […] it hardly seems conceivable that an individual can waive his rights to an independent and impartial tribunal and this case still be considered a “fair trial” under Article 6 § 1 of the Convention’.
• although the judgment dismissed Mutu’s allegations that two of the Arbitrators that considered his case were not impartial, it could not reach a conclusion on the wider question of whether the composition of the List of Arbitrators that adjudicate CAS cases is impartial – the dissenting opinion argues that this doesn’t equate to the ECHR’s conclusion that the List system ‘met the requirements of independence and impartiality applicable to arbitration courts’.
As mentioned, the ECHR Chamber Judgment also raises serious questions about whether the Athlete Agreement can be considered compatible with the European Convention on Human Rights. This is recognised in the CAS response to the Judgment, which reads: ‘The ECHR recognizes that a non-State dispute resolution mechanism of first and/or second instance, with a possible appeal, even limited, before a State court, as a last instance, is appropriate in this area (of international sport)’.
The origin of the requirement for athletes to submit all disputes to arbitration at the CAS at the exclusion of State courts lies in a Bye-law 6 to Article 44 of the Olympic Charter, which reads as follows: ‘All participants in the Olympic Games in whatever capacity must comply with the entry process as prescribed by the IOC Executive Board, including the signing of the entry form, which includes an obligation to (i) comply with the Olympic Charter and the World Anti-Doping Code and (ii) submit disputes to CAS jurisdiction’. This position is strengthened by Article 13.2 of the World Anti-Doping Code, which requires any signatory to accept the jurisdiction of the CAS.
The reason why arbitration is necessary in sport is referred to by Jonathan Taylor of Bird & Bird in this article. ‘With all sports rules that apply globally, it is critical to obtain a definitive ruling from one authoritative body, rather than a range of different decisions from different courts and tribunals across the globe, which would lead to uneven application of the rule and so deny athletes a level playing field’, he writes. ‘And the Court of Arbitration for Sport has been set up to be that authoritative body’.
This requirement to arbitrate sporting disputes is based on a concept known as the ‘specificity of sport’. According to the European Commission, this ‘refers to the inherent characteristics of sport which set it apart from other economic and social activities, as recognised in the amended Treaty of the European Union in 2009’. The Treaty on the Functioning of the European Union (TFEU) states that the European Union ‘shall contribute to the promotion of European sporting issues, while taking account of the specific nature of sport, its structures based on voluntary activity and educational function’.
It would appear that the Chamber Judgment calls this entire concept into question, by stating that athlete consent to such arbitration is not freely given, and is therefore not compatible with Article 6 § 1 of the Convention. The Judgment outlines that the only option open to Pechstein was ‘either to accept the arbitration clause […] or refuse the clause and be obliged to give up her professional activities completely’.
The ECHR statement also reads: ‘the Court held that the questions concerning the merits of the sanction imposed on the second applicant for doping, discussed before the CAS, required a hearing that was subject to public scrutiny’. This appears to suggest that the merits of certain sanctions imposed on athletes for doping require a hearing that is subject to public scrutiny.
How CAS arbitrators will be able to determine whether certain doping cases require a public hearing and others do not remains to be seen. It could mean that athletes accused of doping based on intelligence-led investigations, now a requirement under Articles 5.1.2 and 5.8 of the World Anti-Doping Code, are more likely to request a public hearing at CAS. It could also mean that in certain cases, athletes are entitled to bring disputes before State courts – especially as it would appear that their Athlete Agreement, binding them to arbitration at the CAS, is invalid.
The CAS has every right to welcome the ECHR Summary Judgment as a moral victory. However, what happens next is sure to be watched closely by sports law experts. It would appear that sporting federations cannot bind athletes to agreements that require them to arbitrate solely at the CAS, as such agreements are now considered an infringement of Article 6 § 1 of the Convention.
As the dissenting opinion hints at, sport is not the only section of civil society that has an international dimension – especially in today’s information age. Why it should be allowed to operate its own arbitration system at the exclusion of other legal systems has yet to be unequivocally confirmed by a judicial body. It would appear that in certain cases, athletes can now knock on the doors of a State court.

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