URANIUM ANTITRUST LITIGATION

                                                                                         

CRA Limited (now known as Rio Tinto) Corporate Counsel, Rohan George Skea, was one of the key lawyers on CRA’s Australian legal defense team, comprising Sir Roderick Carnegie, Executive Chairman of CRA, other CRA in-house counsel, Australian lawyers, Arthur Robinson & Co, and CRA’s US Counsel, Robert Osgood of Sullivan & Cromwell in New York, involved in the application of the Australian Government’s international antitrust “blocking” and “claw-back” legislation. The blocking and claw-back statutes were enacted by Prime Minister Malcolm Fraser’s Australian Government in response to the USD7.5 billion antitrust treble damages claim launched in 1976 by Westinghouse Electric Corporation (“Westinghouse”) against 29 foreign and US domestic uranium producers. Westinghouse alleged those producers were co-conspirators in an international cartel controlling the supply and price of uranium.
The CRA defense team, including Rohan George Skea, worked together with the Australian Government, the Australian Attorney-General’s Department and other agencies in relation to the application and implementation of policy and legislative responses of the Australian Government in relation to the attempts by US Courts, with the support of the United States Government, to extraterritorially apply United States antitrust laws to the alleged activities of CRA, Rio Tinto (UK) and other Australian and foreign corporations.
The Westinghouse Uranium Antitrust case was for nearly 10 years the most significant foreign relations problem between the United States Government and the Governments of the United Kingdom, Australia, Canada and South Africa.
Westinghouse alleged that the Uranium Producers’ Cartel comprised the major suppliers of uranium. The companies allegedly involved represented some of the world’s largest resource companies, together with the world’s major uranium suppliers. The alleged members, being defendants in the case, were, Rio Algom Limited, Rio Algom Corporation, Rio Tinto Zinc Corporation Limited, RTZ Services Limited, Rio Tinto Zinc Corporation, Conzinc Rio Tinto of Australia Limited (“CRA”), Mary Kathleen Uranium Limited, Pancontinental Mining Limited, Queensland Mines Limited, Nuclear Fuels Corporation, Anglo-American Corporation of South Africa Limited, Engelhard Minerals and Chemicals Corporation, Denison Mines Limited, Denison Mines (U.S.) Incorporated, Noranda Mines Limited, Gulf Oil Corporation, Gulf Minerals Canada Limited, Kerr-McGee Corporation, the Anaconda Company, Getty Oil Company, Utah International Inc., Phelps Dodge Corporation, Western Nuclear, Inc., Homestake Mining Company, Federal Resources Corporation, Pioneer Nuclear, Inc., Atlas Corporation, Reserve Oil and Minerals Corporation, United Nuclear Corporation, and Atlas Alloys, Inc. Because of the strategic and defense interests of the nations involved in the uranium supply industry , the commercial dispute between Westinghouse and the alleged members of the Uranium Producers’ Cartel inevitably and quickly became elevated into a serious clash between the governments of the companies involved .The case also escalated into a bitter and hard fought legal fight between the United States and the claimed extraterritorial application of its domestic antitrust laws, and the sovereign rights of each of the other governments involved to make and enforce laws within their respective territorial jurisdictions.

The international legal controversy at the core of the jurisdictional dispute was not new, as the clash between the claimed extraterritorial application of US antitrust laws and the international legal principles of comity has had a long jurisprudential history. The Westinghouse fight, while conducted within the polite “language” of international diplomacy, represented a serious rupture in the otherwise long-standing cooperation on international legal issues among allies and friendly governments, and caused inquiry and policy soul searching on all sides of the debate long after the Westinghouse case was settled in 1982. The settlement decision was facilitated by the election of Ronald Reagan as President in late 1980. President Reagan needed the producers on board to gain privileged access into the Japanese market. It has been asserted that access to the Japanese market was also a long-standing goal of the Australian Government.
Following the Westinghouse settlement, CRA developed close links with the Reagan Administration in relation to its proposed major foreign investment initiatives in respect to special steel production in the United States. These initiatives were quickly launched by CRA following the settlement with Westinghouse. Mr Skea was a one of the key executives in CRA’s US business development team and was deeply involved in the confidential discussions in Washington and California with the Reagan Administration’s White House executive team. Those discussions involved the negotiation of Federal and California State tax relief and the government support package to support CRA’s proposed massive investment in leading edge US steel technologies and manufacture at the mothballed Kaiser Steel plant at Fontana in California.

In addition, CRA’s negotiating team, led by Ira Davidson (former executive vice-president of Kaiser Aluminum and Chemical Corporation) and Rohan Skea, developed extensive US political connections and support to secure CRA’s entry into main stream steel manufacture in the United States by regular contact and meetings in Washington with key Senators and Congressman on Senate and Congressional Committees dealing with foreign investment, taxation, industry and labor relations, and with the California Governor’s office (under Governor Jerry Brown and later under Governor George Deukmejian) and State legislature representatives.
Davidson and Skea, received powerful support in building US political and business links from CRA’s US lawyers, O’Melveny & Myers, who were engaged in relation to CRA’s US steel technology and manufacturing investment. Rohan Skea worked closely with the O’Melveny & Myers legal team led by Chairman, Warren Christopher and senior partner, Charles Bakaly Jr. In particular, Warren Christopher’s Washington connections were impeccable. Christopher had been the Deputy Secretary of State under President Jimmy Carter and was widely acknowledged as the person responsible for successfully negotiating the release of 52 U.S. diplomats who were held hostage in Iran for 444 days from November 4, 1979 to January 20, 1981, after a group of Islamist student radicals loyal to Ayatollah Ruhollah Khomeini took over the American embassy in Tehran. It has been suggested by some former hostages that one of those student radicals was Mahmud Ahmadinejad, now the President of the Islamic Republic of Iran, and who is currently locked in a serious international controversy with President George W Bush and
International Atomic Energy Agency director Mohamed ElBaradei over Iran’s uranium enrichment program and the threat of an Iranian nuclear weapon . President Ahmadinejad has denied his involvement in the taking of the hostages. The student radicals, named Muslim Student Followers of the Imam's Line, demanded the return and trial of Mohammad Reza Pahlavi, the Shah of Iran, who had been permitted to enter the US for medical treatment following intervention on the Shah’s behalf by influential figures including former United States Secretary of State Henry Kissinger and Council on Foreign Relations chairman David Rockefeller, The hostages’ ordeal transfixed the world and reached a climax when after initial failed attempts to negotiate a release, President Carter ordered the United States military to attempt a rescue operation, Operation Eagle Claw, on April 24, 1980, which resulted in an aborted mission, the crash of two aircraft and the deaths of eight American military men. Following Christopher’s lengthy and skilled negotiations the crisis ended with the signing of the Algiers Accords in Algeria on January 19, 1981. The hostages were formally released into United States custody the following day, just minutes after the new American president Ronald Reagan was sworn in. Christopher also spearheaded the Sino-American relations with the People's Republic of China, helped to win ratification of the Panama Canal treaties, and headed the first interagency group on human rights. President Jimmy Carter awarded him the Presidential Medal of Freedom, the nation's highest civilian award, on January 16, 1981. In addition, Christopher went on to be appointed by President Bill Clinton as the 63rd Secretary of State on January 20, 1993, and served until 1997. Christopher negotiated an end to the bloody war in Bosnia and Herzegovina and Serbia, through the Dayton Peace Agreement. He also negotiated a peaceful resolution to the military takeover in Haiti, and restored the democratically elected president Jean-Bertrand Aristide.
In the space of several years, CRA, assisted by the efforts of its US business development team, led by Davidson and Skea, and Warren Christopher’s team from O’Melveny & Myers, turned CRA’s reputation around from an alleged antitrust violator, as claimed by Westinghouse, and being unable to transact business in the United States because of proceedings in the Westinghouse case, to a significant and welcome foreign investor with powerful links in the political elite in the US ranging from the Reagan White House Administration, to both sides of politics in the US Senate and Congress, through to the California Governor’s mansion. As a direct result of these high level and confidential activities, CRA negotiated access to generous Federal and State tax and other incentives supporting its proposed US investments. At the height of the Westinghouse battle, when CRA executives could not travel to the US for fear of arrest and imprisonment, such a privileged and influential position in the US was barely imaginable.
While the Westinghouse case was settled, the issues revolving around international comity and the extraterritorial application of United States antitrust and trade laws, and the enforcement of antitrust judgments in foreign countries, are far from settled and the potential for serious controversy remains between the United States and the governments of foreign countries over these issues. In the period since 1982, the United States Government, and governments of various other countries, have been steadily introducing legislation which has the potential to underscore a major fall out between Western governments over the extraterritorial application of United States antitrust and trade laws.

The Westinghouse case procedures triggered the first legislative responses in Australia to the extraterritorial application of United States antitrust laws in the form of blocking legislation. The Westinghouse Uranium Antitrust case was itself a response by Westinghouse to various suits launched against it by US energy utilities for breach by Westinghouse of uranium supply contracts entered into by Westinghouse as part of its sales of US nuclear power plants. Westinghouse’s defense to those suits was the commercial impossibility or impracticability of its obligations under the uranium supply agreements due to the alleged price and supply fixing arrangements among the members of the Uranium Producers’ Cartel . Westinghouse alleged the conspiratorial activities of the members of the Uranium Producers’ Cartel had restricted the supply of world uranium, and had so increased the price of that uranium, that Westinghouse was unable to supply the uranium without suffering a massive loss. The cost to American consumers if those increases were passed on was estimated in the billions of dollars. The Uranium Antitrust Case centered on the alleged actions of the members of the cartel in limiting and allocating the production and sale of uranium outside the US.
The Westinghouse case proceeded under the Sherman Act which applies to anti-competitive activities in trade or commerce within the United States and with foreign nations. Unlike other countries competition laws, the extraterritorial application of US antitrust laws is potentially very wide. The US approach is that where there are direct, substantial and foreseeable “effects” upon the US market, and that it is “reasonable” to exercise jurisdiction, the party concerned is subject to US antitrust laws. For that purpose, it does not matter where that party is incorporated or where the offending conduct took place.
An important feature of US antitrust laws is that enforcement can be initiated by Government agencies and by private parties .Public enforcement can be by criminal or civil proceedings by either the US Attorney-General , or the Federal Trade Commission . However, in private proceedings the plaintiff is entitled to seek treble damages for the damages or losses incurred as a consequence of the alleged antitrust behavior of defendants. In addition, plaintiffs are entitled to injunctive relief for any threatened damage likely to be caused by a defendant’s anti-competitive conduct. The combination of the threat of treble damages, and extensive injunctive relief available to US plaintiffs under US laws has proven a powerful weapon against domestic and foreign anti-competitive conduct.
In the face of massive losses in its breach of contract disputes with the US nuclear energy utilities, Westinghouse commenced a treble damages suit against the members of the Uranium Producers’ Cartel and applied for various forms of injunctive relief. In addition, the US Justice Department initiated an official investigation into the activities of the alleged cartel, and empanelled a Grand Jury to determine whether criminal sanctions applied. Both Westinghouse and the Justice Department made document discovery and witness deposition requests against all the defendants in the cartel. These interlocutory requests, if enforced, had the potential to apply to millions of documents in the possession of the defendant corporations and would have involved corporations and individual witnesses becoming subject to in personam jurisdiction in the US. As part of the process of enforcing its right to discovery of documents and taking of evidence, Westinghouse issued letters rogatory to the Supreme Court of New South Wales seeking the Court to enforce its discovery and deposition requests. Similar letters rogatory were addressed to the Supreme Court of Ontario and the High Court of Justice in England.

A number of defendants, including the Australian defendants, refused to appear in the US courts to defend the proceedings. The defaulting defendants comprised four Australian companies: Conzinc Rio Tinto of Australia Ltd (“CRA”), Mary Kathleen Uranium Ltd, Pancontinental Mining Ltd and Queensland Mines Ltd; two British companies: Rio Tinto Corp. Ltd. (“RTZ”) and RTZ Services Ltd.; two South

About the author:
Rohan Skea has been involved in some interesting cases. Rohan Skea, along with other Australian lawyers, worked closely with NI’s US counsel, Rooks, Pitts, Fullagar & Poust in Chicago in coordinating the massive logistics involved in mounting NI’s global legal defense strategy.

Article Source: http://www.Free-Articles-Zone.com