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With energy prices soaring and the Organization of Petroleum Exporting Countries (OPEC) planning to cut oil production, a bipartisan coalition of senators this year will pressure President George W. Bush to sue OPEC for price-fixing under U.S. antitrust laws. Formidable legal precedents and foreign policy ramifications stand in the way of such a suit. Most antitrust and foreign policy experts interviewed say they cannot imagine a scenario in which such legal action would succeed, or that any president would risk his foreign policy goals for such a lawsuit. But Sen. Arlen Specter, R-Pa., the leader of the effort, says it is time to set new precedents for the emerging global economy. “I believe the antitrust laws are a very effective weapon that can be used here,” Specter says in an interview. “OPEC is a horrible cartel that is damaging us enormously. “They trade in the United States,” he says, so selling oil is not an act of a sovereign nation: “It’s a commercial transaction.” While an antitrust action against foreign nations has rarely been considered in the past, Specter and his allies argue that recent trade agreements and the creation of international criminal courts have laid the groundwork for a lawsuit against OPEC. “It’s a different world today,” Specter says. “You have the War Crimes Tribunal and international criminal courts. There’s a lot more emphasis on international law and order.” Specter and five other senators on April 11, 2000 wrote to President Bill Clinton urging him to file a lawsuit against OPEC in federal court under U.S. antitrust laws. They also asked Clinton to file a lawsuit in the International Court of Justice at the Hague based upon an ICJ statute referring to the “general principle of law recognized by civilized nations.” The senators argued that most countries have laws against price-fixing cartels; thus antitrust enforcement is already an international standard. Also signing the letter were Senators Mike DeWine, R-Ohio, who chairs the Senate Judiciary Antitrust Subcommittee; Herb Kohl, D-Wisc., the top Democrat on the subcommittee; Charles Schumer, D-N.Y.; Strom Thurmond, R-S.C.; and Joe Biden, D-Del. The Clinton administration took no action on the senators’ request — so Specter says he and his allies this year will push President Bush to address the issue. Spokesmen for the Bush State Department, Energy Department, Justice Department and National Security Council all said they could not comment on Specter’s plan. But Specter has already started his public campaigning. At the Senate Judiciary Committee confirmation hearing on Jan. 17 for John Ashcroft to become attorney general, Specter told Ashcroft he wants him to “take a look” at antitrust action against OPEC. Because of the late hour of the hearings, he did not ask Ashcroft to respond with his opinion. But Specter later said in an interview, “I plan to press President Bush on this. … In fact, I’d like to argue the case myself.” CHALLENGING PRECEDENTS While the norms for international business law may be changing, winning an antitrust case against an international organization like OPEC under current legal precedents is nearly impossible, according to antitrust experts interviewed for this article. Experts say the first barrier is the Foreign Sovereign Immunities Act, which gives immunity to foreign governments from lawsuits targeting their actions as a sovereign nation. This rule of international law developed as a custom among nations that believe it is better to settle disputes with political diplomacy than with dueling lawsuits of questionable jurisdiction. “Foreign governments are not easily sued in the United States,” says Harvey Applebaum, an antitrust and international trade lawyer at Washington, D.C.’s Covington & Burling. But an exception to that rule also has developed by custom: commercial activities by a state. Therefore, the key question is whether selling oil is a sovereign act by OPEC nations or a commercial transaction. If OPEC countries, which often mine natural resources owned by the state, are acting as sovereign nations, the United States cannot sue over such actions. But if selling oil is deemed a purely commercial act, then it could be subject to a suit in U.S. court. “Is this the action of a private cartel, or is it a quasi-governmental action? If [the latter is] the case, it is immune from antitrust action,” says Joe Winterscheid, an antitrust lawyer in the Washington office of Jones, Day, Reavis & Pogue. Specter acknowledged at the Ashcroft hearing that the Foreign Sovereign Immunities Act of 1976 “prohibits law enforcement from going after acts of state.” But Specter then argued there is “an exception if there is a commercial practice, and there is an acceptable international standard available, which there is now, with an emerging international consensus that price-fixing is unlawful.” But even if the plaintiffs against OPEC were able to show that selling oil is a purely commercial act, thus subject to U.S. antitrust laws, the question then becomes whether a U.S. court would issue any sort of remedy. The courts follow an “act of state” doctrine — which is neither in statute nor in the Constitution, but has become a generally accepted practice — by which U.S. courts do not issue decisions against foreign governments because it might interfere with the conduct of U.S. foreign policy. “It’s a matter of comity,” Winterscheid says. “We don’t want governments suing other governments over commercial issues.” The act-of-state doctrine was the basis of an appellate court decision the last time a party tried to sue OPEC. In International Association of Machinists and Aerospace Workers v. OPEC, 649 F.2d 1354 (9th Cir. 1981), the 9th U.S. Circuit Court of Appeals ruled against the plaintiffs. The court wrote: “While the case is formulated as an antitrust action, the granting of any relief would in effect amount to an order from a domestic court instructing a foreign sovereign to alter its chosen means of allocating and profiting from its own valuable natural resources… . The courts should not enter at the will of litigants into a delicate area of foreign policy which the executive and the legislative branches have chosen to approach with restraint.” That is why it is important, if Specter is to succeed, that the Bush administration be the driving force of such a lawsuit. Placing legal theory and arguments aside, the practical hurdles to launching such a lawsuit are mountainous. THE EVIDENCE PROBLEM Applebaum says that gathering evidence in a case involving foreign governments is very difficult, if not impossible. Winterscheid says that the United States has resisted antitrust action against foreign governments in the past because it might spark similar lawsuits against the United States, or that an international antitrust standard might emerge that the United States opposes. “We might end up confronting a standard that’s close to the lowest common denominator,” Winterscheid says. And the foreign policy ramifications are huge. “There’s a long list of things where we ask the OPEC countries for their cooperation, including the Arab-Israeli peace process and sanctions on Iraq and Iran,” says Lee Hamilton, former chairman of the House Foreign Affairs Committee who now heads the Woodrow Wilson Center in Washington. “There is no substitute for building close relationships with those countries. It is not easy. But if you go the route of litigation, you would jeopardize much of that. “Oil is more a foreign policy issue than a legal issue,” Hamilton says. Even if a lawsuit is successful in a U.S. court, what would OPEC do? “OPEC would likely ignore it,” says Robert Ebel, director of the Energy Program at the Center for Strategic and International Studies in Washington. “They would never be drawn into a give-and-take on the issue.” Ebel says the senators are advocating the lawsuit against OPEC “in an effort to show their concern about [oil prices] over which we seemingly have no control.” But Specter still plans to press ahead. In addition to asking President Bush to file the antitrust lawsuit, Specter will again introduce his bipartisan bill from last year that would change antitrust laws that could apply to the OPEC situation. The bill would exempt OPEC and other nations from the provisions of the Immunities Act if their governments engage in price-fixing or other anti-competitive practices. The bill also would clarify that the act-of-state doctrine will not prevent a court from ruling on antitrust charges brought against foreign governments, and that foreign governments are “persons” subject to suit under the Sherman Antitrust Act. Specter hopes that changing those parts of the law will help make the filing of future antitrust cases easier. Despite the foreign policy ramifications, Specter is willing to take the chance to sue OPEC for antitrust violations, writing in his letter last year to Clinton that “this clearly would be a cutting-edge lawsuit, making new law at the international level.” Specter says, “I believe you undertake litigation where you have a solid purpose and a solid case. I don’t believe in bringing only litigation that is guaranteed to win.”

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