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Sunday, 26 August, 2012
Tweak to US bill on Iran sanctions opens door to damages One way to win a court case is to get the United States Congress to change the rules of the game midstream NEW YORK
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little-noticed provision tucked into the latest Iran sanctions bill may have done just that for American victims of a 1983 bombing of the U.S. Marine Corps barracks in Beirut. The sanctions bill, signed by President B a r a c k Obama on August 10, set out additional penal-
Wall Street gains on stimulus hopes, but ends week lower NEW YORK AGENCIES
Despite the day’s advance, the S&P 500 broke a six-week string of gains. For the week, the benchmark index fell 0.5 percent. Conflicting perceptions of the Fed’s commitment to provide more stimulus took a toll on the market this week. Investor sentiment received a lift on Friday from U.S. Fed Chairman Ben Bernanke, who said the Fed has room to deliver additional monetary stimulus to boost the U.S. economy. Bernanke made the comment in a letter to a congressional oversight panel. The letter comes a week ahead of the annual economic symposium at Jackson Hole, Wyoming, where Bernanke and ECB President Mario Draghi will speak. The ECB is discussing yield-band targets under a new bond-buying program to let it shield its strategy and avoid speculators trying to cash in, central bank sources told Reuters on Friday. Any decision would not be made before the ECB’s September 6 policy meeting. “If there can be a nice balance of stimulus that keeps interest rates low, as opposed to throwing more debt at the problems in Europe, and some level of austerity, Europe can get out of this tangle. But that balance is really the key,” said Bryant Evans, investment advisor and portfolio manager at Cozad Asset Management, in Champaign, Illinois.
ties against Tehran to curb the country’s nuclear ambitions. The bill also specifically disarms claims the Central Bank of Iran has made in a legal battle in federal court in Manhattan over $1.75 billion in securities frozen in a New York bank account that the central bank says it owns. The plaintiffs in that case are trying to get Tehran, through the Central Bank of Iran, to pay damages for Iran’s suspected role in helping Hezbollah carry out the barracks attack during the civil war in Lebanon. The $1.75 billion was uncovered by the U.S. Treasury Department in 2008 and sits in a New York branch of Citibank, part of Citigroup. Treasury says the money is effectively Iranian funds. The Beirut plaintiffs’ lawsuit, filed in 2010, argues that the funds should go toward paying a $2.65 billion damages award they obtained against Iran in 2007 and have so far been unable to collect. In court papers, the Central Bank of Iran has argued that the funds are off limits from seizure under the doctrine of sovereign immunity, which holds that foreign states or their agents are not subject to another nation’s laws. But Section 502 of the sanctions law, officially known as the Iran Threat Reduction and Human
Rights Act of 2012, takes direct aim at that defense. The section specifically declares that the Central Bank of Iran “is not immune” under the Foreign Sovereign Immunities Act of 1976, the U.S. law that Iran’s central bank claims protects its funds from seizure. It also states that the “financial assets that are identified” in the Manhattan case “shall be subject to execution or attachment ... to satisfy any judgment to the extent of any compensatory damages awarded against Iran.” Over the years, there have been billions of dollars in default judgments against Iran levied by U.S. courts in favor of Americans, but never collected. Language in the latest sanctions bill, which could be subject to legal challenge, appears to have brought the plaintiffs in the Manhattan case closer to seizing actual funds than in any other case. David Lindsey, a New York-based lawyer for the Central Bank of Iran, also known as Bank Markazi, acknowledged that the new sanctions law could affect the Manhattan case. “The purpose of this 10th inning change in the law was to do away with our defenses,” Lindsey said. “No allegations have ever been made that the Central Bank of Iran was involved in the 1983 attack,” he said.
Steven Perles, a lawyer for the Beirut plaintiffs, declined comment. The case was brought on behalf of Deborah Peterson, the personal representative of one of the deceased servicemen, and encompasses hundreds of individual plaintiffs. “If this section stands, it does seem to overcome any defenses Iran might have,” said Julian Ku, a professor at Hofstra University’s School of Law. Ku, who called the statute modification “unusual,” said that “if the payment is made, I think it would be the first such payment, and certainly the largest ever paid out in a U.S. court against Iran.” To be sure, the plaintiffs must file supplemental briefs in light of the new legislation, and the judge must eventually decide whether to order that the funds be turned over - a process that could still take years. A BIG ASSIST FROM CONGRESS: While Congress has previously intervened to help terrorism victims obtain compensation from foreign states, it is rare for a law to directly address an active case, legal experts said. “There is precedent for massive payouts, but this is a little bit unusual because it changes a law about Iranian sovereign immunity in just one case,” said Roger Alford, a professor at the University of Notre Dame Law School. “How did the lawyers get Congress to do that?” The amendment was introduced last winter by Senator Robert Menendez, a New Jersey Democrat. A senior aide to Menendez said the lawmaker’s efforts were spurred on by a visit from a victim’s family from his home state. The aide, who spoke on condition of anonymity, said the purpose of the legislation was to ensure that claims against Iran were in fact actionable. “The amendment sends a message not just to Iran but to the other states that support terrorism that the U.S. will allow the seizure and attachment of assets to satisfy judgm e n t s against
those countries,” the aide said. Experts and lawyers involved in such cases said the defendants in the Manhattan case may seek to challenge the constitutionality of Congress changing the statute, but that this would likely be a losing battle. One way would be to argue that the legislative branch had improperly interfered with judicial matters. ‘INNOCENT THIRD PARTY’: There is another wrinkle in the claims over the $1.75 billion held in a Citibank account. The money was deposited there by Luxembourg-based bank Clearstream, which holds Iranian funds in accounts in Luxembourg. Clearstream said in court papers in July that if it is forced to turn over the $1.75 billion in New York, it may be barred from docking an equivalent sum from a Bank Markazi account in Europe because of European sanctions against Iran. Clearstream has argued that since the Iranian assets were booked in Europe, they could not be considered to be in the United States. The sanctions law, however, said that a sum held in the United States that was “equal in value” to Iranian assets held abroad could be attached. A spokesman for Clearstream’s law firm, White & Case, declined comment. FEEDING FRENZY: Ever since the Menendez amendment was introduced, other groups of plaintiffs who have won judgments against Iran have expressed interest in getting a piece of any possible payout. Lawyers close to the case in New York say the $1.75 billion would currently be shared among about 1,350 people, which includes families of victims of a 1996 truck bomb attack at a U.S. military complex in Khobar near the Saudi Arabian oil city of Dhahran. The attack killed 19 soldiers and injured nearly 400. The aide to Menendez said lawyers for the 1,350 people had brokered a sharing agreement for the funds should they be turned over. Five days after Obama signed the sanctions bill, the Peterson plaintiffs sued London-based bank Standard Chartered seeking compensation over its concealment of Iran-linked transactions, citing the Beirut bombing, which killed 241 U.S. servicemen.
GREEK PM TAKES DEBT CRISIS TALKS TO PARIS PARIS AFP
The Greek prime minister headed to Paris Saturday on the second leg of a trip to try and win more time for his country to meet a deadline to slash billions of euros (dollars) from its budget. Antonis Samaras was due to meet French President Francois Hollande, a day after Germany’s Chancellor Angela Merkel offered a ray of hope to Greece, stressing she wanted the debt-burdened country to stay in the eurozone. Samaras on Friday kicked off a twoday trip to Berlin and Paris with his troubled country’s future in the 17-nation eurozone in the balance as its cash reserves dry up and a new injection of European funds hangs by a thread. The trip began just after Merkel and Hollande urged Greece to redouble its reform efforts to unlock a new funding lifeline. As part of a 130-billion-euro ($161-billion) bailout package from the EU and the International Monetary Fund (IMF), Greece has committed to sweeping reforms and some 11.5 billion euros of cuts in 2013 and 2014. But amid reports that the budgetary hole is actually closer to 14 billion euros and a recession now in its fifth year, Samaras is thought to want a two-year extension to make the cuts. Merkel on Friday pledged German help after her crisis talks with the Greek leader. “I want to say very clearly ... that Greece is part of the eurozone and I want Greece to remain part of the eurozone,” Merkel said at a joint news conference with Samaras.
Greece must be tackled after troika report: Hollande PARIS AGENCIES
French President Francois Hollande said Greek leaders must demonstrate their commitment to push through reforms and that Europe must take decisions on the country as soon as possible following a progress report by Athens’ international lenders. Hollande also said following a meeting with Greek Prime Minister Antonis Samaras on Saturday that Greece must stay in the euro zone, echoing comments by German Chancellor Angela Merkel, who held similar talks with Samaras on Friday. “It (Greece) must demonstrate again the credibility of its programme and the will of its leaders to go through with it to the end, whilst ensuring it’s bearable for the population,” Hollande told reporters. “On the European side, we are waiting for the troika report,” he said, referring to the grouping of the European Commission, European Central Bank and International Monetary Fund. “Once we have this report, once the commitments ... are confirmed, Europe has to do what it has to do. “We’ve been facing this question for 2-1/2 years. There’s no time to lose — there are commitments to reaffirm on both sides, decisions to take, and the sooner the better. That means after the troika report at the European summit in October.” Samaras said he had assured the French president that Greece was determined to overcome the debt crisis and remain in the euro zone, which would show that Europe was capable of solving its problems. “Some are betting that Greece will not make it. I am here to assure the French president that Greece is determined to make it and it will. (It will) do whatever is needed to overcome its crisis and remain in the euro zone and play the role it merits in European integration,” he said. The Greek leader added that economic recovery was crucial to help it meet its targets. Merkel on Friday reassured Samaras that
she wanted Greece to stay in the euro zone, but gave no sign of ceding to his pleas for more time to meet the tough terms of Athens’ international bailout. Merkel also stuck doggedly to her policy of deferring to the troika report, though she did say that she and Hollande were in no doubt they wanted Greece to stay in the single currency. The French and German leaders had coordinated their stance on Greece over dinner in Berlin on Thursday. Trying to emulate the “Merkozy” partnership under Hollande’s predecessor Nicolas Sarkozy, the conservative Merkel and the Socialist French president showed a united front, insisting Greece must meet its targets before any new discussion of terms. The markets have been optimistic that Europe – and particularly the ECB — will finally come up with decisive action in a busy month of euro diplomacy in September to resolve the shared currency bloc’s sovereign debt crisis. Samaras said in a German newspaper interview earlier this week that Greece can stay afloat if it receives its next tranche of aid later than October, but will be broke if the money does not arrive.
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SweepIng Apple wIn,
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but Samsung set for bounce-back Defeat in a bitter patent wrangle with Apple Inc, its smartphone rival and biggest customer, will dent Samsung Electronics Co’s $21 billion cash-pile, but could actually help cement its leadership in the global smartphone market
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U.S. court has ordered Samsung which sold around 50 million phones in April-June, almost twice the number of iPhones - to pay $1.05 billion damages, after ruling that the South Korean firm infringed on some Apple patents. While the verdict was a big win for Apple, the damages are less than half the $2.5 billion compensation it sought - although that could yet be increased by the judge - and are just 1.5 percent of annual revenues from Samsung’s telecoms business. That phone and tablet business is the powerhouse behind Samsung’s growth, earning around 70 percent of total profit. The group had net profit of $4.5 billion in April-June. Samsung could also see its popular Galaxy smartphone banned from sale in the United States. But its skill as a “fast executioner” - quick to match others’ innovations - would likely mean tweaked, non-patent infringing devices would be on the market soon after any ban came into place. “Samsung has already made some design changes to new products since the litigation first started more than a year ago,” said Seo Wonseok, an analyst at Korea Investment & Securities. “With the ruling, they are now more likely to make further changes or they could simply decide to raise product prices to cover patent-related payments.” Also, Apple’s demands for Samsung to pay it a royalty on its phone sales could hit rival phones using Google’s Android operating system more than it hits Samsung. CONTRADICTING VERDICTS: The California jury had only begun deliberating on Wednesday after a complex weeks-long trial. Friday’s
verdict on seven Apple patent claims and five Samsung patent claims suggests the nine-person panel had little difficulty in concluding that Samsung had copied some features of Apple’s iPhone and . It could lead to an outright ban on sales of key Samsung products, with Apple saying it planned to file for a sales injunction within seven days and the judge in the case setting a hearing on September 20. Because the jury found “wilful” infringement, Apple could seek triple damages. The U.S. ruling, read out to a packed federal courtroom in San Jose, just miles from Apple’s headquarters, came less than 24 hours after a Seoul court found that while the iPhone and Galaxy look very similar Samsung hadn’t violated Apple’s design. Samsung issued a defiant response to the U.S. decision, which it called “a loss for the American consumer”, indicating the legal tussle is far from over. “This is not the final word in this case or in battles being waged in courts and tribunals around the world, some of which have already rejected many of Apple’s claims,” Samsung said in a statement. Nomura analyst CW Chung, speaking before the verdict, predicted it could take “many years” for Apple and Samsung to settle the case whatever the result of this round, leaving the two firmly in control of the $200 billion-plus global smartphone market. “The litigation may end up with both parties entering a cross-licensing agreement, which should enable them to build a higher patent wall in the smartphone market,” said Chung. “This would have a positive impact on the share prices of Samsung and Apple, while posing a substantial threat to other competitors.” Based on the damages ruling, Samsung is asked to pay Apple around $10 royalty per phone, a move seen aimed at slowing rival phones that run on Android - which account for more than two-thirds of the global market. If Apple were to pursue similar legal challenges against other Android manufacturers that could squeeze profit margins as smartphone prices decline in a growing market - reinforcing the dominance of Samsung, one of the few with big enough margins to absorb the extra cost. Handset competitors using Android include Taiwan’s HTC Corp, LG Electronics, Google’s Motorola, Sony Corp and some Chinese brands.
Oil beneath the ice Arctic Circle in the spotlight as the race for a quarter of the world’s untapped oil and gas reserves heats up in freezing temperatures CRUDE AWAKENING KUNWAR KHULDUNE SHAHID
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CCORDING to a Global Data report oil and gas capital expenditure (capex) would increase by 13.4% this year as compared to the $916
million of 2011. This precipitous rise in investment in oil and gas exploration is not only owing to increasing demandsupply disparity of energy resources in the world, it is also the logical corollary of the presence of untapped (or at least not fully tapped) zones like the Gulf of Mexico, offshore Brazil and the one creating
WIN SOME, LOSE SOME?: Although Samsung had been viewed as the underdog in the U.S. case, the sweeping nature of Apple’s victory was something of a surprise, with many analysts having expected a mixed ruling. Concerns over potential reputational damage, the short-term cash hit and the impact on billions of dollars of business with Apple had knocked as much as 5 percent off Samsung’s shares this week in the run-up to the verdict. But the stock is still up nearly 50 percent since Apple filed its accusations. Samsung has previously been able to move nimbly to release model upgrades by the time courts have ruled certain products infringed Apple patents and retire patent-infringing models from its line-up. It has skirted around those rulings with a few engineering tweaks and has also made some bold design changes to differentiate its devices from Apple’s. “The impact on Samsung will be quite limited, as affected models are mostly legacy products and its new products did make some design changes to avoid potential litigation,” said D.J. Jung, representative patent attorney for SU Intellectual Property. “Still ... it’s a sweeping loss in the most important market. It’s inevitable that Samsung’s brand will be negatively affected - Samsung could be perceived as a copycat.” Even though Samsung’s flagship Galaxy S III phone was not involved in the trial, the jury validated Apple’s patents on features and design elements that Apple could then try to wield against that product. It is possible Apple would not have to seek an entirely new trial against the S III, but rather include it in a “contempt proceeding” which moves much faster, said Nick Rodelli, a lawyer and adviser to institutional investors for CFRA Research in Maryland. Seoul-based Jung predicted further appeals and fresh suits against newer products as the rivals continue to clash in court. OUTSIDE THE BOX: In a research note before the verdict, UBS analysts said an Apple win could, in the long-run, hurt the U.S. firm “as the real threat is not a competitor beating Apple at its own game, but instead changing the game. “The likelihood of Apple being leapfrogged or a rival creating a new category (of device) is greater if they have to think out of the box. If they just copy Apple, like Coke, Apple can claim to be ‘the real thing’.” Samsung also looks to be staying ahead of the curve - by reviving the stylus function, derided by Apple’s Steve Jobs, in its latest tablets and by creating the hybrid phone-cum-tablet, or phablet, category, with its 5.3-inch Note. Apple, which has largely stood by its original form and design, is taking note, with speculation that the next iPhone will have a bigger screen and new iPads may be smaller.
the most hullabaloo: Arctic Circle, which has 22 percent of the global untapped oil and gas resources underneath the ice. As the black gold-rush heats up in the Arctic, it’s obviously Russia that has the upper hand if any military conflict were to surface in the region. For, not only is it by far the strongest militaristic presence in the area, it is also the only nation scrambling for the Arctic that is a nuclear power. Even so, NATO has been making noises about a possible charge towards the North Pole in case the aforementioned scramble goes pear-shaped and brims over. The deadline for countries to file claims with the United Nations (UN) for “the right to exploit the seabed beyond their coastlines” has passed. This should logically mean that this race that is under discussion to carve out the region, or slice out the cake, so to speak has already begun. However, what needs to be kept in mind – something that Pavel Baev, a Russian expert on the Arctic Circle recently said on a TV show “Spotlight” – is that the center part of the Arctic, which is completely covered with ice isn’t exactly a promising prospect as far as the resources being sighted are concerned. It is the area near the coastline that is actually promising, which is why the whole ‘race for oil’ might just be a misnomer, for what in all honesty could be a peaceful division of the area in synchrony with the countries and their stake-holding sectors. There is the “Russian shelf”, which legitimately belongs to Russia and hence
US, European shares rise on ECB report, euro trims losses US and European stocks rose and the euro bounced off lows against the dollar after sources said the European Central Bank is considering setting targets in the bond market in a bid to contain crippling borrowing costs in troubled euro zone economies. NEW YORK AGENCIES
Stocks had earlier come under pressure on worries about Greece and uncertainty over how Europe will address Spain’s debt crisis. Speculation has grown in recent weeks that the ECB will soon start buying Spanish and Italian bonds. The ECB is considering targeting a yield band, an option gaining favor among central bankers, central bank sources told Reuters. But the decision would not be made before the ECB’s September 6 policy meeting and it wasn’t clear how wide the band would be or how the ECB would decide when to intervene in the bond markets. “Any time we get comments out of Europe that create a perception that they are working diligently to solve the debt issue, the euro starts to rally, (the) dollar goes lower and in return, our equity markets move higher,” said Randy Frederick, managing director of active trading at Charles Schwab. “I’m not sure if this will have lasting impact on the market.” Further boosting investor sentiment, U.S. Federal Reserve Chairman Ben Bernanke said the Fed has room to deliver additional monetary stimulus to boost the U.S. economy. Bernanke made the comment in a letter to a congressional oversight panel. The Dow Jones industrial average .DJI ended up 100.51 points, or 0.77 percent, at 13,157.97. The Standard & Poor’s 500 Index .SPX closed up 9.04 points, or 0.64 percent, at 1,411.12. The Nasdaq Composite Index .IXIC finished up 16.39 points, or 0.54 percent, at 3,069.79. The FTSEurofirst-300 index of pan-European shares .FTSE rose 0.11 percent to end at 1,090.38 points. The MSCI global stock index .MIWD00000PUS slipped 0.1 percent to 324.34. Mixed U.S. economic data added to uncertainty over whether the Fed would act soon to bolster the stalled economic recovery. Hopes for action had grown after minutes from the Fed’s latest meeting showed policymakers might deliver another round of stimulus “fairly soon” unless the economy improves considerably. New orders for longlasting U.S. manufactured goods surged in July, but a gauge of planned business spending declined for a second straight month, pointing to slowing growth in manufacturing. GREECE WORRIES RESURFACE: Sentiment remained fragile and worries about Greece supported safehaven German government bonds, which rallied to their biggest weekly gains since early July. Germany and France want Greece to stay in the euro zone, but Athens must meet its commitments, German Chancellor Angela Merkel said after meeting Greek Prime Minister Antonis Samaras. The euro fell 0.4 percent to $1.2511, off a session low of $1.2481 on Reuters data. It briefly erased losses to trade little changed after the ECB report. The euro zone’s common currency fell to a session low against the dollar after Market News International reported that senior euro-zone officials said the German Finance Ministry is seriously considering a plan in which Greece would be obliged to ask for a temporary exit from the euro zone until it sorts out its public finances. Against the yen, the dollar rose 0.3 percent to 78.69 yen.
no one else can stake a claim to that region, like no one else can stake a claim to the opulent oil zones in offshore Alaska but the US – even though Washington has a pretty weak legal position apropos Alaska since it hasn’t as yet ratified the UN convention and hence any nation can pick up their tools and start digging there and no one would be breaching any clause of the International Law. There are talks about a joint submission by Canada, Russia and Denmark to the UN Commission, and hence peaceful cooperation between the five Arctic states is definitely not off the table. If anything
it seems like the more likely course of action, considering the imbalance of militaristic wherewithal in the region, the varying stakeholders of the respective nations, lack of ambiguity with regards to the demarcation of oil zones and most importantly the fact that mutually cooperative exploration would not only be beneficial for the entire Arctic zone, but also for the world as a whole. Maybe this race for Arctic riches is one where the participants are collaborating and driving each other on instead of opting for a callous competition for regional and economic supremacy.
Sunday, 26 August, 2012