New Move In Us Battle Over English Libel Decision

By MediaLawyer.Press.Net | by Michael Dodd
Tuesday, June 12th, 2007 @ 7:51PM

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The battle over whether a Saudi Arabian businessman who sued an American academic in London over a book which was not published in Britain can enforce the judgment he won has been sent from a United States federal court to the New York State Court of Appeals. The move is the latest in the battle between Saudi businessman Sheikh Khalid Bin Mahfouz and his two sons and New York-based Dr Rachel Ehrenfeld, director of the American Centre for Democracy, over her book, Funding Evil – How Terrorism is Financed – and How to Stop It.

Sheikh Bin Mahfouz and his sons sued Dr Ehrenfeld in London, winning summary judgment – Dr Ehrenfeld played no part in the litigation – because some 23 copies of her book, which was published only in the United States, were sold to buyers in Britain, and because one chapter appeared on the Internet and could be accessed in the UK. The Sheikh and his sons – they have always denied having any links with terrorism or terrorist funding, or with Osama Bin Laden’s Al Qaida terror organisation – were each awarded $10,000 in damages, and costs. Mr Justice Eady also made a declaration that certain statements in Dr Ehrenfeld’s book were false, issued an injunction prohibiting their repetition, and ordered Dr Ehrenfeld and her publisher to publish a suitable apology.

Dr Ehrenfeld then applied to the U S District Court in New York for a declaration that Mr Justice Eady’s judgment would be unenforceable in the United States, on the grounds that it breached the U S Constitution. The court refused to make the declaration, holding that it had no jurisdiction to do so.

Dr Ehrenfeld – who also seeks a declaration that Sheikh Bin Mahfouz’s defamation case against her could not succeed in New York or in the United States – appealed to the U S Court of Appeals for the Second Circuit. That court, in a decision handed down on June 8, affirmed part of the District Court’s decision. But it certified a question to the New York Court of Appeals – whether New York State law would give the Federal Court jurisdiction over Sheikh Bin Mahfouz. New York has a so-called “long-arm statute” which entitles it to claim jurisdiction over people outside the State in certain circumstances.

The Court of Appeals for the Second Circuit asked the New York court whether the State’s statute applied to someone who “sued a New York resident in a non-U S jurisdiction” and “whose contacts with New York stemmed from the foreign lawsuit and whose success in the foreign suit resulted in acts that must be performed by the subject of the suit in New York?” The New York statute confers jurisdiction over someone who does not reside in the State who “in person or through an agent . . . transacts any business within the state” if the cause of action arises out of the defendant’s New York transactions.

Dr Ehrenfeld argues that Sheikh Bin Mahfouz’s contact with New York included serving numerous papers and documents on her during the libel proceedings, and that the libel case was a means of chilling her writing and research in New York. Circuit Judge Wilfred Feinberg, giving the decision of the three-judge Court of Appeals for the Second Circuit, wrote that it believed that the case involved public policy issues which justified asking the New York courts for guidance.

The case involved issues which had not yet been addressed and about which New York State court decisions did not give a clear answer. He went on: “Furthermore, the question certified is significant, implicates important public policy for the State of New York, and is likely to be repeated. “The question is important to authors, publishers, and those, like Mahfouz, who are the subject of books and articles. Thus the question is ‘significant’. “The issue may implicate the First Amendment rights of many New Yorkers, and thus concerns important public policy of the State. Because the case may lead to personal jurisdiction over many defendants who successfully pursue a suit against a New York citizen, the question before us is also likely to be repeated.” The New York Law Journal quoted Dr Ehrenfeld’s attorney, Daniel Kornstein of Kornstein Veisz Wexler and Pollard as saying that the increase in the number of libel actions against American authors and publishers which were being brought in foreign courts by non-US citizens represented an alarming trend. “It is a vitally important issue for the publishing industry and for authors because of the concerns it raises about the chilling effect on free speech,” he said. Dr Ehrenfeld said of the latest decision: “The Second Circuit Court of Appeals breathed vitality into my case against Saudi billionaire Khalid bin Mahfouz, handing my extraordinary lawyer, Daniel Kornstein (and associates) an important victory and establishing a legal precedent that henceforward affects every American writer and publisher. “The Second Circuit Court of Appeals overruled the U S District Court for the Southern District of New York in requesting that New York’s highest state court should determine whether Mahfouz should personally be subject to New York jurisdiction.

“The Second Circuit’s decision went further, ruling that my claim is ‘ripe’ – and therefore can be brought before a U S court. Thus, every American writer and publisher, finding themselves in a similar situation, can now seek a U S court decision. “When and if the New York Court of Appeals decides that there is jurisdiction over Sheikh Bin Mahfouz, the case would proceed on the merits. This would allow me to take pre-trial ‘discovery’ of Mahfouz’s financial activities. “It is one step forward. If the New York court holds there is jurisdiction, the circuit court would then do two things, I think. First, the court would determine if the New York ruling is constitutional. Second, I think the circuit court would have to determine whether enforcing the judgment violated the U S constitution, or remand the case back to the district court to make this determination. “There is such clear precedent on this point – that Sheikh Bin Mahfouz’s foreign judgment is not enforceable – that I think I would have to win.”

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