August.16.2016
On August 12, 2016, the Fourth Circuit Court of Appeals issued a highly anticipated published decision in United States v. Batato, No. 15-1360. The case raised several constitutional questions about the U.S. government's ability to civilly forfeit assets located in foreign jurisdictions. In Batato, the government sought to forfeit approximately $75 million in funds located in Hong Kong and New Zealand -- funds allegedly derived from a $500 million “MegaUpload” copyright infringement scheme. Today, a divided panel of the Fourth Circuit affirmed the district court’s in rem forfeiture judgment against the foreign assets.
The majority and dissent disagreed about whether a U.S. Court had the Article III power to enter an in rem judgment in favor of the United States and against foreign-located assets, a judgment which might not prove binding when presented abroad for enforcement. Citing Courtney Linn's article in the American Journal of Criminal Law, International Asset Forfeiture and the Constitution, the majority concluded that the district court had the requisite power, notwithstanding concerns that the judgment might be ignored by a foreign jurisdiction. It was enough, the majority reasoned, that the judgment was likely to be enforced by authorities in Hong Kong and New Zealand. The dissent also cited Courtney’s article for the proposition that a U.S. forfeiture judgment against foreign assets raised two distinct but related Article III concerns: bindingness, meaning the judgment must be binding and conclusive on the parties, and redressability, meaning the judgment must give relief to the injured party. In the dissent's view, the in rem judgment entered by the district court violated the principle of bindingness because it was not binding on the defendant property in the case – the res – which was under the control of foreign courts and not the U.S. district court.
The majority and dissenting opinions can be found here.