Thursday 5 December 2013

Security for costs and US litigants in Serbia

Back in November 2010, famous US shoe company Skechers sued Serbian company Safran, which imported and sold sneakers similar to Skechers’ Shape-Ups, for trade mark and copyright infringement and for unfair competition. Safran asked for Skechers to deposit security for litigation costs since, with Skechers not having a presence in Serbia, there was a risk that the company would not reimburse Safran’s litigation costs if it lost (the United States is not a member of the 1954 Hague Convention on Civil Procedure, which provides for free access to the courts). Skechers refused to deposit security for litigation costs and invoked an 1881 Treaty on Commerce between Serbia and the United States which provided, among other things, that citizens of Serbia and the US are to have full reciprocity and access to the courts. Safran objected that the treaty was no longer applicable, because there was no factual reciprocity.

The Court of First Instance refused Safran’s request. Safran appealed; the Appellate Court remitted the action to the Court of First Instance, asking it to seek the opinion of the Ministry of Justice. The Ministry responded that the 1881 treaty is was in force, but that there was no factual reciprocity between the US and Serbia, because Serbian citizens in the US had to deposit security for litigation costs when suing in a state in which they did not have residence.

After the Court of First Instance ordered Skechers to deposit security, Skechers appealed, arguing that Serbia and the US had to respect the 1881 treaty until it was revoked by a special procedure under the treaty itself. Skechers added that the US did comply with the treaty, citing a US Supreme Court decision in which the court explicitly held that the treaty must be respected. In light of this, the Appellate Court refused Safran's request that Skechers deposit security for litigation costs in a decision which is final.

Source: "US companies do not have to deposit security for litigation costs", article for World Trademark Review by Gordana Pavlovic and Maruska Bracic (Cabinet Pavlovic), Belgrade and Brussels, 25 November 2013

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