The Evolving Conflict between Employment Discrimination Laws and Immunity under Title VII of the Civil Rights Act and Article VII of the FCN Treaty between the United States and Japan - the Papaila Case

By Isenberg, Beth Ann | Albany Law Review, Summer 1997 | Go to article overview

The Evolving Conflict between Employment Discrimination Laws and Immunity under Title VII of the Civil Rights Act and Article VII of the FCN Treaty between the United States and Japan - the Papaila Case


Isenberg, Beth Ann, Albany Law Review


An escalating problem exists in the area of cross-border investment between the United States and Japan. Such investment brings with it cultural and managerial preferences for persons of Japanese descent, males, and non-blacks when hiring personnel. While Japanese society and culture support and reinforce these preferences, conflict occurs when these preferences are carried over into the United States. This conflict results when these preferences collide with the protections of Title VII of the Civil Rights Act of 1964 against discrimination. As global investment is ever increasing, this problem will only escalate, particularly as there are potential defenses for domestic subsidiaries of foreign corporations in bilateral treaties of Friendship, Commerce and Navigation between the United States and foreign countries. In resolving this conflict, an analysis of culture and its implications is essential as it is a driving force behind the continuation of such hiring practices. Furthermore, to reach a thorough understanding, this analysis must be made in conjunction with an analysis of illustrative case law. As a result of such analyses, it is clear that promotion of foreign investment is contingent upon both domestic and foreign laws and cultures.

I. Introduction

"Recent decades have witnessed a rapid increase in the number of multinational corporations ... [and] their importance as promoters of economic prosperity."(1) Such corporations, which can be either foreign branch organizations or domestic subsidiaries, provide jobs and profits for "both the host nation and the guest nation."(2) The growth of multinational corporations is also important to the growth of a global economy.(3) However, as the world becomes a commercially and technologically smaller entity, the potential for violation of domestic laws by foreign corporations grows exponentially.(4) This is particularly evident when considered in light of the tremendous and unacknowledged cultural differences involved in international transactions.(5) These issues are further complicated by treaties and litigious interpretations of specific provisions generally intended to facilitate international investment.

In an effort to promote this cross-border prosperity, the United States has entered into a number of bilateral treaties known as the Friendship, Commerce and Navigation Treaties [FCN Treaties].(6) These treaties are self-executing and come into force as binding domestic law of their own accord upon ratification without the requirement of additional independent legislation by Congress.(7) One such FCN Treaty exists between the United States and Japan.(8) Specifically, "[t]he purpose of the FCN Treaty is to encourage mutually beneficial trade and investment opportunities between the United States and Japan.... [T]he FCN Treaty assures Japanese corporations conducting business in the United States that they will receive the same treatment as U.S. companies."(9) However, these treaties do not foreclose the application of the laws of the host country to the corporation entirely.(10) Rather, the treaty "merely prohibits the host government from applying more restrictive provisions to foreign companies than it applies to similar domestic interests."(11)

While these treaties have successfully allowed the growth of foreign branches and subsidiaries in the United States, they have also produced a substantial amount of litigation. This litigation generally focuses upon employment discrimination where the hiring practices of the foreign subsidiary run contrary to domestic protections under Title VII of the Civil Rights Act. The Friendship, Commerce and Navigation Treaty with Japan has been a particular source of such litigation involving conflicts between Article VIII(1) of the FCN Treaty, the "of their choice" provision, and Title VII of the Civil Rights Act of 1964.(12)

The conflict between the protections of Article VIII and Title VII is evolving in such a way that employment discrimination litigation has been increasing over the last three years with at least a dozen suits being filed.

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