Marc Rich & Cо., A.G. appeals from an order of the United States District Court for the Southern District of New York (Sand, J.), which held it in civil contempt for failing to comply with the court’s order directing it to produce certain records pursuant to a grand jury subpoena duces tecum and which imposed a coercive fine to take effect upon the disposition of this expеdited appeal. We affirm.
Appellant is a Swiss commodities trading corporation dealing in the international market in bulk raw materials such as petroleum, metals, and minerals. Its principal office is in Zug, Switzerland. Although it has forty branch offices in thirty countries around the world, it has no office in the United States. However, Marc Rich & Co. International Limited (Internationаl), a wholly-owned subsidiary of appellant, does business in the State of New York. The same five persons serve as the directors of the two companies. Three board members are Swiss residents, and two, Marc Rich and Pincus Green, reside in the United States and are employed by International as traders.
In March, 1982, a federal grand jury in the Southern District of New York was invеstigating an alleged tax evasion scheme, involving appellant, International, and the principals of each company, whereby, during 1980, International diverted a minimum of $20 million of its taxable income to appellant. On March 9, 1982, a grand jury subpoena duces tecum was served on International for the production of business records relating to crude oil transactions during 1980 and 1981. International complied with the subpoena. On April 15,1982, a grand jury subpoena duces tecum, addressed to appellant and served on International, called for production by appellant of similar records.
On June 9, 1982, appellant moved to quash the subpoena on the grounds that appellant was not subject to the in person-am jurisdiction of the court and that Swiss law prohibited the production of the materials demanded. In an opinion dated August 25, 1982, Judge Sand denied the motion to quash, finding that personal jurisdiction existed and that the operation of Swiss law was no bar to the production of the documents. When appellant persisted in its refusal, Judge Sand adjudged it to be in civil contempt. Aрpellant’s arguments on appeal center principally on the issue of jurisdiction.
DISCUSSION
Because the grand jury is a centuries-old, common law institution, adopted without definition by the framers of our Constitution, its historical purposes and functions have been explored at length by judges and legal scholars.
See
Wright,
Federal Practice and Procedure: Criminal 2d
§ 101 (1982). All are agreed that a grand jury has both the right and the duty to inquire intо the existence of possible criminal conduct,
Branzburg v. Hayes,
Congress has made clear its intent that this nation’s income tax laws are applicable to foreign corporatiоns.
See, e.g.,
26 U.S.C. §§ 881-884; Bittker and Eustice,
Federal Income Taxation of Corporations and Shareholders
1117.01-17.43 (3d ed. 1971). Under well-settled rules of international law, the authority of Congress to impose punishment for violation of these laws is equally clear. Of the five generally recognized principles of international criminal jurisdiction — territorial, nationality, protective, universality, and passive person
ality
— Introductory
Comment to Research on International Law, Part II, Draft Conventiоn on Jurisdiction with Respect to Crime,
29 Am.J.Int’l Law 435, 445 (Supp. 1935), the territorial and protective principles justify the enforcement of penal revenue statutes such as 26 U.S.C. §§ 7201 and 7206. The territorial principle is applicable when acts outside a jurisdiction are intended to produce and do produce detrimental effects within it.
United States v. Pizzarusso,
Where, as here, the territorial principle is applicable, the Government may punish a defendant in the same manner as if it were present in the jurisdiction when the detrimental effects occurred. “The principle that a man who outside of a country wilfully puts in motion a force to take effect in it is answerable at the place where the evil is done, is recognized in the criminal jurisprudence of all countries.”
Ford v. United States,
[I]t is certain that the courts of many countries, even of countries which have given their criminal legislation a strictly territorial character, interpret criminal law in the sense that offences, the authors of which at the moment of commission are in the territоry of another State, are nevertheless to be regarded as having been committed in the national territory, if one of the constituent elements of the offence, and more especially its effects, have taken place there.
The S.S. Lotus,
1927 P.C.I.J., ser. A, No. 10, at 23,
reprinted in
2 Hudson,
World Court Reports
23, 38 (1935).
See also Melia v. United States,
It would be strange, indeed, if the United States could punish a foreign corporation for violating its criminal laws upon a theory that the corporation was constructively present in the country at the time the violation occurred,
see Hyde v. United States,
In performing its duty of inquiry, the grand jury must have the right to summon witnesses and to require the production of documentary evidеnce. “[T]he grand jury’s authority to subpoena witnesses is not only historic, .. . but essential to its task.”
Branzburg v. Hayes, supra,
The question, then, in the instant case is whether the district court had such personal jurisdiction over appellant that it could enforce obedience to the grand jury subpoena. We agree with counsel for both sides that Judge Sand should not have loоked to New York State’s long-arm statutes in answering this question.
Cryomedics, Inc. v. Spembly, Ltd.,
With
McGee v. International Life Ins. Co.,
A state has power to exercise judicial jurisdiction' over a foreign corporation which causes effects in the state by an act done elsewhere with respect to any cause of action arising from these effects unless the nature of these effects and of the corporation’s relationship to the state makes the exercise of such jurisdiction unreasonable.
While this principle must be applied with caution in matters which have international complications,
Bersch v. Drexel Firestone, Inc.,
If appellant did violate the United States tax laws, a question whose answer must await the possible return of an indictment, that violation occurred in cooperation with appellant’s wholly-owned subsidiary, Marc Rich & Co. International, Ltd., which is authorized to do business in New York State and does so. Moreover, two of the five members of appellant’s board of directors, who are also on the board of Marc Rich & Co. International, are residents of the United States. At least one of these directors is alleged to have been directly involved in the scheme to divert the taxable income of International. If, in fact, there was а conspiracy among all of these parties to evade the tax laws, both the conspiracy and at least some of the conspiratorial acts occurred in the United States.
See Melia v. United States, supra,
We find no merit in appellant’s argument that ratification of the service upon it of the subpoena would be tantamount to creating a novel federal long-arm rule without congressional authorization. That argument, as we understand it, proceeds as follows:
1. Fed.R.Crim.P. 17(e)(2) provides that a “subpoena directed to a witness in a foreign country shall issue under the circumstances and in the manner and be served as provided in Title 28, U.S.C., § 1783.”
2. Section 1783 provides for service upon a “national or resident of the United States who is in a foreign country” for the “production of a specified document or other thing by him.”
3. Since section 1783 is silent concerning foreign corporations which are not nationals or residents of the United States, those corporations are not subject to subpoena, regardless of the place and manner of service.
In making this contention, appellant ignores the fact that the subpoena in the instant case was not served in a foreign country and that, ever since the enactment оf the first all-writs statute as part of the Judiciary Act of 1789, 1 Stat. 73, 81-82, judicial authority to issue subpoenas has had congressional approval. From almost the birth of our nation, Congress has recognized that the “right to resort to means competent to compel the production of written, as well as oral, testimony, seems essential to the very existence and сonstitution of a court of common law.”
American Lithographic Co. v. Werckmeister,
Briefly summarized, appellant’s argument puts the cart before the horse. A federal court’s jurisdiction is not determined by its power to issue a subpoena; its power to issue a subpoena is determined by its jurisdiction.
United States v. Germann, supra,
The crucial issue on this appeal is how much of a jurisdictional showing the Government had to make in order to warrant the issuance of the subpoena directed to appellant. Appellant contends that the district court committed reversible error in holding that, although the Government had to show in the first instance that it had a good faith basis for asserting jurisdiction, once it did so, the burden of proving lack of jurisdiction shifted to appellant. We agree with appellant’s argument concerning burden of proof but disagree with appellant’s contention that reversal is required. Based upon our own review of the affidavits submitted in the district court,
see Diversified Mortgage Investors v. U.S. Life Title Ins. Co.,
In the seminal case of
Blair v. United States,
Although Justice Pitney was discussing subject matter rather thаn personal jurisdiction, the same reasoning may be applied in cases such as the instant one, where the appellant is not challenging enforcement of the grand jury subpoena on the due process grounds of notice and an opportunity to be heard, see
Blackmer v. United States,
As already pointеd out, a grand jury is not limited in its investigation to criminal acts occurring in the district in which it sits. In
United States v. Girgenti, supra,
There is not the slightest doubt that if people conspire in New Jersey to ... conceal tax liability ... in the Eastеrn District of Pennsylvania, the grand jury in the latter district may inquire into it. To appellant’s argument that this grand jury had not found anything about af-. fairs in New Jersey that affected matters *670 in the Eastern District of Pennsylvania, we answer that the grand jury had not then and has not now completed its investigation. What it will eventually find, no one, not even appellant’s counsel, knows.
Id. at 219.
Attendance and resрonse to a subpoena is a public duty, a duty “not to be grudged or evaded.”
Hurtado v. United States,
Such a showing has been made in the instant case. For example, affidavits submitted by the Government disclose that, in 1980, approximately 40% of International’s crude oil purchases, worth $345 million, were from appellant. International then rеalized a gross loss of over $110 million in selling to its domestic customers. There is sufficient likelihood that unlawful tax manipulation was taking place between appellant and its wholly-owned subsidiary to make it “reasonable and just, according to our traditional conception of fair play and substantial justice" to require appellant to respond to thе grand jury’s inquiries.
See International Shoe Co. v. Washington,
Appellant’s remaining contentions require no extended discussion. Although in camera submissions of affidavits are not to be routinely accepted, an exception to this general rule may be made where an “ongoing interest in grand jury secrecy” is at stake.
In re John Doe Corp.,
Affirmed.