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Australian exporters exposed to US lawsuit risk

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Two landmark US supreme court decisions have left Australian manufacturers with export interests in the USA exposed to litigation under US state laws. Decisions in two recent cases have confirmed that international exporters fall under the jurisdiction of US state courts if the exporter is found to have "continuous and systematic" business dealings with a US state. The arm of the law could even stretch to companies who have no physical presence in America, and only export to certain states. Decisions in J McIntyre Machery Ltd v Nicastro and Goodyear Dunlop Tyres Operations SA v Brown involved product liability claims against companies operating in the United Kingdom, Turkey, France and Luxembourg, but not in the US. "The rulings in [these cases] mean Australian exporters ... clearly targeting export to specific states may be liable under state law," says David Miller, partner at Colin, Biggers and Paisley Lawyers. However, if a company has no specific business connections with a particular state, it may be exempt from the application of state law, he added. "It will all depend on the facts underlying the commercial dealings-you cannot divorce the legal analysis from the facts." Miller said the decisions should prompt Australian firms with foreign interests to review their US marketing and business activities, locate any potential for claims and update insurance policies to ensure they extend to US liabilities. "The insurance implications are substantial. If an exporter is found to have ‘purposely availed itself’ to a state market, the state court may have jurisdiction over issues such as personal injury claims resulting from faulty products." Dissenting justices in the McIntyre case said the ruling ‘turned back the clock’ in the age of modern trade and e-commerce. Miller said international trade law is a "space to watch". "These rulings remind Australian exporters to the US that their legal obligations may not end in Australia," he added.

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