UNITED STATES OF AMERICA
Before the
COMMODITY FUTURES TRADING COMMISSION


LORENZ HOFF

v.

AMERICAN FUTURES GROUP, INC.

CFTC Docket No. 96-133

ORDER

Reparation complainant Lorenz Hoff ("Hoff" or "complainant") is a German resident. For a non-resident to bring a complaint in the Commission's reparation forum it is a jurisdictional prerequisite under Section 14(c) of the Act and Commission Rule 12.13(b)(4) that he or she must file a bond in double the amount of the claim or submit a waiver request "accompanied by sufficient proof" that the country of which the complainant is a resident permits the filing of a complaint by a resident of the United States against a citizen of that country without the furnishing of a bond.

On April 20, 1998, the Commission issued an order in the above matter granting complainant an opportunity within 60 days of the order to post a bond or to submit a sufficiently supported waiver request. Hoff v. American Futures Group, CFTC No. 96-R133, 1998 WL 187850 (CFTC April 20, 1998). The Commission found that Hoff apparently had filed his complaint in reliance on a right to a waiver of the bond predicated on Section 110 of the German Code of Civil Procedure ("German Code"). The Commission noted, however, that it had recently held that Section 110 was insufficient to support the bond waiver reciprocity requirement in Rule 12.13(b)(4). Haekal v. Refco, [Current Transfer Binder] Comm. Fut. L. Rep. (CCH) 27,162 (CFTC Sept. 26, 1997). Specifically, the Commission held in Haekal that Section 110, when read in conjunction with Article VI of the German-American Treaty of Friendship, Commerce and Navigation and Paragraph 6 of the Protocol to the Treaty, limits the circumstances under which a United States resident is not required to post a bond and, therefore, does not satisfy the reciprocity required by Rule 12.13(b)(4). Id. at 45,543.

On June 17, 1998, complainant submitted a response to the Commission's order. He first argues that he should not be required to submit evidence on the jurisdictional issue supporting a waiver request because his filing fee was accepted and the proceedings reached the appeal stage. Appellate brief ("AppBr.") at 2. He cites several provisions of the German Code in support. He principally argues, however, that Section 110 of the German Code, together with a treaty which he terms the "Agreement Haag," dated March 1, 1954, provides the reciprocity that forms the basis for a valid waiver of the bond requirement. AppBr. at 3.

With respect to the timeliness of the Commission's consideration of the bond issue, Hoff asserts that Section 111 of the German Code states that an additional bond "cannot be required after the beginning of the proceedings." AppBr. at 2. He also cites Section 282 III, claiming that it also provides that a complainant may not be subjected to additional requirements after the beginning of the proceedings. Id. Finally he cites Section 296 to argue that "in appeal proceedings it is not admissible to make up for a review failed by the court of the first instance." Id. These provisions are not relevant, however, because the German Code is not the governing body of law as to this issue, and under Commission practice the Commission will address the jurisdictional issue of the bond requirement sua sponte, even if the issue has been overlooked or abandoned by the parties. Haekel at 45,542.

Complainant's main argument is that Section 110 of the German Code and the treaty he cites establish the right to a waiver of the bond requirement. App. Br. at 3. Although Hoff did not submit a copy of that treaty, we have located a multilateral treaty relating to civil procedure done at the Hague on March 1, 1954, which appears to be the relevant document. However, the United States is not a party to this treaty. In these circumstances, we conclude that Hoff has not offered a persuasive reason to depart from our holding in Haekal and has failed to offer sufficient proof supporting his request that the Commission waive the bond requirement.

Accordingly, because Hoff has not demonstrated that he is entitled to a waiver of the bond requirement and has not filed a bond, we dismiss his appeal.

IT IS SO ORDERED.1

By the Commission (Chairperson BORN and Commissioners TULL, HOLUM, SPEARS and NEWSOME).

Jean A. Webb

Secretary of the Commission

Commodity Futures Trading Commission

Dated: November 3, 1998


1 Under Sections 6(c) and 14(e) of the Commodity Exchange Act, 7 U.S.C. 9 and 18(e), a party may appeal a reparation order of the Commission to the United States Court of Appeals for only the circuit in which a hearing was held; if no hearing was held, the appeal may be filed in any circuit in which the appellee is located. The statute also states that such an appeal must be filed within 15 days after notice of the order, and that any appeal is not effective unless, within 30 days of the date of the Commission order, the appealing party files with the clerk of the court a bond equal to double the amount of the reparation award.