The appellant was the Australian-citizen father of two Australian-born children, ages two and four. Appellee, the children's mother, was an American citizen who lived in Australia for approximately nine years before returning to the United  States in 2003. The father and mother were never married, but lived together with their elder child for approximately 18 months before the mother and child moved out. At that time, the mother was pregnant with her second child with the father. He never had primary physical custody of either child. Both parties agreed that the father maintained contact with his children after they separated. The father claimed he visited the children multiple times a week; the mother, only about four or five times a year. The father gave the mother money for child support, although the amount and regularity was unclear. In early September 2003, the father, mother, and their children had dinner together in Australia, at which time the mother told father she planned to take their children on a holiday to visit her parents in Texas. He understood the children would be there for a month before returning to Australia and believed the trip was planned for February 2004. He signed the necessary papers for the children to receive Australian passports. He did not consent to the children's permanent removal from Australia. The Mother left Australia with the children in early September 2003, with no intention of returning. Several days later, the Father discovered the Mother had permanently left the country when he found her telephone line disconnected and her house vacated. He attempted to communicate with her in Texas. He was able to speak with her parents and ascertain that the children were staying at their home, but she refused to speak to him. With the help of the Australian International Family Law Section of the Attorney-General's Department, Father filed the necessary documents to begin the process of having the children returned to Australia under the Convention.

In April 2004 he petitioned the United States District Court for the children= s return to Australia. At the hearing, the Mother testified, among other things, that the father paid token support for the children and occasionally visited them. He testified, that he paid child support to Mother weekly, that he visited the children at least weekly and that he did not consent to the children's permanent removal from Australia. The mother testified as an affirmative defense that the father was not exercising his custody rights, so the removal was not wrongful.

The Court of Appeals held that the District court's findings of fact are reviewed for clear error and its legal conclusions are reviewed de novo. When there is no formal custody agreement between parents, courts must apply the laws of the country of the child's habitual residence to determine if the non-removing parent had "rights of custody" within the meaning of the Hague Convention. Under Australian law, in the absence of any orders of court, each Australian parent of a child has custody rights as to the child. In the absence of any orders of court, each Australian parent of a child is a joint guardian and a joint custodian of the child, and guardianship and custody rights involve essentially the right to have and make decisions concerning daily care and control of the child.

The Court held that:@ the determination whether a party is exercising custody rights closely parallels the determination of the nature and dimension of those rights. American courts have interpreted "exercise" broadly. See Friedrich II, 78 F.3d at 1063; Hazbun Escaf v. Rodriquez, 200 F.Supp.2d 603 (E.D.Va.2002); Freier v. Freier, 969 F.Supp. 436 (E.D.Mich.1996); Sampson v. Sampson, 267 Kan. 175, 975 P.2d 1211 (1999). Friedrich II held: "The only acceptable solution, in the absence of a ruling from a court in the country of habitual residence, is to liberally find 'exercise' whenever a parent with de jure custody rights keeps, or seeks to keep, any sort of regular contact with his or her child". Id. 1065.

[I]f a person has valid custody rights to a child under the law of the country of the child's habitual residence, that person cannot fail to "exercise" those custody rights under the Hague Convention short of acts that constitute clear and unequivocal abandonment of the child. Once it determines that the parent exercised custody rights in any manner, the court should  stop-- completely avoiding the question whether the parent exercised the custody rights well or badly. These matters go to the merits of the custody dispute and are, therefore, beyond the subject matter jurisdiction of federal courts. Id. 1066 (footnote and citation omitted; emphasis added).@

The Court of Appeals adopted the reasoning from Friedrich II. It held that in the absence of a ruling from a court in the child's country of habitual residence, when a parent has custody rights under the laws of that country, even occasional contact with the child constitutes "exercise" of those rights. To show failure to exercise custody rights, the removing parent must show the other parent has abandoned the child.

In determining whether a parent was exercising his or her rights of custody under the Hague Convention American courts have interpreted the term "exercise" broadly. If a person has valid custody rights to a child under the law of the country of the child's habitual residence, that person cannot fail to "exercise" those custody rights under the Hague Convention short of acts that constitute clear and unequivocal abandonment of the child. In the absence of a ruling from a court in the child's country of habitual residence, when a parent has custody rights under the laws of that country, even occasional contact with the child constitutes "exercise" of those rights, To show failure to "exercise" custody rights, within the meaning of the Hague Convention on the Civil Aspects of International Child Abduction, the removing parent must show the other parent has abandoned the child.

The Court of Appeals defers to the district court's credibility determinations and will not disturb them unless a review of the evidence leaves the appellate court with the definite and firm conviction that a mistake has been made. Under the law of Australia, the removed children's country of habitual residence, the father was "exercising" his rights of custody when mother removed the children to Texas, within the meaning of the Hague Convention. Although the parties disagreed about the amount of contact between father and children, the mother conceded that he visited the children about five times a year and paid child support to her, and there was no evidence in the record showing he completely abandoned the children.

Upon de novo review of the district court's application of law, the court held the district court erred in its conclusion that Mother showed, by a preponderance of the evidence, that the father was not exercising his custody rights. At oral argument she conceded that the Father's contacts with the children would constitute "exercise" under the Friedrich II standard, if applicable; and there was no evidence in the record showing Father completely abandoned his children. The Court held that the Father did not abandon his children. By visiting his children and contributing to their financial support, the Father was exercising his custody rights at the time Mother removed the children from their country of habitual residence.

It vacated the order and remanded to the district court for a determination of the logistics of the children's prompt return to Australia.