Yes, it has been applied in custody cases, as well as maritime lien cases and other private law cases. I'm sort of realizing I haven't been very clear. The court does not apply the other nations law as a whole, rather certain relevant portions of it, where necessary (American courts usually refuse to do so, though). Not sure about the PB case though. I just find it idiotic to use that as a defence: "Sweden is not a state of the US, therefore swedes can do what the fuck they want against american citizens". Copyright infringements are crimes in Sweden as well as the US. And to in the same mail threaten with a law suit for harassment. So they can't sue you, but you can sue them? Nice.
Of course, if the copyright infringement would not have been a crime in Sweden, nothing would happen. But it is, so what are they on about? Don't get it.