Amicus Curiae Brief — WS Kirkpatrick & Co. v. Environmental Tectonics Corp., Int'l
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In the Supreme Court of the
OCTOBER TERM, 1983
W.S. KIRKPATRICK & Co., INC., ET AL., PETITIONERS
Vv.
i ean TECTONICS CORPORATION,
Gee
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
BRIEF FOR THE UNITED STATES
AS AMICUS CURIAE SUPPORTING RESPONDENT
KENNETH W. STARR
Solicitor General
STUART E. SCHIFFER
Acting Assi-tant Attorney General
THOMAS W. MERRILL
Deputy Solicitor General
EDWIN S. KNEEDLER
Assistant to t’:\e Solicitor General
MICHAEL JAY SINGER
JOHN P. SCHNITKER
Attorneys
Department of Justice
Washington, D.C. 20530
(202) 623-2217
ABRAHAM D. SOFAER .
Legal Adviser
Department of State
Washington, D.C. 20520
QUESTION PRESENTED
Whether the act of state doctrine should be applied to
bar a private civil action brought under United States
law by a United States corporation that was the disap-
pointed tidder for a military construction contract
awarded by the Government of Nigeria, seeking to re-
cover damages from another United States corporation
that allegedly obtained the contract as a result of paying
bribes to Nigerian officials.
(1)
ee ee eee =
TABLE OF CONTENTS
Page
Interest of the United States ee. 1
LT 1
EEE 6
Argument:
The act of state doctrine should not be applied to
bar adjudication of respondent’s damage claims un-
der United States law based on petitioners’ alleged
bribery of Nigerian officials to obtain a contract...... x
I. Sabbatino, its predecessors, and its progeny... 10
Ii. Principles of separation of powers and interna-
tional comity suggest that application of the act
of state doctrine is not required in this case...... 19
A. International comity ............ a 19
a remnnnenneaenneens 28
C. The Court should not adopt a rule that turns
; solely on whether only the “motivation” for
a foreign sovereign act is at issue ................. 37
A 41
SEL la
TABLE OF AUTHORITIES
Cases:
Alfred Dunhill of London, Inc. v. Cuba, 425 US.
Er 7, 9, 18, 23, 26-27, 28, 40
American Banana Co. yv. United Fruit Co., 213 U.S.
SS 11, 12, 22, 34, 35, 37-38
Angle v. Chicago, St. P., & O. Ry., 151 US. 1
i nssnounnonmeens 25
Argentine Republic v. Amerada Hess Shipping
ee 30
Banco Nacional de Cuba v. Sabbatino, 376 U.S.
ET 6, 8, 11, 14, 15, 16, 29, 30, 40
Bernstein v. N.V. Nederlandsche-Amerikaansche,
210 F.2d 375 (2d Cir. 1954) 4, 32
Blad v. Bamfield, 3 Swans. 604, 36 Eng. Rep. 992
EEE ES 11
IV
Cases—Continued: Page
California Motor Transp. Co. Vv. Trucking Unlim-
ited, 404 U.S. 508 (1972) 21
Callejo v. Bancomer, S.A., 764 F.2d 1101 “(6th Cir.
I nsccecninliiticaitiiaatiigeiaiaeenis -
City of London Electric Lighting Co. Vv. Mayor.
London, [1903] App. Cas. 434 (H.L. , aff’g
[1901] 1 Ch. 602 24-25
Clayco Petroleum Corp. v. Occidentai Petroleum
Corp., 712 F.2d 404 (9th Cir. 1983), cert. de-
nied, 464 U.S. 1040 (1984) —........... 5, 28, 35, 36-37, 39
Continental Ore Co. v. Union Carbide & Carbon
Corp., 370 U.S. 69@ (1962) ...........---------2---00----- 12, 26
Crocker Vv. United States, 240 U.S. 74 (1916) -...... 25
Dames & Moore V. Regan, 453 U.S. 654 (1981) _.... 30
Dominicus Americana Bohio v. Gulf & Western
Indus., 473 F. Supp. 680 (S.D.N.Y. 1979) ....... 36
Duke of Brunswick v. King of Hanover, [1848] 2
+ A hy Rr ee reer eee 11
First National City Bank v. Banco Para el Comer-
cio Exterior de Cuba, 462 US. 611 (1983)........ 38
First National City Bank v. Banco Nacional de
Cuba, 406 U.S. 759 (1972) _........ 6-7, 9, 10, 17, 18, 23, 32
Fletcher v. Peck, 10 U.S. (6 Cranch) 87 (1810)... 40
George V. Dominion Flour Mills Ltd., [1963] 1 All.
N.L.R. 71 (Fed. Sup. Ct. Nigeria) 24
Grace V. E.J. Kozin Co., 538 F.2d 170 (7th Cir.
TET acctccncintscseinnntteninatinsestainsinssiiiniasiastaiaasesttshliiaiiaiaaatiiis 21
Grand Jury Proceedings, In re, 817 F.2d 1108
(4th Cir.), cert. denied, 484 U.S. 890 (1987)... 40
H.J. Ine. Vv. Northwestern Bell Tel. Co., 109 8. Ct.
TR Sener 21
Hetch vy. Baez, 7 Hun. 596 (N.Y. Sup. Ct. 1876). 11
Hilton v. Guyot, 159 U.S. 113 (1895) ..................... 9, 19, 26
Hudson v. Guestier, 8 U.S. (4 Cranch) 293 .
SIE ieensinnee Dieta iiniaitnitarliatiaienahiieeediiaitaie elite liens 11, 16
Hunt v. Mobil Oil Corp., 434 U.S. 984 (1977) ........ 3, 37
Hunt v. Mobil Oil Corp., 550 F.2d 68 (2d Cir.
1977), cert. denied, 434 U.S. 984 (1977) ............. 38
IAM v. OPEC, 649 F.2d 1354 (9th Cir. 1981),
cert. denied, 454 U.S. 1163 (1982) ...................... 38
Vv
Cases—-Continued : Page
Industrial Inv. Dev. Corp. Vv. Mitsui & Co., 594
F.2d 48 (5th Cir. 1979), cert. denied, 445 U.S.
I i nnnesoiaad nical rina aaeitaniiaihts 39
Langenegger V. United States, 756 F.2d 1565 (Fed.
Cir.), cert. denied, 474 U.S. 824 (1985) —............. 38
L' Invincible, 14 U.S. (1 Wheat.) 238 (1816)... 1l
Mannington Mills, Inc. v. Congoleum Corp., 595
. fb ff fF & ee 39
Milwaukee v. Illinois, 451 U.S. 304 (1981) _..... 30
Mitsui & Co. v. Industrial Inv. Dev. Corp., 445
eee 3, 37
National City Bank v. Republic of China, 348 U.S.
fl 17
Northrop Corp. v. McDonnell Douglas Corp., 705
F.2d 1030 (9th Cir.), cert. denied, 464 U.S. 849
ESSERE eee mer eee ee 27, 39
Occidental Petroleum Corp. Vv. Buttes Gas & Oil
Co., 331 F. Supp. 92 (C.D. Cal. 1971), aff'd,
461 F.2d 1261 (9th Cir.), cert. denied, 409 U.S.
gn ELIE Oe Tee TTT ere 28, 38
Oetjen v. Central Leather Co., 246 U.S. 297
SIT ncisnictntenaaticiniacatunnnssiaennataaienttseaniiahiiieiinaiitaimmiaiel 13, 14
O.N.E. Shipping, Ltd. v. Flota Mercante Gran-
colombiana, S.A., 109 S. Ct. 303 (1988) ............ 37
Pan American Petroleum & Transp. Co. v. United
dates, STB UWB. GES (IGRI) -.nnceceennceccccseeeeceees--- 25
Perrin Vv. United States, 444 U.S. 37 (1979)... 28
Ramirez de Arellano v. Weinberger, 745 F.2d 1500
(D.C. Cir. 1984), vacated, 471 U.S. 1113 (1985),
on remand, 788 F.2d 762 (D.C. Cir. 1986)... 38
Rangen, Inc. v. Sterling Nelson & Sons, Inc., 351
F.2d 851 (9th Cir. 1965), cert. denied, 383 U.S.
ES ere eT 21
Republic of the Philippines Vv. Marcos, 806 F.2d
344 (2d Cir. 1986), cert. denied, 481 U.S. 1048
a 40
Republic of the Philippines v. Marcos, 862 F.2d
1355 (9th Cir. 1988), cert. denied, 109 S. Ct.
0 SE Se ee eee 39-40
Ricaud v. American Metal Co., 246 U.S. 204
IIIT soos ase atid anetiiankian atieahdaseiaiamatiaisbanadeataadieidniiaiead 9, 13, 14
VI
Cases—Continued : Page
Sage Int’l ¥. Cadillac Gage Co., 534 F. Supp. 896
(E.D. Mich. 1981) -...... " ; 36
Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479
ELS ae ore ee 21
Societe Nationale Industrielle Aerospatiale v.
United States District Court, 482 U.S. 522
ee eran eee 19, 21, 22, 25, 37, 40
Sodipo v. Lemninkainen Oy, [1986] 1 N.W.L.R.
Be GR, Gah, BI cectecennscectnsntenesttinnssenestitiinen 24, 25
Steele v. Bulova Watch Co., 344 U.S. 280 (1952) .. 24
The Santissima Trinidad, 20 U.S. (7 Wheat.) 283
ESE OR ee ee eee oar EN 11
The Schooner Exchange Vv. McFaddon, 11 U.S. (7
I I a seeetnsinciel 11, 15, 37, 40
Timberlane Lumber Co. v. Bank of America, N.T.
& S.A., 549 F.2d 597 (9th Cir. 1976) —.............. 39
Town of Kearney Vv. Hudson Meadows Urban Re-
newal, 829 F.2d 1263 (3d Cir. 1987) -.................. 21
Underhill v. Hernandez, 168 U.S. 250 ‘1897).._... 6,11
United States v. Belmont, 301 U.S. 324 (1937) .... 14
United States v. Curtiss-Wright Export Corp., 299
a ne ian ia cnineeianiintiatin 1, 29
United States v. Mississippi Valley Generating
Co., 364 U.S. 520 (1961) . 1 daesimeemintiaintideatmenl 25
United States v. Pink, 315 U.S. 203 (1942) ..._... 14, 30
United States v. Sisal Sales Corp., 274 U.S. 268
I cites cchatieeneeciaieialdiilait tacnihesbisiieatnenanieiianniaall 22-23, 26
Walker Process Equipment, Inc. v. Food Machin-
ery & Chemical Corp., 382 U.S. 172 (1965)_...... 25
Ware v. Hylton, 3 U.S. (3 Dall.) 199 (1796) _._... 1l
Williams v. Curtiss-Wright Corp., 694 F.2d 300
PR ceri cn etetetnnenainmnaiaaends 27
Young, Ex parte, 209 U.S. 123 (1908) —................. 39
Zschernig V. Miller, 389 U.S. 429 (1968) _...... as 38
Constitution and statutes:
U.S. Const.
Art. I, § 8
EEE SEES eer ee en a 29
i 29
Art. II, § 2, Cl. 2 (Treaty Clause) iasiiedmanidneiie a 29
Statutes—Continued:
Foreign Corrupt Practices Act of 1977, 15 U.S.C.
15 U.S.C. 78dd-1 et seq.:
Page
TT «+21, 88, 35
TTS LTS ee a 33
KS : | eee 22
he TT a ATE 1, 2, 35
15 U.S.C. 78dd-2(a) ........ fA Nn ae ee ote 33
15 U.S.C. 78dd-2 (a) (2)... eee cence 33
16 U.S.C. T8dd-2(c) (1).............n.. ecececceeeceeeceeees 22
Ee 33
15 U.S.C. 78dd-2(h) ......... Ssninblabesideniadneemaataaiom a 33
15 U.S.C. 78dd-2 (hh) (5)... eee eee eee eee 33
Foreign Sovereign Immunities Act, 28 U.S.C.
1602 et seq.:
ET ane ee ee 28
ER 27
Omnibus Trade and Competitiveness Act of 1988,
Pub. L. No. 100-418, § 5008, 102 Stat. 1415... 88
Racketeer Influenced and Corrupt Organizations
Act, 18 U.S.C. 1961- 1968 (1982 & Supp. V
EES a Se 3
EE ee 20
A ee ee 2
Robinson-Patman Act, 15 U.S.C. 18 et seq.:
SE ee . 8,21
SIRES SEIS 21
Rev. Stat. § 5335 (1875) (Logan Act) 34
Pub. L. No. 95-213, 91 Stat. 1494:
Se 33
§ 104, 91 Stat. 1496.00 A ra See ee 83
EE ne ne ee 34
EEE ean nae Ce ee re Rone 20
RESETS Ce eee eee aaa EEO 20
22 U.S.C. 2370(e)(2) (Hickenleoper Amend-
EELS eC Ne Re 82
New Jersey Auti-Rachetesring Act, NJ. Stat.
Ann. §§ 41-1 to 41-6.2 (West 1982) 3
Decree No. 38, §§ 1-3 (Nov. 22, 1975)... 21
VI
Statutes—Continued : Page
D. Kingdon, The Laws of the Federation of
Nigeria and Lagos, Criminal Code, ch. 42
(1958) :
ETT ANSE: ate ee ene ma are 22
ES a ne, a 22
H.H. Marshall, The Laws of Northern Nigeria,
ch. 89, §§ 115-122 (1965) .......... .. 21-22
Miscellaneous:
O. Achike, Nigerian Law of Contract (1972) ........ 24
122 Cong. Rec. (1976) :
LE ee sea 35
a ct ailiemallen 35
123 Cong. Rec. (1977)
a ad cal 36
EE ee an ee 36
J. Dellapenna, Deciphering the Act of State Doc-
trine, Manuscript (1989) (to be published in 35
eee 9, 24
T. Elias, The Nigerian Legul System (19638) .......... 25
H.R. Rep. No. 1487, 94th Cong., 2d Sess. (1976) ... 28
H.R. Rep. No. 640, 95th Cong., 1st Sess. (1977) .... 34, 35,
36
Henkin, Act of State Today: Recollections in
Tranquility, 6 Colum. J. Transnt’l. L. 175
EE EES ee ee a eee 9
Leigh & Sandler, Dunhill: Toward a Reconsidera-
tion of Sabbatino, 16 Va. J. Int’l L. 685 (1976) .. 9
Note, Act of State Doctrine: An Emerging Cor-
ruption Exception in Antitrust Cases, 59 Notre
Dame Ee, BROW. GES CIDE) .n.-e~cccccencceccccseeceesesesessss 37
Note, Clayeo Petroleum Corp. v. Occidental Pe-
troleum Corp.: Should There Be a Bribery Ex-
ception to the Act of State Doctrine?, 17 Cornell
i la 37
J. Orojo, Nigerian Commercial Law & Practice
EES a a ee a a 24
Restatement (Second) of Judgments (1982) —_— 24
Restatement (Third) of the Foreign Relations
Law of the United States (1987) ........0..000.0....... ss)
Miscellaneous—-Continued : Page
S. 3379, 94th Cong., 2d Sess. (1976)... 85
S. Rep. No. 1031, 94th Cong., 2d Sess. (1976) 22, 34,
35, 36
S. Rep. No. 114, 95th Cong., 1st Sess. (1977)... 33, 35
S. Rep. No. 85, 100th Cong., Ist Sess. (1987) ....... 34
In the Supreme Court of the United States
OCTOBER TERM, 1989
No. 87-2066
W.S. KIRKPATRICK & Co., INC., ET AL., PETITIONERS
Vv.
ENVIRONMENTAL TECTONICS CORPORATION,
INTERNATIONAL
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
BRIEF FOR THE UNITED STATES
AS AMICUS CURIAE SUPPORTING RESPONDENT
INTEREST OF THE UNITED STATES
The act of state doctrine is based on principles of
comity among nations and the proper distribution of
functions between the judicial and political Branches
in the are. of foreign affairs. As the “constitutional
representative of the United States with regard to for-
eign nations,” United States v. Curtiss-Wright Export
Corp., 299 U.S. 304, 319 (1936), the Executive Branch
has a vital interest in proper application of the doctrine.
The United States also enforces the federal laws under
which respondent’s suit arises, as well as the Foreign
Corrupt Practices Act, 15 U.S.C. 78dd-1 and 78dd-2,
which prohibits bribery of foreign officials.
STATEMENT
1. In 1980, petitioner Carpenter, the Chairman and
Chief Executive Officer of petitioner W.S. Kirkpatrick &
Co., a New Jersey corporation, learned that the Niger-
ian Government planned to construct an aeromedical
(1)
2
center for its Air Force. Carpenter hired a Nigerian
national, petitioner Akindele, to act as Kirkpatrick’s
local agent in procuring the contract. Akindele informed
Carpenter that Kirkpatrick should be prepared to pay a
“sales commission,” totalling 20% of the contract price,
to Nigerian political and military officials. Kirkpatrick
and Akindele agreed that, if Kirkpatrick received the
contract, it would pay the “commission” through two
Panamanian corporations established by Akindele. Re-
spandent, a Pennsylvania corporation, also bid for the
contract.
In March 1982, the contract was awarded to a sub-
sidiary of Kirkpatrick. The Nigerian Government made
four payments to Kirkpatrick under the contract in 1982
and 1983. On each occasion, Kirkpatrick, through use
of the mails or wires, paid a portion of the promised
“commission” to Akindele’s Panamanian corporaticns,
which distributed them to the intended recipients. Kirk-
patrick paid more than $1.7 million under this arrange-
ment. After learning that its bid had been far lower
than Kirkpatrick’s, respondent reportec its findings to
the Nigerian Air Force and the United States Embassy
in Lagos. Carpenter and Kirkpatrick subsequently
pleaded guilty to one count of violating the Foreign “or-
rupt Practices Act of 1977 (FCPA), 15 U.S.C. 78dd-2,
based on one of the four payments.* In connection with
their pleas, Carpenter and Kirkpatrick stipulated to an
offer of proof that outlined the agreement between Car-
penter and Akindele and the payments made to the Pan-
amanian corporations, but did not state that money had
actually been paid to Nigerian officiais (J.A. 17-20, 35-
32). Pet. App. A4-A7, A43-A44.
1 The statement of facts is taken from the opinions below, which
are based on allegat‘ons in the complaint. Pet. App. A4 n.1.
2The count charged Carpenter and Kirkpatrick with using an
international telex in furtherance of the payment, while having
reason to know that a portion of the money would be offered,
promised or given to governmental and party officials'in Nigeria
for the purpose of inducing them to use their infiuence to obtain
the contract for Kirkpatrick. J.A. 15-16, 33-34.
3
2. Respondent then brought this suit seeking to re-
cover damages from Kirkpatrick and the other petition-
ers under the Racketeer Influenced and Corrupt Organi-
zations Act (RICO), 18 U.S.C. 1961-1968; Section 2(c)
of the Robinson-Patman Act, 15 U.S.C. 13(c); the New
Jersey Anti-Racketeering Act, N.J. Stat. Ann. §§ 41-
1 to 41-6.2 ‘(West 1982); and the common law of in
terference with prospective contractual relations. Pe-
titioners moved to dismiss the complaint on the ground
that the suit is barred by the act of state doctrine. In
response to the court’s request for the views of the De-
partment of State, the Legal Adviser stated in a letter
that the United States had taken the position in its
amicus briefs at the petition stage in Mitsui & Co. v.
Industrial Development Corp., 445 U.S. 903 (1980), and
Hunt vy. Mobil Oil Corp., 434 U.S. 984 (1977), that in-
quiries into the motivation (as distinguished from the
validity) of the official acts of a foreign sovereign are
not barred by the act of state doctrine (Pet. App. A34-
A37). Adhering to that view, and based upon his under-
standing that “the validity of the Nigerian Government’s
decision to award the contract * * * is not in question,”
the Legal Adviser stated that the act of state doctrine
would not bar the court “from adjudicating this dispute.”
He cautioned, however, that “inquiries into the motiva-
tion and validity of foreign states’ actions and discovery
against fore'gn government officials may seriously af-
fect United States foreign relations,” and he urged the
court “to assure that no unnecessary inquiries are made,
or allegations tested, during the course of discovery or
trial.” Ibid.*
8 Counsel for respondent requested a declaration from the
Nigerian Embassy in Washington that the prosecution of this
action “will not have any impact whatsoever on the relations be-
tween the Republic of Nigeria and the United States of America”
(Pet. App. A45; J.A. 124-132). The Nigerian Government did not
respond to that letter; nor, apparently, has it repudiated the con-
tract or taken any other action in response to the allegations (Pet.
App. A45, A62 n.14; see J.A. 143-144, 173, 175).
4
After receiving the Legal Adviser’s letter, the court
dismissed the suit (Pet. App. A38-A73), holding it barred
by the act of state doctrine (id. A53-A66). The court
noted that in order to prevail, respondent must dem-
onstrate that petitioners “intended to wrongfully in-
fluence the award of the Nigerian contract by pay-
ment of a bribe, that the Governrici. of Nigeria, its of-
ficials or other representatives knew of the offered con-
sideration for awarding the Nigerian contract to Kirk-
patrick, that the bribe was actually received or an-
ticipated and that ‘but for’ the payment or anticipation
of the payment of the bribe, respondent would have been
awarded the Nigerian contract” (Jd. at A55-A56). Be-
cause “the indispensible ingredient of [respondent’s]
cause of action requires establishing the involvement of
the Government of Nigeria, its officials or representatives
in corrupt activities which violate Nigerian law,” the
court believed the suit would “question[],” either “di-
rectly or collaterally,” the acts of a foreign sovereign
(id. at A57-A58). The court believed such an inquiry
might embarrass the political Branches, or make rela-
tions with Nigeria more difficult, by impugning the in-
tegrity of decisions of Nigerian officials (id. at A565,
A56, A58, A64-A65).
The district court rejected respondent’s contention that
the FCPA prosecutions of Carpenter and Kirkpatrick
created an exception to the act of state doctrine, noting
that the offer of proof in the FCPA case did not establish
that bribes had actually been paid to Nigerian officials
(Pet. App. A61-A62). The court likewise concluded that
the Legal Adviser’s letter did not bring this case within
the “Bernstein exception” te the act of state doctrine,‘
which has been invoked where the Executive Branch
represents that application of the doctrine would not
advance the interests of United States foreign policy
(id. at A62-A65). The court reasoned that, although the
Legal Adviser took the position that the doctrine is in-
*See Bernstein v. N.V. Nederlandsche-Amerikaansche, 210 F.2d
375 (2d Cir. 1954).
5
applicable in this case, he acknowledged that “inquiries
into the motivation and validity of actions by foreign
states * * * may seriously affect United States foreign
relations” (id. at A63).
3. The court of appeals reversed (Pet. App. Al-A37).
It recognized that the award of a military procurement
contract can be a sufficiently formal expression of sov-
ereign interests to trigger the act of state doctrine and
does not fall within any exception for ministerial or
“commercial” acts, because it may involve national se-
curity considerations that “are far from routine” (id.
at Al2-A13). But the court nevertheless found the act
of state doctrine inapplicable (id. at A13-A21). It noted
that respondent did not seek to have the contract invali-
dated or to recover damages from the Nigerian Govern-
ment or its officials, and “the cistrict court would be
called upon simply to determine as a factual matter
whether [Kirkpatrick’s] alleged bribery of Nigerian offi-
cials motivated the award of the contract” (id. at A17-
A18). The court therefore concluded that “the district
court’s dismissal was based on little more than specula-
tion about the effect that [respondent’s] lawsuit might
have on relations tetween the United States and Ni-
geria” (id. at A17).
The court also declined to follow Clayco Petroleum
Corp. v. Occidental Petroleum Corp., 712 F.2d 404, 407
(9th Cir. 1983), cert. denied, 464 U.S. 1040 (1984),
which held that judicial inquiry into whether bribery
caused a foreign sovereign act was barred because it
would “impugn or question the nobility of a foreign
nation’s motivation” (Pet. App. Al5). The court bciow
believed that the doctrine should not be applied “to allow
litigants to shield themselves from the cousequences of
illegal conduct abroad” and should not “in all circum-
stances foreclose judicia! scrutiny of the motivations be-
hind the military procurement decisions of a foreign
government” (id. at A15-A16). The court found sup-
port for this view in the Legal Adviser’s letter, observ-
ing that “the State Department is satisfied that the con-
duct of American foreign policy relative to Nigeria will
6
not be compromised by orderly federal court adjudica-
tion of [respondent’s] lawsuit” (id. at Al9).°
SUMMARY OF ARGUMENT
I. Under the classic formulation of the act of state
doctrine, “[e]very sovereign State is bound to respect
the independence of every other sovereign State, and
the courts of one country will not sit in judgment on
the acts of the government of another done within its
own territory.” Underhill v. Hernandez, 168 U.S. 250,
252 (1897). Redress for such acts ordinarily is avaii-
able only in the courts of the other nation or through
diplomatic means. As synthesized in Banco Nacional de
Cuba v. Sabbatino, 376 U.S. 398 (1964), the doctrine
has evolved from a rather rigid rule based on territorial
sovereignty to a more flexible analysis based on inter-
national comity and the responsibility of the political
Branches for the conduct of foreign relations.
In Sabbatino itself, the Court, consistent with the
position of the Executive Branch, held that United
States courts could not examine the validity of a
Cuban expropriation decree under either Cuban or in-
ternational law, because there was no governing treaty
or unambiguous agreement on the controlling principles
of international law and judicial inquiry might interfere
with the Executive’s conduct of foreign relations. But
in two subsequent decisions, the Court, again in accord-
ance with the Executive Branch’s position, held that
the act of state doctrine should not be applied where
adjudication of the claims was consistent with equity,
the underlying purposes of the doctrine, and the for-
eign relations interests of the United States. First Na-
tional City Bank v. Banco Nacional de Cuba, 406 U.S.
5 The court read the Legal Adviser’s suggestion that the district
court exercise “caution and due regard for foreign sensibilities” as
a “reminder” that “[floreign governments have often expressed
their dissatisfaction with the wide discovery authorized under the
Federal Rules” and that courts should “exercise appropriate super-
vision over discovery and other trial preparation to limit damage to
foreign sensibilities” (Pet. App. Al9-A20 n.11) ; see App., infra, 2a.
7
759 (1972); Alfred Dunhill of London, Inc. v. Cuba,
425 U.S. 682 (1976).
II. A. Adjudication of respondent’s «iaims would be
consistent with principles of international comity that
inform the act of state doctrine. In Sabbatino and other
cases, the act of the foreign state itself was challenged
under the law of that state or international law. *e-
spondent’s suit, by contrast, is brought against private
parties and arises under provisions of United States law
(RICO, the Robinson-Patman Act, and New Jersey law)
that, in respondent’s view, were directly applicable to
petitioners’ primary conduct. The interest of the United
States in enforcing its laws weighs heavily in the comity
analysis. Nor is there any corflict with Nigerian law
on this point, because Nigeria, like virtually all countries,
makes bribery of its public officials illegal. Moreover,
because respondent has not sued Nigeria and does not
allege violations of Nigerian law, the court will not be
required to adjudicate the validity or enforceability of
the contract under Nigerian law. Finally, although Ni-
geria’s decision to award the contract to Kirkpatrick
rather than respondent does not fall within any “com-
mercial activity” exception to the act of state doctrine,
it nevertheless is relevant that petitioners’ alleged acts
of bribery were designed to induce Nigerian officials to
enter ints a commercial relationship.
B. The constitutional underpinnings of the act of
state doctrine confirm that dismissal of respondent’s
complaint is not required. Even private litigation chal-
lenging the sovereign act of a foreign state affects the
foreign relations interests of the United States, the other
country involved, and the community of nations—matters
for which the President and Congress are responsible
under the Constitution. A court therefore must give
great weight to the views of the Executive Branch (and
relevant acts of Congress) on whether a failure to give
full effect to the sovereign act of a foreign state would
be consistent with our foreign relations interests. Here,
the act of state concerns arise because, in order to
8
prove that it was injured by reason of petitioners’
alleged violation of United States law, respondent must
show that Nigeria’s award of the contract was caused
by the alleged bribes. However, we have been advised
by the Department of State that, in its judgment, adjudi-
cation of this case would not be inconsistent with the
conduct of the Nation’s foreign relations. We also have
been advised that, in the absence of an affirmative repre-
sentation to the contrary, adjudication of other private
suits solely involving commercial bribery of foreign offi-
cials by United States firms would not embarrass the
conduct of foreign relations. These assessments by the
Department of State are consistent with the Foreign
Corrupt Practices Act, in which Congress has made it a
criminal offense for United States nationals to bribe
foreign officials to obtain business.
C. The Court should not adopt a general rule that
would attach dispositive significance to whether a rit in-
volves only the “motivation” for, not the “validity” of, a
foreign sovereign act. Some cases that concern only a for-
eign government’s motivation plainly do raise significant
act of state concerns. In this case, however, respondent’s
claims implicate only the allegedly corrupt personal moti-
vations of individuals acting on behalf of the Nigerian
Government, not the official purposes of the Nigerian
Government itself in awarding the contract.
ARGUMENT
THE ACT OF STATE DOCTRINE SHOULD NOT BE
APPLIED TO BAR ADJUDICATION OF RESPOND-
ENT’S DAMAGE CLAIMS UNDER UNITED STATES
LAW BASED ON PETITIONERS’ ALLEGED BRIBERY
OF NIGERIAN OFFICIALS TO OBTAIN A CONTRACT
The opinion in Banco Nacional de Cuba v. Sabbatino,
376 U.S. 398 (1964), sets forth the Court’s understand-
ing of the origins, bases, and proper application of the
act of state doctrine. The Court in Sabbatino identified
the underpinnings of the doctrine in principles of com-
ity among nations and the primary responsibility of the
political Branches—and especially the Executive Branch
—in the area of foreign relations.
Although the Court’s prior decisions had appeared to
take a rather rigid view of the act of state doctrine,
Sabbatino expressly declined to lay down or reaffirm any
inflexible or all-encompassing rule for application of the
doctrine in future ceses. Consistent with Sabbatino, and
in recognition of the widely divergent circumstances in
which the issue may arise, we do not urge any rigid
formula for the resolution of act of state cases gen-
erally. In particular, we do not urge the Court to
choose among the expressions in judicial opinions and
commentary that have variously sought to explain the
act of state doctrine as a rule of judicial abstention,°
an aspect of the political question doctrine,’ a choice-
of-law rule,* a broader conflict-of-laws rule that incor-
porates both choice-of-forum and choice-of-law notions,’ or
a principle of repose that treats the act of a foreign
sovereign as conclusively settling its legality in the courts
of the United States, much as the judgment of a court
operates under principles of issue or claim preclusion.”
Each of these analytical theories may furnish useful in-
* First National City Bank, 406 U.S. at 773-776 (Powell, J., con-
curring) ; Alfred Dunhill, 425 U.S. at 715 (Powell, J., concurring).
' First National City Bank, 406 U.S. at 787-790 (Brennan, J.,
dissenting); Alfred Dunhill, 425 U.S. at 727-728 (Marshall, J.,
dissenting).
8 Alfred Dunhill, 425 U.S. at 705-706 n.18 (opinion of White,
J.); id. at 726 (Marshall, J., dissenting); Henkin, Act of State
Today: Recollections in Tranquility, 6 Column. J. Transnt’! L. 175,
178 (1967).
* Restatement (Third) of the Foreign Relations Law of the
United States § 443, reporters’ note 1 (1987); Leigh & Sandler,
Dunhill: Toward a Reconsideration of Sabbatino, 16 Va. J. Int’! L.
685, 709-718 (1976); Ricaud v. American Metal Co., 246 U.S. 304,
310 (1918).
10J. Dellapenna, Deciphering the Act of State Doctrine, Manu-
script at 44-52 (1989) (to be published in 35 Vill. L. Rev.);
Ricaud, 246 U.S. at 309; Callejo v. Bancomer, S.A., 764 F.2d 1101,
1113-1114 (5th Cir. 1985). Cf. Hilton v. Guyot, 159 U.S. 113
(1895).
10
sights in one setting or another. But at least for the case
at hand, we believe that whatever guidance they impart
is sufficiently subsumed in the more general understand-
ing, synthesized in Sabbatino, that the doctrine “effec-
tuate[s] genera! notions of comity among nations and
among the respective branches of the Federal Govern-
ment.” First National City Bank, 406 U.S. at 762 (opin-
ion of Rehnquist, J.). We therefore rest our submis-
sion on the identification of a number of factors that,
under principles of comity and separation of powers,
indicate that application of the act of state doctrine
is not required in the circumstances of this case. Be-
fore turning to those considerations, however, we believe
it appropriate to review the manner in which the act of
state doctrine has evolved through this Court’s decisions.
I. SABBATINO, ITS PREDECESSORS, AND ITS
PROGENY
The act of state doctrine has gradually been trans-
formed from a set of precepts based on strict notions
of territorial sovereignty, requiring seemingly unques-
tioned deference by our courts to the acts of a foreign
government within its territory, to a more flexible anal-
ysis in which the national interests of the United States
may in certain circumstances require modification of the
effect to be given to the act cf a foreign state. In ad-
dition, because the decision whether to disregard a for-
eign act of state in United States courts often implicates
important and sensitive foreign relations interests of
the United States, and because the ascertainment, articu-
lation and implementation of those interests is the re-
sponsibility of the political Branches, the Court has rec-
ognized in Sabbatino and other cases that the doctrine
must respect the role of those Branches under established
principles of separation of powers.
l.a. Although the origins of the act of state doctrine
may be found in the earliest vears of the Nation’s
jurisprudence,"' the Court’s seminal decision on the sub-
11 The principle that courts of one nation will not sit in judgment
on the acts of another was articulated (though not fully de
11
ject is Underhill v. Hernandez, 168 U.S. 250 (1897). In
Underhill, an American citizen brought suit in an Amer-
ican court against the commander of revolutionary forces
who exercised full civil and military authority over a
city in Venezuela, seeking damages (presumably under
Venezuelan law) for illegal detention and related wrongs.
The trial court directed a verdict for the com:nander,
and this Court affirmed. 168 U.S. at 252-253. The Court
explained its holding in what Sabbatino later described,
376 U.S. at 416, as the “classic American statement” of
the act of state doctrine (168 U.S. at 252):
Every sovereign State is bound to respect the inde-
pendence of every other sovereign State, and the
courts of one country will not sit in judgment on the
acts of the government of another done within its
own territory. Redress of grievances by reason of
such acts must be obtained through the means open
to be availed of by sovereign powers as between
themselves. | '*}
See also Hatch v. Baez, 7 Hun. 596 (N.Y. Sup. Ct. 1876).
b. In American Banana Co. v. United Fruit Co., 213
U.S. 347 (1909), the defendant was not, as in Under-
hill, the foreign official who commitied the act of state,
but rather an American company that allegedly induced
the act. The Court nevertheless concluded that the
Underhill principle applied. American Banana was a
veloped) in early decisions of this Court. See Ware v. Hylton, 3
U.S. (2 Dall.) 199, 230 (1796); Hudson v. Guestier, 8 U.S. (4
Cranch) 293, 294 (1808); The Schooner Exchange vy. McFaddon,
il U.S. (7 Cranch) 116, 146 (1812); L’Invincible, 14 U.S. (1
Wheat.) 238, 253 (1816); The Santissima Trinidad, 20 U.S. (7
Wheat.) 283. 336 (1822). The doctrine is generally traced to Blad
v. Bamfield, 3 Swans. 604, 26 Eng. Rep. 992 (Ch. 1674), in which
the English courts declined to question a patent granted by the
King of Denmark. See Sabbatino, 376 U.S. at 416; see also Duke
of Brunswick v. King of Hanover, [1848] 2 H.L.C. 1.
12 The Court also noted that the commander acted to coerce the
American plaintiff to operate the city water works for the benefit
of the community and the revolutionary forces, not out of “malice
or any personal or private motive.” 168 U.S. at 254.
12
suit between two American companies under the anti-
trust laws of the United States, in which the plaintiff
alleged that the defendant had caused the Government
of Costa Rica to seize the plaintiff’s banana plantation
and railroad for the purpose of eliminating it as a com-
petitor. In an opinion by Justice Holmes, this Court
affirmed the dismissal of the complaint. The Court first
held that the antitrust laws did not reach conduct occur-
ring outside of the United States (213 U.S. at 357),
a holding that has, of course, been rejected by subse-
quent decisions. Continental Ore Co. v. Union Carbide
& Carbon Corp., 370 U.S. 690, 704-705 (1962).
More pertinently, the Court also relied upon act of
state principles (213 U.S. at 357-359) :
[T]he acts of the defendant in * * * Costa Rica
* * * were not torts by the law of the place and
therefore were not torts at all, however contrary to
the ethical and economic postulates of [the Sherman
a. **”
The fundamental reason why persuading a sover-
eign power to do this or that cannot be a tort * * *
is that it is a contradiction in terms to say that
within its jurisdiction it is unlawful to persuade a
sovereign power to bring about a result that it de-
clares by its conduct to be desirable and proper. It
does not, and foreign courts cannot, admit that the
influences were improper or the results bad. It makes
the persuasion lawful by its own act. The very
meaning of sovereignty is that the decree of the sov-
ereign makes law.
.- * . *
* * * As to the buying at a high price, etc., it is
enough to say that we have no ground for supposing
that it was unlawful in the countries where the pur-
chases were made. * * * A conspiracy in this country
to do acts in another jurisdiction does not draw to
itself those acts and make them unlawful, if they
are permitted by the local law.
Thus, in American Banana, the Court concluded that the
defendant’s conduct should not give rise to liability un-
LE I OR Re
a
13
der United States law (even assuming the antitrust laws
otherwise applied in Costa Rica) because the plaintiff's
injury was the direct effect of acts of the Costa Rican
Government. Moreover, the defendant’s conduct, includ-
ing its inducement of the expropriation, appeared to be
lawful under the law of Costa Pgef. |
ce. The Court reiterated the rule of Underhill and
American Banana in Oetjen v. Central Leather Co., 246
U.S. 297, 303-304 (1918)}, and -.icaud v. American
Metal Co., 246 U.S. 304, 309 (1918). Those cases in-
volved disputed title to property that was seized in Mex-
ico by revolutionary forces. that later were recognized by :
the Executive Branch as the government of Mexico. Re-
lying on principles of separation of powers and comity,
the Court gave effect to the seizures by sustainiag the
title of the party who claimed through a- person who
purchased from the Mexican Government after the sei-
zure, rather than from the prior owner.
The Court first stressed that “[t]he conduct of the for-
eign relations of our Government is committed by the
Constitution to the Executive and Legislative—‘the politi-
cal’—Departments of the Government,” and held that the
courts could not question the Executive’s rgeognition of
the revolutionary forces that = the property.
Oetjen, 246 U.S. at 302-303. e Court then explained
that the governing principle of Underhill and American
Banana, which involved damage claims based xpon torts
allegedly committed in the foreign country,” was equally .
applicable to a case involving title to property breught
within the custody of the court. This was so, the Court
reasoned, because the principle “rests at last upon the
highest considerations of international comity and ex-
pediency,” and “[t]o permit the validity of the acts of
one sovereign State to be reexamined and perhaps con-
demned by the courts of another would very certainly
‘imperil the amicable relations between governments and —
vex the peace of nations.’” Oetjen, 246 U.S. at 303-304.
At the same time, the Court rejected the contention
that the rule of Underhill and American Banana deprives
. 14
a court of jurisdiction over a case involving the act of a
foreign sovereign. Rather, the Court explained, it re-
quires only that “when it is made to appear that the
foreign government has acted in a given way on the
subject-matter of the litigation, the details of such action
or the merit of the result cannot be questioned but must
be accepted by our courts as a rule for their decision”
(Ricaud, 246 U.S. at 309). Any remedy the losing claim-
ant might have, the Court concluded, must be in the courts
of Mexico or through diplomatic efforts of the Executive
Branch. Jd. at 310; Oetjen, 246 U.S. at 304.
2. It was against the background of these precedents
that the Court reexamined the act of state doctrine in
Sabbatino. See 376 U.S. at 416-418." Sabbatino involved
an expropriation by the Cuban Government of the prop-
erty and rights of an American-owned Cuban corporation.
The expropriation was challenged in United States courts
on the ground that it violated Cuban and international
law. The Court held that the expropriation must be given
effect by United States courts and that the Cuban gov-
ernment, not the former American owners, was entitled
to the proceeds of the sale of expropriated sugar.
In reciting the evolution of the doctrine (376 U.S. at
416-419) and finding it to be one of federal law (id. at
421-427), the Court examined the various justifications
that had been offered for it. The Court rejected the
view, implied by Underhill, Oetjen, and American
13 Sabbatino also cited United States v. Belmont, 301 U.S. 324
(1937), and United States v. Pink, 315 U.S. 208 (1942). 376 U.S.
at 416-417. In those cases, the Court gave effect to the expropria-
tion by the Soviet Union of all assets of Russian companies, in-
cluding assets in the United States. Although the act of state doc-
trine ordinarily is limited to acts of a foreign sovereign that are
effectuated within its own territory, the President had concluded
an executive agreement with the Soviet Union, which included an
assignment to the United States Government of the Soviet Union's
claims against expropriated assets in the United States. For this
reason, and because American claimants were not adversely af-
fected, the Court found it to be consistent with the public policy of
the United States to give effect to the Soviet decree even as it ap-
plied to such assets. Pink, 315 U.S. at 226-234.
15
Banana, that the act of state doctrine is compelled by
the inherent nature of a foreign sovereign’s authority
within its territory. The Court noted that if a transac-
tion takes place in one jurisdiction and the forum is in
another, the forum state does not divest the other state
of its territorial sovereignty if it applies its own law to
the controversy or dismisses the suit. The Court likewise
rejected the view that the doctrine is required by inter-
national law (as evidenced by the practice of nations),
since most countries in fact failed to adhere to it rigidly.
Finally, the Court held that, although the conduct of
the Nation’s foreign relations is committed by the Con-
stitution to the Executive and Legislative Branches, the
Constitution does not thereby render every case touching
upon foreign relations a political question or irrevocably
remove from the Judiciary the capacity to review the
validity of foreign acts. See generally 376 U.S. at 421-
423.
After putting these alternative rationales to one side,
the Court reiterated that the doctrine rests in part on the
principles of comity among nations articulated in Under-
hill, Oetjen and Ricaud. 376 U.S. at 416-418; cf. The
Schooner Exchange, 11 U.S. (7 Cranch) at 136-137, 146-
147. It further held that, although the doctrine is not
constitutionally compelled, it does have “ ‘constitutional’
underpinnings.” 376 U.S. at 423. Thus, in the Court’s
view, the doctrine arises out of the basic relationships
among the Branches under the separation of powers and
“eoncerns the competency of dissimilar institutions to
make and implement particular kinds of decisions in
the area of international relations.” Jbid. Specifically,
it “expresses the strong sense of the Judicial Branch
that its engagement in the task of passing on the validity
of foreign acts of state may hinder rather than further
this country’s pursuit of goals both for itself and for the
community of nations as a whole in the international
sphere.” Jbid.
Applying these principles, the Court held that United
States courts could not inquire into the validity of the
16
Cuban expropriation decree. It noted that judicial inquiry
into the validity of a foreign official’s actions under the
law of his own state “would not only be exceedingly diffi-
cult but, if wrongly made, would be likely to be highly
offensive to the state in question.” 376 U.S. at 415 n.17,
citing Hudson v. Guestier, 8 U.S. (4 Cranch) 293, 294
(1808). In holding that the courts likewise could not
examine the validity of the expropriation under interna-
tional law, the Court declined to “lay[] down or reaf-
firm[] an inflexible and all-encompassing rule,” because
the continuing vitality of the doctrine “depends on its
capacity to reflect the proper distribution of functions
between the judicial and political branches of the Govern-
ment on matters bearing upon foreign affairs.” 376 U.S.
at 427-428. The Court therefore held that the courts
“will not examine the validity of a taking of property
within its own territory by a foreign sovereign govern-
ment * * * in the absence of a treaty or other unam-
biguous agreement regarding controlling legal principles,
even if the complaint alleges that the taking violates
customary international law.” Ibid.
The Court found these principles barred adjudication
of the claim in Sabbatino. Although the Department of
State had taken the firm view in the diplomatic arena
that the expropriation violate? international law (376
U.S. at 432), the Court found no consensus among na-
tions on that question (éd. af 428-430) and therefore
found that it was “not niéet for adjudication by domestic
tribunals” (id. at 429 n.26). The Court also feared that
judicial determinations in a few individual cases regard-
ing the validity of an expropriation under international
1* For example, the Court noted that the greater the degree of
codification or consensus concerning a particular area of inter-
national law, the more appropriate it would be for a court to render
decisions regarding it. The Court also found it evident that “some
aspects of international law touch much more sharply on national
nerves than do others,” and that “the less important the implica-
tions of an issue are for our foreign relations, the weaker the justi-
fication for exclusivity in the polit.cal branches.” 376 U.S. at 428.
17
law could interfere with or embarrass the Executive
Branch in its efforts to obtain compensation for all
United States citizens through economic and political
sanctions and diplomatic efforts, yet at the same time
would prove ineffective to exert real pressure on the
Cuban Government. Jd. at 430-437.
3. Since Sabbaiino was decided, the Court has held in
two other cases that adjudication of the validity of a
foreign act was not barred by the act of state doctrine
in the particular circumstances presented. In First Na-
tional City Bank v. Banco Nacional de Cuba, 406 U.S.
759 (1972), the Court held that a United States court
could adjudicate the validity of a Cuban expropriation
decree in the context of a counterclaim ar‘si.g in a suit
brought by an instrumentality of the Cuban Government.
The Solicitor General in that case filed with the Court a
letter from the Legal Adviser of the Department of State,
stating that the foreign policy interests of the United
States do not require application of the doctrine to bar
adjudication of a counterclaim or setoff when the foreign
state’s claim arises from a relationship existing at the
time of the expropriation and the amount of relief sought
is limited to the amount of the foreign state’s claim.
See id. at 781 (Brennan, J., dissenting). Three Justices,
explicitly adopting the so-called “Bernstein exception,” *
took the position that “where the Executive Branch,
charged as it is with primary respensibility for the con-
duct of foreign affairs, expressly represents to the Court
that application of the act of state doctrine would not
advance the interests of American foreign policy, that
doctrine should not be applied by the courts” (id. at 768)
(opinion of Rehnquist, J.)). Those Justices further noted
(id. at 768-769), as did Justice Douglas in his separate
opinion (id. at 770-773), that allowing the counter-
claim also was consistent with the principles of equity
set forth in National City Bank v. Republic of China,
348 U.S. 356 (1955), which held that sovereign immunity
did not bar assertion of a counterclaim against a foreign
15 See note 4, supra, and page 32 and note 32, infra.
18
sovereign that invoked the jurisdiction of our courts.”
In Alfred Dunhill of London, Inc. v. Cuba, 425 U.S.
682 (1976), the Court held that Cuba’s refusai to pay a
commercial debt did not constitute an act of state in the
absence of some statute, decree or order of the Cuban
Government indicating that it had repudiated the debt
or confiscated the amounts due. /d. at 690-695. In a
plurality opinion for four Members of the Court, Justice
White further concluded that the act of state doctrine
should not in any event be extended to the repudiation of a
commercial debt. /d. at 695-706. The plurality placed
particular reliance on the Executive Branch’s statement,
which indicated that purely commercial conduct, as op-
posed to public or governmental acts, should not be re-
garded as the sort of conduct to which the doctrine ap-
plies. That position made clear that no embarrassing
conflicts with the Executive Branch would ensue from
adjudicating the validity of the repudiation. Jd. at 696-
698.
As these two cases de nonstrate, the Executive Branch
has moved incrementally in suggesting areas in which
the act of state doctrine need not be applied in order to
protect the foreign policy interests of the United States.
And the Court likewise has moved incrementally in ad-
justing the application of this once-rigid doctrine in light
of the flexibility suggested by Sabbatino, in order to ac-
commodate changing developments in the international
community (Alfred Dunhill) or equitable factors (First
National City Bank). Indeed, the result reached in
each of the Court’s most recent cases——Sabbatino, First
National City Bank, and Alfred Dunhiil—was that
urged by the Executive Branch, despite some divergence
16 In a separate opinion that expressly departed from the reason-
ing of Sabbatino, Justice Powell concurred in the judgment because
it did not appear that an exercise of jurisdiction would interfere
with delicate foreign relations conducted by the political Branches
(406 U.S. at 773-776). The four dissenting Justices concluded that
the act of state doctrine was appliceble to the counterclaims. Like
Justice Powell (id. at 773) and Justice Douglas (id. at 772-773),
they did not believe that a “Bernstein exception” should be recog-
nized (id. at 776-777, 782-793 (Brennan, J., dissenting) ).
19
in the supporting rationale. As we explain below, our
submission in this case builds upon the approach both
we and the Court have taken in Sabbatino and subse-
quent cases, but finds support in principles articulated
in the Court’s earlier cases as well.
II. PRINCIPLES OF SEPARATION OF POWERS AND
INTERNATIONAL COMITY SUGGEST THAT AP-
PLICATION OF THE ACT OF STATE DOCTRINE
IS NOT REQUIRED IN THIS CASE
Both the Court’s general articulation of the bases for
the act of state doctrine in principles of separation of
powers and comity, and the Court’s application of those
principles in Sabbatino and other cases, suggest that re-
spondent’s claims in this case need not be barred. As we
explain in Part A, several considerations of international
comity suggest that the act of state doctrine need not be
applied in this case. These same considerations also have
informed the determination by the Department of State
that tne conduct of the foreign relations of the United
States would not be adversely affected by adjudication
of respondent’s claims. As we explain in rart B, that
judgment regarding the foreign relations context of the
case—and of the requirements of international comity
in this setting—is entitled to great weight.
A. International Comity
“*“Comity,” in the legal sense, is neither a matter of
absolute obligation, on the one hand, nor of mere courtesy
and good will, upon the other. But it is the recognition
which one nation allows within its territory to the legisla-
tive, executive or judicial acts of another nation, having
due regard both to international duty and convenience,
and to the rights of its own citizens or of other persons
who are under the protection of its laws.’” Societe Na-
tionale Indust, elle Aerospatiale v. United States District
Court, 482 U.S. 522, 543-544 n.27 (1987) (quoting
Hilton v. Guvot, 159 U.S. at 163-164). As Societe Na-
tionale and Hilton v. Guyot show, the courts are called
upon in a variety of circumstances to determine the
relationship between the laws and official acts of the
20
United States and those of foreign countries—often in
suits between private parties that do not implicate sub-
stantial exercises of sovereign authority by another na-
tion.
{n the context of the act of state doctrine, however, the
national sensibilities that principles of comity seek to ac-
commodate may be present with particular intensity and
significance. This is because the doctrine typically ap-
plies to discrete acts of a foreign government that repre-
sent a deliberate and focused exercise of sovereign au-
thority, often in relation to particular property, transac-
tions, or persons. It therefore is with good reason that
the courts have historically given effect to the sovereign
acts of other nations, and that, under Sabbatino, they
properly look to the views of the coordinate Branches
and their place in the Constitutional structure in deciding
whether to adhere to or depart from that practice. Here,
we believe that considerations of comity do not require
that respondent be precluded from litigating its claims.
1. In Sabbatino and many of the Court’s other act of
state cases, the act of a foreign sovereign itself was
challenged on the ground that it was illegal under that
nation’s law or international law. There was no sugges-
tion that the primary conduct at issue was directly gov-
erned by United States law. This case is, obviously, dif-
ferent. Respondent’s suit is brought against private par-
ties who are United States nationals, not against the
Government of Nigeria or its officials, and the suit
arises under laws of the United States that, in respond-
ent’s view, directly applied to petitioners’ primary conduct.
In particular, respondent seeks to recover treble dam-
ages under RICO for injuries sustained in its business or
property as a result of petitioners’ alleged racketeering
activities. 18 U.S.C. 1964(c). RICO, and the mail and
wire fraud statutes that it incorporates,’ make manifest
that the United States has (and has asserted) a strong
17 See 18 “U.S.C. 1661(1), defining the term “racketeering ac-
tivity” to include any act that is indictable under 18 U.S.C. 1341
(relating to mail fraud) or 1343 (relating to wire fraud).
21
interest in protecting the channels and instrumentalities
of the interstate and foreign commerce of the United
States against uses intended to perpetrate fraud and cor-
ruption. Just as RICO prohibits racketeering activities
designed to corrupt domestic governmental bodies through
bribery (cf. H.J. Inc. v. Northwestern Bell Tel. Co.,
109 S. Ct. 2893, 2897 (1989); Town of Kearney v.
Hudson Meadows Urban Renewal, 829 F.2d 1268, 1268-
1269 (3d Cir. 1987)), it also prohibits such activities di-
rected to the decision-making processes of foreign govern-
ments, where the jurisdictional prerequisites of the stat-
ute are otherwise met. Petitioners do not contend other-
wise. Cf. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479,
499 (1985). Petitioners likewise do not challenge the
court of appeals’ holding (Pet. App. A29-A30) that com-
mercial bribery violates Section 2(c) of the Robinson-
Patman Act, 15 U.S.C. 13(c), and is actionable under 15
U.S.C. 15." The interest of the United States in enforcing
Acts of Congress that apply to the conduct at issue,
even though that conduct had extraterritorial effects as
well, is an impo~tant factor in the comity analysis.
See Societe Nationale, 482 U.S. at 545 n.29.
2. It is true that the laws of Nigeria may also have
applied to petitioners’ primary conduct, insofar as that
country had jurisdiction over persons involved in efforts
to corrupt its governmental processes. But there is no
conflict between the governing laws of the two nations in
this respect, since Nigeria, like virtually all countries,
prohibits the payment of bribes to its officials in connec-
tion with the performance of their duties.*° In this re-
8 The Court did not grant review of the court of appeals’ holding
(Pet. App. A22-A24) that the complaint sufficiently alleges a pat-
tern of racketeering activity under RICO.
1 See also Grace v. E.J. Kozin Co., 538 F.2d 170, 173 (7th Cir.
1976) ; Rangen, Inc. v. Sterling Nelson & Sons, Inc., 351 F.2d 851
(9th Cir. 1965), cert. denied, 383 U.S. 986 (1966), cited in Cali-
fornia Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508,
513 (1972). ad
2° See Decree No. 38, §§ (Nov. 22, 1975) (J.A. 146-164, 182-
211). See also H.H. Mz hall, The Laws of Northern Nigeria,
A
4
22
spect, the laws of the two nations that address the pri-
mary conduct at issue do not, standing alone, suggest
that adjudication of respondert’s claims under United
States law would offend principles of comity. Compare
Societe Nationale, 482 U.S. at 541-546.
This conclusion is consistent with the decision 'n Amer-
ican Banana, the Court’s leading case considering the act
of state doctrine in a suit arising directly under United
States law. The act of state ruling there rested in large
part on the premise that the conduct of the defendant,
including its efforts to persuade the Government of Costa
Rica to expropriate the competitor’s land, was legal
under the laws of that country. See 213 U.S. at 357-
359 (quoted at page 12, supra). This reading of Amer-
ican Banana is confirmed by United States v. Sisal
Sales Corp., 274 U.S. 268 (1927), which was an in-
junctive action alleging that the defendants had con-
spired in the United States to monopolize and restrain
trade in sisal by, inter alia, securing passage of favor-
able legislation in Mexico. In holding that the complaint
stated a valid claim for relief, this Court distinguished
American Banana as involving “acts done outside the
United States and not unlawful by the law of the place”
(274 U.S. at 276). Here, as we have said, conduct such
as that alleged by respondent is illegal under the law
of Nigeria.
Moreover, in Sisal Sales, “(t]he United States com-
plain{ed] of a violation of their laws within their own
territory by parties subject to their jurisdiction, not
ch. 89, §$ 115-122 (1965); D. Kingdon, The Laws of the Federa-
tion of Nigeria and Lagos, Criminal Code, ch. 42, §§ 98-101, 104
(1958). The legislative history of the Foreign Corrupt Practices
Act shows Congress’s understanding that “virtually every country
has its own laws against bribery, although some are not vigorously
enforced.” S. Rep. No. 1031, 94th Cong., 2d Sess. 4 (1976). See
also J.A. 176-178 (survey of antibribery laws of 65 nations’ Dif-
ferent considerations would be raised if the receipt of payments
was not illegal under the law of the other country. The FCPA
contains express exceptions for such situations. 15 U.S.C. 78dd-
1(c) (1), 78dd-2(c) (1).
A A
merely of something done by another government at the
instigation of private parties” (274 U.S. 276). Although
“the sonspirators were aided by discriminating legisla-
tion,” they were “within the jurisdiction of our courts
and [could] be punished for offenses against our laws”
(ibid.). Similarly here, respondent complains of injuries
sustained as a result of alleged violations of United
States law committed by persons within the legislative
jurisdiction of the United States. Equitable considera-
tions, which have been deemed relevant under the act of
state doctrine,” suggest that an act “done by another
government” at the allegedly corrupt “instigation of
private parties” should not stand as a bar to a suit
against those private parties, if the suit can proceed in
a manner that is consistent with foreign relations con-
cerns.”
3. Because respondent has brought this action against
petitioners, not the Government of Nigeria or its officials,
the courts below would not be required to adjudicate the
validity of an act of the Nigerian Government under
principles of Nigerian law. That factor, too, diminishes
the potential for conflicts between the laws and interests
of the two nations. It also distinguishes this case from
Underhill, Sabbatino, and other cases in which the suit
squarely challenged an exercise of sovereign authority.
At least in the present context, this conclusion is not
altered by the fact that adjudication of respondent’s
claims may require a United States court te determine
whether the award of the contract was caused by bribes.
The issue of causation would be addressed only to de-
termine the domestic consequences of petitioners’ conduct,
by identifying the intended and foreseeable consequences
21 See Alfred Dunhill, 425 U.S. at 703-704; First National City
Bank, 406 U.S. at 768-769 (opinion of Rehnquist, J.); id. at 770-
773 (Douglas, J., concurring).
22 This is not a situation, tike that in Sabbatino, where t*e Exec-
utive Branch is seeking redress from the foreign sovereign itself
for injuries sustained by United States nationals and the adjudica- |
tion of a private suit could interfere with those diplomatic efforts.
24
abroad of the acts they committed within the legislative
jurisdiction of the United States. Nor is a different
conclusion required because such an adjudication may es-
tablish an evidentiary basis for inferring that Nigerian
officials may have violated Nigerian law, thereby per-
mitting Nigeria to regard the contract as void or void-
able.* Respondent does not request the United States
*8 Because the act of state doctrine requires that the foreign
sovereign’s act, not simply its law, be given controlling effect, the
doctrine has been described as a rule of repose, similar to issue
or claim preclusion in judicial proceedings. See J. Dellapenna,
note 10, supra, at 44-52. Under this view, the act of a for-
eign state is analogous to the judgment of a court that conc!lu-
sively resolves all relevant legal issues under controlling law.
It is significant for purposes of this analogy hat corruption of
the court, unlike mere error in its application of governing
law, is an accepted ground for the court to set aside its judgment—
or, in appropriate circumstances, for allowin;r a collateral attack
on the judgment in a separate proceeding in another forum. Re-
statement (Second) of Judgments §§ 70(1)(a) and comment b,
82 (1982). Here, because respondent’s claims of corruption arise
under United States law and are principally brought against
other United States naticnals, a court of this Nation may be a
convenient and suitable forum in which to litigate those claims,
if the foreign policy interests of the United States do not require
the court to stay its hand. Cf. id. § 82 and comment b.
24To be sure, if the Nigerian Government formally determined
the contract to be void or rescinded the contract because it was
tainted by corruption (and therefore voidable), there would be less
basis for the contention that adjudication of respondent’s claims
under United States law based on the same transaction would
implicate act-of state concerns. Compare Steele v. Bulova Watch
Co., 344 U.S. 280, 285, 288-289 (1952).
Nigerian courts have held that illegality renders a contract in-
valid. Sodipo v. Lemninkainen Oy, [1986] 1 N.W.L.R. 220, 229,
232-236 (Sup. Ct. Nigeria); see also George v. Dominion Flour
Miils Ltd., [1963] 1 All. N.L.R. 71, 73-74 (Fed. Sup. Ct. Nigeria).
Under these authorities, it would appear that violation by a
Nigerian official of the proscription against bribery would render
his award of a government contract invalid and the contract itself
void (or voidable at the option of the government). See also J.
Orojo, Nigerian Commercial Law & Practice 73-74 (1983); O
Achike, Nigerian Law of Contract 189-190 (1972). That also is
the rule under English law (see, e.g., City of London Electric Light-
courts actually to adjudicate any issues arising under
Nigerian law that may be implicated by the evidence ad-
duced. Thus, irrespective of the outcome of respondent’s
suit, the contract will retain whatever effect it otherwise
has as a matter of Nigerian law, and that effect presum-
ably will continue to be recognized in the United States.
The contract simply will not be given the further effect,
under the act uf state doctrine, of precluding all inquiry
by a United States court into the circumstances sur-
rounding its formation, insofar as they are material to
the adjudication of an alleged violation of United States
law. Cf. Societe Nationale, 482 U.S. at 542-546.% Com-
pare Angle v. Chicago, St. P., M. & O. Ry., 151 U.S. 1,
16-22 (i894); Walker Process Equipment, Inc. v. Food
Machinery & Chemical Corp., 382 U.S. 172, 175-i77
(1965).
This analysis is supported by the decision in Conti-
nental Ore. There, the defendants had conspired in the
United States to establish an exclusionary customer allo-
cation program for sales of vanadium in Canada by
utilizing the authority of a wholly owned subsidiary of
ing Co. v. Mayor of London, [1903] App. Cas. 434 (H. L. (E.)),
aff’g {1901} 1 Ch. 602, 613 (Rigby, L.J.)), which the law of
Nigeria, as a former British colony, generally mirrors. See Sodipo
v. Lemninkainen Oy, 1 N.W.L.R. at 232; T. Elias, The Nigerian
Legal System, 12, 17-21, 214 (1963). Similarly, contracts between
the United States and a private party that are taifited by corrup-
tion may be rescinded by the United States. United States v.
Mississippi Valley Generating Co., 364 U.S. 520, 563-566 (1961) ;
Pan American Petroleum & Transp Co. v. United States, 273 U.S.
456, 500 (1927); Crocker v. United States, 240 U.S. 74, 81 (1916).
25 Unlike the French blocking statute in Societe Nationale (482
U.S. at 526 n.6, 544-545 n.29), there is no suggestion here that the
Nigerian statutes governing the award of military contracts or
prohibiting bribery were intended to bar an inquiry into such mat-
ters by a United States court. See Angle v. Chicago, St. P., M. & O.
Ry., 151 U.S. 1, 21-22 (1894). We express no view on whether other
aspects of international comity that are distinct from those inform-
ing the act of state doctrine—e.g., principles of comity concerning
the production of evidence in Nigeria or pertaining to the affairs of
its Government—may properly be invoked in further proceedings in
this case.
26
one of the defendants as the exclusive purchasing agent
for the Canadian government. In upholding the claim,
the Court analogized the case to Sisal Sales, again dis-
tinguishing American Banana (370 U.S. at 705 & n.13),
and continued (id. at 706) :
In the present case [plaintiffs] do not question the
validity of any action taken by the Canadian Gov-
ernment or by its Metals Controller. * * * As in
Sisal, the conspiracy was laid in the United States,
was effectuated both here and abroad, and respond-
ents are not insulated by the fact that their con-
spiracy involved some acts by the agent of a foreign
government.
* * * (T]here is no indication that the Controiler
or any other official within the structure of the Ca-
nadian Government approved or would have approved
of joint efforts to monopolize the production and sale
of vanadium or directed that purchases from Con-
tinental be stopped.
Here, as in Continental Ore, there is no indication that
the specific acts of petitioners on which respondent bases
its claim of injury—namely, alleged racketeering activi-
ties leading to the payment and receipt of bribes by the
agent of a foreign government—were approved by the
Nigerian Government itself.**
4. It also is significant for the comity analysis that the
payments allegedly were made to induce officials of the
Nigerian Government to enter into a commercial rela-
tionship, not to perform acts that would remain of a
distinctly sovereign nature in all] respects. As explained
above, four Justices concluded in Alfred Dunjzill that the
261 addition, because there is no indication that the Nigerian
Government has officially concluded that the contract was unaffected
by any payments that might have been made by petitioners or that
the contract should be ratified despite any such defects, a ruling by
a United States court that the contract was awarded because of
corruption in which United States nationals were involved would
not exhibit a lack of respect for any specific determination by the
foreign goverrment regarding the integrity or continuing force
of its contracting decision. Cf. Hilton v. Guyot, 159 U.S. at 163-
164; compare Alfred Dunhill, 425 U.S. at 695.
27
act of state doctrine should not be applied to bar adjudi-
cation of a claim based on Cuba’s repudiation of a com-
mercial obligation. 425 U.S. at 695-706 (opinion of
White, J.). The plurality relied on several factors. First,
this result would not create a threat of embarrassing
conflicts with the Executive Branch in its conduct of
foreign relations; indeed, the Department of State took
the position that purely commercial activity, as distin-
guished from public or sovereign acts, should not be re-
garded as the sort of conduct to which the doctrine ap-
plies. 425 U.S. at 696-698. Second, under the restrictive
theory of foreign sovereign immunity adopted by the
Executive Branch in the 1952 “Tate Letter,” a sovereign
is not immune from suit for its commercial acts. Jd. at
698-703, 705. Third, adjudicating the validity of a sov-
ereign’s commercial acts, as opposed to its governmental
acts, is less likely to constitute an affront, since in their
commercial capacities foreign governments do not exer-
cise powers unique to sovereigns and are subject to gen-
erally accepted standards of conduct; conversely, refus-
ing to adjudicate could cause unwarranted hardship for
persons engaged in international commerce. /d. at 703-704.
Th. factors upon which the Alfred Dunhill plurality
relied suggest a similar result here. We do not take issue
with the court of appeals’ holding that the decision to
award a military construction contract reflects:a suffi-
ciently formai and substantial expressign of govern-
mental interests to be regarded as a sovereign act for
purposes of the act_of state doctrine. Pet. Amp. A12-A13,
A57; see also Williams v. Curtiss-Wright Corp., 694 F.2d
300, 302 (3d Cir. 1982); Nort.rop Corp v. McDonnell
Douglas Corp., 705 F.2d 1030, 1048 (9th Cir), cert. de-
nied, 464 U.S. 849 (19838). But the contractual relation-
ship between Nigeria and Kirkpatrick that commenced
upon the award of the contract would be regarded as
“commercial activity” for purposes of the Foreign Sov-
ereign Immunities Act, 28 U.S.C. 1605(a)(2).” It
27 Under the FSIA, the commercial character of an activity is
determined “by reference to the nature of the course of conduct or
28
therefore presumably would also be regarded as com-
mercial for purposes of the “commercial activity” ex-
ception to the act of state doctrine that was endorsed by
the plurality opinion in Alfred Dunhill, since that view
was based in part on sovereign immunity principles that
are now incorporated in the FSIA.* Thus, although this
case, unlike Alfred Dunhill, does not involve conduct by
a foreign government in the course of an on-going com-
mercial relationship, the fact that petitioners’ alleged
conduct related to a prospective commercial relation ip
—and therefore resembled ordinary commercial 5rit<:y
between private parties (see, e.g., Perrin Vv. United
States, 444 U.S. 37 (1979))— is relevant in deciding
whether the international comity aspects of the act of
state doctrine require that it be applied to bar adjudica-
tion of this case. Cf. Alfred Dunhill, 425 U.S. at 703-
704 (opinion of White, J.).”
B. Separation Of Powers
The result suggested by principles of international
comity is confirmed by reference to the “constitutional
- underpinnings” of the act of state doctrine. Those under-
pinnings, and their relation to principles of comity, re-
quire consideration of the roles of the political Branches
particular transaction or act, rather than by reference to its pur-
pose” J2@ U.S.C. 1603(d). “Thus, a contract by a foreign govern
ment to buy provisions or equipment for its armed forces or to
cof struct a government building constitutes a commercial activity.”
H.R. Rep. No. 1487, 94th Cong., 2d Sess. 16 (1976).
2° The House Report on the FSIA expressed approval of the
Solicitor General’s position on the act of state issue in Alfred
Dunhill. H.R. Rep. No. 1487, supra, at 20 n.1.
2° The instant case also differs from those in which American
defendants were alleged to have corruptly induced a foreign sov-
ereign to award rights to exploit natural resources. Clayco Petro-
leum Corp. v. Occidental Petroleum Corp., supra; Occidental Pe-
troleum Corp. Vv. Buttes Gas & Oil Co., 331 F. Supp. 92 (C.D. Cal.
1971), aff'd, 461 F.2d 1261 (9th Cir.), cert. denied, 409 U.S. 950
(1972). The development of a nation’s depletable resources impli-
cates its distinctly sovereign interests to a greater extent than does
the award of a procurement contract, which may be of only episodic
interest to its government.
in the conduct of foreign affairs—and, accordingly, of
the relation of those Branches to the subject of the
litigation.
1. When the official act of a foreign government in
matters affecting its sovereign interests is questioned
in the courts of the United States, even in a suit between
private parties, the litigation necessarily affects the na-
tional interests of the United States and the other coun-
try (as well as other countries), not merely those of the
private litigants. Any assessment of the respective na-
tional interests in this setting must be greatly influenced
by the foreign policies and sensibilities of the two na-
tions and other nations and by the standards of conduct
among nations (and their respective nationals) that are
adhered to and advocated by the United States. Under
the Constitution, those are subjects that the President
and Congress have primary responcibility for ascertain-
ing, articulating and implementing. See United States v.
Curtiss Wright Export Corp., 299 U.S. 304, 319 (1936);
U.S. Const., Art II, §2, Cl. 2 (Treaty Clause); Art.
I, §8, Cl. 3 (Congress shall have power to “regulate
Commerce with foreign Nations”); Art. I, §8, Cl. 10
(Congress shall have power to “define and punish
Piracies and Felonies committed on the high Seas, and
Offenses against the Law of Nations”). Accordingly, a
United States court should give great weight to the views
of the Executive Branch (and relevant acts of Congress)
as to whether the national and foreign relations interests
of the United States suggest that the applicable rule of
decision should be supplied by the act of a foreign sover-
eign or drawn from some other source, such as domestic
or international law.
This understanding is reflected in Sabbatino itself.
There, as we have noted, the Executive Branch had
strenuously urged in the diplomatic arena that the ex-
propriation by the Cuban Government violated princi-
ples of international law advocated by the United States.
But the Executive Branch took the equally firm position.
in this Court that, for reasons pertaining to the conduct
of the Nation’s foreign relations, those principles should
30
not be applied by United States courts to determine
whether the expropriation was valid for purposes of re-
solving disputed questions of title to property. See U.S.
Sabbatino Br. 25-34. Thus, the Executive Branch argued,
in substance, that the principles of international law
that it espoused on a natidn-to-nation basis were not
self-executing and did not create private rights that were
judicially enforceable in United States courts. Compare
Argentine Republic v. Amerada Hess Shipping Corp.,
109 S. Ct. 683, 692 (1985).
This Court agreed——largely for the reasons advanced
by the Executive Branch—that “the matter [was] not
meet for adjudication by domestic tribunals.” 376 U.S.
at 429 n.26. The result was to require recognition of the
Cuban decree as the rule of decision. A different posi-
tion of the Executive Branch in other circumstances
(that the foreign relations interests of the United States
do not require unquestioning recognition of the act of a
foreign sovereign) would be entitled to great deference
as well. This Court has recognized in other settings that,
even in the absence of a formal treaty, the actions of the
Executive in the conduct of foreign relations may create
a rule of law to be applied in pending cases. See Dames
& Moore v. Regan, 453 U.S. 654, 685 -(1981); United
States v. Pink, 315 U.S. at 226-234.
2. These constitutional underpinnings of the act of
state doetrine do not suggest that it must be applied to
bar respondent’s suit here.
a. In Sabbatino, one of the factors upon which the
Court relied in declining to adjudicate the validity of the
expropriation decree under international law was the
absence of a “treaty or other unambiguous agree-
ment regarding controlling legal principles.” 376 U.S.
at 428. Thus, one aspect of the separation of. powers com-
ponent of the act of state doctrine concerns the“Aallocation
among the Branches of responsibility for articulating the
rule of law that should be applied in evaluating the
primary conduct at issue. Cf. Milwaukee v. ‘ilinois, 451
U.S. 304, 312-317 (1981). That aspec* is not at issue
ee ee
31
in this case, because the Acts of Congress (and New
Jersey law) upon which respondent relies supply the sub-
stantive standards for the district court to apply in eval-
uating petitioners’ primary conduct.”
b. Respondent of course must further prove that it was
injured by reason of the primary conduct that was made
illegal under domestic law, and it therefore must make
a prima facie showing that payments allegedly made by
petitioners caused Nigerian officials to award the con-
tract to them. It is this feature of respondent’s cause of
action that triggers the separation of powers component
of the act of state doctrine, because it implicates the for-
eign relations concerns for which the political Branches
have primary responsibility.
However, we have been advised by the Department of
State that, in its judgment, adjudication of this case
would not be inconsistent with the conduct of the foreign
relations of the United States, even though the district
court would be required to determine whether the con-
tract was awarded to petitioners because of payments
they made to Nigerian officials. See App., infra, 1a-2a.
To be sure, where the act of a foreign government is ~
itself a direct and immediate cause of the plaintiff’s in-
jury, an inquiry into the “motivation” for that act might
in other circumstances raise significant act of state
concerns, since the effect of such an inquiry is te impugn
the integrity or ingenuousness of the act, even if its
validity is not questioned. See pages 37-39, infra. But in
this regard, we have been further advised by the Depart-
ment of State that, in the absence of an affirmati’ 2
representation to the contrary by the Executive Branch,
adjudication of private suits under United States law
that solely involve commercial bribery of foreign officials
30 In Sabbatino, « treaty or unambiguous agreement would have
served the additional purpose of assuring the Court that applica-
tion of the principles of international law it was urged td invoke
were accepted by Cuba or at least were consistent with general
principles of international comity. In this case, that purpose is
served by the virtual universality of prohibitions against bribery,
including those of Nigeria. See note 20, supra.
32
by United States firms would not generally embarrass the
conduct of foreign relations, so long as the validity of
the act of the foreign state is not questioned. App., infra,
la-2a.*'
In informing the Court of this assessment, we do not
urge that the view of the Executive Branch that the
adjudication may go forward would be binding on the
courts—a position endorsed by the Second Circuit in
Bernstein v. N.V. Nederlandsche-Amerikaansche, 210 F.2d
375 (1954), as that decision was understood by this
Court in First National City Bank.” In general, how-
ever, where application of the doctrine may turn on
an assessrcent of the foreign policy interests of the United
States, including an assessment of the impact of judicial
proceedings in this country on the sensibilities of foreign
nations, a court should not undertake to determine those
31 Reference to the views of the Executive in this fashion is sup-
ported by the Hickenlooper Amendment, 22 U.S.C. 2370(e) (2).
That Amendment provides that no court in the United States shall
decline, on act of state grounds, to make a determination on the
merits under international law in certain cases involving a confis-
cation of property, unless, inter alia, “the President determines that
application of the act of state doctrine is required in that particular
case by the foreign policy interests of the United States and a sug-
gestion to this effect is filed on his behalf in that case with the
court.” We note as well that the letter of the Legal Adviser upon
which the plurality relied in First National City Bank took the po-
sition that counterclaims should not be permitted to proceed if the
foreign policy interests of the United States require application of
the act of state doctrine in the particular case. See 406 U.S. at 781
(Brennan, J., dissenting).
82 As explained above (see pages 17-18 and note 16, supra), al-
though the opinion for three Justices in First National City Bank
endorsed a “Bernstein excepiion,” the concurring and dissenting
opinions rejected that approach. This case of course differs from
First National City Bank because it does not involve a direct chal-
lenge to the validity of the foreign sovereign act itself, and we do
not suggest in this case that the courts below should be permitted
to adjudicate that question. We suggest only that the Court should
give great weight to the Executive Branch’s determination that,
in the commercial bribery setting, an inquiry into whether that act
was corruptly induced by United States nationals would not, as a
general matter, embarrass the conduct of foreign relations.
eS Le OE
questions for itself. Rather, as the district court did in
this case, it should solicit the views of the Executive
Branch in these matters, and should give those views the
greatest deference in determining whether foreign policy
concerns, together with considerations made relevant by
other components of the act of state doctrine, require
that the court give effect to the act of a foreign state.”
ce. The foreign policy assessment by the Department
of State is consistent with the legislative determination
underlying the Foreign Corrupt Practices Act. The
FCPA makes it a criminal offense for any “domestic
concern” ™ to use the mails or any instrumentality of
interstate or foreign commerce to pay or offer anything
of value to an official of a foreign government for the
purpose of influencing him to assist the domestic concern
to obtain or retain business with the foreign government
or any other person. 15 U.S.C. 78dd-2(a), (g) and
(h) (5). This prohibition was enacted in 1977* in
response to an investigation by the Securities and Ex-
change Commission revealing a widespread practice
among more than 300 Americans companies of making
payments, totalling hundreds of millions of dollars, to
officials of foreign governments in order to secure busi-
33 Thus, even in the commercial bribery context, if a trial court
determines that distinct foreign policy interests of the United
States may be involved, it should request the views of the Depart-
ment of State, through the Department of Justice.
34 The term “domestic concern” is defined to mean a citizen or
resident of the United States, or any corporation organized under
the laws of a State or doing business ir the United States. 15
U.S.C. 78dd-2 (h).
35 Similar prohibitions are imposed on certain issuers of securi-
ties covered by the federal securities laws. See 15 U.S.C. 78dd-1.
Both provisions also bar payments to a foreign political party for
the same purposes. 15 U.S.C. 78dd-1(a) (2), 78dd-2(a) (2).
36 Pub. L. No. 95-213, §§ 103, 104, 91 Stat. 1495, 1496. The
FCPA was revised and reenacted by the Omnibus Trade and Com-
petitiveness Act of 1988, Pub. L. No. 100-418, § 5003, 102 Stat.
1415.
34
ness with them. S. Rep. No. 114, 95th Cong., 1st Sess.
3 (1977).
Congress concluded that such payments seriously un-
dermine the foreign policy interests of the United States.
The House Report explained tha “[t]he revelation of
improper payments invariably tends to embarrass friendly
governments, lower the esteem for the United States
among the citizens of foreign nations, and lend credence
to the suspicions sown by foreign opponents of the United
States that American enterprises exert a corrupting in-
fluence on the political processes of their nations.” H.R.
Rep. No. 640, 95th Cong., 1st Sess. 5 (1977). The Senate
Report on a predecessor bili further observed that pay-
ments to foreign officials by American companies “under-
mine[] the foreign policy objective of the United States
to promote democratically accountable governments and
professionalized civil services in developing countries.”
S. Rep. No. 1031. 94th Cong.. 2d Sess. 4 (1976). See also
S. Rep. No. 85, 100th Cong., Ist Sess. 46-47 (1987).
Congress recognized that it was relatively unusual to
give extraterritorial effect to United States law, but it
believed chat overriding interests of this Nation justified
doing so, especially since the statutory proscription reaches
only United States nationals and other persons having
a substantial nexus to the United States and only con-
duct that has a direct effect upon the United States. See
S. Rep. No. 1031, supra, at 5, 15-17; H.R. Rep. No. 640,
supra, at 12 & n.2. Congress also rejected the contention
that no legislation should be enacted because some for-
eign countries might resent attempts to export American
morality or impose American standards on transactions
taking place there.*7 The Senate Committee, for example,
87 In American Banana, 213 U.S. at 356-358, the Court applied
strict territorial principles to the application of United States iaw.
But it also recognized that one sovereign nation, in cases affecting
its “national interests,” might go further and seek to punish acts
committed by its citizens within another jurisdiction, as Congress
had done under the Logan Act (Rev. Stat. §5335 (1875), now
codified at 18 U.S.C. 953). That Act proscribes criminal corres-
pondence by United States citizens with foreign governments to
expressed the belief that “most countries would welcome
a greater effort by the United States to discourage of-
fensive conduct by U.S. companies, wherever their activ-
ities may take place,” and it quoted the opinion of the
Attorney General of Botswana that “most Third World
countries would want to cooperate to the fullest extent
possible, with the U.S. and other home countries,” to
make sure that offenders are punished (S. Rep. No. 1031,
supra, at 4, 5).
To be sure, respondent has not sought to bring this
action under the FCPA, and there is substantial reason
to doubt that the FCPA should be construed to confer an
implied private right of action on a competitor. The
FCPA expressly entrusts enforcement responsibility to
the Attorney General and the SEC, who can take foreign
policy considerations into account in deciding whether to
pursue a particular investigation or civil or criminal
prosecution. 15 U.S.C. 78dd-1, 78dd-2; see Clayco, 712
F.2d at 408-409. Furthermore, although the effect on
domestic competition was one undesirable consequence of
bribery of foreign government officials cited in the legisla-
tive history, the prohibited-payment provisions of the
FCPA were not enacted for the especial benefit of com-
petitors. Rather, Congress sought to benefit the Nation
as a whole, by promoting what it believed to be the Na-
tion’s foreign policy interests and the interests of the
entire business and financial community. See S. Rep.
No. 114, 95th Cong., Ist Sess. 3-4 (1977); H.R. Rep. No.
640, supra, at 4-5. Finally, and significantly, an early
version of the FCPA would have express/y conferred a
private right of action on competitors (3. 3379, 94th
Cong., 2d Sess. § 10 1976, reprinted im 122 ‘Cong. Rec.
12,605, 12,607 (1976)), but the Senate Committee de-
leted that provision from the bill reported in the 94th
Congress. S. Rep. No. 1031, supre, at 13. The Senate
Report stated that the Committee “may offer a floor
amendment relating to competitors rights of action” if
influence their actions in disputes with the United States. See 213
U.S. at 356. The enactment of the FCPA has a similar thrust.
36
“more acceptable language” could be devised (S. Rep. No.
1031, supra, at 13), but no such amendment was offered
or adopted.*
Because respondent does not urge the Court to recog-
nize a private right of action under the FCPA, we do
not take a definitive position on that question here.” But
even if the FCPA cannot be enforced in a private civil
action brought by a competitor, the congressional judg-
ment embodied in the FCPA that bribery of foreign offi-
cials by United States nationals should be made illegal
under United States law, and that cases concerning such
conduct may be adjudicated in United States courts in
some circumstances, accords with the State Depart-
ment’s foreign policy judgment that the act of state doc-
trine need not be applied as an absolute bar to all suits
brought under other federal statutes reaching the same
course of conduct.” By the same token, because the
38 The House Report stated that the Committee “intends that
the courts shall recognize a private cause of action based on this
legislation, as they have in cases involving other provisions of the
Securities Exchange Act, on behalf of persons who suffer injury
as a result of prohibited corporate bribery” (H.R. Rep. No. 640,
supra, at 10). But during the debate on the Conference Report,
Representative Devine stated that “the conferees did not intend to
create a private right of action.” 123 Cong. Rec. 38,778 (1977).
Similarly, Senator Tower stated that although the House Report
expressed an intent that the courts recognize implied private
rights of action, “[t}hia question was not considered in the Senate
or during the conference, and thus [it] cannot be said that any
intent is expressed at all on this issue.” Jd. at 38,602. He also
observed that “[i]n view of the existing case law, it is difficult to
believe that the courts would imply a cause of action in any event.”
Ibid.
39 We also do not take a position on whether an implied right of
action should be recognized on the part of shareholders under the
accounting or prohibited-payment provisions of the FCPA.
49 See Sage Int'l v. Cadillac Gage Co., 534 F. Supp. 896, 995
(E.D. Mich. 1981): Dominicus Americana Bohio v. Gulf & Western
indus., 473 F. Supp. 680, 690 (S.D.N.Y. 1979); contra Clayco, 712
37
FCPA vests enforcement responsibility in the Attorney
General and the SEC, who may decline to proceed in a
particular case if the foreign policy interests of the
United States so require, the structure of the FCPA also
reinforces our view that the Executive Branch must be
afforded the opportunity, in appropriate circumstances, to
suggest in a private civii action that those interests weigh
against allowing the suit to proceed. Compare The Schooner
Exchange v. McF addon, 11 U.S. (7 Cranch) 116, 147 (1812).
C. The Court Should Not Adopt A Rule That Turns
Solely On Whether Only The “Motivation” For A
Foreign Sovereign Act Is At Issue
We do not urge the Court to adopt a rule that would
attach dispositive significance to the fact that this suit
involves only the “motivction” for, rather than the “va-
lidity” of, a foreign sovereign act.*' In our view, so-ne
cases that concern only a foreign government’s “motiva-
tion” plainly do raise substantial act of state concerns.
See Societe Nationale, 482 U.S. at 537 n.23 (“Both comity
and concern for the separation of powers counsel the
utmost restraint in attributing motives to sovereign states
which have bargained as equals.’’)
For example, in American Banana, it could have been
argued that the central issue was whether the decree was
F.2d at 409. See also Note, Act of State Doctrine: An Emerging
Corruption Exception in Antitrust Cases, 59 Notre Dame L. Rev.
455 (1984); Note, Clayco Petroleum Corp. v. Occidental Petroleum
Corp.: Should There Be a Bribery Exception to the Act of State
Doctrine?, 17 Cornell Int’l L. J. 407 (1984).
*1 We took the position in our amicus briefs at the petition
stage in Hunt v. Mobil Oil Corp., 434 U.S. 984 (1977); Mitsui &
Co. Vv. Industrial Inv. Dev. Corp., 445 U.S. 903 (1980); and O.N.E.
Shipping, Ltd. v. Flota Mercante Grancolombiana, S.A., 109 S. Ct.
303 (1988), that the act of state doctrine generally does not bar
inquiry into the motivation for a foreign act, and the Legz! Ad-
viser reiterated that legal view in his letter to the district court in
this case. As explained in the text, we propose a narrower ap-
proach to the “motivation” issue in this case.
38
“motivated” bythe urgings of the United Fruit Company,
rather than Costa Rica’s own sovereign interests, be-
cause United Fruit presumably would have been lia-
ble under United States antitrust laws only if its
actions were shown to have been the cause of the
expropriation. Yet the suit was not permitted to go for-
ward. In fact, the Court specifically noted that the sug-
gestion that the perpetrator of the harm was merely the
“tool” of the defendant “hardly could be listened to con-
cerning a really independent state,” and that it “of
course” was “not alleged that Costa Rica stands in that
relation to the United Fruit Company.” 213 U.S. at 358-
359. See also Zschernig v. Miller, 389 U.S. 429, 434, 436
(1968); Langenegger v. United States, 756 F.2d 1565,
1569 (Fed. Cir.), cert. denied, 474 U.S. 824 (1985);
Hunt v. Mobil Oil Corp., 550 F.2d 68, 77-78 (2d Cir.
1977), cert. denied, 434 U.S. 984 (1977); Occidental Pe-
troleum Corp. Vv. Buttes Gas & Uii Co., 331 F. Supp.
110-111 (C.D. Cal. 1971), aff’d, 461 F.2d 1261 (9th Cir.
1972), cert. denied, 409 U.S. 950 (1972) ; but see Ramirez
de Areilano v. Weinberger, 745 F.2d 1500, 1539-1543
(D.C. Cir. 1984) (en banc), vacated on other grounds,
471 U.S. 1113 (1985), on remand, 788 F.2d 762 (D.C. Cir.
1986) ; ef. First National City Bank v. Banco Para el Com-
ercio Exterior de Cuba, 462 U.S. 611, 634 n.28 (1983).*
Conversely, other decisions that have been characterized
as allowing a suit to go forward because only the “motiva-
tion” of the foreign government was at issue may
be explained on the alternative ground that the act
of the foreign government did not reflect an assertion
of substantial sovereign interests bearing on the merits
of the controversy, or that it was simply part of the con-
42 In other cases, the validity of an act of state might turn so
directly on its purpose that an inquiry into the latter necessarily
would implicate the former. See, e.g., Hunt v. Mobil Oil Corp.,
550 F.2d at 77-78; cf. IAM v. OPEC, 649 F.2d 1354, 1360 (9th Cir.
1981), cert. denied, 454 U.S. 1163 (1982).
text in which essentially private conduct caused the in-
jury. See Clayco, 712 F.2d at 407 (distinguishing /n-
dustrial Inv. Dev. Corp. v. Mitsui & Co., 594 F.2d 48
(Sth Cir. 1979), cert. denied, 445 U.S. 903 (1980), on
this ground) ; Mannington Mills, Inc. y. Congoleum Corp.,
595 F.2d 1287, 1294-1295 (3d Cir. 1979); Timberlane
Lumber Co. v. Bank of America, N.T. & S.A., 549 F.2d
597, 605-608 (9th Cir. 1976) ; see also Northrop Corp. Vv.
McDonnell Douglas Corp., 705 F.2d at 1047-1049.
In this case, moveov~r, it is significant to the State De-
partment’s determination regarding the foreign policy in-
terests of the United States that respondent’s claims im-
plicate the allegedly corrupt personal motivations of in-
dividuals acting on behalf of the Nigerian Government,
not the official purposes of the Nigerian Government in
awarding the contract. Cf. Ex parte Young, 209 U.S.
123 (1998). To be sure, such a suit may nevertheless be
embarrassing to members of the government of the other
ration involved, and it therefore may, in a sense, “em-
barrass” the conduct of the foreign relations of the
United States. But the former consequence differs in
principle from an affront to the sovereignty of the for-
eign nation itself, and the latter consequence is by no
means inevitable. It may often be true, on balance and
especially in the long run, that the foreign policy inter-
ests of the United States would be furthered by rooting
out efforts by its nationals to corrupt the governmental
processes of other nations. The government of the
other ».ation also may have a strong interest in ex-
posing and expunging corruption in its own affairs and
cooperating to assure the availability of legal redress for
injuries sustained (see Rezublic of the Philippines v.
Marcos, 862 F.2d 1355 (9th Cir. 1988) (en banc), cert.
denied, 109 S. Ct. 1933 (1989)), or may be content to
let matters unfold as they will in United States courts.“
43 Special considerations might weigh against permitting a suit
that depended on proof that a law passed by the legislature of
40
We do not rule out the possibility that litigation in
United States courts based on alleged corruption in the
award of contracts or other commercially oriented activi-
ties of foreign governments could sufficiently touch on
“national nerves” (Sabbatino, 376 U.S. at 428) that the
act of state doctrine or related principles of abstention
would appropriately be found to bar the suit.“ But
on the basis of the representations by the Department of
State concerning the foreign relations interests of the
United States in the setting of this case, we do not believe
that the act of state doctrine should be regarded as a
complete bar to such suits.
another nation (as distinguished from an act committed in the
execution of the law) was the product of corruption. See
Fletcher v. Peck, 10 U.S. (6 Cranch) 87, 130-131 (1810). A
suit that depended on proof of corruption of the head of state or
head of government of another nation likewise might raise special
sensitivities and countervailing considerations. A refusal to enter-
tain such a suit would draw some support from the rule of absolute
immunity for a head of state or head of government in United
States courts (The Schooner Exchange, 11 U.S. (7 Cranch) at 137-
138; ef. Alfred Dunhill, 425 U.S. at 698-703 (opinion of White,
J.)), at least where the foreign sovereign has not dispensed with
that immunity (cf. In re Grand Jury Proceedings, 817 F.2d 1108,
1110-1111 (4th Cir.), cert. denied, 484 U.S. 890 (1987); Republic
of the Philippines Vv. Marcos, 806 F.2d 344, 360-361 (2d Cir. 1986),
cert. denied, 481 U.S. 1048 (1987)) or with any special protections
that would otherwise be afforded by the act of state doctrine in
this setting. Republic of the Philippines v. Marcos, 862 F.2d at
1360-1361
**In addition, as the Legal Adviser cautioned in his letter to
the district court (Pet. App. A34-A37), United States courts ad-
judicating such “laims must take care in their control of discovery
and related matters to demonstrate a due respect for sovereign
interests expressed by the foreign state. See Societe Nationale,
482 U.S. at 545-546; Pet. App. Al9-A20 n.11.
et gl
te ye et a ee ee ee ee es OI
41
CONCLUSION
The judgment of the court of appeals should be
affirmed.
Respectfully submitted.
KENNETH W. STARR
Solicitor General
STUART E. SCHIFFER
Acting Assistant Attorney General
THOMAS W. MERRILL
Deputy Solicitor General
EDWIN S. KNEEDLER
Assistant to the Solicitor General
MICHAEL JAY SINGER
JOHN P. SCHNITKER
Attorneys
ABRAHAM D. SOFAER
Legal Adviser
Department of State
OCTOBER 1989
— _ _ — —— =
la
APPENDIX
[SEAL]
United States Department of State
The Legal Adviser
Washington, D.C. 20520
July 25, 1989
The Honorable
Kenneth W. Starr,
The Solicitor General,
Department of Justice,
Washington, D.C.
Dear Judge Starr:
The views of this Department have been requested con-
cerning the foreign relations implications of adjudication
of the claims of the respondent Environmental Tectonics
Corporation (ETC) in W.S. Kirkpatrick & Co., Inc., et al.
Vv. Environmental Tectonics Corp., International, now
pending in the Supreme Court on a wr't of certiorari to
the Court of Appeals for the Third Cirev it.
We understand from the nature of the allegations made
by ETC that in order to prevail at trial on the merits,
it may well be necessary for ETC to offer evidence to
establish that but for certain alleged payments by defend-
ant Kirkpatrick to Nigerian Government officials, ETC,
and not Kirkpatrick, would have been awarded the con-
tract for the Nigerian Air Force aeromedical facility.
Such evidence could involve the disclosure of the identity
of the foreign officials alleged to have received such pay-
ments, and other matters as may be relevant to the moti-
vation behind the award of the contract.
Any litigation that invelves, directly or indirectly, a
foreign government has the potential for affecting the
relations of the United States with that country. We do
not, however, regard a bare potential for affecting U.S.
2a
foreign relations as sufficient, in and of itself, to warrant
dismissal. Cases could arise which present an unaccept-
able risk that adjudication would embarrass the Execu-
tive Branch in its conduct of U.S. foreign relations, lead-
ing the Executive to suggest the desirability of judicia!
abstention. We do not regard Environmental Tectonics as
such a case, and we do not see any foreign relations ob-
stacles to its adjudication on the merits. We also believe
that, in the absence of a representation to the contrary,
the courts may properly assume that no unacceptable
‘nterference with U.S. foreign relations will occur on ac-
count of the adjudication of like cases.
I understand that some uncertainty in the foregoing
regard may have arisen from my December 10, 1986 let-
ter to the District Court, in which I noted inter alia that
. inquiries into the motivation and validity of for-
eign states’ actions and discovery against foreign
government officials may seriously affect United
States foreign relations. These concerns, in the con-
text of this litigation, counsel that caution and due
regard for foreign sovereign sensibilities be exercised
at each relevant stage in the proceedings. Moreover,
the court should endeavor to assure that no unneces-
sary inquiries are made. or allegations tested, during
the course of discovery or trial.
659 F. Supp. at 1403. As the Court of Appeals concluded,
these observations were intcaded to remind the trial court
to exercise “appropriate supervision” over the trial proc-
ess so as to “limit damage to foreign sensibilities.” 847
F.2d at 1062, note 11.
Sincerely,
s/ Abraham D. Sofaer
ABRAHAM D. SOFAER
©. 6. GOVERNMENT PerNTING orrice, 1909 241600 542
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