According to respondent's complaint, petitioners obtained a
construction contract from the Nigerian Government by bribing
Nigerian officials. Nigerian law prohibits both the payment and the
receipt of such bribes. Respondent, an unsuccessful bidder for the
contract, filed an action for damages against petitioners and
others under various federal and state statutes. The District Court
ruled that the suit was barred by the act of state doctrine, which,
in its view, precluded judicial inquiry into the motivation of a
sovereign act that would result in embarrassment to the sovereign,
or constitute interference with the conduct of United States
foreign policy. The court granted summary judgment for petitioners
because resolution of the case in favor of respondent would require
imputing to foreign officials an unlawful motivation (the obtaining
of bribes), and accordingly might embarrass the Executive Branch in
its conduct of foreign relations. The Court of Appeals reversed and
remanded the case for trial, holding that on the facts of this case
the doctrine of sovereign immunity did not apply because no
embarrassment of the Executive in its conduct of foreign affairs
was evident.
Held: The act of state doctrine does not apply because
nothing in the present suit requires a court to declare invalid the
official act of a foreign sovereign.
See, e.g., Ricaud v.
American Metal Co., 246 U. S. 304. It
does not suffice that the facts necessary to establish respondent's
claim will also establish that the Nigerian contract was unlawful,
since the contract's legality is simply not a question that the
District Court must decide.
American Banana Co. v. United Fruit
Co., 213 U. S. 347,
213 U. S.
357-358 (Holmes, J.) distinguished. Nor does it suffice
that judgment in favor of respondents will require the court to
impute to foreign officials improper motivation in the performance
of official acts. To say that international comity, respect for the
sovereignty of foreign nations, and the avoidance of embarrassment
to the Executive Branch in its conduct of foreign relations are the
policies underlying the act of state doctrine is not to say that
the doctrine is applicable whenever those policies are implicated.
The doctrine is not a rule of abstention which prohibits courts
from deciding properly presented cases or controversies simply
because the Executive's conduct of foreign relations may be
adversely
Page 493 U. S. 401
affected; it is a rule of decision which requires that, in the
process of deciding, the acts of foreign sovereigns taken within
their own jurisdictions be deemed valid. Pp.
493 U. S.
404-410.
847 F.2d 1052 (CA3 1988), affirmed.
SCALIA, J., delivered the opinion for a unanimous Court.
Justice SCALIA delivered the opinion of the Court.
In this case, we must decide whether the act of state doctrine
bars a court in the United States from entertaining a cause of
action that does not rest upon the asserted invalidity of an
official act of a foreign sovereign, but that does require imputing
to foreign officials an unlawful motivation (the obtaining of
bribes) in the performance of such an official act.
I
The facts as alleged in respondent's complaint are as follows:
In 1981, Harry Carpenter, who was then Chairman of the Board and
Chief Executive Officer of petitioner W.S. Kirkpatrick & Co.,
Inc. (Kirkpatrick), learned that the Republic of Nigeria was
interested in contracting for the construction and equipment of an
aeromedical center at Kaduna Air Force Base in Nigeria. He made
arrangements with Benson "Tunde" Akindele, a Nigerian citizen,
whereby
Page 493 U. S. 402
Akindele would endeavor to secure the contract for Kirkpatrick.
It was agreed that, in the event the contract was awarded to
Kirkpatrick, Kirkpatrick would pay to two Panamanian entities
controlled by Akindele a "commission" equal to 20% of the contract
price, which would in turn be given as a bribe to officials of the
Nigerian Government. In accordance with this plan, the contract was
awarded to petitioner W.S. Kirkpatrick & Co., International
(Kirkpatrick International), a wholly owned subsidiary of
Kirkpatrick; Kirkpatrick paid the promised "commission" to the
appointed Panamanian entities; and those funds were disbursed as
bribes. All parties agree that Nigerian law prohibits both the
payment and the receipt of bribes in connection with the award of a
government contract.
Respondent Environmental Tectonics Corporation, International,
an unsuccessful bidder for the Kaduna contract, learned of the 20%
"commission" and brought the matter to the attention of the
Nigerian Air Force and the United States Embassy in Lagos.
Following an investigation by the Federal Bureau of Investigation,
the United States Attorney for the District of New Jersey brought
charges against both Kirkpatrick and Carpenter for violations of
the Foreign Corrupt Practices Act of 1977, 91 Stat. 1495,
as
amended, 15 U.S.C. § 78dd-1
et seq., and both pleaded
guilty.
Respondent then brought this civil action in the United States
District Court for the District of New Jersey against Carpenter,
Akindele, petitioners, and others, seeking damages under the
Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §
1961 et seq., the Robinson-Patman Act, 49 Stat. 1526, 15 U.S.C. §
13
et seq., and the New Jersey Anti-Racketeering Act,
N.J.Stat.Ann. § 2C:41-2
et seq. (West 1982). The
defendants moved to dismiss the complaint under Rule 12(b)(6) of
the Federal Rules of Civil Procedure on the ground that the action
was barred by the act of state doctrine.
Page 493 U. S. 403
The District Court, having requested and received a letter
expressing the views of the legal advisor to the United States
Department of State as to the applicability of the act of state
doctrine, treated the motion as one for summary judgment under Rule
56 of the Federal Rules of Civil Procedure, and granted the motion.
Environmental Tectonics Corp., International v. W.S.
Kirkpatrick & Co., Inc., 659 F. Supp. 1381 (1987). The
District Court concluded that the act of state doctrine applies
"if the inquiry presented for judicial determination includes
the motivation of a sovereign act which would result in
embarrassment to the sovereign or constitute interference in the
conduct of foreign policy of the United States."
Id., at 1392-1393 (citing
Clayco Petroleum Corp. v.
Occidental Petroleum Corp., 712 F.2d 404, 407 (CA9 1983)).
Applying that principle to the facts at hand, the court held that
respondent's suit had to be dismissed because, in order to prevail,
respondents would have to show that
"the defendants or certain of them intended to wrongfully
influence the decision to award the Nigerian Contract by payment of
a bribe, that the Government of Nigeria, its officials, or other
representatives knew of the offered consideration for awarding the
Nigerian Contract to Kirkpatrick, that the bribe was actually
received or anticipated and that, 'but for' the payment or
anticipation of the payment of the bribe, ETC would have been
awarded the Nigerian Contract."
659 F. Supp. at 1393 (footnote omitted).
The Court of Appeals for the Third Circuit reversed. 847 F.2d
1052 (1988). Although agreeing with the District Court that
"the award of a military procurement contract can be, in certain
circumstances, a sufficiently formal expression of a government's
public interests to trigger application"
of the act of state doctrine,
id. at 1058, it found
application of the doctrine unwarranted on the facts of this case.
The Court of Appeals found particularly persuasive the letter to
the District Court from the legal advisor to the Department of
State, which had stated that, in the opinion of the Department,
judicial inquiry into the purpose behind the act of a foreign
Page 493 U. S. 404
sovereign would not produce the
"unique embarrassment, and the particular interference with the
conduct of foreign affairs, that may result from the judicial
determination that a foreign sovereign's acts are invalid."
Id. at 1061. The Court of Appeals acknowledged that
"the Department's legal conclusions as to the reach of the act of
state doctrine are not controlling on the courts," but concluded
that
"the Department's factual assessment of whether fulfillment of
its responsibilities will be prejudiced by the course of civil
litigation is entitled to substantial respect."
Id. at 1062. In light of the Department's view that the
interests of the Executive
Page 493 U. S. 405
Branch would not be harmed by prosecution of the action, the
Court of Appeals held that Kirkpatrick had not met its burden of
showing that the case should not go forward; accordingly, it
reversed the judgment of the District Court and remanded the case
for trial.
Id. at 1067. We granted certiorari,
492 U. S. 9
(1989).
II
This Court's description of the jurisprudential foundation for
the act of state doctrine has undergone some evolution over the
years. We once viewed the doctrine as an expression of
international law, resting upon "the highest considerations of
international comity and expediency,"
Oetjen v. Central Leather
Co., 246 U. S. 297,
246 U. S.
303-304 (1918). We have more recently described it,
however, as a consequence of domestic separation of powers,
reflecting "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" the conduct of foreign affairs,
Banco
Nacional de Cuba v. Sabbatino, 376 U.
S. 398,
376 U. S. 423
(1964). Some Justices have suggested possible exceptions to
application of the doctrine, where one or both of the foregoing
policies would seemingly not be served: an exception, for example,
for acts of state that consist of commercial transactions, since
neither modern international comity nor the current position of our
Executive Branch accorded sovereign immunity to such acts,
see
Alfred Dunhill of London, Inc. v. Republic of Cuba,
425 U. S. 682,
425 U. S.
695-706 (1976) (opinion of WHITE, J.); or an exception
for cases in which the Executive Branch has represented that it has
no objection to denying validity to the foreign sovereign act,
since then the courts would be impeding no foreign policy goals,
see First National City Bank v. Banco Nacional de Cuba,
406 U. S. 759,
406 U. S.
768-770 (1972) (opinion of REHNQUIST, J.).
The parties have argued at length about the applicability of
these possible exceptions, and, more generally, about whether the
purpose of the act of state doctrine would be furthered by its
application in this case. We find it unnecessary however, to pursue
those inquiries, since the factual predicate for application of the
act of state doctrine does not exist. Nothing in the present suit
requires the court to declare invalid, and thus ineffective as "a
rule of decision for the courts of this country,"
Ricaud v.
American Metal Co., 246 U. S. 304,
246 U. S. 310
(1918), the official act of a foreign sovereign.
In every case in which we have held the act of state doctrine
applicable, the relief sought or the defense interposed would have
required a court in the United States to declare invalid the
official act of a foreign sovereign performed within its own
territory. In
Underhill v. Hernandez, 168 U.
S. 250,
168 U. S. 254
(1897), holding the defendant's detention of the plaintiff to be
tortious would have required denying legal effect to
"acts of a military commander representing the authority of the
revolutionary party as government, which afterwards succeeded and
was recognized by the United States."
In
Oetjen v. Central Leather Co., supra, and in
Ricaud v. American Metal Co., supra, denying title to the
party who claimed through purchase from Mexico would have required
declaring that government's prior seizure of the property, within
its own territory, legally ineffective.
See Oetjen, supra,
246 U.S. at
246 U. S. 304;
Ricaud, supra, 246 U.S. at
246 U. S. 310.
In
Sabbatino,
Page 493 U. S. 406
upholding the defendant's claim to the funds would have required
a holding that Cuba's expropriation of goods located in Havana was
null and void. In the present case, by contrast, neither the claim
nor any asserted defense requires a determination that Nigeria's
contract with Kirkpatrick International was, or was not,
effective.
Petitioners point out, however, that the facts necessary to
establish respondent's claim will also establish that the contract
was unlawful. Specifically, they note that, in order to prevail,
respondent must prove that petitioner Kirkpatrick made, and
Nigerian officials received, payments that violate Nigerian law,
which would, they assert, support a finding that the contract is
invalid under Nigerian law. Assuming that to be true, it still does
not suffice. The act of state doctrine is not some vague doctrine
of abstention, but a "
principle of decision binding on
federal and state courts alike."
Sabbatino, supra, 376
U.S. at
376 U. S. 427
(emphasis added). As we said in
Ricaud, "the act within
its own boundaries of one sovereign State . . . becomes . . . a
rule of decision for the courts of this country." 246 U.S. at
246 U. S. 310.
Act of state issues only arise when a court
must decide --
that is, when the outcome of the case turns upon -- the effect of
official action by a foreign sovereign. When that question is not
in the case, neither is the act of state doctrine. That is the
situation here. Regardless of what the court's factual findings may
suggest as to the legality of the Nigerian contract, its legality
is simply not a question to be decided in the present suit, and
there is thus no occasion to apply the rule of decision that the
act of state doctrine requires.
Cf. Sharon v. Time,
Inc., 599 F.
Supp. 538, 546 (SDNY 1984) ("The issue in this litigation is
not whether [the alleged] acts are valid, but whether they
occurred").
In support of their position that the act of state doctrine bars
any factual findings that may cast doubt upon the validity of
foreign sovereign acts, petitioners cite Justice Holmes' opinion
for the Court in
American Banana Co. v.
United
Page 493 U. S. 407
Fruit Co., 213 U. S. 347
(1909). That was a suit under the United States antitrust laws,
alleging that Costa Rica's seizure of the plaintiff's property had
been induced by an unlawful conspiracy. In the course of a lengthy
opinion Justice Holmes observed, citing
Underhill, that "a
seizure by a state is not a thing that can be complained of
elsewhere in the courts."
Id. at
213 U. S.
357-358. The statement is concededly puzzling.
Underhill does indeed stand for the proposition that a
seizure by a state cannot be complained of elsewhere -- in the
sense of being sought to be declared
ineffective
elsewhere. The plaintiff in
American Banana, however, like
the plaintiff here, was not trying to undo or disregard the
governmental action, but only to obtain damages from private
parties who had procured it. Arguably, then, the statement did
imply that suit would not lie if a foreign state's actions would
be, though not invalidated, impugned.
Whatever Justice Holmes may have had in mind, his statement
lends inadequate support to petitioners' position here, for two
reasons. First, it was a brief aside, entirely unnecessary to the
decision.
American Banana was squarely decided on the
ground (later substantially overruled,
see Continental Ore Co.
v. Union Carbide & Carbon Corp., 370 U.
S. 690,
370 U. S.
704-705 (1962)) that the antitrust laws had no
extraterritorial application, so that "what the defendant did in
Panama or Costa Rica is not within the scope of the statute." 213
U.S. at
213 U. S. 357.
Second, whatever support the dictum might provide for petitioners'
position is more than overcome by our later holding in
United
States v. Sisal Sales Corp., 274 U. S. 268
(1927). There we held that,
American Banana
notwithstanding, the defendant's actions in obtaining Mexico's
enactment of "discriminating legislation" could form part of the
basis for suit under the United States antitrust laws. 274 U.S. at
274 U. S. 276.
Simply put,
American Banana was not
Page 493 U. S. 408
an act of state case, and whatever it said by way of dictum that
might be relevant to the present case has not survived Sisal
Sales.
Petitioners insist, however, that the policies underlying our
act of state cases -- international comity, respect for the
sovereignty of foreign nations on their own territory, and the
avoidance of embarrassment to the Executive Branch in its conduct
of foreign relations -- are implicated in the present case because,
as the District Court found, a determination that Nigerian
officials demanded and accepted a bribe "would impugn or question
the nobility of a foreign nation's motivations," and would "result
in embarrassment to the sovereign or constitute interference in the
conduct of foreign policy of the United States." 659 F. Supp. at
1392-1393. The United States, as
amicus curiae,, favors
the same approach to the act of state doctrine, though disagreeing
with petitioners as to the outcome it produces in the present case.
We should not, the United States urges, "attach dispositive
significance to the fact that this suit involves only the
motivation' for, rather than the `validity' of, a foreign
sovereign act," Brief for United States as Amicus Curiae
37, and should eschew "any rigid formula for the resolution of act
of state cases generally," id. at 9. In some future case,
perhaps,
"litigation . . . based on alleged corruption in the award of
contracts or other commercially oriented activities of foreign
governments could sufficiently touch on 'national nerves' that the
act of state doctrine or related principles of abstention would
appropriately be found to bar the suit,"
id. at 40 (quoting
Sabbatino, 376 U.S. at
376 U. S.
428), and we should therefore resolve this case on the
narrowest possible ground,
viz., that the letter from the
legal advisor to the District Court gives sufficient indication
that, "in the setting of this case," the act of state doctrine
poses no bar to adjudication,
Ibid. *
Page 493 U. S. 409
These urgings are deceptively similar to what we said in
Sabbatino, where we observed that sometimes, even though
the validity of the act of a foreign sovereign within its own
territory is called into question, the policies underlying the act
of state doctrine may not justify its application. We suggested
that a sort of balancing approach could be applied -- the balance
shifting against application of the doctrine, for example, if the
government that committed the "challenged act of state" is no
longer in existence. 376 U.S. at
376 U. S. 428.
But what is appropriate in order to avoid unquestioning judicial
acceptance of the acts of foreign sovereigns is not similarly
appropriate for the quite opposite purpose of expanding judicial
incapacities where such acts are not directly (or even indirectly)
involved. It is one thing to suggest, as we have, that the policies
underlying the act of state doctrine should be considered in
deciding whether, despite the doctrine's technical availability, it
should nonetheless not be invoked; it is something quite different
to suggest that those underlying policies are a doctrine unto
themselves, justifying expansion of the act of state doctrine (or,
as the United States puts it, unspecified "related principles of
abstention") into new and uncharted fields.
The short of the matter is this: Courts in the United States
have the power, and ordinarily the obligation, to decide cases and
controversies properly presented to them. The act of state doctrine
does not establish an exception for cases and controversies that
may embarrass foreign governments, but merely requires that, in the
process of deciding, the acts of foreign sovereigns taken within
their own jurisdictions shall be deemed valid. That doctrine has no
application to the
Page 493 U. S. 410
present case, because the validity of no foreign sovereign act
is at issue.
The judgment of the Court of Appeals for the Third Circuit is
affirmed.
It is so ordered.
* Even if we agreed with the Government's fundamental approach,
we would question its characterization of the legal advisor's
letter as reflecting the absence of any policy objection to the
adjudication. The letter, which is reprinted as an appendix to the
opinion of the Court of Appeals,
see 847 F.2d 1052,
1067-1069 (CA3 1988), did not purport to say whether the State
Department would like the suit to proceed, but rather responded
(correctly, as we hold today) to the question whether the act of
state doctrine was applicable.