Conflicts of Law: ACT OF STATE DOCTRINE/JURISDICTION OVER THE SUBJECT MATTER (Digest)

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Conflicts of Law

TOPIC: ACT OF STATE DOCTRINE/JURISDICTION OVER THE SUBJECT MATTER

MLP

United States Court of Appeals,District of Columbia Circuit.
Hassan EL–FADL, Appellant v. CENTRAL BANK OF JORDAN, et al., Appellees.
No. 94–7212.
Decided: February 06, 1996

The Central Bank of Jordan removed the case to federal district court pursuant to the Federal Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1441(d) (1994).  Following the removal, the Jordanian defendants filed a motion to dismiss, and PIBC also filed a motion to dismiss and, in the alternative, for summary judgment.   The district court dismissed the complaint as to all defendants.   First, the court ruled that the Central Bank, Governor Mohammed Saeed El–Nabulsi, and Deputy Governor Michel Marto (together, the “sovereign defendants”) were immune from suit under the FSIA.   Second, the court granted Petra Bank’s motion to dismiss for lack of personal jurisdiction under the District of Columbia “doing business” and long-arm statutes found in D.C.Code §§ 13–334, 13–422, and 13–423.   Third, the court granted PIBC’s motion to dismiss on forum non conveniens grounds, although the court had personal jurisdiction, because El–Fadl had an available forum in the Jordanian courts.   The court denied El–Fadl’s motion for reconsideration.

FACTS:

El–Fadl is a Lebanese national who has lived in Jordan since 1982.  Hassan El–Fadl filed suit in the Superior Court of the District of Columbia seeking to recover damages against Petra International Banking Corporation (“PIBC”) for wrongful termination of employment as well as for various tort claims against several Jordanian institutions and officials.

In his complaint, he alleges that he was employed by PIBC, a subsidiary in the District of Columbia of Petra Bank, a privately owned bank in Jordan.   From 1982 to 1989 he was employed by PIBC in Jordan as manager of a regional office for Middle Eastern clients.   He had signed a contract under which he “would be permanently employed for life as a senior manager of Petra International Banking Corporation.”  

The defendants maintain that El–Fadl was employed by Petra Bank (not PIBC) as a senior manager with responsibility for currency and precious metals trading.

In August 1989, the Central Bank of Jordan announced that it had uncovered widespread financial improprieties at Petra Bank and placed Petra Bank in receivership.   Since then, Petra Bank has been run by a Liquidation Committee appointed by the Jordanian government.   The Deputy Governor of the Central Bank, Michel Marto, was appointed to administer the liquidation of PIBC, and Marto came to the District of Columbia for that purpose.   On September 14, 1989, Marto sent El–Fadl a letter in which PIBC terminated El–Fadl’s employment as senior manager of the PIBC office in Amman.

ISSUE:

WON the court is correct in granting PIBC’s motion to dismiss on forum non conveniens grounds?

HELD:

No. Accordingly, we reverse the dismissal of the claims against Petra Bank for lack of personal jurisdiction and remand to allow El–Fadl to conduct discovery of jurisdictional facts;  we also reverse the dismissal of the claims against Petra Bank and PIBC on grounds of forum non conveniens, remanding for a finding whether Petra Bank and PIBC can show that Jordan is an adequate alternative forum.

In deciding a forum non conveniens motion, the district court must first establish that there is an adequate alternative forum:
At the outset of any forum non conveniens inquiry, the court must determine whether there exists an alternative forum.   Ordinarily, this requirement will be satisfied when the defendant is “amenable to process” in the other jurisdiction.  

In rare circumstances, however, where the remedy offered by the other forum is clearly unsatisfactory, the other forum may not be an adequate alternative, and the initial requirement may not be satisfied.   Thus, for example, dismissal would not be appropriate where the alternative forum does not permit litigation of the subject matter of the dispute.
         “Availability of adequate alternative fora is a threshold test ․ in the sense that a forum non conveniens motion cannot be granted unless the test is fulfilled.”   The defendant bears the burden of proving that there is an adequate alternative forum.  

In this case, PIBC and Petra Bank could not prove on the present record that Jordan was an adequate alternative forum. PIBC submitted an affidavit from a Jordanian attorney, Rami M. Al–Hadidi, who states that “Jordanian courts are open to El–Fadl to adjudicate these claims against the defendants.”   Al–Hadidi also explains that the Jordanian Civil Code recognizes various causes of action that El–Fadl has brought.   Yet PIBC’s expert fails to address various potentially dispositive provisions of Jordanian law that El–Fadl brought to the district court’s attention. –Fadl cited two resolutions regarding Petra Bank.10  Based on the foregoing legal authorities, El–Fadl’s expert, a Jordanian attorney named Ibrahim J. Tukan, states in his affidavit that “[t]he above listed laws, decrees, and statutes constitute an absolute prohibition to Mr. El–Fadl to bring his causes of action in Jordan.”   PIBC’s expert, Al–Hadidi, does not address any of these authorities in his affidavit.
Consequently, if El–Fadl’s expert is correct in describing the legal situation in Jordan, the Jordanian courts would appear to be closed to El–Fadl’s claims against Petra Bank and perhaps even to claims against PIBC.

A foreign forum is not inadequate merely because it has less favorable substantive law, id. at 247–55, 102 S.Ct. at 261–65, because it employs different adjudicative procedures, see, e.g., Lockman Found. v. Evangelical Alliance Mission, 930 F.2d 764, 768 (9th Cir.1991), or because of general allegations of corruption in the judicial system.   See, e.g., Blanco v. Banco Industrial de Venezuela, 997 F.2d 974, 981–82 (2d Cir.1993).   El–Fadl’s repeated reliance on a State Department report expressing “concern about the impartiality” of the Jordanian court system, for example, is unavailing.   But if the foreign forum would deny him access to its judicial system on the claims in his complaint, dismissal on forum non conveniens grounds is inappropriate.  

Our review of the grant of a motion to dismiss for forum non conveniens is for abuse of discretion.

Republic of Philippines v. Pimentel

Citation. 553 U.S. 851 (2008)

Brief Fact Summary.

A class action suit was brought against the former President of the Philippines. Plaintiff filed an interpleader action, naming the Republic of the Philippines, the Philippine Presidential Commission on Good Governance, and others as defendants, to determine the ownership of property allegedly stolen by the former President of the Philippines. The Republic of the Philippines and the Philippine Presidential Commission on Good Governance were dismissed due to sovereign immunity. The district court denied Defendants’ motion to dismiss because the Republic of the Philippines and the Philippine Presidential Commission on Good Governance were indispensible parties under FRCP 19. The court of appeals reversed and issued a stay. The district vacated the stay and awarded the money to the class. The court of appeals affirmed because the Republic of the Philippines and the Philippine Presidential Commission on Good Governance were unlikely to succeed on the merits of it s claim. Defendants appealed.

Synopsis of Rule of Law.

Under Federal Rule of Procedure 19(b), a federal district court must dismiss a lawsuit if it cannot, in equity and good conscience, proceed in the absence of a necessary party.

Facts.

Human rights victims (Pimentel) brought a class action suit against Philippine President Ferdinand Marcos. Pimentel obtained a nearly $2 billion judgment and later tried to attach a brokerage account at Merrill Lynch, Pierce, Fenner & Smith Inc. (Merrill Lynch) (Plaintiff), which was owned by Arelma, S.A. (Arelma), a company incorporated by Marcos. The Republic of the Philippines and the Philippine Presidential Commission on Good Governance (collectively, the Republic) claimed the money in the brokerage account belonged to the Republic under Philippine law and asked Merrill Lynch to transfer the money to the Philippine National Banc (PNB), pending a decision by a Philippine court. Instead, Merrill Lynch filed an interpleader lawsuit in federal court to settle all the claims in one case, naming the Republic, Arelma, PNB, Pimentel, and others as defendants. The Republic claimed sovereign immunity and was dismissed from the lawsuit. The Republic then moved to dismiss the interpleader action, arguing that the case could not proceed without it because it was an indispensable party under Federal Rule of Civil Procedure (FRCP) 19. The district court denied the motion and continued to adjudicate the case. The Republic appealed the denial, and the United States Court of Appeals for the Ninth Circuit reversed and issued a stay, pending the outcome of the litigation in the Philippine court. The district judge vacated the stay and awarded the money to Pimentel. The Republic asked the Philippine court to declare the money forfeited, but that court has not yet ruled. The Republic, Arelma, and PNB appealed, but the court of appeals affirmed this time, largely because the Republic, despite being a required party under FRCP Rule 19(a), was unlikely to succeed on the merits of its claim. Defendants petitioned the United States Supreme Court for certiorari, which was granted.

Issue.

Whether a federal district court must dismiss a lawsuit if a necessary party cannot be joined.

Held.

Yes. The court of appeals’ ruling is reversed because it erred in failing to give adequate weight to sovereign immunity and the case is remanded for dismissal. Under Federal Rule of Procedure 19(b), a federal district court must dismiss a lawsuit if it cannot, in equity and good conscience, proceed in the absence of a necessary party.

Dissent.

Stevens, J.

The Court of Appeals should either order the District Judge to stay further proceedings pending a reasonably prompt decision of the Sandiganbayan or order the case reassigned to a different District Judge to conduct further proceedings. There is, of course, a risk of unfairness in conducting such proceedings without the participation of petitioners. But it is a risk that they can avoid by waiving their sovereign immunity, and the record provides a basis for believing that they would do so if the case proceeded before a different judge. I am persuaded that the Court's judgment today represents a more "inflexible approach" than the Rule contemplates. Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 107 (1968). All parties have an interest in the prompt resolution of the disposition of the Arelma assets. A remand would allow a new judge to handle the matter in an expeditious fashion rather than requiring a brand new proceeding.

Souter, J.

I differ as to relief because a conclusion of the matter pending before the Sandiganbayan may simplify the issues raised in this case and render one disposition or another more clearly correct. I would therefore vacate the judgment and remand for a stay of proceedings for a reasonable time to await a decree of the Philippine court. If it should appear later that no such decree can be expected, the Court of Appeals could decide on the next step in light of the Court's opinion. For reasons given by Justice Stevens, I would order that any further proceedings in the District Court be held before a judge fresh to the case.

Discussion.

FRCP 19(a) requires joinder of necessary parties when feasible. If not feasible, the district court must decide whether hearing the case is fair and equitable and may consider the prejudice to all parties; whether the prejudice can be mitigated; whether relief could be awarded without the absent party, and whether the plaintiff has a remedy if the case is dismissed. The Republic will be unable to protect its interests if not joined. The court of appeals did not give enough respect to the Republic’s immunity. Sovereign immunity protects governments from “the inconvenience of suit,” to promote comity and dignity. The Republic has an overriding interest in deciding how to distribute the money and should be allowed to use Philippine courts to do so. There is precedent for dismissing cases where a government could not be joined due to sovereign immunity. The lower courts erred in deciding on the merits of the Republic’s claims. The district court has a right to throw out frivolous claims, but analysis of the merits violates the principles of sovereign immunity. The Republic’s immunity outweighs Pimentel’s interests. There are no measures short of dismissal that could protect those interests. Any judgment issued without joinder would be inadequate and contrary to the policy interest of avoiding duplicate litigation. The question of whether there is an alternative available to the plaintiff concerns Merrill Lynch, not Pimentel. Although Merrill Lynch will potentially be subject to multiple lawsuits, it can join the Republic and have the action again dismissed under Rule 19(b). The analysis may change if, for example, the Philippine court does not rule in a reasonable time.

REPUBLIC OF CHINA v. LIU, 497 U.S. 1058 (1990)

Introduction

On October 15, 1984, Henry Liu was shot to death at his home in Daly City, California. Plaintiff, Helen Liu, suing in her individual capacity, as heir and special administrator of the estate of Henry Liu, and as guardian ad litem for George Liu, has filed this lawsuit alleging that the Republic of China ("ROC") and the named defendants are responsible for the death of her husband.

The complaint pleads six claims. Four claims seek recovery under various legal theories for the wrongful death of Henry Liu. A fifth claim seeks recovery for injury to Helen Liu, who was at home when the killing occurred. The final claim seeks recovery for the injury to Henry Liu for the initial assault on him by his killers.

The individual defendants named in the complaint have been tried and convicted by tribunals in the ROC of criminal conduct relating to the killing of Henry Liu.[1] The individual defendants include Vice Admiral Wong Hsi-ling, former director of the ROC's Defense Intelligence Bureau, as well as Major General Hu Yi-min and Colonel Chen Hu-men, also former officials of the Defense Intelligence Bureau. The remaining three defendants, Chen Chi-li, Wu Tun and Tung Kuei-sen, are ROC citizens who were allegedly recruited to assist in the killing of Henry Liu.

Currently before the Court is the ROC's motion to dismiss the claims against it on act of state grounds. The ROC does not argue that the actual killing of Henry Liu is an act of state which this Court may not review.[2] Rather, the ROC asserts the following:

The Republic of China does not dispute that Henry Liu's death was caused by the private individuals named in the Complaint. Indeed, the civilian and military courts of the ROC, in the course of convicting these individuals, have made formal findings to that effect. The present Complaint, however, does not rest on the facts and the published findings of the ROC courts. Instead, it alleges that the murder of Henry Liu was a deliberate official act of the ROC, that these individuals acted in concert with other unnamed ROC officials who approved and *300 authorized their actions, and that the criminal proceedings before the ROC tribunals were part of a conspiracy to cover up these official acts.

The ROC has at all times repudiated the acts of the individual defendants. It vigorously denies that the Government had knowledge of, participated in, or condoned their conspiracy. This position has been fully sustained by exhaustive military and civilian trials and appeals following thorough investigation of the facts.

Nevertheless, the Complaint would have this Court go behind the findings and judgments of the ROC courts to investigate de novo the alleged events in the ROC in the hope that this Court may disagree with what the ROC's courts have duly found. This would require the Court to inquire into, and sit in judgment upon, the most sensitive areas of the ROC's governmental affairs, proceedings and motivation. The ROC is confident that if this Court performed such a function it would reach the same conclusion as did the ROC courts. But as the United States would undoubtedly assert if the circumstances were reversed, the ROC submits that the Act of State doctrine bars the very inquiry itself, regardless of its outcome.

ROC's Points and Authorities, at 1-2 (emphasis omitted).

In resolving this motion, the Court requested the parties to brief two additional issues that it felt may have a bearing on how the Court would rule. These issues are (1) whether this suit is barred, as to the ROC, by the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1602-11, and (2) whether the ROC may possibly be liable under respondeat superior for the activities of the individual defendants named in the complaint.

Having received the requested supplemental briefing and held oral argument on the matter, the Court denies ROC's motion to dismiss the complaint. For the reasons discussed below, the Court has concluded that it would be premature to dismiss plaintiff's complaint at this time. However, the Court notes that dismissal on act of state grounds may become necessary as the litigation of this matter progresses.

I. ACT OF STATE DOCTRINE

"The act of state doctrine declares that a United States court will not adjudicate a politically sensitive dispute which would require the court to judge the legality of the sovereign act of a foreign state." International Ass'n of Machinists v. OPEC, 649 F.2d 1354, 1358 (9th Cir. 1981), cert. denied, 454 U.S. 1163, 102 S. Ct. 1036, 71 L. Ed. 2d 319 (1982). The traditional formulation of the doctrine is as follows:

Every 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. Redress of grievances by reason of such acts must be obtained through means open to be availed of by sovereign powers as between themselves.

Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682, 691 n. 7, 96 S. Ct. 1854, 1859 n. 7, 48 L. Ed. 2d 301 (1976) (quoting Underhill v. Hernandez, 168 U.S. 250, 252, 18 S. Ct. 83, 84, 42 L. Ed. 456 (1897)).

The act of state doctrine is not jurisdictional, as are questions of sovereign immunity, nor is its observance mandated by the Constitution. DeRoburt v. Gannett Co., Inc., 733 F.2d 701, 702-03 (1984), cert. denied, 469 U.S. 1159, 105 S. Ct. 909, 83 L. Ed. 2d 923 (1985). Rather, the doctrine stems from a recognition by the "Judicial Branch that its engagement in the task of passing on the validity of the 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." Timberlane Lumber Co. v. Bank of America, 549 F.2d 597, 605 (9th Cir.1976), aff'd, 749 F.2d 1378 (9th Cir.1984), cert. denied, ___ U.S. ___, 105 S. Ct. 3514, 87 L. Ed. 2d 643 (1985) (quoting Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 423, 84 S.Ct. *301 923, 937, 11 L. Ed. 2d 804 (1964)). In essence, it is a judicial doctrine of self restraint based on an acknowledgment that certain disputes involving foreign affairs should be be left for resolution by one of the other two branches of government. See International Ass'n of Machinists, 649 F.2d at 1358-59.

The very nature of the act of state doctrine makes it difficult to define. The Ninth Circuit has stated that the "doctrine does not suggest a rigid rule of application.... `[S]ome aspects of international law touch more sharply on national nerves than do others; the less important the implications of an issue are for our foreign relations, the weaker the justification for exclusivity in the political branches.' The decision to deny access to judicial relief is not one we make lightly.... The `touchstone' or `crucial element' is the potential for interference with our foreign relations." Id. at 1360 (quoting in part Sabbatino, 376 U.S. at 428, 84 S.Ct. at 940) (citations omitted); see also DeRoburt, 733 F.2d at 704.

Obviously, a "successful act of state defense must rest on a factual showing that an act of state occurred...." Ramirez v. Weinberger, 745 F.2d 1500, 1534 (D.C.Cir. 1984), vacated on other grounds, ___ U.S. ___, 105 S. Ct. 2325, 86 L. Ed. 2d 255 (1985). The ROC concedes, as it must, that the killing of an American citizen in the United States is not the type of activity to which the act of state doctrine has generally applied.[3]Cf. Letelier v. Republic of Chile, 488 F. Supp. 665, 674 (D.D.C.1980) (suit against the Republic of Chile regarding assassination of Chilean dissident leader in United States not subject to act of state doctrine). The ROC argues that the act of state doctrine is nevertheless applicable because the plaintiff in this case "asks this Court to determine that those investigations, prosecutions, and court adjudications [of the individual defendants] not only were erroneous, but were so lacking in integrity as to constitute mere shams." ROC's Points and Authorities, at 9. This charge arises from the fact that contrary to the findings in the criminal prosecutions of the individual defendants, the plaintiff alleges that other members of the ROC government played a role in the killing of Henry Liu and that their role has been covered up by the ROC. The ROC also argues that the case must be dismissed on act of state grounds because litigation of the case would involve searching inquiries into the internal decisionmaking of the ROC and into ROC national security and intelligence matters. ROC's Points and Authorities, at 4.

Even assuming that the ROC's description of the ramifications of allowing this case to proceed is accurate, the applicability of the act of state doctrine is, for a number of reasons, not clear-cut.

First, it is not clear that the ROC has shown the existence of an act of state. Not all activities of a foreign sovereign state are acts of state for purposes of the doctrine. Timberlane, 549 F.2d at 606. Typically, "acts of state" involve acts by which a foreign state "has exercised its jurisdiction to give effect to its public interests." Id. at 607 (9th Cir.1976) (quoting The Restatement (Second) of Foreign Relations Law of the United States § 41 (1965)). The ROC concedes that the actual killing of Henry Liu in this Country is not an act that is subject to the doctrine. ROC's Reply Brief, at 1. And courts have generally not considered the resolution of a controversy in a foreign tribunal as an act of state. Quoting the Restatement (Second) of Foreign Relations Law of the United States, the Ninth Circuit has observed as follows:

An `act of state' as the term is used in this Title involves the public interest of a state as a state, as distinct from its interest in providing the means of adjudicating disputes or claims that arise within its territory.... A judgment of a court may be an act of state. Usually it is not, because it involves the interests of private litigants or because court adjudication is not the usual way in which the *302 state exercises its jurisdiction to give effect to public interests.

Id. at 608 (quoting the Restatement at comment "d," page 127).

Second, the fact that the litigation of this case may involve embarrassing or intrusive discovery does not necessarily implicate the act of state doctrine. As described above, the traditional purpose of the doctrine has been to avoid judicial review of acts of foreign states, not to dismiss cases otherwise properly before the court on the basis that the required discovery may intrude on the interests of or embarrass a foreign state. But cf. Clayco Petroleum Corp. v. Occidental Corp., 712 F.2d 404, 407 (9th Cir.1983), cert. denied, 464 U.S. 1040, 104 S. Ct. 703, 79 L. Ed. 2d 168 (1984) (suggesting a willingness to limit judicial inquiries solely on the basis that they would "impugn or question the nobility of a foreign nation's motivation").

Finally, unlike most cases dismissed on act of state grounds, resolution of this case would not necessarily require the Court to directly pass judgment on the legitimacy of an act of state. See generally Northrop Corp. v. McDonnell Douglas Corp., 705 F.2d 1030, 1048 (9th Cir.1983), cert. denied, 464 U.S. 849, 104 S. Ct. 156, 78 L. Ed. 2d 144 (1983) ("issue ... is whether resolution of Northrop's claims would necessitate direct judicial inquiry into" foreign military procurement decisions). The Court would not directly challenge the findings of the ROC courts, although its findings could conceivably be inconsistent with those of the ROC courts. Instead, the Court's task would be limited to determining whether the ROC is responsible for the killing of Henry Liu. The ROC wholeheartedly agrees that the killing of Henry Liu was an illegal act. Consequently, the fact that this Court would be required to find that the killing of Henry Liu was "wrongful" certainly does not require application of the act of state doctrine. Cf. Letelier v. Republic of Chile, 488 F. Supp. 665 (D.D.C.1980) (alleged assassination by agents of Chilean government of a dissident in the United States not an act of state).

Notwithstanding the Court's expressed concerns regarding the applicability of the act of state doctrine, if the Court could conclude at this stage in the litigation that a finding of liability on the part of the ROC would necessarily involve findings inconsistent with those made by the courts of the ROC or involve a probing inquiry into ROC national security and intelligence affairs, the Court may be inclined to dismiss the case.

Even though this case may not be easily "pigeon holed" as one involving the act of state doctrine, this Court does not believe that the doctrine is therefore clearly inapplicable. The doctrine is one of discretion and must be applied in light of the circumstances of each case. As mentioned earlier, the Ninth Circuit and the Supreme Court have recognized that the act of state doctrine is not an "inflexible and all encompassing rule." DeRoburt, 733 F.2d at 703. "The teaching of the courts which have considered application of the act of state doctrine is that the doctrine is to be applied pragmatically and flexibly, with reference to its underlying considerations." Tchacosh Co., LTD v. Rockwell Intern. Corp., 766 F.2d 1333, 1337 (9th Cir.1985). The touchstone for determining the doctrines applicability is the potential for interference with our foreign relations. Timberlane, 549 F.2d at 607. "Whether forbearance by an American court in a given situation is advisable or appropriate depends upon the balance of relevant considerations." Id. at 606.

The concerns identified by the ROC are certainly of the same nature as the concerns which have led courts to apply the act of state doctrine. Clearly, a lawsuit that calls into question the propriety and thoroughness with which another country has investigated and prosecuted wrongdoing by high level intelligence officials involving such a serious offense as premeditated murder touches "sharply on national nerves." Sabbatino, 376 U.S. at 428, 84 S. Ct. at 940. Similarly, few inquiries allowed by an United States court could be more intrusive than one directed at the *303 highest levels of a foreign country's intelligence bureau. The Ninth Circuit has previously recognized that even when an act of state is not directly implicated a "case may get so deeply involved in affairs of state" that the trial judge may on his own motion have to terminate the litigation. DeRoburt, 733 F.2d at 704.

Despite the concerns expressed above, the Court does not believe that the case should be dismissed at this stage of the litigation. The act of state doctrine provides a basis for dismissal only if the case cannot be resolved without passing on the validity of the relevant act of state.[4]See Northrop, 705 F.2d at 1048; Ramirez v. Weinberger, 745 F.2d 1500, 1533-37 (D.C.Cir.1984) (en banc), vacated on other grounds, ___ U.S. ___, 105 S. Ct. 2325, 86 L. Ed. 2d 255 (1985); Sharon v. Time, Inc., 599 F. Supp. 538, 546 (S.D.N.Y.1984). In this case, the Court believes that the plaintiff may be able to establish liability on the part of the ROC without calling into question any of the factual findings of the ROC tribunals or conducting intrusive inquiries into the workings of the ROC's Defense Intelligence Bureau.

As described earlier, the ROC has admitted the involvement of a number of its officials in the killing of Henry Liu. Moreover, the ROC has accepted as true the factual findings in that regard made by its own tribunals. Based on the briefing provided by the parties, the Court has concluded that the plaintiff may be able to impute the admittedly improper acts of the named defendants to the ROC by use of the doctrine of respondeat superior. Thus, before this Court considers dismissing this case on act of state grounds, the plaintiff should be given an opportunity by way of a summary judgment motion to argue the liability of ROC based on the factual findings of the ROC's tribunals.

This Court's determination to allow a summary judgment motion on the respondeat superior liability of the ROC should not suggest that the Court has concluded that such liability exists. The Court has simply determined that, given the ROC's admissions regarding the actions of the named defendants, the plaintiff should be given an opportunity to brief and argue the issue of respondeat superior before this Court considers dismissing the plaintiff's claims against the ROC on act of state grounds.

The Court is aware that in their previous filings and upon the request of this Court both sides addressed the issue of respondeat superior liability. Nevertheless, the Court does not believe that it would be appropriate for it to decide the issue on the basis of the papers previously provided it. The Court wishes to give both sides a full opportunity to argue the respondeat superior issue in light of this Order.[5] Thus, the plaintiff is ordered to file a summary judgment motion on whether, accepting the factual findings of the ROC tribunals as admissions by the ROC, the ROC is liable under principles of respondeat superior for any of the claims asserted against it. The motion should be briefed and scheduled in accordance with the local rules and the rules of this Court generally applicable to such motions.

II. SOVEREIGN IMMUNITY

In its original motion to dismiss, the ROC did not raise the issue of whether dismissal was required under the Foreign Sovereign *304 Immunities Act ("FSIA"), 28 U.S.C. § 1605(a). In requesting briefing on the availability of respondeat superior liability, the Court also asked the parties to address the sovereign immunity issue because of its jurisdictional nature. Having reviewed the parties' briefs, the Court has concluded that at this stage in the litigation the Court cannot dismiss the claims against the ROC on grounds of sovereign immunity.

Section 1605(a) of the FSIA provides that a "foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case

(5) ... in which money damages are sought against a foreign state for personal injury or death, or damage to or loss of property, occurring in the United States and caused by the tortious act or omission of that foreign state or of any official or employee of that foreign state while acting within the scope of his office or employment; except this paragraph [5] shall not apply to ... (A) any claim based upon the exercise or performance or the failure to exercise or perform a discretionary function regardless of whether the discretion be abused...."

28 U.S.C. § 1605(a).

Section 1605(a) removes immunity for torts committed either by the foreign state or by its agents acting within the scope of their employment. In this case, the plaintiff alleges both grounds: (1) that the ROC actually authorized the murder of Henry Liu and (2) that Henry Liu's killers were agents of the ROC acting with the scope of their employment. These allegation are sufficient to avoid dismissal of this action at this point in the litigation.

The ROC argues that even if the Court finds that plaintiff has sufficiently alleged that the killing of Henry Liu was authorized by the ROC or was performed by an agent of the ROC acting within the scope of his authority, the complaint should still be dismissed on grounds of sovereign immunity. Section 1605(a) (5) (A) provides that suits otherwise allowed under section 1605(a) (5) will not be allowed if based on the exercise or performance of a discretionary function. Id. The ROC asserts that if the Court accepts plaintiff's allegation that the killing of Henry Liu was either authorized by the ROC or within the scope of the employment of those individuals who actually were involved, the Court must conclude that the decision to kill Henry Liu and the carrying out of that decision involved a "discretionary function." The Court rejects this argument.

The discretionary function exemption contained in section 1605(a) (5) (A) of the FSIA corresponds with a similar exemption found in the Federal Tort Claims Act ("FTCA"). Compare 28 U.S.C. § 1605(a) (5) (A) with id. § 2680(a). The Ninth Circuit has recognized that Congress intended that courts rely on judicial interpretations of the FTCA's similar provision when interpreting section 1605(a) (5) (A) of the FSIA.[6]Olsen by Sheldon v. Government of Mexico, 729 F.2d 641, 646-47 (9th Cir.), cert denied sub nom., 469 U.S. 917, 105 S. Ct. 295, 83 L. Ed. 2d 230 (1984).

In interpreting the FTCA, the Supreme Court has stated that an act is discretionary in nature when "there is room for policy judgment and decision...." Dalehite v. United States, 346 U.S. 15, 35-36, 73 S. Ct. 956, 968, 97 L. Ed. 1427 (1953). Other cases have held that the discretionary function exception does not provide immunity for acts "clearly outside the authority delegated...." Birnbaum v. United States, 588 F.2d 319, 329 (2d Cir. 1978); see also Hatahley v. United States, 351 U.S. 173, 181, 76 S. Ct. 745, 751, 100 L. Ed. 1065 (1956); Medley v. United States, 543 F. Supp. 1211, 1219 (N.D.Cal. 1982).

*305 This Court holds that planning and conducting the murder of Henry Liu could not have been a discretionary function as defined by the FSIA. Such an act is not one where "there is room for policy judgment and decision." The killing of Americans residing in the United States is not a policy option available to foreign countries. Moreover, the ROC appears to admit that the killing of Henry Liu could not, under ROC law, have been legally authorized by anyone in that government. The ROC and its agents simply did not have the discretion to commit the acts alleged.[7] Judge Green aptly expressed this view in a similar case:

Whatever policy options may exist for a foreign country, it has no "discretion" to perpetrate conduct designed to result in the assassination of an individual or individuals, action that is clearly contrary to the precepts of humanity as recognized in both national and international law.

Letelier v. Republic of Chile, 488 F. Supp. 665, 673 (D.D.C.1980); see also Estate of Silme Domingo v. Republic of the Philippines, No. C 82-1055-V (W.D.Wash. July 17, 1984) [Available on WESTLAW, DCTU database] (adopting Judge Green's reasoning in a similar case).

Because plaintiff has alleged sufficient facts to fall within the exception to sovereign immunity contained in section 1605(a) (5) of the FSIA and because the discretionary function exemption is inapplicable, the Court cannot dismiss this case on sovereign immunity grounds at this stage in the litigation.

Conclusion

The Court denies without prejudice the ROC's motion to dismiss on act of state grounds. The Court has concluded that the claims against the ROC should not be dismissed at least until the plaintiff has had the opportunity to argue respondeat superior liability based on the admissions of the ROC. The Court has also concluded that, at this point in the litigation, the claims against the ROC are not barred by sovereign immunity. Plaintiff's allegations fall within the FSIA's immunity exception and do not relate to the exercise or performance of a discretionary function. The Court orders the plaintiff to file a summary judgment motion consistent with the directives of this Order. After that motion is decided, the Court will once again consider whether this case should be dismissed on act of state grounds.

IT IS SO ORDERED.

In Re Philippine National Bank,philippine National Bank, Petitioner, v. United States District Court for the District of Hawaii, Respondent,maximo Hilao; Estate of Ferdinand Marcos; Imelda R. Marcos; Ferdinand R. Marcos, Jr., Real Parties in Interest, 397 F.3d 768 (9th Cir. 2005)

Facts

The case arises from competing claims to more than $30 million, the rewards of an investment former Philippine President Ferdinand Marcos made with Merrill Lynch and subsequently misappropriated. A Philippine agency charged with recovering the funds, several Marcos family creditors, and human rights victims who had already secured a judgment against Marcos' estate each laid claim to the money, prompting Merrill Lynch to file an interpleader action to settle all of the claims in one case. The Philippine government, acting in concert with the recovery agency, claimed that it had sovereign immunity from suit and, because it was an indispensable party to the suit under Federal Rule of Civil Procedure 19(b), justice required that the case be stayed and brought before a special Philippine court established to return such misappropriated funds to the public treasury. However, the district court continued to adjudicate the case, eventually awarding the assets to the creditors.

The Ninth Circuit upheld the award, noting that the government's claim was barred by the applicable Philippine statute of limitations. The Ninth Circuit further held that the "equity and good conscience" requirements of Federal Rule of Civil Procedure 19(b) did not require the Philippine government's participation in the case. In its petition for certiorari, the Philippine government argued that the award of assets undermined the comity principles of the Foreign Sovereign Immunities Act and violated Federal Rule of Civil Procedure 19(b) by not including the government as an indispensable party.

Issue:

Whether the U.S. Court of Appeals for the Ninth Circuit err in approving the award of assets to creditors of former Philippine President Ferdinand Marcos when the Philippine government, claiming rightful ownership of the assets, excluded itself from the proceedings based on sovereign immunity?

Ruling:

Yes. The Court's opinion was unanimous in finding that the Philippine government was a required party to the case under Rule 19(b). Such a required party must be joined to the suit if it is "feasible," and the Court ruled that the government's inclusion was feasible in this case. The Court sent the case back to the district court with instructions to dismiss the interpleader action. Justice Anthony Kennedy delivered the opinion of the Court in which Justices John Paul Stevens and David Souter concurred in part and dissented in part.

Islamic Republic of Iran v. Pahlavi (1984)

LEETHAM, J.

Facts:

Plaintiff, the Islamic Republic of Iran, bring an action against Iran’s former ruler, Shah Mohammed Reza Pahlavi, and his wife, Empress Farah Diba Pahlavi. It alleges in its complaint that defendants accepted bribes and misappropriated, embezzled or converted 35 billion dollars in Iranian funds in breach of their fiduciary duty to the Iranian people and it seeks to recover those funds and 20 billion dollars in exemplary damages. It asks the court to impress a constructive trust on defendants’ assets located throughout the world, for an accounting of all moneys and property received by the defendants from the government of Iran, and for other incidental relief. The action was commenced in November, 19A9 by substituted service on the Shah made at New York Hospital where he was undergoing cancer therapy. Thereafter, defendants moved to dismiss the complaint alleging that it raised non justiciable political questions, that the court lack personal jurisdiction due to defective service of process on them and that the complaint should be dismissed on grounds of forum non conveniens.

Issue (s):

Whether or not forum non conveniens is a valid ground to dismiss the action.

Ruling:

Yes. Special term granted defendants’ motion based on forum non conveniens, concluding that the parties had no connection with New York other than a claim that the Shah had deposited funds in New York banks, a claim which it found insufficient under the circumstances to justify the court inm retaining jurisdiction. “Common-law doctrine of forum non conveniens, also articulated in CPLR 327 (a), which permist a court to state or dismiss [action] where it is determined that the action, although jurisdictionally sound, would be better adjudicated elsewhere”. In a motion to dismiss on the ground of forum non conveniens, the burden is on a defendant challenging the forum to demonstrate relevant private or public interest factors which militate against accepting the litigation here. The order appeal from is reversed and the motion to dismiss the action is granted

W.S. Kirkpatrick & Company, Inc. v. Environmental Tectonics Corporation, International

CITATION

493 US 400 (1990)

Facts:

In 1981, the Republic of Nigeria was interested in building an aeromedical center at Kaduna Air Force Base. Both W.S. Kirkpatrick & Co., Inc. (Kirkpatrick) and Environmental Tectonics Corporation International (Environmental Tectonics) bid for the contract. Kirkpatrick established a deal with a Nigerian citizen who would attempt to ensure Kirkpatrick received the contract. In exchange, Kirkpatrick would pay two Panamanian companies owned by the Nigerian individual 20% of the contract price, which would be distributed as bribes to Nigerian officials. Kirkpatrick succeeded in obtaining the contract, and Environmental Tectonics brought the issue to the attention of the authorities. The United States Attorney for the District of New Jersey brought charges against Kirkpatrick and its CEO, and both pled guilty.

Environmental Tectonics sued Kirkpatrick in district court and sought damages under anti-racketeering acts. Kirkpatrick moved to dismiss the complaint by arguing that the action was barred by state doctrine that prohibited courts from considering cases that would result in embarrassment for a sovereign nation or interfere with US foreign policy. The district court treated the motion as one for summary judgment and granted the motion in favor of Kirkpatrick. The district court held that Environmental Tectonics would have to prove that Nigerian officials accepted bribes and allowed the bribes to influence governmental decisions. The US Court of Appeals for the Third Circuit reversed and held that Kirkpatrick had not met its burden to show that the case could not proceed.

Issue:

Does state doctrine prohibit a US court from adjudicating a case that would attribute unlawful acts to foreign officials acting in their official capacity?

Ruling:

No. Justice Antonin Scalia delivered the opinion of the unanimous Court. The Supreme Court held that state doctrine only applies when the case requires a US court to declare an act of a foreign sovereign nation invalid. The Court held that this suit only requires the district court to rule on the motivation underlying an action rather than the validity of the action itself. Since nothing in this case required the court to declare an action by Nigeria’s government invalid, state doctrine does not apply, and the case should be allowed to proceed.

Reference:

https://forlifeandlaw.org/2018/01/24/col_hassan-el-fadl-appellant-v-central-bank-of-jordan-digest/

https://www.casebriefs.com/blog/law/civil-procedure/civil-procedure-keyed-to-spencer/joinder-of-claims-and-parties-civil-procedure-keyed-to-spencer/republic-of-philippines-v-pimentel/

Liu v. Republic of China, 642 F. Supp. 297 (N.D. Cal. 1986). JUSTIA US LAW. Retrieved May 1, 2020, from

https://law.justia.com/cases/federal/district-courts/FSupp/642/297/2398391/

Republic of Philippines v. Pimentel. (n.d.). Oyez. Retrieved May 1, 2020, from https://www.oyez.org/cases/2007/06-1204

Islamic Republic of Iran v. Pahlavi (1984). JUSTIA US LAW. Retrieved May 1, 2020, from

https://law.justia.com/cases/california/court-of-appeal/3d/160/620.html

W.S. Kirkpatrick & Company, Inc. v. Environmental Tectonics Corporation, International. (n.d.). Oyez. Retrieved May 1, 2020, from https://www.oyez.org/cases/1989/87-2066

Conflict Cases 59-70. Raffy Roncales Retrieved May 1, 2020, from https://www.scribd.com/document/275427444/Conflict-Cases-59-70