Rule: When American interests are attenuated, considerations of comity come to the fore, and it is those considerations and the resulting concern with the judiciary’s stepping on the State Department’s toes, that inform the modern understanding of the Act of State Doctrine.W.S. Kirkpatrick R Co. v. Environmental Tectonics Corp. (1990)The Supreme Court refused to ban the application of the Robinson-Patman Act to the alleged payment of bribes to governmentofficials in Nigeria to obtain a government contract. The Court ruled that act of state issues “only arisewhen a court must decide – that is, when the outcome of the case turns upon – the effect of official action by a foreign sovereign.” Exceptions: The doctrine tolerates the application of the U.S. antitrust laws where judicial inquiry “involves only the ‘motivation’for, rather thanthe ‘validity’of, a foreign sovereign act.” Here the act of state doctrine did not apply because the Pdid not challenge the validity of the contract issued by the Nigerian Government, but only questioned the motive (a possible bribe) for the agreement. Trinh v. Citbank and Citibank N.A. v. Wells Fargo Asia Ltd. Rule: Make sure your client corporation disclaims bearing of the sovereign risk. “X Corporation does not bear the sovereign risk, including events in which the assets of the bank are seized by the present government, or by a foreign government, legally or illegally.” Professor Weintraub: US Citibank has a branch in a foreign country. Citizens of that country deposit their money in that Citibank. Government is overthown by North Vietnam, and bank’s assets are seized. Depositor in this case goes to New York Citbank branch and requests to withdraw his money. Case goes to U.S. Supreme Court twice after a remand. Expressly Address the Sovereign RiskCitibank could have avoided this problem had it expressly disclaimed in its depositors’ agreement that “Citibank does not bear the sovereign risk, including events in which the assets of the bank are seized by the present government, or by a foreigngovernment, legally or illegally.” If you make this clear to the depositors, in order to provide them with an incentive to deposit money in the bank, you would have to pay them a higher interest ratethan what they could get in Switzerland or in the USA. 35
CHAPTER5: FOREIGNSOVEREIGNIMMUNITYSection 1: The Foreign Sovereign Immunities ActForeign Sovereign Immunities Act is simply a first hurdle. You cannot sue a foreign sovereign unless you can fit it into one of the exceptions, particularly those in § 1605. But that does not mean you are home free. Now you have to deal additionally with the judicial abstention doctrines, the act of state doctrine, comity, etc. Professor Weintraub says he believes this is the current reality.