The REPUBLIC OF the PHILIPPINES; National Power Corporation, Appellants, v. WESTINGHOUSE ELECTRIC CORPORATION; Westinghouse International Projects Company; Burns and Roe Enterprises, Inc., Appellees.
No. 93-5672.
United States Court of Appeals, Third Circuit.
Decided Dec. 20, 1994.
As Amended Jan. 5, 1995.
43 F.3d 65
Argued May 13, 1994.
IV. CONCLUSION
Because the claims alleged in the plaintiffs’ complaint clearly meet the requirements of
Richard W. Clary (argued), Cravath, Swaine & Moore, New York City, for appellees, Westinghouse Elec. Corp. and Westinghouse Intern. Projects Co.
Glenn A. Mitchell, Stein, Mitchell & Mezines, Washington, DC, for appellee, Burns and Roe Enterprises, Inc.
Before: BECKER and LEWIS, Circuit Judges, and POLLAK, District Judge*.
OPINION OF THE COURT
LEWIS, Circuit Judge.
This case raises important issues at the intersection of two principles: our deep-seated belief that a district court must be permitted to protect the integrity of its fact-finding process, and the settled considerations which courts in the United States must heed when considering whether to enjoin the executive activities of a foreign sovereign carried out in that sovereign‘s own territory. The district court found that the Republic of the Philippines was harassing witnesses who had testified against it in a suit it had brought in federal court in New Jersey. Thus, the court enjoined the Republic from continuing this harassment. The court also denied interlocutory certification of an underlying jury verdict so as to enforce its injunction, and ordered that any settlement in the case be conditioned upon acceptance of the court‘s continuing jurisdiction to enforce its injunctions. Because the district court exceeded its authority, we will reverse.
I.
A.
In 1988, the Republic of the Philippines (the “Republic“) and the National Power Corporation (“NPC“) filed a complaint against Westinghouse Electrical Corporation and Westinghouse International Projects Company (collectively “Westinghouse“) and Burns and Roe Enterprises, Inc. (“Burns and Roe“) concerning the construction of a nucle-
While preparation for the trial on the tortious interference counts proceeded in New Jersey, arbitration implicating the other counts proceeded apace in Geneva. In late 1991, reaching the bribery allegations in the context of the Republic‘s challenge to the validity of the contract‘s arbitration clause, the arbitrators found that the Republic had failed to show that Westinghouse had bribed President Marcos. When the arbitrators included this finding in a preliminary award in favor of Westinghouse and Burns and Roe entered in Decеmber, 1991, the defendants moved for summary judgment in the district court, claiming the arbitrators’ preliminary award collaterally estopped the Republic and NPC from litigating the bribery and tortious interference claims. The district court denied the motion and, when settlement discussions broke down, the case went to trial in March, 1993.
As the district court noted in the opinion supporting the order now before us, “[f]rom all accounts in the Philippine press, [the filing of the suit against Westinghouse and Burns and Roe and the arbitration in Geneva] assumed enormous importance in the eyes of Philippines leaders.” District Court Opinion (“Op.“) at 5. The court explained that “[c]onstruction of the power plant had been undertaken to help solve the desperate electrical power shortage in the Philippines. Huge foreign loans were incurred to pay for the project.” Id. When Marcos left the Philippines and the Aquino government suspended construction of the power plant, “the Republic found itself with a partially completed plant which was producing no electricity, an ever worsening shortage of electrical power, and a huge foreign debt burden on which, it is said, interest alone amounts to $300,000 each dаy.” Id. Thus, the court surmised that “[i]t appears that the leaders of the Republic looked to a judgment in this case and in the arbitration proceedings as the solution to these staggering problems.” Id. The court further surmised that this factual context “may provide some explanation of the untoward events which transpired after the jury rendered a verdict against the Republic.” Id.
During the trial, two Filipino Westinghouse workers, Pedro A. Padre, Jr. and Jerry R. Orlina, testified for Westinghouse. In addition, Westinghouse introduced an affidavit from Perfecto V. Fernandez, a professor of law at the government-owned University of the Philippines. The affidavit had been rendered two years prior to the trial, when Westinghouse had moved for summary judgment, and discussed Philippine law relevant to the issues in the case. This testimony, the subsequent actions threatened and taken by the Republic against the witnesses, and the court‘s responses are the subjects of this appeal.
B.
After a lengthy trial, the jury returned a verdict for Westinghouse and Burns and Roe on the bribery and tortious interference counts. Because the other claims were still stayed pending arbitration, the Republic filed a motion for certification pursuant to
However, Westinghouse then advised the court that it had evidence that Padre, Orlina and Fernandez were being harassed and subjected to retaliation by Philippine officials because of their testimony on behalf of Westinghouse. When these allegations were brought to its attention, the court abruptly changed its mind about certification, stating that although the facts needed to be developed,
if there is a basis to [the allegation of harassment], it is a very, very serious charge, because nobody could come into this Court and then abuse people who come and testify. Some very dramatic, drastic remedies would have to be provided ... It would be destructive of our whole system. No foreign government should be allowed to use our court system and then not play fair with the witnesses in the case. I can‘t think of anything more destructive of our system, and simply could not permit it.
J.A. at 49-50. The court concluded that it must “hold off” on signing the
The court ordered briefing and requested a motion from Westinghouse formally requesting relief from the court. Westinghouse filed a motion requesting that the court (1) enjoin the Republic from further harassing any witnesses, (2) sanction the Republic by barring it from further prosecuting its claims before the district court or appealing the adverse jury verdict, and (3) grant Westinghouse its attorneys’ fees incurred on the motion.
The court held a hearing in early July, 1993, at which argument was presented on the documentary evidence submitted by the parties relating to the Westinghouse motion, including affidavits of various parties, transcripts of television programs, news clippings, and other data. In correspondence with the parties after the hearing, the court explained that, having considered materials submitted by the Republic with a renewed motion for certification, it believed that “the Republic ha[d] anticipated some of the requirements which are contained in my proposed order [addressing the allegations of harassment], although others remain to be fulfilled.” J.A. at 107. Thus, the court circulated its proposed opinion and order and scheduled another hearing for September 27, 1993, at which it heard argument about the actions the Republic had taken to address the court‘s concerns. Not fully satisfied with the Republic‘s explanations at this final hearing, however, the district court indicated that it would finalize its opinion and order shortly.
On October 4, 1993, the court filed the opinion and order. The court found that, since the jury verdict, Orlina, Padre, and Professor Fernandez had been “the target of vilification in the public press inspired by officials in the Philippines government and each has been the target of actual or threatened government action.” Op. at 15. The court stated that the “attack[s]” were “spearheaded” by Francisco A. Villa, Overall Deputy Ombudsman of the Republic, a presidential appointee whose duties include initiating investigations and directing “any public official to perform any act required by law and to request assistance from any governmental agency.” Id. at 16.
The court found that Deputy Ombudsman Villa had threatened on numerous occasions to take legal action for tax fraud against Padre and Orlina as a result of their testimony on behalf of Westinghouse. The court found that both Padre and Orlina had faced public cеnsure and lost business opportunities because of the Republic‘s actions, and that they would be financially ruined if tax evasion charges were brought against them. In this regard, the court also found it significant that another Filipino who had been involved in the same activities as Padre and Orlina had agreed to testify for the Republic and was then granted immunity from prosecution for tax evasion. Op. at 13, 19.
The court also documented that Villa had initiated disciplinary proceedings against
The Republic had submitted an affidavit from Villa purporting to establish that he did not institute proceedings against Fernandez because of the jury verdict, that Padre‘s and Orlina‘s fears are unwarranted, and that the Ombudsman‘s Office has not harassed any witness and had no intention of doing so. Op. at 24. However, the court found that Villa lacked credibility. Given the evidence of record, “for [Villa] to state that ‘[Padre‘s and Orlina‘s] fears and apprehensions are unfounded’ is poppycоck.” Id. at 25. Furthermore, according to the court, the statements about Fernandez in Villa‘s affidavit continued to “reflect the Republic‘s rage at losing the case and its intent to strike out at one of the three persons seized upon as scapegoats for that loss.” Id. And the court found that Villa‘s assertion that the Ombudsman‘s Office was not guilty of harassment was “simply not true.” Id. at 25.
Although the evidence of harassment centered on Villa, the court determined that other members of the Philippines government had supported Villa‘s efforts. The court found ample evidence that Villa “was acting in accordance with the policies of the Office of the Executive, President Ramos.” Op. at 22. The court also found that the harassment was not confined to the executive branch of government. Id. at 17 (noting that a Philippine senator had urged a study of the “culpability” of the three witnesses).
The court acknowledged that the Republic had submitted evidence purporting to show that the government did not support any action designed to harass or intimidate witnesses, and that the government specifically did not intend to pursue any charges against Padre, Orlina, or Fernandez.2 The court noted that the evidence demоnstrated “a partial retreat from the retaliatory conduct” the court had documented and indicated that the Republic intends “not to pursue the retaliatory conduct further against Padre and Orlina.” Op. at 28. However, the court noted that the proceedings against Fernandez “continue[d] unabated.” Id. at 30.
Because the court found that the Republic‘s actions “threaten[] both the integrity of a United States District Court and the foundations of our system of justice” (Op. at 32), it concluded that it must take action. Accordingly, it (1) enjoined the Republic from
II.
The Republic‘s challenge to the district court‘s order presents three issues: (1) whether the district court exceeded its authority in issuing the injunctive portions of its order; (2) whether the district court erred in refusing
III.
A.
The Republic has not adequately presented the issue of whether the district court‘s factual findings constitute clear error.5 Nevertheless, it is clear from the briefing that the Republic disputes the district court‘s factual conclusions, and we reach the Republic‘s challenge because of the significance of this case not only to a foreign sovereign, but also to our domestic legal system. We believe the evidence supports the district court‘s conclusion that Deputy Ombudsman Villa, with the support of other members of the Philippines government, pursued a campaign designed to smear Padre, Orlina, and Fernandez as scapegoats for the Republic‘s failure to achieve victory in the district court.
We further agree with the district court‘s observation that such behavior had “a doubly subversive effect. First, witnesses, who should have been able to rely upon both the implicit and explicit assurances of th[e district] court that they could testify fully and freely without fear of any retaliatory actions, have been betrayed.” Op. at 33. Additionally, “witnesses from the Philippines will fear to testify for Westinghouse and against the Republic in the arbitration proceedings and in any future proceedings in th[e district] court, preventing each tribunal from receiving all the facts.” Id. We therefore find no
Before we turn to the question of whether the district court‘s chosen relief was an abuse of its discretion, however, we note certain facts of significance. Although the district court found that the Republic‘s acts were retaliatory, it did not find that they were without foundation. In other words, the district court did not find that Padre and Orlina could not, under nоrmal circumstances, be prosecuted for the activities they admitted to in open court in New Jersey. The court also stated that it accepted for purposes of its order that “under normal circumstances” Villa could file charges against Fernandez for his acceptance of compensation for providing an affidavit in this case. Op. at 34.6
The court also concluded that by the time it filed its order, the Republic had taken steps to “cure the effects of the retaliatory actions against Padre and Orlina and any additional steps which may be required can be taken readily.” Id. The only element of the challenged conduct that remained was the administrative complaint against Fernandez.
Additionally, the court concluded for the purposes of its order that the Ombudsman‘s Office is independent of the Executive Branch. Op. at 34. Thus, it tacitly accepted the argument that the Republic could not compel Villa to withdraw his complaint against Fernandez (see id.), and for the purposes of this opinion, we make the same assumption.7
We also note a subsequent factual development not considered by the district court. During the pendency of this matter befоre us, we were informed by counsel for the Republic that the administrative proceeding that had been initiated by Villa against Fernandez had been dismissed by the President of the University of the Philippines. Noting that Fernandez had offered his opinion on a matter of public importance, the President of the University wrote that while
[i]t is conceded that Prof. Fernandez’ point of view may appear to be unacceptable to some or more Filipinos[,] ... the role of academe is to continually engender varying thoughts, positions, theories and postulates on various key issues and concerns affecting the nation. This is not the first time that a dissenting voice has been put forth against the position taken by officials of the Republic and if the University is to remain at all one of the bastions of free thought and speech, it most certainly will not be the last.
Order, In re Complaint of Deputy Ombudsman Francisco Villa v. Prof. Perfecto V. Fernandez of the College of Law 6 (May 5, 1994).8
With these facts in mind, we now address whether the injunctive portions of the court‘s order were lawful exercises of the court‘s discretion.
B.
The district court‘s findings force us to confront fundamental issues involving a federal court‘s power to control litigants who come before it. As discussed below, a district court‘s power to sanction or exercise
1.
Our legal system will endure only so long as members of society continue to believe that our courts endeavor to provide untainted, unbiased forums in which justice may be found and done. Thus, it is beyond peradventure that district courts have broad authority to preserve and protect their essential functions. To ensure that district courts have tools available to protect their truth-seeking process, the Federal Rules of Civil Procedure allow district courts to sanction parties who fail to meet minimum standards of conduct in many different contexts. E.g.,
Nor do those formal rules and legislative dictates exhaust district courts’ power to control misbehaving litigants. To the contrary, the Supreme Court recently reaffirmed that a district court has inherent authority to impose sanctions upon those who would abuse the judicial process. Chambers, 501 U.S. at 43-44.9 In Chambers, a private party challenged a district court‘s order making him liable to his opponent for attorneys’ fees of nearly $1 million expended because of the party‘s bad faith conduct during the course of litigation. The Court rejected the challenge, finding that the order was an appropriate exercise of the district court‘s inherent powers to control litigants. The Supreme Court explained that “[i]t has long been understood that ‘certain implied powers must necessarily result to our Courts of justice from the nature of their institution,’ powers ‘which cannot be dispensed with in a Court, because they are necessary to the exercise of all others.‘” Id., quoting United States v. Hudson, 11 U.S. (7 Cranch) 32, 3 L.Ed. 259 (1812). Such salutary powers, the Court noted, are “governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.” Chambers, 501 U.S. at 43, quoting Link v. Wabash R. Co., 370 U.S. 626, 630-31 (1962).10
Second, having evaluated the conduct at issue, the district court must specifically consider the range of permissible sanctions and explain why less severe alternatives to the sanction imposed are inadequate or inappropriate. Although the court need not “exhaust all other sanctioning mechanisms prior to resorting to its inherent power” (Landon v. Hunt, 938 F.2d at 450, 454), the court must explain why it has chosen any particular sanction from the range of alternatives it has identified. See Poulis, 747 F.2d at 868 (sanctions under
2.
The district court did not explain under what authority it was proceeding in enjoining the Republic. We deduce from the circumstances, and assume for purposes of evaluating the injunctive provisions of the district court‘s order, that it was acting un-
At their core, the injunctive portions of the district court‘s order implicate international comity, that elusive doctrine—something more than mere international manners, but less than obligation—which attempts to mediate the frictions inherent in a community of sovereign states. Comity, in the words of Justice Gray,
is the recognition which one nation allows within its territory to the legislative, 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.
Hilton v. Guyot, 159 U.S. 113, 164 (1895). The doctrine “is a nation‘s expression of understanding which demonstrates due regard both to international duty and convenience and to the rights of persons protected by its own laws.” Somportex Ltd. v. Philadelphia Chewing Gum Corp., 453 F.2d 435, 440 (3d Cir.1971). Consequently, “comity serves our international system like the mortar which cements together a brick house. No one would willingly permit thе mortar to crumble or be chipped away for fear of compromising the entire structure.” Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 937 (D.C.Cir.1984).
Comity cannot be the source of a disability that prevents a district court from having the power to address wrongdoing that impacts a domestic court. As Hilton makes clear, comity must yield to domestic policy: “no nation will suffer the laws of another to interfere with her own to the injury of her citizens....” Hilton, 159 U.S. at 164. Thus, “from the earliest times, authorities have recognized that the obligation of comity expires when the strong public policies of the forum are vitiated by the foreign act.” Laker Airways, 731 F.2d at 937.
But while it is true that principles of comity cannot compel a domestic court to uphold foreign interests at the expense of the public policies of the forum state, it can—and does—force courts in the United States to tailor their remedies carefully to avoid undue interference with the domestic activities of other sovereign nations. Comity is essentially a version of the golden rule: a “concept of doing to others as you would have them do to you....” Lafontant v. Aristide, 844 F.Supp. 128, 132 (S.D.N.Y.1994); see Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985). Thus, it may be permissible to prescribe and enforce rules of law in a foreign country, but unreasonable to do so in a particular manner because of thе intrusiveness of a particular type of sanction. That is the case here: the district court had the power to sanction the Republic for its wrongdoing, but it should not have entered the injunctive provisions at issue here.
The mere fact of sovereignty does not insulate a litigant from sanction for failure to abide by the rules governing litigation in American courts. It would be perverse to allow a foreign sovereign litigant to “take our law free from the claims of justice.” National City Bank of New York v. Republic of China, 348 U.S. 356, 362 (1955). The Republic‘s actions, although taken in a foreign country, undeniably had effects in the United States. Under general principles of international law, a tribunal may prescribe laws with respect to “conduct outside its territory that has or is intended to have substantial effect within its territory.”
However, any exercise of jurisdiction to prescribe and enforce sanctions based on the effects of foreign activity in a domestic court requires the court to balance the interests it seeks to protect against the interests of any other sovereign that might exercise authority over the same conduct. See Romero v. Int‘l Terminal Operating Co., 358 U.S. 354, 383 (1959) (interpreting Jones Act in light of “due recognition of our self-regarding respect for the relevant interests of foreign nations in the regulation of maritime commerce“); Mannington Mills, Inc. v. Congoleum Corp., 595 F.2d 1287, 1296 (3d Cir.1979) (noting with respect to United States antitrust laws that “[w]hen foreign nations are involved ... it is unwise to ignore the fact that foreign policy, reciprocity, comity, and limitations of judicial power are considerations that should have a bearing on the decision to exercise or decline jurisdiction“); Timberlane Lumber Co. v. Bank of America, 549 F.2d 597, 613 (9th Cir.1976) (endorsing “jurisdictional rule of reason” in potential extraterritorial application of United States antitrust laws); Restatement §§ 402, 403. Consequently, al-
This balancing is evident in the principal cases advanced by both the Republic and Westinghouse in support or their respective positions. For example, in United States v. Davis, 767 F.2d 1025 (2d Cir.1985), Davis, a United States citizen, was charged with money laundering. Prior to trial, the United States government issued a subpoena to the Cayman Islands branch of the Bank of Nova Scotia, directing it to produce documents relating to Davis’ activities. When it appeared that the bank would comply with the subpoena, Davis filed an action seeking a temporary restraining order in the Cayman Islands to prevent the bank from disclosing the records, claiming that the district court action was improper and that the bank‘s compliance with the subpoena would violate a Cayman Islands law. In response, the district court ordered Davis to cease his legal proceedings in the Cayman Islands.
The Second Circuit held that the district court had properly exercised its discretion in enjoining Davis from pursuing the Cayman Islands litigation. Davis, 767 F.2d at 1037. The Court provided three reasons: (1) the Cayman Islands litigation “had a direct, sub-
The Davis court warned, however, that because orders enjoining parties from pursuing litigation in foreign tribunals “often restrict[] the jurisdiction of the foreign tribunal,” such orders “should ... be used sparingly.” Davis, 767 F.2d at 1038. Accordingly, the court emphasized that “because an order enjoining a litigant from continuing a foreign action is facially obstructive, international comity demands that this extraordinary remedy be used only after other means of redressing the injury sought to be avoided have been explored.” Id.
Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909 (D.C.Cir.1984), is quite similar. Laker Airways (“Laker“) filed a private antitrust suit in the United States against four American defendants, two British defendants, a Belgian defendant, and a Swiss defendant. In response, the foreign defendants filed suit in Britain and secured an injunction prohibiting Laker from pursuing its case against them in the United States court. Laker, in turn, requested and secured a restraining order in the United States prohibiting the American defendants from instituting similar preemptive suits in the United Kingdom. Laker then filed another antitrust suit in the same United States district court naming two additional defendants, one Dutch and the other Belgian, and sought and received a restraining order prohibiting these defendants from seeking relief from suit in Britain.
The Dutch and Belgian defendants in the second American action appealed the injunction, claiming that the district court had exceeded its jurisdiction to prescribe and enforce—and violated principles of international comity—in enjoining the defendants from seeking relief in the British courts. The District of Columbia Circuit affirmed, finding the injunction was proper because litigation in Britain was designed solely to terminate the United States litigation and deprive the United States court of its rightful jurisdiction. Laker Airways, 731 F.2d at 930. However, the Laker Airways court stressed that comity required that the power to issue anti-suit injunctions be used “only in the most compelling circumstances,” because such injunctions “effectively restrict the foreign court‘s ability to exercise its jurisdiction.” Laker Airways, 731 F.2d at 927.
In Compagnie des Bauxites de Guinea v. Ins. Co. of North America, 651 F.2d 877 (3d Cir.1981), we faced an injunction similar to those addressed in Davis and Laker Airways, but we reversed the district court. In Compagnie des Bauxites, Compagnie des Bauxites de Guinea (“CBG“) brought a claim against several insurance companies because they would not honor a claim on policies issued to CBG. Almost four years later, the insurance companies filed a suit in the High Court of Justice, Queen‘s Bench Division in London, seeking a declaratory judgment rescinding the contracts on the ground that CBG had failed to disclose material facts. The district court enjoined prosecution of the action in England, finding that the second action was duplicative, harassing and vexatious.
On appeal, we declined to “determine that the district court lacks the power to enjoin parties from pursuing an action in another jurisdiction in every case.” Compagnie des Bauxites, 651 F.2d at 887. We found, however, that the sole reasons for the district court‘s injunction—“duplication of issues and the insurers’ delay in filing the [foreign] action“—were insufficient to justify “the breach of comity among the courts of separate sovereignties.” Id.
Thus, what we recognized in Compagnie des Bauxites, like the courts in Davis and Laker Airways, is that the exercise of a power to prescribe and enforce requires a balancing in each case. The domestic court‘s purpose in protecting a particular interest must be set against the interests of any other
Westinghouse urges that Compagnie des Bauxites, Laker Airways, and Davis demonstrate that the district court‘s injunction in this case was a permissible exercise of its power to protect “the proper exercise of its jurisdiction.” Westinghouse Br. at 36, 37-38. The Republic correctly counters that the injunction in this case was very different from those issued in the cases relied upon by Westinghouse. We assume, without deciding, that the district court had the power to provide the injunctive relief it purported to provide here. Our focus, however, is on comity. Unlike the district courts in Compagnie des Bauxites, Laker Airways, and Davis, the court here did not simply enjoin private litigants from pursuing parallel litigation in foreign jurisdictions. Here, the district court‘s injunctions purport to place the court in the position of supervising the law enforcement activities of a foreign sovereign nation against its own citizens on its own soil. The injunctive paragraphs of the district court‘s order provide the following:
- the Republic is “permanently enjoined from taking any action against any witness who has testified or will testify” in this action or the arbitration “where that action is in retaliation for such testimony or has the intent or effect of harassing such a witness for his or her testimony or intimidating such a witness to change or withhold his or her testimony“; and
- the Republic is “directed to take appropriate steps to renounce and abandon the retaliatory actions which the court has found to have taken place, which steps shall include officially advising Pedro A. Padre, Jr. and Jerry R. Orlina of the Republic‘s actions and intended actions with respect to their personal income taxes....”
- “Should the parties settle this case, the agreement of settlement and any judgment implementing it shall contain a provision that each party accepts the continuing jurisdiction of th[e district] court to enforce the provisions of this order.”
Op. at 35; Order at 1-3.14
The first two injunctive provisions thrust the district court into the internal affairs of the Republic.15 The district court acknowledged that the first injunctive paragraph, which prohibits retaliation against not only Padre and Orlina, but “any witness who has testified or will testify” in this action or the arbitration, could place it in the position of acting, as the Republic‘s counsel put it to the district court, as “a special master over at least 50 witnesses who have already participated for both sides and are participating today in the arbitration, as well as literally hundreds of potential witnesses....” J.A. 92. If any of those Filipinos reсeived a traffic citation, or was involved in a tax fraud investigation, or had any other scrape with the law, the court acknowledged that it could be called upon by the individual to make a finding as to whether the Republic‘s prosecution was intended to harass or intimidate the witness. J.A. 93. And although the court did not go so far as to find that tax charges against Padre and Orlina would be unfounded (see supra pp. 71-72), the second injunctive paragraph effectively directs the Republic to grant Padre and Orlina immunity from prosecution for past tax law violations.
The jurisdiction of the nation within its own territory is necessarily exclusive and absolute. It is susceptible of no limitation not imposed by itself. Any restriction upon it, deriving validity from an external source, would imply a diminution of its sovereignty to the extent of the restriction, and an investment of that sovereignty to the same extent in that power which could impose such restriction.
Id. 11 U.S. at 136. In his classic text on conflict of laws, Joseph Story agreed with his former colleague. Synthesizing the views of many publicists, Justice Story concluded that “it is an essential attribute of every sovereignty, that it has no admitted superior, and that it gives the supreme law within its own dominions on all subjects appertaining to its sovereignty.”
The principle also finds recognition in the Restatement: “[u]nder international law, a state has ... sovereignty over its territory and general authority over its nationals[.]” § 206(a). The Restatement explains that the term “sovereignty” is used in section 206(a) to imply “a state‘s lawful control over its territory generally to the exclusion of other states, authority to govern in that territory, and authority to apply law there.” Id. comment (a).18
Additionally, in this case as in any other, the district court should have noted what alternative sanctions were available, and at the very least should have explained why those options would not have achieved the results desired. See Davis, 767 F.2d at 1038. Yet the record is devoid of evidence that the district court considered any sanctions less drastic than the injunctive provisions it adopted.
Consequently, those portions of the court‘s order must be vacated. Although the district court could sanction the Republic for taking lawful actions for retaliatory reasons, the court could not interpose itself into the Republic‘s law enforcement functions as it attempted to do in its order. As explained below, we will remand for a redetermination of sanctions.
Because we are vacating the principal injunctive portions of the district court‘s order, it is also necessary to vacate its third injunctive provision, in which the court required that any settlement include a provision acknowledging the district court‘s continued jurisdiction to enforce its order. That provision no longer has any purpose once the other injunctions are vacated.21
C.
The district court‘s order also provided that the Republic‘s motion for certification under
Of course, we are not directing the district court to certify any portion of this case for interlocutory review at this time. The decision to certify must be reached, if at all, after a sound exercise of the district court‘s discretion upon motion by one or more of the parties after remand.
IV.
The Republic should be sanctioned for having retaliated against Padre, Orlina, and Fernandez. The district court moved with commendable expedition and firmness to address the trespass on its authority and integrity embodied in the retaliation by the Republic against Padre, Orlina and Fernandez. An American court cannot tolerate litigants’ intimidation of witnesses, regardless of whether a litigant happens to be a foreign sovereign. However, for the reasons given, we conclude that the central elements of the district court‘s order went too far, and, accordingly, that order will be vacated. On remand, the district court shall reassess what sanctions should be imposed upon the Republic consistent with international comity as described in section III(B), supra. The district court should take into consideration the status of the Republic‘s actions regarding Padre, Orlina, and Fernandez, but we do not prejudge what sanctions should be imposed. In all events, however, when evaluating the issue of sanctions the district court shall set forth its findings in accordance with our discussion of sanctioning procedure in section III(B)(1), supra.
Notes
- the link of the activity to the territory of the regulating state, i.e., the extent to which the activity takes place within the territory, or has substantial, direct, and foreseeable effect upon or in the territory;
- the connections, such as nationality, residence, or economic activity, between the regulating state and the person principally responsible for the activity to be regulated, or between that state and those whom the regulation is designed to protect;
- the character of the activity to be regulated, the importance of the regulation to the regulating state, the extent to which other states regulate such activities, and the degree to which the desirability of such regulation is generally accepted;
- the existence of justified expectations that might be protected or hurt by the regulation;
- the importance of the regulation to the international political, legal, or economic system;
- the extent to which the regulation is consistent with the traditions of the international system;
- the extent to which another state may have an interest in regulating the activity; and
- the likelihood of conflict with regulation by another state.
Certаinly when, as in this case, a sovereign brings suit in the United States, it subjects itself to jurisdiction over matters incident to the suit, including counterclaims by the defendant (subject to limitations in the Foreign Sovereign Immunities Act). See generally
The court stated, however, that it did not “even want to hear anything about” the viability of its injunctive provisions, because it “[knew] that [it] ha[d] the authority to do it. Anybody who is a litigant here is subject to the jurisdiction of the Court.” J.A. 103-04. The court further believed that any sovereign immunity the Republic had was waived when it filed suit in New Jersey, making the Republic exactly like any other litigant. Thus, the court stated that it did not “even want any research on that,” because if the Republic did not have to submit to the court‘s authority, “I might as well pack up and go home.” J.A. at 104.