Thursday, October 8, 2009
The U.S. Court of Appeals for the Ninth Circuit recently issued a decision clarifying the application of the act of state doctrine in U.S. courts. The underlying case is Provincial Government of Marinduque v. Placer Dome Inc., no. 07-16306 (9th Cir. 2009). Marinduque is an island province in the Republic of the Philippines. It sued Pacer Dome in state court in Nevada alleging that Placer Dome caused serious damage to human health and the environment through the company's mining operations on the island. The complaint alleges that Placer Dome severely polluted the lands and water of the island for 30 years and left the island without cleaning up the mess, in violation of Philippine law. The complaint also alleges that Placer Dome was able to get away with this behavior because it gave former Philippine President Ferdinand Marcos a personal stake in the mining operations in exchange for the easing of environmental protections. Placer Dome sought to remove the lawsuit to federal court, claiming that the complaint presented questions of international law and foreign relations, including implication of the act of state doctrine, which gave the federal court jurisdiction over the suit. The act of state doctrine precludes courts from passing on the validity of acts of a foreign government in its own territory.
The Ninth Circuit rejected Placer Dome's assertion of federal court jurisdiction, stating that "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." Here, the court said, the act of state doctrine is not an essential element of Marinduque's claim because Marinduque need not prove the validity or invalidity of an act of state. Whether or not former President Marcos acted corruptly, Marinduque may still be successful if it proves that Placer Dome violated Philippine mining, fishing, water or pollution laws, or that it breached its contract with the Province. Thus, nothing in the complaint requires a court to pass on the validity of an act of a foreign government and the act of state doctrine is not implicated. As a result, the Ninth Circuit remanded the case to Nevada state court. The full text of the opinion may be found here.