Act of state doctrine

• Author: International Law Group, PLLC
• Pages: 102-103

Page 102

The Provincial Government of the island of Marinduque, Philippines (Plaintiff) sued Placer Dome Corporation (Defendant) in Nevada state court for damages caused by the Defendant's 30 years of mining operations on Marinduque, a Philippine island 355 square miles in area, south of the main island of Luzon. The complaint alleges that Defendant has long been polluting the lands and waters of Marinduque, caused two environmental disasters including the collapse of a dam, was poisoning the islanders, and then left its sites without making any efforts to clean up their environment.

The Defendant removed the case to a Nevada federal court based on federal-question jurisdiction. The Plaintiff moved the court to make the Defendant show cause why the court should not remand the action to state court for lack of subject- matter jurisdiction. The district court held that there was federal-question jurisdiction under the Act of State Doctrine and denied the Plaintiff's Motion.

Under the Act of State Doctrine, the U.S. courts presume that the acts of foreign sovereigns taken within their own jurisdiction were valid. Defendant then moved to dismiss the lawsuit for lack of personal jurisdiction and forum non conveniens. Eventually, the district court did base its jurisdiction upon the Act of State Doctrine, and dismissed the lawsuit based under the doctrine of forum non conveniens.

The Plaintiff duly noted this appeal. The U.S. Court of Appeals for the Ninth Circuit reverses. It finds that none of the alleged governmental misconduct was essential to any of the Plaintiff's causes of action. Thus, the district court lacked subject-matter jurisdiction.

The Court points out that the Plaintiff's lengthy complaint includes many acts alleging government wrongdoing and corruption. For example, the Plaintiff claimed that then Philippine President Ferdinand Marcos owned 49% of one of Defendant's subsidiaries, that his government authorized or allowed mining in a provincial forest reserve, and that it did nothing to prevent the dumping of toxic waste in a nearby bay. Defendant claims that the Act of State Doctrine bars this lawsuit because it is based on damaging acts done under governmental permits plus other acts or omissions of the Philippine Government.

"Fatal to the district court's removal jurisdiction, however, is that the act of state doctrine is implicated here only defensively and the complaint does not 'necessarily raise a stated federal issue...