### INTHE UNI TED S TATESCOU RT OFAPPEALS FORTHE FIFTH CIRCU IT

N o. 07- 60861

N O R T H R O P G R U M M A N S H IP S Y S T E M S IN C , fo r m e r ly k n o w n a s In g a lls S h i pb u i l di n g Inc Pl ai nt i f f - Appe l l e e - Cro s s - Appe l l ant S CR UGGS L AW FI RM, P A ; R I CHA RD F S CR UGGS ; P ODHUR S T OR S EC K, PA Inter ven or Pl ai n t i f fs - A pp el l ees v. THE M I NI S TR Y OF DEF ENSE OF THE RE PUBL I C OF VENEZ UELA D efen da n t - A pp el l an t

- C ross - A pp el l ee

A p p ea lf

rom the U n i ted S tates D i stri ct C ou rt fo r th e S o u th e r n D is tr ic t o f M is s is s ip p i

B ef ore R E AV L E Y , B A R K S D A L E , an d G A R Z A , C i rcui t Ju dg es . E M ILIO M

. G A R Z A , C i rcui t Ju dg e: T h i s c as e b e ga n a s a s ui t f o r c o nt r ac t da m ag e s i ni t i at e d b y N o r t hr op G r u m m a n S h ip S y s te m s (“N o r th r o p ”), a s h ip b u ild e r b a s e d in M is s is s ip p i,
a g a in st th e M in istr y of D e fen se of th e R e p u b li c o f V e n e z u e la (“th e R e p u b li c”). Se ver al year s i nt o t he l i t i g a t i o n, o ne o f t he Re p ub l i c ’ s a t t o r ne y s , Ri c ha r d F. S cruggs ( “ S cruggs”) of M i ssi ssi pp i , p u rport ed t o a gree to a set t l em en t b y w h i ch t h e R epu bl i c w ou l d pa y N ort h rop $70 m i l l i on to resol ve al lcl ai m s. T h e di st ri ct United States Court of App eals

Fifth Circuit 

### F I L E D Jul y 9, 2009 Cha rl es R. F ulb ru g e II I ClerkN o. 07- 60861

The FSIA

provi des j uri sdictio n over fo reign sove reigns whoen ga geincommercial 1 a ctivitie s in th e Unit edS tate s. See28U.S.C . § 160 5(a)(2 ). The Rep ublic does not di spute j uri sdictionu n de r th e F SIA o nthisapp eal. Th e R ep ub lic n owm oves t o su pp le me nt th e a pp ellater ec or d withac op yo f a 2 lette r—all egedly writtenbya Venez uel an officialand sent to th e di strict court onF ebru ary 4, 2 003—in whichth e Repub lic defen ds its failure to appear and specific al lyo bjects toth e ve nueof Mississippi. “As a gene ral rul e, this court willnot enlargethe record on appeal with evidence not b eforeth e di strict court.” McIn to s hv . Pa r tridge , 54 0 F .3d 3 15, 327(5th Cir. 200 8) (internalquotations and citationomi t t ed)

. TheR epub lic has not provided suffici ent ju stificatio n f

oru s to departfrom this ge neral rule . Accordingly , th e Repub lic’ s motio n to 2 c o u r t e n te r e d ju d g m e n t b a s e d o n th e a lle g e d s e tt le m e n t. T h e R e p u b lic sub sequ en t l y m oved t o vacate th i s j u dg m en t , argu i n g t h at ( 1) i t ha d n ot ap proved t h e set t l em en t an d ( 2) Sc ru g gs di d n ot ha ve au t h ori t y t o enter a bi n di n g agreem en t absen t such a pp roval

. Th e di st ri ctcourtden i ed the m ot i on t o vacate and ordered enfor cem en t of t h e set t l em e n t
. V en ezuela now app eal s. F o r th e fo llo w in gre a s o n s , w e re v e r s e a n d re m a n d

. I I n 1 99 7, N o r t hr o p e nt e r e d i nt o a c o nt r ac t w i t h t he Rep ubl i c ( “ t he Agr e e m e nt ” ) t o o ve r haula nd r et r o f i t t w o f r i ga t e s o f

t he Rep ubl i c ’ s na vy . The
w ork w as to b e p erf

orm ed i n P ascagou l a, M i ssi ssi pp i

. T h e A greem en t provi ded th a t a n y disp u tes i n con n ection w i th th e con tract w ou l d b e sub m i tte d to
ar bi trati on i n C ar ac as , V enez uel a ( “ t he ar bi t r at i on- f or um c l ause ” ) and t hat
u n resol ved di spu t es t h ereaf t er w ou l d be “r esol ved by the com petent C ou rt s of V e n e z u e la ” (“ th e litig a tio n -fo r u m cla u s e ”). A s w ork on t h e shi ps pr o ce e d e d betw een 200 0 an d 20 02, di spu t es aros e o ve r c o s t o ve r r uns and o t he r i s s ue s . I n O c t o be r 2 00 2, N o r t hr o p f i l e d a c o m pl ai nt aga i n stt h e R epu bl i c i n federal d i st ri ctcou rtin M i ssi ssi pp i

. N ort h rop assert ed
c l ai m s f o r i nj unc t i ve r e l i e f

a nd “ atl e as t$ 20 0 m i l l i o n” i n da m ag e s bas e d on t he Repub l i c ’ s fai l ur e t o payfo r ex t r a w o r k, and al l e ge d j ur i s di c t i o n pu r s uantt o t he F orei gn S overei gn Im m u n i t i es A ct ( “ F S IA” )

. T h e R epu bl i c fai l ed to ap pea r or 1
r e s p o n d to th e co m p la in t, a n d a d e fa u lt w a s e n te r e d

. 2N o. 07- 60861

su pp le me nt th e re co rdi s D E NI E D. I n December20 08, as this appealwas pe ndin g, the Mexico C ityarbitr ati on was 3 termin ated without decisionbyth e arbitration panel. Th e panelexplained that since the district co urt stayed procee dings inMarch 200 5, “ [t]his arb itral proc ee d ing h as b een 3 In N ov em b er 2 0 0 2 , N orth rop m ov ed to c o m p el t h e R ep u b l i c to arb i trate pu rsuan t t o t h e A greem en t , bu t requested t h at t h e d istr ic t courtorder
ar bi t r at i o n i n M i s si ssi pp i i ns t e ad o f Car ac as a s r e qui r e d b y t he a r bi t r at i o nfo r u m cla u s e . N o r th r o p s u b m itt e d e v id e n c e t h a t a r b itr a tio n in V e n e z u e la w o u ld be u n reasona bl e du e to tha t n ati on ’ s p ol i t i calun rest
. I n A pri l200 3, t h e di st ri ct
c o u r t o r d e r e d a r b it r a t io n in t h e U n it e d S t a t e s , c o n c lu d in gth a t th e A g r e e m e n t ’s “fo r u m -s e le c tio n cla u s e s h o u ld n o t b e e n fo r c e d b e c a u s e th e v io le n tly u n s ta b le po l i t i c als i t uat i o n i n V e ne z ue l a has re nde r e d t hatco unt r y an uns ui t ab l e f o r um at t h i s t i m e. ” W h en t h e R epu bl i c fai l ed to respond t o t h e order, t h e court appoi nt ed an ar bi t r at oron t he R ep u bl i c ’ s behal f

. An ar bi t r at i on s i t e w as e v e n tu a lly s e le c te d in M e x ic o C ity , a n d p r e lim in a r y p r o c e e d in g s w e r e h e l d in A u g u s t a n d S e p te m b e r 2 0 0 3 w ith o u t t h e R e p u b lic ’ s p a r tic ip a tio n . I n N o ve m be r 200 3, t he Rep ubl i c r e t ai ne d Fl o r i da a t t o r ne y St e ve n M ar ks (“M a rk s”) of th e la w firm P o d h u rs t O rs e ck , P .A

. (“th e P o d h u rs t fi r m ”), M i ssi ssi pp iatt orney S cru ggs, an d V en ezuelan att orney A qu i l es M en dez (“M e n d e z ”). T h e A tto rn e y G e n e ra l of V e n e z u e la ex e cu te d a w ritte n p o w e r-o fat t o r ne y aut ho r i z i ng M ar ks a nd Sc r ugg s t o “ c ar r y o ut any and a l ll e ga la c t i o ns ne c e s s ar y f

o r t he b e s t de fe ns e o f t he r i ght s a nd i nt e r e s t s o f t he Repub l i c ” i n t he M i ssi ssi pp i l i t i gati on . In Jan u ary 200 4, t h e R epu bl i c ap pea red i n t h e d istri ct court t h rou g h Scrug gs. Th e R epu bl i c m oved ( 1) t o di sm i ss t h e case f or l ack of persona lan d su b jec t m att er j u ri sdi ct i on an d ( 2) t o vacate t h e 200 3 order
c o m pe l l i ng ar bi t r at i o n o ut s i de o f Vene z ue l a be c aus e i t c o nf l i ct ed wi t h t he A gr ee m ent ’ s ar bi t r at i on- f or um c l ause . I n M ar c h 2005, t he di st r i c t ent er ed an
o r d e r s ta y in gt h e o n g o in gM e x ic o C ity a r b itr a tio n , a n d th e p a r tie s v o lu n ta r ily 3N o. 07- 60861

suspend ed fo r moreth an thre e years an de ight month s . . . which in fact exceeds any reaso nab le suspension term.” 4 agreed t o a m edi ati on bef ore a M agis t rat e Ju dg e in the i n t eri m . T h e m edi ati on con cl u d ed w i th ou t an ag ree m e n t, b u t th e p a rti es co n ti n u ed to attem p t t o
n e g o tia te a s e tt le m e n t o v e r th e s u b s e q u e n t m o n th s . O n Sep t em ber 10, 200 5, Scrug gs t el eph on ed N ort h rop’ s r epresentati ves an d st ated t h at t h e R epu bl i c w as w i l l i n g t o pay $70 m i l l i on to sett l e a l lm on et ary cl ai m s. N ort h rop accepted S cruggs’ of fer on S eptem ber 12. Scrugg s c i rcul ated
a l e t t e r c o nf

i r m i ng t he a gr e e m e ntt o hi s co- c o uns e lM ar ks a nd M e nde z t he f ol l ow i ng day; how eve r , ther e i s no i ndi c at i on t hat any Venezuel an of f i c i alw as i nf o r m e d o f

t he s e t t l e m e nt
. N o r t hr o p r e l ay e d t he ne w s o f t he pa r t i e s ’a gr e e m e nt t o t h e M agis t rat e Ju dg e, w h o, af t er c on f i rm i n g t h e set t l em en t w i t h Scrug gs, ent er ed an o r derdi sm i ss i ng t he c as e o n O c t obe r 5, 2005. F i ve da ys lat er, the A t t orney G en eralof V en ezuela sen t a l et t er of prot est obj ect i n g t o th e set t l em en t
. Th e l et t er s t ated t h at Scrugg s “ i s not au t h ori zed
an d h as nev er been au t h oriz e d to com prom i se Th e R epu bl i c’ s t ri alagainst N orth ro p ” a n d tha t t h e R ep u b l i c ex p ress l y rej ected an y p u rp orted settl em en t. T h e R epu bl i c s u bsequ en t l y m oved t o vaca te t h e di st ri ctcourt ’ s or der of di sm i ss al , ar gui ng in tera lia t h at Scrugg s, as an a gen t of t h e R epu bl i c, di d n ot h a v e a c tu a l a u th o r i t y t o b in d th e R e p u b lic to a s e tt le m e n t. T h e R e p u b lic
m ai n t ai n ed that Scrug gs w as only gi ve n a u th o rity t o n eg o tia te , not t o enter a sp ecif i c s ettl em en t w i th ou t th e R ep u b l i c’ s ap p rov a l

. N orth rop resp on d ed w i th
a n a ffid a v it fr o m S c r u g g s s ta tin g th a t h e h a d r e c e iv e d e x p r e s s a u th o r ity to s e tt leN o. 07- 60861

Acc or din gt o Scru g g s, h e wa s initially “c ontact ed b y th e P odhurs t firm at th e re qu es t 4 of Vene zu elawithth e re que st th at I seek quick r es ol utio n of th e mon eyissu es” in early Septemb er 2 005 . He furth er alle ge s that “th e specifics of said [se ttleme nt] authority were co nfirm edthro u ghat el ep h on e co nfe re ncewhichinclu de d me mb er s of th e P odhurs t firm , Aquil es M e n d e z a n d m e . ” N o t ab ly , S c ru g g s d o e s n o t all e ge th at a ny m e mb e r o f th e Ven ezu elan gove rnment participated in this tele phon e co nfere nce or directly contacte d him regardinga settle ment. More over, Podhurst attorn eyMark s d is putes Scruggs’ ve rsionof events. Accordingto Marks, “ w hile th ere mayh ave b eena misun derstan ding withMr. Scr ug gs c on c er ni ng th e di scussion s that h e was to pursue directly

. . . , Iwas n ever given authority to se ttle thecase on solelymonetaryter ms an d do not believe th at I provided such authority to Mr. Scruggs.” B ased on our review of th e re cord, no indivi dualh as co rrob orat ed Scru g g s’c laimth at h e re ce ivede xpr es s p er mi ssiont o se ttleth e di sp ute
. 5 dur i ng a t e l e pho ne c o nfe r e nc e . Si gni f i c ant l y, b o t h pa r t i e s i ni t i al l y br i e fe d t he 4 is s u e o f S c r u g g s ’a u th o r ity p u r s u a n t t o th e a g e n c y la w o f M is s is s ip p i. T h rou gh ou t m u ch of 2 0 0 6 , reso l u tio n o f th e R ep u b l i c’ s m oti on to va ca te
w as de l ay e d a s Sc r ugg s m o ve d t o w i t hdr aw as c o uns e la nd f i l e d a c o m pl ai nt

- i ni n t erventi on againstt h e R epu bl i c f or att orney’ s fees. T h e R epu bl i c r et ai n ed n ew cou n sel i n D ece m b er 2 0 0 6
. In A p ri l20 0 7 , the R ep u b l i c f i l ed n oti ce p u rsu a n t t o F ED
. R. C IV
. P

. 4 4
. 1 (“R u l e 4 4
. 1 ”) th a t itin ten d ed to rely on V en ez u elan l a w w i th
r e g a r d t o t h e is s u e o f S c r u g g s ’a u th o r ity to s e tt le

. S ee F ED
. R. C IV
. P

. 44
. 1 ( “A par t y w ho i nt ends t o r ai se an i ss ue abo ut a f or ei gn c ount r y’ s l aw m ustgi ve
n otice b y a p l ead i n g or ot h er w ri t i n g. ” )

. Th e R epu bl i c s u bm i t t ed E n gl i sh t ran sl ati on s of

severalV en e z u el an st atutes w h i ch, accor di n g t o t h e R epu bl i c, c ol l ec t ively r equi r e a n at torn ey rep rese n ti n g th e V en ez u elan go ver nm entt o have
w ri t t en a u t h ori zati on p ri or to set t l i n g a di spu t e. In respon se, N ort h rop argu ed th a t t h e n o tic e o f fo r e ig n la w w a s u n tim e ly

. O n Sep t em ber 24, 200 7, t h e di st ri ctcourtrul ed on t h e m ot i on t o vacate. Th e co ur t f

i r s t d e c l i ne d t he Re p ub l i c ’ s r e q ue s t t o r e l y o n t he Ve ne z uel an s ta tu te s . T h e co u r t r e a s o n e d t h a t th e R e p u b lic ’ s R u le 4 4 .1 n o tic e w a s u n tim e ly
an d that, regardl ess of an y del ay, M i ssi ssi pp i sub st an t i ve l aw contr ol l ed u n der ap pl i c ab l e c ho i c e - o f

- l aw pr i nc i pl e s . The di s t r i c t c o ur t t he n a ppl i e d M i s s i s s i ppi ag e nc y l aw and de t e r m i ne d t hatSc r ugg s po s s e s s e d a c t ualaut ho r i t y t o b i nd t heN o. 07- 60861

I n the alternative, th e di strict court noted that even if th e Vene zu elan statut es 5 appli ed, Scruggs possessed th e n ecessary authority to b ind the Rep ublic. Th e court re ason ed that at l east two doc uments provided to S cruggs—inclu ding th e written power-of-attorn eyan d the initialen ga ge ment lette r—sati s f ie d th e “writtenauthoriz atio n” requirement u nder Ven ez u el a nl aw. The parti es a gre e th at Scruggs’ ap pa ren t auth o rity i s n o t s uf f ic i e nt t o b i nd the 6 R ep ub lic a n d isno t at i ssu e o nthisapp eal. See generally Dale v C olagiovann i , 44 3 F .3d 4 25, 4 2 8

–2 9( 5 thC ir

. 2 0 0 6) (dis cu ssin gactu al a n d a pp are nt authority). 6 R epu bl i c t o t h e set t l em en t
. A ccor di n gl y, t h e courtden i ed the R epu bl i c’ s m ot i on 5 to v a c a te a n d o r d e r e d th e e n fo r c e m e n t o f th e 2 0 0 5 s e tt le m e n t. The Repub l i c no w a ppe al s t he e nf o r c e m e nto f

t he set t l em ent
. The Repub l i c a l s o a ppe al s t he di s t r i c t c o ur t ’ s 2 00 3 r e f us alt o e nf

o r c e t he a r bi t r at i o nforu m cl a u se a n d req u ests th i s C ou rt to d i sm i ss th i s ca se ou tri gh t p u rsu a n t t o t h e A gr e e m e nt ’ s s e pa r at e l i t i ga t i o n- f o r um c l aus e . N o r t hr o p c r o s s - ap pe al s, argu i n g t h at t h e di st ri ct court erred i n ref u si n g t o aw ard p rej u dg m en t i n t erest fr o m th e tim e o f th e in itia l s e tt le m e n t a g r e e m e n t. II Th e Republ i c pr i m ar i l y c hal l enges t he di st r i c t c our t ’ s det er m i nat i on t hat t he s e t t l e m e ntw as e nf o r c e ab l e b e c aus e Sc r ugg s ha d a c t uala ut ho r i t y to b i nd 6 th e R e p u b l i c to the ag ree m en t. U n d er th i s ge n era lh ea d i n g, t h e R ep u b lic contend s t h at t h e di st ri ctcourterr ed by ( 1) refu sing to consi der t h e prof fered V en ezuelan st atutes becau se t h e R epu bl i c fai led to g i ve reasona bl e noti ce pu rsuan t t o R u l e 44. 1; ( 2) concl u di n g t h at the R est atem en t ( S econd ) of C on f l i ct of L aw s m an da t ed th e app l i cat i on of M i ssi ssi pp iagen cy l aw i n st ead of V en ezuelan l aw ; an d ( 3) f i n di n g t h at S cruggs possessed act u alau t h ori t y u n der
an ap pl i c at i o n o f

M i s s i s s i ppia ge nc y l aw. W e c o ns i de r e ac h al l e ge d er r o r i n t ur n. A The Repub l i c f

i r s t a ppe al s t he det e r m i nat i o n t hati t fai l e d t o pr o vi de t i m e l y no t i c e o f

i t s i nt e ntt o r e l y o n f o r e i gn l aw as r e qui r e d b y Rul e 4 4. 1. As t he Se c o nd a nd Ni nt h Ci r c ui t s ha ve e xp l ai ne d, “ [b] e c aus e Rul e 4 4. 1 gran t s t heN o. 07- 60861

7 di st ri ctcourtdi scr et i on i n deter m i n i n g ‘ reasona bl e’noti ce, w e r e vi e w t he di st ri ct
c our t ’ s appl i c at i on o f t hi s st andard f

orabus e o f

di sc r et i on . ” D P A vi at i on v. Sm i t hs I

ndus

. Ae r o s

pac e & D ef

e ns e Sy s . Lt d. , 2 6 8 F .3d 8 2 9 , 8 4 6 (9 th C ir. 2 0 0 1 );
ac c o r d R at i o ni s E nt e r pr i s e s Inc . of

Pana m a v. H

y undaiMi

po D o c ky ar d Co. , Lt d. , 4 2 6 F .3d 5 8 0 , 5 8 5 (2d C ir. 2 0 0 5 ). R u l e 44. 1 pro vi des t hat “ [ a] par t y w ho i nt ends t o r ai se an i ss ue a b ou t a foreign cou n try’ s l a w m u st g i ve n oti ce b y a p l ea d i n g or oth er w ri ti n g.” F ED
. R. C IV
. P. 44. 1
. T h e r u l e i s i n t e n d e d t o “ a v o i d u n fa i r s u r p r i s e , ” n o t t o “ s e t a ny def i ni t e l i m i t on t he par t y’ s t i m e f orgi vi ng t he not i c e o f an i ss ue of

f or ei gn l aw

. . . .” F e d . R . C iv . P . 4 4 .1 , A DVI S ORY C OMMI T T EE N OTES (“A DVI S ORY N OT ES ”); see Thys s e n St e e lCo. v. M /V K av o Ye r ak as , 911 F. Supp. 263, 266 ( S. D

. Tex. 1996) ( “ T h e rul e i s not i n t en ded t o be a st ri ctt i m e bar t o parti e s a ttem pti n g t o rai se a choi ce of l aw qu est i on . ” )

. W h en t h e app l i cabi l i t y of f orei gn l aw i s not obvious, not i c e i s suf

f i c i enti f i t al l ow s t he o pposi ng par t y t i m e t o r es ear c h t he f or ei gn
r u le s . T

hysse n S t eel , 9 1 1 F .S u p p . a t 2 6 6 ; Hod son v. A

. H

. R obi n s Co. , 528 F .S u p p . 8 0 9 , 8 2 4 (E .D . V a . 1 9 8 1 ), aff’d , 7 1 5 F .2 d 1 4 2 (4 th C ir . 1 9 8 3 ), ab rogate d
o n o t he rg r o unds , V

an C au w enb erghe v. B i ard , 486 U

. S. 517 ( 19 88 )

. So m e of t he fa c to r s t h a t s h o u ld b e co n s id e r e d in d e te r m in in gw h e th e r n o tic e is re a s o n a b le i nc l ude “ [ t ] he s t ag e w hi c h t he c as e ha d r e ac he d a t t he t i m e o f the n ot i c e , t he
r e as o n pr of

fered by t he pa r t y f o r hi s fai l ur e t o g i ve e ar l i e r no t i c e , a nd t he i m portance t o t h e case as a w h ol e of t h e i ssue of f orei gn l aw soug h t t o be rai sed

. . . . ” S ee A DVI S ORY N OT ES
. H ere, t h e R epu bl i c f il e d its R u l e 44. 1 n ot i ce i n A pri l200 7— ei gh t een
m o n th s a fte r th e R e p u b lic in it i a l l y m o v e d to s e t a s id e th e s e tt le m e n t in S e p te m b e r 2 0 0 5
. T h e d is tr ic t c o u r t c o n c lu d e d th a t t h is w a s u n r e a s o n a b le be c aus e “ t he l e ngth o f t i m e w hi c h ha s pa s s e d s i nc e t he c as e w as f i l e d a nd t he pro gr es s m ade t o dat e i n t he c as e m i l i t at es agai nstt he use of V enez uel an l aw in th is ca s e .”N o. 07- 60861

I n the Rep ublic’s Rep lyto North r op ’ s O p p osition to the Motionto Vacatean d an 7 a cc om panyin gaff

id avit , th e R ep ub lic st ate d th at itinte n de d top urs u e di sc overyt o es tab li sh that No rthro p kne w that Scruggs was requir ed toh ave written au t ho r iz atio n pursuant to Ven ez u el a nl aw. SeeCu n ardS. S. C o. L t d

. v. SalenRee

fe r Ser vs . AB , 77 3 F .2d 4 52, 460–61 (2d Cir. 1 985) (fin ding

noticesufficient whe re p arty’s openi ngp apers clearlyin dicated the re lev anc e of

S we di shl aw); ac cor d Melea, Ltd. v. Jaw er SA , 51 1 F .3d 1 060 , 10 71 (10thC ir. 2 0 0 7). 8 W e concl u de that t h e di st ri ctcourt abu sed i t s di scr et i on . W h i l e ei gh t een
m on th s i s an ex ten d ed d elay , R u l e 4 4
. 1 is i n ten d ed to pre ve n t “ u nfa irs u r p r is e ,”
n o t t o im p o s e a n y s p e c ific tim e lim it. A D V I S ORY N OTES (e m p h a s is a d d e d ); see als o T hysse n S t eel , 911 F. S upp. at 266–67 ( ac c ept i ng not i c e of f or ei gn l aw t hat
w as f i rstprovi ded “ on rem an d, n earl y f ou r years af

t er t h e sui t w as f

i l ed”)

. H ere, N ort h rop does not al l ege t h at i t w as preven t ed fro m r e sp o n di n g or ot h erw i se pr ej udi c e d b y t he del ay e d not i c e ; norco ul d i t m ak e suc h an ar gum e nt : Fi r s t , t he R epu bl i c r eferenced the a p pl i cabi l i t y of V en ezuelan l aw as earl y as D ecem ber 2005. Se c o nd, w hi l e t he Repub l i c di d no t e xp r e s s l y s t at e i t s i nt e nt t o r e l y on

7 Vene z ue l an l aw orf i l e a f o r m alR u l e 4 4. 1 m o t i o n unt i lM ar c h/Apr i l2 00 7, t he d is tri ct cou rt did n ot su b seq u en tl y ru l e on the u n d erlying m oti on u n til S ep tem b er 20 0 7
. T h u s, N orth rop h a d a t l ea st five m on th s to resp on d or to n ote
a n y d is c r e p a n c ie s in th e R e p u b lic ’ s re c ita tio n o f V e n e z u e la n la w . S ee T hysse n S tee l , 911 F. Su pp. at 266 ( “ [ N ] ot i c e i s suf f i c i ent i f i t gi ves t he oppos i ng pa rty tim e to re s e a r c h th e fo r e ig n ru le s .”). M o r e o ve r , t he e xt e nded d el ay i n t hi s c as e i s pa r t l y e xp l ai ne d b y t he
w i t h draw alof

Scrug gs as t h e R epu bl i c’ s c ou n selover t h e course of 200 6. From th e tim e th a t th e R e p u b lic re ta in e d its cu r r e n t c o u n s e l in D e c e m b e r 2 0 0 6 , o n ly th r e e m o n th s e la p s e d b e fo r e th e R e p u b lic e x p r e s s ly in d ic a te d its in te n t to re ly on V en ez u elan law i n M ar c h 2007. Fi nal l y, w e no t e t hat t he “ i ss ue o f f or ei gn l a w sou gh t t o b e ra i sed ” h ere i s cru ci a lto “ th e ca se a s a w h ole. ” S ee A DVI SO RY N OT ES
. A s expl ai ned i n m or e det ai l bel ow , t he appl i c abi l i t y o f t he V enez uel anN o. 07- 60861

No r t hr op also argues that th e di strict court’s Rule44 .1 de termin atio n should b e 8 u ph el d b ec au seth e R ep ub lic fail edt o of fe r suff icie nt proof of

th e co nte nt of

Ven ez u el a nl aw. Th e di strictc ourtn everma deaf in din ga s to th e suff icie ncyo f th e R ep ub lic’ s p ro of

. R egardle ss, “ [t]h e co nte nt of f or ei gnl aw i s aqu es tiono f law an d issubj ect tod e n ovo revie w.” Access Telecom, In c. v. MCI Tele comms. C

orp. , 19 7 F .3d 6 94, 713(5th Cir. 1 999). A court “may consi der anyrel ev antmate rialor source , inclu ding test im ony , wheth er or not submitte d by a party or admissib le und er the Federal Rules of E vi dence .” F ED . R. C IV . P. 44.1 . Her e, th e Rep ublic submitted E nglishtranslation s of seve ral statut es and an affidavit from Vene zu ela’s Atto rne y General expl aining th e co ntent of Ven ezu elan law. Northrop has not all eged th at the Rep ublic ’ssubm iss ions are inacc u r ate ormis rep res ent Vene zuelan lawin any wa y. Accordin gly, we fin d th att he R epub lic offeredsufficient pro of of th e co ntent of Ven ezu elan law. See Forzley v. AVCO C orp. Ele ct ro n ics Div

. , 82 6 F .2d 9 74, 979n .7 (1 1thC ir. 1 987) (findingth at the submission of an unofficial E nglishtranslationof Sau di Arab ianlaw satisfi ed Rule4 4 .1 “ [a]b se nt a nysp ecif icobj ectiont o th e a cc uracyo f th e tr a n sl ation”)

.

9 st atutes t o t h e i ssue of Scrug gs’au t h ori t y di rect l y af fect s t h e enfor ceabi l i t y of th e se ttl em en t. A ccor di n gl y, t h e di st ri ctcourtabu sed i t s di scr et i on by rel yi n g sol el y on t he l e ngt h o f

de l ay . Gi ve n t he l ac k of pr ej udi c e t o t he o ppo s i ng pa r t y and t he i m por t ance of

t he i ss ue t o t he c as e, t he R epubl i c ’ s R ul e 4 4. 1 not i c e s houl d have be e n a c c e pt e d. 8 B N e xt , t he Rep ubl i c conte nds t hatt he di s t r i c t c o ur t e r r e d i n de t e r m i ni ng t h at M i ssi ssi pp isubstan tiv e l aw , not V en ezuelan l aw , governed t h e i ssue of Sc r ugg s ’a ut ho r i t y. W e r e vi e w a di s t r i c t c o ur t ’ s c ho i c e - o f

- l aw de t e r m i nat i o n de
novo . Cate s v. C ream er , 4 3 1 F .3 d 4 5 6 , 4 6 2 (5 th C ir . 2 0 0 5 ). B ecau se t h i s c ase ari ses u n der t h e F S IA , w e ap pl y t h e choi ce- of

- l aw rul es o f th e fo r u m s ta te
. Se e K ar aha Bodas Co. v . Pe r us aha an Pe r t am ba nga n Mi ny ak D an G as B u m iNegara , 313 F

. 3d 70, 85 ( 2d C i r. 200 2) ( “ [ I] n F S IAcases , w e use t h e f orum st ate’ s choi ce of l aw rul es t o res ol ve ‘ a ll i ss ues , ’ex c eptj uri sdi c t i onal
o n e s .”); accord O ’

B ryan v. Hol

y S ee , 556 F. 3d 3 61 , 3 81 n. 8 ( 6t h Ci r . 2 00 9)

. The st ate of M i ssi ssi pp il ooks to t h e R est atem e n t (S e co n d) of C on f l i ctof L aw s on c h o ic e -o f-la w q u e s tio n s . S ee Z u ric h A m . In s. Co . v . G o o d w in , 920 So. 2d 427, 4 3 2

– 3 3 (M is s . 2 0 0 6 ).N o. 07- 60861

10 In ap pl yi n g t h e R est atem en t ( S econd ) , court s s h ou l d l ook to t h e sec t i on th a t is m o s t r e le v a n t t o t h e “p a r tic u la r is s u e []” a t h a n d

. S ee R ES TAT EMEN T (S EC OND ) OF C ONFLICTOF L AWS § 1 8 8 , cm t. d (1 9 7 1 ); see als o McD an i elv. R i t t er , 5 5 6 S o .2 d 3 0 3 , 3 1 1 ( M is s . 1 9 8 9 ) (“[ T ]h e la w o f a s in g le s ta te d o e s n o t n e c e s s a r ily
c o n t r o l e v e r y i s s u e in a g iv e n c a s e .” ). H e r e , t h e “p a r t ic u la r is s u e ” is a n a g e n t ’s ab i l i t y t o b i nd a pr i nc i pa l , w hi c h i s di r e c t l y ad dr e s s e d b y s e c t i o n 2 92 o f t he R e s ta te m e n t (S e c o n d ). S e c tio n 2 9 2 p r o v id e s : C on t ract u alL i abil i t y of P ri n ci pa lt o T h i rd P erson (1 ) W h e th e r a p r in c ip a l is b o u n d b y a c tio n ta k e n o n h is b e h a lf by an ag ent i n deal i ng w i t h a t hi r d per so n i s det er m i ned by t he l oc al l aw of t he st at e w hi c h, w i t h re s pe c t t o t he pa r t i c ul ari s s ue , ha s t he m ostsi gn i f

i can t rel ati on shi p to t h e parti es a n d the tr an sact i on und ert he pr i nci pl es s t at ed i n § 6. ( 2) The pr i nc i pa lw i l lb e hel d bo und byt he a ge nt ’ s a c t i o n i f he w o ul d s o b e he l d b o und unde r t he l o c all aw of t he stat e w he r e t he ag en t d eal t w i t h t he t hi r d p e r s o n, pr o vi de d a t l e as t t hatt he p ri n ci p a lh a d au th orized the ag en t t o a ct on h i s be h a l f i n tha t st a te orhad l ed t he t hi r d per so n re as onabl y t o bel i eve t hat t he age nt had suc h aut hor i t y. R E S TAT E ME NT (S EC OND ) OF C ONFLICTOF L AWS § 292 ( 197 1)

. N ort h rop c ont ends t hat s ubse c t i on ( 2) aut ho r i z e s t he appl i c at i on o f M i ss i ss i ppiage ncy l aw i n t hi s c as e. U nder t he t er m s of s ubse c t i on ( 2 ), th e R ep u bl i c i s bound by S cruggs’ act i on s “ i f

[ t h e R epu bl i c] w ou l d s o be held boun d u n der t h e l ocall aw of t he s t a t e wh e r e [ S c r u g g s ] d e a l t wi t h [ No r t h r o p ] , p r o v i d e d a t l e a s t t h a t [ t he R ep u b l i c] h a d a u th orized [S cru gg s] to a ct o n [i ts] b eh a l f i n th a t st a te. ” S ee id

. Iti s u n d i spu t ed that Scrug gs dealtw i t h N ort h rop i n M i ssi ssi pp i , as N ort h rop i s based i n M i ssi ssi pp ia n d S cruggs w as h i red du e to hi s r esi den cy i n t h e st ate. I t i s a l s o und i s pu t e dt h a tt h e Re p u b l i c a ut ho r i z e d Sc r ugg s t o “ r e pr e s e nt , s us t ai n, and def e nd [ i t s ] r i ght s a nd p at r i m o ni ali nt e r e s t s ” i n M i s s i s s i ppi

. M o r e o ve r , t he fact t h at t h e set t l em en t m ay hav e exceeded t h e scope of Scrug gs’au t h ori t y doesN o. 07- 60861

While§ 292 (2) is dispositive, we noteth at Mississippi likely has the “most significant 9 relation ship” with the is s ue pursuant to § 29 2(1), as th e relevantsettl ementn egotiation s oc curr edwithinMi ssi ssipp i a n d b etwe enMi ssi ssipp i re si de nts
. 11 n o t n e g a te th e a p p lic a b ility o f s u b s e c t i o n ( 2 ). S ee R ESTAT EMEN T (S EC OND ) OF C ONFLICTOF L AWS § 2 9 2 , cm t. d (19 7 1 ) (“A p ri n ci p a lw h o a u th orizes a n ag en t t o ac t o n hi s b e hal f

i n a st at e as s um e s t he ri s k t hathe w i l lbe he l d b o und unde r t he lo c a l la w o f th a t s ta te b y a c tio n , w h e th e r a u th o r iz e d o r u n a u th o r iz e d , th a t is ta k e n th e r e b y th e a g e n t o n h is b e h a lf.”); accord F A S A Corp. v. P l aym ate s Toys, Inc. , 86 9 F

. S u p p . 13 3 4 , 13 4 4

– 4 5 ( N

. D

. Il l

. 19 9 4 ). T h u s, N orth rop i s en ti tl ed to t h e app l i cat i on of

M i ssi ssi p p i ag en cy l aw un der t h e pl ai n t erm s of subsect i on (2 ). 9 A c c or di ngl y, t he di st r i c t cour t cor r ec t l y sel ec t ed M i ss i ss i ppiage ncy l aw as c o n tr o llin gin th e in s ta n t d is p u te
. C Fi nal l y, t he R epubl i c c ont ends t hat t he di st r i c t c our t er r ed i n f i ndi ng t hat S cruggs h ad act u al au t h ori t y t o enter t h e set t l em en t un der M i ssi ssi pp iagen cy l aw . W e r evi ew a di st r i c t c our t ’ s l egal c onc l usi ons as t o t he c ont entof s t at e l aw de no vo . S ee In re L i l j eberg E n t erpri ses , I n c. , 3 0 4 F .3d 4 1 0 , 4 5 4 (5t h C ir. 2 0 0 2 ). H o w e v e r , w e r e v ie w fa c t u a l d e t e r m in a t io n s s u c h a s t h e b o u n d a r ie s o f a n a g e n t ’s
a u th o r ity fo r cle a r e r r o r . S ee H u d ak v. E con. R ese arch A n alys t s, I n c. , 499 F. 2d 9 9 6 , 1 0 0 2 (5 th C ir . 1 9 7 4 ) (a p p ly in gF lo r id a la w ). U n der M i ssi ssi pp il aw , t h e bu rden of show i n g t h at an attor n e y d o es not have t he aut hor i t y t o e nt era s et t l em enti s on t he par t y de nyi ng s uch aut hor i t y. S ee T err ain E n t erpri ses , I n c. v. W est ern C as. an dS u r. Co. , 774 F. 2d 1320, 1322 ( 5t h Ci r . 1 98 5) ( ap pl yi ng M i s s i s s i ppil aw)

. H e r e , t he di s t r i c t c o ur t he l d t hatt he R epubl i c fai l ed t o m ee t t hi s burde n. Th e c our t r eas oned t hat Scr uggs had ac t ual
a u t h o r i t y t o e n t e r t h e s e t t l e me n t ( u n d e r e i t h e r V e n e z u e l a n o r Mi s s i s s i p p il a w)N o. 07- 60861

12 b eca u se th e R e p u b lic gra n ted S cru gg s a p ow er-of- a ttorn ey to rep rese n t i ts in te r e s ts in th e M is s is s ip p i litig a tio n . O n a ppe al , t he pa r t i e s i ni t i al l y di s put e t he ap pl i c ab l e r ul e s f o r c o nve yi ng a ctu a lau th ority to an ag en t un d e r M i ssissi p p il a w . N orth rop arg u es th a t a pr i nc i pa lm ayc o nfe r t he a ut ho r i t y t o e nt e r a c o nt r ac t o r al l y o r byi m pl i c at i o n. The Repub l i c c o nc e de s t hatt hi s i s t r ue a s a g e ne r alr ul e , but c o nt e nds t hatdue t o t he Rep ubl i c s t at us as a s o ve r e i gn, M i s s i s s i ppi c o ur t s w o ul d give e f fe c t t o t he V en ezuelan st atutes requir i n g set t l em en t a u t h ori t y t o b e sp eci f i cal l y convey ed i n w ri t i n g. Th e Su prem e C o u rtof M i ssi ssi pp iha s never ad dressed w h et h er c o ur t s s ho ul d g i ve e f fe c t t o a f

o r e i gn s o ve r e i gn’ s o w n r e gul at i o ns f o r c o nve yi ng ac t ual aut ho r i t y t o i t s a ge nt s . Ac c o r di ngl y, a s a n E rie cou rt , w e “ m u stf orecast h ow t h e M iss i ssi pp iSu prem e C ou rtw ou l d rule” on thi s i ssue “based on M i ssi ssi pp i case l aw , di ct a, gen eral rul es on t h e i ssue, deci si on s of ot h er s t ates,
a n d seco n d a ry sou rces . ” Paz v. B rush E ngi n eer ed Mate ri als , I n c. , 555 F. 3d 383, 3 9 2 (5 th C ir . 2 0 0 9 ). W e b e g in w it h g e n e r a l p r in c ip le s : U n d e r M is s is s ip p i la w , a n a g e n t ’s “[a ]c tu a l a u th o r ity m a y b e e x p r e s s o r im p lie d .” Mig e r o b e , In c . v . Ce r t i n a USA , Inc. , 9 2 4 F .2 d 1 3 3 0 , 1 3 3 6 (5 th C ir . 1 9 9 1 ) (a p p ly in gM is s is s ip p i l a w )

. “I t is deem ed exp ress i f

gran t ed i n ei t h er w ri t t en or o r alsp ecif i c term s. ” Id

. ( em ph asi s add ed). “ Iti s deem ed i m pl i ed i f t h e au t h o rity is a necessary or i n ci d en tal pa rt of

the ex p ress au th ority. ” Id

. M i s s i s s i ppi c o ur t s al s o l o o k t o t he R e s ta te m e n t (T h ir d ) o f A g e n c y . E .g . G e ne r alAm

. Lif e I ns . Co. v . Mc Cra w , 963 So. 2d 1111, 1114 (M i ss . 2007)

. Acc or di ng t o t he R es t at em ent( Th i r d) , “ [ a] c t ual aut hor i t y . . . i s c r eat ed bya pr i nci pal ’ s m ani fes t at i on t o a n agentt hat , as
r e as o nab l y unde r s t o o d b y t he a ge nt , e xp r e s s e s t he pri nc i pa l ’ s a s s e ntt hatt he
a ge n t t a k e a cti on on the pr i n ci p a l ’ s be h a l f. ” R ESTAT EMEN T (T HI RD ) OF A GENC Y § 3 .01 (20 0 6 ).N o. 07- 60861

13 I t i s c l earf

r om the f

or ego i ng t hat the aut hor i t y t o e nt era c ont r ac t m ay be convey ed oral l y an d tha t no f orm alw ri t i n g i s r equ i red as a gen eralrul e of M i ssissi p p il a w . H ow ev er, w e con cl u d e th a t th i s ca se p rese n ts an ex cep ti on to t h at generalrul e, based on i t s c on n ect i on t o a rel ated M iss iss i pp idoct ri n e: M i ssi ssi pp icourt s hav e l on g ad h ered t o t h e pu blic-contr act s doct ri n e, w h i ch provi des t h at “[i] n res pect t o pu bl i c c on t ract s w h ere a part i cul ar m an n er of
c ont ra cti n g i s pr es c r i bed, t he m anner i s t he m eas ure of pow erand m ustbe fol l ow ed to crea te a v a l i d con tract. ” B run er v. Un i v. of S ou t h ern Mi ss. , 501 So. 2d 111 3, 111 5 (M i ss. 198 7) (i n t erna lqu ot ati on m arks om i t t ed). I n a ser i es of cases , M i ssi ssi pp icourt s hav e app l i ed thi s doct ri n e t o den y t h e a u th o ri t y of go ve rn m en t ag en ts w h o a re a l l eg ed to h a ve b ou n d go ve rn m en t en ti ti es to cont r ac t s . Fo r e xa m pl e , i n Bd. of Tr s . of St a t e I ns t s . of H ig he r Le arni ng v. Peopl es B an k of

Mi ss. , the S u prem e C ou rtof M i ssi ssi pp icon si dered w h et h er a hi gh- l eve lem pl oye e c oul d bi nd a s t at e uni ver si t y t o a l eas e c ont r ac t
. 538 So. 2d 361 , 364 –65 (M i ss. 198 9)

. A pp l yi n g t h e pu bl i c- contract s doctr i n e , th e C ou rt
r e as o ne d t hatt he em pl oyee l acked au t h ori t y becau se a st ate s t atute r equ i r e d t he
u n iv e r s ity ’ s p u r c h a s in gd e p a r tm e n t t o a p p r o v e a ll le a s e co n tr a c ts
. Id .; seeal so B run er , 501 S o. 2d at 111 5 ( f i n di n g t h at a st ate u n i versi t y’ s f oot ballcoach l acked t he au t h o r i t y t o b i n d t h e u n i v e r s i t y b e c a u s e a s t a t e s t a t u t e r e q u i r e d t he
a p p r o v a l o f th e B o a r d o f T r u s te e s fo r a ll e m p lo y m e n t c o n tr a c ts ). Th e c r u x o f t h e s e c a s e s i s c l e a r : “ W h a t e v e r t h e f o r m i n whi c h t he G o ve r nm e ntf

unc t i o ns , a nyo ne e nt e r i ng i nt o a n a r r angem e ntw i t h t he G o ve r nm e nt t ak e s t he r i s k o f hav i ng ac c ur at e l y as c e r t ai ne d t h at he w ho purpor t s to a ct fo r t he G ove r nm ents t ays w i t hi n t he bo und s of hi s aut hor i t y. T h e scope of

this a u t h ori t y m ay be exp l i ci t l y defi n ed by C on gress or be l i m i t ed b y de l eg a ted l eg i slati on . . . . ” Sm i t h v

. Fe de r alCr o p. I ns . Cor p. , 58 So. 2d 95, 98 (M i ss . 1952) ( quot i ng F ed er a l C rop In s. Co rp . v . Mer rill , 332 U

. S. 3 8 0 , 384 ( 19 47 ) )

. I n o t he r w o r ds , a g o ve r nm e nte nt i t y has t he po w e r t o de f i ne ho w a ndN o. 07- 60861

F ederal c ourt s havecon sistentlya p p lied simil ar rul es withregard to c ontr acts 10 ente re d intob ya gentso f the f ede ral govern me nt. See Gardiner v. Virgin I

slands Water & Power Aut h. , 145 F.3 d 635 , 644 (3d Cir. 199 8) (“[O]nly thosewithspecific authority canbind the gove rnment co ntractually ; even thoseper sons may d o s o on lyto the extentth at their authority permits. Moreover, aparty who se eks to contract with the gove rnment b ears the bur den of making sure that the personwho purportedlyrep resents th e governme nt actu ally h a s th at authority. . . . ”) ; New Am. Shipbu ilders, In c. v. United States , 871 F.2 d 10 77, 108 1 (Fed. Cir. 1 989) (explainin g that “[t]h e l egal issue of whe ther[th e ag en t] was authori zed to a pp rove th e fu n dsinqu es tioni s app ro priate lyd et er min edb yth e [th e govern me nt a gency’s] inte rn al pub li sh edp ro ce dure s . . . . ”)

. 14 w hen i t e nt e r s a c o nt r a c t , a nd , b y e x t e ns i o n, ho w a nd whe n i t s a g e nt s have
a u th o rity to c re a te co n tra cts on its b e h a lf. S ee id

. 10 E xerci si n g ou r d u t y u n der E rie , w e predi ctt h at t h e Su prem e C ou rtof Mi s s i s s i p p iw o u l d a f f o r d t h i s s a me p r i v i l e g e t o f o r e i g n s o v e r e i g n s . T h e s a me c o nc e r ns t hat ani m at e t he pub l i c - c o nt r ac t s do c t r i ne i n t he c o nt e xto f s t at e a nd fe de r ale nt i t i e s — s uc h a s pr o t e c t i o n o f t he publ i c t r e as ur y and t he i nhe r e nt d i ff i cu l ty of m on i toring a m u l ti tu d e of ag en ts in a b u rea u cra cy
— a p p l y w i th
e q u a l fo r c e to fo r e i g n s o v e r e ig n s . S ee generall y R ESTAT EMEN T (T HI RD ) OF A GENC Y§ 2. 03, c m t
. g ( 2006) ( “ [A ] s ove r ei gn has t he e xc l usive abi l i t y t o pr es c r i be
w hat i t s c r eat i ons and i t s agents m ay do ; t hi r d par t i es w ho dea lw i t h nat i onal govern m en t s, qu asi

- govern m en t al en t i t i es, st ates, coun t i es, an d m u n i ci pa l i t i es t ak e t he r i s k o f

e r r o r r e ga r di ng t he a ge nt ’ s a ut ho r i t y t o a g r e at e r de gr e e t han do th ird p a rtie s d e a li n gth ro u g h a g e n ts w ith n o n g o v e rn m e n ta l pr in cip a ls.”). N orth rop h a s n ot ad va n ced an y legiti m a te rea son f o r M i ssissi p p icou rts to di s c r i m i nat e aga i ns t fo r e i gn s o ve r e i gns i n par t i c ul ar . A c c o r di ngl y, w e c o nc l ude t h at t h e Su prem e C ou rtof M i ssi ssi pp iw ou l d gi ve ef fectt o V en ezuelan st atutes t hat def i ne pr oc edur es f

orc onvey i ng s et t l em entaut hor i t y. H ow ever, our i n qu i ry i s not yet f i n i shed , as t h e parti es d i spu t e the ef fect of t h e V en ezuelan s t atutes on t h e fact s at h an d. T h e R e p u b li c p rovi ded tr a n s la tio n s o f tw o re le v a n t V e n e z u e la n a u th o r itie s :N o. 07- 60861

Northro p al so re lie s he avilyona lette r dated Septemb er 9, 200 5 from Marks to the 11 Rep ublic. Accordin g to Northrop’s interpretation , Marks’ lette r co nfirms t ha tMarks and Scruggs receive d verbal instruction s to settleth e di spute. However, this lette r i s irr elevant for purposes of Articl e 6 8 b ecau s e itw as compo sed b y Scruggs’ co-counselMarks, not any me mb ero f th e Ven ez u el a ngovern me nt. Mo reo ver, t he me a nin go f th e lett eri s a mb igu ou s, a s it canb e re a so n ab lyinte rp re te d a s m er elyc onfirm in gin structions tob eginn egotiation s, n ott o ente r ab in din gsettle me nt. 15

S p e ci alD ecree w i t h F orce of O rgan i c La w of

t h e A t t orney G e n e r a l, a r t. 6 8 (“A r tic le 6 8 ”): “T h e la w y e r s w h o e x e r c i s e in tr ia ls t h e representat i on of t h e R epu bl i c c an not s et t l e . . . or u se any ot h er al t erna t i ve m ean s f

or t h e s o l ut i o n of

t h e conf

l i ct , w i t h ou t t h e expres s aut ho r i z at i o n o f T h e A t t o r n e y G e n e r a l o f th e R e p u b lic , w ith previ o u s w ri t t en i n st ruct i on s f r o m t he m ax i m um a ut ho r i t y o f t he r e s p e c tiv e o ffic e .” (e m p h a s is a d d e d ). C i vi lP rocedure C ode, art
. 154 ( “A rt i cl e 154 ” ) : “ T h e pow er of at t o r ne y aut ho r i z e s t he e m po w e r e d t o c ar r y o n al l t he ac t s of t he p roce ss th a t are n ot rese rv ed ex cl u sively b y law to t h e p a rty h i m sel f; bu t i n order t o agree t o t he de m and , w i t h draw , com prom i se,

. . . [o r] to recei ve sum s of m on ey an d d i spose of l i t i gati on ri gh t s, ex p ress au th ority i s req u i red

. ” N o r th r o p co n te n d s th a t S c r u g g s h a d a c tu a l a u th o r ity to b in d th e R e p u b lic
even i f t h ese st atutes are gi ven ef fect
. N ort h rop argu es ( an d t h e di st ri ctcourt i m pl i c i t l y he l d) t hatt he w r i t t e n po w e r - o f

- at t o r ne y and t he i ni t i ale nga ge m e nt l et t erpr ovi ded t o Sc r uggs sa t i sf y t he w r i t i ng r equi rem entof A r t i c l e 6 8. W e

11 d is a g r e e . U nde r t he t e r m s o f

Ar t i c l e 6 8, a n a t t o r ne y m us t ha ve “ w r i t t e n i ns t r uc t i o ns fr o m th e m a x im u m a u th o r ity ” o f th e re le v a n t G o v e r n m e n t o ffic e . R e a d in
con tex t of

bo th statu tes, this cl a u se re q u i res a w ri tt en doc u m en t t h a t sp ec ifi ca lly
au t h ori zes t h e att orney to entera set t l em en t
. D ocum en t s t h at m erel y evi den ce t h e a t t orney-c l i en t rel ati on shi p, such a s a w ri t t en pow er- of

- att orney, do n ot i m pl i c i t l y c onveyt he aut hor i t y t o s et t l e a di sput e, as s uch aut hor i t y m ustbeN o. 07- 60861

Wenote thatthis approach is consistent with th e b oun dari es of the attorney -clie nt 12 re lation shipinth e Unit edS tate s. See R E S TATEM ENT (T H I RD ) OF T H E LA W G OVE R NI NG LAW YER S § 2 2 (2 0 0 0) (e xpl ainin gth at “wh eth eran d onwh at te rm s to s ett le ac laim” isa decision “ re served toth e client except w he n t he c li ent ha s v ali dlyauthoriz ed th e l awye r to make th e part icular de ci sion” (e mp h a si s a dd ed))

. B ecau se we find that th e settlement sho uld not be enfo rced, Northrop’s cross-appe al 13 fo r pr ej u dgme nt inte re sti s D I SM I SS E D a s m oo t. 16 “ e xp r e s s [ l y] ” g r ant e d. S ee Ar t i c l e 1 54
. H e re, ne i t he r t he i ni t i ale nga ge m e nt 12 l et t er no r th e w ri t t en pow er- of

- att orney m en t i on t h e pow er t o concl u de a set t l em en t
. Ac c o r di ngly, N o r t hr o p ha s no ti de nt i f i ed an y docu m en t t h at s ati sf i es th e w r itin gre q u ir e m e n t o f A r tic le 6 8
. I n sum , t he distri c t c our t c l ear l y e r r ed i n det er m i ni ng t hat Scr uggs had act u alau t h ori t y t o bi n d the R epu bl i c t o t h e set t l em en t
. E ven i f t h i s C ou rtw ere t o acceptS cruggs’ u n corr oborated test i m on y t h at h e rec ei ved oralau t h ori zati on over t h e ph on e f

rom hi s f

el l ow co- coun sel , su ch au t h ori zati on w ou l d be con t rary t o t he “ pa r t i c ul arm anne r o f con t r ac t i ng . . . pr e s c r i be d” f o r g o ve r nm e nt
s e tt l e m e n t s u n d e r V e n e z u e la n la w . S ee B run er , 501 So. 2d at 111 5. U n der M i s s i s s i ppia ge nc y l aw, t h e sett l e m e nti s no t e nf o r c e ab l e . Acc o r di ngl y, t he

13 d i stri ct cou rt erred i n de n yin g th e R ep u b l i c’ s m oti on to va c a te t h e se ttl em en t.

III The Rep ubl i c a l s o a ppe al s t he di s t r i c t c o ur t ’ s 2 00 3 o r de r c o m pe l l i ng t he par t i es t o a rbi t r at e i n t he U ni t ed St at es i nst ead o f C ar ac as , V enez uel a as requ i r e d un de r t he Agr e e m e nt ’ s a r bi t r at i o n- f o r um c l aus e . I n 2 00 2, w he n t he R epubl i c had ye t t o appeari n t he M i ss i ss i ppil i t i gat i on, N or t hro p m ove d f oran or derc om pel l i ng ar bi t r at i on i n M i ss i ss i ppii nst ead o f V enez uel a. I n A pri l2003, t h e c o u r t g r a n t e d N o r t h r o p ’s r e q u e s t , c o n c lu d in gth a t th e A g r e e m e n t ’s “fo r u m -s e le c tio n cla u s e s h o u ld n o t b e e n fo r c e d b e c a u s e th e v io le n tly u n s ta b le po l i t i c als i t uat i o n i n Vene z ue l a has r e nde r e d t hatc o unt r y an uns ui t ab l e f o r umN o. 07- 60861

Northro pexp l ains that Vene zu elawas aparticularly unr eason abl e fo rum in late20 02 14 an dea rly 2003 beca usethe natio n “w as em broi ledin violent po liti cal tur mo il” involving a “militarycoup” anda“vi olent, o n-goin g ge neral strike.” However , th e di strict court di d not sp ecif ic allyr ef

ert o su chc on dition s inits2 0 0 3o rd er . 17 att hi s t i m e . ” The di s t r i c t c o ur t di d no t pr o vi de a ny ana l ys i s o f t he c o ndi t i o ns in V e n e z u e la o r m a k e a n y s p e c ific fin d in g s to fa c ilita te o u r re v ie w o f th is d e c is io n . Se e g e ne r al l y I n r e Ai r Cra s h Di s as t e rNe arNe w O r l e ans , La. , 821 F. 2d 11 47 , 1 16 6 ( 5t h Ci r . 19 87 ) (i ns t r uc t i ng t he l o w e r c o ur t t o “ s e t o ut i t s f i ndi ngs a nd
co n clu sio n s” to fac il ita te th e re v iew of f orum n o n co n venie n s o r d e r s ), aff’ din relevan tpa rt , 883 F

. 2d 17 ( 5th C i r. 198 9) ( en ban c)

. H ow ever, w e need not r each th e m erits o f th e d i stri ct cou rt’ s ru l i n g: A s n oted pr ev i ou sly, the M ex i co C i ty arbi t rat i on t h at r esul t ed f rom t h e 200 3 order w as t erm i n ated w i t h ou t deci si on duri ng t he pendenc y o f t hi s appeal

. A c c or di ngl y, the di st r i c t c our t ’ s 2003 r ef usal t o e nf o r c e t he a r bi t r at i o n- f o r um c l aus e
— a r e f

us alt hatw as pr e s um ab l y based
on the con d i ti on s i n V en ez u ela i n 20 0 2 an d 20 0 3

— i s n ow m oo t. 14 T h e R epu bl i c r equ est s t h at t h i s C ou rtt ak e a fu rt h er s t ep an d order arbi t rat i on i n C ar ac as i n c o m pl i ance w i t h t h e A greem en t
. I n res pon se, N ort h rop con ten d s th a t V en ez u ela rem a i n s an u n su i tab l e f oru m . N orth rop a l so su gg ests t hat t he Repub l i c has pe r m ane nt l y w ai ve d i t s r i ght t o e nf o r c e t h e ar bi t r at i o nf o r um c l aus e b y fai l i ng t o a ppe ari n t he 2 00 2– 03 l i t i ga t i o n. W e ha ve f o und no au t h ori t y sug gest i n g t h at a part y’ s previ ou s fai l u re t o app e a r consti t u t es abs ol ut e w ai verof

c ont r ac t ualr i ght s. M or eo ver , i n di sput es i nvol vi ng f or ei gn
s o ve r e i gns , t hi s Cour t ha s l o ng fav o r e d t h e res o l ut i o n o f l e ga li s s ue s o n t he
m e r its w h e r e p o s s ib le

. S ee M CI T el ecom m s. Corp. v. A l h ad h ood , 82 F. 3d 658, 6 6 2 ( 5 th C i r. 1 9 9 6 ) ( “[W ]he n a de fen d a n t f ore i gn state h a s ap p ea red an d ass erts l e ga ldef

e ns e s , al be i t af

t e r a defaul t j udg m e ntha s b e e n e nt e r e d, i t i s i m po r t ant t hat t hos e de fens es be cons i der ed car ef ul l y and , i f

poss i bl e, t hat t he di sput e b e
r e s o l ve d o n t he b asi s of a l lr e l e va ntl e ga la r gum e nt
. ” ( quo t i ngPr ac t i c alN o. 07- 60861

Northro p co nten ds that Na t ’l I ra n ia n Oi lh as b eenimplicitlyoverruled byth e 15 Supre me Court’s decisionin Vimar Segu ros y Reaseg uros, S.A. v. M/V Sky Reefer , 51 5 U .S. 528 , 534 (199 4). Whileth e Vimar Segu rosCourtdid s tate that “fo reign arb itrationcl ause s are buta subsetof forei gnforum selectio n clau ses ingene ral,”th e C ourtwas not a ddressin g the rul e in Na t 'lI

ra n ia nOi l . Becaus e ther e i s no thing pr oblem aticabout app lying a hei ghtene d stan dard of e nforc eab ility to a“subs eto f f orei gnforu m sele ctioncl ause s,” Nat’ l I ra n ia nOi lr em ain s goo d law. See Mitsu i &C o., L td. v. Delta Brands, I nc. , 20 05 WL 121 460 3, at *12(N.D . Tex. May20, 2 005) (unpublishe d) (applyingth e Na t ’l I ra n ia nOi lfra mework afte r Vimar Segu ros). 18 C o n ce p ts, In c. v. R e

p u b li c o f B o livia , 8 1 1 F .2d 1 5 4 3 , 1 5 5 2 (D .C

. C ir. 1 9 8 7 )). Acc o r di ngl y, w e c o nc l ude t hatt he pa r t i e s ’c o nt i nue d d i s put e o ve r t he
en f orceabi l i t y of

t h e arbi t rat i on - f

orum cl au se shou l d be resol ved on t h e m eri t s. N o ne t he l e s s , t he r e c o r d b e f o r e us i s i ns uf

f i c i e ntt o de t e r m i ne w he t he r t he present condit i on s i n V e n e z u e l a rend er t h e arbi t rat i on - f orum cl au se
u n en f orceabl e. A ccor di n gl y, w e r e m a n d to t h e di st ri ctcourtf or a proper d e t e r mi n a t i o n o f

t h i s i s s u e . Gi v e n t h e c o n c l u s o r y n a t u r e o f t h e 2 0 0 3 o r d e r , we
r ei t er at e t he f

ol l ow i ng gov er ni ng pr i nci pl es : T he S upre m e C our t has hel d t hat
c o u r t s m a y g e n e r a l l y s e t a s i d e f o r u m - s e l e c t i o n c l a u s e s w h e r e e n f o r c e m e n t w o u ld b e “u n r e a s on a b l e.” M /SB rem en v. Zap ata Of f

- S h ore C o. , 407 U

. S. 1, 10–11 ( 19 72 )

. H ow e ve r , i n s e ve r alc as e s c ul m i nat i ng i n Nat ’lI r ani an O i lCo. v. A shland O i l, I

n c. , t h i s C ou rtha s ap pl i ed a hei gh t en ed st an da rd t o ar bi t r at i o nf o r um c l ause s i n part i cu l a r. 817 F. 2d 326, 332 ( 5t h C i r . 1987) (hol di ng t hat 15 arbi t rat i on - f

orum cl au ses “m u stbe enfor ced, even i f un reasona bl e” )

. U n der Na t’l Ira n ia n O il , a “ f orum sel ect i on cl au se est abli shi n g t h e si t u s of arbi t rat i on
m ustbe enf

or c ed unl es s i t co n fl i c t s w i t h an expl i c i t pr ovi si on o f t he Feder al A rb i tration A ct. ” Id . (in te r n a l q u o ta tio n m a r k s o m itt e d ). “U n d e r th e A c t, a pa rt y se e k in g to a voi d arbit rat i on m u stal l ege an d p rove t h at t h e arbi t rat i on cl au se i t sel f

w as a produ ctof

f rau d, coer ci on , or such groun ds as exi stat l aw or i n eq u i ty fo r t h e rev oca ti on of th e con tract. ” Id

. (i nt e r nalq uo t at i o n m ar ks
om i t t ed). W i t h i n t h i s f ram ew ork, t h e contr act doct ri n es of i m practi cabi li t y or i m po s s i bi l i t y “ c e r t ai nl y s upp l [ y] a n a de qua t e pr e di c at e f o r f i ndi ng t he f

o r umN o. 07- 60861

19 selecti on cl a u se un en forcea b l e.” Id

. H ow ever, i n order t o asser t t h ese defen ses, t he c o m pl ai ni ng pa r t y m us t no t ha ve ha d r e as o n t o k n ow a bo utt he
c o m p la in e d -o f c o n d itio n s a t t h e tim e o f th e co n tr a c t. Id . a t 3 3 3
. A ccor di n gl y, up on re m a n d the di st ri ctcourtshou l d cond u ctsuch pr o c e e di ngs a s ne c e s s ar y t o de t e r m i ne t h e enfor ceabi l i t y of t h e arbi t rat i on - f

o r um c la u s e p u r s u a n t t o th e a fo r e m e n tio n e d le g a l p r in c ip le s . IV F i n al l y, t h e R epu bl i c asks t h i s C ou rtto d i sm i ss thi s acti on outri gh t based
o n t he Agr e e m e nt ’ s s e pa r at e li t i gat i o n- f o r um c l aus e , w hi c h pr o vi de s t hata ny c o nt r o ve r s i e s “ t hatdo no t r e ac h a f r i e ndl y r e s o l ut i o n s hal lb e r e s ol ved b y t he
com petent C ou rt s of

the R epu bl i c of

V en ezuela. ” H ow ever, the R epu bl i c d i d n ot
m o ve f o r di s m i s s al ba s e d o n t he l i t i ga t i o n- f o r um c l aus e be l o w , and t h i s C ou rt g e n e r a lly d o e s n o t c o n s id e r is s u e s ra is e d fo r th e f ir s t tim e o n a p p e a l. S m i t h ex rel

. E st ateof

S m i t h v. Un i t ed S t ate s , 3 9 1 F .3d 6 2 1 , 6 2 5 (5t h C ir. 2 0 0 4 ). M ore ov er, a s ex p l a i n ed pr ev i ou sly, the reco rd b efore u s i s i n su ff i ci en t t o d e t e r m in e th e p r e s e n t s u it a b il it y o f V e n e z u e la a s a fo r u m . T h e R e p u b li c ’s
a r g u m e n t is m o r e a p p r o p r ia te ly a d d r e s s e d o n re m a n d

. S ee g en er a lly Pr ac t i c al C o n ce p ts , 81 1 F

. 2 d a t 15 5 1

– 5 2 ( rem a n d i n g for a de term i n a ti on of th e d efen d a n ts o v e r e ig n ’ s a lte r n a tiv e d e fe n s e s ). V F o r th e fo r e g o in gre a s o n s , t h e ju d g m e n t o f th e d is tr ic t c o u r t is R E V E R S E D , an d the case i s R E M A N D E D to t h e di st ri ctcourtf or f u rt h er pro c ee di ngs c ons i st entw i t h t hi s opi ni on. I n addi t i on, N or t hro p’ s c r os s- appeal for prej u d gm en t i n teres t i s D IS M IS S E D as m oo t, a n d th e R ep u b l i c’ s m oti on to
s u p p le m e n t t h e re c o r d is D E N IE D

.