1994 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

12-20-1994

Phillipines v. Westinghouse Elec. Corp.

Precedential or Non-Precedential:

Docket 93-5667

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Recommended Citation

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 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 ___________ 

 No. 93-5672 

 ___________ 

 THE REPUBLIC OF THE PHILIPPINES; NATIONAL 

POWER CORPORATION 

 Appellants, 

 vs. 

 WESTINGHOUSE ELECTRIC CORPORATION; 

WESTINGHOUSE INTERNATIONAL PROJECTS COMPANY; 

BURNS AND ROE ENTERPRISES, INC. 

 Appellees. 

 ___________ 

 APPEAL FROM THE UNITED STATES DISTRICT COURT 

 FOR THE DISTRICT OF NEW JERSEY 

 (D.C. Civil No. 88-cv-05150) 

 ___________ 

 ARGUED MAY 13, 1994 

 BEFORE: BECKER and LEWIS, Circuit Judges, 

 and POLLAK, District Judge*

 (Filed December 20, 1994) 

 ___________ 

 

* Honorable Louis H. Pollak, United States District Judge for 

the Eastern District of Pennsylvania, sitting by designation. 
David J. Cynamon 

William P. Barr (ARGUED) 

Shaw, Pittman, Potts & Trowbridge 

2300 N Street, N.W. 

Washington, DC 20037 

 Attorneys for Appellants

Richard W. Clary (ARGUED) 

Cravath, Swaine & Moore 

825 Eighth Avenue 

Worldwide Plaza 

New York, NY 10019-7415 

 Attorney for Appellees, Westinghouse Electric

 Corporation and Westinghouse International

 Projects Company

Glenn A. Mitchell 

Stein, Mitchell & Mezines 

1100 Connecticut Avenue, N.W. 

Suite 1100 

Washington, DC 20036 

 Attorney for Appellee, Burns and Roe

 Enterprises, Inc.

 ___________ 

 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 nuclear power plant in 

Bagac, Bataan. The fifteen-count complaint alleged breach of 

contract, fraud, tortious interference with fiduciary duties, 

negligence, civil conspiracy, violations of state and federal 

racketeering statutes, and violations of the Robinson-Patman Act 

and the New Jersey Consumer Fraud Act. The district court 

determined that all but two of the counts against Westinghouse 

were subject to international arbitration. Republic of the 

Philippines v. Westinghouse Electric Corp., 714 F. Supp. 1362 

(D. N.J. 1989). Thus, most of the Republic's claims against 

Westinghouse were referred to arbitration under the Rules of 

Conciliation and Arbitration of the International Chamber of 

Commerce.1 In the remaining two counts, the Republic and NPC 

alleged that Westinghouse and Burns and Roe had conspired to 

bribe then-President Ferdinand Marcos in order to win the power 

plant contract, and had thus tortiously interfered with the 

fiduciary duties that Marcos had owed the people of the 

Philippines. 

 

1. The court ruled that only one count of the plaintiffs' 

complaint against Burns and Roe was subject to arbitration, but 
 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 

for Westinghouse and Burns and Roe, entered in December, 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 

(..continued) 

nevertheless stayed all of the non-bribery counts against Burns 

and Roe in the interest of judicial economy. 
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 day." 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 governmentowned 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 Fed. R. Civ. P. 54(b) to appeal the 

issues that had been adjudicated. At a hearing held on June 28, 

1993 to consider this motion, the court was inclined to grant 

certification, stating that "there is no case more appropriate 

for certification than this one" (Joint Appendix ("J.A.") at 41) 

and that "clearly [the case] should be certified" (J.A. at 44). 

 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 Rule 54(b) certification because it would lose 

jurisdiction once the notice of appeal was filed. Id. at 50. 

 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 censure 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 Professor Fernandez for having 
allegedly violated Philippine law by testifying against the 

government while under its employ. Although the Republic had 

known about Fernandez' affidavit when it was submitted to the 

court in 1991, Villa filed charges relating to the affidavit on 

May 31, 1993, twelve days after the verdict. Villa charged that, 

by filing an affidavit on behalf of Westinghouse, Fernandez had 

violated his duty as a public officer "to be loyal at all times 

to the Republic and the Filipino people . . . ." Op. at 21, 

quoting administrative complaint. The court noted that the 

administrative complaint concluded by stating that Fernandez, "in 

a cowardly attempt to escape the clutches of the law, whimpered 

`I'm not even a government official. I'm just a lowly college 

professor.'" Op. at 21, quoting administrative complaint, which 

quotes Philippines Daily Inquirer (May 20, 1993). The complaint 

also quoted approvingly from a news columnist who had written 

that "Professor Fernandez should not only be fired from the State 

University but should be hanged in public at the courtyard of the 

Nuclear Plant in Morong, Bataan . . . ." Id. The court 

additionally found that Villa had called Fernandez a traitor "on 

a number of occasions, including a television show," and that 

"this characterization was repeated in the Philippine press." 

Id. Based on the tone and substance of the administrative 

complaint, as well as the circumstances surrounding its filing, 

the court concluded that the charges against Fernandez were 

"motivated by rage at the jury verdict rather than considered 

judgment . . . ." Id. 
 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 poppycock." 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 demonstrated "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 harassing any witness who had given evidence or 

will give evidence in this case or the arbitration proceeding; 

(2) directed the Republic to renounce and abandon its retaliatory 

actions, and to advise Padre and Orlina officially of its actions 

and intended actions with respect to their personal income taxes; 

(3) denied certification under Fed. R. Civ. P. 54(b) ("Rule 54(b) 

certification") until the Republic established that it was in 

compliance with the injunctive provisions of the court's order 

and that the proceedings against Fernandez were resolved "in a 

 

2. With the renewed motion for certification, the Republic 

submitted a press release and statement noting that the Republic 

did not condone any retaliation against any past or future 

witness in any legal proceeding; documents purporting to show 

that Villa's proceedings against Fernandez were not in 

retaliation for his affidavit, but because Fernandez violated the 

law, and that Villa acted independently of the Executive; and 

statements purporting to establish that the government had taken 

steps to correct any mistaken impression that it intends to 

retaliate against any witness. 
manner which cures the retaliatory actions"; and (4) directed 

that any settlement in the case must provide that the parties 

agree to the court's retention of jurisdiction to enforce the 

provisions of the order. Op. at 35-36; Order at 1-3.3 The 

Republic appeals this order in its entirety. 

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 Rule 54(b) 

certification; and (3) whether the district court exceeded its 

authority in ordering that if the parties settle, they must 

stipulate to the district court's continuing jurisdiction to 

enforce its order. We have jurisdiction over the injunctive 

portions of this order under 28 U.S.C. § 1292(a)(1),4 and because 

of our resolution of the Republic's challenge to the injunctions, 

we find that the Rule 54(b) issue becomes moot. 

 

3. The court denied without prejudice Westinghouse's motion to 

bar the Republic from proceeding with this case, as well as 

Westinghouse's request for attorneys' fees. 

4. 28 U.S.C. § 1292(a)(1) provides that, with exceptions not 

relevant here, "the courts of appeals shall have jurisdiction of 

appeals from: (1) Interlocutory orders of the district courts of 

the United States . . . granting, continuing, modifying, refusing 

or dissolving injunctions . . . ." 
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. 

 

5. Although the Republic stated in its initial briefing that 

it "strongly disagrees" with the district court's findings "that 

Philippine government officials engaged in retaliation against or 

harassment of witnesses in this case" (Appellant's Br. at 19), it 

did not squarely challenge those findings as clearly erroneous. 

See Burns and Roe Br. at 14 (noting Republic's failure to 

challenge findings). The Republic did raise the issue of clear 

error in its reply brief (Appellant's Reply Br. at 10-16), but 

that was one brief too late: we have often instructed that 

"appellants are required to set forth the issues raised on appeal 

and to present an argument in support of those issues in their 

opening brief." Kost v. Kozakiewicz, 1 F.3d 176, 182 (3d Cir. 

1993); Institute for Scientific Info., Inc. v. Gordon & Breach, 

Science Publishers, Inc., 931 F.2d 1002, 1011 (3d Cir. 1991); 

Daggett v. Kimmelman, 811 F.2d 793, 795 n.1 (3d Cir. 1987); see

also Fed. R. App. P. 28(a)(3) (requiring appellant to provide in 

brief "[a] statement of the issues presented for review"); Third 

Cir. Loc. App. R. 28.1(a)(i) (noting that party must comply with 

Fed. R. App. P. 28(a)(3) by designating where in record the issue 

presented for appeal was raised and what standard of review 

applies). 
 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 error in the district court's 

conclusion that the Republic's harassment created a "situation 

that no court can tolerate, and that effective relief must be 

granted." Id. at 34. 

 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 normal 

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 before us, we were informed by counsel for the Republic 

 

6. We reach no conclusion about whether the evidence provided 

at trial, or the fact of Fernandez' providing affidavits to 

Westinghouse, constitute evidence of wrongdoing under Philippines 

law. We note only that the district court did not conclude that 

the charges against Padre, Orlina, and Fernandez were meritless, 

whatever the motivations may have been in threatening or bringing 

them. 

7. Indeed, there appears to be substantial support for this 

proposition. See Constitution of the Philippines Art. XI, § 5 

(1987) (Office of the Ombudsman established as independent 

office); In re Raul M. Gonzalez, 160 S.C.R.A. 771, 775 (1988) 

(Ombudsman and deputies may be removed only through impeachment 

in Congress for "culpable violation of the Constitution, treason, 

bribery, graft and corruption, other high crimes, or betrayal of 

the public trust"). 
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. 

 

8. Cessation of the Republic's threats of tax fraud 

investigations against Padre and Orlina, and dismissal of the 

administrative complaint against Fernandez, do not moot the 

Republic's appeal of the injunctive portions of the order, since 

the district court's order is still in effect and that order 

reaches conduct targeted at other individuals, as well as the 

three named. Yet these facts may play a role in the district 

court's assessment of a proper sanction of the Republic. 
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 other forms of judicial 

control over a foreign sovereign is not coterminous with its 

power to regulate or punish other litigants. Here, in issuing an 

order which purports to supervise and control the law enforcement 

activities of a foreign sovereign nation against its own citizens 

on its own soil, the district court exceeded the boundaries of 

its lawful discretion. 
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 function. 

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., 

Fed. R. Civ. P. 11 (groundless pleadings and other papers); 16(f) 

(failing to abide by pretrial orders); 26(g), 30(g), 37(d), and 

37(g) (discovery abuses), 41(b) (involuntary dismissal for 

failure to prosecute, failure to follow rules, or failure to obey 

court order); 45(f) (disobeying subpoena); 56(g) (providing 

affidavit at summary judgment in bad faith or for delay). 

Congress has also enacted laws providing additional powers to 

district courts to police misconduct. E.g., 18 U.S.C. § 401 

(contempt power); 28 U.S.C. § 1927 (punishing attorneys who 

vexatiously multiply proceedings). See generally Chambers v. 

NASCO, Inc., 501 U.S. 32, 111 S. Ct. 2123, 2142 (1991) (Kennedy, 

J., dissenting) (listing sources of sanctioning authority). 

 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, 111 S. Ct. 
at 2132. 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 court's inherent powers to control litigants. 

The 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 (1812).9 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 

 

9. The Court, in fact, unanimously recognized that district 

courts have inherent authority to fashion sanctions against 

parties in certain circumstances. Justice Scalia disagreed with 

the majority's interpretation of the order at issue in the case 

and therefore dissented, but nevertheless agreed with the 

majority that a court has the ability to "enter orders protecting 

the integrity of its proceedings." Chambers v. NASCO, Inc., 501 

U.S. 32, 111 S. Ct. 2123, 2140 (1991). And while Justice 

Kennedy, in a dissent joined by the Chief Justice and Justice 

Souter, believed that a district court must first exhaust express 

grants of sanctioning power before utilizing its inherent 

authority (id. at 2141), he did not gainsay that district courts 

have such authority and may use it to combat abuses of the 

judicial process when other, express sources of authority fail 

(id. at 2141, 2149). 
cases.'" Chambers, 111 S. Ct. at 2132, quoting Link v. Wabash R. 

Co., 370 U.S. 626, 630-31 (1962).10 

 Of course, "[b]ecause of their very potency, inherent 

powers must be exercised with restraint and discretion." 

Chambers, 115 L. Ed. 2d at 45. "A primary aspect of [a district 

court's] discretion is the ability to fashion an appropriate

sanction for conduct which abuses the judicial process" (id. 

(emphasis added)). Thus, a district court must ensure that there 

is an adequate factual predicate for flexing its substantial 

muscle under its inherent powers, and must also ensure that the 

sanction is tailored to address the harm identified. In 

exercising its discretion under its inherent powers, the court 

should be guided by the same considerations that guide it in the 

imposition of sanctions under the Federal Rules. First, the 

court must consider the conduct at issue and explain why the 

 

10. Illustrating the variety of powers exercised by a district 

court, the Supreme Court noted that courts can discipline 

attorneys, punish contempt, vacate judgments obtained by fraud, 

investigate whether a fraud upon the court has been committed, 

bar from the courtroom those who disrupt proceedings, dismiss 

actions on the ground of forum non conveniens, and dismiss a suit 

for failure to prosecute. Chambers, 111 S. Ct. at 2132-33. In 

the same spirit, we have noted that a district court may dismiss 

a suit outright in response to litigation abuses. Eash v. 

Riggins Trucking Inc., 757 F.2d 557, 566 (3d Cir. 1985) (in 

banc); see also, e.g., Frumkin v. Mayo Clinic, 965 F.2d 620, 627 

(8th Cir. 1992) (court likely would not have abused discretion if 

it had dismissed suit because plaintiff had intimidated 

witnesses); National Hockey League v. Metropolitan Hockey Club, 

Inc., 427 U.S. 639, 643 (1976) (per curiam) (dismissal under Fed. 

R. Civ. P. 37 not an abuse of discretion). And certainly, in 

appropriate circumstances, a district may enjoin a wrongdoing 

party from continuing its wrongful conduct or direct it to take 

corrective action. Cf. Gregory v. Depte, 896 F.2d 31 (3d Cir. 

1990) (contempt sanction). 
conduct warrants sanction.11 If an attorney, rather than a 

client, is at fault, the sanction should ordinarily target the 

culpable attorney. Carter v. Albert Einstein Med. Center, 804 

F.2d 805, 807 (3d Cir. 1986); Dunbar v. Triangle Lumber and 

Supply Co., 816 F.2d 126, 128-29 (3d Cir. 1987). Cf. Poulis v. 

State Farm Fire and Casualty Co., 747 F.2d 863, 868 (3d Cir. 

1984) (court must consider "the extent of the party's personal 

responsibility," but this factor "is not dispositive, because a 

client cannot always avoid the consequences of the acts or 

omissions of its counsel"). Obviously, a pattern of wrongdoing 

may require a stiffer sanction than an isolated incident; a grave 

wrongdoing may compel a more severe sanction than might a minor 

infraction; and wrongdoing that actually prejudices the 

 

11. Although we stated in Landon v. Hunt, 938 F.2d 450 (3d Cir. 

1991), that "a prerequisite for the exercise of the district 

court's inherent power to sanction is a finding of bad faith 

conduct" (id. at 454), that statement should not be read to 

require a finding of bad faith in every case, regardless of the 

sanction contemplated. Landon addressed the propriety of 

assessing attorneys' fees against a litigant; thus, we followed 

the Supreme Court's decision in Chambers, which also involved 

assessment of attorneys' fees. Landon, 938 F.2d at 454. Under 

the American Rule, attorneys' fees ordinarily may not be shifted 

to a losing party. However, the Court in Chambers had relied on 

an exception to that rule allowing fees to be shifted when the 

losing party exhibited "bad faith." Chambers, 111 S. Ct. 2133. 

As Justice Scalia pointed out in his dissent, however, the fact 

that fee-shifting as a sanction requires a finding of bad faith 

"in no way means that all sanctions imposed under the courts' 

inherent authority require a finding of bad faith." Id. at 2140. 

Thus, a court need not always find bad faith before sanctioning 

under its inherent powers: "[s]ince necessity does not depend 

upon a litigant's state of mind, the inherent sanctioning power 

must extend to situations involving less than bad faith." Id.; 

see generally Estate of Leon Spear v. Commissioner of IRS, No. 

93-7727, __ F.3d __, 1994 WL 656893 at *9-*10 (3d Cir. Nov. 21, 

1994) (discussing role of bad faith in sanctioning). 
wrongdoer's opponent or hinders the administration of justice may 

demand a stronger response than wrongdoing that, through good 

fortune or diligence of court or counsel, fails to achieve its 

untoward object. Furthermore, there may be mitigating factors 

that must be accounted for in shaping the court's response. 

 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 (3d Cir. 1991)), 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 

Fed. R. Civ. P. 16 and 37). 
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 under its inherent authority. "We review a district 

court's imposition of sanctions under its inherent power for 

abuse of discretion" (Chambers, 111 S. Ct. at 2138), but we have 

made it clear that "a district court `would necessarily abuse its 

discretion if it based its ruling on an erroneous view of the law 

or on a clearly erroneous assessment of the evidence.'" Garr v. 

U.S. Healthcare, Inc., 22 F.3d 1274, 1279 (3d Cir. 1994), quoting 

Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990). 

 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 the 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 the 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." Restatement (Third) of the Foreign 

Relations Law of the United States §402(c) (1987) (the 

"Restatement"). And where a court may prescribe, it may also 

enforce. Id. § 431(1) ("A state may employ judicial or 

nonjudicial measures to induce or compel compliance or punish 

non-compliance with its laws or regulations, provided it has 

jurisdiction to prescribe in accordance with §§ 402 and 403"); 

see also United States v. Davis, 767 F.2d 1025, 1036 (2d Cir. 

1985). Thus, because the district court found that the 

Republic's actions compromised the court's ability to adjudicate 
fairly the claims before it, the district court had the power to 

address the retaliatory conduct notwithstanding that it 

transpired on foreign soil half a world away. 

 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 selfregarding 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, although the courts of 

appeals have occasionally approved orders issued by district 

courts enjoining proceedings in foreign countries that would 

interfere with the proper exercise of district court 

jurisdiction, they have recognized that such action must be 
exercised only in rare cases, and must be premised on a thorough 

analysis of the interests at stake.12

 This balancing is evident in the principal cases 

advanced by both the Republic and Westinghouse in support or 

 

12. The Restatement provides a useful, non-exclusive list of 

factors that should be considered when a court contemplates 

extending its reach to punish extraterritorial conduct: 

 (a) 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; 

 (b) 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; 

 (c) 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; 

 (d) the existence of justified expectations that might be 

protected or hurt by the regulation; 

 (e) the importance of the regulation to the international 

political, legal, or economic system; 

 (f) the extent to which the regulation is consistent with 

the traditions of the international system; 

 (g) the extent to which another state may have an interest 

in regulating the activity; and 

 (h) the likelihood of conflict with regulation by another 

state. 

Restatement (Third) of the Foreign Relations Law of the United 

States § 403(2) (1987). As the Restatement makes clear, this 

list is "not exhaustive." Id., comment b. 
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, substantial and foreseeable effect on 

the United States," in that it was "instituted and pursued with 

the express purpose of" frustrating the United States action; 

(2) Davis had close links to this country and was thus subject to 

the court's jurisdiction; and (3) "the United States had a strong 

national interest in safeguarding the integrity of its criminal 

process." Id. 

 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 Airlines 

("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 contract 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 sovereign 

that might exercise authority over the same conduct.13

 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 

 

13. Similar balancing is also evident in the other principal 

case relied upon by Westinghouse. See Mutual Service Casualty 

Ins. Co. v. Frit Indus., Inc., 805 F. Supp. 919, 923 (M.D. Ala. 

1992) (recognizing need to balance interests at stake in 

respective jurisdictions). 
nation against its own citizens on its own soil. The injunctive 

paragraphs of the district court's order provide the following: 

 (1) 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 

 (2) 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 . . . ." 

 (3) "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. 

 The first two injunctive provisions thrust the district 

court into the internal affairs of the Republic.14 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 

 

14. The third injunctive paragraph, concerning settlement, is 

addressed infra pp. 38-39 

. 
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 received 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 p. 14), the second injunctive paragraph 

effectively directs the Republic to grant Padre and Orlina 

immunity from prosecution for past tax law violations.15

 We are unaware of any court in the United States -- or 

elsewhere -- that has ever attempted to inject itself in this 

manner into the internal law enforcement activities of a foreign 

 

15. Recalling that comity is like the golden rule, one could 

imagine the profound legal -- indeed, constitutional -- issues 

that would arise if the Executive Branch of the United States 

government were enjoined by a foreign court the way the district 

court has enjoined the Republic here. Were the shoe on the other 

foot, we would surely find it intolerable for a court in the 

Philippines to order the President of the United States to 

provide immunity for witnesses who had testified in a Philippines 

proceeding, silence members of Congress who called for an 

investigation of those witnesses, prevent members of Congress 

from even speaking in a manner that could be interpreted as 

harassment of those witnesses, or fire an independent prosecutor 

who had threatened or initiated proceedings against such 

witnesses. 
sovereign.16 The unique nature of the district court's 

injunctions is demonstrated by comparison to background precepts 

of international relations. Although countries sometimes 

exercise jurisdiction to prescribe and enforce laws that reach 

extraterritorial conduct, it is nevertheless widely accepted that 

each sovereign nation has the sole jurisdiction to prescribe and 

administer its own laws, in its own country, pertaining to its 

own citizens, in its own discretion. This principle was 

articulated in by Chief Justice Marshall in The Schooner Exchange 

v. M'Fadden, 11 U.S. (7 Cranch) 116 (1812): 

 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. 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." 

 

16. Despite the facial similarity of this case to those decided 

under the act of state doctrine, this case is not cognizable 

under that rubric. The act of state doctrine is confined to 

cases in which a litigant seeks to challenge the validity of a 

public act of a foreign sovereign. W.S. Kirkpatrick & Co., Inc. 

v. Environmental Tectonics Corp., 493 U.S. 400, 406 (1992). 
Story on Conflict of Laws § 8 (7th ed. 1872). And more recently, 

Professor Charles Hyde echoed Justice Story in explaining that 

"[i]ndependent States are equal in the sense that they resemble 

each other in possessing and enjoying the same privilege of 

freedom from external control in the management of their domestic 

or foreign affairs." Charles C. Hyde, 1 International Law § 11 

at 27 (2d rev. ed. 1951). He added that "[a] State which 

habitually contents itself with less ceases to be the equal of 

independent States and finds itself in an inferior class." Id. 

at 28.17

 The principle also finds recognition in the 

Restatement: "[u]nder international law, a state has . . . 

 

17. In addition to Story and Hyde, other scholars and 

publicists have long recognized the principle that a state is not 

subject to outside legal control of its internal legal affairs. 

E.g., Hugo Grotius, The Law of War and Peace 102 (Kelsey ed. 

1925) ("That power is called sovereign whose actions are not 

subject to the legal control of another"); 4 Blackstone's 

Commentaries 66 (Sharswood ed. 1879) ("no[] . . . state[] will 

allow a superiority in the other"); Lassa F.L. Oppenheim, 1 

International Law § 125 at 288 (8th ed. 1955) ("in the absence of 

treaty provisions to the contrary, a State is not allowed to 

interfere in the management of [other States'] internal or 

international affairs, nor to prevent them from doing or to 

compel them to do certain acts in their domestic relations or 

international intercourse"); Hedley Bull, The Anarchical Society: 

A Study of Order in World Politics 70 (1977) ("At the heart of 

th[e] complex of rules [of international coexistence] is the 

principle that each state accepts the duty to respect the 

sovereignty or supreme jurisdiction of every other state over its 

own citizens and domain, in return for the right to expect 

similar respect for its own sovereignty from other states"); 

Urban G. Whitaker, Jr., Politics and Power 411 (1964) ("Of all 

[the] elements bearing on problems of jurisdiction, the most 

important is territory. Once it is decided which state controls 

what territory, it is possible to determine whose laws apply, 

whose courts may sit in judgment and who may enforce the law"). 
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

 

18. This fundamental principle is also reflected in our law of 

sovereign immunity. Courts of the United States no longer apply 

the "absolute" theory of sovereign immunity which once prevailed, 

supported by broad dicta in The Schooner Exchange, under which 

foreign states were deemed completely immune to suit in the 

United States. The Schooner Exchange v. M'Fadden, 11 U.S. 

(7 Cranch) 116, 136-37 (1812). However, the doctrine of 

sovereign immunity still has profound effects upon the 

jurisdiction of domestic courts. The more modern, "restrictive" 

theory of foreign sovereign immunity, which was "largely 

codifi[ed]" by the Foreign Sovereign Immunity Act of 1976 

(Republic of Argentina v. Weltover, Inc., __ U.S. __, 112 S. Ct. 

2160, 2165 (1992), provides that "a state is immune from the 

jurisdiction of foreign courts as to its sovereign or public acts 

(jure imperii), but not as to those that are private or 

commercial in character (jure gestionis)." Saudi Arabia v. 

Nelson, __ U.S. __, 113 S. Ct. 1471, 1479 (1993) (citations 

omitted). Thus, the Act embodies the fundamental principle that 

sovereigns are generally immune from interference by courts in 

the United States. As the Supreme Court recently explained in 

Saudi Arabia, 113 S. Ct. 1471, "[u]nder the Act, a foreign state 

is presumptively immune from the jurisdiction of United States 

courts; unless a specified exception applies, a federal court 

lacks subject-matter jurisdiction over a claim against a foreign 

state." Id. at 1476 (citations omitted). 

 Certainly 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 28 U.S.C. § 1607; Nat'l City Bank 

of New York v. Republic of China, 348 U.S. 356, 361-63 (1955). 

But even in such circumstances, it cannot be seriously suggested 

that the plaintiff sovereign gives up its essential attributes of 

sovereignty, including in particular its authority to administer 

in its sole discretion its own laws respecting its own citizens 

within its own territory. 
 It is fundamental that law enforcement is a core 

function of government, and a court should be loathe to interfere 

with a foreign sovereign's exercise of such power if alternatives 

are available that may achieve the same result with less 

derogation of sovereignty. As we have made clear, supra n.10 and 

accompanying text, the district court had substantial power at 

its disposal in this case. It could have imposed monetary 

sanctions to signal its disapproval of the Republic's conduct and 

its intolerance of any future harassment or intimidation. It 

could also have dismissed the case. See supra n.10 (discussing 

Chambers, Eash, and National Hockey League v. Metropolitan Hockey 

Club, Inc., 427 U.S. 639 (1976) (per curiam)).19 To have 

exercised its discretion consistent with its authority, however, 

the district court should have balanced the interests at stake. 

This the court did not do,20 and thus it failed to recognize that 

 

19. Although we have stated that "[d]ismissal must be a 

sanction of last, not first, resort" (Poulis v. State Farm Fire 

and Casualty Co., 747 F.2d 863, 869 (3d Cir. 1984)), we did not 

mean to imply that it was, in all circumstances, the most extreme 

penalty possible. This case illustrates the exception: here, 

although dismissal would prevent the Republic from going forward 

with its claims, it would be less intrusive into the internal 

affairs of the Republic -- and therefore significantly less 

harmful to principles of international comity -- than the 

injunctive alternative chosen by the district court. Thus, 

Westinghouse misconceives the impact of the injunction in this 

case in arguing that because the district court had the "greater" 

power to dismiss this case, it could also enter the injunction as 

an exercise of a "lesser" power. Westinghouse Br. at 42. 

20. The court recognized that its power to influence the 

proceedings against Fernandez was cabined by the "limits which 

United States courts impose upon themselves when asked to enjoin 

proceedings in other nations." Op. at 34, citing Compagnie des 

Bauxites de Guinea v. Ins. Co. of North America, 651 F.2d 877 (3d 

Cir. 1981). The court found that it could avoid any limitations 
the extraordinarily intrusive nature of its injunctive provisions 

made such relief inappropriate. 

 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. 

 The district court's error was compounded by its 

response when the Republic came forward, before the court's order 

was formalized, with evidence that it had achieved substantial 

compliance with paragraphs (1) and (2) of the draft order, at 

least with respect to Padre and Orlina. At that point, it was 

particularly inadvisable for the district court to have followed 

(..continued) 

on its authority by addressing Fernandez' situation "without 

enjoining the proceedings against him. I will simply defer 

granting the Republic's Rule 54(b) motion until I am satisfied 

that in one way or another the proceedings against Professor 

Fernandez have been resolved in a manner which cures the 

retaliatory actions described above." Op. at 34-35. 

 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. 
through by entering those portions of its order because there was 

evidence that they were no longer even necessary. 

 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

 

21. Additionally, we note that under Fed. R. Civ. P. 

41(a)(1)(ii), parties to a civil action may stipulate to a 

dismissal of an action at any time. A court has no authority to 

disapprove or place conditions on any such dismissal. First 

Nat'l Bank v. Marine City, Inc., 411 F.2d 674, 677 (3d Cir. 

1969). As the Eighth Circuit recognized in Gardiner v. A.H. 

Robins Co., Inc., 747 F.2d 1180 (8th Cir. 1984), such an attempt 

would "deprive[] the parties of their unconditional right to a 

Rule 41(a)(1)(ii) dismissal by stipulation." Id. at 1190. 
C. 

 The district court's order also provided that the 

Republic's motion for certification under Rule 54(b) would "not 

be granted until it establishes that it is in full compliance 

with" the principal injunctive portions of the order, discussed 

above, and "until the Court finds that the proceedings against 

Professor Perfecto V. Fernandez have been resolved in a manner 

which cures the retaliatory actions described above." Order at 

2. The Republic asks us to find that the district court erred in 

refusing to certify the Republic's appeal under Rule 54(b). We 

find, however, that the Republic's challenge to this portion of 

the order is moot. We have invalidated the provisions of the 

order with which the Republic had to comply, and, as explained 

above, supra p. 15-16, the proceedings against Professor 

Fernandez were resolved in a manner that completely vindicated 

him. Thus, we need not reach the thorny issue of whether -- and 

how -- we could assert jurisdiction over a district court's 

denial of a motion to certify under Rule 54(b). 

 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 both 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. 

 We will not instruct the district court to certify the 

jury verdict at this time. That question will be left to the 

district court's sound discretion upon proper motion by the 

Republic.