Opinion ID: 521021
Heading Depth: 3
Heading Rank: 3

Heading: Whether Aramco May Invoke the Defense of Foreign Government Compulsion

Text: 26 The jury rejected Aramco's defense that its termination of the plaintiffs was compelled by the Saudi government. Although the judgment nov did not address whether the jury's conclusion in this regard had any support in the evidence, Aramco argues that the absence of support for the jury's rejection of this defense provide an alternative basis for affirming judgment nov on the contract claims. 27 It is doubtful whether the foreign compulsion defense should ever have been presented to the jury at all. There are at least two possible bases for the view that foreign compulsion doctrine is inapplicable in cases of this sort. First, the purposes of foreign compulsion doctrine normally are not implicated in cases involving international contract disputes. 4 Avoidance of the courts' passing on the validity of foreign acts is the central purpose of the foreign government compulsion doctrine. See Timberlane Lumber Co. v. Bank of America, N.T. & S.A., 549 F.2d 597, 601 (9th Cir.1976). A court looks to the contract for an express or implied allocation of risks where circumstances beyond a party's control cause it to breach a contract. When a party breaches a contract because a foreign government prevented it from meeting its obligations and the court determines that the party subjected to the foreign government compulsion contracted to bear that risk, an award of damages therefore does not implicate the legality of the foreign government's actions. The award of damages merely indicates the court's assessment of the parties' allocation of risks. 28 Second, the purposes of foreign compulsion doctrine normally are not implicated in cases where liability is assessed under the legal standards of the foreign sovereign. The necessity for judicial deference to the foreign policy functions of the political branches, and thus for application of the foreign government compulsion doctrine, depends upon the depth and nature of the foreign sovereign's interest in the action in question. Timberlane Lumber, 549 F.2d at 607, quoting Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 428, 84 S.Ct. 923, 940, 11 L.Ed.2d 804 (1964). The jury was instructed to apply Saudi legal standards on the valid reason question, and reasonably concluded that under these standards the plaintiffs were entitled to damages notwithstanding the Saudi government's involvement in the events at issue. Since liability was assessed under foreign law standards, it is difficult to see how the foreign sovereign could have an interest sufficient to justify the application of foreign compulsion doctrine. 29 Even if we were to hold that the foreign compulsion defense is available in international contract disputes governed by the foreign sovereign's legal standards, we would uphold the jury's rejection of this defense in this case. Nothing in the case law on this defense indicates that the trier of fact should not consider whether the defendant could have taken measures to avoid or mitigate the effects of the foreign sovereign's orders. The district court's instruction to the jury on this defense accordingly left the jury free to consider whether Aramco could have avoided General Othman's order by passing along the specific Saudi directive on videoptape rentals or by dealing with the anonymous complaint about the plaintiffs without involving the Saudi authorities. Further, a reasonable jury could have concluded that General Othamn's order left Aramco the discretion to transfer the plaintiffs to positions outside Saudi Arabia. 5 30