## Facts

- Nigeria solicited bids to construct and equip an aeromedical center at Kaduna Air Force Base; Environmental Tectonics and Kirkpatrick submitted bids.
- Environmental Tectonics alleged that Kirkpatrick, through its CEO and a Nigerian intermediary, arranged a 20% “commission” to Panamanian entities with the understanding the funds would be paid as bribes to Nigerian officials involved in awarding the contract.
- The Nigerian contract was awarded to a Kirkpatrick subsidiary, and Kirkpatrick paid the commission; funds were allegedly disbursed as bribes.
- Environmental Tectonics claimed Nigerian law prohibited such bribery and that it lost the contract because of the scheme.
- U.S. authorities investigated; Kirkpatrick and its CEO pleaded guilty to violations of the Foreign Corrupt Practices Act.
- Environmental Tectonics sued in federal court asserting federal RICO claims, Robinson–Patman Act claims, and New Jersey anti-racketeering claims, seeking damages for lost business.

## Issues

1. Whether the act of state doctrine barred a private damages action alleging a U.S. company secured a foreign government contract through bribery of foreign officials.
2. Whether adjudicating the claims would improperly require a U.S. court to question or invalidate the foreign sovereign’s contract award.

## Decision

- The Third Circuit reversed the district court’s judgment for defendants and remanded.
- The court held the act of state doctrine did not bar the suit because resolving the claims did not require declaring invalid Nigeria’s contract award; the case could proceed against private defendants for alleged bribery and racketeering conduct.
- The district court’s concern that litigation might embarrass the Executive Branch or implicate foreign relations was not a sufficient basis to apply the doctrine absent a need to invalidate a foreign sovereign act.

## Legal Principles

- The act of state doctrine applies only when a court must treat an official act of a foreign sovereign, performed within its own territory, as valid by declining to declare it invalid as part of deciding the case.
- The doctrine is not triggered merely because proof may involve allegations that foreign officials acted unlawfully or with improper motives.
- Potential foreign-relations sensitivity, standing alone, does not justify dismissal if the case can be resolved without invalidating the foreign sovereign’s act.

## Conclusion

The Third Circuit allowed Environmental Tectonics’ claims to proceed because adjudication focused on the defendants’ alleged bribery and racketeering rather than requiring a U.S. court to set aside or declare invalid Nigeria’s official decision to award the contract.


Environmental Tectonics Corp., Int’l v. W.S. Kirkpatrick & Co., 847 F.2d 1052 (3d Cir. 1988)