Courts of Appeals Allow Enforcement of Foreign Governments' Contracts in U.S. Federal Courts
By Dan Bushell
U.S. federal courts are characteristically wary of overstepping their bounds when adjudicating cases involving foreign governments or issues and events occuring in foreign countries. That can pose a challenge for U.S. companies engaged in international business, especially with foreign governments. When such business dealings go sour, the ability to enforce contract rights in U.S. courts can be critical.
Recent decisions of the Eleventh Circuit and other federal courts of appeals should give comfort to U.S. companies that do business with foreign governments that they can enforce their contract rights in U.S. courts. Lawyers can help keep their clients’ disputes in U.S. courts by ensuring that their contracts include clauses protecting the right to do so.
The Eleventh Circuit’s recent decision in GDG Acquisitions, LLC v. Government of Belize, decided April 22, 2014, illustrates that point. The dispute arose from a deal in which International Telecommunications, Ltd. (Intelco) leased telecommunications hardware to the government of Belize.
Although Intelco was actually a Belizean company, the deal was negotiated in Florida and Washington, D.C. It was financed by a U.S. bank located in Miami. The deal closing was in Miami, where the government of Belize also took possession of the equipment. A month before suit was filed, Intelco assigned its rights against Belize to GDG, a U.S. company owned by the founder and director of Intelco.
The lease agreement included (1) a choice of law clause specifying that Florida law controlled; (2) a choice of forum clause, in which the government of Belize “submit[ted] to the exclusive jurisdiction of” the federal and state courts in Florida and consented to suit in those courts; and (3) a clause in which the government of Belize waived objections to Florida forums and claims that such forums were inconvenient.
After the government of Belize neither returned the equipment at the end of the lease term nor continued making lease payments, GDG filed suit in the Southern District of Florida. In response, Belize contended that the minister who signed the lease agreement did not have authority under Belizean law to bind the government. It moved to dismiss the complaint on the ground that the suit should be adjudicated in Belize.
The District Court dismissed the suit based on the alternative grounds of forum non conveniens and the doctrine of international comity. On appeal, the Eleventh Circuit disagreed.
Forum Selection Clauses Control the Forum Non Conveniens Analysis
Regarding forum non conveniens, the Eleventh Circuit found