Republic of the Philippines v. Westinghouse Electric Corp.

Opinions of the United
1994 Decisions States Court of Appeals
for the Third Circuit

12-20-1994

Phillipines v. Westinghouse Elec. Corp.
Precedential or Non-Precedential:

Docket 93-5667

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1994

Recommended Citation
"Phillipines v. Westinghouse Elec. Corp." (1994). 1994 Decisions. Paper 223.
http://digitalcommons.law.villanova.edu/thirdcircuit_1994/223

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 1994 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
 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 government-

owned 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 self-

regarding 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.