United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 6, 2008 Decided August 26, 2008
No. 07-7113
MCKESSON CORPORATION, ET AL.,
APPELLEES
v.
ISLAMIC REPUBLIC OF IRAN,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 82cv00220)
H. Thomas Byron III, Attorney, U.S. Department of
Justice, argued the cause for amicus curiae United States of
America in support of appellant. With him on the brief were
Jeffrey S. Bucholtz, Acting Assistant Attorney General,
Jeffrey A. Taylor, U.S. Attorney, and Douglas N. Letter,
Attorney.
Thomas G. Corcoran, Jr. argued the cause for appellant.
With him on the briefs were Laina C. Wilk and Henry M.
Lloyd.
2
Mark N. Bravin argued the cause for appellees. With him
on the brief were Peter Buscemi, Thomas J. O’Brien, and
Mark R. Joelson.
Before: TATEL, GARLAND, and GRIFFITH, Circuit Judges.
Opinion for the Court filed by Circuit Judge GRIFFITH.
GRIFFITH, Circuit Judge: In this long-running dispute,
now before us for a fifth time, McKesson Corporation alleges
that the state of Iran unlawfully expropriated its investment in
an Iranian dairy company. In this appeal, Iran raises a number
of challenges to the latest decisions of the district court. We
hold that the district court properly asserted subject matter
jurisdiction, but reverse its conclusion that the treaty provides
a cause of action and its refusal to reconsider its earlier ruling
that customary international law does so as well. We remand
for further proceedings consistent with this opinion.
I.
The facts of this case are set forth fully in our previous
decisions. See Foremost-McKesson, Inc. v. Islamic Republic
of Iran, 905 F.2d 438, 440–42 (D.C. Cir. 1990) (“McKesson
I”); McKesson Corp. v. Islamic Republic of Iran, 52 F.3d 346,
347–50 (D.C. Cir. 1995) (“McKesson II”); McKesson HBOC,
Inc. v. Islamic Republic of Iran, 271 F.3d 1101, 1104–05
(D.C. Cir. 2001) (“McKesson III”). Suffice it to say for
purposes of this appeal that McKesson, an American
company, is a significant shareholder in an Iranian dairy
company called Sherkat Sahami Labaniat Pasteurize Pak
(“Pak”). As alleged, Iran effectively froze out McKesson’s
stake in Pak and blocked its receipt of dividend payments. In
1982, McKesson filed suit in the United States District Court
for the District of Columbia, alleging that Iran had unlawfully
3
expropriated its property without compensation. The Overseas
Private Investment Corporation (“OPIC”), a federal agency
that helps American businesses invest abroad, participated as
a co-plaintiff because it had insured a significant portion of
McKesson’s stake in Pak. OPIC has since been dismissed
from the litigation.
In our first two decisions, we held that McKesson had
properly pleaded federal jurisdiction under the commercial
activity exception of the Foreign Sovereign Immunities Act
(“FSIA”), 28 U.S.C. § 1605(a)(2). See McKesson I, 905 F.2d
at 449–51, 453; McKesson II, 52 F.3d at 350–51. In the third
decision, we affirmed jurisdiction under the FSIA and also
held that the 1955 Treaty of Amity, Economic Relations, and
Consular Rights, Aug. 15, 1955, U.S.-Iran, 8 U.S.T. 899
(“Treaty of Amity”), between the United States and Iran
provided McKesson a cause of action for expropriation.
McKesson III, 271 F.3d at 1106, 1107–08. We remanded the
case to the district court for a trial on two factual issues:
whether Pak had instituted a so-called “come-to-the-company
requirement” for the payment of dividends, and whether it
would have been futile for McKesson to “come” to Pak to
collect its dividends. Id. at 1108–10.
Iran petitioned the Supreme Court for certiorari to review
McKesson III. Until then, OPIC had been represented by
private counsel that had taken the position that the Treaty of
Amity provided a cause of action. In the Supreme Court, the
Solicitor General took over OPIC’s representation and
opposed certiorari, arguing that even though the Treaty of
Amity did not provide a cause of action, certiorari was not
appropriate because a final judgment had yet to be entered.
The Court denied certiorari, and in light of the government’s
change in position we vacated “the portion of [McKesson III]
addressing whether the Treaty of Amity between the United
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States and Iran provides a cause of action to a United States
national against Iran in a United States court,” and instructed
the district court “to reexamine that issue in light of the
representation of the United States that it does not interpret
the Treaty of Amity to create such a cause of action.”
McKesson HBOC, Inc. v. Islamic Republic of Iran, 320 F.3d
280, 281 (D.C. Cir. 2003) (“McKesson IV”).
At issue on this appeal are the proceedings in the district
court on remand from McKesson III and McKesson IV. The
district court concluded that the Treaty of Amity provides a
cause of action for McKesson. The court also denied Iran’s
motion for reconsideration of its 1997 decision that customary
international law (“CIL”)1 provides a cause of action. The
court then held a three-week bench trial on the two factual
issues and ruled against Iran on both. Iran appeals, and we
have jurisdiction under 28 U.S.C. § 1291. Iran urges us to re-
visit the question whether there is subject matter jurisdiction
under the FSIA. Having thrice held that jurisdiction exists, we
decline Iran’s request. McKesson I, 905 F.2d at 449–51;
McKesson II, 52 F.3d at 350–51; McKesson III, 271 F.3d at
1106; see also LaShawn A. v. Barry, 87 F.3d 1389, 1393
(D.C. Cir. 1996) (en banc) (“[T]he same issue presented a
second time in the same case in the same court should lead to
the same result.”).
Iran argues that the district court erred by interpreting the
Treaty of Amity to provide McKesson a cause of action, by
denying its motion to reconsider the earlier CIL ruling, by
misconstruing our remand mandate in McKesson III, and by
1
CIL is occasionally referred to as the “law of nations.” It “results
from a general and consistent practice of states followed by them
from a sense of legal obligation.” RESTATEMENT (THIRD) OF
FOREIGN RELATIONS LAW OF THE UNITED STATES § 102(2) (1986).
5
committing several errors during the trial. We reverse the
district court on the first two issues, defer consideration of the
remaining issues, and remand for further proceedings
consistent with this opinion.
II.
We must determine whether the Treaty of Amity
provides a private cause of action. If it does, then McKesson’s
appearance as a plaintiff in federal court was a proper exercise
of its “right . . . to seek judicial relief from injuries caused by
another’s violation of a legal requirement.” Cannon v. Univ.
of Chi., 441 U.S. 677, 730 n.1 (1979) (Powell, J., dissenting).
If it does not, and if a cause of action cannot otherwise be
found, then McKesson’s complaint must be dismissed. The
district court concluded that McKesson had a cause of action
under the Treaty of Amity. McKesson Corp. v. Islamic
Republic of Iran, 520 F. Supp. 2d 38, 52–55 (D.D.C. 2007).
Reviewing this interpretation de novo, we reverse. See United
States v. Al-Hamdi, 356 F.3d 564, 569 (4th Cir. 2004)
(“Interpretation of an international treaty is an issue of law
subject to de novo review.”).
To determine whether a treaty creates a cause of action,
we look to its text. See United States v. Alvarez-Machain, 504
U.S. 655, 663 (1992) (“In construing a treaty, as in construing
a statute, we first look to its terms to determine its meaning.”).
The Treaty of Amity, like other treaties of its kind, is self-
executing. See Medellín v. Texas, 128 S. Ct. 1346, 1365–66
(2008); Blanco v. United States, 775 F.2d 53, 60 (2d Cir.
1985) (Friendly, J.); CURTIS A. BRADLEY & JACK L.
GOLDSMITH, FOREIGN RELATIONS LAW 379 (2d ed. 2006)
(“[C]ourts commonly assume that certain types of bilateral
treaties, such as . . . Friendship, Commerce, and Navigation
(FCN) treaties, are self-executing.”). As such, it “operates of
6
itself without the aid of any legislative provision,” Foster v.
Neilson, 27 U.S. (2 Pet.) 253, 314 (1829) (Marshall, C.J.), and
its text is “the supreme Law of the Land,” U.S. CONST. art.
VI, cl. 2, on par with that of a statute, Whitney v. Robertson,
124 U.S. 190, 194 (1888). That the Treaty of Amity is self-
executing begins but does not end our search for a treaty-
based cause of action, because “[w]hether a treaty is self-
executing is a question distinct from whether the treaty
creates private rights or remedies.” RESTATEMENT (THIRD) OF
FOREIGN RELATIONS LAW OF THE UNITED STATES § 111
cmt. h (1986) [hereinafter RESTATEMENT]; accord Renkel v.
United States, 456 F.3d 640, 643 n.3 (6th Cir. 2006); United
States v. Li, 206 F.3d 56, 67 (1st Cir. 2000) (en banc) (Selya
& Boudin, JJ., concurring). “Even when treaties are self-
executing in the sense that they create federal law, the
background presumption is that ‘[i]nternational agreements,
even those directly benefiting private persons, generally do
not create private rights or provide for a private cause of
action in domestic courts.’ ” Medellín, 128 S. Ct. at 1357 n.3
(quoting RESTATEMENT, supra, § 907 cmt. a).
We find nothing in the Treaty of Amity that overcomes
this presumption. To be sure, article IV(2) of the Treaty of
Amity directly benefits McKesson by declaring that “property
shall not be taken except for a public purpose, nor shall it be
taken without the prompt payment of just compensation.”
McKesson contends that the Treaty of Amity creates a right
(“property shall not be taken”) and provides a remedy (“just
compensation”), and that together these make a cause of
action. Not so. The Treaty of Amity tells us what McKesson
will receive — money — but leaves open the critical question
of how McKesson is to secure its due. For a federal court
trying to decide whether to interject itself into international
affairs, the Treaty of Amity’s silence on this point makes all
the difference. A treaty that “only set[s] forth substantive
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rules of conduct and state[s] that compensation shall be paid
for certain wrongs . . . do[es] not create private rights of
action for foreign corporations to recover compensation from
foreign states in United States courts.” Argentine Republic v.
Amerada Hess Shipping Corp., 488 U.S. 428, 442 (1989).
And without a cause of action, McKesson cannot invoke
federal judicial authority to pursue its desired remedy. Cf.
HENRY M. HART, JR. & ALBERT M. SACKS, THE LEGAL
PROCESS 137 (William N. Eskridge, Jr. & Philip P. Frickey
eds., 1994) (“A right of action is a species of power — of
remedial power. It is a capacity to invoke the judgment of a
tribunal of authoritative application upon a disputed question
about the application of preexisting arrangements and to
secure, if the claim proves to be well-founded, an appropriate
official remedy.”).
It would be one thing if the Treaty of Amity explicitly
called upon the courts for enforcement, as the Warsaw
Convention does. See Convention for the Unification of
Certain Rules Relating to International Transportation by Air,
Oct. 12, 1929, 49 Stat. 3000, 137 L.N.T.S. 11 (declaring that
“carrier[s] shall be liable for damage” to passengers and
baggage (arts. 17, 18(1)); that “action[s] for damages” must
be brought before certain courts (art. 28(1)); that “[t]he right
to damages” lasts for two years (art. 29(1)); and that
“passenger[s] or consignor[s] shall have a right of action” in
cases of successive carriers (art. 30(3))); see also Curtin v.
United Airlines, Inc., 275 F.3d 88, 90 (D.C. Cir. 2001)
(“Article 18 of the Warsaw Convention, an international air
carriage treaty ratified by the United States in 1934, creates a
cause of action against an air carrier for loss or damage to a
passenger’s checked baggage.”); cf. Key Tronic Corp. v.
United States, 511 U.S. 809, 822 (1994) (Scalia, J.,
dissenting) (“Surely to say that A shall be liable to B is the
express creation of a right of action.”). Federal court
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participation is appropriate where the President, by and with
the advice and consent of the Senate, makes a treaty declaring
that money should change hands by way of judicial
compulsion rather than executive negotiation. But unlike the
Warsaw Convention, with its explicit references to “right[s]
of action” and “action[s] for damages,” the Treaty of Amity
reflects no such determination.
Reasoning by analogy to the Takings Clause of the Fifth
Amendment, McKesson next asks us to use our federal
common law power to recognize an implied cause of action.
The phrase “just compensation” appears in both the Treaty of
Amity and the Takings Clause. Compare Treaty of Amity, art.
IV(2) (“[P]roperty shall not be taken except for a public
purpose, nor shall it be taken without the prompt payment of
just compensation.”), with U.S. CONST. amend. V (“[N]or
shall private property be taken for public use, without just
compensation.”). McKesson urges us to infer a cause of
action from the former, as the Supreme Court has from the
latter. See First English Evangelical Lutheran Church v.
County of Los Angeles, 482 U.S. 304, 316 & n.9 (1987);
United States v. Causby, 328 U.S. 256, 267 (1946); Jacobs v.
United States, 290 U.S. 13, 16 (1933).
This attempt to draw an analogy between a treaty and the
Constitution is unsound. When it comes to implied causes of
action, the Constitution stands apart from other texts. See
Davis v. Passman, 442 U.S. 228, 241–42 (1979) (explaining
that “the question of who may enforce a statutory right is
fundamentally different from the question of who may
enforce a right that is protected by the Constitution”);
Cannon, 441 U.S. at 733 n.3 (Powell, J., dissenting) (“[T]his
Court’s traditional responsibility to safeguard constitutionally
protected rights, as well as the freer hand we necessarily have
in the interpretation of the Constitution, permits greater
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judicial creativity with respect to implied constitutional
causes of action.”). Inferring a cause of action from the
Constitution squares with the “presum[ption] that justiciable
constitutional rights are to be enforced through the courts.”
Davis, 442 U.S. at 242. By contrast, inferring a treaty-based
cause of action embroils the judiciary in matters outside its
competence and authority. See Medellín, 128 S. Ct. at 1357
n.3 (noting presumption against finding treaty-based causes of
action); Sosa v. Alvarez-Machain, 542 U.S. 692, 727 (2004)
(noting that “a decision to create a private right of action is
one better left to legislative judgment in the great majority of
cases,” and that “the possible collateral consequences of
making international rules privately actionable argue for
judicial caution”); Tel-Oren v. Libyan Arab Republic, 726
F.2d 774, 799, 801–08 (D.C. Cir. 1984) (Bork, J., concurring)
(arguing that separation-of-powers concerns counsel against
inferring treaty-based causes of action). Our conclusion that
the Treaty of Amity does not create an implied cause of action
accords with the prevailing sentiment against recognition of
implied causes of action. See, e.g., Corr. Servs. Corp. v.
Malesko, 534 U.S. 61 (2001) (refusing to extend Bivens v. Six
Unknown Named Agents of the Federal Bureau of Narcotics,
403 U.S. 388 (1971), to provide cause of action against
private party); Alexander v. Sandoval, 532 U.S. 275, 286
(2001) (“Like substantive federal law itself, private rights of
action to enforce federal law must be created by Congress.”);
FDIC v. Meyer, 510 U.S. 471 (1994) (refusing to extend
Bivens to provide cause of action against federal agency);
RICHARD H. FALLON, JR. ET AL., HART AND WECHSLER’S THE
FEDERAL COURTS AND THE FEDERAL SYSTEM 781–83, 816–21
(5th ed. 2003) (describing retrenchment of implied causes of
action in statutory and constitutional contexts).
In the absence of a textual invitation to judicial
participation, we conclude the President and the Senate
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intended to enforce the Treaty of Amity through bilateral
interaction between its signatories. We give “ ‘great weight’ ”
to the fact that the United States shares this view. Medellín,
128 S. Ct. at 1361 (quoting Sumitomo Shoji Am., Inc. v.
Avagliano, 457 U.S. 176, 184–85 (1982)); see United States
Amicus Br. at 5–11 (arguing that the Treaty of Amity does
not create a cause of action). This interpretation is in keeping
with traditional assumptions about how treaties operate. As
the Supreme Court declared in The Head Money Cases:
A treaty is primarily a compact between independent
nations. It depends for the enforcement of its
provisions on the interest and the honor of the
governments which are parties to it. If these fail, its
infraction becomes the subject of international
negotiations and reclamations, so far as the injured
party chooses to seek redress, which may in the end be
enforced by actual war. It is obvious that with all this
the judicial courts have nothing to do and can give no
redress.
Edye v. Robertson (The Head Money Cases), 112 U.S. 580,
598 (1884). The Treaty of Amity does not provide a cause of
action. We must leave to the political branches the
implementation of its just compensation guarantee.
III.
We reverse the district court’s ruling that McKesson has
a cause of action under the Treaty of Amity. In light of this
conclusion, we remand for the district court to decide whether
this suit can proceed. The court shall consider three issues.
First, the district court must consider whether McKesson has a
cause of action under Iranian law. McKesson has so
contended in the district court, but the court has had no reason
11
to address the issue before now. Second, it must reconsider, in
light of, inter alia, the Supreme Court’s intervening decision
in Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), whether
CIL provides McKesson a cause of action. Third, it must
determine whether the act of state doctrine applies to this
case. “The act of state doctrine ‘precludes the courts of this
country from inquiring into the validity of the public acts a
recognized foreign sovereign power committed within its own
territory.’ ” World Wide Minerals, Ltd. v. Republic of
Kazakhstan, 296 F.3d 1154, 1164 (D.C. Cir. 2002) (quoting
Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 401
(1964)). The doctrine must be addressed before this litigation
is completed because if it applies Iran cannot be held liable.
On the latter two issues, the district court shall invite the
views of the United States, whose interests may be implicated
by those matters. Because it is unclear whether McKesson’s
suit may proceed, we defer for now Iran’s challenges to the
district court’s interpretation of the remand order in
McKesson III and its rulings at trial.
So ordered.