Question

Does the act of state doctrine bar Robco from seeking to enforce the contract? Explain. 

Robco, Inc., was a Florida arms dealer. The armed forces of Honduras contracted to purchase weapons from Robco over a six-year period. After the government was replaced and a democracy installed, the Honduran government sought to reduce the size of its military, and its relationship with Robco deteriorated. Honduras refused to honor the contract and purchase the inventory of arms, which Robco could sell only at a much lower price. Robco filed a suit in a federal district court in the United States to recover damages for this breach of contract by the government of Honduras. Using the information presented in the chapter, answer the above question.

Answer 1

The act of state doctrine provides that the judicial branch of one country will not examine the validity of public acts committed by a recognized foreign government within its own territory. Here, the newly democratic government of Honduras is seeking to reduce the size of its military. The U.S. government likely recognized the new democratic regime since the U.S. supports democratization globally. The U.S. is also likely to be supportive of its efforts to reduce the size of its military and its inventory of weapons. Because the Honduran government’s policy decision is public act within its own territory, the U.S. judicial branch will most likely be unwilling to intervene and force the government to fulfill its contract to purchase arms. There is more at stake than a simple contract because enforcing an arms deal may harm international relations between the U.S. and the new government of Honduras.

There is more at stake than a simple contract because enforcing an arms deal may harm international relations between the U.S. and the new government of Honduras.