According to the U.S. Court of Appeals for the Second Circuit, a sovereign entity cannot separate itself from its past government or leaders, even if the government committed illegal acts or violated international law.
In its decision on September 18, 2014, the Court affirmed the district court ruling inRepublic of Iraq v. ABB AG that Iraq was equally at fault as the defendants in the alleged conspiracy to corrupt a United Nations humanitarian program created during the Hussein Regime.
Iraq had sought recovery from various business entities under the Racketeer Influenced and Corrupt Organizations Act, 18 USC §1961, the Foreign Corrupt Practices Act, 15 USC §78, and also state common law. The Court determined that RICO was inapplicable to extraterritorial actions, and that the FCPA does not provide private parties right of action.
Iraq's complaint stated that Hussein and Iraqi ministry officials orchestrated the exploitation of funds from the UN Oil-for-Food Program that were meant to provide humanitarian aid to the Iraqi people. It posited that certain corporations conspired with the Regime, while others were coerced by Hussein. Despite Iraq's argument that the Hussein-led government was illegitimate and that its actions were detrimental to the Iraqi people, the Court determined that the actions of a government are representative of its sovereign entity. Although the district court suggested the obvious distinctions between state and government, a sovereign cannot skirt responsibility for the acts committed by past, albeit corrupt, governmental leaders.
For a prior report on the case in German, see Kochinke, Erst korrupt, dann so sauber: Irak, Schadensersatz für vormals bestechlichen Staat?, German American Law Journal--US-Recht auf Deutsch, Sept. 19, 2014.
