A recent Second Circuit ruling suggests that U.S. courts should willingly hear suits by foreign plaintiffs that involve foreign law, so long as a U.S. ruling will not likely disrupt international relations. Bigio v. The Coca-Cola Co., 448 F.3d 176 (2nd Cir. 2006).

In 1997, the Bigio family sued Coca-Cola in U.S. District Court for the Southern District of New York, seeking to regain assets that the Egyptian government under President Nasser seized in 1962. The Bigios operated a factory in Egypt from the 1930s until the 1962 seizure, after which they left Egypt for Canada. They are now Canadian citizens.

The Bigios' suit alleges that Coca-Cola either purchased or leased the confiscated property in 1993 with full knowledge that the Nasser government had seized it without compensating the family. After finding no relief in Egyptian courts, the plaintiffs brought their case in the United States, claiming a violation of the Alien Tort Claims Act. The district court dismissed the suit under the "act of state" doctrine, which bars courts from hearing cases whose results might interfere with U.S. foreign policy.

In 2000, the Second Circuit reversed. It held that the act of state doctrine does not apply because the current Egyptian government "is far removed in time and circumstance" from Nasser's regime, and the current government has apparently repudiated Nasser's actions. Therefore, a judicial ruling will not embarrass or hinder U.S.-Egyptian relations.

On remand, the district court dismissed again, citing international comity and forum non conveniens. The court applied a seven-factor test from Timberlane v. Bank of America, 749 F.2d 1378 (9th Cir. 1984), involving a dispute between two American parties over a Honduran transaction. In dismissing that case, the Ninth Circuit cited conflicts between U.S. and Honduran laws, the number of Honduran witnesses, and the likely effect on Honduran commerce. Here, the district court concluded that ruling for the Bigios would require the court to criticize the Egyptian government. Moreover, the court could not enforce a judgment involving real property in Egypt.

Reversing a second time, the Second Circuit held that the lower court erred by applying Timberlane. Although Timberlane determines whether U.S. laws should apply outside the United States, the issue here is whether a U.S. adjudication would upset U.S.-Egyptian relations. The court noted that the Egyptian government has never objected to the case's presence in U.S. courts, and that Second Circuit courts routinely interpret foreign law without upsetting international comity. This ruling was hardly a departure for the circuit, which has applied foreign law in cases involving both stolen property and foreign ownership of funds held in U.S. trust accounts.

As to forum non conveniens, the circuit court rebuked the lower court for discounting the Bigios' forum preference. A foreign plaintiff's choice to sue in U.S. courts merits deference, especially where the forum presents no genuine inconvenience. Here, the parties and key witnesses reside in either the United States or Canada, not Egypt, and the suit targets a U.S. company.

Different views regarding the plaintiffs' options underlie this case. The district court notes that the Bigios abandoned their Egyptian lawsuits, and have a valid forum there. In contrast, the circuit court notes the plaintiffs' "legitimate and substantial reasons" for suing in the United States. If other courts follow the Second Circuit's reasoning, the ruling may presage greater involvement by our courts in disputes over assets overseas.

For business lawyers, such a shift would require increased facility with foreign law and a willingness to adjudicate foreign disputes at home.