Contract formation

Army Lawyer, Jan, 2005 by James Dorn, Michael Benjamin, Bobbi Davis, Andrew Kanter, Louis Chiarella, Kevin Huyser, Steven Patoir

Authority

You Promised Me $4 Million for My Testimony--I'm Here To Collect

In Awad v. United States, (1) the Court of Federal Claims (COFC) dismissed an action alleging the government breached a contract to pay plaintiff $4 million in exchange for his assistance prosecuting several members of a terrorist organization. Although the outcome was rather predictable, the case offers an interesting examination of the differences between contracting with the government in its proprietary capacity versus sovereign capacity.

In 1982, Mr. Adnan Awad, an Iraqi citizen, carried a suitcase bomb to Switzerland, at the behest of the May 15 terrorist organization. However, upon arrival he turned himself in to the U.S. Embassy. Thereafter, Awad was permitted to stay in Switzerland and "was given many amenities." (2) During this time, Awad met with several Department of Justice (DOJ) representatives, who allegedly offered a United States passport and citizenship, and told him "his life in the U.S. would be at least equal to what he enjoyed in Switzerland" and that he could return to Switzerland at any time if he was unsatisfied with his life in the United States. In return, the United States expected Awad to assist in prosecuting members of the May 15 terrorist organization. (3)

Awad decided to come to the United States, where he became involved in the Witness Security Program (WITSEC), which the U.S. Marshals Service (USMS) administered. Before he entered the program, the USMS required Awad to complete a memorandum of understanding, which contained a clause stating that the USMS would retain Mr. Awad's identification documents until he decided to "revert to his ... true identity." (4) Awad left the WITSEC in 1986. At this point he requested his passport from the USMS, but was denied his request. In the late 1980s, Awad received a refugee travel document, but was not given a passport. To obtain a passport, Awad met with an FBI agent, who allegedly told him he would receive a passport and a reward of $4 million in six months. (5) Awad rejoined the WITSEC later that year, but was "terminated" from the program in 1991. Nevertheless, Awad traveled to Greece to testify in the trial of an alleged terrorist. Throughout this process, different government agents allegedly told Awad on several occasions that he would be receiving a passport shortly. However, Awad did not become a U.S. citizen until 2000. (6)

Awad filed a complaint before the COFC seeking $5 million in compensation. (7) In response, the government filed a motion to dismiss for lack of jurisdiction. (8) Upon examination, the court observed that the government has not waived its sovereign immunity with regard to all contracts that it makes with private entities. Rather, the application of sovereign immunity depends on the type of contract the government makes. The court noted the two main categories of contracts that the government makes are, respectively, proprietary and sovereign. "The United States generally has waived sovereign immunity with regard to proprietary contracts, which are contracts in which 'the sovereign steps off the throne and engages in purchase and sale of goods, lands, and services, transactions such as private parties, individuals or corporations also engage in among themselves.'" (9) In contrast, the court observed the government has not waived sovereign immunity for contracts that it makes in its sovereign, or governmental, capacity. As a result, the COFC has subject matter jurisdiction over most proprietary contracts, but under the Tucker Act, (10) the court generally does not have jurisdiction over contracts the government makes in its sovereign capacity. (11)

For the court, the alleged contract at issue was obviously made in the government's sovereign capacity, "since both counter-terrorism efforts and the granting of citizenship and passports are solely government functions, neither of which has a private analogue." (12) The court observed it "has found in many instances that, when the government makes a contract involving 'activities of the criminal justice system, [these] activities ..., without question, lie at the heart of sovereign action.'" (13) In addition, "an alleged contract for citizenship and a passport is not the type of contract that a private person could make because only the government has the power to naturalize citizens and award passports." (14)

The court then observed that since the government made the alleged contract in its sovereign capacity, under the Tucker Act's waiver of sovereign immunity, the court would only have jurisdiction to entertain the case if the persons who made the contract had the authority to bind the government. (15) Based on the evidence available, the individuals who contacted Awad clearly lacked the actual authority to bind the government. Further, the court noted that Awad made no attempt to show these individuals had such authority to bind the government. Thus the court lacked jurisdiction to entertain the case. (16)