Federal Circuit Revives Afghanistan Lease Dispute
June 18, 2025
In a recent decision, Lessors of Abchakan Village v. Secretary of Defense, the Federal Circuit reversed the Armed Services Board of Contract Appeals (the “Board”) and revived a claim by Afghan villagers for $28 million in unpaid rent on a lease for a U.S. military base.
Whether the villagers or the Government of Afghanistan owned the land on which the United States built the base was the subject of several Afghan court decisions. In determining which of these decisions to recognize, the Federal Circuit looked to provisions of the Restatement (Fourth) of Foreign Relations Law (2018), apparently as a matter of federal common law. The Federal Circuit also relied on the Restatement (Fourth) in concluding that the villagers’ claim was not barred by the act of state doctrine. (Disclosure: I was a Reporter for the Restatement (Fourth).)
Conflicting Afghan Judgments
The plaintiffs are residents of Abchakan Village in Logar Province, Afghanistan. In 2009, they leased property to the United States for a military base known as Forward Operating Base Shank. The United States paid $2.6 million in rent for 2009 and indicated its intent to renew the lease. But towards the end of the year the Government of Afghanistan filed suit in Afghan court claiming that it, rather than the villagers, owned the land. Although the United States continued to occupy the land for several more years, it paid no more rent because of the dispute over land ownership.
An Afghan provincial court dismissed the Government of Afghanistan’s claim, and appeals followed. In 2015 an Afghan appellate court sided with the villagers. But the Government again appealed. In 2018 the Afghanistan Supreme Court reversed the 2015 decision, holding that the Government was not given a sufficient opportunity to prove its claim. The case was remanded to a different court and ultimately transferred to the Special Appeals Court for Government Land Usurpation Cases. In 2021, shortly before the Taliban takeover, the Land Court once again found in favor of the villagers. In 2022 the Supreme Court, now under Taliban control, issued a fatwa that the Land Court’s decision be implemented.
In 2017 and 2018, while the litigation was ongoing, the Government of Afghanistan issued declarations authorizing the United States to use the land and “accepting full responsibility for any and all land claims that may arise over the use of this area, including accepting for resolution any such land claims filed against the United States Government.”
The Armed Services Board’s Decision
After the U.S. Army Corps of Engineers denied their claim for unpaid rent, the villagers appealed to the Board. The Board granted summary judgment to the Defense Department on two grounds.
First, the Board held that the villagers failed to raise a genuine issue of material fact that they owned the land. The Board declined to recognize the 2021 Land Court judgment or the 2022 fatwa and treated the 2018 Supreme Court decision remanding the case as a final judgment with preclusive effect.
Second, the Board held that the act of state doctrine barred the villagers’ claim because granting them relief would require the Board to declare invalid the Government of Afghanistan’s 2017 and 2018 declarations authorizing the United States to continue using the land.
The Federal Circuit’s Decision
In a per curiam opinion, the Federal Circuit reversed. In its view, there were genuine issues of material fact concerning ownership of the land and deciding the villagers’ claim would not require the Board to declare invalid a foreign act of state.
Recognition of Judgments
The Board declined to recognize the 2021 Land Court judgment based on three grounds for nonrecognition found in § 484 of the Restatement (Fourth): (1) that the party resisting recognition did not receive adequate notice of the proceeding in the foreign court in sufficient time to enable it to defend; (2) that the judgment was rendered in circumstances that raise substantial doubt about the integrity of the rendering court with respect to the judgment; and (3) that the specific proceeding in the foreign court leading to the judgment was not compatible with fundamental principles of fairness. These grounds are based on the 2005 Uniform Foreign-Country Money Judgments Recognition Act, adopted in 29 states and the District of Columbia. State law does not govern claims like these that are brought against the United States. And both the Board and the Federal Circuit seem to have relied on the Restatement as federal common law.
The Federal Circuit held that the record was not sufficient to justify nonrecognition of the 2021 judgment on any of the three grounds on which the Board relied. The court of appeals did not, however, hold that the 2021 judgment was entitled to recognition. Instead, it remanded to the Board for further proceedings.
On remand, two points are worth bearing in mind. First, the Department of Defense bears the burden of showing that grounds exist for not recognizing the 2021 judgment. The Federal Circuit held that it was appropriate to place the overall burden of proving ownership of the land on the villagers because they have better access to the relevant information. But with respect to using the judgment as evidence, § 485 of the Restatement (Fourth) states that once a party seeking recognition has shown that a foreign judgment is final, conclusive, and enforceable, the burden shifts to the party resisting recognition to show that a ground for non-recognition exists.
Second, although the grounds for nonrecognition listed in § 484 are often termed “discretionary,” that discretion only works in one direction. That is to say, a court may decide to recognize a foreign judgment even if a ground for nonrecognition exists (though courts rarely do this). But a court may not decide against recognizing a foreign judgment unless a ground for nonrecognition is established. Under § 481, a final, conclusive, and enforceable judgment is entitled to recognition unless a ground for nonrecognition exists.
In contrast to its treatment of the 2021 Land Court judgment, the Board did recognize the 2018 Afghanistan Supreme Court decision reversing an earlier judgment in favor of the villagers. The Board concluded that this decision had issue preclusive effect with respect to some of the ownership evidence on which the villagers relied. But as the Federal Circuit correctly pointed out, the 2018 Supreme Court decision was not a final judgment because it remanded the case for further proceedings. Under § 487 of the Restatement (Fourth), only final judgments have preclusive effect.
Act of State Doctrine
The act of state doctrine provides that U.S. courts will not question the validity of an official act of a foreign government fully performed within its own territory. According to the Board, the villagers’ claim was barred under this doctrine because deciding that claim would require the Board to question the validity of declarations by the Government of Afghanistan concerning the land in 2017 and 2018.
The Federal Circuit disagreed. As the court of appeals read them, the declarations acknowledged the controversy over ownership of the land and took responsibility for resolving the issue. But the declarations did not expropriate the land or otherwise definitively claim ownership by the Government.
Nor would deciding the villagers’ claims require the Board to question the validity of the Government’s extension to this land of its Bilateral Security Agreement with the United States. “The Board could determine that the U.S. government was required to pay rent for the period for which relief was requested,” the court of appeals reasoned, “without concluding any part of the Declarations is invalid.”
Under the U.S. Supreme Court’s decision in W.S. Kirkpatrick & Co. v. Environmental Tectonics Corp., International (1990), “[a]ct of state issues only arise when a court must decide—that is, when the outcome of the case turns upon—the effect of official action by a foreign sovereign. When that question is not in the case, neither is the act of state doctrine.” Thus, the Federal Circuit was correct to reject application of the act of state doctrine in this case.
Conclusion
The Abchakan Village case addresses important issues of transnational litigation—the recognition of foreign judgments and the act of state doctrine—in an unusual factual context. Because it involves claims against the U.S. government, the court decided those issues as questions of federal common law.
Treating the act of state doctrine as federal common law is nothing new. The Supreme Court made clear in Banco Nacional de Cuba v. Sabbatino (1964) that the act of state doctrine is a doctrine of federal common law binding on federal and state courts alike.
It is unusual, however, to treat the recognition of foreign judgments as governed by federal common law. Since Erie Railroad Co. v. Tompkins (1938), federal courts sitting in diversity have considered themselves bound by state rules on the recognition and enforcement of foreign judgments. As mentioned above, the Restatement (Fourth) is modeled on state uniform acts addressing foreign judgments.
But it also seems appropriate for federal courts to follow the Restatement (Fourth) when required to decide questions of foreign judgment recognition under federal common law. Federal courts often look to other Restatements, which are typically based on state law, when fashioning federal common law in other fields. And I can see no good reason for them to do otherwise with respect to foreign judgments.