May 27, 2011

State's secret doctrine and contract claims: No remedy for anyone

In a recent decision by the US Supreme Court, the state secrets doctrine and enforceability of contracts were discussed. Facts of the case goes like this, General Dynamics Corp. was given a contract by the US government to make stealth airplanes. Corp. failed to deliver in time and made little progress in its work. As a result govt. terminated the contract and asked for a sum more than US $1billion which was given as advance amount. On the other hand, Corp. asked for US $ 1.85 billion for work which was not received by the US govt. Corp. also invoked a provision wherein a govt is required to share its superior knowledge in a govt contract, with the contractor. In the lower court, govt. took the defence the it cannot allow the plaintiff to check its records whether govt had superior knowledge because such documents are state secret and can pose national security threat if disclosed. After various rounds of litigation before Federal Court case reached before the Supreme Court.

By a unanimous decision, Supreme Court held that defense of state secret doctrine can be taken by govt. in a suit instituted by it. If prima facie evidence exists that damages evaluation would require disclosure of classified documents then such a claim is non- justiciable in court of law.Hence, the proper remedy that court could give is to leave the parties in the position they were on the day before they firs knocked the doors of the court. 

With this observation case was remanded back to district court.

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