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I Can’t Drive 55: The Uselessness of a ‘Custom and Practice’ Defense under the FCPA

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Perhaps the defendants became confused about the inclusion of a local law defense in the Foreign Corrupt Practices Act (FCPA) under which payments to foreign governmental officials that are otherwise prohibited are permitted if the “payment, gift, offer, or promise of anything of value that was made, was lawful under the written laws and regulations of the foreign official’s…country.” The local law defense is an affirmative defense which was added to the FCPA in 1988 as part of a series of amendments designed to address criticisms of the statute. As noted by Kyle Sheehan, in his article “I’m Not Going to Disneyland”, one such criticism of the FCPA was that through it the United States was more interested in exporting its cultural biases than its products”; may have placed “unreasonable restrictions on American corporations operating in foreign countries”; and that payments to foreign government officials rendered unlawful by the FCPA may have been legal in many countries. The Fifth Circuit Court of Appeals spoke to this issue in its decision in United States v. Castle, where it noted that “the [FCPA] drafters acknowledged, and the final law reflects this, that some payments that would be unethical or even illegal within the United States might not be perceived similarly in foreign countries, and those payments should not be criminalized.”


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Published In: International Law & Trade Updates, Mergers & Acquisitions Updates, Securities Law Updates, Commercial Law & Contracts Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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