Also known as: local-law defense · local law defences · local law
Written by attorneys · grounded in primary & secondary sources — see below
An affirmative defense under the Foreign Corrupt Practices Act that excuses a payment or gift of value when the defendant proves it was lawful under the written laws and regulations of the foreign official's country. The defense requires reference to formal statutes rather than customs or practices. It shifts the burden to the defendant to establish the legality of the conduct under foreign written law.
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TechCorp hired consultant Maria Soto to secure permits in Country X. Soto paid a licensing officer $50,000. When prosecuted under the FCPA, TechCorp invoked the local law defense. The court examined Country X's written statutes and accepted the defense after TechCorp proved the payment was expressly authorized by published regulations.
PharmaCo delivered medical samples valued at $8,000 to Dr. Patel, a government hospital official in Country Y. Charged with bribery, PharmaCo raised the local law defense. The company produced Country Y's formal health-ministry regulations permitting such samples and was acquitted.
BuildRight paid a customs clerk $2,500 to expedite inspection of construction equipment in Country Z. Prosecutors alleged an FCPA violation. BuildRight established the local law defense by citing Country Z's published customs code that expressly permitted expedited-service fees when paid directly to the agency.
EnergyMax contributed $25,000 to a foreign political party at the request of a minister whose agency awarded drilling rights. Indicted under the FCPA, EnergyMax asserted the local law defense. The court dismissed the case after the company proved the contribution complied with Country W's written election-finance statutes.
AeroParts reimbursed a state airline executive for documented travel costs required by Country V's aviation regulations. When the payment was challenged, AeroParts invoked the local law defense. The defense succeeded because the reimbursement was mandatory under the foreign written rules.
GlobalTrade retained an agent who paid a municipal tax official in Country U. Facing FCPA charges, GlobalTrade proved the payment was required by Country U's published tax-collection ordinance. The court upheld the local law defense and entered judgment for the defendant.
The defendant must show that the payment or gift was lawful under the written laws and regulations of the foreign official's country. Customs or unwritten practices do not suffice. The burden rests on the defendant as an affirmative defense.
Supporting sources
No. The defense requires that the payment be lawful under written laws and regulations. Unwritten customs or traditions provide no protection even if widely followed.
Supporting sources