Eleventh Circuit Adopts “Revenue Rule” Abstention Doctrine

The Eleventh Circuit recently considered a group of consolidated cases in which the countries of Honduras, Ecuador and Belize alleged that American tobacco companies violated RICO by engaging in tax avoidance schemes. In Republic of Honduras v. Philip Morris Companies, Inc., 341 F.3d 1253 (11th Cir. Aug. 14, 2003), the court affirmed the district court’s decision to abstain under the “revenue rule,” which prevents the courts of one sovereign from enforcing or adjudicating tax claims from another sovereign. Observing that the doctrine has a long history, the appellate court adopted it as law of the circuit and held that plaintiffs could not avoid the rule by invoking the RICO statute.