Source: http://openjurist.org/218/f3d/152
Timestamp: 2013-05-21 18:33:46
Document Index: 793074266

Matched Legal Cases: ['§ 209', '§ 209', '§ 1605', '§ 1605', '§ 1605', '§ 1605']

218 F3d 152 Third Avenue Associates v. Consulate General of Socialist Federal Republic of Yugoslavia | OpenJurist
218 F. 3d 152 - Third Avenue Associates v. Consulate General of Socialist Federal Republic of Yugoslavia	Home218 f3d 152 third avenue associates v. consulate general of socialist federal republic of yugoslavia
218 F3d 152 Third Avenue Associates v. Consulate General of Socialist Federal Republic of Yugoslavia 218 F.3d 152 (2nd Cir. 2000)
767 THIRD AVENUE ASSOCIATES, CARLYLE LIMITED PARTNERSHIP-XI, MELVYN KAUFMAN, and ROBERT KAUFMAN, Plaintiffs-Appellants,v.CONSULATE GENERAL OF SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA, YUGOSLAV PRESS AND CULTURAL CENTER, YUGOSLAV CHAMBER OF ECONOMY, FEDERAL REPUBLIC OF YUGOSLAVIA, REPUBLIC OF BOSNIA-HERZEGOVINA, as a sovereign entity and as a successor state to the Socialist Federal Republic of Yugoslavia, REPUBLIC OF CROATIA, FORMER YUGOSLAVIA REPUBLIC OF MACEDONIA, as a sovereign entity and as a successor state to the Socialist Federal Republic of Yugoslavia, REPUBLIC OF SLOVENIA, as a sovereign entity and as a successor state to the Socialist Federal Republic of Yugoslavia, Defendants-Appellees.FEDERAL REPUBLIC OF YUGOSLAVIA, Cross-Claim Plaintiff,v.REPUBLIC OF BOSNIA-HERZEGOVINA, as a sovereign entity and as a successor state to the Socialist Federal Republic of Yugoslavia, REPUBLIC OF CROATIA, FORMER YUGOSLAVIA REPUBLIC OF MACEDONIA, as a sovereign entity and as a successor state to the Socialist Federal Republic of Yugoslavia, REPUBLIC OF SLOVENIA, as a sovereign entity and as a successor state to the Socialist Federal Republic of Yugoslavia, Cross-Claim Defendants.
Docket No. 99-9011August Term 1999
Argued: May 4, 2000Decided: July 12, 2000
Appeal from order of the United States District Court for the Southern District of New York (Motley, J.) holding that this action presents nonjusticiable political questions, staying all matters in the case, and placing it on the suspense calendar. Appellants argue that the court erred in finding that this case raises nonjusticiable political questions and in staying the litigation. We affirm on nonjusticiability, but vacate the stay order and remand with instructions to dismiss.
B. The Leases
The court then considered the landlords' two proposed methods of allocating the alleged SFRY liabilities among the various defendants: (1) impose the same allocation of SFRY assets and liabilities used by the International Monetary Fund (IMF); or (2) apply a rule of joint and several liability. The district court rejected both suggestions. First, the judge noted that IMF allocation was inappropriate as it related only to state debt to the IMF, and the United States has "expressly reject[ed] use of the IMF percentages outside the IMF context." Id. at 276. Next, the court rejected joint and several liability on the ground that "it would not avoid any political questions, but simply would decide them implicitly and in a chaotic fashion." Id. The court pointed out that imposing joint and several liability would not only potentially lead to inequitable distribution of the debt, but would likely conflict with future political settlement of the debt allocation. Id. at 276-77.
We agree with the district court that virtually all of the Baker v. Carr factors, see supra n.4, apply to this case. In Baker, the Court specifically addressed application of the political question doctrine to questions involving foreign relations. The Court noted that "[n]ot only does resolution of such issues frequently turn on standards that defy judicial application, or involve the exercise of a discretion demonstrably committed to the executive or legislature; but many such questions uniquely demand single-voiced statement of the Government's views." 369 U.S. at 211 (citations omitted).
Because the "nonjusticiability of political questions is primarily a function of the constitutional separation of powers . . . the dominant consideration in any political question inquiry is whether there is a textually demonstrable constitutional commitment of the issue to a coordinate political department." Lamont v. Woods, 948 F.2d 825, 831 (2d Cir. 1991) (internal quotations and citations omitted); see also Powell, 395 U.S. at 518. In Oetjen v. Central Leather Co., 246 U.S. 297, 302 (1918), the Supreme Court held that "[t]he conduct of the foreign relations of our Government is committed by the Constitution to the Executive and Legislative - 'the political' - Departments of the Government, and the propriety of what may be done in the exercise of this political power is not subject to judicial inquiry or decision."
In Can v. United States, 14 F.3d 160 (2d Cir. 1994), this court considered a claim by a group of citizens of the Republic of South Vietnam who sought to obtain title to assets of the former Republic of South Vietnam in the United States. We held that "[t]he recognition of any rights of succession to a foreign sovereign's power or property is in the first instance constitutionally committed to the executive branch . . . ." Id. at 163 (emphasis supplied). We conclude that these precedents squarely apply here.
In its amicus brief to us, the government argues that "liability, if any exists, cannot attach to the Successor Defendants in the absence of a political determination, which has not yet been made . . . ." It further represents to us that "[t]he policy of the United States has been to encourage successors to agree among themselves regarding [debt] allocation," and that "the United States continues to support the international process as the means to pursue resolution." Thus, the executive branch has apparently made the initial policy determination that resolution of issues such as debt allocation among the successors to the SFRY must be resolved in an international forum. This position is understandable in light of the still volatile atmosphere in the Balkans. A determination by this court of the allocation of debt among the successors might hinder or prejudice the future resolution of this issue through negotiations or another determination by the Executive. Such an outcome would directly "interfere with executive foreign policy prerogatives," Can, 14 F.3d at 163.
Finally, international law does not support the landlords' claim that the successor states are automatically liable to the landlords. The Restatement (Third) of Foreign Relations Law § 209(2) provides that: "Subject to agreement between predecessor and successor states, responsibility for the public debt6 of the predecessor, and rights and obligations under its contracts, remain with the predecessor state . . . ." Clearly, no agreement between the SFRY and the successors regarding assumption of SFRY's liabilities has been formulated yet. None of the exceptions listed in the Restatement to this general rule applies. Accordingly, there is no rule of law that automatically subrogates successor states to their predecessor's debt. See Yucyco, 984 F. Supp. at 217 ("[u]nder principles of international law, a successor state . . . is not bound by its predecessor's agreements"). It may be, as the landlords claim, that principles of equity and international comity suggest some equitable assumption of a predecessor state debt. See, e.g., Restatement (Third) Foreign Relations Law § 209 cmt. f; D.P. O'Connell, International Law 442-43 (1965). However, the federal courts do not have the authority or the means to determine the equitable distribution of the public debt of a foreign state among several successor states. See Yucyco, 984 F. Supp. at 219 (equitable allocation among five new republics would require the court to make policy determinations "'of a kind clearly for nonjudicial discretion'") (quoting Baker, 369 U.S. at 217); cf. O'Connell at 446 (the rights of the predecessor state and the creditors against the successors remain "abstract" until "a basis of repartition is agreed upon").7
In their principal brief on appeal, the landlords relied on the "commercial activity" exception to sovereign immunity. 28 U.S.C. § 1605(a)(2). In the reply brief and at oral argument, the landlords argued - for the first time on appeal - that 28 U.S.C. § 1605(a)(4), somehow "eliminates any concern regarding justiciability" because it concerns acquisition of "rights in property" by a foreign state through "succession or gift." As is clear both from the language of the statute and the legislative history, however, that section governs acquisition of property through bequests or gifts (as opposed to a commercial transaction), and in no way refers to state succession. See H.R. Rep. No. 94-1487, reprinted in 1976 U.S.C.C.A.N 6618-19.
In the district court, the landlords invoked the FSIA, 28 U.S.C. § 1605(a)(1) in their complaint to allege jurisdiction. In their reply memorandum to Bosnia's and Macedonia's motions to dismiss, the landlords briefly mentioned § 1605(a)(4) in a footnote responding to Macedonia's assertion of sovereign immunity. The landlords do not appear to have otherwise relied on the FSIA in the district court.
The landlords simply conflate the question of jurisdiction with that of justiciability. As the Court explained in Baker v. Carr, 369 U.S. at 198, "[t]he distinction between the two grounds is significant."
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