Source: http://fsmsupremecourt.org/WebSite/fsm/decisions/vol3/3fsm416_427.htm
Timestamp: 2017-09-22 02:49:52
Document Index: 160342715

Matched Legal Cases: ['§ 203', '§ 201', '§ 203', '§ 111', '§ 206', '§ 210', '§ 210', '§ 210', '§ 210', '§ 219', '§ 224', '§ 45', '§ 203', '§ 14', '§ 203']

Constitutional Law - Case or Dispute;
When a party has been specifically warned by the attorney general that he is required to obtain a foreign investment permit under national statute which imposes criminal sanctions for failure to comply, the question of whether a permit is required is sufficiently ripe to support a suit seeking declaratory judgment. Michelsen v. FSM, 3 FSM Intrm. 416, 418 (Pon. 1988).
Constitutional Law - Interpretation;
A cardinal principle of statutory construction is that, where possible, courts should avoid interpretations of a statute which may bring into doubt the constitutionality of that statute. Michelsen v. FSM, 3 FSM Intrm. 416, 423 (Pon. 1988).
National government has neither constitutional authority nor law enforcement capacity to oversee, on a worldwide basis, every noncitizen acquisition of an interest in a business operating within the FSM. Michelsen v. FSM, 3 FSM Intrm. 416, 423 (Pon. 1988).
The "applicant" referred to in the Foreign Investment Act is one interested in doing business, not just investing money, in the Federated States of Micronesia, and the considerations to be employed in determining whether to grant an application relate to business operations within the FSM, not to investment of funds. Michelsen v. FSM, 3 FSM Intrm. 416, 525 (Pon. 1988).
The Foreign Investment Act regulates the operation of noncitizen businesses within the Federated States of Micronesia, not individual investors. 32 F.S.M.C. §§ 203(2) and 204 have no application to acquisitions of interests in a business operating in the Federated States of Micronesia with a national foreign-investment permit. Michelsen v. FSM, 3 FSM Intrm. 416, 426 (Pon. 1988).
An attorney's professional activities are individually subject to regulation by the judiciary, not by the administrators of the Foreign Investment Act. Michelsen v. FSM, 3 FSM Intrm. 416, 428 (Pon. 1988).
Plaintiff R. Barrie Michelsen, a citizen of the United States and an attorney practicing in Pohnpei, seeks a declaratory judgment that he is not required to obtain a national foreign-investment permit pursuant to the FSM Foreign Investment Act, 32 F.S.M.C. §§ 201-232, in order to acquire a partnership interest in a law firm which already has a national foreign-investment permit. He also seeks an injunction prohibiting officials of the national government from attempting to require him to obtain a permit for that purpose. The case is now before the Court on Mr. Michelsen's motion for summary judgment.
§ 203. Business activities and interests for which permits required.
This is not the kind of question upon which courts commonly defer to the statutory interpretation of the administrative agency. Olter v. National Election Comm'r, 3 FSM Intrm. 123, 133 (App. 1987). There is no direct statement in the Act or its legislative history that Congress intended the Court to defer to interpretations of the administration. Applying the standards set forth in Olter, the Court finds no grounds for deferring to the administrative interpretation of the statute. Instead the Court must make its own independent determination as to whether the Board's announced position is in accordance with law. See 17 F.S.M.C. §§ 111(3), 111(3)(b)(i), and 111(3)(b)(iii).
1. Grammar and Composition:
Statutes must be construed like every other piece of English composition. This does not mean merely that the words in a statute are to be read according to their ordinary meaning and grammatical sense; it means that a statute must be construed according to the ordinary rules of construction applied to any English composition.
2. Enforceability and Constitutionality
A cardinal principle of statutory construction is that, where possible, courts should avoid interpretations of a statute which may bring into doubt the constitutionality of that statute. In re Otokichy, 1 FSM Intrm. 183, 190 (App. 1982).
The government's interpretation of section 203(2) would radically realign the focus of administrative activity under the statute, but in a way that is inconsistent with the general administrative scheme established by other provisions in the Act.
The pattern holds throughout the Act. The first action required of administrators upon receipt of an application is to determine the interstate or international character of the business. 32 F.S.M.C. 206. Administrators must consider: whether "the applicant" will engage in business in more than one State, section 206(1); the proportion of the applicant's business revenues which will be realized through exports from the FSM, section 206(2); and whether the applicant will import materials, or engage in international communications or in other international or interstate activities. §§ 206(3) and (4). The "applicant" plainly is expected to be engaged directly in business activities, not to be just an investor.
Similarly, the standards to be employed by the board in determining whether to grant a particular foreign investment permit are suitable only for consideration of the business activity itself. The board is instructed to consider the economic, social or environmental need for the business activity to be performed, 32 F.S.M.C. 210(1); the degree to which the business activities will effect change in exports or imports, § 210(2); the environmental impact of the proposed business activities, § 210(3); ownership participation in the business by FSM citizens, § 210(4); business plans totrain and employ FSM citizens, §§ 210(5) and (6); and the overall effect of thebusiness operation upon the economic well-being of the nation. 32 F.S.M.C. 210(7). Nothing is said about the organization's need for funds, or the arrangements pertaining to the investment itself.
The same analysis applied to other parts of the Act yields the same result. A noncitizen who has a foreign-investment permit is a "licensee". 32 F.S.M.C. 202(3). The Act's references to licensees confirms that they are expected to be continuing and active businesses, not merely one-time individual investors. 32 F.S.M.C. §§ 219, 220, 222 to 226.
In addition, the idea of modifying or revoking a permit, 32 F.S.M.C. §§ 224-226, would have no likely application to a permit authorizing a noncitizen to make one specific acquisition of an identified business interest. Once acquisition of the interest has occurred, the investor would apparently have no further need for the permit. The Act does not say that revocation of the permit could affect the investor's ownership rights already established.
Congress did not expect individual investors to be involved. First, unless the investor is a major one indeed, he quite often could not obtain or provide the information called for concerning the business itself. Secondly, by the time investors would apply, the administrators would already have obtained from the business itself the same information required of the investors.7 We should not lightly assume that the statute mandates an application procedure whereby a large number of applicants could be required to submit precisely the same information about precisely the same business to administrators who have already received that information from the business itself. "It has been called a golden rule of statutory interpretation that unreasonableness of the result produced by one among alternative possible interpretations of a statute is reason for rejecting that interpretation in favor of another which would produce a reasonable result." 2A N. Singer, Sutherland Statutory Construction § 45.12 (4th ed. 1984).
This in turn leads to the conclusion that the Foreign Investment Act regulates the operation of noncitizen businesses within the Federated States of Micronesia, not individual noncitizen investors. The Court holds that 32 F.S.M.C. §§ 203(2) and 204 have no application to acquisitions of interests in a business operating in the Federated States of Micronesia with a national foreign-investment permit. Section 203(2) prohibits noncitizens from investing in any business operating in the Federated States of Micronesia without a foreign-investment permit.8
1. Subsequent to initiation of the litigation, three sections of the Act, 32 F.S.M.C. 206, 207 and 208, were repealed. Pub. L. No. 5-21, § 14 (5th Cong., 2d Reg. Sess. 1987). This legislation, which abolished the Foreign Investment Board, also provides that former sections 209 through 232 are renumbered as sections 206 through 229, respectively. Thus, the section cited above appears in the current edition of the Code as 32 F.S.M.C. 232. The updated section numbers are used throughout this opinion.
2. "`Business' means any sole proprietorship, partnership, corporation or any other association engaged in commerce." 32 F.S.M.C. 202(1).
3. "`Noncitizen'" means: "(b) ... any person who is not a citizen of the Federated States of Micronesia, and any business in which any interest is owned by a person who is not a citizen of the Federated States of Micronesia." 32 F.S.M.C. 202(4)(b).
4. The FSM Foreign Investment Act is traceable, and similar, to the previous Trust Territory Foreign Investment Act. See 33 TTC 1 et seq. (1980).
5. On the other hand, there is symmetry in substance, if not form, in the alternative interpretation, which would have all three subsections of section 203 bent toward the same goal, preventing noncitizen businesses from operating without FSM foreign-investment permits.
6. "A noncitizen intending to engage in business in the Federated States of Micronesia, or intending to acquire an interest in a business in the Federated States of Micronesia, shall apply to the Secretary for a foreign-investment permit." 32 F.S.M.C. 204(1).
7. This presumes, of course, that no noncitizen investor could be granted a permit to acquire an interest in a business operating within the FSM without a permit. The presumption is apt. Any noncitizen ownership makes the business itself a noncitizens, 32 F.S.M.C. 202(4)(b), and prevents the businessfrom engaging in business activities here. 32 F.S.M.C. 232(1). Thus, although the government apparently reads 32 F.S.M.C. §§ 203(2) and 204 as allowing a noncitizen to apply for a permit to acquire an interest in a business operating here, this would be a futile act if the business itself has no permit. This is yet another strong indication that the government's interpretation is unsound, and that section 203(2) is intended simply as a flat prohibition against noncitizen acquisition of any interest in a business operating in the FSM without a foreign-investment permit.
8. A noncitizen desiring to acquire an interest in a wholly FSM-owned business operating without a foreign-investment permit may apply under 32 F.S.M.C. 204. This application is not for permission to acquire an interest in the business but so that the investor may obtain a ruling in advance of the proposed acquisition on whether the business activity could be continued within the Federated States of Micronesia as a noncitizen business.