Opinion ID: 480622
Heading Depth: 2
Heading Rank: 1

Heading: Act of State and the Hickenlooper Amendment

Text: 39 Ordinarily, the act of state doctrine would be applicable here for all the reasons discussed in the securities claim section supra. However, Congress has adopted a specific statutory provision requiring federal courts to examine the merits of controversies involving expropriation claims. The so-called Second Hickenlooper Amendment, 22 U.S.C. Sec. 2370(e)(2) (1982), overrides the judicially developed doctrine of act of state. Hickenlooper was passed in response to the Supreme Court's decision in Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964), which barred adjudication of an expropriation claim on act of state grounds. The amendment states in part: 40 [N]o court in the United States shall decline on the ground of the federal act of state doctrine to make a determination on the merits giving effect to the principles of international law in a case in which a claim of title or other rights to property is asserted by any party ... based upon (or traced through) a confiscation or other taking ... by an act of that state in violation of the principles of international law, including the principles of compensation.... 41 22 U.S.C. Sec. 2370(e)(2). When Hickenlooper governs, courts are barred from invoking the judicially created doctrine under which we refrain from consideration of cases involving acts of foreign governments or foreign officials. 8 42 Defendants argue that Hickenlooper is inapplicable because rights arising out of ownership of certificates of deposit are contractual, and hence not 'tangible property' which can be taken by expropriation within the meaning of the amendment. Although this proposition finds support in case law, e.g., French v. Banco Nacional de Cuba, 23 N.Y.2d 46, 295 N.Y.S.2d 433, 242 N.E.2d 704 (1968), it is based largely upon an overly formalistic attachment to private law categories and is contrary to the motivating policies of the Hickenlooper Amendment. 43 Defendants' construction would unnecessarily restrict the scope of Hickenlooper. As the District of Columbia Circuit has noted, the broad, unqualified language of the carefully drafted amendment should not be undermined by the importation of external constraints on interpretation. Ramirez de Arellano v. Weinberger, 745 F.2d 1500, 1542 n. 180 (D.C.Cir.1984) (en banc), vacated and remanded because of subsequent legislation, 471 U.S. 1113, 105 S.Ct. 2353, 86 L.Ed.2d 255 (1985). The legislative history to Hickenlooper supports the rejection of a constricted interpretation and makes it clear that the protection afforded U.S. investments was to be broad in scope: 44 The sponsors of the amendment referred to it as the Rule of Law amendment; they viewed it as authorizing courts to apply established law [in] suits challenging expropriations. Congressional intent to overturn Sabbatino was never limited to a single narrow class of cases. The purposes of the amendment include the promotion and protection of United States investment in foreign countries (which characteristically has always principally been land, minerals, and large fixed immovables), and securing the right of a property holder to a court hearing on the merits. 45 Id. See also Foreign Assistance Act: Hearings on H.R. 7750 Before the Committee on Foreign Affairs, 89th Cong., 1st Sess. 592, 607-10 (1965). 46 Moreover, the tangible/intangible characterization of property interests, urged by the defendants, is a distinction without a difference. This distinction is not generally recognized in international, federal, or state law. See Christie, What Constitutes a Taking of Property Under International Law?, 38 Brit.Y.B.Int'l L. 307, 318-19 (1964) (contract and many other so-called intangible rights can, under certain circumstances, be expropriated); Oakland v. Oakland Raiders (Raiders I), 32 Cal.3d 60, 68, 183 Cal.Rptr. 673, 678, 646 P.2d 835, 840 (1982) (at least for eminent domain purposes, neither the federal nor the state Constitution distinguishes between property which is real or personal, tangible or intangible). 47 Although the certificates of deposit may be characterized as intangible property or contracts, they are property interests that are protected under international law from expropriation. For example, in its adjudication of disputes involving claims for compensation for alleged takings of property--bank deposits in Czechoslovakia--the Foreign Claims Settlement Commission observed that while [t]he relationship between a depositor and bank arises only out of contract[,] ... a contract right is property. Panel Opinion No. 1, (revised), Fourteenth Semiannual Report to the Congress for the Period Ending June 30, 1961, 124, 125 (Foreign Cl. Settlement Comm'n) (footnote omitted). The Commission ruled that the right to payment of [a] deposit is regarded as property and provides a basis for an expropriation claim. Here, we have citizens who purchased certificates of deposit. Such contracts are properly understood as investments and are therefore the type of property that Hickenlooper sought to protect. Cf. Kaiser Aetna v. United States, 444 U.S. 164, 175, 100 S.Ct. 383, 390, 62 L.Ed.2d 332 (1979) (some of the factors to be considered in determining whether government action effected a taking of property are the economic impact of the regulation, its interference with reasonable investment backed expectations, and the character of the governmental action). 48 In sum, the rights arising from a certificate of deposit are rights to property capable of being expropriated by foreign states under international law within the meaning of Hickenlooper. We reject the construction suggested by the defendants and hold that the tangibleness of property is not the dispositive factor. 9 Accordingly, the amendment is applicable and we are free to adjudicate the plaintiffs' claims on the merits.