Opinion ID: 2463629
Heading Depth: 1
Heading Rank: 2

Heading: the hickenlooper amendment

Text: In the wake of reaction against Sabbatino, Congress passed the Hickenlooper Amendment. It became law on October 7, 1964, and was reenacted as permanent law in 1965. It reads as follows: Notwithstanding any other provision of law, no 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 right to property is asserted by any party including a foreign state (or a party claiming through such state) based upon (or traced through) a confiscation or other taking after January 1, 1959, by an act of that state in violation of the principles of international law, including the principles of compensation and the other standards set out in this subsection: Provided, That this subparagraph shall not be applicable (1) in any case in which an act of a foreign state is not contrary to international law or with respect to a claim of title or other right to property acquired pursuant to an irrevocable letter of credit of not more than 180 days duration issued in good faith prior to the time of the confiscation or other taking, or (2) in any case with respect to which the President determines that application of the act of state doctrine is required in that particular case by the foreign policy interests of the United States and a suggestion to this effect is filed on his behalf in that case with the court. 22 U.S.C. § 2370(e)(2). The Senate Report indicates that the amendment was meant to modify the Sabbatino decision and to achieve a reversal of presumptions as to the embarrassment caused the Executive Branch by judicial determinations on the merits of controversies that involve an act of state by a foreign sovereign. [3] Under Sabbatino, courts were required to refuse adjudication of claims that involved passing on the validity of a foreign country's act of state, presuming that such an adjudication would embarrass the Executive's conduct of foreign policy. The Hickenlooper Amendment directs that courts shall adjudicate such claims, presuming that such an adjudication will not embarrass the Executive. This presumption may be rebutted if the President determines that application of the act of state doctrine is required in a particular case by United States' foreign policy interests. [4] Under the Hickenlooper Amendment, any court in the United States must determine the merits of controversies if (1) any party makes a claim of title or other right to property based upon or traced through a confiscation or taking, (2) the President has not filed with the court a suggestion that the application of the act of state doctrine is required by the foreign policy interests of the United States, [5] and (3) that taking was by a foreign state in violation of the principles of international law. The amendment further directs that the determination be made giving effect to the principles of international law. Despite the majority's assertion to the contrary, the statute does not require that the expropriated property itself be brought within the territorial jurisdiction of the United States. The amendment does apply to the proceeds of such property. [6] The Hickenlooper Amendment has been narrowly construed by the courts and has been restricted to fact situations closely in point to Sabbatino. I would hold that the case at bar is in that class of cases encompassed by the amendment and that our courts are under a duty to make a determination on the merits of this controversy.
The majority has concluded that, under Libyan law, Hunt does not have title to oil in strata, but only has a contract right to that oil, and that therefore he has no claim to property as required by the Hickenlooper Amendment. I disagree. The Hickenlooper Amendment does not require proof of title to property; it requires adjudication of controversies when a claim of title or other right to property is asserted. (Emphasis added). The amendment also requires that the determination be made giving effect to the principles of international law, not according to the law of the country that has just accomplished the confiscation. Significance has been attached to Congress' addition of the words to property after the phrase a claim of title or other right when it reenacted the amendment and made it permanent in 1965. A close reading of the legislative history surrounding the adoption of this amendment makes it clear that these words were added to assure the availability of the act of state doctrine as a defense in certain cases where American banks, insurance companies, and other financial institutions that have had reserves expropriated abroad might otherwise be susceptible to multiple liability. [7] This does not preclude the applicability of the amendment to cases where a contract has granted a party a claim of title or other right to certain tangible property that has been the subject of expropriation by a foreign sovereign. Furthermore, it has long been recognized that contract rights are a form of property protected by the Fifth Amendment. See United States Trust Co. v. New Jersey, 431 U.S. 1, 19, n. 16, 97 S.Ct. 1505, 52 L.Ed.2d 92 (1977). The legislative history indicates that the case at bar presents precisely the type of claim that was contemplated by Congress in the passage of the Hickenlooper Amendment. Professor Cecil Olmstead, one of the original authors of the amendment, expected the amendment to apply to contract rights when tangible property or goods claimed under a contract, or proceeds thereof, came into the United States: I would think that a contract right would [be covered] because there is a property interest in the contractual right of course. We certainly intended a contractual right would be covered here. Of course, if there was a violation of a contract between a U. S. investor and a foreign state and no proceeds or goods or commodity from the enterprise came into the United States, there would never be an opportunity for this amendment to work. Foreign Assistance Act of 1965, Hearings on H.R. 7750 Before the House Committee on Foreign Affairs, 89th Cong., 1st Sess., Part IV, 608 (1965). Congressman Adair, sponsor of the original amendment in the House, explained its purpose in this manner: [The amendment] insures that however the case may arise or the act of state doctrine be invoked, a party who had suffered an expropriation in violation [of international law] may bring suit to assert his claim to the expropriated property if there is an attempt to market it in the United States. 110 Cong.Rec. 23680 (1964). Even an opponent of the amendment, Professor Louis Henkin, admitted its applicability to this type of situation. In a letter submitted in response to a request during his testimony prior to the amendment's reenactment, Henkin stated: So far as the Sabbatino amendment is concerned, it would apply also to expropriations of property owned by nationals of third countries. The famous expropriation by Iran of the Anglo-Iranian Oil Co. is a notable example. Presumably, if some of that oil had come to the United States, the British company might have traced it here and, under the Sabbatino amendment, an American court would have had to decide whether the nationalization program of the Government of Iran was consistent with international law. (Emphasis added). Foreign Assistance Act of 1965, Hearings on H.R. 7750 Before the House Committee on Foreign Affairs, 89th Cong., 1st Sess., Part VII, 1076 (1965). As recognized by the Second Circuit Court of Appeals in Banco Nacional de Cuba v. First National City Bank of New York, 431 F.2d 394, 402 (2d Cir. 1970), after studying the legislative intent behind this amendment: If one fact is clear from the legislative history, it is that this language [of the Hickenlooper Amendment] was designed to be invoked by American firms in order to afford them a day in courtand presumably a monetary recovery when some other entity attempted to market the American firms' expropriated property and some aspect of such an attempted transaction took place in this country. The majority cites four cases presumably as support for the holding that the Hickenlooper Amendment is inapplicable because Hunt only acquired a contract right in the Concession Agreement. None of these cases, however, is directly on point, nor does any preclude a holding that a claim to property, granted by contract, is encompassed by the Hickenlooper Amendment. Of the four cases cited, only one actually involved a claim to tangible property that was expropriated and later brought into the United States. Although the scope of the act of state doctrine must be determined under federal law, see Sabbatino, 376 U.S. at 427, 84 S.Ct. 923, the majority has relied on two state court cases. The New York State Court of Appeals decision, French v. Banco Nacional de Cuba, 23 N.Y.2d 46, 295 N.Y.S.2d 433, 242 N.E.2d 704 (1968), is distinguishable from the case at bar. Plaintiff in that case was holding certain certificates of tax exemption that the Cuban Government would no longer redeem. These certificates purported to allow the holder to convert pesos into United States dollars and to take those dollars out of Cuba without paying any exportation tax. The New York Court found that French's only loss was occasioned by a change in Cuban currency regulations and did not therefore constitute a taking of property. [8] Furthermore, French involved no expropriated property, or proceeds thereof, brought into the United States. The plaintiff was seeking monetary recovery from an account maintained by Banco Nacional in New York City. The Hickenlooper Amendment was not intended to provide a remedy in this kind of situation. The Court did express, by obiter dicta, the opinion that the Hickenlooper Amendment would not apply to contract claims. The second state court case cited by the majority, Present v. United States Life Ins. Co., 96 N.J.Super. 285, 232 A.2d 863, aff'd, 51 N.J. 407, 241 A.2d 237 (1968), did not involve a taking of property as contemplated by the Hickenlooper Amendment, nor did it involve a violation of international law. [9] Menendez v. Saks and Co., 485 F.2d 1355 (2d Cir. 1973), cert. denied, 425 U.S. 991, 96 S.Ct. 2201, 48 L.Ed.2d 815 (1976), followed the United States Supreme Court decision in First National City Bank v. Banco Nacional de Cuba, 406 U.S. 759, 92 S.Ct. 1808, 32 L.Ed.2d 466 (1972), to avoid strict application of the act of state doctrine. The Court, in following that decision, concluded that despite the act of state doctrine a counterclaim limited to the amount sought by the foreign sovereign was enforceable. Menendez, 485 F.2d at 1373. The Court concluded that the Hickenlooper Amendment did not govern the counterclaim against Banco Nacional and, in dicta, cited French, supra . The denial of certiorari by the United States Supreme Court in no way reflects approval of the dicta regarding the Hickenlooper Amendment. [10] The only case cited that involved property allegedly expropriated and later brought into the United States was Occidental of Umm Al Qaywayn, Inc. v. Cities Service Oil Co., 396 F.Supp. 461 (W.D.La.1975), dismissed in part, reversed in part, 577 F.2d 1196 (5th Cir., 1978). Occidental sued Cities Service for the conversion of oil in three tankers, claiming that the oil had been produced from an area of the Persian Gulf in which Occidental held valid concession rights. Cities Service contended that it held the only valid concession rights to the area in dispute. Each company held a concession granted by one of the States bordering the Persian Gulf. The area covered by each concession was defined by the territorial waters of the State granting those rights. The boundary lines were in dispute between these governments, however, with each government claiming the area where this oil was produced. It was never clearly established that Occidental had valid concession rights in the area in dispute. The boundary dispute was the crucial factor that led the Fifth Circuit Court of Appeals to hold that the controversy between Occidental and Cities Service involved a political question and was therefore non-justiciable. 577 F.2d 1196. In light of that holding on appeal, I consider the portion of the district court's opinion stating that the Hickenlooper Amendment does not apply to contract claims to be of no significant precedential value. Occidental is further distinguishable from our case at bar because of the applicability of the second proviso of the Hickenlooper Amendment. That proviso precludes application of the amendment when the President determines that application of the act of state doctrine is required in that particular case by the foreign policy interests of the United States and a suggestion to this effect is filed on his behalf in that case with the court. A letter from the State Department was included in the Government's amicus curiae brief in Occidental wherein the opinion was expressed that it would be contrary to the foreign relations interests of the United States if our domestic courts were to adjudicate boundary controversies between third countries and in particular that controversy involved here. 577 F.2d at 1204, n. 13. Conversely, Hunt has produced expressions from the State Department supporting his pursuit of legal remedies in regard to the oil from the Sarir field, as will be discussed below. I do not find any of the cases above to be controlling in light of the clear Congressional intent, as discussed previously, to include contractual rights to property within the exception provided by the Hickenlooper Amendment. Indeed, I have been cited to no case, and have discovered no case, holding squarely that a claim to property, granted by contract, is not encompassed by the Hickenlooper Amendment. Finally, the amendment's application is not restricted to cases where the plaintiff has asserted a claim of title or other right to expropriated property. Rather, the amendment requires a determination on the merits in a case in which a claim of title or other right to property is asserted by any party ... based upon (or traced through) a confiscation or other taking. ... Therefore, by its language, the Hickenlooper Amendment applies if either the plaintiff, or the defendant, claims title or right to property based upon a taking by a foreign country. Clearly, Coastal States, the defendant here, is a party claiming the right to oil from the Sarir field based entirely upon Libya's taking of Hunt's concession rights. In this case, therefore, both the plaintiff, Hunt, and the defendant, Coastal States, are asserting claims of right to property that was expropriated by Libya.
The second proviso of the Hickenlooper Amendment exempts its application in any case with respect to which the President determines that application of the act of state doctrine is required in that particular case by the foreign policy interests of the United States and a suggestion to this effect is filed on his behalf in that case with the court. This provision avoids the situation that concerned the United States Supreme Court in Sabbatino : that judicial determinations of parties' rights might interfere with, or embarrass, the Executive Branch of the government. [11] There has been no such request filed with any court in this case. In fact, the Department of State has indicated its belief that the Hickenlooper Amendment was passed precisely to permit American courts to entertain suits such as this, brought in pursuit of hot oil; that the nationalization of Hunt's interest in the Sarir field by Libya violated international law; and that wherever possible Hunt should be supported in his pursuit of legal remedies. [12] It is apparent, therefore, that the Department of State has determined that adjudication of Hunt's claim by the judicial branch of our government will cause no serious harm or embarrassment to the conduct of foreign policy by the Executive Branch of our government.
The amendment also requires that the taking by the foreign state be in violation of the principles of international law, including the principles of compensation and the other standards set out in this subsection. The majority does not reach this question since it found the Hickenlooper Amendment inapplicable to the instant case on other grounds. Hunt contends that Libya's expropriation violated international law because it did not provide for prompt, adequate compensation and because it arbitrarily discriminated against him for a political purpose unrelated to any legitimate public interest. In my view, the Hickenlooper Amendment itself requires speedy compensation, equivalent to the full value of the expropriated property. The amendment refers to the principles of compensation and the other standards set out in this subsection as guidelines for the determination of the adequacy of compensation. That subsection, 22 U.S.C. 2370(e)(1), requires the President to suspend assistance to any country expropriating property owned more than 50% by United States' citizens if that government does not, within a reasonable time after the expropriation, take steps to discharge its obligations toward those citizens, including speedy compensation for such property in convertible foreign exchange, equivalent to the full value thereof, as required by international law .... The statute, therefore, anticipates that United States' citizens will receive the full value of their expropriated property and that such compensation will be forthcoming shortly after the expropriation takes place. Other authority indicates further that the United States expects compensation to its citizens for expropriated property to be reasonably prompt and to be for the full market value. [13] It is uncontested that Hunt received no compensation from Libya until approximately two years after the expropriation and that the compensation received at that time was limited to the net book value of the physical assets on the concession at the time of the nationalization. The nationalization decree purported to provide some measure of compensation to Hunt. However, the amount of compensation was to be determined by a committee appointed by Libya's oil minister, with no provision for Hunt to produce evidence as to the value of his interest in the Sarir field. Further, the decree explicitly precluded any appeal from the committee's decision. The Restatement of the Law (Second), Foreign Relations Law of the United States, § 185 (1965) states that the taking of property by a state is wrongful under international law if, among other things, there is not reasonable provision for the determination and payment of just compensation. Comment (e) elaborates on this requirement and explicitly refers to two elements of fairness which were denied Hunt: that an impartial tribunal or administrative authority determine his rights, and that he have a reasonable opportunity to obtain and present witnesses and evidence in his own behalf. I conclude that the compensation provisions of the nationalization decree were illusory and did not meet the requirements for adequate compensation. Coastal States points out that several countries, notably Latin American and Communist countries, do not acknowledge any duty to provide compensation to aliens for expropriated property. There is also disagreement among international law experts as to whether something less than full market value may constitute adequate compensation. However, in the case at bar, we have the additional consideration that the property was seized as a means of political and economic retaliation against the United States. The retaliatory nature of Libya's expropriation of Hunt's interest in the Sarir field is clearly shown in the text of a speech given by Libyan Chairman Mu'ammar al-Qadhafi at a celebration marking the third anniversary of the closing of the United States Air Force Base at Wheelus: The United States, which has suffered defeats everywhere, has not yet been taught the final lesson, especially when we see it being quarrelsome in the Arab world and completely siding with Israel... we say with a loud voice that this United States needs to be given a big hard blow on its cold insolent face in the Arab area. U.S. policy, brothers, is going to lead to a catastrophe for U.S. interest in the Arab area in particular. The time has come for the Arab peoples to confront the United States. The time has come for the U.S. interest to be threatened earnestly and seriously in the Arab area, regardless the cost .... The United States is still scorning the Arab nation and its rights. It is continuously giving Israel the most modern arms to enable it to humiliate the Arab nation or to conquer at its will or to remain unjustly in the occupied territory. Also, U.S. (arrogance) is now manifested in the attitude of the oil companies .... However, the time may come, if it has not already come, for the serious and dangerous confrontation to take placea confrontation the cost of which we must bearwith the oil companies and with the entire U.S. imperialism. On this occasion, the RCC of the Libyan Arab Republic has decided to nationalize the American oil company Bunker Hunt. (Emphasis added). There is generally a consensus among authorities that an uncompensated expropriation, when done as an act of retaliation, is contrary to international law. The Second Circuit Court of Appeals reviewed such authorities and concluded: Unlike the situation presented by a failure to pay adequate compensation for expropriated property when the expropriation is part of a scheme of general social improvement, confiscation without compensation when the expropriation is an act of reprisal does not have significant support among disinterested international commentators from any country. And despite our best efforts to deal fairly with political and social doctrines vastly different from our own, we also cannot find any reasonable justification for such procedure. Peacetime seizure of the property of nationals of a particular country, as an act of reprisal against that country, appears to this court to be contrary to generally accepted principles of morality throughout the world. Banco Nacional de Cuba v. Sabbatino, 307 F.2d 845, 866 (1962), reaffirmed in Banco Nacional de Cuba v. Farr, 383 F.2d 166, 183, cert. denied, 390 U.S. 956, 88 S.Ct. 1038, 20 L.Ed.2d 1151 (1968). I agree with the reasoning of the Second Circuit Court of Appeals and would hold that the expropriation of Hunt's interest in the Sarir field by Libya was without prompt, adequate compensation; that the expropriation was in retaliation against the United States; and that for these reasons the expropriation violated international law. I would reverse the summary judgment against Hunt and remand his suit against Coastal States for a determination on the merits. GREENHILL, C. J., and SPEARS, J., join.