Expropriation Claims in United States Courts: The Act of State Doctrine, the Sovereign Immunity Doctrine, and the Foreign Sovereign Immunities Act - A Road Map for the Expropriated Victim

Pace International Law Review Volume 8 Issue 1 Winter 1996 Article 5 January 1996 Expropriation Claims in United States Courts: The Act of State Doctrine, the Sovereign Immunity Doctrine, and the Foreign Sovereign Immunities Act - A Road Map for the Expropriated Victim Ronald Mok Follow this and additional works at: https://digitalcommons.pace.edu/pilr Recommended Citation Ronald Mok, Expropriation Claims in United States Courts: The Act of State Doctrine, the Sovereign Immunity Doctrine, and the Foreign Sovereign Immunities Act - A Road Map for the Expropriated Victim, 8 Pace Int'l L. Rev. 199 (1996) Available at: https://digitalcommons.pace.edu/pilr/vol8/iss1/5 This Article is brought to you for free and open access by the School of Law at DigitalCommons@Pace. It has been accepted for inclusion in Pace International Law Review by an authorized administrator of DigitalCommons@Pace. For more information, please contact . COMMENT EXPROPRIATION CLAIMS IN UNITED STATES COURTS: THE ACT OF STATE DOCTRINE, THE SOVEREIGN IMMUNITY DOCTRINE, AND THE FOREIGN SOVEREIGN IMMUNITIES ACT. A ROAD MAP FOR THE EXPROPRIATED VICTIM I. INTRODUCTION As American corporations and individuals increase their investments abroad, they are inevitably subject to political risks. Foreign countries often infringe on the property interests of the American investor. The taking of property by foreign sovereigns, under the guise of either eminent domain or nationalization, gives rise to litigation involving the legality of expropriation. "Unfortunately, the courts in the United States have not always done well in handling issues of international law, particularly in the expropriation context." 1 The United States courts are unwilling to adjudicate expropriation claims because of the act of state doctrine, the assertions of foreign sovereigns to immunity, and other related jurisdictional and political issues which limit the courts' power. This article will analyze these limitations on the courts' power. It will focus on the history and rationales of both the act of state doctrine and the theory of foreign immunities as shown by case law. It will then examine whether a claimant whose property has been expropriated can sue the foreign sovereign in the courts of the United States. This article provides an overview of the factors that an expropriated victim will encounter in suing a 1 Symposium, Adjudication of ForeignExpropriationsin U.S. Courts, 77 Am. SOC'Y INT'L L. PRoc. 335 (1985). 1 PACE INT'L L. REV. 200 [Vol. 8:199 foreign sovereign. The goal is to provide information in furtherance of the understanding of the act of state doctrine, the sovereign immunity doctrine, the foreign sovereign immunities statute, and other issues that can stand in the way of an expropriated claimant. Part II of the article begins with an historical approach to the background of the act of state doctrine and the sovereign immunity doctrine. It will show the definitions, origins, policies, and the comparisons of each doctrine. Part III provides the substantive analysis, starting with the international law on expropriation and the Executive Branch's view towards bringing a foreign sovereign into the United States courts. The discussion examines the Cuban expropriation cases which provide the impetus for the legislation limiting the act of state doctrine by the Hickenlooper Amendment, 2 and the codification of the sovereign immunity doctrine by the Foreign Sovereign Immunities Act. 3 The Hickenlooper4 Amendment and the FSIA will be introduced and analyzed, along with case law to show the interactions and interpretations of these statutes with the act of state and the sovereign immunity doctrines. Lastly, this article presents a synthesis of existing case law, explaining the subtleties presented by the cases, and evaluating the courts' performances in adjudicating expropriation claims. It is the author's final assessment that most expropriation victims will not be able to obtain relief from the United States judiciary due to its inclination to apply the act of state doctrine and its inconsistent interpretation of the FSIA. II. BACKGROUND A. The Act of State Doctrine The act of state doctrine took root in England as early as 1674, and sprouted in the jurisprudence of the United States in 2 22 U.S.C. § 2370(e)(2) (1994) [hereinafter Hickenlooper Amendment]. See infra note 86. 3 28 U.S.C. §§ 1330, 1602-1611 (1994) [hereinafter FSIA]. See infra notes 126, 132, 133. 4 For a pertinent article concerning the interaction of the act of state doctrine and the FSIA, see Ifeanyi Achebe, The Act of State Doctrine and ForeignImmunities Act of 1976: Can They Coexist? 13 MD J. IN'L L. & TRADE 247 (1989). https://digitalcommons.pace.edu/pilr/vol8/iss1/5 2 19961 EXPROPRIATION CLAIMS IN THE UNITED STATES 201 the late eighteenth and early nineteenth centuries. 5 The act of state doctrine holds that "the Judicial Branch will not examine the validity of a taking of property within its own territory by a foreign sovereign government ... in the absence of a treaty or other unambiguous agreement regarding controlling legal principles, even if the complaint alleges that the taking violates customary international law."6 In 1812, Justice Marshall in The Schooner Exchange v. M'Faddon7 articulated the concept of the act of state doctrine, though he did not specify it as such. There, the plaintiff sought attachment of a ship he claimed was forcibly 8 taken from him by order of Napoleon, the Emperor of France. The Supreme Court held that a nation's limitation on jurisdiction is its implied consent to waive its jurisdiction, 9 and justified the waiver of jurisdiction on diplomatic and policy grounds. 10 The act of state doctrine can be explained as follows: Every sovereign [s]tate is bound to respect the independence of every other sovereign [sitate, and the courts of one country will not sit in judgment on the acts of the government of another done within its own territory. Redress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves. 1 In 1918, the act of state doctrine was used to validate the takings of property by the Mexican government. In Oetjen v. Central Leather Co.,1 2 the plaintiff, the assignee of the original owner, sought to replevy property that the Mexican government seized from the original owner.' 3 The Supreme Court held that 5 Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 416 (1964). For comparisons of the usage of the act of state doctrine in other countries, see the list of citations found in Sabbatino, 376 U.S. at 421 n.21. 6 Id. at 428. 7 11 U.S. (7 Cranch) 116 (1812). 8 Id. Because the ship sailed into a United States seaport during a storm, the plaintiff attempted to invoke a United States court's jurisdiction. Id. at 118. 9 Id. at 146. 10 Id. 11 Underhill v. Hernandez, 168 U.S. 250, 252 (1897). This explanation is cited wi (...truncated)