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Sabbatino Resurrected: The Act of State Doctrine in the Revised Restatement of U.S. Foreign Relations Law

Published online by Cambridge University Press:  27 February 2017

Malvina Halberstam
Malvina Halberstam*
Affiliation:
Benjamin N. Cardozo School of Law, Yeshiva University
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Extract

Among the more controversial provisions of the Restatement of the Foreign Relations Law of the United States (Revised), are the sections dealing with the act of state doctrine in Tentative Draft No. 4. Section 428 provides: “Subject to §429, courts in the United States will refrain from examining the validity of an act of a foreign state taken in its sovereign capacity within the state’s own territory.” This provision, of course, is based on the Supreme Court decision in Sabbatino. The Court there stated, “the Judicial Branch will not examine the validity of a taking of property within its own territory by a foreign sovereign government” even if it is alleged that the taking is contrary to international law.

Type
Research Article
Information
American Journal of International Law , Volume 79 , Issue 1 , January 1985 , pp. 68 - 91
Copyright
Copyright © American Society of International Law 1985

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References

1 The Restatement of the Foreign Relations Law of the United States was adopted by the American Law Institute in 1962 and finally promulgated with revisions in 1965. Work on the Restatement (Revised) began in the late 1970s. Thus far, five tentative drafts have been completed and presented to the members of the Institute. The revised Restatement as a whole is scheduled to be considered at the May 1985 meeting of the Institute.

2 Restatement of the Foreign Relations Law of the United States (Revised) §§428 and 429 (Tentative Draft No. 4, 1983) [hereinafter cited as Tentative Draft No. 4]. This draft was considered by the members of the Institute at its 60th Annual Meeting, held in Washington, D.C., May 17–20, 1983. The greater part of the morning of May 19, at which Tentative Draft No. 4 was discussed, was devoted to discussion of these provisions. Other provisions that were subjected to considerable discussion and criticism at previous meetings include Jurisdiction (Tentative Draft No. 2 §§401 and ff., 1981) and Economic Injury to Nationals of Other States and Remedies for Such Injuries (Tentative Draft No. 3 §§712,713, 1982).

3 Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964).

4 Id. at 428.

5 See, e.g., Lillich, R., The Protection of Foreign Investment: Six Procedural Studies (1965)Google Scholar; McDougal, , Comments, 58 ASIL Proc. 48 (1964)Google Scholar; Jennings, , Comments, in The Aftermath of Sabbatino 87 (Tondel, ed. 1965)Google Scholar; Mann, , The Legal Consequences of Sabbatino, 51 Va. L. Rev. 604 (1965)CrossRefGoogle Scholar; Kline, , An Examination of the Competence of National Courts to Prescribe and Apply International Law: The Sabbatino Case Revisited, 1 U.S.F.L. Rev. 49 (1966)Google Scholar; Laylin, , Holding Invalid Acts Contrary to International Law—A Force toward Compliance, 58 ASIL Proc, supra, at 33 Google Scholar.

6 See, e.g., Henkin, , The Foreign Affairs Power of the Federal Courts: Sabbatino, 64 Colum. L. Rev. 805 (1964)CrossRefGoogle Scholar; Henkin, , Comments, in Act of State: Sabbatino in the Courts and in Congress, 3 Colum. J. Transnat’l L. 99, 107 (1964)Google Scholar; Cardozo, , Congress versus Sabbatino: Constitutional Considerations, 4 id. at 297 (1966)Google Scholar; Metzger, , Act of State Redefined: The Sabbatino Case, 1964 Sup. Ct. Rev. 23 Google Scholar.

7 The Hickenlooper Amendment was first adopted in 1964 as a rider to the Foreign Assistance Act of 1964, Pub. L. No. 88–663, §301(d)(4), 78 Stat. 1013 (1964). As originally adopted, it read:

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 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 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, or (3) in any case in which the proceedings are commenced after January 1, 1966.

For Senator Hickenlooper’s statement on the purpose of the amendment, see 110 CONG. REC. 19,546, 23,674–82 and App. 5757 (1964).

8 Section 620(e)(2) of the Foreign Assistance Act of 1965, Pub. L. No. 89–171, §301(d)(2), 79 Stat. 653, 659, as amended, 22 U.S.C. §2370(e)(2) (1982). The bracketed words “to property” were not in the amendment as enacted in 1964. See Foreign Assistance Act of 1964, §301(d)(4), quoted supra note 7. See also S. Rep. NO. 1188, 88th Cong., 1st Sess., pt. I, at 24 (1964).

9 Henkin, , Act of State Today: Recollections in Tranquility, 6 Colum. J. Transnat’l L. 175, 175(1967)Google Scholar.

10 Id. (emphasis added) (footnotes omitted).

11 Lowenfeld, , The Sabbatino Amendment—International Law Meets Civil Procedure, 59 AJIL 899 (1965)CrossRefGoogle Scholar (emphasis added) (footnote omitted).

12 Tentative Draft No. 4 §429 (emphasis added).

13 22 U.S.C. §2370(e)(2), supra note 8 (emphasis added). The amendment as originally adopted did not even include the words “to property,” which were added in the 1965 version. See supra notes 7 and 8. Although the amendment as currently in effect includes the words “to property,” it makes no reference to “specific” property, or to its being “located” in the United States. The property involved in the Sabbatino case itself was not in the United States when the action was brought and, indeed, had never been in the United States; only the bills of lading were here. Thus, unless the words “specific property located in the United States” in §429 are interpreted to include not only the actual tangible property that was confiscated, but documents for property, such as bills of lading, as well, the Restatement provision would require application of the act of state doctrine to the facts in Sabbatino, the very case the Hickenlooper Amendment was designed to reverse.

14 See, e.g., Banco Nacional de Cuba v. First Nat’l City Bank, 431 F.2d 394 (2d Cir. 1970), vacated and remanded, 400 U.S. 1019, 442 F.2d 530 (2d Cir. 1971), rev’d, 406 U.S. 759 (1972); French v. Banco Nacional de Cuba, 23 N.Y.2d 46 (1968); Johansen v. Confederation Life Ass’n, 312 F.Supp. 1056 (S.D.N.Y. 1970). For a discussion of the Second Circuit decision, summarizing the legislative history and criticizing the opinion, see Note, 11 VA. J. Int’l L. 406 (1971); Lillich, , International Law, in Annual Survey of New York Law, 22 Syracuse. L. Rev. 263, 269–80 (1970–71)Google Scholar. See also Note, A New Approach to the Act of State Doctrine: Turning Exceptions into the Rule, 8 Cornell Int’l L.J. 273 (1975). The French decision is discussed and criticized in Note, 11 Harv. Int’l L.J. 212 (1970); Note, Sabbatino Comes Full Circle: A Reconsideration in Light of Recent Decisions, 4 N.Y.U. J. Int’l L. & POL. 260 (1971). But see Comment, Sabbatino Property: A French Twist, 57 Geo. L.J. 1299 (1969).

It should be noted, however, that while the Second Circuit construes the exception created by the Hickenlooper Amendment narrowly, it does not give the act of state doctrine the broad application provided by §428. In Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300 (2d Cir. 1981), the court declined to apply the act of state doctrine, stating:

Act of state analysis depends upon a careful case-by-case analysis of the extent to which the separation of powers concerns on which the doctrine is based are implicated by the action before the court. . . . Here, adjudication of the legality of Nigeria’s and Central Bank’s challenged conduct does not threaten to embarrass the executive branch in its conduct of United States foreign relations, and hence does not seriously implicate the relevant policy considerations. . . . We are not being asked, as the Court was in Sabbatino, to judge a foreign government’s conduct under ambiguous principles of international law. These are not cases where the challenged governmental conduct is public rather than commercial in nature, . . . or where its purpose was to serve an integral governmental function. . . . Finally, the executive branch has not stated its views in these cases regarding either the propriety of applying the act of state doctrine . . . or the validity of the very governmental act sub judice. . . .

Id. at 316 n.38 (citations omitted). See also Kalamazoo Spice Extraction Co. v. Provisional Military Gov’t of Socialist Ethiopia, 729 F.2d 422 (6th Cir. 1984); Allied Bank Int’l v. Banco Credito Agricola de Cartago, 566 F.Supp. 1440 (S.D.N.Y. 1983); Razoulzadeh v. Associated Press, 574 F.Supp. 854 (S.D.N.Y. 1983).

15 In response to a question by Congressman Fraser, Cecil J. Olmstead, one of the main proponents of the amendment, stated:

[I]f 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. There would have to be other ways of seeking redress in that situation. Of course this amendment will only operate when some proceeds of the illegal expropriation turn up in the United States.

The Foreign Assistance Act of 1961: Hearings on H.R. 7750 Before the House Comm. on Foreign Affairs, 89th Cong., 1st Sess. 608 (1965) [hereinafter cited as House Hearings]. In a written statement submitted to amplify his interpretation of the Hickenlooper Amendment, Olmstead made clear that his view that the amendment would not apply if the property or proceeds thereof could not be found in the United States was based not on an interpretation of the Hickenlooper Amendment itself but on his belief that the doctrine of sovereign immunity, as then in effect, would bar the court from exercising jurisdiction. See House Hearings, supra, at 1306. Mr. Olmstead’s statement and insertions for the record are reprinted in The Foreign Assistance Program: Hearings Before the Senate Comm. on Foreign Relations, 89th Cong., 1st Sess. 731–34, 744–46 (1965) [hereinafter cited as Senate Hearings]. In a letter to the author, dated Feb. 23, 1984, commenting on an earlier draft of this article, Olmstead stated, “[A]s to the discussion in connection with the hearings on the so-called Hickenlooper Amendment, there was never any intention that the exception be limited to the specific property taken in violation of international law.”

Questioning another witness before the committee, Congressman Fraser said:

This gets to the second question, which to my mind is a much more important one. You have assumed throughout the discussion that the only time the Sabbatino amendment would have an effect is where a party in this country has acquired some kind of attachment, rights, some kind of jurisdiction in rem that attaches to the property that flows from or is related to the actual taking back in the other country.

I don’t read the amendment that way. . . . I read it to mean that if a private party in the United States can acquire jurisdiction in rem against the government of whose acts it complains, then they can go to court seeking to enforce their rights with respect to other property that was confiscated but which has no relationship to property that was attached in order to acquire jurisdiction.

In other words, I don’t read this amendment as saying they only can proceed where they actually get their hands on the property that flows from the property confiscated.

House Hearings, supra, at 1029. Congressman Fascell, on the other hand, stated, “It [the amendment] was never intended to apply to any property that doesn’t come here.” Id. at 1027. See also the colloquy between Congressman Fraser and Professor Stanley Metzger in id. at 1030. Even Senator Hickenlooper’s position on this point is not without ambiguity. Compare 110 Cong. Rec. 19,557 (1964) -with id. at 18,936. For a discussion of the legislative history, see R. Lillich, supra note 5, at 97–113; Lillich, supra note 14, at 269–80; Sabbatino Comes Full Circle, supra note 14, at 267–69; Note, 11 Harv. Int’l L.J., supra note 14, at 218–24; Note, 11 Va. J. Int’l L., supra note 14, at 408–16; Sabbatino Property, supra note 14, at 1299–1307; Reeves, , The Sabbatino Case and the Sabbatino Amendment: Comedy—or Tragedy—of Errors, 20 Vand. L. Rev. 429 (1966–67)Google Scholar.

A substitute amendment, submitted by the State Department, and explicitly limited to cases in which “title [is] asserted to property (or to the proceeds thereof) located in the United States,” was not adopted. See Senate Hearings, supra, at 728–29. However, the substitute amendment also required an affirmative determination by the Executive that application of the act of state doctrine would “not be consistent with the foreign policy interests of the United States”; moreover, it was received too late for consideration. See id. at 728. Thus, Congress’s failure to adopt the administration’s proposal is not necessarily indicative of a congressional intent to make the amendment applicable to situations in which the property was not in the United States.

16 See supra quote at note 10.

17 See infra note 44 and accompanying text.

18 See infra notes 104–108 and accompanying text.

19 Sabbatino, 376 U.S. at 428.

20 Id.

21 Kalamazoo Spice Extraction Co. v. Provisional Military Gov’t of Socialist Ethiopia, 729 F.2d 422 (6th Cir. 1984).

22 Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d at 316 n.38, quoted more fully supra in note 14.

23 Professor Henkin has suggested that the arguments in this paper would more appropriately be directed at the act of state doctrine than at the revised Restatement provisions, given the Supreme Court’s decision in Sabbatino. That, of course, raises the question as to whether the Restatement should foreshadow changes in the law or merely state what courts have held in the past. Professor Herbert Wechsler, the eminent director of the Institute for over 20 years, has made it clear that in his view the Restatement should be more than a formulation of what the courts have held and has vehemently opposed attempts to limit it to merely stating the established law. See Wechsler, , The Course of the Restatements, 55 A.B.A.J. 147 (1969)Google Scholar; Wechsler, , Restatements and Legal Change: Problems of Policy in the Restatement Work of the American Law Institute, 13 St. Louis U.L.J. 185 (1968)Google Scholar; Wechsler, , On Freedom and Restraint in the Restatements, 43 A.L.I. Annual Report 5–9 (1966)Google Scholar. He said, “[I]f we ask ourselves what courts will do in fact within an area, can we divorce our answers wholly from our view of what they ought to do, given the factors that appropriately influence their judgments, under the prevailing view of the judicial function?” 55 A.B.A.J. at 149 (emphasis added). He suggested as “a working formula” that “we [the Institute] should feel obliged in our deliberations to give weight to all of the considerations that the courts, under a proper view of the judicial function, deem it right to weigh in theirs.” Id. at 150, adding that he meant “the courts of last resort.” Id. at 149. In a letter to the author, Professor Wechsler observed:

Institute practice has always viewed the U.S. Supreme Court as a special case . . . and has felt obliged to state Supreme Court doctrine and decisions as they stand, reserving a critique for Comment or Reporters’ Notes. Whatever may be thought about the special case, I did not undertake to deal with it in anything I wrote.

I would suggest that even where there is a Supreme Court case in point, if the decision is not recent and has been substantially eroded by the refusal of a majority of the Court to reaffirm the principle in subsequent cases, the black-letter rule should not reassert the principle without qualification. Even viewing the Supreme Court as “a special case,” the act of state provisions in §§428 and 429 are unnecessarily rigid, given the limiting language in Sabbatino and subsequent Supreme Court decisions, as noted in the introduction and discussed more fully below, and as a number of Institute members pointed out during the discussion of these sections. See 60 A.L.I. Proc. 426–27 (Richard B. Lillich), 428 (Fred. L. Morrison), 428–29 (Monroe Leigh), 434–36 (Cecil J. Olmstead), 440–43 (Mark B. Feldman), 447 (Sigmund Timberg), 449–50 (Peter B. Trooboff) (1983). Urging the inclusion of an exception for human rights violations, Frederick A. Ballard stated: “I think you are hesitating because of the policy of The American Law Institute to just state what the law is. But I would remind you that the Institute has frequently, as our Director has put it, caught the movement of the law. . . .” Id. at 437. See also notes 89 and 117 infra.

24 See Baker v. Carr, 369 U.S. 186, 211–12 (1962).

25 376 U.S. at 428 (emphasis added).

26 Tentative Draft No. 4 §428 (emphasis added).

27 While the U.S. Constitution does not prohibit the taking of private property for a public purpose (see Hawaii Housing Auth. v. Midkiff, 104 S.Ct. 2321 (1984)), it prohibits the Government from doing so without just compensation. The Fifth Amendment provides, “nor shall private property be taken for public use without just compensation.” The Court in Sabbatino noted that “the possibility of payment” under the system provided for by the Cuban decree “may well be deemed illusory.” 376 U.S. at 402.

Clearly, the U.S. Constitution has no application to the conduct of a foreign government outside the United States. It is not clear, however, that the Constitution should have no application when a U.S. court is asked to enforce a foreign state act in the United States, in Justice White’s words, “to validate the lawless act.” See infra text accompanying note 29. It is at least arguable that constitutional limitations should apply in these circumstances. See infra notes 71–74 and accompanying text.

28 In this respect, the act of state doctrine goes further than the full faith and credit clause, which has been held not to require one state to enforce the judgment of another state that violates the Constitution. See, e.g., Thomson v. Whitman, 85 U.S. (18 Wall.) 457 (1873); William v. North Carolina II, 325 U.S. 226 (1945). Cf. Judge Dimock’s opinion in Banco Nacional de Cuba v. Sabbatino, 193 F.Supp. 375, 381 (S.D.N.Y. 1961) (“Even if we were to suppose a requirement of international law that a state afford full faith and credit to the acts of another state, such a requirement clearly would not extend to an act of state which was in violation of international law”).

29 376 U.S. at 439 (White, J., dissenting) (emphasis added).

30 Committee on International Law, Association of the Bar of the City of New York, A Reconsideration of the Act of State Doctrine in United States Courts 8 (1959). This suggested resolution was adopted with some minor textual changes at the Annual Meeting of the association on May 12, 1959, 1959 Y.B. A.B. City N.Y. 276.

31 House Hearings, supra note 15, at 1037 (citation omitted).

32 Castro’s action, nationalizing the property of U.S. citizens in retaliation for the lowering of Cuba’s sugar quota by the United States, is by no means an isolated instance of a foreign state’s confiscation of a U.S. citizen’s property as retaliation against the United States. Muammar Qaddafi, when nationalizing oil holdings of U.S. citizens in Libya, said, “We proclaim loudly that this United States needs to be given a big blow in the Arab area in its cold, insolent face.” 13 ILM 767, 770 (1974). For a discussion of the Libyan nationalization, see generally id. at 767–82. See also testimony of Henry Schuller at the hearings on the “International Rule of Law Act,” infra note 62, at 55–61, 88–104.

33 See, e.g., Justice White’s dissent in Sabbatino, 376 U.S. at 439 passim; Reeves, , The Act of State—Foreign Decisions Cited in The Sabbatino Case: A Rebuttal and Memorandum of Law, 33 Fordham L. Rev. 599, 618–70 (1964–65)Google Scholar; Olmstead, submission in House Hearings, supra note 15, at 593–96, and Senate Hearings, supra note 15, at 746–49; Olmstead, testimony in House Hearings, supra note 15, at 598–600, 1320–24; Henkin, id. at 1076–78; Katzenbach, id. at 1257–59.

34 376 U.S. at 423–24, 427.

35 Id. at 431–33.

36 Id. at 428–30, 434–35.

37 324 U.S. 30 (1945).

38 Jessup, , Has the Supreme Court Abdicated One of its Functions?, 40 Ajil 168 (1946)CrossRefGoogle Scholar.

39 Id. at 169. Compare Falk, R., The Role of Domestic Courts in the International Legal Order, at xii (1964)Google Scholar: “[D]omestic courts must struggle to become their own masters in international law cases. The executive must not be allowed, and must certainly not be invited, to control the outcome of judicial proceedings by alleging the precedence of foreign policy considerations.”

40 The Foreign Sovereign Immunities Act of 1976, 90 Stat. 2891, 28 U.S.C. §§1330, 1332, 1391, 1441, 1602–1611 (1976).

41 See, e.g., Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480 (1983); Pfizer Inc. v. Government of India, 434 U.S. 308 (1978); S & S Mach. Co. v. Masinexportimport, 706 F.2d 411 (2d Cir. 1983); United States v. County of Arlington, Va., 702 F.2d 485 (4th Cir. 1983).

42 See letter of John R. Stevenson to the Honorable E. Robert Seaver, Clerk of the Court, United States Supreme Court, Nov. 17, 1970, printed as an appendix to Banco Nacional de Cuba v. First Nat’l City Bank, 442 F.2d 530 (2d Cir. 1971).

43 425 U.S. 682(1976).

44 Letter from Monroe Leigh, the Legal Adviser, Department of State, printed as Appendix 1 to the plurality opinion of the Supreme Court in Alfred Dunhill of London, Inc. v. Republic of Cuba, id. at 706, 709, 710–11 (emphasis added).

45 See Contemporary Practice, 77 AJIL 142–43 (1983); Kalamazoo Spice Extraction Co. v. Provisional Military Gov’t of Socialist Ethiopia, 729 F.2d 422 (6th Cir. 1984).

46 See testimony of Davis R. Robinson in the hearings on the “International Rule of Law Act,” infra note 62, at 8. He cited the court decisions involving the Libyan nationalization as an example. Id.

47 376 U.S. at 427–33.

48 See articles cited supra note 5; see also Olmstead, House Hearings, supra note 15, at 576- 620, 1305–06, and Senate Hearings, supra note 15, at 731–34; Jennings, House Hearings, supra note 15, at 586–89, and Senate Hearings, supra note 15, at 739–43; Dean, House Hearings, supra note 15, at 584–86, and Senate Hearings, supra note 15, at 738–39; Stevenson, House Hearings, supra note 15, at 581–84, and Senate Hearings, supra note 15, at 734–39.

49 Hilton v. Guyot, 159 U.S. 113, 163 (1895), quoted in The Paquete Habana, 175 U.S. 677, 700 (1900). See also The Nereide, 13 U.S. (9 Cranch) 388, 423 (1815), in which Chief Justice Marshall stated that “the Court is bound by the law of nations, which is a part of the law of the land.”

50 175 U.S. 677 (1900).

51 Id. at 715–21 (dissenting opinion of Fuller, C.J., in which Harlan, J., and McKenna, J., concurred).

52 Id. passim.

53 See, e.g., cases cited supra note 49; Mosler, , L’Application du droit international public par les tribunaux nationaux, 91 Recueil des Cours 619 (1957 I)CrossRefGoogle Scholar; Barbuit’s Case, Cases Talb. 280 (1735) (“The law of nations . . . in its fullest extent was and formed part of the law of England . . .”); see also Triquet and others v. Bath, 97 Eng. Rep. 936 (K.B. 1764); West Rand Central Gold Mining Co. v. The King, [1905] 2 K.B. 391; The Rapid, 12 U.S. (8 Cranch) 153, 162 (1814); Memorandum, Senate Hearings, supra note 15, at 746–49.

54 See generally Henkin, L., Pugh, R., Schachter, O. & Smit, H., International Law, Cases and Materials 116–67 (1980)Google Scholar; Bishop, W., International Law, Cases and Materials 77–91 (3d ed. 1971)Google Scholar. See also R. Falk, supra note 39; McDougal, Senate Hearings, supra note 15, at 751–76; Memorandum, Senate Hearings, supra note 15, at 746–49.

55 Tentative Draft No. 1 § 103(a) (1980).

56 Jennings, The Sabbatino Controversy, Senate Hearings, supra note 15, at 739–40, and House Hearings, supra note 15, at 586–87. Jennings has since been appointed to the International Court of Justice.

57 Jessup, supra note 38, at 171–72.

58 Id. at 170.

59 Senate Hearings, supra note 15, at 751–52.

60 Committee on International Law, supra note 30, at 4 (emphasis added).

61 The resolution read:

Whereas it is important both for the redress of individual wrongs and for the realization of the rule of law in international affairs, that United States courts be encouraged to exercise the judicial function of inquiry into the validity under international law of the acts of foreign States when such inquiry is necessary to determine the rights of litigants and will not prejudice the conduct of the foreign relations of the United States;

Now therefore, be it resolved, that The Association of the Bar of the City of New York is of the view that the United States Department of State should make a public declaration to the effect that (1) it is the policy of the United States Government that United States courts consider themselves free from any restraint based on deference to the executive branch of Government and the conduct of this country’s foreign relations which prevents judicial inquiry into the validity under international law of the acts of foreign States whenever such inquiry is necessary for the determination of controversies within the jurisdiction of such a court and will neither violate recognized principles of sovereign immunity, to the extent such principles may be applicable, nor prejudice the conduct of the foreign relations of the United States; and (2) if the Department of State, after such notice as the court deems reasonable, does not indicate otherwise in a particular case, the absence of such prejudice shall be presumed.

Id. at 15–16 (emphasis added). The signatories to the report and suggested resolution included John R. Stevenson, subsequently Legal Adviser, Richard N. Gardner, Philip C. Jessup, subsequently a judge on the International Court of Justice, Professor Willis L. M. Reese, and Stephen M. Schwebel, currently a judge on the International Court of Justice. Monroe Leigh, who subsequently served as Legal Adviser, and Richard R. Baxter, who subsequently was appointed to the International Court of Justice, also expressed their opposition to the proposition that municipal courts should not decide questions of international law, as did other academicians and practitioners. See, e.g., Griffin, testimony on the “International Rule of Law Act,” infra note 62, at 62–75; Jennings, The Sabbatino Controversy, House Hearings, supra note 15, at 586–91, and Senate Hearings, supra note 15, at 739–44; Lillich, testimony on the “International Rule of Law Act,” infra note 62, at 124–29; Olmstead, House Hearings, supra note 15, at 576, and Senate Hearings, supra note 15, at 731; Schuller, testimony on the “International Rule of Law Act,” infra note 62, at 55–61, 88–104; Committee on International Law, supra note 30; Wallace, testimony on the “International Rule of Law Act,” infra note 62, at 22–30. But see Cardozo, supra note 6; Henkin, House Hearings, supra note 15, at 1060–74; Henkin (both references), supra note 6; Rabinowitz, testimony on the “International Rule of Law Act,” infra note 62, at 104–17.

62 S. 1434. Designated the “International Rule of Law Act,” the bill was introduced by Senators Mathias and Domenici in 1980 and reintroduced in 1982. It provides: “No court in the United States shall decline on the grounds of the federal act of state doctrine to make a determination on the merits in any case in which the act of state is contrary to international law.” The International Rule of Law Act: Hearings on S. 1434 Before the Subcomm. on Criminal Law of the Senate Judiciary Comm., 97th Cong., 1st Sess. (1981). Although extensive hearings were held before the Senate Judiciary Committee, no action has yet been taken.

63 Testimony of Davis R. Robinson on the “International Rule of Law Act,” supra note 62, at 8.

64 Judges Jessup, Baxter and Schwebel and Legal Advisers Stevenson, Leigh and Robinson. See supra note 61. Sir Robert Jennings, the British judge on the International Court, has also argued that municipal courts have an obligation to decide questions of international law. See supra text accompanying note 56. Justice Powell has stated, “Until international tribunals command a wider constituency, the courts of various countries afford the best means for the development of a respected body of international law.” First Nat’l City Bank v. Banco Nacional de Cuba, 406 U.S. 759, 774 (1972).

65 Falk, , Toward a Theory of the Participation of Domestic Courts in the International Legal Order: A Critique of Banco Nacional de Cuba v. Sabbatino, 16 Rutgers L. Rev. 1, 2 (1961)Google Scholar.

66 Id. at 8.

67 Id.

68 Id. at 38.

69 Id.

70 Id. at 21–23, 31.

71 334 U.S. 1 (1948).

72 Id. at 14, 19.

73 See, e.g., Chicago, Burlington & Quincy R.R. Co. v. Chicago, 166 U.S. 226 (1897); Thompson v. Consolidated Gas Corp., 300 U.S. 55 (1937) (invalidating an uncompensated taking); Berman v. Parker, 348 U.S. 26 (1954); Kirby Forest Indus, v. United States, 104 S.Ct. 2187 (1984).

74 While Shelley v. Kraemer involved racial discrimination and the equal protection clause, and may therefore be sui generis, its rationale would apply equally in this context. Moreover, the fear that a broad reading of Shelley would obliterate the distinction between private and governmental action and would, for example, bar the enforcement of state trespass laws against persons excluded from private property on racial grounds (see Gunther, G., Constitutional Law, Cases and Materials 1002–07 (10th ed. 1980)Google Scholar) has no application in this context.

75 See Dames & Moore v. Regan, 453 U.S. 654, 675–88 (1981); Henkin, L., Foreign Affairs and The Constitution 262–63 (1972)Google Scholar; Shanghai Power Co. v. United States, 4 Cl. Ct. 237 (1983). However, the Supreme Court was careful to limit its holding narrowly even on this point. It said:

We do not decide that the President possesses plenary power to settle claims, even as against foreign governmental entities. . . . But where, as here, the settlement of claims has been determined to be a necessary incident to the resolution of a major foreign policy dispute between our country and another, and where, as here, we can conclude that Congress acquiesced in the President’s action, we are not prepared to say that the President lacks the power to settle such claims.

453 U.S. at 688.

76 The United States relinquished the claims of U.S. citizens against France in exchange for France’s forgiveness of a breach of a treaty obligation by the United States. For a discussion of the case, see L. Henkin, supra note 75, at 263.

77 Id. (footnotes omitted).

78 453 U.S. 654 (1981).

79 Id. at 688–89 n.14.

80 Id. at 691 (footnote omitted).

81 Henkin, supra note 9, at 181.

82 This principle is codified in the criminal law of many states. See, e.g., Colombia Criminal Code (1967), Arts. 196–202; French Criminal Code (1960), Arts. 97, 99, 103–107; German Criminal Code (1961), §§47–49a; Greek Penal Code (1973), Arts. 45–49; Italian Penal Code (1978), Arts. 110–119; Criminal Code of Kenya (1967), §§20–22; Korean Penal Code (1960), Arts. 25, 28, 30–34; Criminal Code of the People’s Republic of China (1982), Arts. 19–20, 22–26; Criminal Code of the RSFSR (1972), Arts. 15, 17–19; Turkish Penal Code (1965), Arts. 64–67. See American Series of Foreign Penal Codes (1960–).

83 Draft articles on state responsibility, Art. 27, [1978] 2 Y.B. Int’l L. Comm’n, pt. 2, at 78, 99, UN Doc. A/CN.4/SER.A/1978/Add.1/pt.2. Indeed, it is arguable that even under the revised Restatement a state is not free to implement an illegal act of another state. Section 711, State Responsibility for Injury to Nationals of Other States, provides:

A state is responsible to another state for injury to a national of the latter state resulting from an official act or omission that violates

  • (a)

    (a) an internationally recognized human right;

  • (b)

    (b) any other personal right or interest of individuals of foreign nationality that is protected by international law; or

  • (c)

    (c) rights to property or other economic interests of persons, natural or juridical, of foreign nationality that are protected by international law, as provided in §712.

Tentative Draft No. 3 (1982).

84 Mann, , International Delinquencies before Municipal Courts, 70 Law Q. Rev. 181, 198 (1954)Google Scholar (emphasis added). Cf. Paust, , Federal Jurisdiction over Extraterritorial Acts of Terrorism and Nonimmunity for Foreign Violators of International Law under the FSIA and the Act of State Doctrine, 23 Va. J. Int’l L. 191, 220–32 (1982–83)Google Scholar (arguing that foreign state officials who engage in terrorist acts in violation of international law are not entitled to immunity from prosecution in the United States). He states:

If, for example, a foreign government or official violated international law and one of our courts recognized a claim to immunity, the court’s decision would have the undesirable effect of supporting illegality. The judiciary’s commitment to law would be compromised and its decision to tolerate illegality would be functionally the same as though the court had been an accomplice of the offending government.

Id. at 227.

85 Shelley v. Kraemer, 334 U.S. 1 (1948). See supra text accompanying notes 71–74.

86 See, e.g., McNabb v. United States, 318 U.S. 332, 345 (1943) (“a conviction resting on evidence secured through such a flagrant disregard of the procedure which Congress has commanded cannot be allowed to stand without making the courts themselves accomplices in willful disobedience of law”) (emphasis added); Terry v. Ohio, 392 U.S. 1, 12–13 (1968) (“The rule also serves another vital function—the imperative of judicial integrity”) (citing Elkins v. United States, 364 U.S. 206, 222 (1960)).

87 See supra text at note 81.

88 Tentative Draft No. 4 §428 Reporters’ Note 4.

89 Several members of the Institute urged qualification of the black-letter rule to indicate that the act of state doctrine does not apply to human rights violations. See, e.g., comments by Sigmund Timberg, 60 A.L.I. Proc. 423 (1983), and Richard B. Lillich, id. at 426–27. See generally id. at 423–30, 437–39, 447–48. Finally, Bennett Boskey suggested as a compromise that the sentence concerning human rights quoted above (see text at note 88 supra) be moved from the Reporters’ Notes to the Comment and Professor Henkin agreed to do so. Id. at 452–55.

90 Tentative Draft No. 4 §428 Reporters’ Note 4 (emphasis added). While the court in Filartiga v. Pena-Irala, 630 F.2d 876 (2d Cir. 1980), did not rule on the applicability of the act of state doctrine since the defense had not been raised below, it nevertheless noted “in passing” its doubt as to “whether action by a state official in violation of the Constitution and laws of the Republic of Paraguay, and wholly unratified by that nation’s government, could properly be characterized as an act of state.” Id. at 889. Given the tenor of the opinion and the extensive discussion of human rights under international law, it is probable that had the court believed it to be so, it would have also “noted in passing” that the act of state doctrine does not apply to human rights violations.

91 Tentative Draft No. 4 §428 Reporters’ Note 4.

92 E.g., treaty violations, see Vienna Convention on the Law of Treaties, UN Doc. A/CONF.39/27 (1969); Convention on the Prevention and Punishment of Crimes against Internationally Protected Persons, Including Diplomatic Agents, 28 UST 1977, TIAS No. 8532 (1977); treatment of aliens, see authorities cited infra note 94.

93 Compare 1 Oppenheim, L., International Law (1912)Google Scholar, “States only and exclusively are subjects of the Law of Nations” with Lauterpacht’s edition of 1 Oppenheim (1955), that one can “no longer countenance the view that, as a matter of positive law, States are the only subjects of International Law. . . . [T]here must be an increasing disposition to treat individuals, within a limited sphere, as subjects of International Law,” quoted in Sohn, L. & Buergenthal, T., International Protection of Human Rights 1, 6 (1973)Google Scholar. See also Sohn, , The New International Law: Protection of the Rights of Individuals Rather than States, 32 Am. U. L. Rev. 1, 19 (1982)Google Scholar. “[A] State’s own citizens were almost completely at its mercy, and international law had little to say about mistreatment of persons by their own government.”

94 See, e.g., West Rand Central Gold Mining Co. v. The Kings, [1905] 2 K.B. 391; Chorzów Factory case, 1928 PCIJ, ser. A, No. 17, 1 World Ct. Rep. 646; 3 Hackworth, G., Digest of International Law 655–65 (1942)Google Scholar; U.S. Dep’t of State, 19 Press Releases 50, 136, 139, 165 (1938) (United States-Mexico discussions on expropriations); see generally 2 Whiteman, M., Damages in International Law 900–29, 1385–1413 (1937)Google Scholar. See also Comment, The Act of State Doctrine—Its Relation to Private and Public International Law, 62 Colum. L. Rev. 1278, 1297–1302 (1962). For international arbitration awards regarding international scrutiny of confiscation of alien property, see, e.g., Marguerite de Joly de Sabla (U.S. v. Pan.), American and Panamanian General Claims Arbitration 432, 447, 6 R. Int’l Arb. Awards 358, 366 (1933) (“acts of a government in depriving an alien of his property without compensation impose international responsibility”); accord Norwegian Shipowners’ Claims (Nor. v. U.S.), Hague Ct. Rep. 2d (Scott) 36, 69, 1 R. Int’l Arb. Awards 307, 334 (Perm. Ct. Arb. 1922).

95 For the position that other states do not have a similar rule, see Justice White’s dissent in Sabbatino, 376 U.S. at 439–41, 446; the testimony of Cecil Olmstead in the hearings on the Hickenlooper Amendment, Senate Hearings, supra note 15, at 743–44, 746–49, and House Hearings, supra note 15, at 590–91, 593–96. For the position that other states do have a similar rule, see Reeves, supra note 15, at 541–63; Reeves, supra note 33.

96 [1981] 3 All E.R. 616, [1981] 3 W.L.R. 787. For a discussion of the act of state doctrine in England, criticizing its extension in Buttes, see Jones, , Act of Foreign State in English Law: The Ghost Goes East, 22 Va. J. Int’l L. 433 (1982)Google Scholar.

97 Tentative Draft No. 4 §428 Reporters’ Note 11.

98 Buttes, [1981] 3 All E.R. at 616.

99 38 U.S. (13 Pet.) 415 (1839).

100 Occidental of Umm al Qaywayn v. A Certain Cargo, 577 F.2d 1196, 1204 (5th Cir. 1978), cert, denied, 442 U.S. 928 (1979). A letter from the Legal Adviser, included in the Government’s amicus curiae brief, stated, in part:

It is our view 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.

. . . .

We do not believe that this judicial self-restraint should turn on . . . the so-called Act of State doctrine. . . . It rather follows from the general notion that national courts should not assume the function of arbiters of territorial conflicts between third powers even in the context of a dispute between private parties.

577 F.2d at 1204 n.13. For a discussion of that case, see Insley, & Woolridge, , The Buttes Case: The Final Chapter in the Litigation, 32 Int’l & Comp. L.Q. 62 (1983)CrossRefGoogle Scholar.

101 [1981] 3 All E.R. at 630. A British commentator stated that “Lord Wilberforce was invoking and applying a notion of non-justiciability akin to the U.S. political question doctrine.” Jones, , supra note 96, at 466. Compare Occidental of Umm al Qaywayn, 577 F.2d 1196 (5th Cir. 1978)Google Scholar.

102 [1981] 3 All E.R. at 633.

103 Id.

104 Chief Justice Burger and Justices White, Rehnquist and Powell.

105 376 U.S. at 439–72.

106 First Nat’l City Bank v. Banco Nacional de Cuba, 406 U.S. 759, 774 (1972).

107 W. at 774–75.

108 Id. at 768.

109 Texas v. Brown, 103 S.Ct. 1535, 1540 (1983).

110 See supra notes 5 and 48 and accompanying text.

111 See supra notes 7 and 8.

112 See supra note 44 and accompanying text.

113 See supra text at notes 104–108.

114 See supra quote at note 46.

115 Following statements by several members of the Institute, urging greater flexibility, Professor Henkin agreed to insert the word “generally” or “ordinarily” in §428 and to modify the comments somewhat. Even as modified, the proposed provision would not take sufficient cognizance of the caveats in Sabbatino and of the subsequent developments. As Mark Feldman stated:

[S]ince the Sabbatino decision . . . there has not been any decision of the Supreme Court . . . and there has not been any position by the United States Congress or by the Executive Branch supportive of the act of state doctrine in the expropriation context.. . . [I]n every case the Court has put together a majority against the application of the act of state doctrine.

60 A.L.I. Proc. 440–41 (1983). For a discussion of the role of the Restatement, see supra note 23.

116 For the text of the proposed resolution, see supra note 61.

117 Whether U.S. antitrust laws or foreign laws should apply to conduct abroad that has an effect on trade in the United States involves complex and controversial questions of law and policy beyond the scope of this article. For the approach suggested by the Restatement, see Tentative Draft No. 2 §§403, 415. See also Tentative Draft No. 3 §419. For a summary of the U.S. cases on point, see §415 Reporters’ Note 2. It should be noted, however, that a rejection of the act of state doctrine would not necessarily deprive those who engage in conduct abroad that is either permitted or required by the foreign law but a violation of U.S. law of the protection of the foreign law, which is now sometimes invoked under the act of state doctrine. The act of state doctrine as applied in Sabbatino and as set forth in §428 requires U.S. courts to enforce the foreign act in those cases to which it applies without considering its validity under international law. Rejection of this doctrine would permit the courts to consider the validity of the foreign act under international law. But if the foreign act does not violate international law, it would still be applied to those cases to which it is otherwise applicable. Since both the U.S. laws that prohibit restraint of trade and the laws of other countries that permit or in some instances require conduct that results in limiting competition are valid under international law, adoption of the approach suggested by the New York City Bar Association (see supra notes 60–61 and accompanying text) or by the Mathias bill (see supra note 62) would not preclude application of the foreign law.

118 Whether the courts should be foreclosed from making such a determination by an executive decision that a judicial determination would be detrimental to U.S. foreign relations raises complex questions concerning the appropriate role of the courts in our constitutional system. Judge Jessup and Justice Powell have taken the position that even in those circumstances, automatic deference by the courts to the Executive is an abdication of the judicial function. See supra notes 38 and 107 and accompanying text.

119 369 U.S. 186 (1962). See also Occidental of Umm al Qaywayn v. A Certain Cargo, 577 F.2d 1196 (5th Cir. 1978), cert, denied, 442 U.S. 928 (1979).