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The United States—Hungarian Claims Agreement of 1973

Published online by Cambridge University Press:  28 March 2017

Richard B. Lillich
Richard B. Lillich*
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Of the Board of Editors
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Extract

Over a quarter century after most of them arose, an agreement settling claims of the United States against Hungary was signed at Washington on March 6, 1973. Under its terms Hungary will pay a lump sum of $18,900,000 in settlement of the claims of the United States and its nationals arising out of war damage, nationalization of property, and certain financial debts. Like the Rumanian and Bulgarian lump sum agreements of 1960 and 1963, upon which it is modeled, the Hungarian Agreement constitutes a unique development in international claims practice, for it follows the “preadjudication” of most of the claims by the Foreign Claims Settlement Commission (FCSC), a U.S. national claims commission acting pursuant to Title III of the International Claims Settlement Act. Although the claims against the three former Axis satellites now have been settled internationally, other preadjudicated claims under Titles III (Soviet Union), IV (Czechoslovakia), and V (Cuba and China) of the same act still remain outstanding. The present agreement, therefore, merits analysis not only in its own right, but also for what it reveals about the technique of preadjudication and the international claims settlement process generally.

Type
Research Article
Information
American Journal of International Law , Volume 69 , Issue 3 , July 1975 , pp. 534 - 559
Copyright
Copyright © American Society of International Law 1975

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References

1 Agreement with Hungary, March 6, 1973, [1973] 1 UST 522, TIAS No. 7569, 1 R. Lillich & B. Weston, International Claims: Their Settlement by Lump Sum Agreements app. B (1975) [hereinafter cited as Lillich & Weston]. Congress recently enacted legislation implementing the agreement. Pub. L. No. 93-460, §1, 88 Stat. 1386 (Oct. 20, 1974).

2 Art. 2(1)-(3). Article 2(4) settles a mixed governmental and private claim. See text at notes 93-99 infra.

3 Agreement with Rumania, March 30, 1960, [1960] 1 UST 317, TIAS No. 4451, 2 Lillich & Weston 217. See Christenson, , The United States-Rumanian Claims Settlement Agreement of March 30, 1960, 55 AJIL 617 (1961)CrossRefGoogle Scholar [hereinafter cited as Christenson].

4 Agreement with Bulgaria, July 2, 1963, [1963] 1 UST 969, TIAS No. 5387, 2 Lillich & Weston 266. See Lillich, , The United States—Bulgarian Claims Agreement of 1963, 58 AJIL 686 (1964)Google Scholar [hereinafter cited as Lillich].

5 The term refers to the Foreign Claims Settlement Commission’s unilateral determination of claims against a foreign country before the conclusion of a lump sum agreement with it. See R. Lillich, The Protection of Foreign Investment: Six Procedural Studies ch. V (1965).

6 See generally Lillich, R., International Claims: Their Adjudication by National Commissions (1962)Google Scholar.

7 International Claims Settlement Act of 1949, as amended, 22 U.S.C. §1641 (1970).

8 Id. The FCSC rendered 1,925 awards amounting to $129,058,893, including $70,466,019 in principal and $58,592,874 in interest, against the Soviet Union for claims arising prior to November 16, 1933. See FCSC, Dec. & Ann. 297 (1968) [hereinafter cited as FCSC].

9 International Claims Settlement Act of 1949, as amended, 22 U.S.C. §1642 (1970). See Lillich, The Gravel Amendment to the Trade Reform Act of 1974: Congress Cheekmates a Presidential Lump Sum Agreement, to be published in a forthcoming issue of this Journal.

10 International Claims Settlement Act of 1949, as amended, 22 U.S.C. §1643 (1970). See Murphy, , Claims Against the Republic of Cuba, 27 U. Miami L. Rev. 372 (1973)Google Scholar, and Redick, , The Jurisprudence of the Foreign Claims Settlement Commission: Chinese Claims, 67 AJIL 728 (1973)CrossRefGoogle Scholar.

11 Treaty of Peace with Hungary, Feb. 10, 1947, Art. 26(1), 61 Stat. 2065, TIAS No. 1651, 4 C. Bevans, Treaties and Other International Agreements of the United States of America 1776-1949, at 453 (1970). See text accompanying note 16 infra.

12 Art. 26(4)(a).

13 Art. 26(9)(a).

14 See Doman, , Postwar Nationalization of Foreign Property in Europe, 48 colum. L. Rev. 1125, 1152-54 (1948)Google Scholar; id., Compensation for Nationalised Property in Post-War Europe, 3 Int’l L.Q. 323, 338-39 (1950); Drucker, , The Nationalisation of United Nations Property in Europe, in 36 Transact. Grot. Soc’y 75, 92-93 (1951)Google Scholar; and Gutteridge, , Expropriation and Nationalisation in Hungary, Bulgaria and Roumania, 1 Int’l & Comp. L.Q. 14 passim (1952)CrossRefGoogle Scholar.

15 Telegram from the Minister in Hungary to the American Delegation at the Council of Foreign Ministers in Paris, [1946] 6 Foreign Rel. U.S. 284-85 (1969). Although the claims subsequently filed came to $225,816,966, the FCSC rendered awards amounting to only $80,296,047. FCSC 157. See text at note 32 infra.

16 Rubin has argued that the Hungarian nationalizations violated not only customary international law, but also the Peace Treaty as well. Rubin, , The Almost-Forgotten Claimant: American Citizens’ Property Rights Violated, 40 A.B.A.J. 961, 962 (1954)Google Scholar. But cf. Sipkov, , Postwar Nationalizations and Alien Property in Bulgaria, 52 AJIL 469, 478 (1958)Google Scholar, who contends that the identical Bulgarian Peace Treaty “does not contain any clauses guaranteeing that United Nations nationals will enjoy their property rights or in case of expropriation will be paid according to international law.” In any event, customary international law requires the payment of just compensation. See generally 1-3 The Valuation of Nationalized Property in International Law passim (R. Lillich ed. & contrib. 1972-1975).

The position of the United States at the time was more realistic than legalistic. During the period of the armistice, it refused to recognize Hungary’s right to nationalize property representing United Nations interests. Telegram from the Minister in Hungary to the American Delegation at the Council of Foreign Ministers in Paris, [1946] 6 Foreign Rel. U.S. 285 (1969). See Telegram from the Secretary of State to the Legation in Hungary, [1947] 4 Foreign Rel. U.S. 300-01 (1972). In principle, it maintained that Hungary continued to be similarly restricted under Article 26(1) of the Peace Treaty but, as a practical matter, it refrained from challenging Hungary’s right to nationalize U.S. property and concentrated instead upon obtaining “prompt, adequate and effective” compensation. Id. at 366.

17 For a brief description of the incident, see text accompanying note 93 infra. Shortly thereafter the United States ordered the closure of all Hungarian consulates in the United States. 26 Dept. State Bull. 7 (1952).

18 As it had in the case of Yugoslavia. See R. Lillich, supra note 6, at 106-08. See also text accompanying note 166 infra.

19 Act of Oct. 6, 1917, ch. 106, 40 Stat. 411 (1917), as amended, 50 U.S.C. App. §§1-40 (1970).

20 3 C.F.R. 645 (comp. 1938-1943).

21 Domke, M., The Control of Alien Property 305 (1947)Google Scholar. Article 29(1) of the Treaty of Peace reads:

Each of the Allied and Associated Powers shall have the right to seize, retain, liquidate or take any other action with respect to all property, rights and interests which at the coming into force of the present Treaty are within its territory and belong to Hungary or to Hungarian nationals, and to apply such property or the proceeds thereof to such purposes as it may desire, within the limits of its claims and those of its nationals against Hungary or Hungarian nationals, including debts, other than claims fully satisfied under other Articles of the present Treaty. All Hungarian property, or the proceeds thereof, in excess of the amount of such claims, shall be returned.

22 See Rubin, supra note 16, at 1007-09. But see H.R. Rep. No. 624, 84th Cong., 1st Sess. 13 (1955). As far back as 1947, Secretary of State Marshall had taken the position that the assets were available for distribution to all U.S. claimants. “Ultimate possibility should be kept in mind this connection that, should other means not be agreed upon, US might obtain at least partial compensation for land, together with other unsatisfied claims under Art 29, from Hun assets available to US under that Article of Treaty.” Telegram from the Secretary of State to the Legation in Hungary, [1947] 4 Foreign Rel. U.S. 366 (1972).

23 International Claims Settlement Act of 1949, as amended, 22 U.S.C. §1631 (1970). By Executive Order 10644 of Nov. 8, 1955, 3 C.F.R. 281 (comp. 1954-1958), the President authorized the Attorney General to perform the functions granted to the President by Title II. See text at and accompanying notes 35 & 42 infra.

24 See note 7 supra. Titles II and III established similar procedures with respect to Bulgaria and Rumania. See Clay, , Relief for War Victims: Recent Foreign Claims Legislation, 42 A.B. AJ. 337 (1956)Google Scholar, and Ujlaki, , Compensation for the Nationalization of American-Owned Property in Bulgaria, Hungary and Rumania, 1 N.Y.L.F. 265 (1955)Google Scholar.

25 International Claims Settlement Act of 1949, as amended, 22 U.S.C. §1641(2) (1970). Compare the broader eligibility requirements of the Treaty of Peace in the text at note 13 supra.

26 The term includes both foreign and ineligible U.S. corporations. Since a stockholder may have a compensable claim based upon his interest in the latter, i.e., in a U.S. corporation which fails to meet the 50 percent test, the term is more accurate than the traditional but unduly narrow one of “foreign” corporation, used loosely by the FCSC in the past. See, e.g., Settlement of Claims by the Foreign Claims Settlement Commission of the United States and Its Predecessors 224 (1955).

27 International Claims Settlement Act of 1949, as amended, Act of Aug. 9, 1955, ch. 645, 69 Stat. 573 (1955). Of course, if the corporation itself was an eligible claimant, its stockholders were barred from bringing claims. International Claims Settlement Act of 1949, as amended, 22 U.S.C. §1641j(a) (1970). Compare the seemingly more liberal eligibility requirements of the Treaty of Peace in the text at note 13 supra.

28 International Claims Settlement Act of 1949, as amended, 22 U.S.C. §1641j(b) (1970). “The effect of this amendment was that the prerequisite of 25% United States interest applied only in cases where the claim was based upon indirect ownership interest in the corporation which sustained the loss, such as ownership of stock in a Belgian corporation which in turn owned stock in a [Hungarian] corporation.” FCSC 184. Also, it “related only to [nationalization] claims under Section 303(2) of the Act. Thus, where [Peace Treaty] claims under Section 303(1) of the Act were involved, the original provisions . . . applied, irrespective of whether the interests in the corporations in question were direct or indirect.” FCSC, Tenth Semiann. Rep. 121 (1959).

29 International Claims Settlement Act of 1949, as amended, 22 U.S.C. §1641o (1970). “The claims program was completed on August 9, 1959, as specifically provided under the terms of the enabling statute.” Hearing on the United States—Hungarian Claims Agreement Before the Senate Comm. on Foreign Relations, 93d Cong., 2d Sess. 2 (1974) (statement of Wayland D. McClellan, General Counsel, FCSC) [hereinafter cited as Senate Hearing].

30 International Claims Settlement Act of 1949, as amended, 22 U.S.C. § 1641b (1970).

31 FCSC 157. By way of comparison, the Commission handled only 1,464 claims against Bulgaria and Rumania combined. Id. at 157-58.

32 Id. at 157. The FCSC’s opinions in the most important Hungarian claims may be found in FCSC, Tenth Semiann. Rep. 27-87 (1959). Selected opinions also may be found in FCSC 159-264 passim.

33 Id. at 157.

34 Id. The FCSC allowed interest on nationalization and financial debt claims to August 9, 1955. Id. at 190-97. In recent testimony before Congress, representatives of the FCSC did not mention the interest outstanding and the Congressmen present did not raise the point. Senate Hearing 2 (statement of Wayland D. McClellan, General Counsel, FCSC); Hearing on Hungarian Claims Legislation Before the Subcomm. on Europe of the House Comm. on Foreign Affairs, 93d Cong., 2d Sess. 4 (1974) (statement of J. Raymond Bell, Chairman, FCSC) [hereinafter cited as House Hearing], Excluding interest from the compensation calculation naturally inflates the percentage return supposedly obtained under the present agreement. Compare text at note 156 infra with text at and accompanying note 165 infra.

35 Senate Hearing 2 (statement of Wayland D. McClellan, General Counsel, FCSC); House Hearing 5 (statement of J. Raymond Bell, Chairman, FCSC). This figure represents the net amount in the Hungarian Claims Fund “[a]fter deducting an amount equivalent to 5 percent of the proceeds for reimbursement to the United States for expenditures incurred by the Commission in carrying out its functions with respect to these claims. . . .” Id. Cf. Rubin, supra note 16, at 1007 n.4.

Other figures on the amount of the fund vary. The FCSC, for instance, previously had given it as $1,653,647.09. FCSC 157. See Freidberg, & Lockwood, , The Measure of Damages in Claims Against Cuba, in 1 The Valuation of Nationalized Property in International Law 116, 130 (Lillich, R. ed. & contrib. 1972)Google Scholar. Article 6(2)(ii) of the present agreement, on the other hand, fixes it at $3,318,614. See S. Rep. No. 93-1095, 93d Cong., 2d Sess. 2 (1974).

36 Under the provisions of Title III, the principal amounts of awards under $1,000 were paid in full, “plus approximately 1.5 percent of the principal amounts of awards in excess of $1,000.” Senate Hearing 2 (statement of Wayland D. McClellan, General Counsel, FCSC). Accord, House Hearing 5 (statement of J. Raymond Bell, Chairman, FCSC). A former FCSC Commissioner previously had given a general figure of 2.8 percent. Freidberg & Lockwood, supra note 35, at 130.

37 International Claims Settlement Act of 1949, as amended, 22 U.S.C. §1641Z (1970).

38 S. Rep. No. 93-1095, 93d Cong., 2d Sess. 2 (1974). The preadjudication of Hungarian claims prior to the negotiation of the present agreement naturally placed certain political, if not constitutional, limitations upon the Department of State’s traditional freedom in the negotiating process. See Lillich 690-91. Accord, Christenson 620-21, 632.

39 Art. 1(1). See note 32 supra. In addition to paying $18,900,000, Hungary also agreed to relinquish all claims it may have had in respect of vested assets valued at $3,318,614. Art. 6(2)(ii). See text at and accompanying note 35 supra. Hence the total amount of compensation available for distribution eventually should reach $22,218,614. Senate Hearing 29.

40 Art. 4(1). Hungary has paid two installments of $945,000 and $984,000 in 1973 and June 1974 respectively. “The increased amount [of the second installment] is the result of a payment accelerator clause in [Article 4(2) of] the agreement based upon Hungarian exports to the United States.” House Hearing 2 (statement of Fabian A. Kwiatek, Assistant Legal Adviser, Department of State). See text at and accompanying note 168 infra.

41 Art. 6(1). Moreover, under Article 6(3):

neither Government will present to the other on its behalf or on behalf of any person included in the definition of United States or Hungarian nationals any claims which have been referred to in this Agreement and neither Government will support such claims. In the event that such claims are presented directly by nationals of one country to the Government of the other, such Government will refer them to the Government of the national concerned.

42 Art. 8 (emphasis added). Compare Articles 6 and 4 of the Rumanian and Bulgarian lump sum agreements respectively, where the United States agreed to unblock all their remaining property in the United States. Presumably, most of this property consisted of the assets of natural persons residing in Rumania or Bulgaria, whose assets had not been vested or liquidated pursuant to Title II. See text at note 23 supra. In the case of Hungary, such assets once were estimated at $2,683,189. Rubin, supra note 16, at 1007 n.4. Since 1960, when payments from blocked accounts were licensed, this amount has been run down to “approximately $1 million.” Senate Hearing 31 (letter from Marshall Wright, Acting Assistant Secretary for Congressional Relations, to Senator Fulbright). See text at note 167 infra.

43 See text at and accompanying note 169 infra.

44 Art. 5. This phrase refers to Title III, which authorized preadjudication, and to the legislation implementing the agreement providing for the FCSCs adjudication of certain additional claims. See text at notes 63-64 & 93-99 infra. Additional legislation was needed to enable the FCSC to handle such claims, since under Title I it was without jurisdiction to adjudicate claims after lump sum agreements with “governments against which the United States declared the existence of a state of war during World War II. . . .” International Claims Settlement Act of 1949, as amended, 22 U.S.C. §1623(a) (1970).

It is worth noting that a frequently overlooked 1896 statute gives the Department of State authority to perform this function if it so desires. Act of Feb. 27, 1896, ch. 34, 29 Stat. 32 (1896), 31 U.S.C. §547 (1970). See R. Lillaich, supra note 6, at 35 n.121. But cf. House Hearing 2 (statement of Fabian A. Kwiatek, Assistant Legal Adviser, Department of State): “The first amendment in the proposed bill . . . will transfer the funds received under the agreement into the Hungarian Claims Fund. Unless such action is taken, the lump-sum settlement fund cannot be used to pay any claim.”

45 Art. 5. Like its two counterparts, but unlike Article 5A of the Agreement with Poland, July 16, 1960, [1960] 2 UST 1953, TIAS No. 4545, 2 Lnxich & Weston 227, and Article 4 of the Agreement with Yugoslavia, Nov. 5, 1964, [1965] 1 UST 1, TIAS No. 5750, 2 Lillich & Weston 308, the present agreement omits any undertaking by the foreign country to furnish all documents in its possession necessary to a just determination of the claims. While most of the claims under the Hungarian Agreement already have been determined, making such an undertaking superfluous as to them, it might have facilitated the task of new nationalization claimants who still have to establish their right to awards before the FCSC. See text at notes 63-64 infra.

46 Arts. 1(1) of the Rumanian and Bulgarian lump sum agreements.

47 See text at note 24 supra.

48 See the Negotiating Record Regarding the 1951 Aerial Incident attached to the Hungarian Agreement, note 97 infra.

49 In an Exchange of Notes constituting Annex B, Hungary states, with reference to these claims, “that all the obligations of the Government of the Hungarian People’s Republic set out in Article 27 of the Treaty of Peace with Hungary signed in Paris on February 10, 1947 have already been fulfilled.” In its reply, the United States records that it “has taken note of [this] statement,” diplomatic language indicating disagreement with it. For other lump sum agreements concluded by Hungary containing similar caveats, see the Canadian-Hungarian Agreement, June 1, 1970, [1970] Can. T.S. No. 17, 1 Lillich & Weston app. B; the Dutch-Hungarian Agreement, July 2, 1965, [1965] Trb. nr. 181, 564 UNTS 49, 2 Lillich & Weston 316; and the Norwegian- Hungarian Agreement, Feb. 22, 1957, [1957] St. prp. nr. 64, 2 Lillich & Weston 147.

50 See text at notes 13 & 25 supra. FCSC 159-68. This requirement has been carried over into Article 2 of the Hungarian Agreement. Other countries concluding lump sum agreements with Hungary have required their nationality only at the date of the agreement, thus allowing war damage claimants to benefit from the Peace Treaty’s more liberal eligibility provisions. See, e.g., Article 3(1) of the Canadian-Hungarian Agreement, note 49 supra.

51 See text at and accompanying notes 25-28 supra. FCSC 180-85.

52 “Comparing the foregoing domestic law with the settlement agreement, which necessarily incorporates the nationality and ownership provisions of [Title III], it is evident that any United States claimants with rights under the Treaty of Peace can receive nothing more than was provided under that law.” Christenson 629.

53 See Lillich 697-98.

54 Id. at 693.

55 Id. at 703-04.

56 See text at note 13 supra.

57 But see Christenson 629: “If there are any [peace] treaty claimants who were ineligible under [Title III], the agreement should not be used as an argument to seek any greater rights than Congress has already provided after careful consideration.”

58 See note 12 supra.

59 International Claims Settlement Act of 1949, as amended, 22 U.S.C. §1641b(1) (1970).

60 See Article 1(1)(a) of the Agreements with Rumania and Bulgaria, notes 3 & 4 supra.

61 Since Peace Treaty claimants will receive nowhere near two-thirds of their awards under the Hungarian Agreement anyway, the limitation point is of academic interest only. Of more practical importance is the provision contained in the implementing legislation prohibiting any further payments to be made on war damage awards until all other awards have been paid in equal proportions to such awards. See text accompanying note 164 infra. For the approach of other countries to this problem, see 1 Lellich & Weston ch. V n.201.

62 See text at note 24 supra.

63 Art. 2(1). On the constitutionality of such provisions in lump sum agreements and in legislation implementing them, see Avramova v. United States 354 F. Supp. 420 (S.D.N.Y. 1973).

In an Exchange of Notes constituting Annex A, Hungary states, with reference to nationalization claims which arose subsequent to August 9, 1955, “that this settlement in no way constitutes a precedent for the Government of the Hungarian People’s Republic for similar claims arising after the date of this Agreement.” In its reply, the United States confirms this curious and seemingly harmless understanding. Compare text at and accompanying note 176 infra.

Quaere: Was the above Exchange of Notes sought by Hungary in view of its conclusion of follow-up lump sum agreements with other countries? Compare the French- Hungarian Agreement of 1950, June 12, 1950, [1952] J.O. 9260, [1952] Rev. Crit. D.I.P. 780, 2 Lillich & Weston 45, with the French-Hungarian Agreement of 1965, May 14, 1965, [1965] J.O. 6308, [1965] Rev. Gen. D.I.P. 901, 2 Lillich & Weston 311, and the Swedish-Hungarian Agreement of 1951, March 31, 1951, [1951] S.O. No. 16, 2 Lillich & Weston 56, with the Swedish-Hungarian Agreement of 1966, Sept. 12, 1966, id. at 113.

64 Senate Hearing 31 (letter from Marshall Wright, Acting Assistant Secretary for Congressional Relations, to Senator Fulbright). The FCSC, on the other hand, has estimated that there are “about 600-plus” such claims. House Hearing 8 (statement of Wayland D. McClellan, General Counsel, FCSC).

The legislation implementing the agreement provides that, in addition to new nationalization claimants, claimants mailed notices with respect to filing claims against Hungary under Title III “who did not receive the notice as the result of administrative error in placing a nonexistent address on the notice, may file with the Commission a claim. . . .” See note 1 supra. This special interest amendment, opposed by the FCSC, was added to cover several claimants, now represented by former Senator Frank J. Lausche, whose claims arose prior to August 9, 1955, but who had failed to file them in timely fashion under Title III. Senate Hearing 7-19. No other old nationalization claims, i.e., claims arising prior to August 9, 1955, may be filed at this time. See S. Rep. No. 93-1095, 93d Cong., 2d Sess. 3-4 (1974). Of course, old nationalization claimants holding awards under Title III are eligible for additional compensation. See text at and accompanying note 164 infra.

65 See text at note 30 supra.

66 FCSC 246. According to the Commission:

It has not been demonstrated to the Commission, and the Commission’s own research has not established, that international law requires a payment of compensation to a creditor when the debtor or the debtor’s property has been nationalized or otherwise taken. Quite to the contrary, the weight of authority is to the effect that such losses as a creditor may suffer as a result of a wrongful act committed against his debtor are too remote or indirect to sustain an award to the creditor.

Id. at 252. Compare the forceful dissenting opinion in this claim by Commissioner Pace:

It is an anachronism, in my opinion, to deny the instant claim on the basis of so-called traditional reluctance of international tribunals to look with favor upon claims based on secured creditor interests. Such decisions have always been founded on the theory that any losses sustained by the creditor were too remote, or indirect, and were not the proximate result of the wrongful act forming the basis of the claim. There is nothing remote or indirect, in my opinion, about the loss sustained by a mortgagee when the property securing his mortgage was nationalized under conditions which have prevailed in Hungary since 1946. Moreover, the total lack of due process in the nationalization program of the present government of Hungary demands, it seems to me, that the precedents cited by the majority of the Commission be distinguished from the situation herein, for the decisions were rendered in an atmosphere which assumed the existence of all of the rights and remedies which nations have customarily afforded.

Id. at 257-58. Commissioner Pace, it is interesting to note, was not a lawyer, much less an international one.

67 According to Christenson, the dissent rather than the holding in the above claim “appears to reflect the correct rule of international law, that a secured creditor interest constitutes an interest in property which may be taken when the debtor corporation is nationalized.” Christenson 631 n.63. For recent state practice supporting this view, see 1 Lillich & Weston ch. IV, Part B. See also text at and accompanying notes 68 & 142-43 infra.

68 Article 2(c) of the Agreement with Poland, note 45 supra, specifically covers claims for “debts owed by enterprises which have been nationalized or taken by Poland and debts which were a charge upon property which has been nationalized, appropriated or otherwise taken by Poland.” Poland has concluded lump sum agreements with other countries containing similar provisions. See, e.g., Article 1(2) of the Canadian- Polish Agreement, Oct. 15, 1971, [1971] Can. T.S. No. 39, 1 Lillich & Weston app. B.

69 Discussing the Bulgarian Agreement, the present writer pointed out that

[a]ssuming, arguendo, that the Department of State should undertake to espouse these claims [in the future], Bulgaria could admit their international validity under modem claims practice and plead their settlement by the agreement. If the Department then argued that they were not settled, perforce on the Commission’s ground that the claims were not valid under international law, Bulgaria would respond that in this case its international liability never had been engaged at all. The failure to spell out in the agreement whether these claimants were included or excluded therefore places them in an unprofitable vicious circle. Even if their claims had been written out of the agreement they would have been in no worse position than they are now, since then Bulgaria would not have been able to rely upon the broad waiver clause found [therein].

Lillich 696.

70 Under Title V the FCSC has preadjudicated many debt claims against Cuba and China, which politically if not constitutionally the Department of State must seek to satisfy under eventual lump sum agreements. The present agreement, to say the least, will be most unhelpful in this regard. See text accompanying note 38 supra.

71 See text at notes 142-43 infra.

72 See text at note 24 supra.

73 Legislation implementing the agreement specifically prohibits further payments to two types of creditor claimants who received awards under Title III and thereby fall nominally under Article 2(2). For discussion of this unique prohibition, see text at notes 82-92 infra.

74 FCSC 244. “The term ‘obligations . . . arising out of contractual or other rights,’ as used in [Title III], was not limited to bonds . . . . but also included other types of government obligations.” Id. at 245.

75 Id. at 260-62.

76 FCSC, Tenth Semiann. Rep. 29 (1959).

77 Id. See FCSC 244.

78 Id. at 237.

79 Id. at 245.

80 Id.

81 Id. at 197.

82 Emphasis added. The FCSC, it will be recalled, denied claims based upon the bonds of the italicized entities under Title III. See text at note 75 supra. While the present agreement does not render them compensable, at least it includes a commitment by Hungary to settle them along with the bonds of the Hungarian Government. See text at notes 83 and 86 infra.

Note also that Annex E’s reference to dollar bonds does not contain the limitation, found in the Exchanges of Notes accompanying the Rumanian and Bulgarian lump sum agreements, that the bonds must have been payable in the United States. See Christenson 633 and Lillich 697.

83 “Such discussions are now taking place between the Government of Hungary and the Foreign Bondholders Protective Council.” House Hearing 3 (statement of Fabian A. Kwiatek, Assistant Legal Adviser, Department of State).

84 Senate Hearing 29 (letter from Marshall Wright, Acting Assistant Secretary for Congressional Relations, to Senator Fulbright). But see H.R. Rep. No. 93-1027, 93d Cong., 2d Sess. 2 (1974), which refers to “$3.3 million in Kingdom of Hungary bonds.”

85 The legislation implementing the agreement makes this point explicitly. “[T]he Secretary of the Treasury shall not authorize any further payments on account of awards . . . based on Kingdom of Hungary bonds expressed in United States dollars. . . .” See note 1 supra. Compare text accompanying note 87 infra.

86 This development constitutes a welcome step in the direction of treating all bondholder claimants alike. Cf. 1 Lillich & Weston ch. IV, Part B.

87 See Christenson 633-34 and Lillich 697. It is fair comment that neither of these articles properly developed the principal point of this paragraph, namely, that Exchanges of Notes in each case effectively excluded Title III bondholder claimants from further payments under these agreements. The legislation implementing the Rumanian and Bulgarian lump sum agreements certainly did not make this point clear. Compare text at and accompanying note 85 supra. For possible constitutional complications, see text at and accompanying note 92 infra.

88 See House Hearing 9:

Mr. Rosenthal. What is a Standstill Creditor?

Mr. Kwiatek. The Standstill Creditors claims are claims which arose from credits which were extended by certain American banks to several Hungarian Credit Institutions during 1928 to 1931. These loans which were extended were guaranteed by the Government of Hungary.

They were paid regularly up to 1941. In 1941 they defaulted on these obligations. Since 1941 until 1969, there was no payment. This comprises roughly about $6 million which was outstanding and upon which amount the Standstill Creditors based their agreement directly with the Government of Hungary.

The clause provides that “the Secretary of the Treasury shall not authorize any further payments on account of awards . . . to Standstill creditors of Hungary that were the subject matter of the agreement of December 5, 1969, between the Government of Hungary and the American Committee for Standstill creditors of Hungary.” See note 1 supra.

89 Senate Hearing 29 (letter from Marshall Wright, Acting Assistant Secretary for Congressional Relations, to Senator Fulbright).

90 See text accompanying note 88 supra. Details of this separate agreement have not been made public. Since their preadjudicated awards amounted to $3,210,422, see text at note 89 supra, the Standstill Creditors will have been treated more favorably than other claimants against Hungary if, in addition to the compensation they already have received from vested assets, compensation payable under the separate agreement exceeds $1,236,012. See text at notes 36 supra & 156 infra (other claimants have been paid 1.5 percent of their awards and can anticipate eventual 40 percent payment).

91 S. Rep. No. 93-1095, 93d Cong., 2d Sess. 3 (1974).

92 In Seery v. United States, 127 F. Supp. 601 (Ct. CI. 1955), the Court of Claims held that the part of an executive agreement which withdrew a claimant’s right of action against the United States was unconstitutional, since it in effect took her property without due process of law. See Oliver, , Executive Agreements and Emanations from the Fifth Amendment, 49 AJIL 362 (1955)Google Scholar. Here, with the text of the present agreement nominally covering the claims of Standstill Creditors, it could be argued that the implementing legislation was unconstitutional, since it specifically prevents them from receiving compensation to which they otherwise would be entitled under an executive agreement. Presumably this argument was anticipated and met by providing in the separate agreement of 1969 that the Standstill Creditors waived any nominal rights they might acquire under a subsequent lump sum agreement with Hungary. Still, an Exchange of Notes along the lines recommended in the text would have removed any possible constitutional complications. For other lump sum agreement problems raised by Seery, see Lillich 690-91.

93 On November 19, 1951, Russian intercepters forced down an off-course C-47 near Papa, Hungary. The four man crew was held incommunicado until December 3, 1951, when they were turned over to Hungarian authorities. After being tried, convicted, and fined $123,605.15, they were released on December 28, 1951, upon payment of the fine. The plane and its cargo of freight, however, were confiscated. The incident is described in detail in 27 Dept. State Bull. 980-84 (1952). See also Lissitzyn, , The Treatment of Aerial Intruders in Recent Practice and International Law, 47 AJIL 559, 581-85 (1953)Google Scholar.

The United States, in separate notes dated March 17, 1953, presented formal claims against the Russian and Hungarian Governments amounting to $637,894.11, computed as follows: (1) Cost of plane, equipment, and cargo, $98,779.29; (2) Fine paid for release of crew, $123,605.15; (3) Damages to crew for unlawful detention, mistreatment, and denial of justice, $200,000; and (4) Damages to the United States, $215,509.67. See Senate Hearing 32 (letter from Marshall Wright, Acting Assistant Secretary for Congressional Relations, to Senator Fulbright). Thereafter, on February 16, 1954, the United States instituted proceedings against the two countries in the International Court of Justice. Since both countries refused to submit to the ICJ’s jurisdiction, the Court removed the cases from its list. Treatment in Hungary of Aircraft and Crew of United States of America, [1954] ICJ 99, 103.

According to the Department of State:

The 1951 aerial incident claim was included in this settlement agreement because both [Governments] desired to remove as many irritants as possible in the relations between the two countries, and the time was propitious to settle this incident. Additionally, the two Governments had discussed the settlement of this matter in the past in the context of a claims settlement agreement.

Senate Hearing 32 (letter from Marshall Wright, Acting Assistant Secretary for Congressional Relations, to Senator Fulbright).

94 See 1 Lillich & Weston ch. II, Part E.

95 Article 1(b) of the United States-Panamanian Agreement, Jan. 26, 1950, [1950] 1 UST 685, TIAS No. 2129, 2 Lillich & Weston 35, specifically settled for $3,156 “[t]he claims of the United States of America against the Republic of Panama for personal injuries sustained by six soldiers of the United States Army during disturbances which occurred in the city of Panama in the year 1915. . . .” The FCSC also interpreted Article 1(a) of the United States-Yugoslav Agreement of 1948, July 19, 1948, 62 Stat. 2658, TIAS No. 1804, 2 Lillich & Weston 10, under which Yugoslavia paid a lump sum of $17,000,000 “in full settlement and discharge of all pecuniary claims of the Government of the United States, other than those arising from Lend-Lease and civilian supplies furnished as military relief, . . . and in full settlement of all claims of nationals of the United States,” to include purely governmental claims. FCSC 22: “The Commission granted an award to the United States of America for the loss of a jeep and two aircraft. . . .”

96 Approximately one-third of the payments eventually received by the United States presumably will be earmarked, in turn, to compensate the four crewmen or their heirs and legatees. See text accompanying notes 93 supra & 97 infra. Since the legislation implementing the agreement makes no provision for the determination of their aliquot share, see text accompanying note 98 infra, this allocation apparently will be made by the Department of State pursuant to its discretionary powers. See text accompanying note 44 supra.

97 “With reference to Article 2, paragraph 4 of the Agreement regarding claims of today’s date, the Government of the United States will earmark, out of the amount of the lump sum paid, $125,000 for the settlement of the 1951 aerial incident.”

98 The legislation implementing the agreement authorizes and directs the Secretary of the Treasury:

to deduct the sum of $125,000 from the Hungarian Claims Fund and cover such amount into the Treasury to the credit of miscellaneous receipts in satisfaction of the claim of the United States referred to in article 2, paragraph 4 of the United States-Hungarian Claims Agreement of March 6, 1973. Such amount shall be deducted in annual installments over the period during which the Government of Hungary makes payments to the Government of the United States as provided in article 4 of the agreement.

See note 1 supra.

99 Although it is far from clear from the legislation implementing the agreement, see text accompanying note 98 supra, the Department of State takes the position that the United States will not receive the full $125,000, but only “an installment payment on a par with other awardees. . . .” House Hearing 3 (statement of Fabian A. Kwiatek, Assistant Legal Adviser, Department of State). If the United States does receive only a pro rata share of the $125,000, the reduction in the amount of compensation available for ordinary distribution will be minimized accordingly.

100 See note 46 supra.

101 Art. 2. See text at notes 93-99 supra.

102 8 Whiteman, M., Digest of International Law 1241 (1967)Google Scholar.

103 FCSC 159. In the case of Hungary, January 20, 1945.

104 FCSC, Tenth Semiann. Rep. 44 (1959).

105 FCSC 170. In the case of Hungary, prior to September 1, 1939.

106 Arts. l (2) (a)–(c) of the Rumanian and Bulgarian lump sum agreement. See Lillich 698–99.

107 The Department of State apparently assumes that the Hungarian Agreement incorporates the FCSC’s approach sub silentio. Thus, in response to the question of whether persons who had fled Hungary during the 1956 revolt would benefit from the provision authorizing new nationalization claims, the Department’s representative replied that “[i]f they were U.S. nationals as of the time their property was taken, they will.” House Hearing 8 (statement of Fabian A. Kwiatek, Assistant Legal Adviser, Department of State).

108 FCSC 159.

109 Arts. l(2)(a)-(c) of the Bulgarian lump sum agreement.

110 For a brief discussion of this possibility, which also may have relevance under future lump sum agreements, see Lillich 700.

111 See text accompanying note 107 supra. The hearings on the legislation implementing the agreement are silent on this point.

112 See text at note 28 supra.

113 Article 2 provided for the settlement of certain claims:

(a) directly owned by individuals who were nationals of the United States of America (for this purpose ownership through a partnership or an unincorporated association being considered direct ownership);

(b) directly owned by a corporation or other legal entity organized under the laws of the United States of America or a constituent state or other political entity thereof, if more than fifty per centum of the outstanding capital stock or other beneficial interest in such legal entity was owned directly or indirectly by natural persons who were nationals of the United States of America; or

(c) indirectly owned by individuals or corporations within subparagraphs (a) or (b) of this Article through interests, totalling twenty-five per centum or more, in a Rumanian legal entity.

114 For a detailed critique of this paragraph, see Lillich 701-03.

115 “[M]ust the United States corporate claimant be 50 percent American-owned as Title III specified, 20 percent American-owned as the Yugoslav Agreement required, or merely incorporated in the United States as the Treaty of Peace provided?” Id. at 703-04.

116 Compare Art. 2(a) of the Rumanian Agreement in the text accompanying note 113 supra.

117 Compare Art. 2(b) of the Rumanian Agreement in the text accompanying note 113 supra.

118 See text at and accompanying note 115 supra.

119 See Lillich 703:

It is far from certain . . . what rules the Department envisaged would govern the distribution. Should all stockholder claims be allowed without regard to American ownership interest, as the Treaty of Peace provided? Should indirect stockholder claims be subjected to a 25 percent requirement? Should all stockholder claims except direct claims in nationalized corporations, as was the case under the amended statute, fall within the 25 percent rule? Or should all stockholder claims be so handled, as the original statute stated? Presumably the penultimate alternative is to control, although claimants, attorneys and students of international law would welcome a clearer manifestation of this intent.

120 For extensive discussion of the customary International law norms governing stockholder claims, see 1 Lillich & Weston ch. II, Part D.

121 Barcelona Traction, Light & Power Co., Ltd. Case, [1970] ICJ 3. For a critique of the Court’s approach to the determination of the customary international law norms governing stockholder claims, see Lillich, , The Rigidity of Barcelona, 65 AJIL 522 (1971)Google Scholar.

122 Other claimant states have insisted on such specific provisions. See, e.g., Art. 2 of the Belgian/Luxembourgeois-Rumanian Agreement, Nov. 13, 1970, 1 Lillich & Weston app. B.

123 The three lump sum agreements constituted a package settlement. Under the Austrian-Hungarian Agreement, Oct. 31, 1964, [1967] BGBl. 1673, 605 UNTS 3, 2 Lillich & Weston 302, Hungary agreed to pay Austria 65 million Austrian schillings within 30 days and another 22.5 million Austrian schillings within two years. The 65 million, however, came from lump sums of 40 million Austrian schillings and 25 million Austrian schillings which Austria agreed to pay Hungary within 30 days under the Hungarian-Austrian Agreement, Oct. 31, 1964, [1967] BGBl. 1694, 605 UNTS 63, 2 Lillich & Weston 305, and the Hungarian-Austrian Agreement, Oct. 31, 1964, [1967] BGBl. 1696, 605 UNTS 77, 2 Lillich & Weston 306, respectively.

124 Belgian/Luxembourgeois-Hungarian Agreement, Feb. 1, 1955, [1955] Monit. 6373 (Oct. 7), 2 Lillich & Weston 109.

125 See note 49 supra.

126 Danish-Hungarian Agreement, June 18, 1965, [1965] Lovtidende C 1034, 2 Lillich & Weston 312.

127 See note 63 supra.

128 British-Hungarian Agreement, June 27, 1956, [1956] Gr. Brit. T.S. No. 30 (CMD. 9820), 249 UNTS 19, 2 Lillich & Weston 131.

129 Greek-Hungarian Agreement, April 27, 1963, 550 UNTS 197, 2 Lillich & Weston 260.

130 See note 49 supra.

131 See note 49 supra.

132 See note 63 supra.

133 Swiss-Hungarian Agreement, July 19, 1950, [1950] ROLF 736, [1950] AS 712, 2 Lillich & Weston 49.

134 Hungarian-Soviet Agreement, March 14, 1958, 20 USSR Ministry of Foreign Affairs Collection of Treaties, Agreements, and Conventions in Force 412 (1961), 2 Lillich & Weston 161.

135 Yugoslav-Hungarian Agreement, May 29, 1956, [1957] Medjunardodni ugovori FNRJ. Sveska br. 73, str. 22, [1957] Dodatak Sluzbenog lista FNRJ br. 10, str. 22, 2 Lillich & Weston 130.

136 The only exceptions were Article 6 of the Swiss-Hungarian Agreement, supra note 133, providing for payments over 10 years, and Article 2 of the British-Hungarian Agreement, supra note 128, under which payments, keyed to exports from Hungary to Great Britain, took 15 years to complete. FCC, Twenty-First Report, Cmnd. No. 4787, at 3 (1971).

137 Converting the various currencies of payment into U.S. dollars, using the rate of exchange prevailing on the date of signing of the lump sum agreements obtained from World Currency Charts (5th ed. 1970), it appears that Hungary agreed to pay a grand total of $109,206,562, to which must be added the value of the claims it waived under several of the settlements. See, e.g., Art. 2 of the Hungarian-Soviet Agreement, note 134 supra. Thus the figure of $125,000,000, while a guess, is an educated one.

138 See Art. 2 of the Canadian-Hungarian Agreement, note 49 supra.

139 See text at note 32 supra. Moreover, if interest from August 9, 1955 to March 6, 1973 were added to the preadjudicated nationalization and financial debt claims, their value would be considerably higher than the figure given in the text.

140 France, it will be recalled, negotiated its first lump sum agreement with Hungary in 1950. See note 63 supra. The median date of the seventeen lump sum agreements previously concluded with Hungary is 1963.

141 See text at notes 166-70 infra.

142 Art. 1(1) of the Swiss-Hungarian Agreement, note 133 supra; Art. 1(1) of the Swedish-Hungarian Agreement of 1951, note 63 supra; Art. 2(c) of the Belgian/Luxembourgeois- Hungarian Agreement, note 124 supra; and Art. 1(1) of the Danish-Hungarian Agreement, note 126 supra.

143 See, e.g., Art. 1(1) (a) of the Dutch-Hungarian Agreement, note 49 supra.

144 See, e.g., Art. 1 (1) (b) of the Greek-Hungarian Agreement, supra note 129, which settles claims by “any Greek creditor. . . .”

145 See, e.g., Art. 1 (1) (a) of the British-Hungarian Agreement, note 128 supra.

146 See, e.g., Art. 1 (1) (a) (i i) of id.

147 See, e.g., Art. 1 (1) (b) of the Austrian-Hungarian Agreement, note 123 supra.

148 See, e.g., Art. 1(2) (a) of the Swedish-Hungarian Agreement of 1951, note 63 supra.

149 See, e.g., Art. 1 (2) (b) of id.

150 See, e.g., Art. 1(2) of the Canadian-Hungarian Agreement, note 49 supra.

151 See, e.g., Art. 1(2) of the British-Hungarian Agreement, note 128 supra.

152 See note 143 supra.

153 See text at and accompanying notes 67-68 supra.

154 But see text at notes 164-65 infra.

155 Certain creditor claimants, of course, eventually may receive some compensation under the private settlements contemplated by Annexes D and E. See text at notes 70-71 & 82-87 supra.

156 Senate Hearing 29 (letter from Marshall Wright, Acting Assistant Secretary for Congressional Relations, to Senator Fulbright).

157 Id. at 30 (emphasis added).

158 Freidberg & Lockwood, supra note 35, at 130.

159 Id.

160 See note 157 supra.

161 See the FCC report cited in note 136 supra.

162 This percentage is based upon composite figures taken from van, Wees, Compensation for Dutch Property Nationalized in East European Countries, 3 Neth. Y.B. Int’l L. 62, 88 (1972)Google Scholar.

163 See Weston, B., International Claims: Postwar French Practice 179 n.444 (1971)Google Scholar, who also quotes informed sources as stating that the actual percentage paid was “much lower” than this figure.

164 See text at notes 142-55 supra. The return also may have been achieved by using other funds to “top up” awards to Peace Treaty claimants, thus freeing funds to compensate other claimants, a fact insufficiently explored during hearings on the legislation implementing the present agreement.

Provisions in the above legislation revamping the award payment structure found in Title III, aimed at assuring that new claimants will not obtain an advantage over old ones, specify that “new awardees will initially be limited to the percentage paid to the old awardees and then permit the residual balance to be distributed proportionately among all eligible awardees.” Senate Hearing 3 (statement of Wayland D. McClellan, General Counsel, FCSC). Furthermore, they specifically prohibit

any further payment to be made on war damage awards made under [Title III] until all other awards have been paid in equal proportions to such awards. The war damage awards have been paid in amounts of up to 40 percent out of another fund, the War Claims Fund, under the provisions of Public Law 87-846, approved October 22, 1962 [Title II of the War Claims Act of 1948, as amended].

Id. (emphasis added). Accord, House Hearing 3, 6 (statements of Fabian A. Kwiatek, Assistant Legal Adviser, Department of State, and J. Raymond Bell, Chairman, FCSC). See note 1 supra.

In revamping the award payment structure, Congress ignored the suggestion of Members of the Bar that individual claimants be given priority over corporate claimants, despite the fact that a single corporate claim “absorbs almost one-half of the entire Hungarian Claims fund. . . ,” House Hearing 22 (letter from Messrs. Regosin, Edwards, & Freeman to Representative Rosenthal). Compare Congress’s receptivity to the special interest amendment of a former Senator discussed in the text accompanying note 64 supra.

165 Assuming that $22,218,614 will be available for distribution to claimants holding awards the principal of which amounts to $58,181,408, and that after a delay of 28 years it now will take another 19 years to complete payment, the 4.5 percent figure is arrived at as follows (using a formula from the standard work C. Griffin, T. Williams & G. Welsch, Advanced Accounting 783-84 [1966]):

Terms

PV = present value.

P = the amount of each installment( or $1,110,930.70, assuming equal payments each year).

i =.the market interest rate (6 percent).

n1 = the number of years over which payments are to be made (20).

n2 = the number of years of delay in payment of the first installment (28).

Formula

Calculation

=$2,642,342.08 (to be compared with $58,181,408).

Thus the actual value to claimants of the compensation to be paid under the Hungarian Agreement, that is, the value in 1945 of a guarantee that they would receive the compensation provided for in the agreement in installments from 1973-1992, is 4.5 percent of the amount of their adjudicated awards.

Nota bene: The above calculation does not take into account the ravages of inflation, which would reduce still further—to less than 2 percent—the actual value of the compensation.

The writer wishes to express his appreciation to his friend and colleague in many joint ventures, Professor Norman N. Mintz of the Department of Economics at Columbia University, for his valuable assistance in the preparation of this footnote and for his wise counsel about approaching the compensation question generally.

166 In addition to economic assistance of various sorts, the United States on August 6, 1946 returned gold reserves of the Hungarian National Bank worth an estimated $32,000,000. [1946] 6 Foreign Rel. U.S. 296, 310, 329 (1969). See 15 Dept. State Bull. 335 (1946). The following year it returned 127 tons of silver. [1947] 4 Foreign Rel. U.S. 293 (1972). The premature release of these assets proved costly indeed.

The United States learned its lesson, however, for in 1948 it conditioned the release of Yugoslav gold reserves upon the negotiation of the Agreement with Yugoslavia of 1948, supra note 95, under which $17,000,000 of gold reserves amounting to nearly $47,000,000 was earmarked to compensate claimants in more adequate fashion. Currently the United States is holding a substantial amount of Czech gold pending a satisfactory settlement with that country. See note 9 supra.

167 See text at and accompanying note 42 supra.

168 Article 4(3) provides, inter alia, that “the f.o.b. value in dollar imports into the United States from Hungary shall be taken from the official publications of the United States Department of Commerce (that is, FT 990, U.S. Foreign Trade, Highlights of Exports and Imports, or its successor publications.)” During 1973 Hungarian exports to the United States were sufficient to produce a second installment of $984,000 under this formula. See text at and accompanying note 40 supra.

For a similar provision keying the amount of installment payments to Hungarian exports, see Article 2 of the British-Hungarian Agreement, note 128 supra. Under this provision, which unlike Article 4(2) of the present agreement contained no acceleration clause, Hungary took 15 years to complete payment. See note 136 supra.

169 See note 43 supra. In the Exchange of Notes comprising Annex F, Hungary states in reply that “[i]f it is not possible for the two governments to extend reciprocally most-favored-nation treatment on mutually agreeable terms within a reasonable amount of time, the Government of the Hungarian People’s Republic reserves the right to consult with a view toward considering the continuation of payments provided for by Article 4 of the Agreement regarding claims of today’s date.” By “a reasonable amount of time” apparently is meant two years. Senate Hearing 6 (statement of Thomas S. Huang, Acting Assistant Legal Adviser, Department of State). Nota bene the Department of State’s acknowledgment that, if Congress has not granted most-favored-nation treatment to Hungary by such time, “it is possible that the Government of the People’s Republic of Hungary, based on its contention that it must be able to earn foreign exchange in order to pay in foreign exchange, might wish to suspend future payments until FMN [sic] treatment is granted.” Id. at 31 (letter from Marshall Wright, Acting Assistant Secretary for Congressional Relations, to Senator Fulbright). See text at and accompanying note 178 infra.

170 See note 41 supra. Conversely, Hungary waives three classes of claims against the United States, declaring that the lump sum has been reached by taking them into account. Art. 6(2). This provision prompted one Hungarian claimant to inquire: “Is it possible that funds to pay our claims are being used to pay off a counterclaim that is directed against all the people of the United States?” House Hearing 23 (letter from Andre Bodor to Representative Rosenthal). The FCSC replied that it was “unable to comment on the mechanics utilized by the Department of State in reaching the $18.9 million settlement. Any comment on this issue should come from the Legal Adviser, Department of State.” Id. at 24 (letter from J. Raymond Bell, Chairman, FCSC, to Representative Rosenthal). None was forthcoming. On the waiver of private claims as part of a package deal to obtain various benefits for the entire body politic, see text at and accompanying note 179 infra.

171 See, e.g., Enders, , Action Program for World Investment, 71 Dept. State Bull. 477, 481 (1974)Google Scholar: “[W]e must insist on prompt, adequate and effective compensation in the few cases of nationalization.”

172 R. Lillich, supra note 6, at 105-06.

173 It had been foreseen. Lillich 705.

174 H.R. Rep. No. 93-1027, 93d Cong., 2d Sess. 2 (1974).

175 Senate Hearing 7 (statement of Wayland D. McClellan, General Counsel, FCSC).

176 Letter from Ambassador Spacil to the Washington Post, Feb. 14, 1975, at A31, at cols. 4, 5, & 6. Presumably Cuba will demand such treatment too, as well it might in view of the above and the fact that, when asked recently about the settlement of U.S. claims against Cuba, “[a] State Department official said that negotiations with foreign governments usually conclude with U.S. claimants receiving about 40 per cent of their demands.” Int’l Herald-Tribune, April 1, 1975, at 3, col. 2. Lawyers with any experience negotiating settlements in domestic disputes can only shake their heads upon reading such self-defeating (and self-fulfilling) prophecies!

177 Christenson 634-35.

178 See Pedersen, , Restoring Europe’s Sense of Unity, 69 Dept. State Bull. 16, 20 (1973)Google Scholar: “In a country with a relatively liberalized system such as Hungary, for example, the 100 percent higher tariffs our exporters face over those from western Europe is [sic] a real obstacle which reciprocal extension of MFN would overcome.”

179 Former Senator Keating once called lump sum agreements “a form of foreign aid at the expense of [certain] U.S. taxpayers.” 109 Cong. Rec. 25149 (1963). For the suggestion that the burden might be spread over all taxpayers and not limited to private claimants, see R. Lillich, supra note 5, at 194-205 passim. It is worth noting that the Department of State’s new Legal Adviser once expressed similar views. Leigh, & Atkeson, , Due Process in the Emerging Foreign Relations Law of the United States—Part I, 21 Bus. Lawyer 853, 870-77 (1966)Google Scholar.

180 See R. Lillich, supra note 5, at 187-88.

181 See text accompanying note 15 supra.

182 Martin, , The Distribution of Funds Under the Foreign Compensation Act, 1950, in 44 Transact. Grot. Soc’y 243, 249-50 (1959)Google Scholar.

183 Rubin, S., Private Foreign Investment 98 (1956)Google Scholar.

184 See text at notes 56-61, 88-92, 106-07, 111 & 118-20 supra.

185 Int’l Herald-Tribune, Feb. 13, 1975, at 3, cols. 5-6.

186 See text at and accompanying note 176 supra.