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Foreign Nationalizations

Some Aspects of Contemporary International Law

Published online by Cambridge University Press:  28 March 2017

Martin Domke
Martin Domke*
Affiliation:
New York University School of Law
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Extract

Nationalization of foreign property and deprivation of contractual rights have again achieved prominence through measures in Iran, Egypt, Indonesia, and, more recently, in Cuba. The end of certain regimes often brings with it changes in political and social conditions. And yet recognition of acquired rights is the principal basis of intercourse in economic relations, as recognized by the law of civilized nations. International law, far from being an outgrowth of only Western concepts, is indeed an expression of fundamental principles embodied in long established legal systems throughout the world. Islamic law, for instance, which is of real significance for one sixth of the world population, in the Middle East, Pakistan, Southeast Asia and parts of Africa, clearly embodies the universal maxim of the protection of acquired rights.

An anomalous situation arises where governments desire foreign investments while at the same time rights in property and contractual relations are threatened and even destroyed. The Brazilian Judge Levi Carneiro said in the Anglo-Iranian Oil Co. Case:

When there are so many countries in need of foreign capital for the development of their economy, it would not only be unjust, it would be a grave mistake to expose such capital, without restriction or guarantee, to the hazards of the legislation of countries in which such capital has been invested.

Type
Research Article
Information
American Journal of International Law , Volume 55 , Issue 3 , July 1961 , pp. 585 - 616
Copyright
Copyright © American Society of International Law 1961

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References

1 Jenks, The Common Law of Mankind 142 (1958); Anderson, and Coulson, , “The Moslem Ruler and Contractual Obligations,” 33 N.T.U. Law Rev. 917 (1958)Google Scholar; Schacht, “Islamic Law in Contemporary States,” 8 A.J. Comp. Law 133 (1959)CrossRefGoogle Scholar ; Anderson, “The Significance of Islamic Law in the World Today,” 9 ibid. 187 (1960).

2 [1952] I.C.J. Rep. 93, 162.

3 U.N. Doc. A/AC.97/5, Rev. 1, of Dec. 27, 1960.

4 U.N. Docs. E/3325, of Feb. 26, 1960, and Corr. 1-3; E/3492, of May 18, 1961.

5 Reports by the Special Rapporteur, García-Amador, F. C., on International Responsibility, especially the Fourth Report, 1959 I.L.C. Yearbook (II, 1)Google Scholar, and the Fifth Report U.N. Doc. A/CN. 4/125, of Feb. 9, I960.

6 Convention on the International Responsibility of States for Injuries to Aliens Draft No. 12, Louis B. Sohn and R. R. Baxter, Reporters, Harvard Law School, Feb 18, 1961; reprinted above, p. 548.

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9 As noted by Lord Shawcross, “The Promotion of International Investment, “Cong Rec, May 19, 1960, pp. A 4309, 4312 ; see also 1961 Journal of Business Law 98.

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11 Observations of the German Branch of the International Law Association, Hamburg Conference, 1960, p. 2, par. 1.

12 Notes 48-51, 222, 223 below.

13 Mann, , “State Contracts and State Responsibility,” 54 A.J.I.L. 570, 583, note 5: (1960)Google Scholar.

14 Drucker, , “Edmund Burke’s View on Expropriation,” 228 The Law Times 86, 87 (1959)Google Scholar; cf. also Seidl-Hohenveldern, , “Communist Theories on Confiscation and Ex propriation—Critical Comments,” 7 A.J. Comp. Law 541 (1958)CrossRefGoogle Scholar.

15 For a recent survey, see note 3 above, p. 125.

16 Art. 24 (1), trans, in 1 Peaslee, Constitutions of Nations 614 (2d ed., 1956).

17 Trans., Fundamental Law of Cuba, 1959 (Pan American Union, General Legal Division, Department of Legal Affairs), p. 7 (1959).

18 Official Gazette, No. 130, July 7, 1960, Leyes del Gobierno Provisional de la Evolution XXII, p. 29; reprinted below, p. 822.

19 But see Art. 87 of the Fundamental Law of Cuba, which provides : “The Cuban State recognizes the existence and legitimacy of private property in its broadest concept as a social function and without other limitations than those which, for reasons of public necessity or social interest, are imposed by law.”

20 Law of Nations 570 (2d ed., 1952). Italics added.

21 44 Annuaire (II) 283. No final decision was taken by the Institute, since further consideration of nationalization questions was discontinued.

A similar definition is to be found in Katzarov, Théorie de la Nationalisation 226 (1960, trans.) : “Nationalization is the transformation, in the public interest of higher order, of a specific property or of a particular activity which is or may be a means of production or of exchange in the wider sense of the term, into property or activity of the collectivity—State, community or cooperative—in view of their immediate or future utilization in the general, and no longer private, interest.”

22 Wortley, Expropriation in Public International Law 36 (1959).

23 The wording is identical with Art. 10, par. 3(a) of Draft No. 11, printed in I960 A.S.I.L. Proceedings 103.

24 Of July 16, 1960, T.I.A.S., No. 4545; 43 Dept. of State Bulletin 226 (1960), 55 A.J.I.L. 540 (1961) ; see Rode, “The American-Polish Claims Agreement of 1960,” ibid. 452.

25 The agreement of March 30, 1960, between the United States and Rumania, speaks in Art. I (c) of “Claims for the nationalization, compulsory liquidation, or other taking, prior to the date of this Agreement of property, rights and interests of nationals of the united States of America in Rumania.” 42 Dept. of State Bulletin 670 (1960); 54 A.J.I.L. 742 (1960). See Christenson, below, p. 617. A similar agreement with Bulgaria is under negotiation, 44 Dept. of State Bulletin 150 (1961).

The agreement of Nov. 10, 1960, between the United Kingdom and Rumania, Treaty Series No. 82 (1960), Cmnd. 1232, refers in Art. 1 (lb) to “Roumanian measures of nationalisation, expropriation, State administration, liquidation and other similar measures and regulations made or administrative action taken thereunder.”

26 Cf. Wolfgang Friedmann, Law in a Changing Society 359 (1959): “Property, as it must, is no longer defined as a compound of tangible, real and personal assets, but the totality of all rights and interests capable of legal protection which have an economic value.”

27 Cf. “ The Measures Taken by the Indonesian Government against Netherlands Enterprises,” 6 Netherlands Int. Law Rev. 227, 231 (1958).

28 Settlement of Claims by the Foreign Claims Settlement Commission of the United States and its Predecessors from September 14, 1949, to March 31, 1955, pp. 93 and 201 (1955).

29 Foreign Claims Settlement Commission of the United States, Tenth Semiannual Report 24 (1960).

30 Official Gazette, Oct. 30, 1959; see 42 Dept. of State Bulletin 157 (1960).

31 43 Dept. of State Bulletin 604 (1960). The plant was later taken over by Resolution No. 3 of Oct. 25, 1960, implementing Nationalization Law No. 851, of July 6, 1960, text below, p. 822.

32 Such practice was first introduced in 1938 in (then) Nazi-controlled Austria ; see Domke, Trading with the Enemy in “World War II, p. 178 (1943), and The Control of Alien Property 126 (1947).

33 A Reuters dispatch from Leopoldville, Aug. 2, 1960, noted a Congo government announcement to Belgian owners to decide whether to go back into business or sacrifice their firms to the government. Times (London), Aug. 3, 1960, p. 8, col. 2.

34 Weis, , “The International Protection of Refugees,” 48 A.J.I.L. 193, 205 (1954)Google Scholar; Veiter, , “Der internationale Eigentumsschutz der Flüchtlinge,” in Handbuch des internationalen Flüchtlingsrechts 155, 176 (Schätzel, and Veiter, eds., 1960)Google Scholar; Heller, , “Die Behandlung des zurückgelassenen Flüchffingsvermögens in der sowietischen Besatzungszone und in Ost Berlin,” 4 Recht in Ost und West 213 (1960)Google Scholar; Foreign Claims Settlement Commission of the United States, Thirteenth Semiannual Report 21 (1961).

35 Art. 24 of the Fundamental Law, quoted above, p. 587.

36 Stephen v. Zivnostenska Banka, National Corporation, 3 N.Y. 2d 862 and 931 (1957), noted in 52 A.J.I.L. 349 (1958); 23 Misc. 2d 855, 199 N.Y.S. 2d 797, 54 A.J.I.L. 898 (1960); 213 N.Y.S. 2d 396, Jan. 12, 1961; digested below, p. 748.

37 12 App. Div. 2d 506, 207 N.Y.S. 2d 288 (2d Dept., Nov. 14, I960).

38 26 Mise. 2d 520, 208 N.Y.S. 2d 361 (Sept. 28, 1960).

39 209 N.Y.S. 2d 225 (Oct. 17, 1960) ; 12 App. Div. 2d 486, 206 N.Y.S. 2d 746 (2d Dept., Nov. 3, 1960).

40 Bishop, International Law Cases and Materials 485 (1953) ; Orfield and Re, Cases and Materials on International Law 531 (1955) ; Katz and Brewster, International Transactions and Belations, Cases and Materials 779 (1960).

41 Art. 7 of García-Amador’s Revised Draft, Fifth Report, note 5 above, p. 74.

42 Int. Law Ass’n, Report of the Forty-Eighth Conference xi (1958).

43 E.g., Cuban Resolution No. 1 of Aug. 8, 1960, implementing the Nationalization Law No. 851 of July 6, 1960, states: “It is hereby declared that these expropriations are effected for reasons of public necessity and use and national interest.”

44 Preliminary Draft with Explanatory Note, May 1, 1959, p. 66. Similarly it was stated: “It is extremely difficult to conceive of a situation where an international tribunal would undertake to review a state’s determination of what is a dominating public purpose except in a situation so flagrant that the procedure involves a manifest denial of procedural justice.” Stokes, “Some Aspects of the Protection of Foreign Investments under International Law,” Proceedings and Committee Reports of the American Branch of the International Law Association 1959-1960, pp. 19, 24 (1960). See also note, “Expropriation of Alien Property,” 109 U. of Pa. Law Rev. 245, 260 (1960).

45 Harvard Draft No. 12 is printed above, p. 548.

46 9 Journal of Public Law 147, 156 (1960).

47 Robert R. Wilson, United States Commercial Treaties and International Law 120 (1960).

48 Art. IV (2) of the Treaty of Amity, Economic Belations and Consular Bights, of Dec. 20, 1958, in force since June 11, 1960, T.I.A.S., No. 4530; see 55 A.J.I.L. 160 (1961).

49 Art. VI (3) of the Treaty of Friendship and Commerce, of Nov. 12, 1959, effective Feb. 12, 1961, 44 Dept. of State Bulletin 164 (1961): “Neither party shall take unreasonable or discriminatory measures that would impair the legally acquired rights or interests within its territories of nationals and companies of the other party. ...” and Art. VI (4) : “ property . . . shall not be taken without the prompt payment of just compensation. “See also notes 222 and 223 below.

50 Art. 15 of the Treaty of Commerce, Establishment and Navigation, of March 11, 1959, Iran No. 1 (1959), Cmd. 698; 9 Int. and Comp. Law Q. 311 (1960): “The nationals and companies of one High Contracting Party shall receive equitable treatment ... in respect of any measures of . . . restriction or expropriation affecting their property, rights and interests . . . and shall receive prompt, adequate and effective compensation for any such measures.”

51 Art. 3 (2) of the Treaty for the Promotion and Protection of Investments (zur Förderung und zum Schutz von Kapitalsanlagen) of Nov. 25, 1959, Bundesrat Doc. No. 11/61, provides (trans.) : “Nationals or companies of either Party shall not be subjected to expropriation of their investments in the territory of the other Party except for the public benefit against compensation, which shall represent the equivalent of the investments affected.” It is interesting to note that Art. 12 provides that the treaty shall remain in force (trans.) “also in the event of a conflict arising between the Parties without prejudice to the right of taking sueh temporary measures as are permitted under international law and are indispensable for assuring a supervision of investments” (italics supplied). A similar treaty was concluded between the Federal Republic of Germany and Iran on Feb. 28, 1961. Bundesanzeiger No. 52, March 15, 1961.

52 Kram. No. 221-S, of Sept. 13, 1957, Official Gazette No. 2378, p. 6.

53 Art. 6(1) of the Union of Burma Investment Act of 1959, Burma Gazette, Sept. 29, 1959.

54 Art. 15 of the Taiwan Revised Statute for Investments by Foreign Nationals, of Dec. 14, 1959, note 3 above, p. 82.

55 Wilde, , “Investment in Thailand,” 9 A.J. Comp. Law 481, 492 (1960)CrossRefGoogle Scholar; the Indus trial Promotion Act of 1954, ibid. 495, has meanwhile been replaced by Act B.[uddhist] E.[ra] 2503, effective Oct. 25, 1960, Government Gazette, No. 77, Sec. 88, Oct. 25, 1960.

56 12 International Financial News Survey (International Monetary Fund) 558 (1960). An Investment Guaranty Agreement with Nepal, the thirty-fourth under the International Cooperation Administration, guarantees expressly against losses from expropriation. Dept. of State Press Release No. 270, of May 17, 1960.

57 Associated Press Release, N. Y. Herald Tribune, Jan. 16, 1961, p. 18, col. 4.

58 The Nigeria (Constitution) Order in Council, 1960 (Statutory Instruments 1960, No. 1652), Second Schedule, s.30 (1).

59 Scliwelb, , “The Republican Constitution of Ghana,” 9 A.J. Comp. Law 634, 648 (1960)Google Scholar.

60 The Approved Enterprises (Concessions) Act of 1956, No. 8, provides that “if at any time any property belonging to an approved foreign enterprise is compulsorily acquired by the Sudan Government in furtherance of nationalization of any industry, fair and equitable compensation shall be paid for the same and the said compensation shall be permitted to be remitted out of the Sudan.” See also 65 Foreign Commerce Weekly, No. 5 (Jan. 30, 1961), p. 12.

61 The Guinea Investment Ordinance of May, 1960, guarantees against any expropriation (toute spoliation) and, in case of vital necessity for the economy of the country, provides for the purchase of foreign enterprises under conditions agreed upon by the parties (dans les conditions librement fixées par accord entre les parties).

62 Narayanan, , “India,” in Legal Aspects of Foreign Investment (ed. Friedmann, Wolfgang) 249, 261 (1959)Google Scholar; Merillat, , “The Indian Constitution: Property Rights and Social Reform,” 21 Ohio State Bar J. 616, 624 (1960)Google Scholar.

63 Hearings before the Anti-Trust Subcommittee of the House Committee on the Judiciary, 84th Cong., 1st Sess., Ser. 3, Pt. 2, p. 1563 (1955) ; 2 Hurwitz, Diplomacy in the Near and Middle East, a Documentary Record 1914-1956, pp. 348, 374 (1956).

64 64 Pleadings 513.

65 3 Int. Arb. Awards 1621, 1627 (1935) ; 30 A.J.I.L. 535, 540 (1936).

66 Award 61 (unpublished, available in university law libraries). The quoted sentences are also to be found in 6 Netherlands Int. Law. Rev. 233 (1959), aud in U.N. Doc, note 3 above, p. 290.

67 Haight, “The Oil Situation in Europe and Some Belated Legal Problems,” Address before the Mineral and Natural Resources Law Section, American Bar Association, Aug. 30, 1960, p. 11. See also Wadmond, “The Sanctity of Contract between a Sovereign and a Foreign National,” 1957 Proceedings, idem, p. 177.

68 Cheatham, , “Problems and Methods in Conflict of Laws,” 99 Hague Academy Recueil des Cours 230, 279 (1960, I)Google Scholar.

69 Wolfgang Friedmann, Law in a Changing Society 457 (1959).

70 Nussbaum, , “The Arbitration between Lena Goldfields and the Soviet Government,” 36 Cornell Law Q. 31 (1950)Google Scholar.

71 Cf. the Decree of March 18, 1938, Expropriating on behalf of the Nation the Property of Certain Oil Companies, U.N. Doc, note 3 above, p. 138.

72 The Société d’Energie Electrique de Guinée and Companie Africaine de Services Publiques were nationalized because of the “intentionally poor performance” of the two French-controlled companies. New York Times, Feb. 2, 1961, p. 2, col. 5.

73 43 Dept. of State Bulletin 141 (1960). For a similar protest by the United Kingdom, see The Times (London), July 5, 1960, p. 12, col. 4; July 6, 1960, p. 8, col. 1, and p. 12, col. 1.

74 Calvert, , “The Law Applicable to Concessions,” 1 U. of Malaya Law Rev. 265, 269 (1959)Google Scholar.

75 Cf. Verdross, , “The Status of Foreign Private Interests Stemming from Economic Development Agreements with Arbitration Clauses,” 9 österreichische Zeitschrift für öffentliches Recht 452 (1959)Google Scholar; Bourquin, , “Arbitration and Economic Development Agreements,” 15 Business Lawyer 860, 864 (1960)Google Scholar; and for further references, Ray, , “The Law Governing Contracts between States and Foreign Nationals,” in Proceedings of the 1960 Institute on Private Investments Abroad 5, at 64, note 148 (Southwestern Legal Foundation, 1960)Google Scholar.

76 Verdross, , “Protection of Private Property under Quasi-International Agreements,” 6 Netherlands Int. Law Rev. Special Issue (Liber Amicorum J.P.A. François) 355, at 358, 359 (1959)Google Scholar.

77 García-Amador, Fourth Report, note 5 above, p. 31 (1959); Mann, , “The Proper Law of Contracts Concluded by International Persons,” 35 Brit. Yr. Bk. of Int. Law 34, 43 (1959)Google Scholar.

78 ‘s For examples, see Domke, “International Arbitration of Commereiai Disputes,” in Proceedings, note 75 above, p. 131, at 164. A panel discussion at the Annual Meeting of the American Society of International Law on April 28, 1961, dealt with the topic of “Arbitration between Governments and Foreign Enterprises. ”

79 9 Transnational Law 2 and 102 (1956).

80 Wehberg, , “Pacta Sunt Servanda,” 53 A.J.I.L. 775 (1959)Google Scholar; Fitzmauriee, , “The Law and Procedure of the International Court of Justice, 1954-9: General Principles and Sources of International Law,” 35 Brit. Yr. Bk. of Int. Law 183, 194 (1959)Google Scholar ; for a recent historical survey, see Baerman, , “Pacta sunt servanda. Considérations sur l’histoire du contrat consensuel,” 13 Bévue Internationale de Droit Comparé 18 (1961)CrossRefGoogle Scholar.

81 P.C.I.J., Ser. A, No. 17 ; for a recent discussion, see Baade, note 82 below, p. 822.

82 Domke, , “Indonesian Nationalization Measures before Foreign Courts,” 54 A.J.I.L. 305 (1960)Google Scholar; Baade, “Indonesian Nationalization Measures before Foreign Courts—A Reply,” ibid. 801; The Bremen Tobacco Case (Department of Information, Republic of Indonesia), with preface by Prof. Gouw (1960); Gouw, “Segi-Segi Hukum Internasional Pada Nasionalisasi Di Indonesia [International Law Aspects of Nationalization in Indonesia] (Penerbitan Universitas, 1960, 236 pp.); Munch, , “Das Sumatra-Tabak-Urteil des Hanseatischen OLG Bremen,” 9 Jahrbuch fur Internationales Becht 84 (1960)Google Scholar.

83 69 U.N. Treaty Series 200 (I, No. 894, trans. 1950).

84 Cited in 54 A.J.I.L. 321 (1960); see ibid,., note 79, that the finding does not appear justified on the historic facts.

85 “Auslandische Nationalisierungsmassnahmen und ihre Beurteilung dureh deutsche Gerichte,” 5 Aussenwirtschaftsdienst des Betriebs-Beraters 272 (1959).

86 P.C.I.J., Ser. C, No. 78, p. 32 (trans. 1936).

87 30 A.J.I.L. 523, 531 (1936).

88 By its Committee on Protection of Investments Abroad in Time of Peace, Seventh Conference Report, Cologne, 1958, p. 485.

89 Report of the Forty-Eighth Conference xi (1958).

90 Note 66 above, at 125, 87, and 109.

91 Its single article provided that “the oil industry throughout all parts of the country, without exception, be nationalized.” Ford, The Anglo-Iranian Oil Dispute of 1951-1952, p. 268 (1954).

92 The statement that “the Indonesian seizure does [raise the issue of extraterritorial effect], in that it purports to affect all assets of the seized companies wherever located, Note, “Foreign Seizure of Investments. Remedies and Protection,” 12 Stanford Law Rev. 606, 612 (1960), is not justified. The Indonesian Act No. 86 of 1958, cited in 54 A.J.I.L. 305 (1960), concerns “the nationalization of property of Dutch-owned enterprises within the territory of the Republic of Indonesia.” No attempt has been made to cover assets located in other countries.

93 Resolution No. 1 of Aug. 8, 1960, Leyes del Gobierno Provisional de la Revolución XXII, p. 184, implementing Nationalization Law No. 851, of July 6, 1960, provides: “ . . . There is decreed the nationalization, by means of forced expropriation and, therefore, there are adjudged the property of the Cuban State in full dominium (se adjudiean a favor del Mstado Cubano en pleno dominio) all the properties and concerns located in the national territory and the rights and actions resulting from the exploitation of these properties and concerns, which are the property of the juridical persons nationals of the United States of America, or operations of concerns in which nationals of that country have a predominant interest.”

94 For references, see Domke, , “American Protection Against Foreign Expropriation in the Light of the Suez Canal Crisis,” 105 U. of Pa. Law Rev. 1033, 1039 (1957)CrossRefGoogle Scholar; The Suez Canal Problem 31 (Dept. of State Pub. 6392).

95 U.N. Doc. A/3898, S/4089, of Sept. 23, 1958; 54 A.J.I.L. 498, 502 (1960). See also Heads of Agreement, of April 29, 1958, Art. 1 of which is identical with the quoted Art. 3(A) of the final agreement.

96 Rauschnig, , “Die Abwicklung des Suez Kanal Konfliktes,” 8 Jahrbuch fur Internationales Recht 267 (1959)Google Scholar; Focsaneanu, , “L’Accord ayant pour Objet I’Indemnisation de la Compagnie de Suez Nationalised par l’Egypte,” 5 Annuaire Francais de Droit International 161 (1959)CrossRefGoogle Scholar.

97 Establishment of Diplomatic Relations with the Union of Soviet Socialist Republics 13 (Dept. of State Publication 528, 1948); 28 A.J.I.L. Supp. 2, 10 (1934).

98 On the administration of the Soviet Claims Fund under Public Law 285, 84th Cong., see Foreign Claims Settlement Commission of the United States, Eleventh Semiannual Report 1 (1960).

99 315 U. S. 203, 220 (1942); 36 A.J.I.L. 309 (1942).

100 Domke, , “Dutch War-Time Legislation before American Courts 1953,” 1 Netherlands Int. Law Rev. 365 (1954)CrossRefGoogle Scholar.

101 Knapp (Czechoslovakia), International Law Association, Report of the Forty-Eighth Conference 177 (1958), and Report of its Committee on the Juridical Aspects of Nationalization and Foreign Property (Hamburg Conference, 1960), p. 8, par. 29.

102 Katzarov (Bulgaria, living in Geneva, Switzerland), “The Validity of the Act of Nationalisation in International Law,” 22 Modern Law Rev. 639, 647 (1959).

103 Magaresevie (Yugoslavia), Report, note 101 above, p. 9, par. 30.

104 For ample references, see Wortley, , “The General Principles of Private International Law,” 94 Hague Academy Recueil des Cours 85, 192 (1958, II)Google Scholar.

105 Cf. Domke, , “On the Nationalization of Foreign Shareholders’ Interests,” 4 New York Law Forum 46 (1958)Google Scholar ; Cassoni, , La Nazionalizazzione delle Società e il Diritto Internazionale Privato 75 (Padua, 1959)Google Scholar.

106 Trademarks play indeed an important rôle in court decisions on foreign nationalizations when the original shareholders or partners in nationalized enterprises have used the latter’s trademarks abroad, against the protests of the nationalized (state) enterprises. See Carney, and Fisher, , “Effects of Confiscation on Trade-Marks Registered Abroad,” 8 A. U. Law Rev. 44 (1959)Google Scholar; Rotondi, , “Effets Internationaux d’Expropriations et Nationalisations vis-à-vis des Marques,” in Mélanges Jacques Maury 435 (1960)Google Scholar.

107 54 A.J.I.L. 305 (1960).

108 Ibid. 315.

109 Animal Farm 148 (New York: Harcourt, Brace and Co., 1954).

110 In the preamble to Act No. 86 of Dec. 31, 1958, trans, in 6 Netherlands Int. Law Kev. 291 (1959).

111 43 Dept. of State Bulletin 401 (1960).

112 New York Times, Dec. 2, 1960, p. 8, col. 8 ; Dec. 3, 1960, p. 3, col. 2.

113 Ibid., Dec. 4, 1960, p. 34, col. 3; Dec. 6, 1960, p. 6, col. 2.

114 U.N. Doc. A/C. 2/SR. 704, of Dec. 8, 1960, p. 13. For further sequestration of Belgian properties in the United Arab Republic, see New York Times, Feb. 27, 1961, p. 18, col. 1, and Feb. 28, 1961, p. 3, col. 6.

115 Official Gazette, Year LVII—Quinquennial Volume No. XI, Annual Number 7, June 3, 1959. See Reeves, “The Cuban Situation,” Report of the Committee on International Law, New York State Bar Association (Dec. 31, 1960), p. 4; and Allison, , “Cuba’s Seizure of American Business,” 47 A.B.A.J. 48 and 187 (1961)Google Scholar.

116 See, generally, Mallory, , “The Land Problem in the Americas,” 43 Dept. of State Bulletin 815 (1960)Google Scholar; Hume, “Agrarian Reform in the Americas” (address before the Inter-American Bar Association Conference, Bogotá, Colombia, Jan. 28, 1961), 107 Comp. Rec. 2647 (Feb. 28, 1961). For further references see also Eder, , “Agrarian Reform in Venezuela,” 9 A. J. Comp. Law 667 (1960)CrossRefGoogle Scholar.

It may be noted that the American Bar Foundation’s proposed International Institute on Agrarian Planning will also deal with “methods of establishing amounts and character of compensation due to owners.” 145 N. Y. Law J., No. 59, p. 1, col. (March 28, 1961).

117 “The Instituto Nacional de Reforma Agraria (INRA) has rapidly become the Cuban Government’s principal instrument for extending state monopolistic practice. Although the original intent of INRA was confined to agrarian reform the organization now controls many enterprises of a non-agricultural nature and its activities are constantly increasing.” U. S. Memorandum to Inter-American Peace Committee, Aug 2, 1960, 43 Dept. of State Bulletin 317, 338 (1960). Later, administration of non agrarian nationalized property was carried out by the newly established Ministry of Industry. New York Times, Feb. 25, 1961, p. 2, col. 7.

118 41 Dept. of State Bulletin 715 (1959); 42 ibid. 158, 237, 994 (1960).

119 Decision No. 7, of Feb. 25, 1960. Official Gazette, March 17, 1960, p. 6604.

120 For full text, see below, p. 822.

121 Leyes del Gobierno Provisional de la Revolución XXIII, p. 181; XXIV, p. 12 XXV, pp. 181, 35, 59; 43 Dept. of State Bulletin 316 (1960). A translation of Resolution No. 2 of Sept. 17, 1960, regarding American banks is to be found ibid. 603.

122 43 Dept. of State Bulletin 171 (1960).

123 U. S. District Court, S. D. New York, 60 Civ. 3929, March 31, 1961, Dimock, D. J., digested below, p. 741.

124 See note 37 above.

125 Magaresevic, , “The Right to Social Reform and the Restrictions of Private Alien Property: A Comment on Selected Issues,” 7 Jugoslovenska Revija za Medunarodno Pravo 272, 280 (1960)Google Scholar.

126 Cf. Schubert, , “Compensation under New German Legislation on Expropriation,” 9 A. J. Comp. Law 84 (1960)CrossRefGoogle Scholar; Ferencz, “Taxation of United Nations Nationals under the German Equilization of Burdens Law,” ibid. 262 (1960) ; German Federal Constitutional Court, July 25, 1960, 13 Neue Juristische Wochenschrift 2091 (1960).

127 Notes 91-94 above.

128 Drucker, , “On Compensation Treaties between Communist States,” 229 Law Time 279 and 293 (1960)Google Scholar ; and 10 Int. & Comp. Law Q. 238 (1961).

129 For a survey, see U.N. Doc, note 3 above, pp. 195, 647.

130 Of March 30, 1960, 42 Dept. of State Bulletin 670 (1960) ; 54 A.J.I.L. 742 (1960)

131 Of Nov. 10, 1960, Treaty Series No. 82 (1960) ; Cmnd. 1232.

132 Of July 16, 1960, T.I.A.S., No. 4545; 43 Dept. of State Bulletin 226 (1960); 5: A.J.I.L. 540 (1961) ; Protocol of Nov. 20, 1960, T.I.A.S., No. 4629.

133 U. S. Aide-Memoire of Aug. 28, 1953, on “Expropriation of United Fruit Company; Property by Government of Guatemala,” 29 Dept. of State Bulletin 357 (1953).

134 Becker (then Legal Adviser, Dept. of State), “Just Compensation in Expropriate) Cases: Decline and Partial Recovery,” 1959 A.S.I.L. Proceedings 336.

135 Cited in notes 48 and 49 above and 222 and 223 below.

136 40 Dept. of State Bulletin 958, 41 ibid. 715 (1959); 42 ibid. 158, 238, 43 ibid 316, 360 (1960).

137 Cited in note 50 above.

138 Note 51 above, Art. 3 (2) (trans.): “Compensation shall represent the equivalent of the investment affected. Such compensation shall be actually realizable and freely transferable in the currency of the other Party without undue delay.”

139 Mentioned in the Netherlands Note of Dec. 18, 1959, 54 A.J.I.L. 484, 487 (1960)

140 Cited in 54 A.J.I.L. 317 (1960); cf. Münch, , “Les effets d’une nationalisation l’étranger,” 98 Hague Academy Recueil des Cours 411, 455 (1959, III)Google Scholar.

141 Note 115 above, Art. 29: “The constitutional right of owners affected by this Law to receive indemnification for the property expropriated shall be recognized.”

142 Art. 3 provides: “The indemnity shall be paid in redeemable bonds. To that end an issue of Republic of Cuba bonds shall be floated in such amount, and under such terms and conditions, as may be fixed in due time. The bonds shall be called ’Agrarian Reform Bonds’ and shall be considered public securities. The issue or issues shall be floated for a period of twenty years, with annual interest not exceeding four and one-half per cent.”

143 For acceptance of the Agrarian Reform Bonds, if ever issued, under protest by American creditors, see Alyea, “Testing the Adequacy of Compensation for Property Expropriated under the Cuban Agrarian Reform Law,” Proceedings of the Third Annual Conference on International Law, Cornell Law School, p. 137 (1960).

144 “Comment on the Draft Convention by its Authors,” 9 Journal of Public Law 119, 122 (1960).

145 Norway v. U.S.A., 1 Int. Arb. Awards 307 (1922).

146 Germany v. Rumania, 2 Int. Arb. Awards 90 (1928).

147 lbid. 1037 (1930).

148 For the identical wording of Draft No. 11, see 1960 A.S.I.L. Proceedings 103. The provision is expressly made applicable in Art. 12 (2) of the Draft to “ a contract or concession to which the central government of a State and an alien are parties.”

149 Report of the Committee on International Law, Association of the Bar of the City of New York, 15 Record 414 (1960).

150 See notes 176-179 below.

151 U. S. note to Rumania, Sept. 7, 1948, 19 Dept. of State Bulletin 408 (1948).

152 Bulgarian legislation, for instance, provided for nationalization with “permissible compensation.” Bonds with 3 percent interest payable in 20 years were devaluated by the subsequent currency reform of 1952. Moreover, “since the Bulgarian nationalized economy did not permit private reinvestment in the country, accordingly local currency was of no practical utility to a foreign national.” Sipkov, , “Postwar Nationalizations and Alien Property in Bulgaria,” 52 A.J.I.L. 469, 493 (1958)Google Scholar.

152 Note 133 above, at 359. An agreement of Dec. 27, 1954, provided for the return of the properties, and recognized the company’s right to hold reserve land for laud rotation. U.N. Doc, note 3 above, p. 615.

153 It may be of interest to note the Study Outline in 2 Schwarzenberger, , A Manual of International Law 485 (4th ed., 1960)Google Scholar: “Expropriation of the whole motor industry of State X, including enterprises owned by foreign nationals, with compensation to be paid out of a fund, into which ten per cent of the annual profits of the concerns taken over are to be paid.”

154 Printed below, p. 822. See also Law No. 890, of Oct. 13, 1960, Leyes del Gobierno Provisional de la Revolución XXV, p. 35, on the nationalization by forced expropriation (mediante expropiación forzosa) of commercial and industrial enterprises.

155 For the U. S. protest of July 16, 1960, see 43 Dept. of State Bulletin 171 (1960).

156 Proclamation 3355 of July 6, 1960, 25 Fed. Reg. 6414 (1960), reducing the Cuban sugar quota under the Sugar Act of 1948, as amended. The President’s authority was extended until June 30, 1962, to prohibit Cuban sugar imports and to re-allocate the Cuban sugar quota. 107 Cong. Rec. 4865 (March 29, 1961). The President set the Cuban sugar quota at “zero” for the calendar year 1961. 44 Dept. of State Bulletin 592 (1961).

158 Cf. Committee on the Study of Nationalization, American Branch, International Law Association, 1957-1958 Proceedings and Committee Reports 61, 67.

159 Cited in 54 A.J.I.L. 317 (1960).

160 Ibid.

161 García-Amador, Fourth Report, 1959 I.L.C. Yearbook (II, 1) at 24.

162 Wortley, , “The Mexican Oil Dispute 1938-1946,” 43 Grotius Society Transactions 15, 25 (1959)Google Scholar; U.N. Doc, note 3 above, p. 131.

163 Law 588, of Oct. 1959, Leyes del Gobierno Provisional de la Revolución XIII, p. 45 (Normas legales para la expropiación de fincas rústicas a virtud de la Ley de Reforma Agraria).

164 The Suez Canal Problem 31 (U. S. Dept. of State Pub. 6392, 1956).

165 Wilson, note 47 above, p. 116.

166 Gardner, , “International Measures for the Promotion and Protection of Foreign Investment,” 9 Journal of Public Law 176, 180, note 6 (1960)Google Scholar. Cf. also Berber, Lehrbuch des Völkerrechts 401 (1960, trans.): “In any event, the effectiveness [of compensation] must be adhered to under all circumstances, since, for example, non-transferability in view of contrary foreign exchange legislation would make the claim to compensation illusory in practice.”

The Consultative Assembly of the Council of Europe suggested a statute for private investments in Africa which should provide that dispossession of the investment “cannot take place without fair compensation, paid without undue delay and transferable without restriction.” Europe and Africa, Council of Europe (Strasbourg, 1960), p. 27.

167 For a List of Agreements on Compensation for Nationalized or Appropriated Property, see U.N. Doc. A/AC.97/5, Rev. 1, of Dec. 27, 1960, pp. 195 and 647.

168 3 Whiteman, Damages in International Law 2067 (1943).

169 Schwarzenberger, , “The Protection of British Property Abroad,” 5 Current Legal Problems 295, 309 (1952)CrossRefGoogle Scholar. See also Verdross, Völkerrecht 99, 290 (4th ed., 1959).

170 “When settlements are reached, on the experience of the past, they seem to be only a leit-motif against which the heavier theme of practical advantage is played.” Rubin, Private Foreign Investment. Legal and Economic Realities 99 (1956).

171 Martin, , “Private Property, Rights, and Interests in the Paris Peace Treaties,” 24 Brit. Yr. Bk. of Int. Law 273, 284 (1947)Google Scholar.

172 Peace Conference 1946. Selected Documents 480 (Dept. of State Pub. 2868, Conference Series 103).

173 Ibid, at 1288.

174 Notes 24 and 25 above.

175 As quoted by Baade, “Expropriation Problem in Foreign Investment,” Virginia Law Weekly, Dicta No. 26, p. 1 (1960).

176 1960 A.S.I.L. Proceedings 112.

177 l Völkerrecht 515 (1958).

178 For recent references on the question of property protection and human rights, see Veiter, Die Rechtsstellung des fremden, insbesondere des deutschen Privateigentums in fisterreich 26 (1958); Comment, “The European Convention for the Protection of Human Bights and Fundamental Freedoms,” 49 Calif. Law Rev. 172, 174 (1961).

179 Bindsehedler, , “La Protection de la Propriété Privée en Droit International Public,” 90 Hague Academy Recueil des Cours 185, 278 (1956, II )Google Scholar ; Vannod, Fragen des Internationalen Enteignungs- und Konfiskationsrechts 30 (1959); Heiz, Das fremde offentliche Recht im Internationalen Kollisionsrecht 812 (1959).

180 Notes 5-10 above.

181 Kollewijn, , “‘Nationalisation’ without Compensation and the Transfer of Property,” 6 Netherlands Int. Law Rev. 140, 158 (1958)CrossRefGoogle Scholar.

182 Cited in 54 A.J.I.L. 314 (1960).

183 “Die Anerkennung im Ausland vollzogener Enteignungen,” 3 Jahrbuch für Internationales Recht 133, 134 (1954).

184 “Völkerrechtswidrige staatliehe Eigentumseingriffe und deren Folgen,” 63 Friedens-Warte 1, 15 (1955).

185 Also in his recent articles, cited note 175 above, p. 2, and note 82 above, p. 808.

186 ”Nichtige und Strafbare Staatsakte im Völkerrecht,” 1949 Juristische Blätter 58, und Völkerrecht 261 (2d ed., 1950). Verdross, however, states in the fourth edition (1959), p. 289, that “Nach dem Grundsatz der Achtung der erworbenen Privatrechte ist eine Wegnahme ausländischen Privatvermögens ohne Entschädigung (Konfiskation) verboten. ”

187 Mentioning the 1942 Dutch decision in Poortensdijk Ltd. v. Soviet Republic of Latvia, Annual Digest 1919-1942, No. 75. In that case, however, a claim due from a private Latvian enterprise had been advanced against the government by reason of the latter’s nationalization measures. The Court of Appeal of Amsterdam, in confirming the dismissal of the action because of the Latvian Government’s acts performed jure imperii, applied the act of state doctrine denying jurisdiction of Dutch courts “even if the measures under consideration should have been taken contrary to Latvian law and to the general principles of international law.” More recently, the Court of Appeal of Amsterdam in the Indonesian Tobacco Case, June 4, 1959, Nederlandse Jurisprudentie 1959, No. 350, p. 355, partly translated in 7 Netherlands Int. Law Rev. 400 (1960) and 54 A.J.I.L. 315 (1960), held that an exception (to the application of the act of state doctrine) has to be made when the sovereign acts are to be considered “in flagrant conflict with international law.”

188 168 U. S. 250 (1897). For recent comments, see The Foreign Relations Law of the United States, Restatement, Tentative Draft No. 4, p. 10 (American Law Institute, I960).

189 “Die Nationalisierung niederländischer Unternehmungen in Indonesien im Lichte des Völkerrechts,” 6 Netherlands Int. Law Rev. 278, 285 (1959).

190 Internationales Konfiskations- und Enteignungsrecht 43 (1952).

191 Ibid. 36.

192 Baade, note 82 above, at 814 and 827, note 158.

193 Note 102 above, at 641.

194 “Two Cases concerning Confiscation of Foreign Property,” Liber Amicorum of Congratulations to Algot Bagge 56, at 62 (1955).

195 “Der völkerrechtliche Schutz des Privateigentums,” Pestschrift für Hans Lewald 547, 552 (1953), and “Einige Grenzfragen des ordre public in Pallen entschädigungsloser Konfiskation,” 11 Annuaire Suisse de Droit International 91, 98 (1954).

196 Das Völkerrecht in der Praxis der Deutschen Gerichte 7 (1957).

197 Ibid.

198 Art. 25 of the Basic Law of the Federal Republic of Germany, the Bonn Constitution of 1949 (U. S. Dept. of State Pub. 3526); cf. Pigorsch, Die Einordnung völkerrechtlicher Normen in das Recht der Bundesrepublik Deutschland 23 (1959) ; Kauper, , “The Constitutions of “West Germany and the United States: A Comparative Study,” 58 Michigan Law Rev. 1091 (1960)CrossRefGoogle Scholar.

199 Wortley, , “Expropriation in International Law,” 33 Grotius Society Transactions 25, 31 (1948)Google Scholar : “a title acquired by the lex situs only and unsupported by international law, will not in fact be of international validity once the arbitrary nature of the original expropriation has been proved.”

200 “Some Problems of Nationalization in International Law,” International Bar Association, Fifth Conference Report, Monaco, 1954, pp. 14, 26.

201 “Legal Deterrents and Incentives to Private Foreign Investment,” 43 Grotius Society Transactions 39, 48 (1959).

202 “The Relevance of Public and Private International Law Respectively for the Solution of Problems Arising from Nationalization of Enterprises,” 19 Zeitschrift für ausl. öff. Recht u. Völkerrecht 531, 541 (1958).

203 Note 181 above, at 163.

204 Confiscation in Private International Law 149 (1959): “To take the existence of the rule (against confiscation) a rule of the law of nations ought to render the confiscating a nullity.”

205 “General Approach to Foreign Confiscations,” in 2 Scandinavian Studies in Law 177, 186 (1958) : “When the confiscation is not in conformity with international law or its recognition would be against public policy, restitution will be in order.”

206 “Le Probléme de la Transformation et la Question de la Validité des Actes Étatiques Contraires au Droit International,” 3 Revue Hellenique de Droit International 234, 253 (1950): “Tout acte étatique dont le sens contractu une règie du droit international est nul, excepté le cas où la régie du droit international en dispose autrement.”

207 6 Archiv des Völkerrechts 499 (1957).

208 l Völkerrecht 271 (1958), and “Völkerrechtliche Grenzen der inliindischen Gerichtsbarkeit gegeniiber auslandischen Staaten,” Festschrift fur Arthur Nikisch 153, 180 (1958); cf. also, as to movables only, Raape, Internationales Privatrecht 620 (4th ed., 1955).

209 Note 101 above, p. 12, par. 44.

210 Birke, Die Konfiskation auslandischen Privatvermogens in Hoheitsbereieh des konfiszierenden Staates nach Friedensvolkerrecht 196 and 202 (1960).

211 Cf. Schechter, , “Towards a World Rule of Law—Customary International Law in American Courts,” 29 Fordham Law Rev. 313 (1960)Google Scholar.

212 1953 Int. Law Rep. 31 ; on the general approach of German courts, see Graue, , “Germany: Recognition of Foreign Expropriations,” 3 A.J. Comp. Law 93 (1954)CrossRefGoogle Scholar, and the recent decisions of the Federal Supreme Court: Nov. 12, 1959 (13 Neue Juristische Wochenschrift 189 (1960); 14 Juristenzeitung 90 (1960), with note by Beitzke) ; May 5, 1960 (BGHZ, Vol. 32, p. 256, 13 Neue Juristische Wochenschrift 1569 (1960), with notes by Mann, ibid. 2141, and Kübel, 14 ibid. 24 (1961); 15 Juristenzeitung 703 (1960), with note by Seidl-Hohenveldern) ; and Oct. 6, 1960 (14 Neue Juristische Wochenschrift 22 (1961), 16 Juristenzeitung 127 (1961), with note by Seidl-Hoħenveldern). On a similar approach of the Austrian Supreme Court to Czechoslovakian nationalizations, see decision of March 4, 1959, 1 [Austrian] Zeitschrift für Rechtsvergleiehung 175 (1960), with note by Beitzke, p. 178.

213 For decisions of West German courts on nationalization measures in the East German zone, see esp, the Zeiss Judgments of the Federal Supreme Court of July 25, 1957, 53 A.J.I.L. 687 (1959) ; Feb. 6, 1959, 62 Gewerblicher Rechtsschutz und Urheberrecht 367 (1960), and Nov. 15, 1960, IZR 10/59. See also 1 Sammlung der deutschen Entscheidungen zum interzonalen Privatrecht 1954-1957, Nos. 57-65, pp. 128-166 (ed. Drobnig, 1960).

214 1 Oppenheim, International Law 268 (8th ed., Lauterpacht, 1955).

215 Report, note 158 above, p. 65.

216 U. S. District Court, S. D. New York, 60 Civ. 3229, March 31, 1961, Dimock, D.J., digested below, p. 741,

217 Resolution No. 1, of Aug. 6, 1960, note 121 above, translated in note 14 of the court decision in the instant case.

218 Note 122 above.

219 Note 154 above.

220 Verzijl, note 202 above, p. 534.

221 Wortley, note 104 above, p. 201, note 2.

222 U. S. Senate, 86th Cong., 2d Sess., Exec. Rep. No. 12, June 26, 1960, p. 6. The Convention with France came into force on Dec. 21, 1960, 43 Dept. of State Bulletin 902 (1960); the Treaty with Pakistan on Feb. 12, 1961, 44 ibid. 164 (1961).

223 The most recent agreement, the Treaty of Amity and Economic Relations between the United States of America and the Republic of Viet-Nam, signed at Saigon, April 3, 1961 (44 Dept. of State Bulletin 652 (1961)), provides in Art. IV (2) : “Property of nationals and companies of either Party, including direct or indirect interests in property, shall receive the most constant protection and security within the territories of the other Party. Such property shall not be taken except for a public ‘ purpose, nor shall it be taken without the payment of just compensation. Such compensation shall be in an effectively realizable form and without unnecessary delay, and shall represent the full equivalent of the property taken; and adequate provision shall have been made at or prior to the time of taking for the determination and payment thereof.”

224 jessup, , The Process of International Law 27 (1960)Google Scholar; Bishop, , “The International Rule of Law,” 59 Michigan Law Rev. 553, 570 (1961)CrossRefGoogle Scholar.

225 Observations, note 11 above, p. 4, par. 10.