COMITY OF ERRORS: THE OVEREMPHASIS OF PLAINTIFF CITIZENSHIP IN FOREIGN SOVEREIGN IMMUNITIES ACT TAKINGS EXCEPTION JURISPRUDENCE

Transcription

1 COMITY OF ERRORS: THE OVEREMPHASIS OF PLAINTIFF CITIZENSHIP IN FOREIGN SOVEREIGN IMMUNITIES ACT TAKINGS EXCEPTION JURISPRUDENCE Todd Grabarsky INTRODUCTION On April 13, 1949, Jack B. Tate, under his authority as Acting Legal Advisor of the U.S. Department of State, sent a letter to legal counsel for Arnold Bernstein. 1 Bernstein had been the plaintiff in a recent federal restitution claim, which alleged that the sovereign nation of Germany under Nazi rule had illegally expropriated his shipping business and various assets. 2 The correspondence of no more than a few hundred words would lay the foundation for a complete overhaul of the U.S. government s approach to the relationship between the federal judiciary and the world s sovereign nations. Now known as the Bernstein Letter, this brief communication would mark the shift from a world where foreign governments would essentially stand beyond the jurisdictional reach of the federal courts to one where the United States, acting through its judiciary, would affirmatively hold sovereigns accountable for their illegal 3 actions. Editor-in-Chief, Cardozo Law Review. J.D. Candidate (June 2012), Benjamin N. Cardozo School of Law; B.A., magna cum laude, University of Pennsylvania, I would like to thank Professor Richard H. Weisberg for his invaluable support, guidance, and mentorship. I would also like to thank Nina Frank, Sue Jean Jhun, Michael McGarry, and Stephanie Spangler for their edits and insights. 1 The letter is reprinted as Press Release, U.S. Dep t of State, Jurisdiction of U.S. Courts Re Suits for Identifiable Property Involved in Nazi Forced Transfers (Apr. 27, 1949), in 20 DEP T ST. BULL. 592 (1949) [hereinafter Bernstein Letter]. 2 Bernstein v. N.V. Nederlandsche Amerikaansche Stoomvaart Maatschappij, 173 F.2d 71 (2d Cir. 1949), aff g 76 F. Supp. 335 (S.D.N.Y. 1948), rev d on reh g, 210 F.2d 375 (2d Cir. 1954). Bernstein was also a plaintiff in a prior suit from See Bernstein v. Van Heyghen Freres Societe Anonyme, 163 F.2d 246 (2d Cir. 1947). The Bernstein cases are discussed in depth infra Part I. 3 When used in reference to the actions of a sovereign government or leader, the term illegal is indeed thorny. It is used here to refer to a sovereign nation s violation of generally accepted notions and principles that comprise international law. 237

2 238 CARDOZO LAW REVIEW [Vol. 33:1 The story of the shift from absolute to restrictive sovereign immunity 4 from federal court jurisdiction with regard to property expropriation began in the aftermath of World War II, passed through the Nuremberg Trials and the Cuban Revolution, and reached a breaking point with the enactment of the Foreign Sovereign Immunities Act (FSIA) of The FSIA establishes a rule of immunity from federal jurisdiction for foreign sovereign nations, while simultaneously enumerating various types of claims that exempt foreign sovereigns from immunity. Among these exemptions is the takings exception, 6 under which U.S. citizens can bring suit against a foreign sovereign if they claim that property was taken in violation of international law. 7 Such claims typically involve cases where property is allegedly expropriated as part of governmental transitions, during times of war or revolution, or in soured business deals between a foreign sovereign and a private corporation. 8 In recent years, many cases brought under the takings exception have involved claims of restitution related to widespread expropriation that occurred in Europe during the Holocaust and World War II. 9 Though his suit was 4 The term absolute immunity refers to the notion that foreign sovereign nations could never be held accountable for their actions by the U.S. judiciary and therefore a U.S. citizen could never bring suit against foreign sovereigns in U.S. courts. See Underhill v. Hernandez, 168 U.S. 250, 252 (1897); see also text accompanying infra note 54. The term restrictive immunity refers to the jurisdictional approach that accounts for exceptions to general sovereign immunity, allowing a citizen to sue a foreign sovereign, but only under certain specified types of claims. 5 Foreign Sovereign Immunities Act of 1976, Pub. L. No , 90 Stat (codified as amended at 28 U.S.C. 1330, (2006)). 6 The takings exception provides: (a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case... (3) in which rights in property taken in violation of international law are in issue and that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state; or that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States U.S.C. 1605(a)(3) (2006). 7 Id. That the alleged wrongdoing by the sovereign involved an expropriation of property rights in violation of international law, is one of two general requirements for the takings exception. The other criterion relates to the ownership status at the time of the suit: the property must either be present in the United States in connection with a commercial activity carried on in the United States by the foreign state or owned by an agency of the foreign state defendant that is engaged in a commercial activity in the United States. Id. For a more detailed discussion on the takings exceptions requirements, see infra notes and accompanying text. 8 See H.R. REP. NO (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 1976 WL 14078; see also Beverly May Carl, Suing Foreign Governments in American Courts: The United States Foreign Sovereign Immunities Act in Practice, 33 SW. L.J. 1009, , (1979). 9 See, e.g., Cassirer v. Kingdom of Spain, 616 F.3d 1019 (9th Cir. 2010) (en banc); Altmann v. Republic of Austria, 317 F.3d 954 (9th Cir. 2002), aff d, 541 U.S. 677 (2004); see also Aryeh S. Portnoy et al., The Foreign Sovereign Immunities Act: 2008 Year in Review, 16 L. & BUS. REV.

3 2011] COMITY OF ERRORS 239 filed nearly thirty years prior to the FSIA s enactment, if brought today, Bernstein s claims would likely fall under this exception. 10 The takings exception was established to provide recourse for plaintiffs like Bernstein individuals whose property was taken from them by their own governments in contravention of the mores of international law. 11 Despite this, many federal courts have balked at the notion of granting such plaintiffs full access to the U.S. judiciary to litigate their expropriation claims against foreign sovereigns. 12 Claiming principles of comity in their refusal to render judgment on foreign judicial and executive actions, such courts have reverted to the pre-fsia era of absolute immunity, where actions of foreign countries were essentially untouchable. 13 One route through which these courts are able to reach this outcome involves an analysis of the plaintiff s citizenship at the time of the alleged expropriation. These courts insist that a plaintiff s citizenship with the foreign sovereign nation at the time of the sovereign s expropriation necessarily pushes the suit outside the takings exception and back into the realm of general sovereign immunity. The reasoning behind this approach is that such expropriations, though they may be abhorrent, are purely domestic actions and do not implicate international law. 14 For such courts, the inquiry ends with this conclusion. 15 For other courts, in contrast, an inquiry into whether the expropriation was part of a greater scheme of prejudice, discrimination, or genocide is just as vital as a determination of citizenship in gauging whether a violation of international law had occurred. 16 These courts rest on the notion that an expropriation of the property of a sovereign s own national within its own borders could nonetheless implicate international law. International adjudication of the various domestic crimes and illegal expropriations of the Holocaust is one extreme, yet pointed illustration of this notion. 17 This Note proposes that, in FSIA takings exception cases involving a foreign sovereign s expropriation of property owned by one of its own AM. 179 (2010); cf. Westfield v. Fed. Republic of Germany, No. 3: , 2009 WL (M.D. Tenn. July 28, 2009), aff d, 633 F.3d 409 (6th Cir. 2011). 10 While Bernstein s property was transferred through a forced sale, such transfers have often been considered expropriations for the purpose of determining violations of international law. See G.C. Christie, What Constitutes a Taking of Property Under International Law?, 38 BRIT. Y.B. INT L L. 307, (1962). 11 H.R. REP. NO , at 19, reprinted in 1976 U.S.C.C.A.N. at See, e.g., Siderman de Blake v. Republic of Argentina, 965 F.2d 699, 711 (9th Cir. 1992); Jafari v. Islamic Republic of Iran, 539 F. Supp. 209 (N.D. Ill. 1982). 13 See supra note See supra note For an in-depth discussion of this approach, see infra Parts II.B, III.A. 16 See, e.g., Altmann v. Republic of Austria, 317 F.3d 954 (9th Cir. 2002), aff d, 541 U.S. 677 (2004); Agudas Chasidei Chabad of U.S. v. Russian Federation, 528 F.3d 934 (D.C. Cir. 2008). 17 Id. For an in-depth discussion of this approach, see infra Parts III.B, IV.

4 240 CARDOZO LAW REVIEW [Vol. 33:1 citizens or nationals, courts necessarily make an inquiry into whether the expropriation was part of a greater scheme of international law violation. In a micro-sense, such situations may seem purely domestic or intranational; however, as shown by the historical fact of the Holocaust, they may just as well be an international concern. 18 Such an approach more genuinely and accurately follows case precedent, the history behind the FSIA, the congressional intent for its application, as well as the general trend towards restrictive sovereign immunity. By granting victims of unjust property expropriation the keys to the doors of United States courts even on the limited scale that is allowed under the takings exception this approach ensures that foreign sovereigns can no longer act with complete impunity when their actions implicate the need for justice on an international scale. Part I of this Note identifies the genesis of restrictive immunity as it relates to international property expropriation through an examination of the Bernstein cases. Part II traces the history of the FSIA takings exception and explores how cases have dealt with the issue of domestic expropriation as it relates to international law violations. Part III examines a handful of the recent trend of Holocaust restitution cases litigated under the FSIA and illuminates discrepancies in their jurisprudence regarding the issue of citizenship. And Part IV proposes that all courts handling sovereign expropriation cases undertake a deeper inquiry beyond that of plaintiff citizenship when gauging whether the expropriation violated international law. I. ARNOLD BERNSTEIN, THE HOLOCAUST, AND THE GENESIS OF RESTRICTIVE SOVEREIGN IMMUNITY In January 1937, Arnold Bernstein, a German-Jewish business owner, was imprisoned in Hamburg by Nazi authorities where, under threats of further imprisonment and bodily harm to him and his family, he signed papers purporting to transfer his shipping line to a Nazi trustee. 19 The assets were then transferred to a Belgian corporation 20 and a Dutch shipping company, 21 both of which had knowledge of Bernstein s imprisonment, his status as a Jew, and the circumstances of the transfer. 22 In July 1939, Bernstein was released from this imprisonment af- 18 Cf. ROBERT K. WOETZEL, THE NUREMBERG TRIALS IN INTERNATIONAL LAW (2d ed. 1962). 19 Bernstein v. Van Heyghen Freres Societe Anonyme, 163 F.2d 246, 247 (2d Cir. 1947). 20 Id. 21 Bernstein v. N.V. Nederlandsche Amerikaansche Stoomvaart Maatschappij, 173 F.2d 71, 73 (2d Cir. 1949), aff g 76 F. Supp. 335 (S.D.N.Y. 1948), rev d on reh g, 210 F.2d 375 (2d Cir. 1954). 22 Id.

5 2011] COMITY OF ERRORS 241 ter his ransom was paid. 23 He eventually survived the Holocaust, immigrated to the United States after World War II, and declared U.S. citizenship. 24 Bernstein s story is unfortunately a variation on a theme of widespread property expropriation that took place during the Holocaust. 25 What made his story unique was that soon after becoming a U.S. citizen, he sought retribution or, at least, just compensation through the vehicle of justice afforded by his newfound homeland: the federal judiciary. However, the federal courts Bernstein turned to proved to be illequipped to provide a remedy or even to adjudicate his claim. His first suit, Bernstein v. Van Heyghen Freres Societe Anonyme, was swiftly dismissed by the District Court for the Southern District of New York for lack of subject matter jurisdiction; the Court of Appeals for the Second Circuit, in an opinion by Judge Learned Hand, affirmed. 26 The ground for dismissal was a standard application of the principle of absolute immunity, under which claims against foreign sovereigns are beyond the subject matter jurisdiction of federal courts. 27 The Second Circuit therefore found that a district court had no authority to hear a claim by a U.S. citizen that involved the action of a foreign sovereign government. 28 Judge Hand emphasized Bernstein s German citizenship and nationality at the time of the alleged expropriation as grounds for the dismissal. 29 In essence, the court refused to render judgment on a foreign sovereign s actions over one of its own nationals 30 even on a claim that involved wrongful expropriation of private property as part of a governmental program of eliminating so-called non-aryans from German life. 31 Less than a year later, Bernstein brought suit again Bernstein v. N. V. Nederlandsche Amerikaansche Stoomvaart 23 Id.; Michael J. Bazyler, Nuremberg in America: Litigating the Holocaust in United States Courts, 34 U. RICH. L. REV. 1, 20 (2000). 24 Bernstein v. N.V. Nederlandsche Amerikaansche Stoomvaart Maatschappij, 173 F.2d 71, 75 n.1 (2d Cir. 1949), aff g 76 F. Supp. 335 (S.D.N.Y. 1948), rev d on reh g, 210 F.2d 375 (2d Cir. 1954). 25 See generally MARTIN DEAN, ROBBING THE JEWS: THE CONFISCATION OF JEWISH PROPERTY IN THE HOLOCAUST, (2008); STUART E. EIZENSTAT, IMPERFECT JUSTICE: LOOTED ASSETS, SLAVE LABOR, AND THE UNFINISHED BUSINESS OF WORLD WAR II (2003). 26 Bernstein v. Van Heyghen Freres Societe Anonyme, 163 F.2d 246, 247 (2d Cir. 1947). 27 See supra note 4. The defendant in the Bernstein suit was not a foreign sovereign, but rather one of the private corporations to which the Nazi trustee transferred the interest in Bernstein s shipping line. Bernstein v. Van Heyghen Freres Societe Anonyme, 163 F.2d at 247. The court nonetheless based its affirmation of the dismissal on sovereign immunity; it refused to render judgment on the actions of a foreign sovereign. Since the court refused to consider whether Germany wrongfully expropriated his property, Bernstein had no case. 28 Bernstein v. Van Heyghen Freres Societe Anonyme, 163 F.2d Id. at Id. 31 Id. at 247, 251.

6 242 CARDOZO LAW REVIEW [Vol. 33:1 Maatschappij only to have his claim dismissed once more by the District Court for the Southern District of New York. 32 The Second Circuit, in a kindred opinion by Judge Augustus Hand, affirmed for nearly identical reasons. 33 After these futile attempts to obtain remedy through the federal judiciary, Bernstein turned to another branch of government. He implored the Department of State for an executive authorization to allow a federal court to review his case. 34 This was exactly what he received in the form of the Bernstein Letter. 35 In sweeping language, the Letter affirmed the U.S. government s unwavering opposition to forcible acts of property expropriation by the Nazi-controlled German government and expressed its commitment to rectifying such wrongs. 36 It asserted that it would henceforth be the policy of the Executive, with respect to restitution claims arising from property expropriation and forced transfers during the state-sanctioned program of persecution that constituted the Holocaust, to relieve American courts from any restraint upon the exercise of their jurisdiction to pass upon the validity of the acts of Nazi officials. 37 Essentially, the executive branch was allowing and even requiring federal courts to abandon the practice of absolute sovereign immunity and to instead establish scenarios in which they could adjudicate claims involving actions by foreign governments. This was, in other words, restrictive immunity. 38 This declaration came at the request of a newly naturalized U.S. citizen, whose property was wrongly taken from him by his former sovereign. The trend towards restrictive sovereign immunity coincides with the growing authority of the legal bramble bush that comprises international law. Since the close of World War II and the postwar adjudication of various international crimes, the position taken by the international 32 Bernstein v. N.V. Nederlandsche Amerikaansche Stoomvaart Maatschappij, 76 F. Supp. 335 (S.D.N.Y. 1948). 33 Bernstein v. N.V. Nederlandsche Amerikaansche Stoomvaart Maatschappij, 173 F.2d 71 (2d Cir. 1949), aff g 76 F. Supp. 335 (S.D.N.Y. 1948), rev d on reh g, 210 F.2d 375 (2d Cir. 1954). 34 Robert Delson, The Act of State Doctrine Judicial Deference or Abstention?, 66 AM. J. INT L L. 82, 89 (1972). 35 Id. 36 Bernstein Letter, supra note 1, at 592 ( This government has consistently opposed the forcible acts of dispossession of a discriminatory and confiscatory nature practiced by the Germans on the countries or peoples subject to their controls. ). In support of this notion, the Letter lists nine Executive Orders, Agreements, Directives and laws of government the Allied Military Zone of occupied Germany. Highlighted is Military Government Law No. 59 on Restitution of Identifiable Property (Mil. Gov. Gaz. U.S. Zone, Nov. 10, 1947), which shows this Government s policy of undoing forced transfers and restituting identifiable property to persons wrongfully deprived of such property within the period from January 30, 1933 to May 8, 1945 for reasons of race, religion, nationality, ideology or political opposition to National Socialism. Id. at Id. at See supra note 4.

7 2011] COMITY OF ERRORS 243 legal community has generally been that sovereign governments can no longer act with complete impunity; in certain circumstances, the international community has the duty and the authority to bring to justice those sovereigns that step beyond their rightful powers of quotidian domestic governance. 39 One particularly thorny yet significant field in fact, the subject of this Note involves the problem illustrated in Bernstein s story: sovereign property expropriation that is part of a larger scheme of discrimination, persecution, and, sometimes, genocide. With the post-world War II advent of international adjudication of foreign sovereigns, 40 it comes as no surprise that the Bernstein Letter was written as an attempt to reconcile the widespread property expropriation committed by various European governments during the Holocaust and World War II. The Bernstein Letter was followed in 1952 by what is known as the Tate Letter, another declaration in which Jack B. Tate, the Acting Legal Adviser to the Department of State, affirmed the Executive s position on restrictive sovereign immunity as opposed to absolute immunity. 41 While the language of the Tate Letter primarily invoked the commercial benefits of allowing U.S. citizens to bring their disputes with foreign governments to U.S. courts, the message was clear that for certain claims, foreign governments could not always hide behind the gossamer of sovereign immunity. 42 The Bernstein Letter, which was a response to a sovereign s expropriation of the property of one of its own nationals, had thus kick-started the trend towards restrictive immunity that was later codified in the FSIA. 43 Sure enough, in compliance with the Bernstein and Tate Letters, the Second Circuit reevaluated its decision in Bernstein v. N. V. Nederlandsche Amerikaansche Stoomvaart Maatschappij in The amended decision reprinted significant portions of the Bernstein Letter and ordered that the case be tried on the merits, with the question of whether Bernstein s property was wrongly expropriated by Germany a material issue to be decided. 45 The significance of this rehearing lies not 39 See generally WOETZEL, supra note See, e.g., id. 41 Letter from Jack B. Tate, Acting Legal Adviser, Dep t of State, to Philip B. Perlman, U.S. Att y Gen. (May 19, 1952), in 26 DEP T ST. BULL. 984 (1952) [hereinafter Tate Letter]. The Tate Letter did acknowledge that the federal courts had the ultimate decision on whether to also adopt a jurisdictional interpretation of restrictive immunity. Id. at Id. 43 The Tate Letter is explicitly referenced throughout the legislative history of the FSIA. See H.R. REP. NO , at 8 9, 14, 20 (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6605, 6607, 6613; see also infra note Bernstein v. N.V. Nederlandsche Amerikaansche Stoomvaart Maatschappij, 210 F.2d 375 (2d Cir. 1954), rev g on reh g, 173 F.2d 71 (2d Cir. 1949). 45 Id. at 376 ( In view of this supervening expression of Executive Policy, we amend our mandate in this case by striking out all restraints based on the inability of the court to pass on acts of officials in Germany during the period in question..... This will permit the district court to

8 244 CARDOZO LAW REVIEW [Vol. 33:1 only in its application of restrictive immunity, but also in the fact that a claim involving a foreign sovereign s expropriation of the property of one of its own citizens was allowed to be heard by a U.S. federal court. In the face of this monumental ruling, the controversy ultimately settled out of court. 46 II. THE FSIA TAKINGS EXCEPTION AND DOMESTIC EXPROPRIATION Despite the seeming victory for restrictive sovereign immunity that culminated in the Bernstein story, in the years before the FSIA s codification of restrictive immunity, courts resisted adopting this approach to suits against foreign governments. Even if courts agreed with the Executive s proclamation in the Bernstein and Tate Letters as to the end of absolute immunity and wished to afford plaintiffs some recourse against foreign sovereign governments, it was unclear as to which scenarios and which types of claims would be exempted from sovereign immunity. Foreign governments expropriation of both U.S. citizens and foreign nationals property the latter claims significant in the sense that they sparked the Bernstein suits was a particularly hazy and controversial area for courts deciding whether and to what extent to apply restrictive immunity. 47 The FSIA and its clearly enumerated exceptions attempted to resolve these issues by exclusively controlling subject matter jurisdiction over foreign sovereigns. 48 Therefore, plaintiffs who wish to bring a restitution claim for property expropriation against a foreign sovereign must allege in their complaint that in expropriating their property or infringing upon their property rights, a foreign sovereign violated international law. 49 Since the early years of takings exception jurisprudence, courts have grappled with the broad and often unwieldy question of what constitutes a violation of international law. 50 In the years soon after the FSIA s enactment in 1976, some courts focused their attention on the plaintiff s citizenship when determining whether such an international law violation had occurred. 51 Simply stated, courts have framed accept the Release in evidence and conduct the trial of this case without regard to the restraint we previously placed upon it. (citations omitted)). 46 Delson, supra note 34, at 89 n See infra Part II.A. 48 See Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 439 (1989) (holding that the FSIA provides federal courts with exclusive subject matter jurisdiction over a foreign sovereign state). 49 The takings exception clearly requires that sovereign immunity be exempted only in cases in which rights in property are taken in violation of international law. 28 U.S.C. 1605(a)(3) (2006). 50 Id. 51 See, e.g., Jafari v. Islamic Republic of Iran, 539 F. Supp. 209 (N.D. Ill. 1982).

9 2011] COMITY OF ERRORS 245 the question as follows: Can a violation of international law ever occur where a foreign sovereign expropriates property from one of its own citizens or nationals? A. The Road to the Takings Exception Jurisprudence on sovereign expropriation claims has its roots in pre-fsia cases involving questions of sovereign immunity and international law violations. Despite executive proclamations, like the Bernstein and Tate Letters, before the passage of the FSIA in 1976, courts generally turned to traditional common law jurisprudence, such as the act of state doctrine, to decide these issues. 52 In contrast to the binding statutory limitations on federal jurisdiction under FSIA, the act of state doctrine is a common law principle with origins extending back to the seventeenth century. 53 The late nineteenth-century Supreme Court case of Underhill v. Hernandez is one of the clearest articulations of the doctrine: that inherent in the concept of international sovereignty is the comity-driven principle that a sovereign state will be free from judgment by its fellow sovereigns. 54 Essentially, the doctrine is another way of applying absolute sovereign immunity. Therefore, most pre-fsia courts that came after Underhill generally applied the act of state doctrine as a way of achieving absolute immunity. 55 This naturally excluded a foreign government s expropriation of property of one of its own citizens from the jurisdiction of U.S. courts. Banco Nacional de Cuba v. Sabbatino stands as a landmark application of the absolute immunity that the act of state doctrine bestowed upon sovereign states. 56 The case arose in the wake of the 1959 Cuban Revolution where, in response to the newly imposed U.S. trade embar- 52 For an overview of the act of state doctrine, see JAMES BISER WHISKER, THE SUPREMACY OF THE STATE IN INTERNATIONAL LAW: THE ACT OF STATE DOCTRINE (2003); Michael J. Bazyler, Abolishing the Act of State Doctrine, 134 U. PA. L. REV. 325 (1986); James L. Seal, American Courts Deference to Other Sovereigns Acts of State, in 20TH BIENNIAL CONFERENCE ON THE LAW OF THE WORLD (The World Jurist Association, 2001). The doctrine is sometimes referred to as the acts of state doctrine. 53 Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 416 (1964) ( The classic American statement of the act of state doctrine, which appears to have taken root in England as early as and began to emerge in the jurisprudence of this country in the late eighteenth and early nineteenth centuries.... (citations omitted)). 54 Underhill v. Hernandez, 168 U.S. 250, 252 (1897) ( Every sovereign state is bound to respect the independence of every other sovereign state, and the courts of one country will not sit in judgment on the acts of the government of another, done within its own territory. Redress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves. ). 55 See Bazyler, supra note 52; Andreas F. Lowenfeld, Claims Against Foreign States A Proposal for Reform of United States Law, 44 N.Y.U. L. REV. 901 (1969) U.S. 398.

10 246 CARDOZO LAW REVIEW [Vol. 33:1 go, the Castro-led government expropriated property owned by American sugar companies in Cuba. 57 In applying the act of state doctrine in such a politically charged climate, the Supreme Court held that in the absence of an unambiguous treaty or agreement, the judiciary would not examine a dispute over the expropriation of any property by a foreign government within its own territories. 58 The Court referred to the divided nature of the domestic and international opinion as to whether governmental expropriation against aliens, as well as its own citizens, violates international law. 59 Underscoring the Sabbatino decision were principles of international comity that the Court believed would be threatened if it were allowed to examine and pass judgment upon the action of a foreign government. 60 Here, the absolute-immunity-for-the-sake-of-comity reasoning of Underhill is quite apparent. It is also worth noting that the Sabbatino Court distinguished and limited the precedential application of the amended Bernstein v. N. V. Nederlandsche Amerikaansche Stoomvaart Maatschappij decision, 61 as well as that of the Bernstein and Tate Letters, to its own unique circumstances. 62 Congressional outrage over the Sabbatino decision 63 led to the swift proposal and passage of the Second Hickenlooper Amendment Id. 58 Id. at Id. 60 Id. at See supra text accompanying notes Sabbatino, 376 U.S. at The court implied that the guiding force of the Bernstein and Tate Letters was trumped in this case by correspondence issued by Abram Chayes, Legal Adviser to the Department of State. The correspondence contained the following statement: Since the Sabbatino case and other similar cases are at present before the courts, any comments on this question by the Department of State would be out of place at this time.... [S]tatements by the executive branch are highly susceptible of misconstruction. Id. at 420 n.19. Since Sabbatino, the issuance of restrictive immunity, which rose out of the Bernstein cases, has been referred to as the Bernstein exception to sovereign immunity. Essentially, courts like the Sabbatino Court reasoned that instead of having a long-lasting precedential force, the Bernstein Letter and perhaps the Tate Letter as well stood for the notion that the Executive can cause a court to exempt sovereign immunity, but must do so on a case-by-case basis. For more on the so called Bernstein exception, see Bazyler, supra note 52, at , See William Harvey Reeves, The Sabbatino Case and the Sabbatino Amendment: Comedy or Tragedy of Errors, 20 VAND. L. REV. 429 (1967) U.S.C. 2370(e)(2) (2006) ( Notwithstanding any other provision of law, no court in the United States shall decline on the ground of the federal act of state doctrine to make a determination on the merits giving effect to the principles of international law in a case in which a claim of title or other right to property is asserted by any party including a foreign state (or a party claiming through such state) based upon (or traced through) a confiscation or other taking after January 1, 1959, by an act of that state in violation of the principles of international law, including the principles of compensation and the other standards set out in this subsection.... (emphasis added)). The Second Hickenlooper Amendment was originally attached to the Foreign Assistance Act of 1964, Pub. L. No , 301(d)(4), 78 Stat. 1009, It is worth noting the Act s provision concerning the embargo of trade with Cuba, which provides that

11 2011] COMITY OF ERRORS 247 within months of the judicial ruling. 65 In theory, the Amendment was designed to prohibit federal courts from applying the act of state nonjusticiability doctrine in cases involving expropriation by a foreign sovereign state that may be in violation of the principles of international law. 66 In this sense, the Amendment can be seen as a legislative prototype of the FSIA takings exception. But while it sought to resolve the issue of discriminatory expropriation of aliens by foreign governments, it did not explicitly address whether immunity should be granted to foreign governments that expropriate property from their own citizens or nationals. 67 Despite this, in the short time period between the passage of the Amendment and the FSIA s codification of restrictive sovereign immunity 1964 through 1976 courts presumed that the Sabbatino absolute immunity principle naturally extended to situations involving property expropriation. 68 The question of whether sovereign immunity no assistance shall be furnished under this chapter to any government of Cuba, nor shall Cuba be entitled... to receive any other benefit under any law of the United States, until the President determines that such government has taken appropriate steps according to international law standards to return to United States citizens, and to entities not less than 50 per centum beneficially owned by United States citizens, or to provide equitable compensation to such citizens and entities for property taken from such citizens and entities on or after January 1, 1959, by the Government of Cuba. 22 U.S.C. 2370(a)(2) (2006). For more on American claims to property expropriated during the Cuban Revolution of 1959, see Understanding U.S. Claims, CERTIFIED CUBAN CLAIMS, (last visited Dec. 3, 2010). 65 Seal, supra note 52, at 8 9. The Second Hickenlooper Amendment is sometimes referred to as the Sabbatino Amendment. Reeves, supra note U.S.C. 2370(e)(2) (2006). 67 Moreover, courts have interpreted the Second Hickenlooper Amendment quite narrowly. See, e.g., Menendez v. Saks & Co., 485 F.2d 1355, 1372 (2d Cir. 1973) (holding that the Amendment is not applicable to claims related to contracts); Occidental of Umm Al Qaywayn, Inc. v. Cities Serv. Oil Co., 396 F. Supp. 461, 472 (W.D. La. 1975) (holding that the Amendment is limited only to claims of title by involving nationalization of American owned property, based on prior holdings by the Court of Appeals for the Second Circuit); Occidental Petrol. Corp. v. Buttes Gas & Oil Co., 331 F. Supp. 92, 112 (C.D. Cal. 1971), aff d, 461 F.2d 1261 (9th Cir. 1972) (holding that the exception to the Act of State doctrine afforded by the Amendment is extremely narrow and does not include confiscation attempts); Hunt v. Coastal States Gas Producing Co., 570 S.W.2d 503, 508 (Tex. Civ. App. 1978) (holding that the Amendment applies only if the property in dispute comes within U.S. territorial jurisdiction); see also Bazyler, supra note 52, at (averring that the Amendment had almost no effect on the [act of state] doctrine, and that the only time it was applied successfully was in the remand of Sabbatino: Banco Nacional de Cuba v. Farr, 383 F.2d 166 (2d Cir. 1967)). 68 See, e.g., F. Palicio y Compania, S.A. v. Brush, 256 F. Supp. 481, 487 (S.D.N.Y. 1966), aff d per curiam, 375 F.2d 1011 (2d Cir. 1967). For influential historical precedent used by the Brush court, see M. Salimoff & Co. v. Standard Oil Co. of N.Y., 262 N.Y. 220, 227 (1933) (holding that under the the law of nations, the Soviet Republic of Russia did no legal wrong when it confiscated the oil of its own nationals and sold it in Russia to the defendants ); see also United States v. Belmont, 301 U.S. 324 (1936) (exhibiting non-interference by the U.S. federal court in the act of expropriation of a foreign sovereign against one of its own nationals in that case, Bolshevik nationalization of the private property of a Soviet citizen). It is further noted that the Tate Letter did concede that the judiciary would ultimately have the discretion to adopt a more restrictive approach to sovereign immunity as recommended by the Executive. Tate Letter, supra note 41, at 985 ( It is realized that a shift in policy by the executive

12 248 CARDOZO LAW REVIEW [Vol. 33:1 should be restricted in cases involving expropriation of the property of a foreign sovereign s own national would not be addressed directly until courts began interpreting the FSIA takings exception. B. The Role of Plaintiff Citizenship in Takings Exception Interpretation Since the FSIA s codification of restrictive sovereign immunity, courts have generally minimized the weight and effect of the act of state doctrine. 69 The FSIA was passed in 1976, partially as a way to settle the nebulous judicial interpretation of the scope of the act of state doctrine and other principles of nonjusticiability related to foreign sovereign immunity. 70 Specifically, the FSIA takings exception controls the jurisdiction of courts over suits against foreign sovereigns, claiming unlawful property expropriation. 71 In Zappia Middle East Construction Co. v. Emirate of Abu Dhabi 72 the exception was broken down into a fourpronged test in which a plaintiff must show that (1) rights in property are at issue; (2) the property was taken ; (3) the taking was in violation of international law; and (4) one of the two nexus requirements 73 is satisfied. 74 Even though the legislative history was clear that the violation of international law requirement of the third Zappia prong would cannot control the courts but it is felt that the courts are less likely to allow a plea of sovereign immunity where the executive has declined to do so. ). 69 See, e.g., Bodner v. Banque Paribas, 114 F. Supp. 2d 117, 122, (E.D.N.Y. 2000) (finding the act of state doctrine as well as deference to principles of international comity inapplicable to a claim alleging the Vichy France and Nazi Germany governments cooperation with French banks in the property expropriation, discrimination, and genocide of French Jews during World War II); see also RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW OF THE U.S. 444 (1987) ( In the absence of a Presidential determination to the contrary, the act of state doctrine will not be applied in a case involving a claim of title or other right to property, when the claim is based on the assertion that a foreign state confiscated the property in violation of international law. ). 70 H.R. REP. NO (1976), reprinted in 1976 U.S.C.C.A.N. 6604; see also Von Dardel v. Union of Soviet Socialist Republics, 623 F. Supp. 246, 251 (D.D.C. 1985), vacated, 736 F. Supp. 1 (D.C. Cir. 1990). For a survey of the confused and confusing state of the law with regards to sovereign immunity as it was in the years leading up to the codification of the FSIA, see Lowenfeld, supra note HAZEL FOX, THE LAW OF STATE IMMUNITY (2002). 72 Zappia Middle East Constr. Co. v. Emirate of Abu Dhabi, 215 F.3d 247 (2d. Cir. 2000). 73 The nexus requirements refers to a requirement related to the physical location of the expropriated property and the connection between the foreign sovereign and the United States. Under the nexus requirements, the complaint must show either that (i) the property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state or (ii) the property is currently owned by an agency of the foreign sovereign that is engaged in a commercial activity in the United States. 28 U.S.C. 1605(a)(3) (2006). 74 Zappia, 215 F.3d at 251; see also Garb v. Republic of Poland, 440 F.3d 579, 588 (2d Cir. 2006). This Note examines courts jurisprudence concerning whether property was expropriated in violation of international law, or the third Zappia prong.

13 2011] COMITY OF ERRORS 249 include nationalization and expropriation, 75 the question as to whether plaintiffs, who were either citizens or nationals of the sovereign at the time of the expropriation, could avail themselves of the takings exception to litigate their claims remained unclear. 76 Jafari v. Islamic Republic of Iran 77 is one of the few interpretations of the FSIA to acknowledge and address this question directly. 78 The facts of this case are similar to those of Sabbatino: Jafari involved a suit against the new Iranian government, which was established as a result of the 1979 Revolution, for the expropriation of private property. 79 Differing from the Cuban case, and perhaps dispositive of the holding, was that at the time of the expropriation all four plaintiffs were Iranian nationals. 80 At the filing of the lawsuit, only one plaintiff, Kianoosh Jafari, was a U.S. citizen. 81 The court split its reasoning for dismissing the entire suit into two parts: one part addressing the claims of the non-u.s. citizen plaintiffs, and another part for Kianoosh Jafari, who became a U.S. citizen after the alleged expropriation, but before the suit s filing. 82 Despite ultimately dismissing the non U.S. citizens claims for lack of subject matter jurisdiction in the face of the Alien Tort Act (ATA), 83 the Jafari court nonetheless addressed the foreign sovereign immunity issue with regard to these plaintiffs. 84 The court stated in dicta that because these plaintiffs had Iranian citizenship at the time of the expropriation, a violation of international law necessarily could not be alleged and therefore the issue was nonjusticiable. 85 Relying on an in- 75 H.R. REP. NO , at 19 20, reprinted in 1976 U.S.C.C.A.N. at 6618 ( The term taken in violation of international law would include the nationalization or expropriation of property without payment of the prompt adequate and effective compensation required by international law. It would also include takings which are arbitrary or discriminatory in nature. ). 76 Under the Alien Tort Act, federal courts have jurisdiction over claims brought by aliens for a tort only. 28 U.S.C (2006). The FSIA, therefore, cannot confer jurisdiction over aliens bringing expropriation claims. While many of the plaintiffs in these types of takings exception claims are U.S. citizens or nationals at the time of the suit, the issue concerns their citizenship at the time of the alleged expropriation by the foreign sovereign defendant F. Supp. 209 (N.D. Ill. 1982). 78 The question of whether a foreign sovereign that expropriates property from one of its own citizens or nationals has immunity in federal courts, which is the guiding thrust of this Note, has rarely been discussed in ratio decidendi in federal court opinions interpreting the act of state doctrine, the FSIA, or other jurisdictions, principles or doctrines involving the question of foreign sovereign immunity. 79 Jafari, 539 F. Supp Id. at Id. 82 Id U.S.C (2006); see also supra note However, despite conducting an interpretive analysis of the takings exception, the court was clear that the weight of its decision rested on the lack of subject matter jurisdiction because of the Alien Tort Act. Jafari, 539 F. Supp. at Id. at 215 n.8. ( It is relevant for this analysis that the expropriation challenged here affected property of the sovereign s own subjects. Conceptual difficulties confront the purely intra national wrong sought to be labeled a violation of inter national [sic] law. ).

14 250 CARDOZO LAW REVIEW [Vol. 33:1 terpretation of the FSIA that embodied the comity-infused ethos of Sabbatino, the district court invoked the general principles of the act of state doctrine. 86 The court also relied on the Bernstein-like case Dreyfus v. Von Finck, which held that because a plaintiff was a German national, the admittedly wrongful expropriation of his property interest in his banking firm by the Nazi government in 1938 did not violate international law. 87 Because Kianoosh Jafari was a U.S. citizen at the time of the suit, his claim was not subject to dismissal under the ATA. 88 It would thus seem that the Jafari court would have had to address the applicability of the takings exception, which necessarily would have involved a determination of whether a violation of international law had occurred from the alleged expropriation. The court ultimately concluded, however, that while it may have subject matter jurisdiction over Kianoosh s claim under the FSIA, 89 sovereign immunity could be derived from other sources: namely, the Algerian Accords 90 and the Suspension of Litigation Against Iran Executive Agreement 91 barred the suit. 92 The Jafari court explicitly acknowledged the need to sort out the confusion in the law regarding plaintiff citizenship and the takings exception; 93 however, 86 Id. at 215 ( It may be foreign to our way of life and thought, but the fact is that governmental expropriation is not so universally abhorred that its prohibition commands the general assent of civilized nations... a sharp conflict of views exists in the world as to such expropriation, mainly between capital-exporting and capital-importing nations, and between socialist and capitalist nations. We cannot elevate our American-centered view of governmental taking of property without compensation into a rule that binds all civilized nations. (quoting Filartiga v. Pena-Irla, 630 F.2d 876, 881 (2d Cir. 1980)); see also supra text accompanying note Dreyfus v. Von Finck, 534 F.2d 24 (2d Cir. 1976); see infra Part III.A. 88 Jafari, 539 F. Supp. at 211; see supra note Jafari, 539 F. Supp. at Declaration of the Government of the Democratic and Popular Republic of Algeria Concerning the Settlement of Claims by the Government of the United States of America and the Government of the Islamic Republic of Iran, reprinted in 1 IRAN-U.S. CL. TRIB. REP. 9 (Jan. 19, 1981) [hereinafter Algerian Accords]. 91 Exec. Order No. 12,294, 46 Fed. Reg. 14,111 (Feb. 24, 1981) [hereinafter Suspension of Litigation Against Iran]. 92 Jafari, 539 F. Supp. at In the wake of the Iranian Revolution of 1979 and Hostage Crisis of , these agreements essentially set up an international forum to arbitrate for claims by American citizens against the government of Iran: the United States-Iran Claims Tribunal in The Hague. Algerian Accords, supra note 90, arts. II, VII. Under these agreements, the Tribunal s jurisdiction over a claim would necessarily exclude that claim from the jurisdiction of a U.S. federal court. Suspension of Litigation Against Iran, supra note 91, 1; see also Dames & Moore v. Regan, 453 U.S. 654 (1981). Prior to the suit at the district court level, Kianoosh Jafari had already filed a claim with this Tribunal. Jafari, 539 F. Supp. at 212. The Jafari court acknowledged that because of the change in his citizenship status, whether his claim would fall under the Tribunal s jurisdiction jurisdiction granted by the Algerian Accords remained open to question. Id. However, the court concluded that it was for the Tribunal not a U.S. district court to decide questions of jurisdiction. Id. 93 Jafari, 539 F. Supp. at 213 n.4 ( This dismissal is perforce without prejudice, although for the reasons already voiced this Court doubts the existence of jurisdiction in any case. If Kianoosh were to be spurned by the Tribunal and then seek to refile his claims in federal court, the law in

15 2011] COMITY OF ERRORS 251 it ultimately punted the issue for another time and another court (even another international tribunal), relying on principles of nonjusticiability via executive agreements. 94 The Jafari court acknowledged the prickly position plaintiff citizenship plays in takings exception analysis. However, due to issues outside the scope of the FSIA, 95 however, the court did not conclusively determine whether a plaintiff s citizenship with a sovereign defendant would automatically require dismissal. Siderman de Blake v. Republic of Argentina 96 essentially picked up where Jafari left off. The case involved an Argentine-Jewish family s allegation that property was expropriated from them as part of an anti- Semitic program implemented by the military junta that controlled Argentina s government in the mid-1970s. 97 Three of the named plaintiffs Jose, Lea, and Carlos Siderman fled the country, seeking refuge in the United States, where they subsequently attained citizenship. There, they joined family member Susana Siderman de Blake, who had been a U.S. citizen since 1967, before the allegedly injurious acts took place. 98 At the time of the filing, all four family members named as plaintiffs were American citizens; 99 at the time of the taking, however, Jose, Lea, and Carlos Siderman were Argentine nationals. 100 In addressing the claims by Jose, Lea, and Carlos Siderman, the court swiftly concluded that the takings exception did not apply simply because those plaintiffs were citizens of Argentina at the time of the expropriation. 101 When addressing the question of whether the foreign sovereign defendant violated international law, the court presumed that because these plaintiffs were Argentine citizens, such a violation of international law necessarily could not have occurred. 102 Once the court this area might be better settled at that time, facilitating a definitive decision. In the meantime it seems prudential to avoid a jurisdictional decision that may never be necessary. (emphasis added)). 94 For a detailed criticism of federal courts broad use of executive agreements and statements to render claims against foreign sovereigns nonjusticiable, see Graham O Donoghue, Note, Precatory Executive Statements and Permissible Judicial Responses in the Context of Holocaust Claims Litigation, 106 COLUM. L. REV (2006). 95 See, e.g., Alien Tort Act, 28 U.S.C (2006); Algerian Accords, supra note 90; Suspension of Litigation Against Iran, supra note Siderman de Blake v. Republic of Argentina, 965 F.2d 699 (9th Cir. 1992). 97 Id. at Id. at Therefore, the ATA would not apply. See supra note Siderman, 965 F.2d at Id. at With regard to Susana Siderman de Blake s expropriation claim, though, the court found that her claim indeed fell within the takings exception. Thus, it remanded the dispute to the district court for a more complete investigation into the jurisdictional basis for the expropriation claims against the foreign sovereign Argentina. Id. at Further, with respect to Susana s claims, the Ninth Circuit was clear in its assertion that the district court erred in applying [the act of state] doctrine before Argentina had even entered an appearance in the case. Id. at 713.