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As with other provisions in 28 U.S.C. 1391, venue under the new subsection (f) could be waived by a foreign state, such as by failing to object to improper venue in a timely manner. See Rule 12 (h), F.R. Civ. P.

SEC. 6. Removal of Cases from State Courts.

The bill adds a new provision to 28 U.S.C. 1441 to provide for removal to a Federal district court of civil actions brought in the courts of the State against a foreign state or a political subdivision, agency or instrumentality of a foreign state. In view of the potential sensitivity of actions against foreign states and the importance of developing a uniform body of law in this area, it is important to give foreign states clear authority to remove to a Federal forum actions brought against them in the State courts. New subsection (d) of Section 1441 permits the removal of any such action at the discretion of the foreign state, even if there are multiple defendants and some of these defendants desire not to remove the action or are citizens of the State in which the action has been brought.

As with other removal provisions, a petition for removal must be filed with the appropriate district court in a timely manner. 28 U.S.C. 1446. However, in view of the 60-day period provided in Section 1608(c) in the bill and in view of the bill's preference that actions involving foreign states be tried in Federal courts, the time limitations for filing a petition of removal under 28 U.S.C. 1446 may be extended "at any time" for good cause shown.

Upon removal, the action would be heard and tried by the appropriate district court sitting without a jury. Cf. 28 U.S.C. 2402, precluding jury trials in suits against the United States. Thus, one effect of removing an action under the new Section 1441(d) will be to extinguish a demand for a jury trial made in the State court. Cf. Rule 81(c), F.R. Civ. P. Because the judicial power of the United States specifically encompasses actions "between a State, or the Citizens thereof, and foreign States" (U.S. Constitution, Art. III, Sec. 2, Cl. 1), this preemption of State court procedures in cases involving foreign sovereigns is clearly constitutional.

This section, again, would not apply to entities owned by a foreign state which are citizens of a State of the United States as defined in 28 U.S.C. 1332(c) and (d), or created under the laws of a third country.

SEC. 7. Severability of Provisions.

This action provides that if a portion of the Act or any application of the Act should be found invalid for any reason, such invalidity would not affect any other provision or application of the Act.

SEC. 8. Effective Date.

This section establishes that the effective date of the Act shall be 90 days after it becomes law. A 90-day period is deemed necessary in order to give adequate notice of the Act and its detailed provisions to all foreign states.

Dept. of State File No. P75 0172-1430.

§ 8

Acts of Foreign States

Act of State Doctrine

In Occidental of Umm Al Qaywayn, Inc. v. Cities Service Oil Co., 396 F. Supp. 461 (1975), the U.S. District Court for the Western District of Louisiana, on July 8, 1975, granted the defendant company's motion for summary judgment based on application of the act of state doctrine and on the nonapplicability of the Hickenlooper Amendment. The plaintiff, Occidental, sought to recover crude oil seized on board three tankers. The oil had been extracted by Buttes Gas and Oil Company from the seabed of the Arabian Gulf at a point nine miles off the coast of the island of

Abu Musa, in an area where three sovereign entities claim some right, title, or interest.

Occidental and Buttes Gas and Oil Company were holders of offshore oil concession agreements granted by two adjacent sheikdoms-Umm Al Qaywayn and Sharjah, respectively. Sharjah and Iran refused to recognize Occidental's concession, which was later terminated by Umm, allegedly for failure to make payments. Instead, Sharjah and Iran recognized Buttes' concession, thus enabling Buttes to commence drilling and produce the oil. Such action, Occidental argued, was tantamount to a confiscation, which the Court was required to adjudicate by the Hickenlooper Amendment (Sec. 620(e)(2) of the Foreign Assistance Act of 1961, added in 1964 (78 Stat. 1009, 22 U.S.C. 2370(e)(2)).

In an earlier suit on the subject, where plaintiff had filed an antitrust action against Buttes as the principal defendant, the Court had granted a motion to dismiss on the basis that the act of state doctrine precluded further adjudication and that the exception to the doctrine in the Sabbatino (Hickenlooper) Amendment was by its terms extremely narrow and not applicable to the situation. Occidental Petroleum Corp. v. Buttes Gas and Oil Co., 311 F. Supp. 92 (1971), affirmed 461 F.2d 1261 (1972), cert. denied 409 U.S. 950 (1972).

In the present case the defendants argued for dismissal or summary judgment on five grounds: res judicata, collateral estoppel, the act of state doctrine, the fact that resolution of the issues would require adjudication of a boundary dispute between foreign nations, and the absence of Sharjah, Iran, and Umm Al Qaywayn, which were indispensable parties.

The Court rejected the res judicata and collateral estoppel arguments. It also rejected the notion of indispensability of the absent sovereigns, stating that such a holding "would render illusory the very rights the Hickenlooper Amendment seeks to preserve." Concerning the boundary dispute and the act of state doctrine, the Court held (1) where resolution of the action would depend on resolving questions as to a territorial dispute among foreign nations, it was precluded by the act of state doctrine, and (2) the Hickenlooper exception did not apply since a foreign nation's extension of its claim to territorial waters did not constitute a "confiscation" within the meaning of the Hickenlooper Amendment. The Court said:

Throughout this litigation defendants have treated as an unassailable rule of law the premise that a United States Court cannot decide a case involving the private rights of private parties to property if the adjudication of those rights requires a

collateral determination of any kind with respect to boundaries. We do not read the jurisprudence to be that all-embracing. We prefer a narrower construction, and conclude that if the resolution of the boundary dispute requires inquiry into the authenticity and motivations of the acts of foreign states, then and in that case judicial resolution would be inappropriate. This issue reflects the unconventional nature of this litigation, which arises out of the claims and acts of a number of foreign states. The concerns aroused by the boundary aspects are intricately interwoven with the act of state doctrine. The two must be considered together, vis-a-vis the Hickenlooper Amendment.

When foreign governments perform an act of state which changes the relationship of the parties touching the "res," and this change results in an accomplished fact (as here), then it would be an affront to such a foreign government for courts of the United States to hold that such act was a nullity. ...

After reviewing the background and legislative history of the Hickenlooper Amendment, the Court stated further:

. . the Amendment has been very stringently applied and strictly construed. This limited exception controls only when (a) a claim of title or other right to property is asserted, (b) based upon a confiscation or other taking, (c) in violation of international law.

The issue quickly narrows: Are defendants precluded from invoking the act of state doctrine by the Hickenlooper Amendment. . . . We believe the answer must be in the negative.

FIRST:... We find nothing in the wording of the statute or in its legislative history which would give plausibility to Occidental's major premise that the conduct of Sharjah and/or Iran amounted to a "confiscation." We cannot ascribe to the belief that a confiscation of plaintiff's concession agreement occurred when Sharjah and Iran allegedly extended their territorial waters claim to include the disputed area. Territorial waters claims are subject to a body of international law, wholly different from that related to confiscations.

We hold that the conduct set forth in the complaint did not amount to a confiscation within the meaning of the Hickenlooper Amendment. . . .

On its face a claim to submerged lands and their superadjacent waters coincidental with a lease for the exploration of mineral resources could not conceivably have been envisioned by Congress to rise to the magnitude of a confiscation within the narrow confines of the Hickenlooper Amendment. .

SECONDLY: . . . The property allegedly confiscated was the Occidental concession. It was not the confiscation of an oil well. The "concession agreement" was nothing more than a lease contract under which the lessee agreed to pay certain considera

tions to the lessor for the privilege of exploring, drilling for, and extracting oil. . . . Simply stated, the concession agreement was a contractual right to explore for and extract oil from a given area. This agreement did not constitute "a claim of title or other right of property" within the meaning of the amendment.

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In D'Angelo v. Petroleos Mexicanos, 398 F. Supp. 72 (1975), the receiver of a Delaware corporation brought action against a decentralized Mexican governmental agency which had been created to handle production of petroleum in Mexico following the 1938 expropriation decree by the Mexican Government. Plaintiff requested an order requiring the defendant to account to him for oil produced from wells in Mexico in which he claimed the Delaware corporation had royalty or participation interests.

The defendant moved for summary judgment based upon the grounds that (a) the act of state doctrine precluded the Court from considering the merits of plaintiff's claim, (b) the statute of limitations and/or laches barred the claim, and (c) the doctrine of forum non conveniens required a dismissal of the action. The plaintiff sought a summary judgment on the basis of the record. The U.S. District Court for the District of Delaware, in a decision rendered on July 16, 1975, denied all of the defendant's motions.

With respect to the act of state doctrine, the Court held that it did not bar the present action since the complaint did not assert that the expropriation was invalid, but rather that it did not affect the rights of the Delaware corporation. The Court distinguished between cases where courts have interposed the act of state doctrine to prevent a judicial adjudication of the validity of a foreign governmental act and cases where the issue was how to interpret the state act. The Court observed:

In the case at bar, so far as the record discloses, there has been "no official declaration" by the Republic of Mexico as to whether the expropriation decree of 1938 was intended to divest plaintiff and others similarly situated of their rights in the confirmatory concessions and interests thereunder. Had the record revealed such an "official declaration" such interpretation might perhaps be deemed to constitute an act of state which would preclude this Court from making an independent examination of the effect of the decree. This, however, is not presently decided.

On the remaining issues, the Court's holdings were that there was insufficient evidence of record to determine that the action was, as a matter of law, barred by the statute of limitations; that the case would not be dismissed on grounds of forum non conveni

ens; and that the Delaware corporation was not entitled to judgment as a matter of law in view of conflicting evidence.

The Supreme Court granted certiorari on May 13, 1974, 416 U.S. 981, in the case of Alfred Dunhill of London, Inc. v. The Republic of Cuba, No. 73–1288. On June 16, 1975, 422 U.S. 1005, the case was restored to the calendar for reargument, and the Court requested the parties to discuss whether its holding in Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964), should be reconsidered. Solicitor General Robert H. Bork authorized filing by the United States of a brief amicus curiae.

The Dunhill case arose out of the expropriation by Cuba in 1960 of several cigar concerns, and the payments thereafter sent to Cuba by American importers (including Dunhill) for pre-expropriation cigar shipments. The U.S. Court of Appeals for the Second Circuit had held that (a) the Cuban Government's acceptance of the mistaken payments in Cuba and its refusal to return the payments were an act of state, and (b) under First National City Bank v. Banco Nacional de Cuba, 406 U.S. 759 (1972), the importers' counterclaims against the Cuban Government would be allowed only up to the amount of the award to the Cuban Government, thus rejecting Dunhill's entitlement to a counterclaim judgment in excess of the judgment in favor of Cuba. Menendez v. Saks, 485 F.2d 1355 (1973). See also the 1973 Digest, pp. 234–237.

On November 26, 1975, Monroe Leigh, Legal Adviser of the Department of State, wrote a letter to Solicitor General Bork stating the Department's view that the question of reconsideration of the Sabbatino case involved matters of importance to the foreign policy interests of the United States and requesting that its views be conveyed to the Supreme Court. The following is an excerpt from Mr. Leigh's letter:

we do not believe that the Dunhill case raises an act of state question because the case involves an act which is commercial, and not public, in nature. Moreover, since 1952, the Department of State has adhered to the position that the commercial and private activities of foreign states do not give rise to sovereign immunity. Implicit in this position is a determination that adjudications of commercial liability against foreign states do not impede the conduct of foreign relations, and that such adjudications are consistent with international law on sovereign immunity.

In the event, however, that the Court reaches the question whether the Sabbatino holding should be reconsidered, we believe that the following considerations should be called to the Court's attention:

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