Contracting State." (See Article I, paragraph 3 of the Convention and the United States declaration in connection with ratification, reprinted at 9 U.S.C. 201 note.) Thus the situs of the arbitration and not the nationality of the parties to the dispute determines whether the award is enforceable. Because Switzerland, the situs of the present arbitration, is a party to the Convention, Libya cannot invoke its non-party status to avoid enforcement of the award.

Finally, the declaration made by the United States in connection with ratification does not affect the enforceability of this award. In that declaration the United States exercised its option pursuant to Article I, paragraph 3 of the Convention to state that it "will apply the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the United States." The word "commercial" is used here in a broad sense, as the implementing legislation makes clear. Section 202 of title 9 specifies that "a transaction, contract, or agreement described in section 2 of this title" will be considered "commercial"; and section 2 refers broadly to "a transaction involving commerce." The agreement in the present case clearly falls within this broad definition.

17 Of course, Congress may by statute require application of a legal rule that is inconsistent with a treaty commitment. Though such a statute is effective as a matter of domestic law, it cannot supplant the obligation on the international plane, which remains binding while the treaty is in force. 5 G. Hackworth, Digest of International Law 194-95 (1943). Accordingly, where there is doubt as to the proper interpretation of a national law rule, it is appropriate to construe the rule harmoniously with the international obligation. Whitney v. Robertson, 124 U.S. 190 (1888).

18 The classic statement of the act of state doctrine is found in 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.

19 See First National City Bank v. Banco Nacional de Cuba, 406 U.S. 759 at 763 (1972) (plurality opinion).

20 Sabbatino, supra, 376 U.S. at 423.

21 Id.

22 Moreover, Congress, in limiting the scope of the Sabbatino decision, has indicated a preference for a narrow application of the act of state doctrine. See 22 U.S.C. 2370(e)(2).

23 The Supreme Court's Sabbatino opinion recognizes that application of the act of state doctrine is not needed where the courts are called upon to "focus on the application of an agreed principle to circumstances of fact rather than on the sensitive task of establishing a principle not inconsistent with the national interest or with international justice." 376 U.S. at 428. The "agreed principle" or "unambiguous agreement” (id.) in the present case is

the agreement to submit disputes to binding arbitration.

24 The withholding of foreign aid and the sanctions of economic embargo and freezing of assets are among the weapons noted by the Sabbatino court, 376 U.S. at 435-36.

25 See, e.g., Letelier v. Republic of Chile, [488] F. Supp. [665] (D.D.C. No. 78-1477, Mar. 11, 1980) ("To hold otherwise would totally emasculate the purpose and effectiveness of the Foreign Sovereign Immunities Act by permitting a foreign state to reimpose the so recently supplanted framework of sovereign immunity as defined prior to the act." . . . [488 F. Supp. at 674.]

Brief for the United States as Amicus Curiae, Libyan American Oil Company v. Socialist People's Libyan Arab Jamahirya [Jamahiriya], Nos. 80-1207 and 80-1252 (D.C. Cir.), pp. 7-28; also to be found at Dept. of State File No. P82 0164-0067.

The brief concluded by urging reversal of the district court's dismissal of LIAMCO's suit on the basis of the act of state doctrine and affirmance of its jurisdictional ruling.

The Department of State again sought to clarify the scope of the act of state doctrine in regard to foreign nationalizations, following the district court's decision in Ethiopian Spice Extraction Share Company v. Kalamazoo Spice Extraction Company; Kalamazoo Spice Extraction Company v. Provisional Military Government of Socialist Ethiopia, 543 F. Supp. 1224 (W.D. Mich. 1982). There Judge Benjamin F. Gibson held on July 6, 1982, that the act of state doctrine barred adjudication of the claim of the Kalamazoo Spice Extraction Company ("Kal-Spice") to compensation for expropriation of the major part of its shares in an Ethiopian corporation by the Provisional Military Government of Socialist Ethiopia (PMGSE). Kal-Spice urged its claim as a counterclaim in the first action, one for goods sold and delivered and for an account stated, in which it moved, also, to have the PMGSE added as an indispensable party plaintiff, or, alternatively, to have it formally named as being already in fact a party plaintiff. Kal-Spice then filed a separate action on its claim for compensation against the Ethiopian Government itself, and moved to consolidate the cases.

Without consolidating the cases, the district court granted the plaintiff's motion for partial summary judgment in the first case and the defendant's motion to dismiss in the second. In the latter the Court upheld the Ethiopian Government's argument that the act of state doctrine barred the action. In so doing, the Court ruled that the property protection provision (Art. VIII, §2) of the 1951 Treaty of Amity and Economic Relations between the United States and Ethiopia did not "demonstrate unambiguous agreement on controlling legal standards" so as to permit application of the "treaty exception" to the act of state doctrine. (Under the treaty provision, property, including property interests, of either party's nationals and companies is not to be taken except for a public purpose nor without prompt payment of just and effective compensation.)

Kal-Spice appealed the district court's dismissal, and the U.S. Government and the American Bar Association appeared as amici curiae on the appeal. (The Government's brief amicus may be found also at Dept. of State File No. P84 0151-0761.) On Mar. 9, 1984, in Kalamazoo Spice Extraction Co. v. Provisional Military Government of Socialist Ethiopia, 729 F.2d 422 (6th Cir. 1984), a three-judge panel of the U.S. Court of Appeals for the Sixth Circuit reversed and remanded. The treaty provision in question, Circuit Judge Damon J. Keith said, was "a controlling legal standard in the area of international law", and the term, "prompt, just and effective compensation" and similar terms were found in many United States treaties. 729 F.2d at 426.

On remand, the Provisional Military Government of Socialist Ethiopia renewed its motion to dismiss, upon the grounds that the Court lacked subject matter jurisdiction

over Kal-Spice's claims, that the Court lacked personal jurisdiction over the Ethiopian Government, and that venue in the Western District of Michigan was improper. On Aug. 26, 1985, in Kalamazoo Spice Extraction Company v. Provisional Military Government of Socialist Ethiopia, 616 F.Supp. 660 (W.D. Mich. 1985), District Judge Gibson ruled against all three arguments and denied the defendant's motion to dismiss.

On Dec. 19, 1985, the Government of the United States of America and the Provisional Military Government of Socialist Ethiopia entered into a compensation agreement for settlement of claims of U.S. nationals relating to property, rights, and interests in Ethiopia affected by measures of nationalization, expropriation and other restrictive measures ordered or decreed by the Ethiopian Government. TIAS ; see also, Am. J. Int'l L., Vol. 80 (1986), pp. 344-345.

On Dec. 26, 1985, District Judge Benjamin F. Gibson of the Western District of Michigan, on the stipulation of the parties dated Dec. 20, 1985, ordered the dismissal with prejudice of the complaint and counterclaims in Ethiopian Spice Extraction Share Company v. Kalamazoo Spice Extraction Company, Kalsec, Inc., and Kalsec International, Inc., Case No. K79-400 CA, and of the complaint in Kalamazoo Spice Extraction Company v. Provisional Military Government of Socialist Ethiopia, Case No. K81-17 CA.

The Treaty of Amity and Economic Relations between the United States and Ethiopia, and related notes, signed at Addis Ababa, Sept. 7, 1951, may be found at TIAS 2864; 4 UST 2134; entered into force, Oct. 8, 1953. Those notes that concerned administration of justice were terminated by an exchange of notes at Addis Ababa, Sept. 16, 1965 and Oct. 20, 1972; TIAS 7726; 24 UST 2136; entered into force, May 3, 1973.

Because of Ethiopian failure to take meaningful steps to provide compensation to Americans whose properties were expropriated, the United States suspended foreign assistance in 1979, pursuant to the Hickenlooper Amendment; see the 1979 Digest, pp. 1388-1389. The United States had also begun voting in various multilateral development banks against proposed loans to Ethiopia, and had denied generalized tariff preferences to Ethiopia. Brief for the United States as Amicus Curiae, Kalamazoo Spice Extraction Company v. Provisional Military Government of Socialist Ethiopia, No. 82-1521 (729 F.2d 422), p. 5.

Chapter 7

LAW OF THE SEA AND
INTERNATIONAL WATERWAYS

General

United States Ocean Policy

Third U.N. Conference on the Law of the Sea

On October 1, 1980, Ambassador Elliot L. Richardson, Ambassador at Large and Special Representative of the President for the Law of the Sea Conference, discussed with the members of the House Committee on Foreign Affairs the status of negotiations upon conclusion of the Ninth Resumed Session of the Law of the Sea Conference, held at Geneva, July 28-August 29, 1980.

Ambassador Richardson said that only four substantial issues required additional work. Three of them were not central to the text of the Convention (treaty) itself but involved procedurally oriented matters: (1) participation (“essentially the issue of what countries or entities will be allowed to become parties to the treaty"); (2) the Preparatory Commission (“a body established [by resolution of the Conference, to come into existence] after signature and before entry into force of the treaty in order to take steps necessary to create the institutions that would be established by the treaty . . . [its] critical functions . . . includ[ing] the design of the administrative structure of these institutions and most important of all, the preparation of the [provisional] rules, regulations, and procedures of the future International Seabed Authority"); and (3) preparatory investment protection ("measures necessary to encourage seabed mining investment to go forward in the interval between signature of the treaty and its entry into force").

Ambassador Richardson noted that additional negotiations would be necessary on the fourth remaining substantial issue, boundary delimitation, the existing text of which was acceptable to the United States and to many other countries. He then commented at length on "the most important accomplishments of the resumed session in Geneva, [which] as our [United States delegation] report indicates, .. [concerned] the Deep Seabed Mining Regime" (in regard to which see this Chapter, §5, post).

The 1980 Geneva Session and Status of the Negotiations on the Law of the Sea: Hearing before the House Comm. on For. Aff., 96th Cong., 2d sess. (1980), pp. 4-6.

Following presentation of his opening statement before the Committee, Ambassador Richardson answered questions from Committee members. Excerpts follow:

Chairman ZABLOCKI. Mr. Ambassador, you mentioned the Preparatory Commission would prepare the rules and regulations and procedures. What will the membership of the Commission be, what will be the major issues in establishing the Commission, how long will it take for the Commission to complete its work? You say it may take a year or two to organize it?

Ambassador RICHARDSON.

The view of the United States is that only countries that have signed the treaty should participate, not countries that have merely signed the final act.

Assuming that this is the case, the Preparatory Commission should be able to get underway within, say, 6 months of signature of the treaty.

Chairman ZABLOCKI. Mr. Ambassador, I understand it takes 60 states of the 155 to ratify the convention in order for the convention to come into force. Is that true?

Ambassador RICHARDSON. That is correct.

Chairman ZABLOCKI. What effect would the provisions of the convention have on nonsigning states other than they would not be members of the Commission?

Ambassador RICHARDSON. That is a most important consequence, Mr. Chairman. I think we would regard as highly likely that other provisions of the treaty would take effect as customary international law, at least many of them, assuming that the treaty has otherwise come into force. There would be uncertainty as to what provisions of the treaty had been assimilated into customary international law, if it never came into force at all, and even if it does, there is, of course, room for argument on the part of nonsignatories as to what exactly they are bound.

But certainly the treaty would have major impact on the shaping of customary international law, in any case.

Chairman ZABLOCKI. Is there a specific language reference in the convention to the obligations of a nonsignatory nation?

Ambassador RICHARDSON. No, not that I am aware of.

Chairman ZABLOCKI. So if they do not sign they are not bound to anything?

Ambassador RICHARDSON. That is true, Mr. Chairman. One would only be bound to the extent that the provisions of the treaty are regarded as declaratory of customary international law. The treaty has already had a significant impact in that respect. The United States Fisheries Management and Conservation Act [Fishery Conservation and Management Act, 1976] language had no foundation in international law except to the extent that certain