Iraqi dinars (U.S. $15,770) of the U.S. Interests Section checking account at the request of a creditor who was the landlord of the former USIS Library. The Department of State, in a note dated January 14, 1974, to the Iraqi Interests Section of the Embassy of India in Washington, characterized the seizure of the checking account as "in plain violation of recognized principles of international law concerning the inviolability of the property of diplomatic missions and the immunity of the property of sovereign states from attachment and execution." With respect to sovereign immunity, the Department said:

A sovereign and its property are immune from all judicial process relating to its sovereign or public acts. Moreover, international law recognizes a distinction between immunity from civil jurisdiction of courts and from execution on property. Article 32, paragraph 4 of the Vienna Convention provides specifically that:

"Waiver of immunity from jurisdiction in respect of civil or administrative proceedings shall not be held to imply waiver of immunity in respect of the execution of the judgment, for which a separate waiver shall be necessary."

See also Sen, B., A Diplomat's Handbook of International Law and Practice, The Hague (1965), pages 132–133; Taylor v. Best, 14 C.B. 407; Suarez v. Suarez, (1917) 2 Ch. 131. This rule applies, a fortiori, in cases of sovereign immunity. In Dexter v. Kunglig Jarnvagsstyrelsen, the United States Court of Appeals said: "But consenting to be sued does not give consent to a seizure or attachment of the property of a sovereign government. The clear weight of authority... is against all seizures, even though a valid judgment has been entered . . . it is but recognizing the general international understanding, recognized by civilized nations, that a sovereign's person and property ought to be held free from seizure or molestation . . . ." 43 F.2d 705, at page 708. Thus, although the Government of the United States has refrained from asserting its immunity from the jurisdiction of the court of first instance in the action. brought..., it has not thereby waived its sovereign immunity from attachment and execution upon its property.

Accordingly, the Government of the United States requests that the Government of Iraq release the property of the United States Interests Section in compliance with the foregoing principles of international law governing the property of sovereign states.

Dept. of State File No. INCO 15–2 Iraq. The Department also noted Art. 22(3) of the 1961 Vienna Convention on Diplomatic Relations (TIAS 7502; 23 UST 3227; entered into force for the United States Dec. 13, 1972), which provides that the property of a diplomatic mission "shall be immune from search, requisition, attachment or execution." Also, Art. 25 of the Convention provides that "the receiving state shall accord full facilities for the performance of the functions of the Mission." The Department stated that “[o]ne of the most necessary of such facilities is the availability of banking facilities immune from attachment and execution in the receiving state."

§ 8 Acts of Foreign States

Act of State Doctrine

Property Expropriation

On May 8, 1974, the Department of State sent to the Subcommittee on Multinational Corporations of the Senate Committee on Foreign Relations a statement concerning the policy of the Department with respect to international trade in "hot" Libyan oil. The following are excerpts from the statement:

The policy of the State Department in respect of international trade in "hot" products must be considered in the context of enactments of the United States Congress. In particular, it should be recalled that, following a decision by the U.S. Supreme Court in the case of Banco Nacional de Cuba v. Sabbatino, Receiver, et al., 193 F. Supp. 375 (S.D.N.Y. 1961); aff'd 307 F.2d 845 (2d Cir. 1962); reversed and remanded, 376 U.S. 398 (1964), the Congress, on October 7, 1964, enacted, as Section 620 (e) (2) of the Foreign Assistance Act of 1961, as amended, what is known as the "Sabbatino" or "Hickenlooper" Amendment. That Amendment reversed the presumption that U.S. courts had previously applied in cases involving "acts of state." It has been authoritatively stated that the act-ofstate doctrine means that "the courts of one country will not sit in judgment on the acts of the government of another done within its own territory . . ." [Underhill v. Hernandez, 168 U.S. 250 (1897)]..

The purpose of the Sabbatino Amendment, which is the law today, is precisely to permit American courts to entertain suits such as those that have been brought in pursuit of "hot" oil. The commodity in point in 1964 was "hot" sugar; later there have been legal actions brought in pursuit of "hot" copper (though none in the United States); most recently, there have been cases brought in pursuit of "hot" oil. More broadly, the intent of the Congress in nationalization cases is, as the Sabbatino Amendment makes clear, that, first, foreign governments should be discouraged from nationalizing property of U.S. citizens in a manner contrary to international law, and second, the law of the offending country should not operate as a shield when the courts of the United States are called upon to consider the consequences of unlawful nationalizations, such as attempts to sell property which is the object of such acts-except when the President determines that U.S. foreign policy interests require otherwise. These two aspects of the intent of Congress in nationalization cases are reflected in Section 620 (e) of the Foreign Assistance Act. The actions. of the Department of State in the cases of the Libyan expropriations were formulated and carried out in the light of and in accordance with the policy enunciated by Congress in the Sabbatino Amendment.

The theory of a suit brought in pursuance of hot oil or another hot commodity is simple. The company whose property has been seized in violation of international law maintains that the expropriating government did not, by virtue of an act that violates international law, acquire good title to the property in question. The company places prospective purchasers on notice of this contention. If nevertheless a party proceeds to purchase a hot product, the expropriated company initiates a legal action designed to regain possession of the property unlawfully taken from it, or the proceeds.

Courts of various countries have reached varying decisions in cases brought in pursuance of "hot" commodities. Perhaps the most notable of such cases before Sabbatino was that of the Rosemary. The Anglo-Iranian Oil Company brought suit in 1951 to recover a cargo of oil sold by the Mossadegh Government. The Aden Court found that the expropriation of Anglo-Iranian's property had not been compensated, that expropriation without compensation is contrary to international law, that international law was incorporated into the domestic law of Aden, and that, therefore, the Court could not recognize title of the Iranian Government to the oil taken in violation of international law, nor title in the purchaser of the oil. While Anglo-Iranian won the case in Aden, which was then a British protectorate, it lost similar suits in Japan and Italy.

The proceeds of sugar exported from Cuba which were at issue in the Sabbatino litigation ultimately went not to the Castro Government but to the expropriated American party-in-interest. Litigation over Chilean copper and Libyan oil has not yet been definitely resolved.

This is not to say that the policy of pursuit of "hot" oil- a policy of certain companies which was of course initiated before the imposition of the Arab oil embargo and cutback and consequent shortage has been a great success. It has not stopped unlawful expropriations, though it may have inhibited them. It may have contributed to an increase in the costs of oil in some markets, though data in this regard is mixed, for, as noted, "hot" oil sells at a discount.

But it is to say that the measured support which the Department of State lent to the policy of pursuit of "hot" oil was understandably and sensibly given. Pursuit of "hot" oil was a weapon in an effort to deal with the unlawful expropriation of American investment in countries overseas. Pursuit of "hot" oil and other products in earlier instances of unlawful expropriation had proved a significant weapon. There were few weapons at hand; this one, which the companies were within their legal rights in invoking, promised to have a useful, if not decisive effect.

In pursuing the foregoing approach, the Department of State has been influenced not only by the view which the Congress manifested in adopting the Sabbatino Amendment that it should take a benign attitude towards suits brought in pursuit of "hot" products. It also has been influenced by the will of the Congress, manifested in more

than one piece of legislation, that the Department of State should vigorously protect American foreign investment.

Hearings before the Subcommittee on Multinational Corporations, Committee on Foreign Relations, United States Senate, 93d Cong., 2d Sess., May 8, 1974. See also the 1973 Digest, Ch. 9, § 2, pp. 334-335.

The Wall Street Journal of February 15, 1974, carried a front-page story which claimed that the Department of State acted on behalf of "big oil" to discourage small American oil companies from importing "hot" Libyan oil to the United States. It further claimed that, as a result of the actions of the Department, the American consumer was paying more for energy. Related stories appeared in The New York Times and The Washington Post of February 19, 1974. The Department of State, on February 19, 1974, sent a statement to The Wall Street Journal in reply to the February 15 story. The statement, in relevant part, reads as follows:

1. The Department of State does not act on the particular behalf of the major oil companies. As appropriate, it acts on behalf of all American nationals with investments overseas whose investments have been the object of foreign measures that violate international law. In Libya, it has supported the lawful claims of all American companies large and small. For example, its first and strongest protest to date against pertinent actions of the Libyan Government has not been on behalf of a major oil company but on behalf of Nelson Bunker Hunt, an independent oil company.

2. The State Department traditionally has sought to assure that American property interests abroad shall not be subjected to expropriation in violation of international law. It does so because of the importance it attaches to the integrity of international law and the important contribution made by American investment abroad to the wellbeing of the American economy-including that of the American consumer. The foreign ministries of other governments likewise seek to promote the just and lawful treatment both of the persons and property of their nationals.

3. American companies whose overseas assets have been seized in violation of international law-whether oil, copper or other assets-have sometimes decided legally to pursue possession of those assets when they are exported to third countries. It is for the courts in various jurisdictions to pass upon the merits of resultant conflicting claims. The State Department has declined to block suits in American courts in pursuit of goods claimed to be "hot." Its so declining is clearly consistent with the will of the U.S. Congress as expressed in Section 620 (e) (2) of the Foreign Assistance Act of 1961. Moreover, it has informed a number of foreign governments that it hopes that their agencies and nationals will not purchase goods whose title is clouded under international law. It similarly has informed American nationals concerned-such as the New England Petroleum Company-of its view that certain Libyan seizures of

American assets were in violation of international law, and that, accordingly, title to goods produced from those assets is controversial. The State Department leaves to the companies concerned the decision whether they wish to proceed with such purchases.

4. It is inaccurate to say, as The Wall Street Journal does, that efforts of some American oil companies, small as well as large, to block the sale of "hot" Libyan oil have had "next to no effect." Actually, a number of prospective purchasers have refrained from purchasing "hot" oil and other "hot" products; court actions appear to have further inhibited the flow of "hot" goods; the price at which "hot" oil sells today is markedly lower than that of other oil, a reflection of the fact that it is harder to move; and governments that have seized foreign property unlawfully have manifested their anxiety that suits in pursuit of "hot" products be dropped. It is also questionable to infer, as stories in The New York Times and The Washington Post do, that the increase in the price of Libyan oil to the American consumer simply stems from efforts to pursue "hot" oil. Increased costs for Libyan and other foreign oil the world over have largely resulted from policies imposed by governments of oil exporting states.

Dept. of State File No. P74 0026-1325. Section 620(e)(2) of the Foreign Assistance Act of 1961 (P.L. 87-195; 75 Stat. 424; as amended) was added to the 1961 Act by Sec. 301 (d) (4) of the Foreign Assistance Act of 1964 (P.L. 88633; 78 Stat. 1009). It reads as follows:

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 of 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: Provided, That this subparagraph shall not be applicable (1) in any case in which an act of a foreign state is not contrary to international law or with respect to a claim of title or other right to property acquired pursuant to an irrevocable letter of credit of not more than 180 days duration issued in good faith prior to the time of the confiscation or other taking, or (2) in any case with respect to which the President determines that application of the act of state doctrine is required in that particular case by the foreign policy interests of the United States and a suggestion to this effect is filed on his behalf in that case with the court.