Nationalization and Compensation

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ISI FOIGHEL

Nationalization and Compensation

S T E V E N S & S O N S L I M I T E D L O N D O N

N Y T N O R D I S K F O R L A G A R N O L D B U S C K C O P E N H A G E N 1 9 6 4

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S . L . M ØLLERS BOG TR Y K K ERI, K Ø B ENH AVN 1782

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P R E F A C E

T h is tre a tise is a c o n tin u a tio n a n d e n la rg e m e n t o f th e p o in ts o f view e x p re s

sed in th e w o rk I p u b lish e d in 1957, N a tio n a liza tio n , A S tu d y in the P ro  te c tio n o f A lie n P ro p e rty in In te rn a tio n a l L a w , fo r w h ich I w as a w a rd e d th e G o ld M e d a l o f th e U n iv e rsity o f C o p e n h a g e n in 1956.

S ince th a t tim e n a tio n a liz a tio n p ro b lem s h a v e b e e n m a d e th e o b je c t o f fa r-g o in g d iscu ssio n s in in te rn a tio n a l o rg a n iz a tio n s a n d in lite ra tu re o n In te rn a tio n a l L aw a n d n ew n a tio n a liz a tio n m easu res h a v e b een ta k e n in re s p e c t o f fo re ig n p ro p e rty . T h e re fo re it h as b e e n n a tu r a l to su b ject th e p o in ts o f view I ex p ressed in m y a b o v e w o rk fro m 1957 to a scru tin y .

T h is tre a tise , th a t is larg ely c o m p iled ac c o rd in g to th e sam e sy stem as m y e a rlie r w o rk , d iffe rs fro m th e fo r m e r n o t o n ly q u a n tita tiv e ly , a n a tte m p t h a v in g b e e n m a d e to b rin g th e p e rtin e n t m a te ria l u p to d a te . M y e n q u iry in to th e p ro b le m s c re a te d by n a tio n a liz a tio n s h a s c au sed n ew q u estio n s to b e ta k e n u p f o r d iscussion a n d it h as b een re a so n a b le to view th e p ro b le m s th a t h a v e b een ra ise d e a rlie r fro m n ew angles a n d to su b je c t th e m to a m o re d e ta ile d an aly sis th a n w as possible in a G o ld M ed al treatise. T h is h as en ta ile d th a t I h a v e h a d to a d m it th a t som e o f th e view s I a d v o c a te d e a rlie r c a n n o t be u p h e ld w h ile o th e r view s I h av e ex p ressed e a rlie r h a v e b e e n c o n firm e d by la te r d ev elo p m en ts.

A s re g a rd s th e lite ra tu re q u o te d a full re fe re n c e to a n y w o rk q u o te d is o n ly m a d e o n th e first q u o ta tio n o f th e w o rk in q u estio n s. W h e re several w o rk s by th e sam e a u th o r are q u o te d th e title o f th e w o rk inv o lv ed o r p a r t th e re o f is q u o te d in so f a r as e a rlie r q u o ta tio n s m a y give rise to d o u b t.

T h is w o rk w as p u b lish e d in th e D a n ish la n g u a g e in 1961, a n d th e sam e y e a r th e w rite r o n th e basis o f th is w o rk w as a w a rd e d th e d e g re e o f d o c to r ju ris in th e U n iv e rsity o f C o p e n h a g e n .

T h e d iffic u lt w o rk o f tra n s la tin g a legal b o o k fr o m th e D a n ish lan g u ag e in to th e E n g lish la n g u a g e h as b e e n c o n d u c te d by M r. A . F . C o lb o rn , L o n d o n . T h e R a sk Ø rsted F o u n d a tio n h a s c o n trib u te d to w a rd s th e p a y m e n t o f

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s tu d e n t o f law .

T h e p re p a r a tio n o f a tre a tise o n a legal su b je c t a t th e sam e tim e as th e w rite r is te a c h in g a t th e U n iv e rsity a n d p ra c tic in g as a n a d v o c a te c a n n o t be c a rrie d th r o u g h w ith o u t stro n g an d c o n tin u e d e n c o u ra g e m e n t. I a m deep ly g ra te fu l fo r th e in te re st a n d sy m p a th y th a t h a s b e e n given m e in th a t respect.

I h e re b y b rin g ev e ry b o d y c o n c e rn e d m y h e a rt-fe lt th an k s.

C o p en h a g en , S e p te m b e r 1963.

I SI Fo i g h e l.

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Cases Reported

A .I.O.C. case, see A nglo-Iranian Oil Com pany case.

Alsop case, the – , 290.

A nglo-A m erican Oil Com pany, see A nglo-Iranian Oil Com pany case.

A nglo-Iranian Oil Com pany case, the – , 60, 89, 108 n. 116, 131 n. 2, 136, 137, 147 n. 40, 159, 163, 183, 219.

A nglo-Iranian Oil Co. v. Jaffrate et A l, see the “ Rose M ary case” .

A nglo-Iranian Oil Co. v. Societa U nions P etralfere O rientale, see “ The M ariella case” .

A rabian A m erican Oil Com pany case, the – , 172 n. 42, 173 n. 44, 174.

A ram co, see A rabian A m erican Oil Co.

Brazilian Loans Case, the – , 161.

Bremen Tobacco D ispute, the – , 138, 152, 179 n. 57.

C ertain G erm an Interests in Polish U pper Silesia, the case concerning – , 73.

Chorzow , the Case of the Factory in – , 74, 140, 248.

Civilian W ar C laim ants A ssociation Ltd. v. Rex (The King), 291.

Com pany G eneral o f the Orinoco, the case – , 190.

Danzig, the Case concerning the T reatm ent o f Polish citizens and others of Polish E xtraction o r Language in – , 150.

D elagoa Bay and E ast A frican Railway Co., the case of the – , 67, 191, 193 n. 103, 224.

D e Vegvar v. G ellilland, the case – , 276.

D utch Senem bah Tobacco Com pany v. Bank of Indonesia, 138, 153 n. 17.

East A frican Railway Co., the case of the D elagoa Bay and – , 67, 191, 193 n. 103, 224.

El Encanto Case, the – , 122.

El T rium fo Case, the –, 225.

Factory in Chorzow, the case of the – , 74, 140, 248.

Finlay-case, the – , 66, 216 n. 4.

Fletcher Smith, W alter – , v. C uba, 27 n. 31, 54 n. 6.

G erm an Interests in Polish U pper Silesia, the case concerning C ertain – , 73.

G ellilland v. D e Vegvar, the case – , 276.

H enry Savage Case, the – , 66, 216 n. 5 and n. 10.

Indonesia, Bank of – , v. D utch Senem bah T obacco Co., 138, 153 n. 17.

International Fisheries Com pany Case, the – , 161.

Italian Life Insurance M onopoly, the conflict of the – , 68, 217.

Jaffrate et Al v. A nglo-Iranian Oil Co., see “ Rose M ary case” . Jonas King case, the Reverend – , 66, 248.

Lossinger & Co. case, the – , 165.

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“ M ariella case, T he – , ” , 137, 146, 147 n. 40.

M artini-case, the – , 182 n. 66.

M artin Koszta, the case o f – , 231 n. 15.

M avrom m antis Palestine Concessions, the case o f the – , 163.

M exican A gricultural Expropriations, the case of the – , 31, 61.

M exican Eagle Com pany, the case o f the – , 241.

N o rth A tlantic Fisheries Case, the – , 33 n. 44.

N orw egian Shipowners’ Claim against the U.S., the case o f the – , 54 n. 6, 69, 217 n. 7, 248.

O lson v. the U.S., the case – , 249.

O scar C hinn Case, the – , 151, 218.

Petroleum D evelopm ent Ltd. v. T he Sheik o f A bu D habi, 164, 168 n. 39.

Polish citizens and others o f Polish E xtraction o r Language in Danzig, the Case concerning the T reatm ent o f – , 150.

Portugal, T he Case o f Religious Property in – , 69.

Reverend Jonas King case, the – , 66, 248.

Rex (The King) v. Civilian W ar C laim ants Association Ltd., 291.

R obert M ay’s claim, the case o f – , 191.

R om ano-A m ericano Com pany case, the – , 225.

“ Rose M ary case” , the – , 136, 139, 140, 146, 147 n. 40.

Savage case, the H enry – , 66, 216 n. 5 and n. 10.

Senem bah Tobacco Co. v. Bank of Indonesia, 138, 153 n. 17.

Serbian Loans Case, the – , 161.

Sheik of A bu D habi v. T he Petroleum D evelopm ent Ltd., 164, 168 n. 39.

Shufeldt Claim , the – , 191.

Sicilian Sulphur M onopoly, the case o f the – , 65, 217 n. 5.

Smith, W alter Fletcher – , v. Cuba, 27 n. 31, 54 n. 6.

Societa Unions P etralfere O rientale v. A nglo-Iranian Oil Co., see “ T he M ariella case” .

Sokoloff v. N ational City Bank, 26 n. 30.

Suez M aritim e C anal, the Case o f the Universal Com pany of the – , 141, 151, 187, 190, 250 n. 11.

T reatm ent of Polish citizens and others o f Polish the E xtraction o r Language in Danzig, case concerning the – , 150.

“ T he M ariella case” , 137, 146, 147 n. 40.

U .f.R. 1952. 856, 15.

U natra, see the O scar C hinn Case.

U nited F ru it Com pany case, the –, 32, 57, 103 n. 109, 256.

U nited States, the case o f the N orw egian Shipowners’ Claim against the – , 54 n. 6, 69, 217 n. 7, 248.

W alter Fletcher Sm ith v. Cuba, 27 n. 31, 54 n. 6.

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P refa ce C ases R e p o r te d

B A C K G R O U N D

§ 1

Th e Pr o b l e m

A . T h e p ro te c tio n o f fo re ig n in v estm en ts h a s p la y e d a le ad in g ro le in in te rn a tio n a l d iscu ssio n s sin ce th e S econd W o rld W ar. In th e c o u rs e o f a few y ears th e r e h a s a p p e a re d n o t o n ly a n e n o rm o u s v o lu m e o f in te rn a tio n a l legal lite r a tu re o n th e p ro b le m s w h ich arise as a re s u lt o f in v estm en ts a b ro a d , b u t also in te rn a tio n a l bodies, such as O .E .C .D ., U n esco , th e In te rn a tio n a l L a w C o m m issio n , th e E c o n o m ic an d S ocial C o u n c il a n d o th e r o rg a n iz a tio n s w ith in th e U n ite d N a tio n s , th e C o u n cil o f E u ro p e , th e P a n - a m e ric a n U n io n , as w ell as p riv a te legal o rg a n iz a tio n s, h a v e b ro u g h t fo rw a rd c o n n e c te d q u e stio n s f o r discussion.

T h is sp ecial a n d w id e sp re a d in te re st in a single p ro b le m in in te rn a tio n a l so ciety is e asy to ex p lain .

T h e e c o n o m ic co n se q u e n c e s o f th e S eco n d W o rld W a r b o th in E u ro p e a n d in th e F a r E a s t c re a te d a n e e d f o r c a p ita l w h ich S tates w ere ab le to m a k e g o o d fro m th e ir o w n re s o u rc e s o n ly in ex tre m e ly few cases. T h e e m e rg e n c e o f n e w S tates as a re s u lt o f new p o litic a l te n d e n c ie s, a n d th e c o n tin u o u sly d ev elo p in g im p u lse to w a rd s in d e p e n d e n c e in th e fo rm e r co lo n ia l p o ssessio n s o f th e G r e a t P o w ers, b ro u g h t w ith it p o litical lib e ra tio n , w h ich , in so m e in stan ces, w as re g a rd e d b y th e n e w S tates as th e p re c u rs o r o f a c o rre sp o n d in g a n d n e cessary e c o n o m ic lib e ra tio n fr o m th e in v estm en ts w h ic h th e p rev io u s c o lo n ial p o w ers, o r o th e rs, h a d m a d e in th e ir te rrito rie s.

I n p ra c tic e , h o w ev er, it h as a lre a d y b eco m e a p p a re n t th a t n o n e o f th e n ew S tates h as b e e n in a p o sitio n to su rv iv e w ith o u t th e h e lp fo re ig n c a p ita l c a n give. S u ch h elp w as in d eed fo rth c o m in g o n a v e ry ex ten siv e scale a n d th e re b y d e m o n s tra te d th e n ecessity o f m u tu a l e c o n o m ic c o -o p e ra tio n b e tw een S tates. M o re o v e r, m o d e rn te c h n iq u e s o fte n d e m a n d in v e stm e n ts w h ich S tates a re q u ite u n a b le to u n d e rta k e alo n e , a n d b y re a s o n o f e a sie r c o m m ercial in te rc o u rse th e e c o n o m y o f S tates h as b eco m e a v e ry sensitive piece o f a p p a ra tu s w h ic h ra p id ly reg isters in flu en ces fr o m th e e c o n o m ic life o f

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o th e r c o u n trie s. T h e re c o g n itio n o f th e fa c t th a t S tates a re m u tu a lly d e p e n d e n t o n each o th e r e c o n o m ically has, ev en in th e so-called " o ld ” n atio n s, re s h a p e d e c o n o m ic th in k in g as to h o w th e in te rn a tio n a l e c o n o m ic p ro cess o f fu s io n is to be b ro u g h t ab o u t.

T h is e c o n o m ic in te g ra tio n h as n o t b een fo llo w ed by a c o rre sp o n d in g legal in te g ra tio n . T h e in te rn a tio n a l c o m m u n ity to -d a y show s a p ic tu re w h ic h in its p o litical an d legal asp ects is v e ry f a r fr o m th e c o m p a ra tiv e ly h o m o g e n e o u s c o m m u n ity o f C h ris tia n E u ro p e a n S tates w h ich w o rk e d o u t a sy stem o f in te rn a tio n a l law a t th e b eg in n in g o f th e 19th c e n tu ry . U p to th e b eg in n in g o f th is c e n tu ry th e legal an d p o litical ideas o f m e m b e rs o f th e c o m m u n ity o f in te rn a tio n a l law w ere b ro a d ly sp e a k in g u n ifo rm , o r in a n y case n o t d if fe re n t in essence; b u t th e situ a tio n to -d a y is q u ite oth erw ise.

T h e lead in g S tates n o w re p re s e n t e c o n o m ic -p o litic a l system s w h ic h a re n o t on ly d iffe re n t, b u t to a c e rta in d eg re e d ire c tly in c o m p a tib le , an d th e c o n c e p t o f fu n d a m e n ta l ju s tic e in th e d iffe re n t c o u n trie s is f a r fr o m u n ifo rm . T h e d isa g re e m e n t o n legal c o n cep ts acts as a b ra k e o n th e d e v e lo p m e n t w h ic h sh o u ld fo llo w fro m th e d e m a n d f o r p ro g ressiv ely g re a te r eco n o m ic in te g ra tio n .

T h e re is a n a tu r a l co n n e x io n b etw e e n th is an d th e fa c t th a t th e steadily g ro w in g n eed fo r c a p ita l in c e rta in p a rts o f th e w o rld ca n on ly be ex p ected to be filled if a fa v o u ra b le in v e stm e n t-c lim a te exists in th e te rrito rie s c o n c e rn e d . In o th e r w o rd s c o n d itio n s m u s t be su ch th a t n o t o n ly sh all th e in v e sto r h a v e a re a s o n a b le re tu rn o n th e ca p ita l in v ested , b u t a t th e sam e tim e th e c e rta in ty th a t w h a t is invested th e re w ill n o t be lost. M a n y fa c to rs c o n trib u te in d e te rm in in g th e c lim a te o f in v estm en t o f a te rrito ry : p o litical, c u ltu ra l, c o m m e rc ia l a n d , n o t least, legal.

A lth o u g h m a n y o f th ese fa c to rs o p e ra te th ro u g h th e legal p ro cesses it m u s t be a d m itte d th a t in ju d g in g th e p ro b le m as a w h o le th e legal a sp ect is o n ly a single c o n trib u to ry e le m e n t in d e te rm in in g th e e x te n t o f p ro te c tio n w h ich in p ra c tic e is given to fo re ig n in v estm en ts, th o u g h it is by n o m e a n s th e le a st im p o rta n t elem en t.

T h e tra d itio n a l ru le s o f in te rn a tio n a l law as th ey a p p ly to th e p ro te c tio n o f alien p ro p e rty h av e, as a re s u lt o f th e d e v e lo p m e n ts m e n tio n e d above, b e e n exp o sed to a severe test. T h e p ro b le m is n ow w h e th e r th e classical ru les o f in te rn a tio n a l law (w hich, as w ill a p p e a r la te r, c a m e in to b e in g in th e age o f lib eralism ) can b eco m e c o m m o n g ro u n d fo r a n u m b e r o f n a tio n s w h o lo n g ag o a b a n d o n e d lib eralism as a n a p p ro p ria te e c o n o m ic basis an d w h o , in th e ir m u n ic ip a l law , h a v e a b a n d o n e d th e p rin c ip le o f th e p ro te c tio n

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Th e Pr o b l e m 13

o f p riv a te p ro p e rty a g a in s t a tta c k a n d re g u la tio n by th e S ta te a c tin g fro m m o tiv es o f o v e rrid in g p u b lic in terest.

In th is situ a tio n c a n in te rn a tio n a l law c o n tin u e to c laim c o m p le te an d fu ll p ro te c tio n f o r a lie n p ro p e rty ? T h e a n sw e r given by A l f R o s s 1 is th a t in te rn a tio n a l law m u s t fo llo w so cial d e v elo p m en t. In te rn a tio n a l law m u s t e n tr u s t th e ju d g m e n t o n w h ich fo rm s o f d e p riv a tio n o f p ro p e rty shall q u a lify f o r c o m p e n s a tio n to th e m u n ic ip a l law o f th e n a tio n involved, since th e p o sitio n w ill b ec o m e clea rly u n re a s o n a b le o n th e d a y w h e n in te rn a tio n a l law calls fo r c o m p e n s a tio n fo r a n a c tio n a g a in st p riv a te p ro p e rty w h ic h n o n a tio n w ith in its o w n legal system w ould re g a rd as q u a lify in g fo r c o m p e n sa tio n . In th e 19th c e n tu ry th e d o c trin e o f in te rn a tio n a l ju stic e co u ld h a v e v alid ity , b ecau se it w as in h a rm o n y w ith n a tio n a l ideas o f ju stice. T o d ay it is m e re ly a c u ltu ra l relic. R oss m ak es th e f u r th e r p o in t th a t n o g e n e ra l a n aly sis exists in in te rn a tio n a l law as to w h a t fo rm s o f d e p riv a tio n o f p ro p e r ty sh all be u n d e rs to o d as q u alify in g f o r c o m p e n s a tio n b y in te r

n a tio n a l law .

W ith th ese p ro n o u n c e m e n ts as a sta rtin g p o in t, th is stu d y w ill an aly se th e p ro b le m s w h ich a rise in co n n e x io n w ith a single fo r m o f a c tio n ag a in st p riv a te p ro p e rty : n a tio n a liz a tio n .

T h e ta s k h e re is th re e fo ld . F irs t, a n a tte m p t w ill be m a d e to estab lish w h e th e r th e la te st n a tio n a l p ra c tic e in th is field h as in flu e n c e d in te rn a tio n a l law , o r, in o th e r w o rd s, to d e m o n s tra te th e e x te n t to w h ich in te rn a tio n a l law a c tu a lly fo llo w s so cial d e v e lo p m e n ts in m u n ic ip a l law . T h is e x a m in a tio n w ill seek to show h ow th e in te rn a tio n a l sy stem o f law , in sp ite o f its sta tic n a tu r e arisin g fr o m th e la c k o f a n a u th o rita tiv e in s tru m e n t to im p o se new ru les to m e e t th e d e m a n d o f a lte re d c irc u m sta n c e s, is ch an g e d a n d a d a p te d to n ew legal situ atio n s.

T h e seco n d o b jectiv e w ill be to c a rry o u t a n an aly sis o f h ow legal c o n flicts w h ich h a v e a lre a d y arise n as a re s u lt o f n a tio n a liz a tio n o f fo re ig n p ro p e rty h a v e b e e n solved in p ra c tic e w ith o u t th e q u e stio n s b ein g su b m itte d to in te rn a tio n a l c o u rts o r bodies. T h is p a r t o f th e w o rk w ill serv e to illu m in a te th e ru les o f p ro c e d u re in in te rn a tio n a l law .

F in a lly , th e re is a n analysis o f th e p ro b le m s o f th e d is trib u tio n o f c o m p e n sa tio n receiv ed . S trictly sp eak in g th ese a re n o t p ro b le m s o f in te rn a tio n a l law , b u t a n e x a m in a tio n o f th e legal q u estio n s c o n ta in e d in th em show s th a t th e ru les o f in te rn a tio n a l law a re n o t e n tire ly w ith o u t in flu e n c e on 1. T extbook o f International Law (1946), p. 167.

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th e m u n ic ip a l ru le s w h ich c o v e r th e d is trib u tio n o f c o m p e n sa tio n . I t is fro m th is co n n e x io n th a t th ese q u estio n s o f m u n icip al law arise n a tu ra lly f o r discussion.

T h e re a s o n f o r th e exclusive c o n c e n tra tio n o f th e w o rk o n a single fo rm o f ta k in g o f p ro p e rty , n a tio n a liz a tio n , is firs t o f all th a t b o th fro m a p o litic a l a n d legal sta n d p o in t w e a re a p p a re n tly fa c in g a n ew p h e n o m e n o n w h o se in flu e n c e o n th e in te rn a tio n a l c o m m u n ity h as se t o n f o o t events w h ic h h a v e le ft th e ir m a r k a t m a n y im p o rta n t p o in ts o f in te rn a tio n a l d e v e lo p m e n t in th e p a st few years. I t seem s a n a p p ro p r ia te a im o f this w o rk th a t it sh o u ld c o n c e n tra te o n a c o n c e p t w h ich h as on ly in th e p ast few y ears b e c o m e a c o m m o n a n d n o rm a l e le m e n t in th e p o licy o f m a n y c o u n trie s. In th is w ay th e effects o n tra d itio n a l in te rn a tio n a l law o f this ta k in g o f p ro p e rty c a n be estab lish ed m o re clearly.

T h e seco n d re a s o n , a n d a special o n e, fo r n a rro w in g th e sco p e o f th e w o rk co m es fro m th e re c o g n itio n th a t, in in te rn a tio n a l law , th e p ro b le m o f th e lim its o f p ro te c tio n o f p ro p e rty c a n n o t b e solved, as is a tte m p te d in m u n ic ip a l c o n stitu tio n a l law , by th e fo r m u la tio n o f g e n e ra l p rin cip les, by re fe re n c e to w h ich a d ecisio n c a n b e re a c h e d in e v ery in d iv id u al ca se as to w h e th e r o r n o t a n a c tio n a g a in s t p riv a te p ro p e rty c a rrie s liab ility to c o m p e n sa te o r c a n b e re g a rd e d as a n a d ju stin g a c tio n w ith o u t c o m p en satio n . T h e re a s o n is n o t o n ly th a t th e types o f a c tio n ag a in st p ro p e r ty a re neces

sarily m o re v a rio u s in th e in te rn a tio n a l legal system th a n w ith in th e c o n stitu tio n a l system o f a n y single S tate. I t m u s t also be su p p o se d th a t th e rules o f in te rn a tio n a l law a re n o t so d ecisively a ffe c te d b y th e n a tu r e o f each single in te rv e n tio n , its m o tiv e, o r its e x ten t, seen in re la tio n to th e in d iv id u al o r th e ju rid ic a l p e rs o n a g a in s t w h o m th e a c tio n h as b e e n ta k e n , b u t are m o re c o n c e rn e d w ith th e in te rn a tio n a l e ffe c ts o f th e a c tio n . I t c a n n o t be ru le d o u t th a t a c tio n s w h ic h a re d ic ta te d by m o tiv es w h ich a re th e sa m e in n a tio n a l law a n d w h ich h av e th e sam e re s u lt f o r th e in d iv id u al, n am ely th a t h is p ro p e r ty is lost, m a y h a v e d iffe re n t in te rn a tio n a l co n se q u e n c e s a n d th e re fo re b e e v a lu a te d d iffe re n tly in in te rn a tio n a l law . V e rific a tio n o f this h y p o th e sis is o n ly p o ssib le b y a th o ro u g h e x a m in a tio n o f in d iv id u a l in stan ces o f actio n s a g a in s t p riv a te p ro p e rty e x a m in ed singly.

F in a lly , th e re is th e p u re ly te c h n ic a l a d v a n ta g e th a t a n e x a m in a tio n o f a single c e n tra l p ro b le m o ffe rs b e tte r o p p o rtu n itie s to an aly se th e special b a c k g ro u n d to th e se ac tio n s, so a v o id in g co n clu sio n s b y a n a lo g y a n d th e lik e fr o m legal ru les th a t sp rin g fr o m q u ite o th e r c irc u m sta n c e s.

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B. In c o n n e x io n w ith n a tio n a liz a tio n m easu res, p ro b le m s m a y a rise in m u n ic ip a l law , in te rn a tio n a l p riv a te law , o r in te rn a tio n a l law , p a rtly d e te rm in e d b y th e c h a ra c te r o f th e n a tio n a liz e d p ro p e rty , w h e th e r fo reig n o r n a tio n a l, a n d p a rtly d e te rm in e d by th e p la c e w h e re th e n a tio n a liz e d p ro p e r ty is situ a te d .

P ro p e r ty is h e re d e fin e d as n a tio n a l w h e n th e p ro p e rty b e lo n g s 2 to a p h y sical o r ju rid ic a l p e rs o n w ho is a tta c h e d to th e n a tio n a liz in g sta te by his n a tio n a lity .

T h e re is scarcely a n y d o u b t o n th e q u e stio n o f th e te r rito ria l s itu a tio n o f p ro p e rty w h e n im m o v ab le o r m o v a b le p ro p e rty is in q u e stio n . W h e re claim s a re c o n c e rn e d , it is ta k e n th a t th ese are , in a c c o rd a n c e w ith “ the u su a l th e o r y ,” te rrito ria lly situ a te d in th e c re d ito r’s c o u n t r y 3. H o w e v e r th is d o c trin e c a n n o t be a ccep ted . T h e q u e stio n o f th e te r rito ria l situ a tio n o f claim s ta k e s o n p ra c tic a l sig n ifican ce o n ly a t th e m o m e n t w h e n th e c re d ito r e n fo rc e s h is c laim an d th e p la c e w h ere th is ta k e s p la c e m u s t th e n b e decisive fo r th e te rrito ria l sta tu s o f th e c laim a n d th u s d e te rm in e s th e legal c o n se q u e n c e s o f n a tio n a liz a tio n 4. T h is is e q u a lly tr u e in a situ a tio n w h ere th e c la im co m es fr o m a fo re ig n n a tio n a l, b u t is d ire c te d ag ain st, fo r e x am p le, a n a tio n a liz e d c o m p a n y , a n d in a s itu a tio n w h e re th e claim is n a tio n a l, a n d fo r e x am p le b elongs to a n a tio n a liz e d c o m p a n y . T h is p o in t o f view seem s to h a v e b e e n a d o p te d in th e c ase re f e rre d to in U .f.R . 1952, pag e 85 6 , c o n c e rn in g a c laim b y a n a tio n a liz e d c o m p a n y a g a in s t a D a n ish firm . A lth o u g h th e c la im a n t w as a C zech c o m p a n y , w h ic h a t th e tim e o f n a tio n a liz a tio n w as situ a te d in C z ech o slo v a k ia, it w as laid d o w n in th e ju d g m e n t th a t situs o f th e claim w as in D e n m a rk .

In th e fo llo w in g stu d y , w h e n th e te rrito ria l situs o f p ro p e rty is an im p o rta n t fa c to r, th e p o in t o f tim e o f n a tio n a liz a tio n w ill b e decisiv e in th e case o f im m o v a b le a n d m o v a b le p ro p e rty , w h ile th e p o in t o f tim e a t w h ich a c laim is ra ise d w ill d e te rm in e w h e re claim s a re to b e assigned territo ria lly .

2. F o r the justification of this lim itation, see below page 221.

3. T hus M agne Schjødt, N orsk Ekspropriationsrett (1947), p. 119 and Poul A n

dersen, D ansk Statsforfatningsret (1954), p. 730.

4. cf. L ars A. E. H jerner, “T he G eneral A pproach to Foreign C onfiscations.”

Scandinavian Studies in Law (1958), p. 188 and 191, and Seidl-Hohenveldern, Internationales K onfiskations- und Enteignungsrecht (1952), p. 88 and specially p. 91.

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1. In cases w h ere n a tio n a liz e d p ro p e rty is situ a te d o n th e te r rito ry o f th e n a tio n a liz in g sta te , legal p ro b le m s a risin g fro m th e effe c ts o f n a tio n a liz a tio n o f n a tio n a l p ro p e rty o n ly w ill fa ll o u ts id e th e ju risd ic tio n o f in te r

n a tio n a l law , sin ce in te rn a tio n a l law does n o t to u c h th e legal re la tio n sh ip s b etw een a S tate an d its n a tio n a ls. T h e legal p ro b le m s h e re a re th o se o f m u n ic ip a l law .

O n th e o th e r h a n d , if th e p ro p e r ty is alien th e p ro b le m s w h ich arise b etw e e n th e n a tio n a liz in g S ta te an d th e fo re ig n o w n ers ( a n d /o r th e h o m e c o u n trie s o f these o w ners) w ill fall w ith in th e ju risd ic tio n o f in te rn a tio n a l law . T h e se p ro b le m s m a k e u p th e m a in bo d y o f th e p re s e n t analysis.

In th e la st n a m e d s itu a tio n q u estio n s c a n also a rise o n h o w f a r th e h o m e c o u n try o f th e fo re ig n e r c o n c e rn e d o r a th ird c o u n try is u n d e r a n o b lig a

tio n to reco g n ize the n a tio n a liz a tio n o f alien p ro p e rty , a n d th is p ro b le m c a n w ell a rise u n d e r c o n d itio n s w h ere n a tio n a liz e d p ro p e rty is b ro u g h t o u t o f th e te r rito ry o f th e n a tio n a liz in g S ta te a fte r n a tio n a liz a tio n h as ta k e n p la c e . T h is p ro b le m is tra d itio n a lly re g a rd e d as belo n g in g to in te rn a tio n a l p riv a te law , a lth o u g h c e rta in asp ects o f in te rn a tio n a l law a re o f im p o rta n c e in d ecid in g th e q u estio n . T h e se asp ects o f in te rn a tio n a l law w ill be d is

cu ssed below § 12.

2. I f th e n a tio n a liz e d p ro p e rty is situ a te d o u tsid e th e te r rito ry o f th e n a tio n a liz in g S tate, p ro b le m s c a n arise p a rtly fro m th e re la tio n sh ip b etw een th e n a tio n a liz in g S tate a n d th e S ta te w h e re th e p ro p e rty is situ a te d (the h o ld in g S tate), a n d p a rtly in re la tio n to th e p h y sical o r ju rid ic a l p e rso n w ho ow ns th e n a tio n a liz e d goods.

R e la tio n s b etw e e n th e n a tio n a liz in g S ta te an d th e h o ld in g S tate c a n give rise to a n u m b e r o f q u estio n s.

T h e first is th e p ro b le m w h e th e r a n d h ow f a r th e ju d ic ia ry o f th e h o ld in g S tate is u n d e r a n o b lig a tio n to c o -o p e ra te in th e e x e c u tio n o f th e n a tio n a li

z a tio n 5. T h is p ro b le m falls w ith in th e sco p e o f in te rn a tio n a l p riv a te law 0 sin ce in te rn a tio n a l law w ill h a v e n o claim s to m a k e in su ch a case 7.

5. Cf. U .f.R . 1955, p. 1070.

6. Cf. O. A. Borum, L o vko n flikter (1957), p. 138.

7. In his F ifth R eport on International Responsibility (1960), G arcia A m ador, however, proposes th at international law should be changed on this point, cf.

U N.doc. A /C N . 4/125, p. 75. This also agrees w ith views frequently put fo r

w ard by w riters from the Eastern E uropean States, cf. Seidl-Hohenveldern,

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S eco n d ly , th e q u e stio n m a y also arise in th is c o n n ex io n as to w h e th e r th e h o ld in g S tate h as a n o b lig a tio n to reco g n ize n a tio n a liz a tio n w ith o u t a n a p p ro a c h h a v in g b e e n m a d e to th e ju d ic ia l a u th o ritie s o f th e h o ld in g S tate to c o -o p e ra te in th e e x e c u tio n o f th e n a tio n a liz a tio n . T h is p ro b le m c o u ld w ell a rise in c o n n e x io n w ith a d ecisio n o n w h o is th e re a l c re d ito r in a c laim w h ich is ra ise d b e fo re th e c o u rt o f th e h o ld in g S ta te 8, o r in co m in g to a d ecisio n o n w h o is th e re a l d e b to r in a case w h e re th e p rev io u s o w n e r o f th e n a tio n a liz e d p ro p e r ty w h ich is th e su b je c t o f th e claim , h as p ro p e rty in th e h o ld in g S tate. T h ese, to o , are q u estio n s w h ic h fall w ith in in te rn a tio n al p riv a te law .

F in a lly , q u e stio n s m a y arise o n th e legal s ta tu s o f th e n a tio n a liz e d p ro p e rty w h e re n a tio n a liz a tio n is reco g n ized as in a c c o rd a n c e w ith th e ru les o f in te rn a tio n a l p riv a te law . A s fa r as th e special ru le s o n th e im m u n ity o f S ta te p ro p e rty are c o n c e rn e d , th ese q u estio n s a re c o v e re d b y th e ru les o f in te rn a tio n a l law 9.

I f th e p o sitio n w h ic h th e h o ld in g S tate a d o p ts o n th e p ro b le m s se t o u t ab o v e re su lts in a fo re ig n ju rid ic a l o r p h y sical p e rs o n losing his p ro p e rty as a c o n se q u e n c e o f n a tio n a liz a tio n , th e q u e stio n arises as to h o w f a r th e in ju re d p a rty h as a c laim ag a in st th e n a tio n a liz in g S tate. T h is p ro b le m falls w ith in th e sco p e o f in te rn a tio n a l law , since th e fa c ts o f th e case fr o m th e v ie w p o in t o f in te rn a tio n a l law c o rre sp o n d su ffic ie n tly clo sely w ith th e s itu a tio n w h e re n a tio n a liz e d p ro p e rty is situ a te d in th e te r rito ry o f th e n a tio n a liz in g S tate.

T h e m o re d etailed d e fin itio n o f w h a t is to be u n d e rs to o d by p ro p e rty a n d w h a t is decisive in d e te rm in in g th e n a tio n a l c h a ra c te r o f p ro p e rty w ill fo llo w in c o n n e x io n w ith a su rv ey o f th e ru les, w h e re c lo s e r d e fin itio n is im p o rta n t.

A s a s ta rtin g p o in t f o r th e e x a m in a tio n it w ill be su ffic ie n t to d esig n ate th e o b je c t a ffe c te d b y n a tio n a liz a tio n as “ alien p ro p e r ty .”

“ C om m unist Theories on Confiscation and E xpropriation,” A .J.C .L . (1958), vol. 7, p. 558 and Konst. K atzarov, Théorie de la nationalisation (1960), p. 399—400.

8. Cf. U .f.R . 1952, p. 856.

9. T his question will not be the subject of special exam ination in this book, since such a legal situation, if it is recognized, cannot be regarded as a true effect of nationalization, in th a t it does not result from the p articular rules valid for nationalization, but is a consequence of the application to the nationalized property of the general rules o f international law.

2

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Th e Co n c e p t o f Na t i o n a l i z a t i o n

A . Is there a difference o f fact betw een nationalization and other form s of taking o f property?

1. T h e tra d itio n a l view : In th e ex ten siv e legal lite ra tu re w h ic h h as co m e in to b ein g as a re s u lt o f n a tio n a liz a tio n in th e p a s t few y ears, th e p ro b le m o f d e fin itio n , th a t is to say a c le a r s ta te m e n t o f w h a t is to be u n d e rs to o d by n a tio n a liz a tio n in in te rn a tio n a l law , h as n o t re c e iv e d g re a t a tte n tio n . G ra d u a lly , as th e w o rd n a tio n a liz a tio n c a m e to be m o re fre q u e n tly used by S tates in co n n e x io n w ith p u b lic a c tio n a g a in s t p ro p e rty , a n d as th e n u m b e r o f cases o f n a tio n a liz a tio n ro se, it c a m e to be acc e p te d th a t w h a t w as re g a rd e d as n a tio n a liz a tio n in m u n ic ip a l law w as also n a tio n a liz a tio n in in te rn a tio n a l law . W ith o u t a n y c le a r e x p la n a tio n as to w h e th e r it w as ju stifia b le th a t c e rta in p u b lic ac tio n s ag ain st p ro p e r ty sh o u ld h av e a n ew lab el d if fe re n t fro m th e tra d itio n a l o n e o f e x p ro p ria tio n , so cial re s tric tio n e tc ., th e p re v a ilin g view is th a t th e esta b lish in g o f th e d e fin itio n o f th e te rm “ n a tio n a liz a tio n ” h as n o re a l im p o rta n c e 1.

T h e re is n o d o u b t th a t th e re a s o n f o r th is is th a t th e d e fin itio n o f th e c o n c e p t o f n a tio n a liz a tio n is a sso ciate d by m a n y a u th o rs w ith th e tra d itio n a l c o n c e p t o f e x p ro p ria tio n .

A s a n illu s tra tio n , M ich ael B ra n d o n 2 states th a t th e te rm n a tio n a liz a tio n is a p p lic a b le to th e tr a n s fe r o f p riv a te p ro p e rty to p u b lic o w n e rsh ip an d ad d s th a t, if c o m p e n s a tio n is p a id , su c h a tr a n s fe r is e x p ro p ria tio n w ith o u t re g a rd to o th e r fa c to rs p re se n t.

J. E . S. F a w c e t t3 likew ise claim s th a t n a tio n a liz a tio n w ith c o m p e n s a tio n 1. Cf. e.g. T orsten G ihl who, answering a questionnaire sent out by the Inter

national Law A ssociation in 1947, declares that it is difficult and valueless to find a difference between “ expropriation” and "nationalization.”

2. M ichael B randon “ Legal D eterrents and Incentives to Private Foreign Invest

m ents,” Transactions o f the G rotius Society (1958), vol. 43, p. 43, cf. also

“ Legal Aspects o f Private Foreign Investm ents,” The Federal Bar Journal (1958), vol. X V III, p. 303.

3. J. E. S. Faw cett, “ Some Foreign Effects of N ationalization o f Property,”

B .Y .I.L . (1950), vol. 27, p. 335, cf. also R obert Delson, “ N ationalization of the Suez C anal Com pany: Issues o f Public and Private International Law ,”

Colum bia Law Review (1957), vol. 57, p. 757, note 3.

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Th e Co n c e p t o f Na t i o n a l i z a t i o n 19

is e x p ro p ria tio n , w hile n a tio n a liz a tio n w ith o u t c o m p e n s a tio n is co n fisc a tio n 4.

T h is cla ssific a tio n o f a n ew c o n c e p t u n d e r tra d itio n a l d e fin itio n is a p p a re n tly in a g re e m e n t w ith n o rm a l legal m eth o d s.

H o w ev er, in itself th e c la ssific a tio n gives n o in fo rm a tio n o f a n y valu e.

Q u ite a p a r t fro m th e fa c t th a t a s ta te m e n t th a t n a tio n a liz a tio n w ith c o m p e n sa tio n is th e sam e as e x p ro p ria tio n b eco m es m ere ta u to lo g y , b e c a u se o f th e u su al d e fin ito n o f e x p ro p ria tio n , th e cla ssific a tio n set o u t a b o v e is a p o o r fo u n d a tio n f o r a n aly sin g th e legal effects o f n a tio n a liz a tio n . T h is b eco m e s d o u b ly c le a r w h e n th e tra d itio n a l d e fin itio n o f e x p ro p ria tio n is ex am in ed .

E x p ro p ria tio n is d e fin e d in th e th e o ry o f c o n stitu tio n a l la w as p u b lic a c tio n a g a in s t rig h ts w h ic h c a rrie s liab ility fo r fu ll c o m p e n s a tio n , a n d w h ic h c a n o n ly o c c u r u n d e r c e rta in c o n d itio n s 5. T h e te rm “ e x p ro p ria tio n ” a p p lied to p u b lic a c tio n th u s ex p resses o n ly th e legal re su lts w h ic h th e a c tio n involves, b u t c o n trib u te s n o in fo rm a tio n w h a te v e r a b o u t w h a t p h e n o m e n a o r co u rses o f a c tio n a c c o m p a n y th ese legal re su lts, 6 a n d in p a rtic u la r n o th in g o f th e n a tu re o f th e a ctio n , w h e th e r it co v ers g e n e ra l as w ell as p a rtic u la r d e p riv a tio n s, re s tric tio n s o n so cial o r sa n ita ry g ro u n d s a n d so on.

T h e d e fin itio n o f e x p ro p ria tio n is, th e re fo re , o n ly a d e s c rip tio n f o r ju s a n d n o t f o r fa c ta 7, a n d th e asse rtio n th a t n a tio n a liz a tio n is th e sam e as 4. Cf. also Fischer-W illiam s, “ International Law and the P roperty o f A liens,”

B .Y .I.L . (1928), vol. 9, p. 25, and G arcia A m ador, Fourth R eport on Inter

national Responsibility, U N . doc. A /C N . 4/119, p. 31.

5. Cf. E rnst A ndersen in Ross & A ndersen, Dansk Statsforfatningsret II (1949), p. 212. L ater in the text it appears as if “ expropriation” is only another ex

pression fo r “ seizure.” Cf. also Ross, D ansk Statsforfatningsret II (1960), p. 534-535.

6. It is this interpretation of the concept o f expropriation which has been trans

ferred to international law, cf. inter alia R obert Delson, op. cit. p. 759, note 31. T he speech usage is, however, not consistent in international law, w here it often appears th at expropriation is used as a description fo r the action itself, cf. in this connexion the resolution passed by the International Law A ssociation in 1926 w here inter alia it states: . . I t is generally recognised . . . th a t private property m ay not be expropriated w ithout com pensation . . . ” I.L .A . 34th R eport (1926) p. 248.

7. It is quite another m atter that the legal consequences which are characteristic fo r the concept o f expropriation in the national constitutional law o f States

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B

e x p ro p ria tio n n ecessarily p resu p p o ses a n o b lig a tio n to co m p e n sa te , th e ex isten ce o f w h ich m u s t be p ro v e d . T h e p ro b le m f o r an aly sis is in fa c t w h e th e r n a tio n a liz a tio n is th e sam e as e x p ro p ria tio n ; in o th e r w ords w h e th e r th e fa c ts w h ic h a re d e sc rib e d as “ n a tio n a liz a tio n ” a re o f su ch a k in d th a t it is re a s o n a b le a n d in a g re e m e n t w ith re le v a n t law to ascrib e to th e m th e legal re su lts w h ic h a re in h e re n t in th e c o n c e p t o f e x p ro p ria tio n . N o su c h e x a m in a tio n a p p e a rs to h a v e b een u n d e rta k e n by th e a u th o rs n a m e d above.

T h e m e a n in g o f th e w o rd “ n a tio n a liz a tio n ” w h ic h w ill be estab lish ed h e re m u s t c o n se q u e n tly be d e scrip tiv e 8 in th e sense th a t th e d e fin itio n m u s t c o n ta in th e c h a ra c te ristic m a rk s w h ich w ill ju stify an d sh o w th a t th e p h e n o m e n a w h ic h a re in clu d ed in th e d e fin itio n a re d istin g u ish ed fro m o th e r p h e n o m e n a an d specially d esig n ated . I t m u st, h o w ev er, b e ag reed th a t it is n o t v ery u sefu l to c o n c e n tra te exclusively o n p u re d e sc rip tio n o f th e fa c tu a l p h e n o m e n a sim p ly to m a k e th is d e sc rip tio n as c o m p le te as p o ssib le. If a d e fin itio n is to h av e p ra c tic a l value as a n in s tru m e n t f o r use w ith in a g iv en field , it m u s t be po ssib le in th e d e fin itio n to stress th o se e lem en ts w h ic h m ay be th o u g h t to h av e re le v a n c e ev en to th e possible e x clu sio n o f o th e r elem en ts. F ro m th e sta n d p o in t o f th e e c o n o m ic sciences n a tio n a liz a tio n m a y be d e fin e d w ith special re fe re n c e to th e eco n o m ic re su lts o f th e a c tio n ; fro m th e a d m in is tra tiv e s ta n d p o in t w ith special re fe re n c e to th e a d m in is tra tiv e fo rm s w h ic h th e ta k e o v e r o f p riv a te in d u stry by th e S tate can inv o lv e 9, b u t it m a y be p re s u m e d th a t th e se fa c to rs d o n o t h a v e decisive im p o rta n c e fo r th e tr e a tm e n t o f th e su b je c t fro m th e s ta n d p o in t o f in te rn a tio n a l law . A d e fin itio n w h ic h is co m p le te ly re le v a n t to in te rn a tio n a l law c a n n o t, h o w ev er, be laid d o w n in ad v a n c e , b u t req u ires c lo s e r e x a m in a tio n o f th e in te rn a tio n a l effe c ts o f n a tio n a liz a tio n . A t th e p re s e n t stag e o f o u r an aly sis a d e fin itio n o f n a tio n a liz a tio n c a n th e re fo re o n ly b e p ro v isio n a l an d ad ju stab le.

are often connected with certain special types o f action against property, and if th e practice of constitutional law o f the State is well developed, it is pos

sible to obtain from it a very clear idea o f w hat actions against property norm ally involve the consequence which can justify a description o f the actions as expropriation.

8. Cf. also Edw ard D. Re, Foreign Confiscations in Anglo-A m erican Law (1951), p. 15-16.

9. Cf. e.g. M ario Einaudi w ith others, Nationalization in France and Italy (1955), p. 5.

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Th e Co n c e p t o f Na t i o n a l iz a t io n 21

T h e sta rtin g p o in t f o r a d e fin itio n o f th e c o n c e p t o f n a tio n a liz a tio n m u s t b e c u rr e n t sp eech u sag e 10. H e re it is im p o rta n t to o b serv e th a t th e w o rd n a tio n a liz a tio n w as n o t c re a te d by th e legal o r e c o n o m ic sciences, b u t is a te rm w h ich aro se fr o m th e in te rn a l p ra c tic e o f S tates to d escrib e c e rta in a c tio n s a g a in s t p riv a te p ro p e rty .

N a tio n a liz a tio n w as firs t h e a rd o f d u rin g th e R u ssian re v o lu tio n , w h en larg e secto rs o f th e e c o n o m y w h ich u p to th e n h a d b e e n p riv a te p ro p e rty p assed to th e c o m m o n o w n ersh ip o f th e n a tio n .

A su rv ey o f v ario u s law s an d tre a tie s show s th a t th e sam e te rm in o lo g y w as u sed la te r o n f o r sim ilar actio n s ag a in st p riv a te p ro p e rty , th e ty p ical signs b ein g th a t s u c h a c tio n s w ere n o t b eg u n w ith c o n c re te a n d p ra c tic a l objectives in sight, b u t h a d a m o re g e n e ra l c h a ra c te r fre q u e n tly co m in g fro m th e ir a ss o c ia tio n w ith a w id er p o litical aim , fo r e x a m p le th e r e c o n s tru c tio n o f th e e c o n o m ic a n d so cial s tru c tu r e o f th e S ta te in q u estio n . F in a lly n a tio n a liz a tio n is ty p ically (a lth o u g h n o t exclusively) u sed f o r th e ta k e o v e r o f in d u s tria l u n d e rta k in g s in th e w id est sense a n d n o t on ly fo r th e ta k e o v e r o f p ro p e r ty w h ic h exists w ith o u t serv in g in d u s tria l in terests. Since th is w ill be e x a m in ed la te r w h e n th e n a tio n a liz a tio n m e a su re s o f v ario u s c o u n trie s a re su rv ey ed , o n ly a few ty p ical e x am p les w ill be q u o te d h ere.

In G r e a t B rita in th e te rm n a tio n a liz a tio n w as u sed in th e A c ts passed im m e d ia te ly a fte r th e e n d o f th e S eco n d W o rld W a r, f o r e x a m p le , in th e law o f 12 Ju ly 1946 11 n a tio n a liz in g th e B ritish co al in d u s try . T h e a c tio n h a d as its m o tiv e th e w ish , lo n g n o u rish e d by th e B ritish L a b o u r P a rty , to ra tio n a liz e a n d m a k e e ffic e n t ev ery p a r t o f th is in d u stry .

A s a re s u lt o f th e a c tio n c o m p e n s a tio n w as p a id to th e p re v io u s o w n ers.

T h is, th e n , w as a c ase o f a g e n e ra l ta k in g w ith c o m p e n sa tio n .

In Ir a n o n 2 M a y 1951 a law w as p assed n a tio n a liz in g th e w h o le o f th e oil in d u s try . T h e h is to ry b e h in d th e law , h o w ev er, show s th a t th e m o tiv e w as p rim a rily n a tio n a listic , a n d a lth o u g h th e sco p e o f th e law is ex trem ely w ide, ta k in g in th e w h o le o f th e oil in d u s try , in e ffe c t it s tru c k a t a single c o m p a n y o n ly , n a m ely th e A n g lo Ira n ia n Oil C o m p a n y 12.

In In d o n e s ia in 1958, a la w (N o. 86) w as p assed d e a lin g w ith " th e

10. Ross. op. cit. § 1.

11. Cf. Tobin, “N ationalization in G reat Britain – F irst Y ear,” Dep. St. B u l.

(1946), vol. 15, p. 617.

12. Cf. A lan W. F ord, The Anglo-lranian Oil D ispute o f 1951-1952 (1954), p. 51.

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N a tio n a liz a tio n o f D u tc h -o w n e d e n te rp rise s in In d o n e s ia .” In th e p re a m b le to th e law it w as sta te d th a t th e a c tio n w as p a r t o f “ th e stru g g le f o r th e lib e ra tio n o f Ir ia n B a a t” (W est N e w G u in e a ) 13. In re a lity , a c c o rd in g to M e N a ir, w e a re c o n c e rn e d h e re w ith a n a c tio n a g a in st p riv a te p ro p e rty d esig n ed as a n in s tru m e n t f o r fo rc in g th e so lu tio n o f a n in te rn a tio n a l p o litic a l d is p u te , an d w h ic h h a d as its a im objectives n o t d ire c tly c o n n e c te d w ith th e f u tu re use o f th e p ro p e rty n a tio n a liz e d u n d e r th is l a w 14. A sp ecial fe a tu re o f this e x a m p le o f n a tio n a liz a tio n is th a t it d id n o t e x ten d to sim ila r p ro p e rty b e lo n g in g to th e lo c a l p o p u la tio n o r o th e r alien s l s .

In F ra n c e , by th e law o f th e 2 D e c e m b e r 1945, five b a n k s, specified b y n a m e , w ere n a tio n a liz e d as a re s u lt o f th e w ish o f th e S tate to in flu en ce th e c o u n try ’s e c o n o m y a n d its fin a n c ia l p o l i c y l6. T h u s, th is ta k in g o f p ro p e rty , th o u g h d e sc rib e d as n a tio n a liz a tio n , is n o t g e n e ra l a c c o rd in g to th e w o rd in g a n d o b je c t o f th e law , b u t is d ire c te d sp ecific ally a g a in s t c e r

ta in c o n c e rn s w h ic h are n a m e d .

F in a lly , th e re is th e n a tio n a liz in g a c tio n c a rrie d o u t in C zech o slo v a k ia, w h e re b y in 1945, u n d e r a n u m b e r o f re g u la tio n s p ra c tic a lly th e w h o le o f th e e c o n o m ic life o f th e c o u n try w as re c o n s tru c te d b y th e n a tio n a liz a tio n o f all b u t th e v ery sm allest in d u s tria l a n d b a n k in g activ ities, w ith n o c o m p e n sa tio n to th e o w n ers 17.

T h e se e x am p les a lre a d y sh o w th a t n a tio n a liz a tio n is u sed as a d e sc rip tio n f o r actio n s w h ich are v ery d iffe re n t w h e th e r as to m o tiv e, e x te n t, ob ject, fo rm , a n d /o r p u rp o se.

A g a in st th is b a c k g ro u n d legal th e o ry m u s t a tte m p t to e stab lish w h e th e r th e re a re c o m m o n c h a ra c te ristic s in th ese actio n s w h ic h w ill fo r m a basis f o r d istin g u ish in g th ese m e a su re s f r o m tra d itio n a l ac tio n s ag a in st p riv ate p ro p e rty , a n d if th is is so, to set o u t in d e ta il w h a t th is d e stin c tio n is.

13. M c N a ir, “ The Seizure o f Property and Enterprises in Indonesia,” N .T .V .I.R . (1959), p. 220.

14. Ibid., p. 256.

15. Cf. Urteil des Hanseatischen Oberlandesgericlits Brem en im Brem er Tabak

streit (1959), p. 64 and Seidl-H ohenveldern, “ A usländische N ationalisierungs

m assnahm en und ihre Beurteilung durch deutsche G erichte,” Aussenwirt- schaftsdienst (1959), p. 274.

16. Cf. M argaret G. Myers, “T he N ationalization o f Banks in F rance,” Political Science Quarterly (1949), p. 189.

17. Cf. inter alia O atm ann, “T he N ationalization Program in Czechoslovakia,”

Dep.St.Bul. (1946), vol. 15, p. 1028.

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T h e c o m p le x n a tu r e o f th e p h e n o m e n a w h ic h a re d e sc rib e d as n a tio n a li

z a tio n h as, h o w ev er, c a u se d legal a u th o rs to la y e m p h asis o n d iffe re n t elem en ts, th o u g h n o c le a r a n d re lia b le d istin g u ish in g m a rk s h a v e a p p a re n tly em erg ed .

T o q u o te a few ex am p les: as a s ta rtin g p o in t a n d basis f o r d iscu ssio n fo r th e u n fin ish e d d e b a te o n th e in te rn a tio n a l effe c ts o f n a tio n a liz a tio n in th e In s titu t de d ro it in te rn a tio n a l in 1952, L a P ra d e lle 18 d efin es n a tio n a liz a tio n as:

“.. . l’opération de haute politique par laquelle un E tat reform ant tout ou partie de sa structure économ ique enléve aux personnes privées p our la rem ettre å la nation la disposition d ’entreprises industrielles ou agricoles d ’une certaine im por

tance en les faisant passer du secteur privé au secteur public.”

By th is p ro n o u n c e m e n t (a n d th is is u n d e rlin e d in th e d e b a te w h ich follow s) L a P ra d e lle a p p e a rs to lay decisive em p h asis o n th e m o tiv e fo r ac tio n s a g a in s t p ro p e rty , a n d h e p re su p p o se s b y h is d e fin itio n o f th e c o n c e p t 19 th a t n a tio n a liz a tio n is d istin g u ish ed fr o m tra d itio n a l a c tio n in th a t th e la s t n a m e d h as o n ly local sig n ifican ce, w h ile n a tio n a liz a tio n h as as its m o tiv e a c o m p le te a n d g e n e ra l a lte ra tio n o f s tru c tu re .

B ecause o f its la c k o f p re c isio n in fo rm u la tio n a n d its u n su ita b ility as a b asis f o r d istin g u ish in g n a tio n a liz a tio n , L a P ra d e lle ’s d e fin itio n se t o n fo o t a p ro tra c te d d e b a te w h ich co n c lu d e d w ith th e a c c e p ta n c e o f th e follo w in g d e fin itio n b y th e In s titu te 20:

“ L a nationalisation est le transferí å 1’E tat, p ar mesure législative et dans un intérét public, de biens ou droit privés d’une certaine catégorie, en vue de leur exploitation ou contróle p ar l’E tat, ou d ’une nouvelle destination qui leur serait donnée p a r celui-ci.”

In th is d e fin itio n th e ju rid ic a lly v ague s ta te m e n t o f m o tiv e as a re le v a n t f a c t h as b e e n a b a n d o n e d , a n d in its p lace th e c o n c e p t o f n a tio n a liz a tio n h as b e e n a tta c h e d to th e p u rp o s e o f th e a c tio n , n a m e ly th e tr a n s fe r o f th e p ro p e rty in q u e stio n to th e c o n tro l a n d use o f th e S tate.

F rie d m a n 21 m a y b e q u o te d as a n e x am p le f r o m th e g ro u p o f w riters w h o a tta c h decisiv e im p o rta n c e to th e e x te n t o f th e a c tio n . H e d o es n o t re g a rd it as a n e cessary p a r t o f th e c o n c e p t th a t th e m e a su re s o f n a tio n a li

z a tio n sh o u ld a ff e c t th e e c o n o m ic s tru c tu r e o f th e c o m m u n ity , since 18. A nnuaire (1950), vol. 43 I, p. 126.

19. Ibid., p. 128.

20. A nnuaire (1952), vol. 4 4 II, p. 283.

21. Expropriation in International Law (1953), p. 12.

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n a tio n a liz a tio n d oes n o t e n tire ly p re v e n t th e re te n tio n o f p riv a te ca p ita l in in d u s try an d c a n ev en lead to c o -o p e ra tio n b etw een p riv a te in te re sts an d S tate cap ital. T h u s he states th a t n a tio n a liz a tio n n e e d o n ly ex clu d e fo reig n ca p ita l in so f a r as it c o n c e rn s th e a c tu a l h o ld in g o f p ro p e rty in th e n a tio n a liz e d in d u stries. F rie d m a n sees n a tio n a liz a tio n as g e n e ra l d e p riv a tio n o f p ro p e rty o f a p a rtic u la r k in d fo r th e b e n e fit o f th e c o m m o n good.

D o m a n 22 d escrib es n a tio n a liz a tio n as a m o re o r less c o m p reh en siv e, g e n e ra l an d im p e rso n a l in te rv e n tio n in th e e c o n o m ic s tru c tu re w ith the p u b lic b e n e fit in m in d . If c o m p e n s a tio n is p a id , it is a case o f e x p ro p ria tio n , if n o t it is a case o f c o n fisc a tio n . By th is d e fin itio n n a tio n a liz a tio n is c e rta in ly n o t a n ew c o n c e p t, b u t em b ra c e s ev ery ta k in g o f p ro p e r ty fo r th e c o m m o n g o o d a n d is th u s a g en eric te rm fo r all fo rm s o f p u b lic actio n a g a in s t p ro p e rty .

T h is in te rp re ta tio n – an d D o m a n ’s tr e a m e n t in g en e ra l – h as, as stated ab o v e, b een v e ry clea rly o b se rv a b le in in te rn a tio n a l legal lite ra tu re .

R o lin 23 m u s t be q u o te d as a n e x a m p le o f an a u th o r w h o , in his d e fin i

tio n , em p h asizes fo rm , m o tiv e, e x te n t a n d o b ject. In th e m eetin g o f th e I n s titu t de d ro it in te rn a tio n a l m e n tio n e d ab o v e h e p u t fo rw a rd th e fo llo w ing d efin itio n :

“ L a nationalisation est la m esure législative de caractére politique par laquelle un E tat, réform ant la structure de son économie, enléve aux personnes privées et confie à des organismes public la jouissance et l’adm inistration d ’entreprises industrielles ou agricoles de nature déterm inée.”

R o lin , h o w ev er, su b se q u e n tly a b a n d o n e d this in te rp re ta tio n a n d l a t e r 24 states th a t, fro m a legal p o in t o f view , n a tio n a liz a tio n is a “.. .v ariété de d e l’e x p ro p ria tio n , en ta n t q u ’elle te n d à la co llectiv ité c e rta in s biens a p p a rte n a n t à des p a rtic u lie rs .”

F in a lly th e r e a re a u th o rs w h o a tte m p t to solve th e p ro b le m o f d e fin itio n ra d ic a lly by d e lib e ra te ly av o id in g th e u se o f th e w o rd n a tio n a liz a tio n an d , w h en fo rm u la tin g th e legal ru les, u se a n e u tra l e x p re ssio n in stead . In th e p a p e r, C o n v e n tio n on th e In te rn a tio n a l R e sp o n sib ility o f S ta te s fo r In ju rie s to A lie n s , su b m itte d o n 1 M a y 1959 by th e H a rv a rd L a w S chool to

22. “ Postwar N ationalization of Foreign Property in E urope”, C olum bia Law R eview (1948), vol. 48, p. 1125.

23. A nnuaire (1950), vol. 43 I, p. 99.

24. “ Avis sur validité des mesures de nationalisation décrétées par le gouverne- m ent indonésien,” N .T .V .I.R . (1959), p. 266.

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th e In te rn a tio n a l L aw C o m m issio n , p u b lic a c tio n ag ain st p ro p e rty , in c o m p le te a c c o rd a n c e w ith th e la te st A m e ric a n p ra c tic e , is sim ply d e sc rib e d as

“ ta k in g ” , an d th u s co v e rs b o th th e tra d itio n a l p u b lic a c tio n a g a in s t p ro p e rty a n d n a tio n a liz a tio n 23.

2. E v a lu a tio n . T h e e stab lish in g o f a m otive fo r an a c t by th e S tate c a n in p ra c tic e p ro d u c e d iffic u ltie s 26; in p a rtic u la r th e c o u rts w ill fin d it d iffic u lt to set asid e a n a sse rtio n by a S tate th a t this o r th a t m o tiv e w as decisive fo r a c tio n it to o k . N ev erth eless, th e in tro d u c tio n in to th e d e fin itio n o f a n a c tio n o f m o tiv e f o r th a t a c tio n c a n h ave som e im p o rta n c e , n a m e ly as a n eg ativ e test, in th e sense th a t an y p h e n o m e n a w h ic h c le a rly d o n o t arise fro m th e m o tiv es o f th e S tate in q u e stio n , m u s t c e rta in ly be ex clu d e d fro m th e field o f th e d e fin itio n . I t is, h o w ev er, a n a tu r a l p re re q u isite th a t th e sta te m e n t o f m o tiv e sh all h a v e som e so lid ity an d c la rity if it is to be u sefu l.

T h u s, if in th e d e fin itio n o f n a tio n a liz a tio n it is sta te d th a t th e a c tio n m u s t b e p a r t o f th e a lte ra tio n o f th e e c o n o m ic s tru c tu r e o f th e S tate, o r m u s t sp rin g fro m social e c o n o m ic m otives, it is possible to ex clu d e fr o m th e field o f th e d e fin itio n p u b lic a c tio n a g a in s t p ro p e rty b ased o n p e n a l, h e a lth , d e fe n c e o r secu rity g ro u n d s. H o w e v e r th e m o re e x a c t lim itin g o f th e field, fo r e x a m p le as b etw e e n n a tio n a liz a tio n an d th e tra d itio n a l ac tio n s ag a in st p riv a te p ro p e r ty fo r th e c o m m o n b en efit, d oes n o t a p p e a r to be po ssib le by th e u se o f th is c rite rio n .

N o r does th e e x te n t o f a c tio n ag a in st p riv a te p ro p e rty d escrib ed as n a tio n a liz a tio n a p p e a r to give th e n ecessary c la rity a n d so lid ity as a c rite rio n f o r a d e fin itio n . E v e n if n a tio n a liz a tio n is a lm o st alw ays g en eral, i.e.

e m b ra c e s all p ro p e rty o f th e sam e k in d , fo r e x a m p le all in d u s tria l activities o f a c e rta in size a n d /o r w ith a c e rta in p ro d u c tio n 27, it a p p e a rs to be q u ite a g a in st th e c u rr e n t u sag e o f th e w o rd to sp eak o f n a tio n a liz a tio n o n ly a n d exclusively in in sta n c e s w h e re th e g e n e ra l c h a ra c te r o f th e a c tio n is e sta b lished. T h e re a re cases w h e re a n a tio n a liz in g a c tio n fo rm u la te d in g e n e ra l te rm s is in fa c t aim ed o n ly a t a single in d u s tria l c o n c e rn 28, a n d e q u ally th e 25. Cf. art. 10, p. 64-72.

26. Cf. Fischer W illiams, op.cit., p. 26.

27. Cf. e.g. the F rench nationalization law of 8 A pril 1946, covering the elec

tricity and gas works, w here the decisive test fo r nationalization was the size o f the average production in a specified num ber of years. The law is furth er discussed in § 9.

28. Cf. above, on the Iranian nationalization law o f 2 M ay 1951.

Nationalization and Compensation

ISI FOIGHEL