Petition — Occidental of Umm Al Qaywayn, Inc. v. Cities Service Oil Co.
Supreme Court brief1979
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ao Sup em 8 Cou irt, U, Sy
F ILED
DEC 6 1978
~~
f
2 ene og
IN THE
Supreme Court of the HuitedY Staten:
Octoser Term, 1978
No. 7-8 -910
> .
OccwrentTaL or Umm Au Qayrwayy, Inc.,
K, JR, CLERK
Petitioner,
—V.—
Crries Service Or Co., eé al.,
Respondents.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
Louis NIzER
GERALD MEYER
New. A, Poiuio
Puruuires, NizEr, BENJAMIN,
Krim & BaLLon
40 West 57th Street
New York, New York
10019
Tuomas M. BEerGcstTept
J. Bonp Smita, JR.
BicHaM, ENnGuar, JONES
& Houston
14 Wall Street
New York, New York
10005
Henry J. Reap
MoNnTGOMERY, BARNETT,
Brown & Reap
806 First National Bank
of Commerce Building
New Orleans, Louisiana
70130
ScoFreELD, Bercstept &
GERARD
1114 Ryan Street
P. O. Box 1136
Lake Charles, Louisiana
70601
Davin STONE
Strong, Pigman, WALTHER,
Witrmann & HutcHInson
1000 Whitney Bank
Building
New Orleans, Louisiana
70130
Attorneys for Occidental of Umm
Al Qaywayn, Inc., Petitioner
_
INDEX
PAGE
Opinions Below 1
Jurisdiction 1
Questions Presented 2
Statutory Provisions Involved ca
Treaty Provisions Involved +
Statement of the Case ne
A. The Facts 5
B. The Theory of the Petitioner’s Case .................... 9
C. Proceedings Below i" 11
Reasons for Granting the Writ on ae
I. The decision of the court of appeals undermines
the rule of law in international affairs, offends
the constitutional mandate of an independent ju-
diciary and denies due process of law to parties
relying on foreign boundaries determined by the
United States 13
A. The Decision of the Court of Appeals Un-
; dermines the Rule of Law in International
Affairs 14
1. The three-mile limit proclaimed by the
Executive Branch has the force of law
and is binding upon the courts ............ 14
PAGE
2. The letter from the State Department
on which the court of appeals relied
does not profess to change the law of
the three-mile limit .........0.0......ccc-cceces
3. The court of appeals erroneously de-
clined jurisdiction because of its mis-
taken view that it had to determine the
dispute between Iran and Sharjah over
Abu Musa; this dispute is irrelevant
to Occidental’s claim ..................c-0c0c-eee0e+
4. This Court’s policy of fostering a rule
of law in international affairs is under-
mined by the decision below ..................
B. The Decision of the Court of Appeals Of-
fends the Constitutional Mandate of an In-
dependent Judiciary
C. The Refusal of the Court of Appeals to Take
Jurisdiction Denies Due Process of Law to
Parties Relying on Foreign Borders Deter-
mined by the United States .
II. Even if the law of the three-mile limit were not
dispositive, this Court would still be required to
decide this case; otherwise, the litigants would
be relegated to self-help
III. The issue in this case which the court of appeals
denominated a political question is indistinguish-
able from an act of state issue and is therefore
controlled by the Hickenlooper Amendment ........
16
16
18
19
21
22
a at le eh
2 ees Neb eons tlie a
PAGE
IV. The refusal of the court of appeals to hear this ©
case offends the strong Congressional policy
favoring judicial determination of the property
claims of American victims of foreign confisca-
tions 30
ConcLusion - Oe
Appenprx A—Opinion of the Fifth Cirewit ...................... A-1
Apprenpix B—Opinion of the District Court .................... B-1
Appenprx C—Map attached to, and made a part of, oil
concession agreement dated November 18, 1969, be-
tween Ruler of Umm Al Qaywayn and Occidental of
Umm Al Qaywayn, Inc. C-1
Aprenprx D—Same map as Appendix “C” with clari-
fying notations, shadings, and identifications added
by Petitioner for Court’s convenience D-1
TaBLe or AUTHORITIES
Cases:
Airhart v. Massieu, 98 U.S. 491 (1879) 10
Alfred Dunhill of London, Inc. v. Republic of Cuba, 425
U.S. 682 (1976) 20
American Federation of Musicians v. Wittstein, 379
U.S. 171 (1964) 30
Baker v. Carr, 369 U.S. 180 (1962) 23, 24, 25, 30
Banco Nacidnal de Cuba v. Farr, 243 F. Supp. 957
(S.D.N.Y. 1965), aff'd 383 F.2d 166 (2 Cir.), cert.
denied 390 U.S. 956, reh. denied 390 U.S. 1037
(1968) 27, 28, 29
iv
PAGE
Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398
(1964) .... 28, 29
Bernstein v. N.V. Nederlandsche-Amerikaansche, 210
F.2d 375 (2d Cir. 1954) 19
De la Croix v. Chamberlain, 25 U.S. (12 Wheat.) 599
(1827) 23
First National City Bank v. Banco Nacional de Cuba,
406 U.S. 764 (1972) 18, 19, 20, 22, 28, 30
Foster & Elam v. Neilson, 27 U.S. (2 Pet.) 253 (1829) 23
Guarantee Trust Co. of New York v. United States, 304
Th Be Cee hirceatceeprinlciincintinniipipciiliistincitbeaminaiiinnetaia 16
Jones v. United States, 137 U.S. 202 (1890) .................. 16
The Maret, 145 F.2d 431 (3d Cir. 1944) ...........ccsececesees 16
United States v. California, 332 U.S. 19 (1947) ............ 16
United States v. O’Donnel, 303 U.S. 501 (1938) ............ 10
United States v. Percheman, 32 U.S. (7 Pet.) 51 (1833) 10
United States v. Ruzicka, 329 U.S. 287 (1946) .............. 30
Williams v. Suffolk Insurance Co., 38 U.S. (13 Pet.)
414 (1939) 15, 16, 22, 23
United States Constitution
Article ITI, § 2 ne
Amendments, Article V = a
PAGE
Statutes
28 U.S.C. § 1254(1)
22 U.S.C. § 2370(e)(2) (Hickenlooper Amendment) ....3, 11,
12, 26, 27, 28, 29, 30, 31
Louisiana Code of Civil Procedure, Article 3501 et seq. 12
Treaty
Convention on the Continental Shelf of April 29, 1958,
15 U.S.T. 471, TIAS 5578; 499 U.N.T.S. 311 ............ 3, 4, 17
Other authorities
110 Cong. Rec. 18936, 19555 (1964) 2.2... eee eeeseeeneeeeee 26
Department of State Bulletin, v. LXXI, no. 1832, at
233 (Aug. 5, 1974) ...........cccccscccceceeee ad. ae
Department of State Press Release 64, Feb. 25,1970... 14
Foreign Relations of the United States, 1935, at 919
(State Dept. 1953) HS FAN Ae RR 14, 15
Restatement (Second) of Foreign Relations Law, note
to §15 at 40 (ALI 1965) 14
State Department Airgram to United States Embassy,
London, July 22, 1970 .............c.cocscse-seee in
United States note to Saudi Arabia, Foreign Relations
of the United States, 1949, v. VI, at 157-60 (State
Dept. 1977) Seren Coen 14
IN THE
Supreme Court of the United States
Ocroser Term, 1978
OcomentaL or Umm At Qayrwayy, Ino.,
Petitioner,
—_—V—e—
Cites Service Ow Co., et al.,
Respondents.
>
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
Occidental of Umm Al Qaywayn, Inc. petitions for a
writ of certiorari to review the judgment of the United
States Court of Appeals for the Fifth Circuit in this case.
Opinions Below
The opinion of the court of appeals (App. A, infra) is
reported at 577 F.2d 1196. The opinion of the district
court (App. B, infra) is reported at 396 F.Supp. 461 (W.D.
La.). !
Jurisdiction
The judgment of the court of appeals was entered on.
August 9, 1978. On October 31, 1978, Justice Powell issued
an order granting to the petitioner an extension of time
through December 7, 1978 within which to apply for cer-
2
tiorari. The jurisdiction of this Court is invoked under
28 U.S.C. 1254(1).
Questions Presented
1. In an action between American citizens concerning title
to property illegally confiscated abroad and brought
into the United States, did the court of appeals err in
declining jurisdiction on the ground that the ownership
of an island contested between two foreign states in-
volves a political question, when no such issue existed be-
cause no matter who owned that island, the confiscated
oil before the court was extracted outside of that island’s
three-mile territorial water limit?
2. Where the Executive Branch of our Government has
repeatedly proclaimed a three-mile water limit rule
and applied it to the very territories involved in this
case, must not the Federal Court follow such rule in
deciding the case, instead of declining jurisdiction?
3. Did the court of appeals err in surrendering its judi-
cial function upon the suggestion of the Legal Adviser
of the State Department that it should not decide this
case?
4. Does not the political question doctrine merely require
the courts to follow an executive determination as here,
rather than create a judicial vacuum by depriving the
courts of jurisdiction?
5. Is not the issue in this case, which the court of ap-
peals has denominated a “political question”, indistin-
guishable from an act of state issue, and therefore with-
in the Hickenlooper mandate that “no court .. . shall
decline .. . to make a determination on the merits”?
3
6. Even if the court of appeals was not bound by the
Hickenlooper Amendment, did it err in disregarding
the strong Congressional policy embodied in it, which
requires judicial determination of the property claims
of victims of foreign confiscations?
Statutory Provisions Involved
United States Code, Title 22 §2370(e) (2).
Notwithstanding any other provision of law, no court in
the United States shall decline on the ground of the fed-
eral act of state doctrine to make a determination on the
merits giving effect to the principles of international law
in a case in which a claim of title or other right to prop-
erty 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 Janu-
ary 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 sub-
section: 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 (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.
Treaty Provisions Involved
Convention on the Continental Shelf of April 29, 1958,
15 U.S.T. 471, TIAS 5578; 499 U.N.T.S. 311, effective as
of June 10, 1964), article 2, paragraph 1 and article 6,
paragraphs 1 and 2.
4
“Article 2
“1. The coastal State exercises over the continental shelf
sovereign rights for the purpose of exploring it and ex-
ploiting its natural resources.
“Article 6
“1. Where the same continental shelf is adjacent to the
territories of two or more States whose coasts are opposite
each other, the boundary of the continental shelf apper-
taining to such States shall be determined by agreement
between them. In the absence of agreement, and unless
another boundary line is justified by special circumstances,
the boundary is the median line, every point of which is
equidistant from the nearest points of the baselines from
which the breadth of the territorial sea of each State is
measured.
“2. Where the same continental shelf is adjacent to the
territories of two adjacent States, the boundary of the con-
tinental shelf shall be determined by agreement between
them. In the absence of agreement, and unless another
boundary line is justified by special circumstances, the
boundary shall be determined by application of the prin-
ciple of equidistance from the nearest points of the base-
lines from which the breadth of the territorial sea of each
State is measured.
Statement of the Case
This case involves crucial constitutional questions that
transcend the hundreds of millions of dollars at stake here.
All of the parties are American corporations. The peti-
tioner attached crude oil in the United States. It was ex-
5
tracted from a location in the Persian Gulf included within
an oil concession that was validly granted to the petitioner,
and later confiscated without payment of compensation, in
violation of international law. The respondents have thus
far persuaded the courts to refuse jurisdiction of the dis-
pute, thereby preserving an immune “thieves market’’ in
the United States for confiscated property.
The district court declined to try the case and granted
summary judgment for the respondents on the ground of
the “act of state” doctrine. The court of appeals affirmed
on what it called a “slightly different ground”—that the
case presents a “political question”, and is therefore not
a “case or controversy”.
A. The Facts
The basic issue in this case is simple, and not “unman-
ageable” as held by the courts below. Despite the geo-
graphic details and the exotic sheikhdoms involved, the
case is determined by the three-mile territorial water rule
which has been applied by the United States for nearly two
centuries.
Umm Al Qaywayn (“Umm”) and Sharjah are two of
the Trucial Sheikhdoms (now known as the United Arab
Emirates), located on the southeastern coast of the Persian
Gulf. For over a century until November 30, 1971, the
United Kingdom was the protecting power over the Trucial
Sheikhdoms, including Umm and Sharjah. By treaty, the
United Kingdom was in charge of the international rela-
tions and defense of the Sheikhdoms and had jurisdiction
over their territories, including their territorial waters.
This treaty was recognized by the United States. No oil
concession could be granted by any of the Trucial Sheikh-
doms without the approval of the British Government.
6
In 1964, the Rulers of Umm and Sharjah entered an
agreement under the auspices of the British Government
establishing the seabed border between them. The agree-
ment was based on an admiralty chart delineating the
boundary between the continental shelves of Umm and
Sharjah, and showing the continental shelf of Umm as
extending to the three-mile limit of the territorial waters
of the island of Abu Musa. This tiny island is situated
about forty miles off the coast of Umm and Sharjah, and
had for centuries been under the exclusive sovereignty of
Sharjah.
On November 18, 1969, Occidental of Umm Al Qaywayn,
Inc. (“Occidental”) a California corporation, acquired
from the Ruler of Umm a forty-year exclusive oil con-
cession granting Occidental all property rights and owner-
ship to the oil. Said concession covered all offshore waters
of Umm and the underlying seabed, as outlined on a map
annexed to the concession. (A copy of the map is repro-
duced as Appendix C to this petition; a copy of the same map
with clarifying identifications is annexed as Appendix D.)
The boundaries of the concession shown on the map were
identical to the boundaries established by agreement be-
tween the rulers of Umm and Sharjah five years earlier, in
1964. Specifically, the map showed that Occidental’s con-
cession area extended on the northwest to the three-mile
limit of the territorial waters of the island of Abu Musa.
Great Britain, as the protecting power, ratified the Occi-
dental concession.
Six weeks later, the Ruler of Sharjah granted an oil con-
cession to Buttes Gas & Oil Co. (“Buttes”). The Sharjah-
Buttes concession covered an area that was contiguous
with, and did not conflict with, the concession recently
granted to Occidental. This too was formally approved
by Great Britain.
- ~~ OT OOo
—— — =
— Se
a
7
Occidental promptly conducted extensive seismic tests
in its concession area, at a cost of more than $4,000,000.
These tests indicated the prospect of oil and gas in large
quantities at a location clearly outside the three-mile ter-
ritorial water limit of the island of Abu Musa, in a location
wholly within Occidental’s concession area.
Buttes learned of Occidental’s oil find and launched a
campaign to capture Occidental’s property. It notified the
British Political Agent in the Trucial Sheikhdoms, on
March 25, 1970, that it intended to commence drilling in
the precise location of Occidental’s oil find. A few days
later, the Ruler of Sharjah claimed for the first time to
have issued a decree, allegedly made six months earlier, on
September 10, 1969, and concededly “unpublished” at that.
This “secret” decree, which by strange coincidence pre-
dated Occidental’s approved concession, purported to ex-
tend the territorial waters of Sharjah and of its islands,
including Abu Musa, from three to twelve miles.
The Sharjah decree was obviously back-dated, and was
issued at the inducement of Buttes, to deprive Occidental
of its property. The British Government rejected this
fraudulent decree, and refused to give effect to the at-
tempted extension of Sharjah’s territorial waters. The
British Foreign Office advised the Ruler of Sharjah that
his attempt to extend the territorial waters of Abu Musa
from three to twelve miles violated the 1964 seabed border
agreement between Sharjah and Umm, and violated the
vested concession rights of Occidental. The British Gov-
ernment also refused Buttes’ request for permission to
drill, on the ground that the proposed drilling site was
within Occidental’s concession area, and outside the Buttes
concession area.’ Sharjah resisted and the’ matter was
1 Britain’s express language was: “the location lies in an area
which was not included in the concession area specified in the
submitted to mediation. When the mediator ruled in favor
of Umm and Occidental, however, Sharjah, in bad faith, re-
jected the mediator’s ruling.’
Thus frustrated, Buttes took another tack. It persuaded
Iran to assert a claim to the valuable portion of Occi-
dental’s concession. Iran, through the National Iranian Oil
Company, announced in May 1970 that the Island of Abu
Musa belonged to Iran and not to Sharjah, and claimed a
twelve-mile limit for territorial waters of the island.
When Great Britain relinquished its rights and obliga-
tions as protecting power over the Trucial Sheikhdoms on
November 30, 1971, the constraints on Buttes’ manipula-
tions ended. Under threat of forcible occupation of Abu
Musa by Iran, the Ruler of Sharjah entered into an agree-
ment with Iran providing that Iran and Sharjah would
jointly occupy the island; that the oil concession granted
by Sharjah to Buttes, including the illegally extended ter-
ritorial water limits, would be “confirmed”; and that Iran
and Sharjah would split the governmental royalties derived
from the concession.
Iran then occupied Abu Musa (together with Sharjah)
and patrolled the territorial waters extended to twelve
miles. Umm had no means to prevent this seizure and
occupation of.a portion of its continental shelf, and its sov-
ereignty over that portion was terminated by annexation.
concession agreement between [Sharjah] and Puttes... on 29
December 1969 and as approved by Her Majesty's Government at
that time and . . . the location lies in an area which was included
in the concession agreement concluded at an earlier date between
Umm and Occidental .
*The opinion of the court of appeals, through oversight, states
incorrectly that Umm, rather than Sharjah, “refused to abide”
by the mediator’s decision. App. A at p. A-5; 577 F. 2d at 1200.
After the annexation, Sharjah and Iran confiscated Oc-
cidental’s concession in favor of Buttes. The confiscation
was uncompensated, and therefore illegal.
Buttes immediately began drilling operations in the very
location of Occidental’s oil find, Buttes later sold interests
in its Sharjah concession to subsidiaries of Ashland Oil,
Inc., Kerr-McGee Corporation, Skelly Oil Company and
Cities Service Oil Company. Each of these companies, be-
fore acquiring its interest, was put on notice of Occidental’s
ownership of the concession.
In 1974, the defendants began to extract oil from Occi-
dental’s concession area and to ship it to the United States.
Among these shipments were the three cargoes that were
attached in Louisiana in these proceedings. Occidental has
also attached some ninety other cargoes in proceedings in-
stituted in state and federal courts in Louisiana and Texas,
and in the Virgin Islands.’
B. The Theory of the Petitioner’s Case
Occidental’s cause of action arises from the following
ultimate facts alleged in the complaint:
(a) The Ruler of Umm issued to Occidental a valid
oil concession.
(b) Occidental made an important oil find. There-
after, Sharjah and Iran annexed the area of the oil
find.
(c) After the annexation, Sharjah and Iran con-
fiscated Occidental’s vested property right in its con-
cession without compensation.
*In every case, by prior stipulation, the oil was released im-
mediately after seizure, upon an undertaking by the consignees to
stand good for the value of the cargo.
10
(d) Buttes extracted the oil from Occidental’s con-
cession area and shipped the oil to the United States.
The legal theory of Occidental’s claim is simple. After
the annexation on November 30, 1971, Iran and Sharjah
were obligated to respect vested concession rights within
the annexed portion of Umm’s continental shelf, under the
rule of international law, applied repeatedly by this Court,
that a change of sovereignty does not alter vested rights
within the acquired territory.‘ The failure of Sharjah and
Iran to honor Occidental’s vested right in its concession
constituted a taking of Occidental’s property. Because the
taking was uncompensated, it violated international law,
and did not confer upon Sharjah and Iran, or upon anyone
claiming through them, title to the confiscated conces-
sion or to the oil extracted from it.
Occidental’s claim arises not from the annoxation of
Umm’s continental shelf, but from the confiscation of its
concession by Sharjah and Iran, which occurred after the
annexation. Iran and Sharjah have carved up Abu Musa
between them. So be it. Occidental does not challenge this
fait accompli. To put it plainly, there is nothing in the case
that will affect the boundary line of any of Iran’s terri-
tories, no matter where they are. Similarly, the case will
not affect Sharjah’s or anyone else’s boundary lines, no
matter where they are,
There is nothing in Occidental’s claim that will affect
one cent of the royalties now being collected by Iran or any
other sovereign from the oil being drilled on the original
Occidental site. They have been collected and will continue
to be collected without challenge by Occidental. All that is
*Umited States v. O’Donnel, 308 U.S. 501, 510-11 (1938);
Airhart v. Massieu, 98 U.S. 491 (1879); United States v. Perche-
man, 32 U.S. (7 Pet.) 51, 86-87 (1833).
11
involved in this case is that the oil, which was shipped
into the United States, and which is the product of an
illegal confiscation, is subject to a claim in American
courts. No judgment for one cent beyond the property
before the Court is requested or can be granted.
The respondents have, by complex argument and fear
thoughts of involved issues, persuaded the court of ap-
peals that this case is “unmanageable.” Aside from the
fact that American courts decide far more complex issues,
the fright approach is an unworthy one. If the courts with-
draw from deciding this case they return to the day when
the United States was looked upon as a haven for stolen
property and was the delight of thieves, to the consterna-
tion of the rightful owners. It was to eliminate this im-
moral position in which the United States found itself, aptly
called the “thieves market”, that Congress directed the
courts to decide cases like this one. 22 U.S.C. §2370(e) (2).
C. Proceedings Below
Shortly after filing its complaint, Occidental served on
Buttes a request for production of documents.’ The de-
fendants responded with a motion to stay all discovery,
and a motion to dismiss the complaint. The motion was
converted into a motion for summary judgment at the
court’s suggestion. The matter was submitted without an
evidentiary hearing and with virtually no discovery, on the
basis of the defendants’ concession that they would not
controvert any of the facts pleaded in the complaint. In
reliance on this concession, the district court granted the
defendants’ motion to stay discovery. For purposes of this
® Civil Action No. 74-868 (“Dauntless Colocotronis”’) is an in rem
action in admiralty. Buttes Gas & Oil Company, Skelly Oil Com-
pany, Kerr-McGee Corporation, Cities Service Oil Co., Ashland Oil,
Inc., Juniper Oil Corporation, and certain of their subsidiaries and
12
appeal, therefore, the allegations of Occidental’s complaint
must be taken as true. |
The motion for summary judgment was based on five
grounds. The district court rejected four of these grounds,
but granted summary judgment on the theory that the act
of state doctrine prevented the court from reaching the
merits of Occidental’s claim. The district court refused to
apply the provisions of 22 U.S.C. §2370(e)(2) (“the Hick-
enlooper Amendment”), which precludes application of the
act of state doctrine in a case involving a claim based upon
a confiscation in violation of international law.
The court of appeals, after hearing oral argument, asked
the Department of Justice to file an amicus brief. The
Department, in its brief, disagreed with the holding of the
district court that the act of state doctrine would foreclose
a determination of the validity of Occidental’s concession.
But the Department argued that Occidental’s claim should
nevertheless be dismissed, on the theory that a determina-
tion of the sovereignty of Umm at the time the concession
was granted would present a nonjusticiable political ques-
tion. This was a new argument, never before made.
Annexed to the Department’s brief was a letter from the
Legal Adviser to the State Department arguing that re-
gardless of which theory was adopted, the court should not
hear the case. The court of appeals yielded to this sug-
gestion, abdicated its judicial function, and declined juris-
diction.
affiliates intervened as claimants to the seized cargo. Civil Action
No, 74-1192 (“Lykavitos”) and Civil Action No. 75-0033 (“Anglo-
Maersk”) were filed in the Fourteenth Judicial District Court for
the Parish of Calcasieu, as sequestration proceedings under Article
3501 et seg. of the Louisiana Code of Civil Procedure. The defen-
dants removed both cases to the United States District Court for
the Western District of Louisiana, on the basis of diversity of
citizenship. The three cases were then consolidated.
13
REASONS FOR GRANTING THE WRIT
The decision of the court of appeals undermines the
rule of law in international affairs, offends the constitu-
tional mandate of an independent judiciary and denies
due process of law to parties relying on foreign bound-
aries determined by the United States.
The sole basis for the court of appeals’ dismissal of Occi-
dental’s action was that it allegedly would have required
resolution of a non-justiciable territorial dispute between
Iran and Sharjah as to which of them owned the island of
Abu Musa in 1969." This dispute, however, could not affect
Occidental’s claim. No matter who owned Abu Musa, under
the law of the 3-mile limit to the territorial seas of nations,
Occidental’s concession site was clearly outside of that 3-
mile territorial water limit. Thus the court of appeals’ mis-
taken notion that the ownership of Abu Musa affected
petitioner’s claim, gave rise to the court applying the
“political question” theory while in fact no such question
existed in the case herein. In arriving at its decision, the
court of appeals ignored the 3-mile limit recognized by the
United States and substituted in its place a blind adherence
to the transitory pleasure of the State Department as ex-
pressed in a letter from the Department’s Legal Adviser.
‘8 The court of appeals said:
[I]n order to resolve appellant's right to possess the oil, we
would have to resolve the dispute over Abu Musa. The resolu-
tion of a territoria) dispute between sovereigns, however, is a
political question which we are powerless to decide.
App. A. at p. A-11; 577 F. 2d at 1203; see also the court of ap-
peals’ footnote 7:
... @ determination of sovereignty over Abu Musa is necessary
to the ultimate resolution of the right to oil in this case. This
question, however, we hold to be a political question and
therefore non-justiciable.
App. A. at p. A-8, fn.7; 577 F. 2d at 1201, fn.7.
14
A. The Decision of the Court of Appeals
Undermines the Rule of Law in
International Affairs.
1. The three-mile limit proclaimed by the
Executive Branch has the force of law
and is binding upon the courts.
“The United States has been committed to the three-mile
limit from the early days of its existence.” Restatement
(Second) of Foreign Relations Law, note to $15, at 40
(ALI 1965). Through its Executive Branch, the United
States has consistently maintained that the three-mile
breadth of the territorial sea is part of the substantive
“law of nations” which “no nation may legally extend or
enlarge by unilateral action.” Foreign Relations of the
United States, 1935, v. I, at 919 (State Dept. 1953). The
United States has repeatedly proclaimed to the world that
this substantive international law can be amended only by
treaty; absent such a treaty, the United States does not
recognize claims of territorial sovereignty seaward of three
miles. Department of State Press Release 64, Feb. 25, 1970.
The United States firmly maintains that any change in the
law of the three-mile limit “is conditional on a satisfactory
overall treaty.” Department of State Bulletin, v. LXXI,
no, 1832, at 233 (Aug. 5, 1974). No such treaty has been
made.
In an effort to foster the rule of law in international
affairs, the United States has sent notes of diplomatic pro-
test to foreign governments whenever they have sought
to extend their territorial seas through unilateral action.
See, e.g., United States note to Saudi Arabia, Foreign Re-
lations of the United States, 1949, v. VI, at 157-60 (State
Dept. 1977). In particular, with respect to Iran and Shar-
jah, the United States has declared illegal their attempts to
15
extend their territorial seas beyond three miles. In both
cases, the United States expressly reserved the rights of
American nationals (thus including Occidental) in inter-
national waters beyond three miles.
When Jran first attempted to extend its territorial sea,
the United States protested as follows:
The Government of the United States cannot recognize
as valid the legislation under reference in so far as it
purports to extend the dominion of Persia over the sea
beyond three miles from its coast, and it is impelled
therefore, to make full reservation of all its rights and
the rights of its nationals.
Foreign Relations of the
United States, 1935, at 919.
Similarly, when Sharjah purported to extend its terri-
torial sea to twelve miles around Abu Musa in 1970, the
United States proclaimed that it “reserves its rights and
those of its nationals in all areas . . . seaward of the tradi-
tional 3-mile limit.” State Department Airgram to United
States Embassy, London, dated July 22, 1970.°
Thus, the United States through its Executive Branch
clearly refused recognition of Iran’s and Sharjah’s claims
of territorial jurisdiction beyond three miles from the
coast. This determination by the Executive is binding upon
the courts, “[W]hen the Executive branch of the govern-
ment, which is charged with our foreign relations, shall in
its correspondence assume a fact in regard to the sov-
ereignty of any island or country, it is conclusive on the
judicial department.” Williams v. Suff:'* ‘«surance Co.,
*This protest by the United States was addressed to the same
ree - rte decree under which Buttes claims title to the
ecidental oil.
16
38 U.S. (13 Pet.) 414, 420 (1939). See also United States
v. California, 332, U.S. 19, 33-34 (1947); Guarantee I'rust
Co. of New York v. United States, 304 U.S. 126, 138 (1937) ;
Jones v. United States, 137 U.S. 202 (1890). “A policy of
non-recognition when demonstrated by the Executive must
be deemed to be as affirmative and positive in effect as a
policy of recognition.” The Maret, 145 F.2d 431, 442 (3d
Cir, 1944).
2. The letter from the State Department
on which the court of appeals relied
does not profess to change the law of
the three-mile limit.
The letter from the Legal Adviser of the State Depart-
ment relied upon by the court of appeals did not purport
to change the law of the three-mile limit. It merely sug-
gested that the court ought not to decide this case.
Therefore, the Legal Adviser’s letter was just that, ad-
visory, and could not and did not change the officially ex-
pressed position taken by the United States Government
over and over again in its international relations that it
adheres to the three-mile territorial water limit.
3. The court of appeals erroneously
declined jurisdiction because of its
mistaken view that it had to deter-
mine the dispute between Iran and
Sharjah over Abu Musa; this dispute
is irrelevant to Occidental’s claim.
Occidental’s oil find was located nine miles seaward of
the island of Abu Musa and thus well outside the island’s
three-mile territorial sea, as recognized by our government.
Occidental’s grantor, Umm, had sole jurisdiction over that
area for the exploitation of oil under the 1964 agreement ex-
17
ecuted through British auspices. App. A, at pp. A-3, 4; 577
F.2d at 1199. This agreement was concluded pursuant to
Article 6, §2 of the 1958 Convention on the Continental
Shelf of which the United States is a signatory. 15 U.S.T.
471, TLAS 5578."
he sole basis for Iran’s adverse claim to Occidental’s
oil find was the assertion that Abu Musa was an Iranian
island, and that the island’s territorial sea extended twelve
miles from its coast under a unilateral Iranian decree.
Similarly, Sharjah’s sole basis for claiming Occidental’s
drilling site was that Abu Musa belonged to Sharjah and
had a territorial sea of twelve miles under Sharjah’s uni-
lateral, secret, “unpublished” decree that was revealed in
March 1970. Buttes itself, as late as 1972, cited as the sole
basis of its alleged title the rights of Iran and Sharjah to
the “entire 12-mile area around the island.” Buttes Press
Release of October 25, 1972.*
"In addition to its other errors, the refusal of the court of
appeals to take jurisdiction was a refusal to apply and interpret a
treaty of the United States. “The judicial power shall extend to all
oases ... arising under... treaties... .” U. §. Oonst., Art. III,
§ 2. The 1958 Convention on the Continental Shelf was ratified
by the United States and proclaimed by the President as taking
effect as of June 10, 1964. 15 U.S.T. 471, TLAS 5578; 499 U.N.T.S.
311. The court of appeals erred when it held that “no manageable
law exists to resolve disputed continental ownership.” 577 Fed.
2d 1205; App. A. pp. A-15, 17. On the contrary, a treaty of the
United States provided a body of law which the court was re-
quired to interpret and apply. It was the duty of the court, if
necessary, to make that law “manageable” through the ordinary
process of judicial construction.
*Since the three-mile limit is a binding rule of law, American
courts must hold invalid the adverse claims of Iran and Sharjah
to Occidental’s drilling site. To overcome this legal barrier, Buttes
for the first time on appeal raised the novel contention that the
tiny island of Abu Musa a continental shelf of its own
extending beyond the limits of its territorial waters. But neither
Iran nor Sharjah has ever claimed an independent conti-
nental shelf for Abu Musa. Buttes lacks the standing and
18
The court of appeals was wrong in believing that it would
have to decide the adverse claims of Sharjah and Iran to
the island of Abu Musa. It does not matter one whit
whether Iran or Sharjah was right in its claim to Abu
Musa. In either event, Occidental’s concession stands unaf-
fected because it is outside the three-mile limit of Abu Musa.
To hold otherwise would do violence to the official position
of the United States Government.
Therefore, contrary to the view of the court of appeals,
this case does not present embarrassing, unmanageable or
even difficult issues. It merely requires the court to apply
the law of the three-mile limit adopted by our Executive
Branch.
4. This Court's policy of fostering a rule
of law in international affairs is under-
mined by the decision below.
In First National City Bank v. Banco Nacional de Cuba,
406 U.S. 764 (1972), Justice Brennan, writing for four
members of this Court,’ repeatedly appealed for a judicial
policy which would promote the rule of law in international
affairs. Id., at 778; 793; 794. A “rule of law” exists to the
extent that conduct is guided by general principles rather
capacity to assert sovereign rights unclaimed by the sovereigns
themselves. ‘Moreover, we ask this Court to take judicial notice of
the 50-odd tiny islands similar to Abu Musa that are scattered
throughout the Persian Gulf. To attribute independent continental
shelves to these islands would make chaos of the present division of
offshore mineral rights, and would come as a rude shock to the
coastal states of the Gulf, including Iran, Sharjah, and Umm.
* Brennan, Stewart, Marshall and Blackmun, JJ. Though tech-
nically a dissent, Justice Brennan’s opinion in fact represented the
plurality of a Court divided 3-1-1-4. The remaining five justices
with the dissenters on other points, but their opinions
show that they share the dissenters’ concern for a rule of law in the
international sphere.
19
than momentary expediency. When the subject matter be-
fore any court extends into the iniernational arena, the rule
of law is advanced or retarded by the way the court exer-
‘eises its jurisdiction and by the rules of decision it applies.
In this case, the court of appeals refused to give effect
to the law of the three-mile limit which the United States
has steadfastly proclaimed for nearly two centuries in its
defense of the international rule of law. Instead, the Court’s
decision was controlled by a desire to avoid judicial pro-
ceedings which might embarrass the State Department at
a given moment in the ever-changing configuration of for-
eign powers. App. A, at pp. A-14, 15; 577 F.2d at 1204. The
result is that a momentary preference of the State Depart-
ment has prevailed in our courts against a principle of law.
A government department charged with diplomatic func-
tions may find it desirable in a turbulent world to yield
from day to day to special pressures. The courts, however,
have a different mission. The judicial department must up-
hold the rule of law.
B. The Decision of the Court of Appeals
Offends the Constitutional Mandate of
an Independent Judiciary.
In First National City Bank, supra, six members of this
Court denied legal effect to the so-called “Bernstein let-
ters.” These were letters from the Legal Adviser of the
State Department which professed to authorize the courts
to inquire into the validity of foreign acts of state which
otherwise would have been presumed valid under the act
of state doctrine. See Bernstein v. N.V. Nederlandsche-
Amerikaansche, 210 F.2d 375 (2d Cir. 1954).
Prominent among the reasons for this Court’s rejection
of the Bernstein letters was their interference in the judi-
20
cial process. “I would be uncomfortable with a doctrine
which would require the judiciary to receive permission
before invoking its jurisdiction. Such a notion, in the name
of separation of powers, seems to me to conflict with that
very doctrine.” First National City Bank vy. Banco de Cuba,
406 U.S. at 773 (Powell, J., concurring). In the same case,
Justice Douglas said the Bernstein letters tended to make
this Court “a mere errand boy for the Executive Branch,
which may choose to pick some people’s chestnuts from the
fire but not others.” Jd. at 773. Similarly, Justice Brennan,
joined by Justices Stewart, Marshall and Blackmun, said
that the Bernstein letters “would require us to abdicate our
judicial responsibility ....” Id. at 778. In a later case,
Justice Marshall, noting this Court’s disapproval of the
Bernstein letters, said that “the task of defining the role of
the Judiciary is for this Court, not the Executive Branch.”
Alfred Dunhill of London, Inc. v. Republic of Cuba, 425
U.S. 682, 724-5 (1976) (dissenting opinion joined by Bren-
nan, Stewart and Blackmun, JJ.).
The instant case would bring before this Court for the
first time the question of the validity of an “inverse Bern-
stein letter,” i.e., a letter from the Legal Adviser which
urges the courts to decline jurisdiction of a case between
two private litigants, both American nationals, which other-
wise the court would have to decide. Inverse Bernstein
letters offend the same constitutional pong as the dis-
avowed Bernstein letters.
It was not law, but a letter, that the court of appeals felt
compelled it to refuse jurisdiction. The court said, “[wle
are persuaded that a judicial determination would reflect a
lack of respect for the executive branch, particularly the
State Department. ... A decision in this case, the State
Department warns, would seriously impinge on executive
21
neutrality. Therefore, we are convinced that the issue of
sovereignty over disputed territory is a political ques-
tion....” App. A, at pp. A-14, 15; 577 F.2d at 1204 (em-
phasis ‘added).
The very formulation of this sentence which reveals the
non sequitur expressed in the word “Therefore” demon-
strates that the court of appeals resorted to the political
question theory to comply with the State Department’s
“advice” rather than because it was convinced that there
was such a question here. In short, the law was artificially
accommodated to another branch of government.
The Executive cannot by mere suggestion change a cog-
nizable claim into a nonjusticiable political question. More-
over, it is a dangerous error when a court permits “respect
for the State Department” to control whether the door to
the courtroom is open or locked to a litigant. The issue of
the existence of a “case or controversy” is a constitutional
question entrusted to the courts, and not to the State De-
partment.
C. The Refusal of the Court of Appeals to
Take Jurisdiction Denies Due Process of
Law to Parties Relying on Foreign Bor-
ders Determined by the United States.
Occidental had the right to rely on the law of the three-
mile limit. To the extent that the Executive makes and
interprets international law, it must do so within the stric-
tures of the Fifth Amendment. A law, once made, remains
in force until repealed; the Executive cannot turn it on and
off at will. Nor can a party whose rights have been re-
served under a principle of law be deprived of the law’s
protection because the facts of his case displease a govern-
mental department. Due process abhors any doctrine
22
whereby “similarly situated litigants would not be likely to
receive even-handed treatment.” First National City Bank
v. Banco Nacional de Cuba, 406 U.S. at 793 (Brennan, J.,
dissenting).
II.
Even if the law of the three-mile limit were not dis-
positive, this Court would still be required to decide this
case; otherwise, the litigants would be relegated to self-
help.
The decision of the court of appeals in this case is the
only reported decision in American law holding that a
court may not decide a case involving the private rights
of private parties to property before the court, merely be-
cause the adjudication of those private rights touches upon
an issue of sovereignty or boundaries. Nor is there any
other reported decision holding that if the Executive Branch
fails or refuses to make a determination with respect to
sovereignty or boundaries, a court may not make such a
determination in the course of adjudicating private rights.
In its amicus brief filed in the court of appeals, the Depart-
ment of Justice conceded, at page 7, “we have uncovered
no case in which the Supreme Court has specifically held
that cases involving boundary disputes raise nonjusticiable
political questions”.””
There is one case in which this Court, by way of dictum,
has specifically addressed this issue. Williams v. Suffolk
*” Even the district court below, though it dismissed under the
act of state doctrine, recognized that there is no “unassailable rule
of law ... that a United States court cannot decide a case involving
the private rights of private parties to property if the adjudication
requires a collateral determination with respect to boundaries.
396 F.Supp. at 468.
23
Insurance Company, 38 U.S. (13 Pet.) 414 (1839). The
Williams case involved the legality of the seizure of an
American seal fishing vessel by the Government of Buenos
Aires, and required a determination of sovereignty over the
Falkland Islands. This Court made it quite clear that, in
the absence of a determination by our executive or legis-
lative branch, the issue of sovereignty over foreign terri-
tory is “an open question”, into which a court may inquire.
The Court went on to hold that it was “saved from this
inquiry” because the issue of sovereignty over the islands
had been resolved by our Executive. 38 U.S. (Pet.) at 419."
The fact that primary conduct of foreign relations is
entrusted to the Executive Branch is no obstacle to the
power of an American court to decide a collateral issue of
boundaries. If the Executive has made a substantive deter-
mination of sovereignty, the court will ordinarily respect
that position. If the position of the Executive cannot be
ascertained, however, then the Court is bound to decide the
case independently.
In Baker vy. Carr, 369 U.S. 180 (1962), this Court re-
viewed the status of the political question doctrine, includ-
ing the applicability of the doctrine to cases involving
foreign relations. 369 U.S. at 211-213. The Court pointed
out that “it is wrong to suppose that every case or contro-
versy which touches foreign relations lies beyond judicial
cognizance”. 369 U.S. at 211. The opinion in Baker v. Carr
draws a distinction between cases in which the Executive
has made a determination, and cases in which there has
been “no conclusive governmental action”, and suggests
that the judiciary may make its own determination “in the
"See also Foster & Elam v. Neilson, 27 U.S. (2 Pet.) 253,
307 (1829). (“If the course of the nation has been a plain one,
its courts would hesitate to pronounce it erroneous.”); De la Croiz
v. Chamberlain, 25 U.S. (12 Wheat.) 599 (1827).
~~
24
absence of recognizedly authoritative executive declara-
tion”. 369 U.S. at 213. With respect to issues of foreign
sovereignty in particular, the Court stated merely that “the
judiciary ordinarily follows the executive as to which na-
tion has sovereignty over disputed territory”, 369 U.S. at
212 (emphasis added).
In the present case, the court of appeals has abandoned
this Court’s careful statement in Baker v. Carr in favor of
a sweeping rule of nonjusticiability that would prevent
an American court from reaching any decision at all in a
case that touches upon an issue of foreign boundaries, past
or present, if the Executive has refrained from taking a
position :
Just as the judiciary will follow an executive determi-
nation as to which nation has sovereignty over a dis-
puted area [citation], so must the judiciary refuse to
decide the dispute in the absence of executive action
because of that absence of direction.
App. A, at pp. 13, 14; 577 F.2d at 1203-04.
This holding of the court of appeals is erroneous. The
political question doctrine, where applicable, requires a
court to decide the merits of a case by deferring to an
executive or congressional position. The doctrine embraced
by the court of appeals is something very different, and
would require the Court to decline to decide the merits by
deferring to an executive nonposition. The political ques-
tion doctrine does not, and should not, encompass this rule
of nondecision.”
12 The court of appeals also disregards the distinction between
a determination of present sovereignty and a determination of
former sovereignty. Occidental does not assert that Umm is now
sovereign over the valuable portion of Occidental’s concession area,
but merely that Umm was formerly sovereign on November 18,
25
The decision of the court of appeals misapplies the lan-
guage of Baker v. Carr and conflicts with clear expressions
of this Court in earlier decisions. The court of appeals
abdicated its duty to decide the rights of the litigants in
this case, in deference to a mistaken notion of the separa-
tion of powers.
The ruling of the court of appeals creates a decisional
vacuum, in which the claims of the parties can never be
adjudicated, regardless of merit. The result is a form of
anarchy, in which the victor may keep his spoils, free from
the rule of law. The doctrine of nondecision, if allowed to
stand, would put a premium on raw power and self-help.
Under this doctrine, if a victim of a confiscation would
piratically seize a cargo on the high seas and bring it into
the United States, the contrary claimant would be fore-
closed from any remedy. The “pirate” would be immune
from suit and would then prevail, not on th merits of his
claim, but merely because he would be the defendant, and
not the plaintiff.
The decision below raises important issues relating to
the role of the courts and the relationship among branches
of government. These issues warrant the attention of this
Court on review.
1969, when the concession was granted. It is a central element
of Occidental’s theory that Umm’s sovereignty was terminated by
annexation at the end of 1971, and that Sharjah and Iran assumed
sovereignty thereafter. The relief that Occidental seeks—recovery
of the oil extracted from its confiscated concession—would not,
directly or indirectly, challenge the present sovereignty of Iran
or Sharjah over the confiscated concession area, or any of their
present boundary lines.
26
Ill.
The issue in this case which the court of appeals
denominated a political question is indistinguishable
from an act of state issue and is therefore controlled
by the Hickenlooper Amendment.
Congress enacted the Hickenlooper Amendment in 1964
for the express purpose of affording relief to victims of
illegal foreign confiscations who had previously been denied
access to our courts. The amendment provides:
“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 inter-
national law in a case in which a claim of title or other
right of property is asserted by any party * ° * based
upon * * * a confiscation or other taking * * * by an
act of state in violation of the principles of interna-
tional law * * * , 22 U.S.C. §2370(e) (2). (emphasis sup-
plied)
The Hickenlooper Amendment was designed to alter the
role of the United States as a “thieves market” where the
confiscator was immune from suit by the victim. 110 Cong.
Rec. 18936, 19555 (1964) :
“Tt insures that however the case may arise or the act
of state doctrine be invoked, a party who had suffered
an expropriation in violation [of international law]
may bring suit to assert his claim to the expropriated
property if there is an attempt to market it in the
United States * * *” (Ibid., page 23680). (Emphasis
supplied). ;
27
In the present case, the district court dismissed on the
ground of the act of state doctrine, and refused to apply
the Hickenlooper Amendment. The court of appeals pur-
ported to circumvent the Hickenlooper Amendment entirely
by sustaining the dismissal not on the act of state doctrine,
but on what it called a “slightly different ground”—the no-
tion that the case presents a nonjusticiable political ques-
tion. App. A, at p. A-1; 577 F.2d at 1198.
The reasons the court of appeals used in holding the case
nonjusticiable under the political question doctrine are
identical to the reasons that have been expressed from time
to time to justify the act of state doctrine—imagined sensi-
tivity to foreign relations or difficulty of the issues, unman-
ageability, regard for the separation of powers, avoidance
of embarrassment to the Executive Branch. It was pre-
cisely these contentions that Congress rejected when it en-
acted the Hickenlooper Amendment.
Under Hickenlooper, the courts are required to assume
jurisdiction over all cases involving illegal confiscations of
property which is later shipped into the United States re-
gardless of the issues involved. The courts have no disere-
tion under the statute. The directions of Congress to hear
and determine the merits of such cases are clear and uncon-
ditional, and may not be avoided by the judiciary through
abstention or otherwise.
The district court refused to apply the Hickenlooper
Amendment. The court of appeals questioned its constitu-
tionality. Hickenlooper is constitutional and it is clearly
applicable to this case. Banco Nacional de Cuba v. Farr,
243 F. Supp. 957 (S.D.N.Y. 1965), aff’d 383 F.2d 166 (2
Cir.), cert. denied 390 U.S. 956, reh. denied 390 U.S. 1037
(1968).
28
The fact that every confiscation of property in violation
of international law involves a political question does not
render the matter nonjusticiable, nor does it foreclose the
court from inquiring into its legality under Hickenlooper.
In the Farr case, the Hickenlooper Amendment was chal-
lenged on the ground that it represented ar. impermissible
encroachment upon the power of the President and Execu-
tive Branch over foreign relations in violation of the doc-
trine of separation of powers. This is the same ground
noted by the court below in support of its decision.
In upholding the validity of Hickenlooper, the district
court in the Farr case held that the statute related to a sub-
ject “in which Congress had an interest, and in respect to
which it could give direction” (243 F.Supp. at 972, 973).
On appeal, the court of appeals for the Second Circuit
confirmed the constitutionality of Hickenlooper. It held
that “the act of state doctrine * * * was not constitutionally
compelled”, and rejected the notion that illegal confisca-
tion by foreign states “presented a non-justiciable polit-
ical question” beyond the court’s power to adjudicate under
Hickenlooper (383 F.2d at 180-1). This holding is entirely
in accord with the decisions of this Court.
In Banco Nacional de Cuba v. Sabbatino, 376 US. 398
(1964) this Court held that the act of state doctrine is
a “principle of decision * * * compelled by neither inter-
national law nor the Constitution” and that said doctrine
“does not irrevocably remove from the gt ee
ity to review the validity of foreign acts of s e
(876 1 “fy at 423, 427). Similarly, in First National City
Bank, this Court held that the act of state doctrine was
“judicially created to effectuate general notions of comity
among ° * * the respective branches of the Federal Gov-
ernment”, and did not have “its roots * * * in the Consti-
tution” (406 U.S, at 762, 765).
29
In the Farr case, this Court twice denied certiorari. On
each occasion, it refused to review the holdings of the Court
of Appeals for the Second Circuit that the act of state doc-
trine was not constitutionally compelled, and that the ju-
diciary was free to inquire into any act of confiscation
under Hickenlooper even though the underlying issue of
any such inquiry involved a political question.
In Sabbatino, this Court held that the validity of a
foreign act of state in certain circumstances is a “political
question” not cognizable in our courts. The purpose of
the Hickenlooper Amendment was to reverse this holding
by directing the courts to assume jurisdiction over these
“political questions” in determining the merits of the con-
troversy. Thus, whether the case presents a political ques-
tion or an act of a foreign state, in neither event is the court
precluded from making a merit determination under the
Hickenlooper Amendment in a case involving the unlawful
taking of property by a foreign power in violation of in-
ternational law.
In declining jurisdiction herein, the court of appeals
repudiated the very purpose of Hickenlooper. In refusing
to determine the merits of the unlawful confiscation, the
court has rejected the statutory command of Congress. In
dismissing the action, the court of appeals has left the
victim of the illegal confiscation without a judicial remedy
in violation of the statute. Unless the decision below is
vacated by this Court, the Hickenlooper Amendment will
be devoid of all meaning, and will be totally ineffective in
preventing the United States from again becoming a
“thieves market” for the disposal of our citizens’ property
illegally obtained through confiscation.
The importance of the issue presented by this case goes
far beyond the private rights of the litigants, and deals
30
essentially with the rights of all victims of confiscation to
seek legal redress under a federal statute that was enacted
for that very purpose. The case presents a question of first
impression under a statute that has not been construed by
this Court since its enactment, and therefore warrants this
Court’s review. American Federation of Musicians v. Witt-
stein, 379 U.S. 171, 175 (1964); United States v. Ruzicka,
$29 U.S, 287, 288 (1946).
IV,
The refusal of the court of appeals to hear this case
offends the strong Congressional policy favoring judi-
cial determination of the property claims of American
victims of foreign confiscations.
Even if the Hickenlooper Amendment were to be 80
narrowly construed as to control only those issues explicitly
denominated as acts of state, the statute nevertheless em-
bodies a strong Congressional policy that the victims of
foreign conSacation should not be left helpless but should
have their day in court.
Even before Hickenlooper, it was settled law that in
matters involving political questions, ‘it is wrong to sup-
pose that every case or controversy which touches foreign
relations lies beyond judicial cognizance”. Baker v. Carr,
869 U.S. 180, 211 (1962).
In First National City Bank v. Banco Nacional de Cuba,
406 U.S. at 790, a plurality of judges of this Court held
that “the task of defining the contours of a political ques-
tion, such as the act of state doctrine, is exclusively the
function of this Court”, citing Baker v. Carr, supra (em-
phasis added). On the facts of this case, this Court, in
“defining the contours”, should give due regard to the
Hickenlooper Amendment and to the strong policy of jus-
31
ticiability that it embodies. The policy of the amendment
dictates that when an American citizen comes into an Amer-
ican court seeking to recover illegally confiscated property
the American court may no longer say to that citizen,
(whether under the act of state doctrine or on a “slightly
different ground”), “However meri
eritoriou :
hands are tied”, 8 your claim, our
The trumpet call of justice sounded by the Congress
should not have been disregarded by the court of appeals
even if only a matter of discretion were involved,
Entirely apart from the mandate of Hickenlooper, there
is a philosophical compulsion in its logic. It has a salons
moral impact. In a world in which terror is not unknown
in many parts of the globe, may a wrongdoer cloak himself
in technical immunity? Should the courts of our land aid
him in such dishonorable evasion?
The pronouncement of this Court will be awaited eagerly
by constitutionalists as well as by h baat
ators. y hapless victims of pred-
32
CONCLUSION
The petition for a writ of certiorari should be granted,
the judgment of the court of appeals vacated, and the case
remanded for discovery and a trial on the merits.
Respectfully submitted,
Louis Nizer
GeraLD MEYER
Nem A. Pou.io
Pues, Nizer, BenJsaMin,
Krim & Baton
40 West 57th Street
New York, New York
10019
Txomas M, Berostept
J. Bonn Smita, Jr. Scorie.p, Berostept &
BicHAM, ENGuLar, JONES GERARD
& Houston 1114 Ryan Street
14 Wall Street P. O. Box 1136
New York, New York | Lake Charles, Louisiana
10005 70601
Henry J. Reap Davin Stone |
MontTcoMeryY, BARNETT, Stone, Piaman, WALTHER,
Brown & Reap Witrmann & HutcHiInson
806 First National Bank 1000 Whitney Bank
of Commerce Building Building
New Orleans, Louisiana New Orleans, Louisiana
70130 70130
Attorneys for Occidental of Umm
Al Qaywayn, Inc., Petitioner
SES
Appendices
A-l
APPENDIX A
Opinion of the Fifth Circuit
oo
OccrwentaL or Umm aL Qaywayy, Inc.,
Plaintiff-Appellant-Cross Appellee,
—V,—
A ©. v-rary Carco or Perroteum Lapen ABOARD THE
Tanker Dauntiess CoLocorronis, etc., ET AL.,
Defendants-Appellees-Cross Appellants.
_—
No. 75-3088.
United States Court of Appeals,
Fifth Circuit.
Aug. 9, 1978.
Before THorNBERRY, MorGAN and INGraHaAM, Circuit Judges.
Lewis R. Moroan, Circuit Judge:
In these conversion actions, consolidated on appeal, the
federal court is asked for a decision we consider impos-
sible. The immediate question is whether the district court
erred in granting appellee’s motion for summary judg-
ment. The district court determined that it should refrain
from deciding the issue on the merits, the rights to oil ex-
tracted from the Persian Gulf, because the decision would
call into question the acts of foreign states. We dismiss
on the slightly different ground that the question presented
is political, being both constitutionally devolving on the
A-2
executive and judicially unmanageable, and therefore, not
a “case or controversy” within Article III of the Constitu-
tion, On appellee’s counterclaim to enjoin appellants from
further litigation in this and other federally cognized juris-
dictions, we reverse the district court and grant the in-
junction.
A thorough factual development is a necessary pre-
requisite to analysis.
A. Geography.
The scene for this political drama is the exotic Persian
Gulf, once noted for the Arabian nights, now famous and
important as a source of oil to light those nights. On the
southern “lip” of the mouth of the Gulf lie the Trucial
Sheikhdoms of Umm al Qaywayn (hereafter Umm), Shar-
jah, and Al Ajiman. Situated near the mouth of the Gulf,
about 40 miles northwest of Umn, is the tiny island of Abu
Musa. The island is also approximately 50 miles due south
from Iran, the country with the largest contiguous border
on the Gulf.
B. History, relatively ancient.
For almost a century, Great Britain had been the “pro-
tectorate” of the Trucial Sheikhdoms, including Umm and
Sharjah. Pursuant to the treaty establishing this relation-
ship, the United Kingdom was responsible for the Sheikh-
doms’ international relations, defense, and internal rela-
tions among the individual states. This protectorate juris-
diction included all the territories and territorial waters of
the Sheikhdoms and territorial waters. As provided by the
treaty, the protectorate ended in November 30, 1971.
During the course of this protectorate, a dispute over the
sovereignty of Abu Musa had existed between Great Brit-
A-3
ain as agent of Sharjah, and Iran.' For example, the India
Survey Map of 1897 represented the island in the colors of
Persia (now Iran), as did the Viceroy’s unofficial map of
1892. Later, in April of 1904, the dispute flared as the
Persian government placed custom officials on the island
and flew the Persian flag. This establishment of sov-
ereignty was short-lived, however, and the evidence was
quickly removed at the demand of the British government.
Persia did not abandon its claim with this setback, however.
In 1923, Persia reasserted its claim to Abu Musa by pro-
testing the leasing, by Great Britain, of mineral rights to
the island. In 1930, Great Britain and Persia discussed
settlement of the dispute, but no accord was reached.
C. Modern History.
In the early 1960’s, because of rising worldwide energy
demands and the growth of offshore drilling technology,
the Persian Gulf was becoming hot property. In 1964, per-
haps as a response to this increased demand, Umm and
Sharjah entered into an agreement, under the auspices of
the British, establishing their territorial waters and con-
tinental shelf borders. This treaty not only established the
territorial waters of the parties, but also established their
respective continental shelf. The agreement was embodied
in an admiralty map establishing the continental shelf of
1 Appellant contends that the district court erred in permitting
appellees to introduce evidence of a longstanding dispute between
Iran and Sharjah over Abu Musa because of appellees’ agreement
to limit discovery on the issue. Even if the agreement could be
deemed a stipulation the federal court is not bound by a factual
stipulation that will impact on its jurisdiction. Just as the court
will not be bound by the pleadings in collusive federal question
cases, Lord v. Veazie, 8 How. 251, 12 L.Ed. 1067 (1850) and collu-
sive diversity claims, Caribbean Mills, Inc. v. Kramer, 392 F.2d
387 (5th Cir. 1968), so would the court not be bound by stipulations
on which the existence of a “case or controversy” might turn.
A-4
Umm 4s extending to the three-mile territorial waters of
Abu Musa, recognized by the British as Sharjah’s posses-
sion, giving Umm 37 miles of the intervening continental
shelf.
On November 18, 1969, appellant and the Ruler of
Umm contracted that appellant would have the exclusive
right to explore for and extract oil within Umm, its con-
tinental shelf, and its territorial waters for forty years.
The boundaries to this concession conformed to those es-
tablished for Umm by the treaty with Sharjah of 1964. The
British Foreign Office ratified the concession agreement,
as a condition precedent required under the protectorate.
A month later, Sharjah granted Buttes Oil Company, ap-
pellees’ predecessor, a similar concession to extract oil from
its territories. The boundaries of the Buttes concession
also conformed to the 1964 treaty and the agreement was
subsequently ratified by the British Foreign Office.
No conflict existed between the parties until March 25,
1970, when Buttes Oil and Gas Company notified the British
representative to the Sheikhdoms that Buttes intended to
drill for oil within the Occidental concession area, approxi-
mately 31 miles from Umm, 9 miles east of Abu Musa.
Indeed, the drilling location coincided with that suggested
by Occidental’s exploratory testing. Also at that time, the
British agent was made aware of a Sharjah decree pur-
porting to extend its territorial waters from three to twelve
miles, including those of Abu Musa. Of course, this uni-
lateral decree did substantial violence to the 1964 treaty,
and the British Foreign Office rejected the subsequent
amendment of Buttes’ concession agreement with Sharjah
to reflect the extension. Additionally, the Buttes’ request
to drill was also denied by the British Government. Al-
though the Foreign Office considered the unilateral action
in violation of international law, it strove to bring about
A-5
an amicable solution. Although Umm and Sharjah were
persuaded by the United Kingdom to mediate their claims,
mediation failed when Umm refused to abide by the me-
diator’s decision.
Meanwhile, to further muddy the political waters, in a
letter dated May 28, 1970, appellant was informed by the
National Iranian Oil Company that it should desist all
drilling operations in its concession area. The stated basis
for this demand was that because Abu Musa was an Iran-
ian possession, and because Iran recognizes twelve mile
territorial limits, Occidental concession was within Iran’s
territories. Faced with the probability of intervention by
Iran, the British Government maintained the suspension
of all drilling in the disputed area.
On November 26, 1971, the dispute between Iran and
Sharjah over Abu Musa was settled, at least practically
and prospectively.? This agreement between Iran and
Sharjah occurred only four days prior to the expiration of
the British protectorate over the Trucial Sheikhdoms.
Pursuant to this agreement, the island was essentially di-
vided, and Sharjah’s concession with Buttes was ratified
and the future royalties were split between the sovereigns.
On November 30, 1971, Iranian troops landed on Abu
Musa, and the Iranian navy began patrolling the waters of
the island. Shorn of the protection of the British Govern-
ment, Umm had no means to protect its territories as de-
fined under the 1964 agreement, and Occidental was with-
out protection as well. Buttes began drilling immediately
with salutory results, Buttes later sold interests in the oil
to appellees, Ashland Oil Inc., Kerr McGee Corp., Skelly
Oil Company, and Cities Services Company. Each was put
* By the terms of this partition agreement neither Sharjah nor
Iran abandoned its claim to Abu Musa in favor of the other.
A-6
on notice of Occidental’s claim. In 1974, appellants began
extracting oil] from the disputed concession area, and
among the shipments of this oil to the United States were
those aboard the “Dauntless Colocotronis,” “Lykavitos,”
and the “Anglo-Maersk,” which were seized in proceedings.*
At least among the sovereigns, the rights to the royal-
ties from the area were definitely settled. Some time after
the Iranian occupation of Abu Musa, the Rulers of Umm
and Sharjah agreed to divide royalties payable to Sharjah
with Umm receiving thirty percent. Appellant suffered its
final political reverse when in June of 1973, the Ruler of
Umm terminated Occidental’s concession for failure to pay
rentals due under the contract.
D. History of the Case.
Prior to analysis of the case, a brief legal history of the
dispute is helpful. The appellants and appellees’ predeces-
sors have once before litigated the underlying basis of
their dispute. In Occidental Petroleum Corporation v.
Buttes Gas and Oil Co., 331 F.Supp. 92 (C.D.Cal.1971),
aff’d, 461 F.2d 1261 (9th Cir. 1972), cert. denied, 409 U.S.
950, 93 S.Ct. 272, 34 L.Ed.2d 221, appellants brought an
antitrust action against Buttes, and Clayco Petroleum
Company and certain officers of the corporations alleging
a conspiracy among the defendants to oust appellant from
its concession. This action was filed more than eight
months prior to the Iranian occupation of Abu Musa, and
years prior to the exportation of oil. The district court
held, and the court of appeals affirmed, that the court was
® Immediately after the seizures, the oil is released to the ap-
pellees as provided by agreement. The appellees have not been re-
quired to post bond.
A-7
precluded from piercing the veil of sovereign action by
the “act of state” doctrine‘ and granted summary judg-
ment. Although appellee contends that the Ninth Circuit
case is res judicata for the case sub judice, we need not
decide the question because we hold that we lack jurisdic-
tion.
Actions No, 74-1192 and No. 75-0033 were brought as
diversity actions.’ Action No. 74-868 was brought as an in
rem action in admiralty. The district court granted appel-
lee’s motion for summary judgment in the diversity actions
holding that because the actions of foreign sovereigns were
called into dispute, the “act of state doctrine” required the
court to refrain from deciding on the merits. See Banco
Nacional de Cuba v. Sabbatino, 376 U.S. 398, 84 S.Ct. 923,
11 L.Ed.2d 804 (1964). Moreover, the district court con-
eluded that, under the circumstances, the Hickenlooper
Amendment, 22 U.S.C.A. 2370(e)(2) (Cum. 1977), did not
*In 1897 the Supreme Court formulated what has become known
as the “act of state” doctrine. The Court held that “the courts of
one country will not sit in judgment on the acts of the govern-
ment of another, done within its own territory.” Underhill v.
Hernandez, 168 U.S. 250, 252, 18 S.Ct. 83, 84, 42 L.Kd. 456
(1897). This is not an abstention doctrine, but rather resembles a
conflicts of laws principle. See Ricaud v. American Metal Co., 246
U.S. 304, 310, 38 S.Ct. 312, 62 L.Ed. 733 (1917). Although in one
decision the Court stated both that the doctrine had constitutional
underpinnings and the doctrine was not compelled by the Con-
stitution, the better view would be that the doctrine is constitution-
ally compelled by the concept of separation of powers and placement
of plenary foreign relations powers in the executive. See Banco
Nacional de Cuba v. Sabbatino, 376 U.S, 398, 84 8.Ct. 923, 11 L.Ed.
2d 804 (1964). a
* The civil actions were first brought in the Fourteenth Judi-
cial District Court for the Parish of Calcasieu as sequestration pro-
ceedings pursuant to Article 3501 of the Louisiana Code of Civil
Procedure. The appellants, removed to the federal district court
of the Western District of Louisiana, claim diversity of citizenship.
A-8
prevent such abstention.’ The district court dismissed
the admiralty action holding that admiralty jurisdiction
was absent because if any conversion occurred, it occurred
at the well-head not on the seas. Because we hold that no
case or controversy exists, we dismiss all three claims for °
want of jurisdiction, but on the common ground that a reso-
lution would involve a political question.’
* In response to the refusal of the Supreme Court to pierce the
sovereign veil in Sabbatino, Congress passed the so-called Hicken-
looper Amendment designed to prevent such abstention. The
amendment provides, in pertinent part:
Notwithstanding any other provision of law, no court in the
United States shall decline on the grounds of the federal act
of state doctrine to make a determination on the merits giving
effect to the principles of international law in a case in which a
claim of title or other right to property is asserted by any
party including a foreign state (or a party claiming through
such state) based upon (or traced through) a confiscation or
other taking after January 1, 1959, by an act of that state in
violation of the principles of international law, including the
principles of compensation and the other standards set out in
this subsection: 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 dura-
tion 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 doc-
trine 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.
22 U.S.C.A. § 2370(e) (2) (Cum. 1977). It should be noted that if
the act of state doctrine is constitutionally compelled, as was both
suggested and negated in Sabbatino, the Hickenlooper Amendment
would be ineffective. See note 4, supra.
" As will be developed infra, a determination of sovereignty over
Abu Musa is necessary to the ultimate resolution of the right to the
oil in this case. This question, however, we hold to be a political
question and therefore non-justiciable. Note well that this question
would also have to resolved under the “act of state” doctrine.
A-9
A political question clearly emerges under the proper
analysis. Although, whether a political question is present
and the court lacks jurisdiction are issues committed to
federal law, we need to address such questions only if they
would arise in the diversity action framework.’ See
Baker v. Carr, 369 U.S. 186, 82 S.Ct. 691, 7 L.Ed.2d 663
(1962). Therefore, we must analyze appellant’s claim as it
would be tried, to determine whether a political question
will emerge.*® Shorn of its factual complexity, appellants
claim a tortious conversion of oil. Because this is a diver-
sity case, we apply the law of the forum. Louisiana, to the
claim. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817,
82 L.Ed. 1188 (1938). Additionally, because the operative
facts occurred outside of Louisiana, we must also apply
Louisiana’s conflicts principles to determine which forum’s
law to apply. Klaxon v. Stentor Mfg. Co., 318 U.S. 487,
61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Applying these prin-
ciples, we find that to successfully maintain its tortious
conversion action, appellant would have to establish its
fa
* We analyze the question with regard to the diversity action only
because the procedure is more involved. The political question
emerges directly under admiralty jurisdiction because we would
immediately apply international law as a matter of federal law.
See Kossick v. United Fruit Co., 365 U.S. 731, 81 8.Ct. 886, 6 L.Ed.
2d 56, reh. denied, 366 U.S. 941, 81 S.St. 1657, 6 L.Ed.2d 852
(1961). As a matter of federal law the district court would then de-
ra whether the conversion violated the principles of interna-
tional law.
* Appellant complains that the court is unduly delving into the
merits to determine the presence of a political question. Just as it
is necessary to delve into the “merits” of a case to determine
whether the claimant has sustained an injury in fact to determine
standing, United States ex rel. Chapman v. Federal Power Com-
mission, 345 U.S. 153, 156, 73 8.Ct. 609, 97 L.Ed. 918 (1953), so
must we analyze the legal “merits” of the instant case in order to
determine whether a case or controversy exists.
A-10
right to possess the oil at the time of conversion.” Appel-
lant apparently contends that the conversion occurred
when appellant was supplanted by Buttes through the in-
tervention of Iran, sometime after November 30, 1971.”
Because, as a matter of international law, one who receives
an interest in land which is in dispute between sovereigns
In Importsales v. Lindeman, 231 La. 663, 92 So.2d 574 (1957 ),
the Louisiana Supreme Court stated that the essence of conversion
is the wrongful deprivation of the claimant’s possession, to which
he is rightfully entitled. Thus, in order to successfully maintain a
conversion action, appellant would have to show that at the time
of conversion it was entitled to possession of the res. As a matter
of conflicts, if this action did not involve acts of foreign states, a
Louisiana court would apply the law of the forum in which the
conversion.occurred to.determine whether appellant was entitled to
possession. See Matney v. Blue Ribbon Inc., 12 So.2d 249, 253
(La. App. 1942) ; Quickkick v. Quickkick International, 304 So.2d
402, 406 (La. App. 1974). Because appellee traces its title to the
oil to acts of the sovereigns of Sharjah and Iran in supplanting
appellant with Buttes, however, a court setting in Louisiana would
follow the “act of state” doctrine and accept the act of the sover-
eign as a rule of decision. Monte Blanco Real Estate Corp. v.
Wolvin Line, 147 La. 563, 85 So. 242 (1920). It is clear that
the Louisiana Supreme Court intended that the act of state doc-
trine operate as a conflicts principle and that Louisiana courts will
accept and apply as law the acts of foreign sovereigns. The
Louisiana Supreme Court also made it abundantly clear that it
considered the act of state doctrine mandated by federal law. The
Hickenlooper Amendment, however, prevents any United States
court from applying the federal act of state doctrine if the confisca-
tion violated international law. A Louisiana court, therefore, would
apply international law to determine whether the Hickenlooper
Amendment is applicable. Because the Hickenlooper analysis is
federal, however, the Louisiana court would be bound by the
international law as developed by the Supreme Court in Poole v.
Fleeger, 36 U.S. 185, 9 L.Ed. 680 (1837) and Coffee v. Groover,
123 U.S. 1, 8 8.Ct. 1, 31 L.Ed. 51 (1887).
™ The lanation for appellant’s ambiguity with regard to the
compiaalinaunar be the mistaken conception that the Hickenlooper
Amendment in some way provides a cause of action. At most, the
amendment is a federal conflicts principle; at least, a mandate to
the states to follow state law, not the federal “act of state” doc-
trine.
A-11
takes subject to the dispute, Coffee v. Groover, 123 U.S. 1,
29-30, 8 S.Ct. 1, 31 L.Ed. 51 (1887); Poole v. Fleeger, 36
U.S. 185, 9 L.Ed. 680 (1837), appellant must necessarily
develop Umm’s right to undisputed possession of the por-
tion of the continental shelf where the oil was extracted at
the time the interest was passed, 1969. It is evident from
the record, however, that the sovereignty, Abu Musa, and.
derivatively, its continental shelf was in dispute between
Iran and Sharjah (through Great Britain). Therefore, in
order to resolve appellant’s right to possess the oil, we
would have to resolve the dispute over Abu Musa. The
resolution of a territorial dispute between sovereigns, how-
ever, is a political question which we are powerless to
. decide.
Throughout the history of the federal judiciary, political
questions have been held to be nonjusticiable and therefore
‘not a “case or controversy” as defined by Article III. In
Ware v. Hylton, 3 Dall. 199, 300, 1 L.Ed. 568 (1796), the
Supreme Court recognized that in the realm of foreign
relations policy considerations render issues incompetent
for a decision by the court. In Marbury v. Madison, 1
Cranch 137, 164-166, 2 L.Ed. 60 (1803), Chief Justice Mar-
shall acknowledged the existence of a class of cases which
involve a “mere political act of the executive” and which
Tt is arguable that the conversion did not occur until the oil
was actually severed from the realty in 1974. At that time, how-
ever, the boundary disputed was settled among the sovereigns, at
least practically. Application of Coffee and Poole would directly
result in vesting title in the appellees. It is also arguable, how-
ever, that because Iran and Sharjah still refuse to recognize each
other’s claim, the dispute was not settled as a matter of inter-
national'law. See note 2, infra. Therefore, we only use these cases
for the proposition that under international law if a dispute exists
at the time of taking, in the instant case, 1969, when the concession
was granted by Umm, then appellant took subject to that dispute.
a been developed, supra, the sovereignty was disputed in
1969.
A-12
were placed by the Constitution in the hands of the execu-
tive. The Supreme Court therefore appreciated that the
genesis of the political question is the constitutional sepa-
ration and dispersement of powers among the branches of
government. In Coleman v. Miller, 307 U.S. 433, 59 S.Ct.
972, 83 L.Ed. 1385 (1939), the Supreme Court clearly rec-
ognized that the political question doctrine partakes not
only of the existence of separation of powers, but also of
the limitation of the judiciary as a decisional body. The
Court stated: “In determining whether a question falls
within [the political question category], the appropriate-
ness under our system of government of attributing finality
to the action of the political departments and also the lack
of satisfactory criteria for a judicial determination are
dominant considerations.” The Court was merely admit-
ting that they were not tribal wisemen dispensing divinely
or theoretically inspired judgments, but were a court lim-
ited to the application of predetermined law.
In Baker v. Carr, 369 U.S. 186, 82 S.Ct. 691, 7 L.Ed.2d
663. (1962), the Supreme Court extensively reviewed the
history and evolution of the political question. As a result
of this survey, the Court identified a number of basic char-
acteristics or considerations relevant. to the existence of
a political question. The Court held that the inextricable
presence of one or more of these factors will render the
cas nonjusticiable under the Article III “case or contro-
versy” requirement, and therefore, the Court would be
without jurisdiction. In this most definitive pronounce-
ment, the Court identified the following factors as relevant
to the affirmative determination of the existence of a polit-
ical question:
(1) “a textually demonstrable commitment of the
issue to a coordinate political department”
A-13
(2) “a lack of judicially discoverable and manage-
able standards”
(3) “the impossibility of deciding without an initial
policy determination of a kind clearly for nonjudicial
discretion”
(4) “the impossibility of a court’s undertaking inde-
pendent resolution without expressing lack of the re-
spect due coordinate branches of government”
(5) “an unusual need for unquestioning adherence to
a political decision already made”
(6) “the potentiality of embarrassment from multi-
farious pronouncements by various departments on
one question”
369 U.S. at 217, 82 S.Ct. at 710. In the instant case, nearly
every one of the factors is present and the vitality of the
political question in the arena of foreign relations is abun-
dantly demonstrated.
The ownership of lands disputed by foreign sovereigns
is a political question of foreign relations, the resolution
or neutrality of which is committed to the executive branch
by the Constitution. As has been demonstrated, to deter-
mine whether a tortious conversion has occurred, it is
necessary to determine the sovereign ownership of the por-
tion of the continental shelf from which the oil was ex-
tracted. Although sovereigns are not directly involved,
a judicial pronouncement on the sovereignty of Iran or
Sharjak would be unavoidable. Such a determination is
constitutionally reserved to the executive branch, however.
Just as the judiciary will follow an executive determina-
tion as to which nation has sovereignty over a disputed
area, United States v..Klintock, 5 Wheat. 144, 149, 5 L.Ed.
A-14
55 (1820), so must the judiciary refuse to decide the dis-
pute in the absence of executive action because of that
absence of direction. That is, in the language of Baker v.
Carr, supra, the question of sovereignty is committed to
the executive branch by the Constitution, and decision of
the issue is impossible in the absence of the executive
policy decision. Additionally, we are persuaded that a
judicial determination would reflect a lack of respect for
the executive branch, particularly the State Department.
Contained in the Government’s amicus brief is a letter
from the State Department” indicating the importance of
** In pertinent part the letter states:
Your Division has asked for our views concerning certain
aspects of the case of Occidental of Umm Al Qaiwain [sic]
Inc. v. A certain Cargo of Petroleum Laden Aboard the
Tanker “Dauntless Colocotonic,” [sic] Etc., et al., C.A. 5, No.
75-3088,
It is our unders nding that the disposition of this case
would require a ¢ rmination of the disputed boundary be-
tween Umm Al Qa.wain on the one hend and Sharjah and Iran
on the other at the time Umm Al Qaiwain granted the con-
cession in issue to Occidental. It is our view that it would be
contrary to the foreign relations interests of the United States
if our domestic courts were to adjudicate boundary contro-
versies between third countries and in particular that con-
troversy involved here.
The extent of territorial sovereignty is a highly sensitive
issue to foreign governments. Territorial disputes are gen-
erally considered of national significance and politically deli-
cate. Even arrangements for the peaceful settlement of terri-
torial differences are often a matter of continued sensitivity,
These considerations are applicable to the question of Umm
Al Qaiwain’s sovereignty over the continental shelf surround-
ing Abu Musa at the time of the concession to Occidental and
to the subsequent arrangements worked out among the affected
states. For these reasons, the Department of State considers
that it would be potentially harmful to the conduct of our
foreign relations were a United States court to rule on the
territorial issue involved in this case.
We believe that the political sensitivity of territorial issues,
the need for unquestionable U.S. neutrality and the harm to
our foreign relations which may otherwise ensue, as well as
the evidentiary and jurisprudential difficulties for a U.S. court
A-15
neutrality in the politically and economically sensitive
Middle East.’* A decision in this case, the State Depart-
ment warns, would seriously impinge on executive neu-
trality. Therefore, we are convinced that the issue of
sovereignty over disputed territory is a political question
reserved to the executive branch.
The issue of sovereignty is political not only for its
impact on the executive branch, but also because judicial
or manageable standards are lacking for its determination.
To decide the ownership of the concession area it would
be necessary to decide (1) the sovereignty of Abu Musa,
(2) the proper territorial water limit and (3) the proper
allocation of continental shelf. A judicial resolution of
the dispute over Abu Musa between Iran and Sharjah is
clearly impossible. In their external relations, sovereigns
to determine such issues, are compelling grounds for judicial
abstention.
We do not believe that this judicial self-restraint should
turn on such analytical questions as whether the so-called Act
of State doctrine which is traditionally limited to govern-
mental actions within the territory of the respective state can
apply to an exercise of disputed territorial jurisdiction. It
rather follows from the general notion that national courts
should not assume the function of arbiters of territorial con-
flicts between third powers even in the context of a dispute
hetween private parties. As a result, we are of the view that
the court should be encouraged to refrain from setting the
extent of Umm Al! Qaiwain’s sovereign rights in the continental
shelf between its coast and Abu Musa at the time of its grant
of the concession to Occidental.
1*In determining whether to abstain or dismiss because of con-
flicting executive interest, federal courts are becoming more amen-
alle to receiving opinion by the executive branch. See First Na-
tional City Bank v. Banco Nacional de Cuba, 406 U.S. 759, 92
S.Ct. 1808, 32 L.Ed.2d 466 (1972); Bernstein v. N. V. Neder-
landsche-Amerikaansche, 210 F.2d 375 (2d Cir. 1954). Although
these are act of state doctrine cases, not political questions, it is
nonetheless clear that whether the state department believes that
judicial action would interfere with its foreign relations is germane
to whether a court may decide actions involving foreign relations.
A-16
are bound by no law; they are like our ancestors before the
recognition or imposition of the social contract. A pre-
requisite of law is a recognized superior authority whether
delegated from below or imposed from above—where there
is no recognized authority, there is no law. Because no
law exists binding these sovereigns and allocating rights
and liabilities, no method exists to judicially resolve their
disagreements. The ownership of the island, and deriva-
tively its waters, has long been the subject of dispute.
Were we to resolve this dispute we would not only usurp
the executive power, but also intrude the judicial power
beyond its philosophical limits.
The international law of territorial waters and of the
continental shelf would also be involved in determining
Occidental’s right to oil from the concession area. Al-
though some standards have been developed for the deline-
ation of territorial waters, these formulations leave un-
resolved the permissible seaward extent of territorial
waters. See 4 Whiteman, Digest of International Law 94-
137 (1965). Therefore, we would be in a judicial no-man’s
land were we to purport to decide the legality of Sharjah’s
unilateral extension of its territorial waters or Iran’s
twelve-mile limit. Moreover, the ownership of the conces-
sion area would depend upon the ownership of the con-
tinental .shelf between Abu Musa and Umm.” Again,
although some standards have been developed, these stand-
ards depend in part on the existence of agreement among
* According to Article I of the Convention on the Continental
Shelf, the continental shelf begins at the termination of the terri-
torial waters and extends “to a depth of 200 meters or, beyond
that limit, to where the depth of the superjacent waters admit of
the exploitation of natural resources... .” Thus, rights to the
continental shelf of Abu Musa depend both upon the extension of
er waters by Sharjah and the sovereignty over Abu Musa
itself.
A-17
sovereigns. Because ownership of the continental shelf is
derivative of the ownership of the unsubmerged land, the
extent and ownership of Abu Musa’s shelf is necessarily
in dispute. No manageable law exists to resolve disputed
continental shelf ownership, however. See Article VI, Con-
vention on the Continental Shelf, 15 U.S.T. The nexus be-
tween the absence of manageable standards and the poli-
tical question is quite evident. Resolution of disputed con-
tinental shelf can only occur by the political action of the
sovereigns themselves.”*
On cross-appeal, we are asked to review the decision of
the district court refusing to grant cross-appellant’s mo-
tion for an injunction against all pending and further
litigation, both in state and federal courts. The result of
the immediate imposition of this injunction would serve to
deprive the appellant of its statutory remedy of seizing
further shipments of oil. On the other hand, appellees have
a right to a speedy determination of this issue to avoid
endless seizures that may amount to a major nuisance if
this action is not finally determined on appeal.’ We there-
©The response to the appellant’s plea for a day in court can be
interpolated from Ware v. Hylton, supra. The Supreme Court
suggested that anyone dismissed from the judicial remedy because
of executive prerogative should, of course, seek recourse through
the intervention of the executive. Because the president holds ple-
nary power in foreign relations, however, the president is free to
refuse. Should the president ever officially act on a political issue,
we would be constitutionally bound to accept his act. Moreover,
there is no law against executive advisory opinions. As an alterna-
tive, the executive could create administrative courts to handle
all political cases, review to the Supreme Court limited to the
existence of a political question.
17 As of May 9, 1975, there were 58 suits pending involving the
same set of facts; 23 in the Western District of Louisiana, 12 in
the Eastern District, 3 in the Eastern District of Texas, 2 in the
Virgin Islands, 17 in the Louisiana State Court, Calcaieu Parish,
and one in Texas State Court, Jefferson County. At the time of
appeal, approximately 120 such suits were pending.
A-18
fore grant the injunction in order to protect the appellee,
and stay the injunction pending disposition by the Supreme
Court, in order to protect the appellant and promote a
speedy resolution of this problem.” Should the appellant
fail to appeal this judgment, the stay shall expire with the
time limit for filing the appeal.
Dismissep in part, Reversep in part.
Although federal courts are normally precluded from enjoin-
ing state litigation, an injunction is proper “where necessary in
aid of its jurisdiction or to protect or effectuate its judgments.”
28 U.S.C.A. § 2288. Because we have held that, as a matter of
federal law, a political question emerges we deem it necessary to
enjoin state proceedings in order to effectuate our judgment that
the issue is one committed to the executive. Such an injunction
also is necessary to aid the jurisdiction of the Supreme Court
to finally resolve the question of the existence of a political question.
B-1
APPENDIX B
Opinion of the District Court
> -
OcciwenTAL OF UMM aL Qaywayy, Ino,
—V.—
Crrres Service Orn Co., et al.,
(“Lykavitos”).
—_
OcomweEnTAL or Umm au Qaywayy, Ino,
—VvV.—
Kerr-McGere Corporation
(“Anglo-Maersk’’).
—>—
OccipenTAL oF UMM Au Qaywayyn, Inc.
—_—VvV.—
A Certain Carco Lapen Asoarp DauntTLess CoLocorronis.
Civ. A. Nos. 74-1192, 75-0033 and 74-868.
<a
United States District Court,
W. D. Louisiana
Lake Charles Division.
July 8, 1975,
B-2
Epwin F. Hunter, Jn., Chief Judge:
Plaintiff seeks to recover crude oil seized on board
three tankers. The oil was extracted from the seabed of
the Arabian Gulf at a point located nine miles off the
coast of the Island of Abu Musa.
These consolidated cases represent only a small portion
of the pending litigation arising out of the same set of
facts. As of May 9, 1975, there were approximately 58
separate actions: 23 in the Western District of Louisiana,
12 in the Eastern District of Louisiana, 3 in the Kastern
District of Texas, 2 in the Virgin Islands, 17 in the
Calcasieu Parish, Louisiana State Court, and one in the
Jefferson County, Texas State Court.
Buttes Gas & Oil Company and Occidental are holders
of offshore oil concession agreements granted by two
adjacent sheikdoms. Sharjah and Iran refused to recognize
Occidental’s concession and instead recognized the conces-
sion of Buttes, thus enabling Buttes to commence drilling
operations and produce the oil. This action, plaintiff
argues, is tantamount to a confiscation, and the Hicken-
looper Amendment requires that we adjudicate the con-
troversy.
Defendants originally filed a motion to dismiss, which
motion, by the interaction of F.R.Civ.P. 12 and 56, has
now been converted into a motion for summary judgment.
Numerous authenticated documents and affidavits appear
in the record.
Due to the many contradictory factual assertions, it is
appropriate to synopsize the uncontested facts and to set
out the most important of those contested. In 1970 plain-
tiff filed a federal cause of action under the Sherman
Act and claimed a deprivation of the enjoyment of the
B-3
precise gas concession here involved. Buttes Gas & Oil
Company, the major defendant in that suit, moved to
disrniss, The motion was granted in a thorough and well-
reasoned opinion on March 17, 1971. The decision was
pegged on the basic proposition that the Act of State
doctrine precluded further adjudication and that the ex-
ception to the doctrine contained in the Sabbatino Amend-
ment (Hickenlooper) was by its terms extremely narrow
and not applicable to the situation presented. Occidental
Petroleum Corp. v. Buttes Gas & Oil Co., 331 F.Supp. 92,
(C.D, Cal. 1971). The Court of Appeals for the Ninth Cir-
cuit affirmed at 461 F.2d 1261 (1972). The United States
Supreme Court denied a writ of certiorari, 409 U.S. 950,
93 S.Ct. 272, 34 L.Ed.2d 221 (1972).
There are two Trucial States, Sharjah and Umm Al
Qaywayn, located on the southeastern end of the Persian
Gulf. Forty nautical miles into the Gulf is an island named
Abu Musa. At the northern end of the Gulf, approximately
50 nautical miles from Abu Musa, is the country of Iran.
In 1964 the Rulers of Umm and Sharjah allegedly en-
tered into a treaty agreement establishing a seabed border
agreement, pursuant to which the limit of the territorial
waters of Abu Musa was three (3) nautical miles and the
area beyond this three-mile limit was Umm Al Qaywayn’s
continental shelf.’ Sharjah, by an unpublished decree of
September 10, 1969, extended its territorial waters to a
‘This agreement is in the form of unilateral declarations made
by the Rulers of Sharjah and Umm Al Qaywayn. They do not
mention the Continental Shelf, but plaintiff is confident that after
full discovery and a trial on the merits that the Court would con-
clude that these declarations established the boundary of the Con-
tinental Shelf of Umm at the three nautical mile limit off the
territorial waters of Abu Musa.
B-4
point 12 nautical miles off Abu Musa, a decree assertedly
contrary to the 1964 treaty,’
On November 18, 1969, plaintiff obtained from the Ruler
of Umm a concession granting it the exclusive right to
explore for and extract oil underlying the territorial and
offshore waters of Umm. Subsequent to plaintiff’s obten-
tion of its concession from Umm, Buttes was granted an
oil and gas concession by Sharjah on December 29, 1969,
encompassing the territorial waters of Sharjah, its islands,
including Abu Musa, and the seabed and subsoil lying
beneath those waters. Each concession agreement was ap-
proved by the British government. On April 7, 1970, Shar-
jah and Buttes executed an amendment to the original
concession extending the concession area to 12 miles off
Abu Musa’s coast. Plaintiff asserts that although the
British Foreign Office was not “taken in” by the back-
dated decree and concession amendment, it endeavored
to settle amicably the respective Territorial Waters claims
of Umm and Sharjah by requiring both plaintiff and Buttes
to cease any drilling operations and to submit their de-
mands to mediation.
In the meantime, Iran, acting through the National
Iranian Oil Company, set forth its claim to Abu Musa,
and enunciated a 12-mile Territorial Waters jurisdic-
tion. Great Britain left the Persian Gulf on or about De-
cember 1, 1971. Immediately prior thereto Sharjah and
Iran settled their dispute pursuant to an agreement which
called for the joint possession of Abu Musa and the dis-
puted area, The agreement reserved the title question to
* Plaintiff asserts, in effect, that this was a backdated fraudulent
Territorial Waters Decree and should not be considered by the
Court. The record does not contain a copy of the decree, but
it has been alleged affirmatively in the plaintiff's petition (Com-
plaint, paragraph 8).
B-5
the future, It called for a 50-50 split in any oil royalties.
Tran also recognized the validity of the Sharjah lease con-
cession agreement to Buttes. In April of 1972, Buttes com-
menced drilling operations in the disputed area (nine miles
east of Abu Musa) and later entered into joint venture
agreements with the other defendants and/or their sub-
sidiaries, In June of 1973, before the oil in question was
extracted from the disputed area, Umm—the source of
Occidental’s concession rights—terminated that concession
agreement, allegedly because of Occicdental’s failure to pay
monies required under the agreement. Under the auspices
of Sharjah and Iran, Buttes began extracting oil from the
contested area, sturing it temporarily on the “Baraka 1”
and then shipping it to the United States. In September
of 1974 this oil began arriving in the United States.
Defendants argue that dismissal and/or summary judg-
ment should be required on five independent grounds:
A. Application of res judicata doctrine ;
B. Application of collateral estoppel doctrine ;
C. The Act of States Doctrine precludes inquiry into
the acts of foreign states called into question;
D. Resolution of the issues would require adjudica-
tion of a boundary dispute between foreign na-
tions ;
EK. The absence of Sharjah, Iran and Umm Al Qay-
wayn, which are indispensable parties.
PuarntiFrr’s Basic Position
Occidental strenuously insists that defendants are com-
plicating the simple, and that we must look through “these
eristic maneuvers.” In oral argument counsel stated:
B-6
“As surprising as it may sound, after the volume of
briefs that have been filed, this is, in essence, a one
issue law suit. The issue is: ‘was Umm al Qaywayn
& sovereign on November 18, 1969 when the concession
was granted?’ ”
This presents an issue of fact that will require the Court’s
determination (Tr. 58-63). Put another way:
“Occidental’s position is that the court must merely
determine that Umm al Qaywayn was sovereign over
the plaintiff’s entire concession on November 18, 1969.
If the plaintiff’s concession was valid and in force in
November, 1969, it remained valid and in force in
November, 1971. Intervening territorial claims, how-
ever asserted, could not effect the plaintiff’s vested
property right in its concession, because not even an
actual change in sovereignty alters vested property
rights.” *
Based on these arguments, plaintiff asserts that defen-
dants
“cannot obtain summary judgment on the basis of
assertions made in brief, however frantic, nor on the
basis of selected readings, whether in farsi, urdu,
swahili, or for that matter, english.”
* United States v. Rice, 17 U.S. (4 Wheat. 4 L.Ed. 562
1819) ; Cobb v. United States, 191 F.2d 604 ( bean Ole 2961), cert
ed, 342 U.S. 913, 72 S.Ct. 340, 96 L.Ed, Os (1952
5-7
Res Jupicata AND COLLATERAL EstTopren, as A Resut oF
OccwwenTAL PeTroLEUM Corporation vs. Butres Gas &
Om Company, 331 F.Supp. 92 (C.D. California, 1971),
ArrinMep at 461 F.2d 1261 (9 Cir., 1972), Writs
Dentep 409 U.S. 950, 93 S.Ct. 272, 34 L.Ed. 2d 221.
The prior action and the instant one assert the same
right: an alleged exclusive right to explore and develop
the petroleum resources of the disputed area in the Persian
Gulf. The wrong asserted is basically the same—that is,
the interference and deprivation of its lease concession
rights in that area. But the cause of action is different
and at least one new event transpired after the California
decision became final—the delivery of the oil in the United
States.
Res judicata requires two suits involving the same cause
of action. Lawlor v. National Screen Service Corporation
349 U.S. 322, 326, 75 S.Ct. 865, 99 L.Ed. 1122 (1955);
Exhibitors Poster Exchange, Inc. v. National Screen Ser-
vice Corporation, 421 F.2d 1313, 1316 (5th Cir. 1970). Com-
parison of the complaint in the instant case with the one in
California demonstrates that the causes of action are not
the same. In California, Occidental alleged a violation of
antitrust laws based on various activities of Buttes and
others, including an attempted confiscation of its oil con-
cession. The present complaint asserts the right to re-
cover oil within the control of the Court, and a claim traced
through an alleged confiscation of a concession agreement.
Despite the almost identical factual background, the two
causes of action are different.
The motion to dismiss on the basis of res judicata must
be denied. It is.
Collateral estoppel forecloses relitigation of all issues
litigated in a prior proceeding. It is immaterial that two
B-8
actions are different, tried on different grounds, or insti-
tuted for different purposes and seek different relief.
Parker v. McKeithen, 488 F.2d 553 (1974). But a legal
finding may be successfully utilized as collateral estoppel
only when it is evident from the pleadings and the rec-
ord that the finding was necessary to the final decree and
was foreseeably of importance in possible future litigation.
Hyman v. Regenstein, 258 F.2d 502-510 (5th Cir., 1958).
Our duty is to examine the decision of the Court in the
prior litigation and determine the precise perimeter of the
judgment. The California court reached two very pertinent
ultimate conclusions:
1. The claim alleged could not prevail without an in-
quiry into the authority for and motivation of the
acts of foreign sovereigns, and the Act of State
Doctrine precluded such an inquiry.
2. The portion of the complaint in issue did not fall
within the ambit of the Hickenlooper Amendment,
for the reason that the complaint refers to “an
attempted confiscation,” whereas the statute applies
only to a “confiscation or other taking.”
These two determinations were the only necessary and
essential requisites to the dismissal. The present complaint
alleges an actual confiscation, but it was surely foreseeable
that the two other observations made by Judge Pregerson
would be of importance in possible future litigation:
3. “The conduct of Sharjah did not amount to an effec-
tive confiscation; rather, plaintiffs were allegedly
deprived of their concession only by the cooperative
effect of a number of acts of state, of which Shar-
jah’s claims were not the most efficacious. This is
B-9
not a situation at which the Sabbatino Amendment
was aimed.” 331 F.Supp. at 112.
4. “Regardless of the wording of the complaint, it
would be conceptually and prudentially hazardous
to treat the territorial waters claim of Sharjah as
a ‘confiscation’ subject to adjudication under the
international legal standards governing that kind
of act. Claims to territory are a different matter
from the expropriation of corporate property
within or appertaining to that territory.” (footnote
33, at page 112).
Armed with this language, defendants insist there should
be no litigation encore. The passages contained in para-
graphs “(3)” and “(4)” cannot be ignored, especially in
view of the language used by the Ninth Circuit in the per
curiam affirmation:
“The dismissal was correct. We affirm for reasons
stated in the district court’s opinion.” (461 F.2d 1261).
and by Judge Pregerson, below:
“The pleading is insufficient to invoke the Sabbatino
Amendment for several reasons.” (underscoring ours).
The enigma—what “reasons stated in the district court’s
opinion” formed the basis for the affirmance? Our attempt
to carve our way through this litigation has not given us
the answer. Doubt must be resolved by denial. Accord-
ingly, we decline to hold that the Doctrine of Collateral
Estoppel by Judgment operates to prevent plaintiff from
re-litigating the issue of applicability of the Hickenlooper
Amendment.
B-10
INDISPENSABLE PARTIES
Defendants persist in arguing that Sharjah, Iran and
Umm A] Qaywayn are indispensable parties. Arguably,
an adjudication in plaintiff’s behalf might greatly affect
the territorial and financial interest of Sharjah, Iran and
Umm. Be that as it may, the argument of indispensability
and the decisions cited in support are not persuasive in
this factual situation.
None of the absent sovereigns can be joined. As to Shar-
- jah and Iran, the alleged confiscating sovereigns, a holding
of indispensability would render illusory the very rights
that the Hickenlooper Amendment seeks to preserve. Rule
19 of the Federal Rules of Civil Procedure will permit this
action to proceed in absence of the sovereigns who cannot
be joined, Rule 19(b) applies where joinder of a missing
party is not feasible:
(b) Determination by Court Whenever Joinder not
Feasible. If a person as described in subdivision
(a)(1)-(2) hereof cannot be made a party, the court
shall determine whether in equity and good con-
science the action should proceed among the parties
before it, or should be dismissed, the absent person
being thus regarded as indispensable. The factors to
be considered by the court include: first, to what ex-
tent a judgment rendered in the person’s absence might
be prejudicial to him or those already parties; second,
the extent to which, by protective provisions in the
judgment, by the shaping of relief, or other measures,
the prejudice can be lessened or avoided; third,
whether a judgment rendered in the person’s absence
will be adequate; fourth, whether the plaintiff will
have an adequate remedy if the action is dismissed for
nonjoinder. Federal Rules. of Civil Procedure, Rule
19(b).
B-11
Rule 19 directs a pragmatic analysis, not one dictated by
the application of formal categories. Note of the Advisory
Committee on Civil Rules, 39 F.R.D. 69, 90-93 (1966); see
Kaplan, Continuing Work of the Civil Committee; 1966
Amendments of the Federal Rules of Civil Procedure (1),
81 Harv.L.Rev. 356, 363, 367 (1967). The application and
effect of Rule 19(b) are discussed in the opinion of the
United States Supreme Court in the case of Provident
Tradesmen’s Bank and Trust Company v. Patterson, 390
U.S. 102, 88 S.Ct. 733, 19 L.Ed.2d 936 (1968).
We conclude that practical consideration of the rights
and interest of the present parties to the suit and of those
of the absentees require that the case proceed in this
forum even though the absentees cannot be brought into
the action.
The motion to dismiss pegged on the absence of in-
dispensable parties is denied.
Bounpary Dispute—Aoctr or State Doctrine
In the California case, Judge Pregerson: “The deter-
mination of foreign states’ boundaries is not a permissible
function of this court,” (331 F.Supp. at 103) but declined
to dismiss because the antitrust allegations did not require
a determination of foreign boundaries. Our appreciation
of the law and the issues in the instant case require a
different approach.
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 juris-
prudence to be that all-embracing. We prefer a narrower
B-12
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.
Act or Strate Doctrine
To set the stage for a discussion of what the Court feels
is the most substantial ground for defendants’ motion, we
take the liberty of quoting extensively from the district
court’s opinion in Occidental Petrolewm Corp., supra, at
pp. 108-109:
“In Underhill v. Hernandez, 168 U.S. 250, 252, 18
S.Ct. 83, 84, 42 L.Ed. 456 (1897), the Supreme Court
first definitively held that ‘the courts of one country
will not sit in judgment on the acts of the govern-
ment of another, done within its own territory.’ This
‘classic American statement of the act of state doc-
trine’ was reaffirmed by the court most recently in
Banco Nacional de Cuba Sabbatino, 376 U.S. 398, 416-
418, 84 8.Ct. 923, 934, 11 L.Ed.2d 804 (1964). In the
Sabbatino case, the bases of the doctrine were at last
explicitly elaborated. The act of state doctrine, it was
held, is not required by international law. 376 U.S.
at 421-422, 84 S.Ct. 923. Nor is it compelled by no-
tions of sovereign authority, although they ‘do bear
upon the wisdom of employing’ it. Zd. Finally, the
doctrine is not required by the Constitution. 376 U.S.
at 423-424, 84 S.Ct. 923.
B-13
“The act of state doctrine does, however, have ‘con-
stitutional’ underpinnings. It arises out of the basic
relationships between branches of government in a
system of separation of powers. It concerns the com-
petency of dissimilar institutions to make and im-
plement particular kinds of decisions in the area of
international relations. The doctrine as formulated in
past decisions expresses the strong sense of the Ju-
dicial Branch that its engagement in the task of pass-
ing on the validity of foreign acts of state may hinder
rather than further this country’s pursuit of goals both
for itself and for the community of nations as a whole
in the interrnational sphere.”
“In sum, the doctrine is a reflection of the executive’s
primary competency in foreign affairs, and an ac-
knowledgment of the fact that in passing upon foreign
governmental acts the judiciary may hinder or em-
barrass the conduct of our foreign relations. See 376
U.S. at 427-428, 431-433, 84 S.Ct. 923.”
A more descriptive justification of the doctrine is found
in Frazier v. Foreign Bondholders Protective Council, 283
App.Div. 44, 125 N.Y.S.2d 900, 903 (1953) :
“It is a doctrine born of expediency, nourished in the
council halls of nations as well as the courts of justice.
Its dominant motif is political. It has gained stature
in the world of international diplomacy and politics,
where an ‘incident’ involving the dignity of nations is
measured by its explosive potential as well as its legal
implications.”
When foreign governments perform an act of state which
changes the relationship of the parties touching the “res,”
B-14
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. The entire fabric of the complaint is woven out
of attacks on the validity of, or questioning the reasons
for, the acts of Sharjah, Iran and Umm, with respect to
the precise rights which plaintiff asserts. It traces a series
of wrongs of foreign states to reveal why the lease agree-
ment cancellation by Umm was invalid and why neither
Sharjah nor Iran had a right to honor the lease contract
(concession) by Buttes and its joint venturers; or to put
it another way, to explain why the failure to honor Occi-
dental’s concession agreement constituted a confiscation.
Nothing in Rice (supra) and Cobb (supra) will relieve this
court from a forbidden inquiry into acts of state unless,
of course, it is the Hickenlooper Amendment.
A listing of numerous acts of state appear in plaintiff’s
petition:
(1) Plaintiff claims title and right to the oil on the
ground that Umm Al Qaywayn validly granted it an ex-
clusive right to explore and exploit the disputed area,
and never validly terminated that right. Umm Al Qay-
wayn’s notice of termination was invalid, and attempts to
explain the invalidity on the ground that Umm Al Qay-
wayn’s sovereignty over the area was suspended, in fact,
“as a result of actions of Sharjah and Iran * * * .”
(2) Sharjah “allegedly issued” an unpublished decree
dated September 10, 1969—a decree assertedly contrary
to treaty obligations with the British Government—“pur-
porting to extend” its territorial waters to twelve nautical
miles.
(3) Sharjah granted Buttes an oil concession on De-
cember 29, 1969.
B-15
(4) The concession was amended on April 7, 1970, “so
as to extend” the concession area from three to twelve
miles off the coast of Abu Musa, and this was done in fur-
therance of the purposes of the Ruler of Sharjah to enlarge
the concession area granted by him on December 29, 1969,
to Buttes, so as to include the structure in the disputed
area, and “thus to enable the Ruler of Sharjah to share
with Buttes the substantial revenues to be derived from
the underwater structure.”
(5) Sharjah, in May of 1970, rejected a suggestion of
the British Foreign Office that Occidental be allowed to
operate within the disputed area pending arbitration.
(6) Sharjah, in May of 1970, requested the British For-
eign Office to prohibit all operations in the area pending
determination of the dispute by arbitration.
(7) In May of 1970 Iran made a claim to Abu Musa
which was “without foundation and contrary to historical
fact **?ee dd
(8) In July of 1970 Sharjah consented to the British
Government’s appointment of a mediator.
(9) Sharjah rejected the mediator’s proposals, which
were made on or about September 28, 1970.
(10) In November, 1971, Sharjah and Iran “confected”
a “Memorandum of Understanding” relating to Abu Musa,
allegedly in disregard of Occidental’s vested rights to op-
erate in ‘he concession area. The Memorandum of Under-
standing provided that neither Iran nor Sharjah would
recognize the other’s claim of sovereignty over Abu Musa;
that Iranian troops would arrive and occupy part of the
island; that both Sharjah and Iran would recognize the
breadth of Abu Musa’s territorial sea as twelve nautical
B-16
miles; that exploitation of the petroleum resources of the
seabed and subsoil beneath the territorial sea would be
conducted by Buttes; and that half the governmental oil
revenues would be paid directly to Iran and the other half
to Sharjah.
HICKENLOOPER
No doubt disturbed by the deteriorating conditions be-
tween the United States and Cuba and by the Supreme
Court decision in Sabbatino, Congress, on October 2, 1964,
quickly passed the Hickenlooper Amendment to the Foreign
Assistance Act of 1964, the avowed purpose of which was
to “reverse in part the recent decision of the Supreme
Court in Banco Nacional de Cuba v. Sabbatino” (U. 8.
Senate Foreign Relations Committee, July 10, 1964). The
statute provides:
“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 de-
termination on the merits giving effect to the principles
of international law in a case in which a claim of
title or other right to property is asserted by any
party including a foreign state (or a party claiming
through such state) based upon (or traced through)
a confiscation or other taking after January 1, 1959,
by an act of that state in violation of the principles of
internationalylaw * * *; Provided, That this subpar-
agraph shall not be applicable * * * (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.”
B-17
This so-called exception to the acts of state doctrine en-
countered strenuous opposition from the executive branch
during its passage through Congress.‘ In a similar vein,
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 as-
serted’(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 to the Foreign Assistance Act of 1964, 22 U.S.
C.A. 2370(e)(2)? We believe the answer must be in the
negative.
First: Giving full consideration to the asserted new
events,® we agree v th Judge Pregerson’s observation that
“it would be conceptually and prudentially hazardous to
treat the territorial waters claim of Sharjah as a ‘con-
fiscation’ under the legal standards governing that kind of
i; For an extensive review of the amendment’s pertinent legisla-
tive history see Banco Nacional de Cuba v. First National City
Bank of N.Y., 431 F.2d 394 (2nd Cir., 1970) at pp. 400-402.
For the Sabbatino Amendment to be applicable, circumstances
must precisely fit the statutory language. In French v. Banco
Nacional de Cuba, 23 N.Y.2d 46, 295 N.Y.S.2d 433, 444, 242 N.E.
2d 704, 712 (1968) the Chief Judge declared that
“[it was] abundantly clear * * * that Congress was not attempt-
ing to assure a remedy in American courts for every kind of
monetary loss resulting from actions, even unjust actions, of
foreign governments. The law is restricted, manifestly, to the
kind of problem exemplified by the Sabbatino case itself a
claim of title or other right to specific property which had been
expropriated abroad.” (Emphasis added).
*The Sharjah-Iran annexation, followed by non-recognition of
core concession and the importation of oil into the United
B-18
act.” We find nothing in the wording of the statute or in
its legislative history which would give plausibility to Occi-
dental’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 agree-
ment 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 interna-
tional law, wholly different from that related to confisca-
tions. See e. g. McDougal and Burke, The Public Order of
Oceans, 486-98, 520-61; see also Major Middle Eastern
Problems in International Law, American Enterprise [nsti-
tute for Public Policy Research (1972). We hold that the
conduct set forth in the complaint did not amount to a
confiscation within the meaning of the Hickenlooper Amend-
ment. Contrariwise, the record reveals that plaintiffs were
allegedly deprived of the enjoyment of their concession
only by the cooperative effect of a number of acts of state
by Sharjah, Iran and Umm Al Qaywayn. This is not a
situation at which the Sabbatino Amendment was aimed.
Occidental Petroleum Corp. v. Buttes Gas & Oil, supra, 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 en-
visioned by Congress to rise to the magnitude of a confisca-
tion within the narrow confines of the Hickenlooper Amend-
ment,
Seconpty: The United States Court of Appeals for the
Second Circuit has on at least two occasions made an ex-
haustive analysis of the Amendment’s legislative history
and concluded that its effect is limited to cases involving
claims of title with respect to American owned property
nationalized by a foreign government, and that the amend-
B-19
ment was inapplicable to contract claims. Menendez v.
Saks & Co., 485 F.2d 1355 at 1372 (1973) cert. granted on
other grounds, 416 U.S. 981, 94 S.Ct. 2382, 40 L.Ed.2d 758;
Banco Nacional de Cuba, 431 F.2d 394 (1970)." Further
support for this interpretation of the Hickenlooper Amend-
ment is found in French v. Banco Nacional de Cuba, 23
N.Y.2d 46, 295 N.Y.2d 433, 242 N.E.2d 704 (1968), where
the New York Court of Appeals held that a claim for
breach of contract is not a “ ‘claim of title or other right to
property’ within the meaning of the Hickenlooper Amend-
ment,” and that the repudiation of a contractual obligation
does not amount to a “confiscation or other taking,” as
those terms are used in the statute.’
Applying these principles to the instant case, what. was
allegedly confiscated? It was not the oil which was ex.
tracted from the disputed area by Buttes in 1974. It was
not an oil well or an oil mine. The well from which the
oil was extracted was owned by Buttes and developed
and drilled by them, pursuant to their concession agree-
ment with Sharjah. 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 ugreed
to pay certain considerations to the lessor for the privilege
of exploring, drilling for, and extracting oil. A true and
correct Xerox copy of the agreement has been filed by
plaintiff as its Exhibit “1.”
"Upon its review of the Banco case, the Supreme Court did not
disturb the conclusion reached by the Second Circuit that the
Ilickenlooper Amendment was inapplicable. See First National
City Bank v. Banco Nacional de Cuba, 406 U.S. 759 at 780, note 5,
92 S.Ct. 1808, 32 L.Ed.2d 466.
* See also 12 A.L.R, Fed. at 815.
B-20
Simply stated, the concession agreement was a contrac-
tual 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 amend-
ment. We so hold.’
Txuiepiy: Plaintiff, in order to prevail on the merits,
must prove its lease agreement was valid as of the date
the oil was extracted. In June of 1973, before the oil in
question was extracted from the disputed area, Umm Al
Qaywayn, the source of plaintiff's concession agreement,
terminated the agreement.’ The act of state doctrine pre-
cludes inquiry into reasons for or the validity of the can-
cellation unless Hickenlooper is applicable." We do not be-
* Significantly, defendants have not pressed the conclusions
reached as to the confiscation and/or repudiation of contract rights.
This would have been inconsistent with their insistence that we
dismiss on the basis of “res judicata” and/or “collateral estoppel.
We note, too, plaintiff’s suggestion in footnote 3 of its reply memo-
randum that the legislative history set out in Banco (431 F.2d
394) indicates that the amendment is applicable to “oil concessions.
We do not agree. The colloyuy between Professor Olmstead and
Congressman Frazier had to do with ore or oil from an expro-
priated mine or well.
10 Article 26.1 of the Agreement:
“The Ruler shall have the right to terminate this Agreement
upon three (3) months prior written notice to Occidental :
“(a) if Occidental has not fulfilled the obligations provided
for in Article 4 hereof; or
“(b) if Occidental shall be in default of an arbitration award
under the arbitration provisions of this Agreement.”
" Oecidental’s case is premised on the proposition that Umm
was sovereign over the disputed area on November 18, 1969. The
cancellation, they argue, is to be disregarded because Umm is no
longer sovereign. But as we see it, the question of who was sov-
ereign and when, are themselves inquiries into the reasons for
and/or the validity of acts of state. It barely requires emphasis
B-21
lieve it applicable and so conclude. Franch vy. Banco Na-
cional de Cuba, 23 N.Y.2d 46, 295 N.Y.S.2d 433, 242 N.B.2d
704,
Fourtniy: “Hickenlooper” requires title to confiscated
property and its proceeds to be determined as of the date
of confiscation. The petition alleges this occurred in No-
vember of 1971. Concededly, in 1970 a boundary dispute
existed between Iran, Sharjah and Umm. To decide wheth-
er or not there was a confiscation would require a de-
termination of that boundary dispute. Who owned the
disputed area as of November, 1971? Even as of today,
Iran and Sharjah have deferred a determination of title
as between them. Then, too, Umm’s possible ownership is
not being ignored (30% of Sharjah’s share of what it col-
lects from Buttes).
Summarizing: Practical considerations underlying a
specific situation must be precisely examined to avoid con-
clusions making for eventual confusion and conflict, The
instant case presents one of those problems for the rational
solution of which it becomes necessary to take soundings.
The case before us is this: Sharjah and Iran recognize the
Buttes’ concession. Umm cancelled the Occidental conces-
sion, but participates in the rentals received from Buttes.
In light of this history and what we perceive to be the
purpose of Hickenlooper, I just cannot bring myself to
believe that Congress intended to permit United States
Courts to tell these three foreign countries: “You are
that the Ruler of Sharjah pays the Ruler of Umm 30% of Sharjah’s
share of the total revenue accruing to it and payable by Buttes
pursuant to its concession agreement with Sharjah and Iran (See
— of D. Paul Fitzgibbon, filed by plaintiff in these proceed-
ings).
B-22
wrong and we are right as to the ownership of your off-
shore waters.”
The motion for summary judgment should be granted in
each case. So ordered.
DeFENDANTS’ Request For INJuNCTION TO ENJgorIn ALL
FurtHER LITIGATION BasED ON THE SussecT MATTER
The facts alleged in each of the 58 pending actions and
the manner in which they are set forth are virtually iden-
tical. The factual distinction is that different ships and
their cargoes are involved. There are no inherent obstacles
preventing a district court from issuing orders which
affect litigation in other courts, state or federal. This
court has the discretionary power to issue a single in-
junction forbidding further proceedings in the pending
cases awaiting the final outcome of this litigation. How-
ever, we feel it would be highly prejudicial to issue such an
order. This is so because the order would deprive the
plaintiff of its statutory remedy with respect to further
shipments of oil by the defendants to the United States
before a final determination of its claim. The request for
injunctive relief to enjoin all further litigation is denied.
C-1
: | APPENDIX C
Map attached to, and made a part of, oil concession agreement
So ee « dated November 18, 1969, between Ruler of Umm Al Qaywayn and
png ae ee Occidental of Umm Al Qaywayn, Inc.
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r Height above datum of dings
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a Pa Agreement dated November 18, 1969, betwee
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Bate Este de da ee . eee ”
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we Fe Agreement dated November 18, 1969, betwee
rt) . ” ” the Ruler of Umm Al Qaywayn and Occidento
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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.