# Appendix — Hunt v. Coastal States Gas Producing Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_1108%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1979 - **Citation:** 444 U.S. 992 ## Text sof 0 KE sess Fa } ¥ Suri me vLourt VU. & . | : F}LED t OCT 16 1979 AK, JR. cnn | No. Ld 9- eB 3 0 ‘mr In The Supreme Court of the United States OCTOBER TERM 1979 NELSON Bunker Hunt, HerBert Hunt, AND LAMAR HUNT, Petitioners, v. CoasTaL States Gas PRODUCING CoMPANY, AND COASTAL STATES MaRKETING, INC., Respondents. APPENDIX TO PETITION FOR WRIT OF CERTIORARI A. B. CoNanrt, JR. Drew R. HeEarp 3100 First National Bank Building Dallas, Texas 75202 Attorneys foi Petitioners Of Counsel: SHANK, IRwIN, CONANT, WILLIAMSON & GREVELLE 3100 First National Bank Building Dallas, Texas 75202 INDEX TO APPENDIX Page Appendix A Opinion of Supreme Court of Texas in Nelson Bunker Hunt, et al v. Coastal States Gas Producing Company, et al .......0......ccccccccceeecee A-1 Appendix B Dissenting Opinion of Supreme Court of Texas in Nelson Bunker Hunt, et al v. Coastal States Gas Producing Company, et dl ..0000.000 cece B-1 Appendix C Opinion of Court of Civil Appeals for the Fourteenth Supreme Judicial District in Nelson Bunker Hunt, et al v. Coastal States Gas Producing Company, et al oo... C1 Appendix D Final Judgment of the 133RD Judicial District Court for Harris County, Texas in Nelson Bunker Hunt, et al v. Coastal States Gas Producing Company, et al ___.__....... .....D-1 Appendix E Pre-Trial Order, dated November 22, 1976, in Nelson Bunker Hunt, et al v. Coastal States Gas Producing Company, etal.............................. E-1 Appendix F Concession No. 65, dated December 18, 1957 | F-1 Appendix G Law No. 42 of 1973, promulgated by the Revolutionary Command Council of the Libyan Arab Republic | TT INDEX TO APPENDIX Appendix H Transcript and translation of speech mad June 11, 1973, by Libyan Chairmaii ntl al-Qadhdhafi (pages T-4 to T-11 of the Foreign Broadcast Information Service Dail Report, a U.S. government publication) P Appendix I United States of America’s Note dated July 5, 1973... ss isin = eit I-1 Appendix J Letter of August 3, 1973, from William J. Casey of the Department of State to G. H Schuler, a Hunt employee a Appendix K Statement by the Department of State on Policy on “Hot” Libyan Oil... K-1 Appendix L Opinion of the District Court for the South District of New York in Hunt v. Mobil Oil sigs Corporation, 410 F.Supp. 10 (S.D.N.Y. | es L-1 Appendix M Opinion of the Court of Appeals for the Sec . o ond Circuit in Hunt v. Mobil Oil Corporation, 550 F.2d 68 (2d Cir.), cert. denied, 434 U.S. 484 (1977) A-l APPENDIX A IN THE SUPREME COURT OF TEXAS FROM HARRIS COUNTY FOURTEENTH DISTRICT No. B-7984 NELSON BuNKER Hunt, et al, Petitioners, v. CoasTaL States Gas Propuctnc CoMPANY, Respondent This suit was instituted by Nelson Bunker Hunt, Herbert Hunt and Lamar Hunt (Hunt) seeking damages against Coastal States Gas Producing Company and Coastal States Marketing, Inc. (Coastal States) for the alleged conversion of oil to which Hunt was entitled by virtue of a concession agreement with Libya. Coastal States counterclaimed for damages for Hunt’s allegedly tortious interference with the contract and business opportunities of Coastal States. Both parties moved for summary judgment on the issue of liability after extensive development of the case. The trial court denied relief on all claims and the court of civil appeals affirmed. 570 S.W. 2d 503. We affirm the judgment of the court of civil appeals. In 1957 the Government of Libya granted Hunt a conces- sion which gave him the right, for fifty years, to explore, drill and extract oil in an area now identified as the Sarir field. A-2 Hunt assigned a one-half undivided interest in this con- cession to British Petroleum Exploration Company, Ltd (British Petroleum) in 1960. Oil was discovered ‘ns the bares ye Backes er 74 1967, it was produced in . In ptember 196 Mu’ammar al-Qadhafi assumed power in Libya a pam oe the Revolutionary Command Council, and com- esr making changes in the existing contractual relations e various oil producers holding concession agreements with Libya. In 1971, the Libyan Government nationalized pee va interest of British Petroleum in the Sarir e its rights to the Arbian i Company (AGECO). AGECO is a ea a, 7 tire capital stock is owned by the Libyan Government. On June 20, 1973, by Libyan Law N eke Government nationalied all ihe pla cae ea payer the concession agreement and assigned these rights b CO. Although Libya agreed to pay compensation ae ag was to be determined by a committee designated pat *e: State. In response to this action, Hunt published os in newspapers throughout the world claiming that pret byan nationalization violated international law and . ain Suit against anyone who came into possession pee hy Fobra 1973, Coastal States entered into a con- a CO to purchase oil from the Sarir field and it itinu to purchase oil under this contract despite Hunt’s claims against Libya and threatened suits. This oil was pepe _ suc Coastal States to a refinery in Italy where ph. p and sold to third parties. It was stipulated a portion of the products derived from this oil was sub- sequenly taken to the United States, although it was not that Coastal States transported or caused any of one gt to be brought here. Nevertheless, Coastal is domiciled in the United States and, at least, the net A-3 proceeds derived from the Sarir oil were brought here and are the basis of Hunt’s suit for conversion. British Petroleum was a party to the controversy with Coastal States at one time, but it subsequently entered into a full settlement with the Libyan Government after arbi- tration of its claim and it does not now assert any claim against Coastal States’ In May 1975 Hunt entered into a settlement agreement with the Libyan government whereby, for the sum of approximately $19,000,000, it released any and all claims against the Libyan Government arising out of the nationaliation of the Sarir field. Coastal States was not a party to this agreement and Hunt now seeks to recover the proceeds realized by Coastal States from oil allegedly pur- chased from AGECO prior to the May 1975 settlement. Both the trial court and the court of civil appeals con- cluded that the trial court was foreclosed from inquiring into the validity of the Libyan nationalization of Hunt’s interest in the Sarir field by the Act of State Doctrine. These courts further concluded that as a matter of law, Hunt’s actions in giving notice of his claim to oil from the Sarir field did not violate either state or federal law and would not support Coastal States’ claim for damages for tortious interference. Hunt and Coastal States both filed applications for writ of error and complain of the take-noth- ing judgment entered on the claim of each. APPEAL BY HUNT Hunt’s claim against Coastal States is necessarily based upon the assertion that Libya’s expropriation was invalid so that Coastal States acquired no title from AGECO. The critical question involved in Hunt’s appeal is the applicability i The arbitrator held that Hunt did not acquire title to the oil in the strata. A-4 : the Act of State Doctrine and more precisely, whether unt’s suit comes within the exception to the doctrine created by the Hickenlooper Amendment, 22 U.S.C ey (e) (2). The lower courts have held that the doctrine inquiry by a Texas court into th idi . on ee e validity of acts done The Act of State Doctrine is a judicially created doctrine of restraint. The landmark case of Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964) reaffirmed the doctrine as originally articulated in Underhill v. Hernandez, 168 U.S 250 (1897) in the following language: is “Every sovereign State is bound to re i dependence of every other sovereign hn gli the courts of one country will not sit in judgment on the = he the government of another, done within its own a “gs Red ress of grievances by reason of such acts ~ tained through the means open to be availed of by sovereign powers as between themselves.” In Sabbatino it was stated that the doctrine “arises out of the basic relationships between branches of government in a pg of separation” and the courts prior recognition of be vibe doctrine _ expresses the strong sense of the Judicial an that its engagement in the task of passing on the a of foreign acts of state may hinder rather than > er this country’s pursuit of goals both for itself and for € community of nations as a whole in the international sphere.” In Hunt v. Mobil Oil Corp., 550 F. i = denied, 434 U.S. 984, the Act pagho ptont an ai proaithabredh soe inquiry into the validity of Libya’s na- unt S concession. In holding that the trial court properly dismissed Hunt’s claim against seven major A-5 oil producers in the Persian Gulf area for damages under the anti-trust statute, the circuit court said: “We conclude that the political act complained of here was clearly within the act of state doctrine and that since the disputed pleadings inevitably call for a judgment on the sovereign acts of Libya the claim is non-justiciable.” This final judgment against Hunt in that case controls his present suit for conversion unless it comes within the ex- ception to the Act of State Doctrine created by the Hicken- looper Amendment. Benson v. Wanda Petroleum Company, 468 S.W. 2d 361 (Tex. 1971). The Hickenlooper Amendment was enacted by Congress in 1964 shortly after the Sabbatino holding and in obvious re- action to it. It provides in part: “[N]Jo 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 prin- ciples 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... based upon (or traced through) a confiscation or other taking . . . by an act of that state in violation of the principles of international law ... .” (Emphasis Added) 22 U.S.C. § 2370(e) (2). It must be recognized at the outset that this exception which was adopted over the objections of the Executive Department of the United States has been narrowly construed by our courts. Occidental of Umm Al Qay., Inc. v. Cities Serv. Oil Co., 396 F. Supp. 461, aff'd in part, 577 F.2d 1196 (5th Cir. 1978), petition for cert. filed, 47 U.S.L.W. 3422 (U.S. Dec. 6, 1978) (No. 78-910) ; Occi- dental Petroleum Corp. v. Buttes Gas & Oil Co., Co., 331 F. A ae by - les bie 1261 (9th Cir. 1972), cert. denied ; ; Unite exican States v. A ay ages oly v. Ashley, 556 S.W. 2d The statute enumerates three requir i exist in order to avoid the Act of ple posete thet . Hickenlooper Amendment. 1, Expropriated property must a within the territorial jurisdiction of the United States. The act of the expropriating nation must be in violation of international law. 3. The asserted claim must be a claim of pron or other right to property. 22 U.S.C. § 2370(e) (2). The Pi es civil appeals concluded, without consideration of two requirements, that the Hickenlooper Amend- ment is not applicable to this case because Hunt acquired only a contract right by the agreement with Libya Wea with this conclusion and therefore limit our po as to the third requirement stated above. 6 Libya is both the place of the contract’s execution = performance as well as the location of the subject mat- r, Libyan substantive law governs the interpretation and construction of the rights conferred to Hunt by the Con- cession Agreement. Cantu v. Bennett, 39 Tex. 304 (1873). The Concession Agreement ex i pressly provides that the applicable law is the Libyan Petroleum La and this law provides in part: sites ae “(1) All petroleum in Libya in j ya in its natural i strata is the property of the Libyan State. ~~ “(2) No person shall ex ul explore or prospect f i or produce petroleum in any part of Sites: eal es. thorized : Sin ok Law.” by a permit or concession issued under this ry Seragg intent of the Concession Agreement was to grant Hunt the right to search for and to extract oil within A-7 the defined area for the stated term’. It did not grant Hunt title to the oil in the strata. Under Libyan law, title to the oil passed at the wellhead. In 1966 Hunt and Libya volun- tarily amended the 1957 Concession Agreement. Clause 16 of the amended agreement states: “(1) The Government of Libya will take all the steps necessary to ensure that the Company enjoys all the rights conferred by the Concession. The CONTRACT- UAL RIGHTS expressly created by this concession shall not be altered except by mutual consent of the parties. “(2) This Concession shall throughout the period of its validity be construed in accordance with the Pe- troleum Law and the Regulations in force on the date of the execution of the agreement of amendment by which this paragraph (2) was incorporated into this concession agreement. Any amendment to or repeal of such Regulations shall not affect the CONTRACTUAL RIGHTS of the Company without its consent.” (Em- phasis added) This language is significant in that it not only refers to Hunt’s rights as “contractual,” but it also recognizes Libya’s ownership of the oil. We conclude that Hunt obtained only a contractual right under the Concession Agreement. The Hickenlooper Amendment by its express terms ap- plies only to a claim of title or other right to property. This construction was made abundantly clear in 1965 when Con- gress added the words “to property” following the phrase “claim of title or other right.” Thus this exception to the Act of State Doctrine has no application here where only a contractual right was expropriated from Hunt. See Occi- dental of Umm Al Qay., Inc. v. Cities Serv. Oil Co., supra; 2The Concession Agreement provides that the designated area may be reduced at stated intervals during the fifty year term. A8 French v. Banco Nacional de Cuba, 242 N.E. 2d 704 (N.Y. 1968) ; Menendez v. Saks and Company, 485 F.2d 1355 (2nd Cir. 1973), cert. denied, 425 U.S. 991 (1976); Present v. U. S. Life Ins. Co., 282 A.2d 863, aff'd, 241 A.2d 237 (NJ. 1968). We have been cited to no case, and have discovered no case, holding to the contrary. The trial court and the court of civil appeals did not err in concluding that the Act of State Doctrine bars judicial inquiry into the validity of Libya’s actions. APPEAL BY COASTAL STATES We agree with the holding of the court of civil appeals that Hunt’s motion for summary judgment was properly granted on Coastal States’ claim of tortious interference with business contracts and business relations. Hunt’s con- tractual rights in the Sarir field were expropriated by Libya and Hunt was fully justified in apprising the international community of his intent to file suit if they dealt with oil from this field. The judgment of the court of civil appeals is affirmed. Charles W. Barrow, Justice Dissenting Opinion by Justice Steakley, joined by Chief Justice Greenhill and Justice Spears. Opinion Delivered: June 13, 1979 B-1 APPENDIX B IN THE SUPREME COURT OF TEXAS No. B-7984 NELSON BUNKER Hunt, HERBERT Hunt AND LAMAR HUNT, Petitioners, v. CoasTAL SratTes GAS PropucING COMPANY AND CoasTAL STATES MARKETING, INC., Respondents. DISSENTING OPINION I respectfully dissent. This is an appeal from two summary judgments. Nelson Bunker Hunt, Hei»ert Hunt, and Lamar Hunt (hereinafter referred to as “Hunt”) sued Coastal States Gas Producing Company and Coastal States Marketing, Inc., (hereinafter referred to as “Coastal States”). Hunt sought judgment “against Coastal States awarding them possession of an undivided one-half of all crude oil or oil products produced from Concession 65 (the Sarir Field) and converted by Coastal States and its assignees, or the proceeds thereof; or, in the event that such crude oil, oil products or proceeds have been commingled with the property of another, for an undivided interest in such property in proportion to their shares of commingled oil, products, or proceeds; or, alter- natively, for the fair market value of all such crude oil or oil products converted by Coastal States and its assignees to B-2 date of judgment; for an accounting by Coas the amount of crude oil produced ite cave a rt by it or its assignees, the amount of oil products taken b Coastal States and its assignees derived from such wb oil, the consideration received by Coastal States or its as- signees for such oil or oil products, and any other matters proper to such accounting; together with exemplary dam- be interest, costs of Court and general relief.” Coastal ; tates filed a counterclaim alleging tortious interference with its contract and business opportunities. The trial court granted the motion for summary judgment filed by Coastal States against Hunt’s suit, and the motion for judgment filed by Hunt against Coastal States’ suit. The Court of Civil Appeals affirmed. 570 S.W. 2d 503. I would reverse the summary judgment in Hunt’s action against Coastal States, sever this claim and remand it for trial. oa 1957, the Government of Libya granted Concession a 65 to Hunt, granting him the right to explore for and extract oil for fifty years in the area hereinafte, referred to as the Sarir field. In 1960, Hunt assigned a one- half undivided interest in that concession to British Pe- troleum Exploration Company, Limited. Oil was discovered in the Sarir field in 1961, and w:: produced in marketable quantities by 1967. In 1971, Libya nationalized the interest of British Petroleum in the Sarir field and transferred British Petroleum’s interest to the Arabian Gulf Exploration Com- pany (AGECO). Two years later, by enactment of Libyan Law Number 42, Libya nationalized Hunt’s interest in the concession without compensation. Hunt’s rights and assets were then transferred to AGECO. Hunt published notices throughout the world that the Libyan nationalization of the Sarir field violated international law and threatened suit against anyone who came into possession of oil from the Sarir field. Coastal States entered into a contract with B-3 AGECO to purchase oil from the Sarir field at approximately the time the nationalization decree was issued, and first received oil from the Sarir field in May, 1973. Coastal States transported that oil to refineries in Italy and sold the pro- cessed products to third parties. The proceeds of these sales accrued to Coastal States, which is incorporated and head- quartered in the United States. Coastal States also stipu- lated that at least a portion of such products were brought into the United States from the refineries in Italy. In August, 1973, Hunt brought this suit against Coastal States, British Petroleum, originally a co-plaintiff in the suit, took a nonsuit after entering into a settlement with Libya that released Libya and all third parties, thus ending all its claims in regard to oil from the Sarir field. In May, 1975, Hunt settled his claims against the Libyan government for the nationalization of the Sarir field. Hunt and Coastal States stipulated that Libya’s payment of ap- proximately $19,000,000 for that agreement represented only the net book value of Hunt’s physical assets located on Concession 65 and “that no portion of such sum was for oil previously sold by AGECO or for oil in place.” Hunt's present suit seeks an adjudication with respect to a one-half share of the oil purchased by Coastal States from the date of the expropriation in May, 1973, to the date of Hunt’s settle- ment with Libya in May, 1975. In Hunt’s suit against Coastal States, he alleged that the expropriation by Libya was an illegal confiscation and there- fore did not affect his rights to recover against subsequent converters of the oil from the Sarir field. Hunt claimed that Coastal States acquired the oil with full knowledge of Hunt’s contrary possessory rights, title and interest. A pre-trial hearing was held with each party calling experts in inter- national and foreign law who expressed their opinions re- I. THE ACT OF STATE DOCTRINE I would hold that the Hickenlooper Amendment, U.S.C. § 2370(e) (2), a statutory exception to the ae state doctrine, is applicable to Hunt's claim and directs a judicial determination on its merits. The act of state doctrine was articulated in U nderhill v. Hernandez, 168 U.S. 250, 252 (1897): “Every pest sovereign State, and the courts of one country will not sit in judgment on the acts of the government of another done within its own territory.” This doctrine was reaffirmed in the landmark case Banco Nacional de Cuba v. Sabbatino, Sabbatino involved a dispute over the proceeds from a shipload of sugar expropriated by Cuba. Farr, Whitlock & subsidiary of an American owned firm, C.A.V. All permission for the ship to sail. Subsequently, Cuba’s agent in New York, Banco Nacional, and C.A.V. both made demand on Farr, Whitlock & Com. B-5 pany for payment for the sugar. Farr, Whitlock & Company refused payment to Cuba’s agent. Instead, pursuant to court order, it delivered the funds to Sabbatino, the Temporary Receiver for C.A.V.’s New York assets, to await judicial determination of ownership. Banco Nacional brought suit against Farr, Whitlock & Company, alleging conversion of the fund. The district court dismissed the suit. The Second Circuit Court of Appeals affirmed, holding that the expro- priation decree violated international law and therefore did not transfer good title to Banco Nacional. The United States Supreme Court reversed and remanded, holding that the act of state doctrine precluded examination of the validity of the Cuban expropriation. The way was thus cleared for an Amer- ican court, by refusing to look at the validity of Cuba’s ex- propriation, to validate that expropriation by rendering judg- ment requiring Farr, Whitlock & Company to pay the pro- ceeds to the last party having possession of the sugar. The Court examined the foundations of the act of state doctrine and concluded that the doctrine is not compelled by the inherent nature of sovereign authority, by any principle of international law, or by the United States’ Constitution. 376 U.S. at 421-23. Rather, the doctrine “arises out of the basic relationships between branches of government in a system of separation of powers. It concerns the competency of dissimilar institutions to make and implement particular kinds of decisions in the area of international relations.” Jd. at 423. Finally, the Court reasoned that a judicial determina- tion as to the validity of an expropriation by a foreign sov- ereign within its own territory would have only an occasional impact, would often be likely to offend the expropriating country, and would be a potential source of embarrassment to the Executive Branch in its conduct of possible negotia- tions with the expropriating country. Id. at 431-33. There- B-6 fore, as a matter of judicial restraint, the act of state doc- trine was applied to preclude inquiry into the validity of this expropriation. The dissent protested the extension of the act of state doctrine to actions of foreign sovereigns that violate interna- tional law.’ Courts of the United States have long recognized a duty to determine controversies on their merits, according to the applicable law which includes international law.? Our courts have never been required to pay unlimited deference to foreign acts of state. The Courts of other nations do not follow such an inflexible rule in the protection of their Exec- utive Branch. Furthermore, the adoption of such an inflexible 1376 U.S. at 442-44, n.2, discusses earlier cases invoking , the act - one ts 9 nga that those cases did not involve violations *U.S. CONSTI. art III, § 2, extends the judicial si troversies . . . between a State iti Gniiiel & p ieent fete Ciena a Fhe or the Citizens , and foreign psi v. Guyot, 159 U.S. 113, 163 (1895) declared that: nternational law, in its widest and most com i sense — including not only questions of right Seances ham — te governed , by what has been appropriately called the law of nations; but also questions arising under what is usually called private international law, or the conflict of laws, and concern- ing the rights of persons within the territory and dominion of >t wa ie ge send diane or or public, done within - dominions of another na‘.on— is part of our law, and page: ascertained and administered by the courts of justice, often as such questions are presented in litigation between man and man, duly submitted to their determination. B-7 rule is likely to cause as much embarrassment to the Exec- utive Branch as an adjudication on the merits. The Hickenlooper Amendment was enacted before the dis- trict court had entered judgment on remand. Subsequent to such enactment, the district court, in Banco Nacional de Cuba v. Farr, 243 F.Supp. 272 F.Supp. 836 (1965), held that the amendment applied to that case; held that the expropria- tion by the Cuban government violated international law; and dismissed the suit. The Second Circuit Court of Appeals affirmed, 383 F.2d 166 (1967), holding that the Hickenlooper Amendment did apply, that the amendment was constitu- tional, and that the Cuban expropriation violated interna- tional law. The Court of Appeals adopted a considerable portion of its prior determination in the case, 307 F.2d 845 (1962). The United States Supreme Court thereafter denied petition for certiorari in the case, 390 U.S. 956 (1968). Il. THE HICKENLOOPER AMENDMENT In the wake of reaction against Sabbatino, Congress passed the Hickenlooper Amendment. It became law on October 7, 1964, and was reenacted as permanent law in 1965. It reads as follows: Notwithstanding any other provision of law, no court in the United States shall decline on the ground of the federal act of state doctrine to make a determination on the merits giving effect to the principles of international law in a case in which a claim of title or other right 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 viola- tion of the principles of international law, including the principles of compensation and the other standards set out in this subsection: Provided, That this subpara- B-8 graph shall not be applicable (1) in any case i j an act of a foreign state is not contrary to een ret law or with respect to a claim of title or other right to property acquired pursuant to an irrevoca credit of not more than 180 days duration “ed opel faith prior to the time of the confiscation or other tak- ing, or (2) in any case with respect to which the Presi- dent 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 22 U.S.C. § 2370(e) (2). The Senate Report indicates that the amendment was meant to modify the Sabbatino decision and to achieve a reversal of presumptions as to the embarrassment caused the Executive Branch by judicial determinations on the merits of controversies that involve an act of state by a foreign sovereign.’ Under Sabbatino, courts were required to refuse adjudication of claims that involved passing on the validity of a foreign country’s act of state, presuming that such an adjudication would embarrass the Executive’s conduct of foreign policy. The Hickenlooper Amendment directs that courts shall adjudicate such claims, presuming that such an adjudication will not embarrass the Executive. This pre- sumption may be rebutted if the President determines that been ternational law. S. Rep. No. 1188, Part I, 88th Cong., 2d Sess. 24 (1964). B-9 application of the act of state doctrine is required in a par- ticular case by United States’ foreign policy interests.‘ Under the Hickenlooper Amendment, any court in the United States must determine the merits of controversies if (1) any party makes a claim of title or other right to prop- erty based upon or traced through a confiscation or taking, (2) the President has not filed with the court a suggestion that the application of the act of state doctrine is required by the foreign policy interests of the United States,’ and (3) that taking was by a foreign state in violation of the principles of international law. The amendment further directs that the determination be made “giving effect to the principles of international law.” Despite the majority’s as- sertion to the contrary, the statute does not require that the expropriated property itself be brought within the territorial jurisdiction of the United States. The amendment does apply Under the Sabbatino decision, the courts would presume that any adjudication as to the lawfulness under international law of the act of a foreign state would embarrass the conduct of foreign policy unless the President says it would not. Under the amendment, the Court would presume that it may proceed with an adjudication on the merits unless the President states officially that such an adjudication in the particular case would embarrass the conduct of foreign policy. Id. This is similar to the procedure followed by the Department of State currently regarding sovereign immunity claims. That Depart- ment makes a determination whether foreign governments’ claims of immunity should be granted in each case where a party seeks to raise the immunity issue. See Sabbatino, 376 U.S. at 469; 26 DEPT. STATE BULL. 984-985 (1952), Appendix 2, Alfred Dunhill of London, Inc. v. Cuba, 425 U.S. 682, 711-15 (1976). 5’ The Proviso clause of the amendment also exempts its applica- tion “in any case . . . with respect to a claim of title or other right to property acquired pursuant to an irrevocable letter of credit of not more than 180 days duration issued in good faith prior to the time of the confiscation or other taking.” B-10 to the proceeds of such property.* The Hickenlooper Amend- ment has been narrowly construed by the courts and has been restricted to fact situations closely in point to Sabba- tino. I would hold that the case at bar is in that class of cases encompassed by the amendment and that our courts are under a duty to make a determinati ti i contention. on on the me:zits of this A. Claim of title or other right to property. The majority has concluded that, under Lib does not have title to oil in strata, but only a ; ace right to that oil, and that therefore he has no claim to prop- erty as required by the Hickenlooper Amendment. I dis- agree. The Hickenlooper Amendment does not require proof * Although the amendment does not refer specifi roceeds, > . . . call cl at I rs iknded fo ely he orperty mont ble. case i involved th Pe expropriated property. The shipment of sugar steam ian Sahin 4 territorial jurisdiction of the United States. estimony before legislative committees during consi i the amendmen: rc t further r reflects Sie Gidiaban ‘Pacleoe tne Henkin, 7 lumbia r Regence SS ed 3 International Law, who testified against amendmen : “I do not think i spply except to nemcgoaty which was itself expropriated in Bsew | yb aggre prays W; or to that property so long as it is still identi- oe — change its form somewhat and still identify it.” = ign istance Act of 1965, Hearings on H.R. 7750 Before the : in ge Committee on Foreign Affairs, 89th Cong., Ist Sess. Part VII 1 70 (1906), Professor Ceci J. Olmstead stated “This [amendment gned after property or proceeds of i “—— illegally taken by the foreign state.” J Por iv, tied cases also reflect the understanding that the Hickenlooper 2d 433 (1968). See Banco Nacional de C } ] uba v. F j Bank of New York, 431 F.2d 394, 401-02 (2nd Cir 190) Bone acional de Cuba v. Farr, 383 F.2d 166 (2nd Cir. 1967). B-11 of title to property; it requires adjudication of controversies when “a claim of title or other right to property is asserted.” (Emphasis added). The amendment also requires that the determination be made giving effect to the principles of in- ternational law, not according to the law of the country that has just accomplished the confiscation. Significance has been attached to Congress’ addition of the words “to property” after the phrase “a claim of title or other right” when it reenacted the amendment and made it permanent in 1965. A close reading of the legislative his- tory surrounding the adoption of this amendment makes it clear that these words were added to assure the availability of the act of state doctrine as a defense in certain cases where American banks, insurance companies, and other fi- nancial institutions that have had reserves expropriated abroad might otherwise be susceptible to multiple liability.’ 7In 1964, the Hickenlooper Amendment was adopted as a tem- porary law with the understanding that it would be further con- sidered the following year. In 1965, after additional hearings, the Amendment became permanent law as part of the Foreign Assist- tance Act of 1965. Two significant changes were made. First, as noted, it was made permanent law. Second, the words “to prop- erty” were added as described above. The purpuse of that addition was explained in the Senate Report: The words “to property” have been inserted to make it clear that the law does not prevent banks, insurance com- panies, and other financial institutions from using the act of state doctrine as a defense to multiple liability upon any con- tract or deposit or insurance policy in any case where such liability has been taken over or expropriated by a foreign state. In such cases, it is not intended to effect any defense previously available to such institutions. (Emphasis added). S. Rep. No. 170 on S. 1837, 89th Cong., 1st Sess. 19 (1965). The change was also explained during testimony before the House by Professor Cecil J. Olmstead, Professor of International Law at the New York University School of Law, 1965 President of the American Branch of the International Law Association, as- (Continued on next page) B-12 This does not preclude the applicability of the amendment to cases where a contract has granted a party a claim of title or other right to certain tangible property that has been the subject of expropriation by a foreign sovereign. Furthermore, it has long been recognized that contract rights are a form of property protected by the Fifth Amendment. See United States Trust Co. v. New Jersey, 431 U.S. 1, 19, n. 16 (1977). The legislative history indicates that the case at bar pre- sents precisely the type of claim that was contemplated by Congress in the passac2 of the Hickenlooper Amendment. Professor Cecil Olmstead, one of the original authors of the amendment, expected the amendment to apply to contract rights when tangible property or goods claimed under a con- tract, or proceeds thereof, came into the United States: I would think that a contract right would [be cov- ered] because there is a property interest in the con- tractual right of course. We certainly intended a con- tractual right would be covered here. Of course, if there was a violation of a contract be- tween a U.S. investor and a foreign state and no pro- ceeds or goods or commodity from the enterprise came into the United States, there would never be an op- portunity for this amendment to work. (Continued from preceding page) istant to the Chairman of the Board of Texaco, Inc., and one of the original authors of the amendment, speaking on behalf of the Rule of Law Committee: : . [T]he amendment has been so drafted as not to affect the act of state doctrine defense when it is asserted by a party which does not derive a claim of title or right through an expropriation (e.g., U.S. bank defending a suit by depositors in a foreign branch that was expropriated or a U.S. insurance company defending a suit on foreign policies backed by re- serves that were expropriated abroad). Foreign Assistance Act of 1965: Hearings on H.R. 7750 Before the ya on Foreign Affairs, 89th Cong., 1st Sess. Part IV, B-13 Foreign Assistance Act of 1965, Hearings on H.R. 7750 Be- fore the House Committee on Foreign Affairs, 89th Cong., 1st Sess., Part IV, 608 (1965). Congressman Adair, sponsor of the original amendment in the House, explained its purpose in this manner: [The amendment] 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 inter- national law] may bring suit to assert his claim to the expropriated property if there is an attempt to market it in the United States. 110 CONG. REC. 23680 (1964). Even an opponent of the amendment, Professor Louis Henkin, admitted its applicability to this type of situation. In a letter submitted in response to a request during his tes- timony prior to the amendment’s reenactment, Henkin stated: So far as the Sabbatino amendment is concerned, it would apply also to expropriations of property owned by nationals of third countries. The famous expropriation by Iran of the Anglo-Iranian Oil Co. is a notable ex- ample. Presumably, if some of that oil had come to the United States, the British company might have traced it here and, under the Sabbatino amendment, an Amer- ican court would have had to decide whether the na- _ tionalization program of the Government of Iran was consistent with international law. (Emphasis added). Foreign Assistance Act of 1965, Hearings on H.R. 7750 Be- fore the House Committee on Foreign Affairs, 89th Cong., 1st Sess., Part VII, 1076 (1965). As recognized by the Second Circuit Court of Appeals in Banco Nacional de Cuba v. First National City Bank of New B-14 York, 431 F.2d 394, 402 (2d Cir. 1970), after studyi rk, 431 | , , ying the legislative intent behind this amendment: If one fact is clear from the legislative history, it is that this language [of the Hickenlooper Pew, a was designed to be invoked by American firms in order to afford them “a day in court” —and presumably a monetary recovery—when some other entity at- rer + peng the “yn perng firms’ expropriated perty and some aspect of such an attem action took place in this country. ica The majority cites four cases presumably as support for the holding that the Hickenlooper pene es is Hiaslsiio able because Hunt only acquired a contract right in the Con- cession Agreement. None of these cases, however, is directly on point, nor does any preclude a holding that a claim to property, granted by contract, is encompassed by the Hick- enlooper Amendment. Of the four cases cited, only one ac- tually involved a claim to tangible property that was ex- propriated and later brought into the United States. Although the scope of the act of state doctrine must be de- termined under federal law, see Sabbatino, 376 U.S. at 427, the majority has relied on two state court cases. The New York State Court of Appeals decision, French v. Banco Nacional de Cuba, 23 N.Y.2d 46, 242 N.E.2d 704, 295 N.Y.S.2d 433 (1968), is distinguishable from the case at bar. Plaintiff in that case was holding certain “certificates vf tax exemption” that the Cuban Government would no longer redeem. These certificates purported to allow the holder to convert pesos into United States dollars and to take those dollars out of Cuba without paying any exporta- tion tax. The New York Court found that French’s only loss was occasioned by a change in Cuban currency regulations B-15 and did not therefore constitute a taking of property.® Fur- thermore, French involved no expropriated property, or pro- ceeds thereof, brought into the United States. The plaintiff was seeking monetary recovery from an account maintained by Banco Nacional in New York City. The Hickenlooper Amendment was not intended to provide a remedy in this kind of situation. The Court did express, by obiter dicta, the opinion that the Hickenlooper Amendment would not apply to contract claims. The second state court case cited by the majority, Present v. United States Life Ins. Co., 232 A.2d 863, aff'd, 241 A.2d 237 (N.J. 1968), did not involve a taking of property as contemplated by the Hickenlooper Amend- ment, nor did it involve a violation of international law.” ® A legislator who reduces rates of interest or renders agree- ments invalid or incapable of being performed or prohibits exports, or renders performance more expensive by the im- position of taxes or tariffs does not take property. Nor does he take property if he depreciates currency or prohibits pay- ment in foreign currency or abrogates gold clauses. Expecta- tions relating to the continuing intrinsic value of all currency or contractual terms such as the gold clause are, like favor- able business conditions and good will, “transient circum- stances, subject to changes”, and suffer from “congenital in- firmity” that they may be changed by the competent legis- lator. They are not property, their change is not deprivation. Mann, Money in Public International Law, 96 Recueil Des Cours [1959] 1, 90, quoted in French v. Banco Nacional de Cuba, 242 N.E.2d at 710. ® Present involved a claim to life insurance proceeds made on a New York insurance company based on a policy sold by that company’s Cuban branch. That branch had been nationalized with all assets and liabilities assumed by the Cuban government. The plaintiffs were Cuban citizens at the time of the nationalization, ae to the United States, and brought the claim in the United tates. The court accurately pointed out that these persons had no claim to property that had been expropriated. In fact, when Cuba took over the insurance company, it expressly assumed the liabilities to the policy holders. The plaintiffs, however, had made no claim on the policy when they were still in Cuba. Furthermore, there B-16 Menendez v. Saks and Co., 485 F.2d 1355 (2d Cir. 1 cert. denied, 425 U.S. 991 (1976), followed ih United “on Supreme Court decision in First National City Bank v. Banco Nacional de Cuba, 406 U.S. 759 (1972), to avoid strict application of the act of state doctrine. The Court, in follow- ing that decision, concluded that “despite the act of state doctrine a counterclaim limited to the amount sought by the foreign sovereign was enforceable.” Menendez, 485 F.2d at 1373. The Court concluded that the Hickenlooper Amend- ment did not govern the counterclaim against Banco Na- cional and, in dicta, cited French, supra. The denial of cert- = by sno ge States Supreme Court in no way re- approval of the di i i Point nga cta regarding the Hickenlooper The only case cited that involved pro all - propriated and later brought into the tinted tf Occidental of Umm Al Qaywayn, Inc. v. Cities Service Oil Co., 396 F.Supp. 461 (W.D. La. 1975), dismissed in part, reversed in part, 577 F.2d 1196 (1978). Occidental sued (Continued from preceding page) was no violation of international law because the plaintiff page Ho Cuba at the time of the expropriation, Amin “gubject . ws enacted by Cuba — and all such laws were binding — P—ralirag upon their property and property rights.” Id. at applicable oad 7 ania alm phen are. . , en i plicability of the amendment to sane dietiea. sf seen hal 10 Menendez was a suit brought b i , y Cuban interventors (those Cubans Placed in control of expropriated cigar factories ns ex- propriation by the government) for sums owed by United States Pate Baia importers sough t an offset of moneys paid erron- yx a for cigars received before the expropriation occurred. cated above, the court allowed such offset, re- fusing apply the act of state doctrine to validate the inter- ventors repudiation of moneys owed the importers. B-17 Cities Service for the conversion of oil in three tankers, claiming that the oil had been produced from an area of the Persian Gulf in which Occidental held valid concession rights. Cities Service contended that it held the only val- id concession rights to the area in dispute. Each com- pany held a concession granted by one of the States bor- dering the Persian Gulf. The area covered by each con- cession was defined by the territorial waters of the State granting those rights. The boundary lines were in dispute between these governments, however, with each government claiming the area where this oil was produced. It was never clearly established that Occidental had valid concession rights in the area in dispute. The boundary dispute was the crucial factor that led the Fifth Circuit Court of Appeals to hold that the controversy between Occidental and Cities Service involved a political question and was therefore non- justiciable. 577 F.2d 1196. In light of that holding on appeal, I consider the portion of the district court’s opinion stating that the Hickenlooper Amendment does not apply to con- tract claims to be of no significant precedential value. Occidental is further distinguishable from our case at bar because of the applicability of the second proviso of the Hickenlooper Amendment. That proviso precludes applica- tion of the amendment when 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 suggesion to this effect is filed on his behalf in that case with the court.” A letter from the State Depart- ment was included in the Government’s amicus curiae brief in Occidental wherein the opinion was expressed that “it would be contrary to the foreign relations interests of the United States if our domestic courts were to adjudicate boundary controversies between third countries and in par- B-18 ticular that controversy involved here.” 577 F.2d at 1204, n. 13. Conversely, Hunt has produced expressions from the State Department supporting his pursuit of legal remedies in regard to the oil from the Sarir field, as will be discussed I do not find any of the cases above to be controlling in light of the clear Congressional intent, as discussed previous- ly, to include contractual rights to property within the ex- ception provided by the Hickenlooper Amendment. Indeed, I have been cited to no case, and have discovered no case, holding squarely that a claim to property, granted by con- tract, is not encompassed by the Hickenlooper Amendment. Finally, the amendment’s application is not restricted to cases where the plaintiff has asserted a claim of title or other right to expropriated property. Rather, the amendment re- quires a determination on the merits “in a case in which a claim of title or other right to property is asserted by any party .. - based upon (or traced through) a confiscation or other taking. . . .” Therefore, by its language, the Hicken- looper Amendment applies if either the plaintiff, or the de- fendant, claims title or right to property based upon a taking by a foreign country. Clearly, Coastal States, the defendant here, is a party claiming the right to oil from the Sarir field based entirely upon Libya’s taking of Hunt’s concession rights. In this case, therefore, both the plaintiff, Hunt, and the defendant, Coastal States, are asserting claims of right to property that was expropriated by Libya. B. Department of State’s Support of Hunt. The second proviso of the Hickenlooper Amendment ex- empts its application “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 B-19 policy interests of the United States and a suggestion to this effect is filed on his behalf in that case with the court.” This provision avoids the situation that concerned the United States Supreme Court in Sabbatino: that judicial determinations of parties rights might interfere with, or embarrass, the Executive Branch of the government.” There has been no such request filed with any court in this case. In fact, the Department of State has indicated its belief that the Hickenlooper Amendment was passed pre- cisely to permit American courts to entertain suits such as this, brought in pursuit of “hot” oil; that the nationalization of Hunt’s interest in the Sarir field by Libya violated inter- national law; and that wherever possible Hunt should be 11 The Department of State originally opposed the passage of the Hickenlooper Amendment. However, after the Hickenlooper Amendment was passed, the Department of State took the po- sition that the amendment was valid and constitutional. Banco Nacional de Cuba v. Farr, 383 F.2d 166, 181, n. 16 (1967). The State Department’s acceptance of the Hickenlooper Amend- ment post-Sabbatino is further shown in a letter from its Legal Advisor to the Solicitor General, and appended to the majority opinion in Alfred Dunhill of London, Inc. v. Cuba, 425 U.S. 682, 706-11 (1976): In general this Department’s experience provides iittle sup- port for a presumption that adjudication of acts of foreign states in accordance with relevant principles of international law would embarrass the conduct of foreign policy. Thus, it is our view that if the Court should decide to overrule the holding in Sabbatino so that acts of state would thereafter be subject to adjudication in American courts under inter- national law, we would not anticipate embarrassment to the conduct of the foreign policy of the United States. Id. at 710-11. The letter also refers to several recent decisions where courts of other aations have reviewed state acts under international law and noted that “As far as can be determined, this exercise of the judicial function in foreign jurisdictions has not caused serious a ye consequences for the countries concerned.” at ‘ B-20 supported in his pursuit of legal remedies."* It is apparent, therefore, that the Department of State has determined that adjudication of Hunt’s claim by the judicial branch Moray ag by the Department of State on policy on “hot” Question has been raised in testimony before the Subcom- tee on Foreign Relations about the policy of partmen of State in respect of “hot” tdpens ah Wha stones hat B-21 of our government will cause no serious harm or embarrass- ment to the conduct of foreign policy by the Executive Branch of our government. C. Violation of International Law The amendment also requires that the taking by the for- eign state be “in violation of the principles of international law, including the principles of compensation and the other (Continued from preceding page) find it appropriate to request courts in the United States to refrain from passing upon acts of the Libyan Government on grounds of “act of State.” (Emphasis added). UNITED STATES OF AMERICA’S NOTE VERBALE NO. 59, Presented to Ministry of Foreign Affairs of the Libyan Arab Republic dated July 5, 1973: . . . It is clear from those pronouncements [the speech by Chairman Qadhafi, see p. 24 infra, and the official com- mentary actompanying the law expropriating Hunt’s interest] that the reasons for the action of the Libyan Arab Republic Government against the rights and property of the Nelson Bunker Hunt Oil Company were political reprisal against the United States Government and coercion against the economic interests of certain other U.S. Nationals in Libya. Under established principles of international law, measures taken against the rights and property of foreign nationals which are arbitrary, discriminatory, or based on considerations of po- litical reprisal and economic coercion are invalid and not entitled to recognition by other states. LETTER, From William J. Casey, Under Secretary of State to G. Henry M. Schuler of Nelson Bunker Hunt, dated August 3, 1973: I am writing in response: to your letter of August 2, 1973 re- garding the nationalization on June 11, 1973 of Nelson Bunker Hunt’s rights and property in Libya. In your letter, you re- quested me to approve the release of the text of a diplomatic note transmitted by the U.S. Government to the Government of the Libyan Arab Republic on July 8, 1973, which contained our position with respect to the June 11 nationalization. . . . . .. I am enclosing the text of the substance of the note and will provide you with certified copies . . . as soon as they are available. We have no objection to your using this note in connection with any pending or proposed litigation or in any other way appropriate to the assertion of your legal rights to the nationalized property... . B-22 standards set out in this subsection.” The majority does not reach this question since it found the Hickenlooper Amendment inapplicable to the instant case on other grounds. Hunt contends that Libya’s expropriation violated inter- national law because it did not provide for prompt, ade- quate compensation and because it arbitrarily discriminated against him for a political purpose unrelated to any legiti- mate public interest. In my view, the Hickenlooper Amend- ment itself requires speedy compensation, equivalent to the full value of the expropriated prope:ty. The amendment refers to the “principles of compensation and the other standards set out in this subsection” as guidelines for the determination of the adequacy of com- “pensation. That subsection, 22 U.S.C. 2370(e) (1), requires the President to suspend assistance to any country expro- priating property owned more than 50% by the United States’ citizens if that government does not, within a rea- sonable time after the expropriation, take steps to discharge its obligations toward those citizens, “including speedy compensation for such property in convertible foreign ex- change, equivalent to the full value thereof, as required by international law. . . .” The statute, therefore, anticipates that United States’ citizens will receive the full value of their expropriated property and that such compensation will be forthcoming shortly after the expropriation takes place. Other authority indicates further that the United States expects compensation to its citizens for expropriated property to be reasonably prompt and to be for the full market value." 18 $188. Adequacy of Compensation (1) Compensation, to be adequate in amount within the mean- ing of $187, must be in an amount that is reasonable under B-23 It is uncontested that Hunt received no compensation from Libya until approximately two years after the expro- priation and that the compensation received at that time was limited to the net book value of the physical assets on the concession at the time of the nationalization. The na- tionalization decree purported to provide some measure of compensation to Hunt. However, ‘he amount of compensa- tion was to be determined by a committee appointed by Libya’s oil minister, with no provision for Hunt to produce evidence as to the value of his interest in the Sarir field. Further, the decree explicitly precluded any appeal from the committee’s decision. The Restatement of the Law (Second), Foreign Relations Law of the United States, § 185 (Continued from preceding page) , the circumstances . . . Under ordinary conditions, . . . the amount must be equivalent to the full value of the property —— together with interest to the date of payment. (Emphasis ). Restatement of the Law (Second), Foreign Relations Law of the United States, § 188 (1965). The President of the United States, in January 1972, drew attention to the importance which the United States attaches to respect for the property rights of its nationals. He stated that the policy of the United States concerning expropriatory acts includes the position that: “Under international law, the United States has a right to expect: — That any taking of American private property will be nondiscriminatory; — That it will be for a public purpose; and — That its citizens will receive prompt, adequate, and effective compensation from the expropriating country.” With regard to current or future expropriations of property or contractual interests of U.S. nationals, or arrangements for “participation” in those interests by foreign governments, the Department of State wishes to place on record its view that foreign investors are entitled to the fair market value of their interests. DEPARTMENT OF STATE PRESS RELEASE NO. 630, De- cember 30, 1975. B-24 (1965) states that the taking of property by a state is wrongful under international law if, among other things, “there is not reasonable provision for the determination and payment of just compensation.” Comment (e) elaborates on this requirement and explicitly refers to two elements of fairness which were denied Hunt: that an impartial tri- bunal or administrative authority determine his rights, and that he have a reasonable opportunity to obtain and pre- sent witnesses and evidence in his own behalf. I conclude that the compensation provisions of the nationalization de- cree were illusory and did not meet the requirements for adequate compensation. Coastal States points out that several countries notably Latin American and Communist countries, do not acknowl- edge any duty to provide compensation to aliens for ex- propriated property. There is also disagreement among in- ternational law experts as to whether something less than full market value may constitute adequate compensation. However, in the case at bar, we have the additional consid- eration that the property was seized as a means of politi- cal and economic retaliation against the United States. The retaliatory nature of Libya’s expropriation of Hunt’s interest in the Sarir field is clearly shown in the text of a speech given by Libyan Chairman Mu’ammar al-Qadhafi at a celebration marking the third anniversary of the closing of the United States Air Force Base at Wheelus: The United States, which has suffered defeats every- where, has not yet been taught the final lesson, espe- cially when we see it being quarrelsome ia the Arab world and completely siding with Israel . . . we say with a loud voice that this United States needs to be given a big hard blow on its cold insolent face in the Arab area. B-25 U.S. policy, brothers, is going to lead to a catastrophe for U.S. interests in the Arab area in particular. The time has come for the Arab peoples to confront the United States. The time has come for the U.S. interests to be threatened earnestly and seriously in the Arab area, regardless the cost . .. The United States is still scorning the Arab nation and its rights. It is continu- ously giving Israel the most modern arms to enable it to humiliate the Arab nation or to conquer at its will or to remain unjustly in the occupied territory. Also, U.S. (arrogance) is now manifested in the attitude of the oil companies . . . However, the time may come, if it has not already come, for the serious and dangerous confrontation to take place —a confrontation the cost of which we must bear — with the oil companies and with the entire U.S. imperialism. On this occasion, the RCC of the Libyan Arab Repub- lic has decided to nationalize the American oil company Bunker Hunt. (Emphasis added). There is generally a consensus among authorities that an uncompensated expropriation, wher: done as an act of re- taliation, is contrary to international law. The Second Circuit Court of Appeals reviewed such authorities and concluded: Unlike the situation presented by a failure to pay ade- quate compensation for expropriated property when the expropriation is part of a scheme of general social improvement, confiscation without compensation when the expropriation is an act of reprisal does not have significant support among disinterested international commentators from any country. And despite our best efforts to deal fairly with political and social doctrines vastly different from our own, we also cannot find any reasonable justification for such procedure. Peacetime seizure of the property of nationals of a particular coun- try, as an act of reprisal against that country, appears to this court to be contrary to generally accepted prin- ciples of morality throughout the world. B-26 Banco Nacional de Cuba v. Sabbatino, 307 F.2d 845, 866 (1962), reaffirmed in Banco Nacional de Cuba v. Farr, 383 F.2d 166, 183, cert. denied, 390 U.S. 956 (1968). I agree with the reasoning of the Second Circuit Court of Appeals and would hold that the expropriation of Hunt’s interest in the Sarir field by Libya was without prompt, adequate compen- sation; that the expropriation was in retaliation against the United States; and that for these reasons the expropriation violated international law. I would reverse the summary judgment against Hunt and remand his suit against Coastal States for a determination on the merits. Chief Justice Greenhill and Justice Franklin Spears join. OPINION DELIVERED: June 13, 1979 C-1 APPENDIX C Affirmed, and Opinion filed August 23, 1978. No. 1809 NELSON BUNKER HUNT, ET AL, Appellants-A ppellees vs. COASTAL STATES GAS PRODUCING COMPANY, ET AL, Appellees-Appellants Appeal from 133rd District Court of Harris County Nelson Bunker Hunt, Herbert Hunt and Lamar Hunt (collectively referred to as “Hunt’”) originally instituted a suit for conversion against Coastal States Gas Producing Company and Coastal States Marketing, Inc. (collectively referred to as “Coastal States”) claiming that Coastal States had converted oil to which Hunt was entitled by virtue of a concession agreement with Libya. Coastal States answered and filed a counterclaim for tortious interference with its contract and business opportunities. Coastal States moved for summary judgment on Hunt’s claim. Hunt moved for summary judgment only on the issue of liability in the origi- nal suit and for a general summary judgment against Coastal States on Coastal States’ counterclaim. The trial court granted Coastal States’ motion for summary judgment in C-2 the original suit and Hunt’s motion for summary judgment on the counterclaim. Both sides appeal. In 1957 Libya granted a concession (Concession Number 65) to Nelson Bunker Hunt. The concession gave Hunt the right, for fifty years, to explore, drill and extract oil. Subse- quently, Herbert Hunt and Lamar Hunt acquired an interest in the concession pursuant to an agreement with Nelson Bunker Hunt. In 1960, with the approval of the Libyan gov- ernment, the Hunts assigned a one-half undivided interest in the concession to British Petroleum Exploration Com- pany, Limited. In 1961 oil was discovered in the concession (hereinafter called the Sarir field). Oil was produced in marketable quan- tities by 1967. In 1971, the Libyan government nationalized the operations and interest of British Petroleum in the Sarir field and transferred its rights to the Arabian Gulf — tion Company (AGECO). In 1973, the Libyan government, by the enactment of Libyan Law Number 42, nationalized Hunt’s interest in the Sarir field. Article 1 of Libyan Law Number 42 provides: The rights of Nelson Bunker Hunt in Oil Concession Agreement No. 65 shall be nationalized, and ownership of all the funds, rights, assets and shares of Nelson Bun- ker Hunt in the said concession shall revert to the State, including specifically all the rights relating to the instal- lations and facilities for prospecting, exploration and drilling for, and production of, crude oil and natural gas, as well as for transportation, processing, storage and export, and other assets and rights relating to the said concession. Hunt’s rights and assets were then transferred and assigned to AGECO. Hunt subsequently published notices in news- papers throughout the world claiming that the Libyan na- C-3 tionalization of the Sarir field violated international law and was of no effect, and additionally threatened suit against anyone who came into possession of Sarir oil. In May 1973, approximately the time the nationalization decree was issued, Coastal States entered into a contract with AGECO to pur- chase oil from the Sarir field. The oil was then transported to a refinery in Italy. This contract was consummated and performed despite Hunt’s claims against Libya. Hunt ulti- mately settled his claims against Libya in May 1975. In that agreement, Hunt released any and all claims against the Li- byan government which arose out of the nationalization of the Sarir field. Hunt was paid approximately $19,000,000.00 as consideration. In August, 1973 Hunt instituted this suit against Coastal States for conversion of the Sarir field oil. Hunt claimed that the Libyan government confiscated his property in violation of: (1) the concession agreement between the parties; (2) international law; and (3) the public policy of the United States and that such an illegal confiscation could not and did not affect Hunt’s rights to recover against subsequent converters of oil from the Sarir field. Hunt claimed that Coastal States acquired the petroleum from the Sarir field and exercised dominion and control over such oil with full knowledge of and inconsistent with Hunt’s possessory rights, title and interest. Coastal States counterclaimed against Hunt for tortious interference with Coastal States’ contrac- tual relations and business opportunities. At a pre-trial hearing both Hunt and Coastal States called experts in international] and foreign law who expressed their opinions regarding the application of Libyan and interna- tional law to the facts presented in this case. Following the hearing, the parties submitted motions for summary judg- ment. C-4 In October 1977 the trial court entered its final judgment, granting Coastal States’ motion for summary judgment on Hunt’s conversion claim, denying Hunt’s motion for sum- mary judgment on the issue of liability and granting Hunt’s motion for summary judgment on Coastal States’ claim for tortious interference with Coastal States’ contracts and busi- ness opportunities. The trial court additionally filed conclu- sions of law stating that Libyan law determined the interest acquired by Hunt in the Sarir field, and, under Libyan law, Hunt did not acquire title to the oil, but merely a contract right to extract the oil. The trial court also found that the Act of State Doctrine applied to this case and foreclosed the trial court from inquiring into the validity of the Libyan na- tionalization of Hunt’s interest in the Sarir field, and, no ex- ception to this doctrine was applicable. Regarding Coastal States counterclaim for tortious interference, the court held that, as a matter of law, Hunt’s actions in giving notice of his claim to oil from the Sarir field did not violate either state or federal law, and his actions in giving such notice were neither malicious or capricious. Both parties appeal from the judgment rendered by the trial court. APPEAL BY HUNT Hunt asserts seven points of error attacking the trial court’s findings as to the applicability of the Act of State Doctrine, the applicability of Libyan law rather than interna- tional law, and its findings that Hunt had only a contractual right to extract the oil. Since Coastal States’ possession of the oil is clearly right- ful, and does not constitute a conversion, if its transferor’s title was good, the critical issue in the resolution of Hunt’s whole suit is whether Libya’s expropriation was valid. This, C-5 in turn, presents the question of whether a Texas court may inquire into the acts done by a foreign sovereign. Such in- quiry is generally barred by the Act of State Doctrine. In his first two points Hunt asserts four reasons why the Act of State Doctrine, which bars inquiry into the validity of the actions of an expropriating nation, should not apply to the Libyan nationalization in this case: (1) the State De- partment has expressed its views that the Libyan national- ization was violative of international law and it would be unlikely that the executive branch would request American courts to refrain from considering the validity of the acts of Libya on the grounds of the Act of State Doctrine (the Bernstein exception); (2) Libya, by nationalizing the oil field and marketing the petroleum in international commerce did not act officially as a sovereign (the commercial act ex- ception) ; (3) the Hickenlooper amendment, designed to un- dercut the Act of State Doctrine is applicable; and (4) Li- bya and Hunt, parties to the concession agreement, included an “applicable law” clause in the concession agreement which is unambiguous and these terms should be given effect re- gardless of the Act of State Doctrine. For reasons discussed herein, we affirm the summary judg- ment against Hunt. THE ACT OF STATE DOCTRINE The Act of State Doctrine is a judicially created doctrine of restraint. The classic formulation of that doctrine was restated in Banco Nacional de Cuba v. Sabbatino: Every sovereign state is bound to respect the indepen- dence of every other sovereign state, and the courts of one country will not sit in judgment on the acts of the government of another, done within its own territory. Redress of grievances by reason of such acts must be C4 obtained through the means open to be availed of by sovereign powers as between themselves. 376 U.S. 398, 416; 84 S. Ct. 923, 934 (1964) quoting Underhill v. Hernandez, 168 U.S. 250, 252, 18 S. Ct. 83, 84 (1897). Hant claims under his second point that the Bernstein ex- ception to this doctrine applies ‘and permits judicial inquiry into the validity of the Libyan nationalization. See Bernstein v. N. V. Nederlandsche-Amerikaansche Etc., 210 F.2d 375 (2d Cir. 1954). We disagree. It is highly questionable whether there is such an excep- tion. In First National City Bank v. Banco Nacional de Cuba, Justice Rehnquist defined and analyzed the Bernstein excep- tion and concluded: [That where the Executive Branch, charged as it is with primary responsibility for the conduct of foreign affairs, expressly represents to the Court that applica- tion of the act of state doctrine would not advance the interests of American foreign policy, that doctrine should not be applied by the courts. In so doing, we of course adopt and approve the so-called Bernstein excep- tion to the act of state doctrine. 406 U.S. 759, 768, 92 S. Ct. 1808, 1813 (1972). However, the dissent, comprised of four justices, pointed out that only Chief Justice Berger and Justice White concurred with Jus- tice Rehnquist. Tyo additional justices concurred with Jus- tice Rehnquist only in result. The dissent explicitly rejected the Bernstein exception and reasoned that the validity of a foreign act of state is a “political question not cognizable in our courts.” 406 U.S. at 787-88, 92 S. Ct. at 1823. Addition- ally, Justice Powell, in his concurring opinion disapproved of the Bernstein exception. I would be uncomfortable with a doctrine which would require the judiciary to receive the Executive’s permis- C-7 sion before invoking its jurisdiction. Such a notion, in the name of the doctrine of separation of powers, seems to me to conflict with that very doctrine. 406 U.S. at 773, 92 S. Ct. at 1816. Therefore, we conclude that the Bernstein exception is no longer viable, and we do not consider whether the expressions of the State Depart- ment regarding the Libyan nationalization were sufficient expressions to the court. See Alfred Dunhill of London uv. Republic of Cuba, 425 U.S. 682, 725, 96 S. Ct. 1854, 1875-76 (1976) (dissenting opinion); Menendez v. Saks and Com- pany, 485 F.2d 1355, 1373 (2d Cir. 1973) rev’d on other grounds sub nom., Alfred Dunhill of London v. Republic of Cuba, 425 U.S. 682, 96 S. Ct. 1854 (1976). See also Hunt v. Mobil Oil Corp. 550 F.2d 68, 77-79 (2d Cir. 1977). Further- more, we decline to give credence to the exception due to the separation of powers rationale enunciated in Justice Harlan’s opinion in Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 84 S. Ct. 923 (1964) and in Justice Powell’s concurring opinion in First National City Bank v. Banco Nacional de Cuba, 406 U.S. 759, 773-76, 92 S. Ct. 1808, 1816-17 (1972). Hunt’s second contention in his first point of error is that when a foreign government engages in a “commercial” ac- tivity, such as Libya’s conduct with regard to the Sarir field, the Act of State Doctrine does not apply and a court can inquire into the validity of the nationalization decree. In Hunt’s brief, he directs this court to consider language from Alfred Dunhill of London v. Republic of Cuba: [W]e are nevertheless persuaded by the arguments of petitioner and by those of the United States that the concept of an act of state should not be extended to include the repudiation of a purely commercial obliga- tion owed by a foreign sovereign or by one of its com- cercial instrumentalities. Our cases have not yet gone so far, and we decline to expand their reach. ... C-8 425 U.S. 682, 695, 96 S. Ct. 1854, 1861 (1976). The afore- mentioned language is authorized by Mr. Justice White. However, upon examination of Dunhill, we conclude that this language is not the language of a majority of the Su- preme Court and the validity or existence of this exception is likewise doubtful. But, in any event, when a foreign state has exercised a sovereign power, as Libya did here, it is a governmental, and not a commercial, act. Alfred Dunhill of London v. Republic of Cuba, 425 U.S. 682, 720, 96 S. Ct. 1854, 1873 (1976) (dissenting opinion). See Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 84 S. Ct. 923 (1964) ; Hunt v. Mobil Oil Corp., 550 F.2d 68 (2d Cir. 1977). : In Hunt’s second point, he claims that the trial court com- mitted error when it refused to apply the Hickenlooper amendment to obviate and avoid the Act of State Doctrine. The Hickenlooper amendment (sometimes referred to as the Sabbatino amendment) was enacted by Congress in reaction to the Sabbatino holding. The pertinen: portions state that: [N]o court in the United States shall decline ground of the federal Act of State Doctrine to bag determination on the merits giving effect to the prin- ciples 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 . . . based upon (or) traced through) a confiscation or other taking... . by an act of that state in violati inci 7 Ss cl on of the principles of 22 U.S.C. § 2370 (e) (2). We recognize at the outset that this exception is extremely narrow. Occidental of Umm Al Qay, Inc. v. Cities Serv. Oil Co., 396 F. Supp. 461, 471 (W.D. La. 1975) ; Occidental Petroleum Corp. v. Buttes Gas & Oil Co. 331 F. Supp. 92, 112 (C.D. Cal. 1971), aff'd, 461 F.2d 1261 (9th Cir. 1972), cert. denied, 409 U.S. 950, 93 S. Ct. 272; C-9 United Mexican States v. Ashley, 556 S.W.2d 784, 786 (Tex. Sup. 1977). Three elements must exist in order to avoid the Act of State Doctrine under the Hickenlooper amendment. First, expropriated property must come within the territorial jurisdiction of the United States. Second, the act of the expropriating nation must be in violation of international law. Third, the asserted claim must be a claim of title or other right to property. Without considering the merits of the first two require- ments we conclude that the Hickenlooper amendment is inapplicable to this case because Hunt acquired only a con- tract right in the concession agreement. See Occidental of Umm Al Qay., Inc. v. Cities Serv. Oil Co., 396 F.Supp. 461, 472 (W.D. La. 1975); French v. Banco Nacional de Cuba, 295 N.Y.S.2d 433, 448 (N.Y. Ct. App. 1968). There was some disagreement among the testifying ex- perts as to whether, in construing the contract, international law or Libyan law applied. But international law does not govern the nature of the rights conferred by the contract. Under well established Texas conflict of laws rules, Libya substantive law governs the interpretation and construction of the concession agreement. This is true whether the oil is characterized as personalty or realty since Libya is both the place of the contract’s execution and performance and the location of its subject matter. Cantu v. Bennett, 39 Tex. 304 (1873); see Austin Building Co. v. National Union Fire Ins. Co., 432 S.W.2d 697 (Tex.Sup. 1968) (personalty) ; Colden v. Alexander, 171 S.W.2d 328 (Tex.Sup. 1943) (real- ty). Although expert witnesses called by the parties also dif- fered on the meaning and effect of the applicable law, the law is explicitly stated and clear. Libyan Petroleum Law Number 25 of 1955 provides: C-10 (1) All persons in Libya in its natural state in strata is the property of the Libyan State. (2) No person shall explore or prospect for, mine or produce petroleum in any part of Libya, unless au- herp by a permit or concession issued under this Ww. The original agreement executed in 1957 provided, in clause 1, that: vee the Commission hereby grants to the Company, subject to the conditions hereof and the provisions of the Law, the exclusive right for a period of . . . fifty - ++ years to carry out geological investigations, in- cluding aerial surveys, and to search for by any other means, bore for, and extract petroleum within and over the area outlined in red on the map annexed hereto of approximately . . . 32944 ooo. square kilo- metres situated in the ................. OR AE Pa? Zone bounded and defined... . The Company shall also have the right to take away such petroleum whether by pipeline or otherwise from the concession area and to use, process, store, export and dispose of the same. Clause 29 of that agreement, titled “Interpretation,” states that the “Law” means the Petroleum Law of 1955. Further, the amended agreement voluntarily entered into by Hunt and Libya in January 1966, approximately five years before Libya’s gradual nationalization of the Sarir field, and after oil had been discovered, again specifically refers to and is governed by Petroleum Law Number 25 of 1955. Clause 16 of that agreement states: (1) The ae oanageay pag Aen take all the steps necessary to ensure that pany enjoys all the rights conferred by the Concession. The contractual rights expressly created by this concession shall not be altered except by mutual consent of the parties. C-11 (2) This Concession shall throughout the period of its validity be construed in accordance with the Petro- leum Law and the Regulations in force on the date of the execution of the agreement of amendment by which this paragraph 2 was incorporated into this concession agreement. Any amendment to or repeal of such Regulations shall not affect the contractual rights of the Company without its consent. This language is significant in that it not only refers to Hunt’s rights as “contractual” but also recognizes Libya’s ownership of the oil. As this court has recently had occasion to point out, phrases in important, multimillion dollar con- tracts are not inserted loosely, and it is presumed that the parties to such an agreement were aware of the significance and effect of each word agreed upon. See City of Houston v. R. F. Ball Construction Company, Inc., Docket No. 1750 (Tex.Civ.App. — Houston [14th Dist.] July 12, 1978). Hunt argues that it is clause 28(7) of the concession agreement, not clause 29 or clause 16, that governs the rights of the parties, and, under that clause international law applies. Clause 28(7) reads: This Concession shall be governed by and interpreted in accordance with the principles of law of Libya com- mon to the principles of International Law and in the absence of such common principles, then by and :n ac- cordance with the general principles of law, including such of those principles as may have been applied by international tribunals. This clause, however, deals solely with arbitration. It speaks not to the nature of the rights granted and acquired under the concession agreement, but merely to the enforce- ment of those rights following a breach of the agreement; it deals with remedies, not substantative rights. In this C-12 regard we agree with the analysis offered by K. Lipstein in 29 Transactions of the Grotius Society, Conflict of Laws Before International Tribunals (II), 55-56 (1943): First, the tribunal must decide whether a private party interest exists in the light of domestic law and in whom such interest is vested. Secondly; once the preliminary investigation has estab- lished the existence of a private law right, the tribunal must determine whether the violation of the right acquired under municipal law constitutes an illegal act under international law. Libyan Law Number 42 did expropriate the physical assets of Hunt but Libya never relinquished its ownership of the oil, and consequently cannot have expropriated it from Hunt. While Libya’s actions presumably constituted a breach of the concession agreement with Hunt, they do not amount to a confiscation of the oil since Hunt never acquired a valid claim of title or other right in the un- severed oil but only a right to the oil whic Hunt extracted. Therefore, the Hickenlooper amendment does not apply and the Act of State Doctrine precludes judicial inquiry into Libya’s actions. See Occidental of Umm Al Qay., v. Cities Serv. Oil Co., 396 F. Supp. 461, 472 (W.D. La. 1975); French v. Banco Nacional de Cuba, 295 N.Y.S.2d 433, 448-49 (N.Y. Ct. App. 1968). The fourth exception which Hunt asserts in an attempt to avoid the application of the Act of State Doctrine is that it simply does not apply when the private enterprise and expropriating country have jointly executed an unambiguous agreement which enunciates controlling legal principles. Hunt points to the “applicable law” clause (clause 28 (7) ) in the 1957 concession agreement, and then directs this C-13 court to language in Banco Nacional de Cuba v. Sabbatino, in which Hunt claims that the Act of State Doctrine does not apply: [T]he Judicial Branch will not examine the validity of a taking of property within its own territory by a foreign sovereign government, extant and recognized by this country at the time of suit, in the absence of a treaty or other unambiguous agreement regarding controlling legal principles, even if the complaint al- — that the taking violates customary international w. 876 U.S. 398, 428, 84 S. Ct. 923, 940 (1964). We have ex- amined subsequent cases which cite the aforementioned language and conclude it is unclear what type of “unam- biguous agreement” the opinion refers to. However, we conclude that this language is inapplicable to this case since, as we have held, Libya did not expropriate property (the oil) from Hunt. We have examined all of Hunt’s points of error and, hav- ing concluded that the Act of State Doctrine bars judicial inquiry into the validity of Libya’s actions, the trial court’s grant of summary judgment against Hunt on his claim for conversion is hereby affirmed. APPEAL BY COASTAL STATES Coastal States, in its nine points of error, claims that the trial court erred when it granted Hunt’s motion for summary judgment on Coastal State’s claims of tortious interference with its contract and business opportunities. We have considered these points and they are hereby overruled. An essential element to the claims for tortious interference with contractual relations and business relations is that the C-14 defendant’s acts must have no legal justification. We have examined the record and conclude that as a matter of law Hunt’s actions were legally justified and there is no genuine issue of fact on this essential element. See Gibbs v. General Motors Corporation, 450 S.W.2d 827 (Tex.Sup. 1970). The trial court concluded that Hunt had a contractual interest in the Sarir field at the time of nationalization. This interest was repudiated by Libya and the record clearly shows that Hunt instituted litigation against various corpo- rations in the international community due to their dealings in Sarir oil and additionally apprised corporations of his intent to file suit if indeed they dealt with such oil. How- ever, these actions were legally justified due to the repudia- tion of the concession agreement. See Terry v. Zachry, 272 S.W.2d 157 (Tex.Civ.App.—San Antonio 1954, writ ref’d n.r.e.). See also St. Joseph Pro Bldg. Corp. v. American Nat. Ins. Co., 511 S.W.2d 578 (Tex.Civ.App. — Houston [14th Dist.] 1974, writ ref’d. n.r.e.). The court properly granted Hunt’s motion for summary judgment on Coastal States’ claims of tortious interference with business contracts and business relations; there is no genuine issue of fact regarding the essential element of no legal justification. The trial court’s judgment is affirmed. Judgment rendered, and Opinion filed August 23, 1978. C-15 JUDGMENT NELSON BUNKER Hunt, Et AL vs. No. 1809 CoastaL States Gas Propucinc ComMpaNy, Er AL “This cause, being an appeal from the judgment rendered and entered by the court below on October 24, 1977, came on to be heard on the transcript of the record, and the same being inspected, because it is the opinion of this Court that there is no error in the judgment, it is therefore considered, adjudged and ordered that the judgment of the court below be affirmed in all things. It is further ordered that the ap- pellants, Nelson Bunker Hunt, Herbert Hunt and Lamar Hunt, and their surety, Lawyers Surety Corporation, pay all costs incurred by them by reason of this appeal. It is further ordered that appellants, Coastal States Gas Pro- ducing Company and Coastal States Marketing, Inc., and their surety, Highlands Insurance Company, pay all costs incurred by them by reason of this appeal. It is further ordered that this decision be certified below for observance.” D-1 APPENDIX D IN THE DISTRICT COURT OF HARRIS COUNTY, TEXAS 133RD JUDICIAL DISTRICT No. 952,564 NELSON BuNKER Hunt, HErBertT HUNT AND LAMAR HuNT Us. CoasTaL States GAS PRODUCING ComPANY, et al FINAL JUDGMENT CaME ON the above entitled and numbered cause wherein Nelson Bunker Hunt, Herbert Hunt and Lamar Hunt (here- inafter collectively called “Hunt”) are plaintiffs and counter- defendants and Coastal States Gas Producing Company and Coastal States Marketing, Inc. (hereinafter collectively called “Coastal States”), are defendants and counter- claimants, for hearing on the motions of both plaintiffs and defendants for summary judgment, and came all parties by and through their counsel of record and announced to the Court that each waived any and all time requirements regarding the filing and service of motions for summary judgment and that they were ready to proceed with hearing on such motions. The Court, having considered the motion, the summary judgment record, the arguments, briefs and D-2 evidentiary presentations of law by the parti i ry pr parties, and being fully advised in the premises does make and enter the fol- lowing conclusions of law: : i. Libyan law determines the interest acquired by Hunt i Concession No. 65. is ences 2. Under Libyan law, Hunt did not acquire title to petro- leum in strata underlying the area of Concession No. 65 by said Concession Agreement, but only a contractual right to extract such petroleum. 3. The Libyan Nationalization Decree (Law No. 42 of 1973) did not take from Hunt any interest in or title to crude oil that Coastal States purchased from Libya pursuant to the re (“AGECO”) dated May 2, 1973 and the contract een Ashland Oil Company of California and AGECO dated April 11, 1973. 4, Nothing taken from Hunt by the said Nationalization Decree was purchased by Coastal States from Libya pur- suant to said contracts. 5. The Act of State Doctrine applies to foreclose the Court from inquiring into the validity of said Libyan Nationaliza- tion Decree. 6. No exception to the Act of State Doctrine applies in this case, D-3 7. Plaintiffs are not entitled to recover against Coastal States. 8. Hunt’s actions in giving notice of his claim to oil produced from Concession No. 65 (the Sarir Field) following the Libyan confiscation, by newspaper and otherwise, was not in violation of the law and public policy of the State of Texas and of the United States of America. 9. Hunt’s actions in giving such notice were not malicious or capricious. It is noted by the Court that there is a suit between the parties pending in the United States District Court for the Southern District of Texas, Houston Division under Cause No. 74-H-1422. It has been represented to the Court that such action is based upon the United States Antitrust Laws, and in making and entering the above and foregoing conclusions of law, this Court has not considered and does not purport to pass upon the legality of any action of the parties, or any of them under or in light of the United States Antitrust Laws. Accordingly, it is OrperED, ADJUDGED AND DecreeEpD that the motion for sum- mary judgment of Hunt that Coastal States take nothing against Hunt by reason of Coastal States’ counterclaim is granted, and judgment is hereby rendered that Coastal States take nothing of and against Hunt by reason of its counterclaim. It is further OrperepD, ADJUDGED AND Decreep that Coastal States’ motion for summary judgment that Hunt take nothing D-4 against Coastal States by reason of Hunt’s action is granted, and judgment is hereby rendered that Hunt take nothing of and against Coastal States. It is further Orperep, ADJUDGED AND Decreep that Hunts’ motion for summary judgment that it be granted judgment against Coastal States for its damages or in the alternative partial summary judgment establishing the liability of Coastal States to Hunt be and hereby is denied. Dong and ENrerep this 24th day of October, 1977. PPS SEH EEE ESSERE SESESEESESESESEESESOSESESE E-1 APPENDIX E IN THE DISTRICT COURT OF HARRIS COUNTY, TEXAS 133RD JUDICIAL DISTRICT NELSON BUNKER HUuNT, et al vs. CoasTAL STATES GaAs PRODUCING COMPANY ORDER On November 15, 1976, the above styled and numbered cause was called for trial and each of the parties hereto having announced ready, such cause was and has been convened. It appearing, however, that certain additional hearings, determinations, and discovery should be completed prior to jury selection herein and in the interest of the orderly administration of this case, the Court, with the concurrence of counsel for all parties, does hereby make the following order: I, SETTING OF PRELIMINARY HEARING 1. The Court hereby sets for hearing beginning Decem- ber 6, 1976 and continuing from day to day thereafter until completed, without the intervention of a jury, the deter- mination of all questions of international, foreign or domes- tic law presented by this litigation. E-2 2. At such hearing, each of the parties shall be entitled to tender for examination, cross-examination, and examina- tion by the Court, such experts on questions of international or foreign law as they may desire and may submit to the Court such written briefs or memoranda of law as they may believe to be helpful to the Court in determination of the questions therein presented. 3. At such hearing, expert witnesses shall be presented, first, by Hunt, et al., and second by Coastal States Gas Producing Company, with each party thereafter to present such rebuttal testimony as they desire in the same order. Il. LEGAL ISSUES TO BE DETERMINED The following are the legal issues to be determined at the hearing set in Section I, above, as delineated by each party hereto, together with such subsidiary issues as may seem reasonable or proper to the determination of such issues: (1) The issues as tendered by Hunt are: (a) Whether under pertinent choice-of-law and other rules of Texas and the United States international law governs the construction and application of Concession 65 and the rights of Hunt and the Government of Libya thereunder. (b) Whether international law is a part of the law of the United States and of the State of Texas. (c) What the sources are to which courts in the United States must refer to determine the principles of inter- national law to be applied by them. (d) Whether international law determines the validity or legality of the Libyan expropriation of the interest ef Hunt in Concession 65. (e) Whether, under international law or U.S. Federal law, the expropriation of the interest of Hunt in Con- E-3 cession 65 was an arbitrary and wrongful breach of contract which did not affect the property rights pre- viously granted by it to Hunt. (f) Whether, under international law, the expropria- tion of Hunt’s interest in Concession 65 was wrongful if it was done to effect a political reprisal rather than to effect a legitimate public purpose related to the internal needs of Libya. (g) Whether, under international law, the expropria- tion of Hunt’s interest in Concession 65 was an act of political reprisal. (h) Whether, under international law, the Libyan ex- propriation of Hunt’s interest in Concession 65 was wrongful if it was discriminatory rather than general in application. (i) Whether, under international law, the expropria- tion of Hunt’s interest in Concession 65 was discrimina- tory. (j) Whether, under international law, the expropriation of Hunt’s interest in Concession 65 was illegal if it failed to provide for prompt, adequate and effective compensation. (k) Whether, under international law, the expropria- tion of Hunt’s interest in Concession 65 did fail to pro- vide for prompt, adequate and effective compensation. (1) Whether, under established U. S. public policy, when a foreign petroleum concession is expropriated in violation of international law as applied by the United States, the United States favors and supports actions taken by the victim to protect its rights by notifying prospective purchasers of its claim to continued owner- ship of petroleum taken from the expropriated conces- sion and to initiate legal action in the United States against a purchaser of the petroleum or its products to recover the goods or their proceeds? E-4 (m) Whether the courts of the State of Texas follow the public policy of the United States in matters per- taining to foreign expropriations. (n) Whether under international law, if the expropria- tion were invalid for any of the foregoing reasons, Hunt’s rights to the property in question, i.e., Sarir oil, its products and proceeds, are superior to the rights, if any, acquired by Coastal as a result of its purchases of oil from the Government company of the Libyan Arab Republic following such expropriation. (0) Whether, under international law, an appropriate remedy for the protection of Hunt’s rights under Con- cession 65 was a Texas action for conversion. (p) Whether the Act of State Doctrine applies to a government taking in contravention of a concession agreement and, more particularly, the taking of Hunt’s rights under Concession 65. (q) Whether, if the Act of State Doctrine would other- wise apply, the Hickenlooper Amendment nevertheless requires the Court to pass upon the validity of the ex- propriation of Hunt’s interest in Concession 65. (r) Whether, under international law, the payment made pursuant to the Agreement of May 19, 1975 con- stituted prompt, adequate, and effective compensation for oil theretofore wrongfully taken and sold by the Libyan Government to Coastal. (s) Whether, under applicable law, Coastal was re- leased by Hunt by such Agreement. (2) The issues as tendered by Coastal are: (a) Whether Libyan law determines what rights were acquired under the Concession Agreement. (b) Whether, under Libyan law, Hunt (and his as- signee BP) never obtained title or property right in and to the Sarir crude extracted by Arabian Gulf Ex- ploration Company. —- ae —_S musi E-5 (c) Whether, if Hunt never acquired title or property right to the Sarir crude extracted by Arabian Gulf Ex- ploration Company, rules of international law relating to the conditions under which title or property rights may be taken from aliens are irrelevant. (d) Whether, under the applicable law, Hunt relin- quished any rights he may have had against Libya and Coastal States by his Settlement Agreement with the Government of Libya. (e) Whether the acts of the Libyan Government of December 7, 1971, and June 11, 1973 were acts taken by the Government within its own territory and the Act of State Doctrine precludes this Court from exam- ining the validity and effectiveness of such acts. (f) Whether, if the title of Coastal States and Market- ing is not based upon or traced through a confiscation or other taking of crude oil, the Hickenlooper Amend- ment does not apply to allow this Court to examine the validity and effectiveness of the measures taken by the Libyan Government within its own territory even if those measures would be in conflict with the principles of international law. Il. STIPULATIONS OF DOCUMENTARY EVIDENCE The parties have stipulated as to the relevance, admissi- bility, and authenticity of the following documents, for the purposes of the hearing referred to in Section I, above: (a) Concession No. 65, dated December 18, 1957; (b) Assignment by Hunt to BP dated November 10, 1960; (c) Hunt’s Agreement for Amendment of Petroleum Concession No. 2 plus one-half interest in Concession No. 65 dated January 20, 1966; (d) BP’s Agreement for Amendment for Petroleum Concession No. 34, 36, 37, 63, 64, 80, 81 and 65 dated January 20, 1966; E-6 (e) Libyan Petroleum Law No. 25 of 1955, as amended; (f) Law No. 7 of 1971, promulgated by Revolutionary Command Council of the Libyan Arab Republic; (g) Law No. 42 of 1973, promulgated by Revolutionary Command Council of the Libyan Arab Republic; (h) Agreement between Coastal and Arabian Gulf Ex- ploration Company (“AGECO”) dated May 2, 1973; (i) Agreement between Ashland Oil Company of Cali- fornia and Arabian Gulf Exploration Company, dated April 11, 1973; (j) Assignment of Ashland-AGECO Contract to Coastal; (k) Processing Agreement between Coastal and Mon- tedison dated June 10, 1963; (1) Agreement between BP and Libyan Government dated November 20, 1974; and (m) Agreement between Hunt and Libyan Government dated May 19, 1975. The foregoing listing of documents is not intended to ex- clude by omission any documents constituting precedent or authority on any international law questions which may properly be adduced, including diplomatic notes, judicial precedent, writings and the like or documents relevant to the qualification of witnesses. IV. OTHER DOCUMENTARY EVIDENCE The parties have not stipulated to but the Court finds the following documents to be relevant, admissible and au- thentic for purposes of the December 6, 1976, hearing and sc to its ultimate determination of the legal issues above. (a) Letter of August 3, 1973, from William J. Casey to G. Henry H. Schuler of Nelson Bunker Hunt; E-7 (b) Excerpt of the Foreign Broadcast Information Service Daily Report (a U.S. Government publication) dated June 12, 1973, containing a transcription and translation of Libyan Law No. 42 issued on June 11, 1973; (c) U. S. Department of State Press Release No. 630 of December 30, 1975; (a) Excerpt of the Foreign Broadcast Information Service Daily Report (a U. S. Government publication) dated June 12, 1973, pgs. T-4 to T-11, containing a transcription and translation of a speech made on — 11, 1973, by Libyan Chairman Mu’ammar al-Qad- (e) Statement by the Department of State on Policy on “Hot” Libyan Oil; and (f) United States of America’s Note Verbale No. 59 dated July 5, 1973 and the attached certification by W. H. Holm. V. STIPULATED FACTS The following facts have been stipulated by the parties for purposes of the hearing referred to in Section I, above: (a) Hunt and BP discovered oil on Concession 65 in 1961. (b) Hunt and BP subsequently developed an oil field on Concession 65, known as the “Sarir Field”, con- structed physical facilities thereon and a pipeline from such Field to Marsa-al-Hariga /Tobruk, Libya. (c) Hunt and BP produced, sold, and exported oil pur- suant to Concession 65 from the Sarir Field from Jan- uary 12, 1967, to December 7, 1971, when the interest of BP was expropriated. (d) Hunt produced, exported, and sold his share of the oil produced from the Sarir Field from December 7, 1971, to May 24, 1973, when his interest in Concession 65 was expropriated by the Libyan Government. E-8 (e) On December 7, 1971, there were oil companies other than BP, holding concessions other than No. 65, which were not expropriated, in whole or in part, and no other such company was expropriated on that date. (f) On May 24, 1973, and on June 11, 1973, there were oil companies other than Hunt, holding concessions other than No. 65, which were not expropriated, in whole or in part, and no other such company was ex- propriated on that date. (g) Arabian Gulf Exploration Company is the Govern- ment company to which the Libyan Government pur- ported to transfer the interests in Concession 65 expro- priated from BP and Hunt. (h) Pursuant to its contract with Arabian Gulf Explor- ation Company and the assignment to it of the contract between Ashland and the Arabian Gulf Exploration Company, Coastal took possession of Sarir crude oil. (i) Coastal first took possession of oil produced from the Sarir Field on May 29, 1973. (j) Coastal transported all crude oil from the Sarir Field of which it took possession to the Montedison Refinery in Italy pursuant to the Processing Agreement referred to in Paragraph (k) above. (k) Products derived or processed under the Processing Agreement accumulated to Coastal States’ account at the Montedison Refinery and were sold by Coastal States to third parties pursuant to contracts between Coastal States and such third parties. (1) At least a portion of such products were taken from the Montedison Refinery in Italy to points in the United States of America; provided, however, that it is not stipulated that Coastal States transported or caused to be transported any of the products derived from the Montedison Refinery under the Processing Agreement to the United States. FOLATE PL AE EILEEN OIE NTE LORD IIT RT ERLI EAB AT E-9 (m) Nelson Bunker Hunt, Herbert Hunt, and Lamar Hunt are citizens of the United States of America. (n) Coastal is a company incorporated and headquar- tered in the United States of America. (o) All subsidiaries of Coastal are companies incorpo- rated and headquartered in the United States of America. (p) Coastal consolidates its financial information for reporting and income tax purposes with its wholly owned subsidiaries. (q) Among its wholly owned subsidiaries is Coastal States Marketing, Inc. (r) Coastal derived proceeds from sales, exchanges, or other dispositions of products refined or derived under the Processing Agreement. (s) The basis for calculation of the sum paid to Hunt by the Government of the Libyan Arab Republic pur- suant to the Agreement between such parties of May 19, 1975, was the net book value of Hunt’s physical assets located on Concession 65, i.e., such calculation and sum did not include oil previously sold by AGECO or for oil in place. VI. THE SETTING OF FINAL PRELIMINARY HEARING AND DISCOVERY CUTOFF 1. At 1:00 P.M. on January 4, 1977, a preliminary hear- ing shall be held for the resolution of any matters required prior to jury selection in this cause. 2. Effective at the convening of such final preliminary hearing, there shall be no further discovery of any kind or character instituted except upon express consent of all par- ties affected. E-10 Vil. SETTING OF JURY SELECTION Jury selection shall begin in this cause at 9:00 A.M., January 17, 1977, and jury trial shall thereafter follow from day to day until completion. OrpereED this 22nd day of November, 1976. Paul Pressler, Judge Presiding APPROVED SHANK, Irwin, CONANT, WILLIAMSON & GREVELLE BY Attorneys for Hunt, et al FULBRIGHT & JAWORSKI Dan Matthews Attorneys for Coastal States Gas Producing Company F-1 APPENDIX F Second Schedule THE CONCESSION Tuis DEED OF CONCESSION is concluded on the eighteenth day of December, 1957, under the Petroleum Law of 1955: Between The Petroleum Commission (hereinafter called the Com- mission) in the name of the Province of Cyreniaca and with the approval of the Minister and NELSON BUNKER HUNT (hereinafter called the Com- pany) having its registered office at 700 Mercantile Bank Building, Dallas, Texas, U.S.A., represented by Phillips L. Hynes who is legally authorized to act on behalf of the Company by virtue of a Power of Attorney dated May 4, 1956 which has been produced by him. Clause F-2 THE CONCESSION . Working Obligations 0200000. ooocoooccececeee. . Company to Follow Good Oil BPM UII ooo cn bocscscscssccesceccssesosscsscsssscocsones, De ID DOO oincdoccccccccccccsccccsntecescosesecsseseeee.ccce, cmcuen 8 . Method of Making Payments * * >. contrary to its vital interests.” ver eee L-8 A principal feature of the Agreement was its “sharing” provision. In general, the Agreement provided that if the party’s crude oil production in Libya was cut back as a result of government action, all other parties would share in such cut back as provided in the Agreement. And if there was insufficient Libyan oil to meet, the contractual obliga- tions due to restrictions or shut down by the Libyan gov- ernment, those parties with Persian Gulf production would supply the Libyan producers who were cut back with Per- sian Gulf oil at cost. However, this obligation was limited to supply such Persian Gulf oil only to meet: commitments to preexisting European and Western Hemisphere custo- mers.”' Plaintiff Hunt had three such customers at that time, all of whom were signatories to the Agreement, and two of whom were among the seven majors Exxon and Shell). Plaintiff alleges that despite his objections to certain as- pects of the Agreement, particularly to the preexisting custo- mer and market restriction clause, he signed the Agreement for a number of reasons: the pressure of the January 16 deadline set by Libya for response to its latest “Non-nego- tiable’ demands; the fact that industry-wide and OPEC- wide negotiations were preferable to individual negotiations with Libya; a misplaced confidence in the good faith and expressed intention of the other parties, and the fear that he would be boycotted if he refused to sign.” 11This preexisting customer provision did not apply to any Libyan oil supplied to a producer who had been cut back. 12 Plaintiff's Ne en en a ee which he now complains does not prevent him from seeking the protection of the antitrust laws since the Supreme Court has held that “the doctrine of in pari delicto . . . is not to be as a defense to antitrust action.” Perma Life Mufflers, Inc. v. In- ternational Parts Corp., 392 U.S. 134, 140, 88 S.Ct. 1981, 1985, 20 L.Ed.2d 982 (1968). See also Trebuhs Realty v. News Syndicate Co., 107 F.Supp. 595, 599-601 (S.D.N.Y. 1952). L-8 THE FIRST ANTITRUST CLAIM (a) The preexisting customer provision. Plaintiff Hunt in essence charges that defendants, hori- zontal competitors of each other and of Hunt, violated the antitrust laws by the provision of the Agreement that im- posed upon him a restriction against the resale of Persian Gulf oil to any other than a preexisting European or Western Hemisphere customer, with the purpose and in- tended effect of foreclosing him from competing with de- fendants for new customers or in new markets. He further charges that he was the only party to the Agreement with- out refining capacity of his own, which the parties knew; that he had only three eligible or preexisting customers, all of whom were parties to the Agreement; that the effect of confining him to those customers was not only to fore- close him from seeking new customers wherever located, but also to enable the three to deal with him free from competitive forces and thus to extract from him wholly uncompetitive prices. Plaintiff contends that as a result of these acts and conduct of the defendants he sustained a loss of many millions of dollars. On its face plaintiff's charge that the customer and market restrictions contained in the Agreement constituted a per se violation of the Sherman Act and the Wilson Tariff Act appears to be of substance under the Supreme Court decisions in United States v. Arnold, Schwinn & Co." and United States v. Topco Associates, Inc.** In sum, plaintiff's position is that no matter how well intentioned and what- ever the defendants’ motivation in seeking to protect them- 18 388 U.S. 365, 382, 87 S.Ct. 1866, 18 L.Ed.2d 1249 (1967). ** 405 U.S. 506, 607-11, 92 S.Ct. 1126, 31 L.Ed.2d 515 (1972). L-10 selves against the ever increasing demands of the oil pro- ducing countries, the provision of the Agreement which restricted plaintiff to preexisting customers and geographical territories, in effect, a regulation of customers to whom and where he could sell crude oil, constitued a per se violation which forecloses application of the rule of reason.” However, the defendants challenge the very foundation of this antitrust claim by raising the threshold question of whether the agreement to provide Persian Gulf oil to the parties whose supply was cut off by Libya was truly an agreement for the sale and purchase of oil, or whether it was in effect an insurance or risk allocation mechanism which by its very nature did not entail a restraint of trade subject to the antitrust laws. Among other matters, they argue that the preexisting customer clause under which oil was supplied to plaintiff was not an agreement to buy or sell, but rather “a sharing in the loss arrangement,” of special benefit to plaintiff, since he was one of the most vulnerable of the parties to attack by Libya. Accordingly, defendants contend that the preexisting customer clause attached to the oil supply provision is beyond the proscription of the Sherman Act. Whatever the force of this contention, it goes to the merits of the parties’ respective positions. Thus the issue is not one to be decided on a motion to dismiss, since its resolution requires an interpretation of the contract and the circumstances surrounding its execution.” 18 Cf. United States v. Topco Associates, Inc., 405 U.S. 596, 607-11, 92 S.Ct. 1126 (1972). 18 Pekar v. Local No. 181 of the International Union of United , Flour, Cereal, Soft Drink and Distillery Workers of Amer- ica, AFL-CIO, 311 F.2d 628, 636 (6th Cir. 1962); Machen v. Jdo- hansson, 174 F.Supp. 522, 527 (S.D.N.Y.1959); Farrand Optical Co. v. United States, 107 F.Supp. 93, 96 (S.D.N.Y.1952). L-11 A matter of significance which would have to be con- sidered is the so-called option to the Persian Gulf suppliers to pay cash in lieu of supplying oil. Under this provision, upon its face, the Persian Gulf producers who were “obli- gated to supply but [have] not supplied” such oil were permitted to pay cash to those Libyan producers whose supply had been cut off.” However, as the court noted at the argument of the motion to dismiss, this option provision “is rather clear except for one item at the end,’™ which reads: “[E]ach of the Persian Gulf Producers Parties states its present intention is to supply Persian Gulf crude oil in discharge of its obligations under paragraphs 2(e) and 3.” When questioned upon argument as to the meaning of that provision of the contract, counsel for the movants re- plied that it “has no meaning except an expression of in- tention which they [the Persian Gulf suppliers] were free to ignore at any time.” Presumably its inclusion had some purpose;”® otherwise if the Persian Gulf producers had “no present intention . . . to supply Persian Gulf crude oil in ** Paragraph 4 of the Agreement provides in pertinent part: “In respect of each barrel of Persian Gulf crude oil a party is obligated to supply but has not supplied under paragraph 2(e) (a) Such party shall have the option to elect to 10 cents; to every Bey hy oorkyte Ponies ply ro ‘oo -. has such an obligation.” — 1® Transcript of hearing, July 15, 1975, p. 79. ** National Equip. Rental Ltd. v. Reagin, 338 F.2d 759, 762-63 (2d Cir. 1964). See also Hanley v. James McHugh Const. Co., 444 F.2d 1006, 1009 (7th Cir. 1971); United States v. N. A. Deger. strom, Inc., 408 F.2d 1130, 1133 (9th Cir. 1969). L-12 discharge” of their obligations, a substantial question of fraud may come into play.” The plaintiff, in the light of this and other provisions and circumstances surrounding the making of the Agreement, disputes defendants’ position that the parties intended the option to pay cash to be a complete alternative, unlimited in scope or duration, to supplying oil. Apert from these contentions, plaintiff points to the fact that the supply clause also provides that the exercise of the option must apply pro rata to every party to whom the Persian Gulf parties owe oil, and if they supplied oil to one obligee, they were without power to enforce a cash option provision against another obligee. Moreover, the payment of cash instead of supplying oil could, in the instance of the plaintiff, whose supply of Libyan oil was completely cut off, effec- tively eliminate him as a competitor in the crude oil market. Thus, the defendants’ contention that the plaintiff's first claim is beyond the reach of the antitrust laws involves questions of fact which cannot be resolved on a motion to dismiss for failure to state a claim.” The defendants, assuming arguendo that the Agreement at issue is covered by the Sherman Act, make a further attack upon plaintiff's first claim (as well as his other anti- trust claims) upon a variety of grounds. 20 v. Hudson, 225 N.Y. 602, 611-12, 122 N.E. 635 (1919); aie “4 Gillig, 199 N.Y. 314, 319-22, 92 N.E. 670 (1910). See also Schenley Distillers Corp. v. Renken, 34 F.Supp. 678, 680-82 (E.D.S.C. 1940); Terris v. Cumminskey, 11 A.D.2d 259, 261, 203 N.Y.8.2d 445 (3d Dep’t 1960); Sabo v. Delman, 3 N.Y. 2d 155, 160, 164 N.Y.S.2d 714, 143 N.E.2d 906 (1957). 21 Wolman v. Tose, 467 F.2d 29, 35 (4th Cir. 1972); Wilshire Oil Co. of Texas v. Riffe, 409 F.2d 1277, 1284 (10th Cir. 1969); Zell Ins. Agency, Inc. v. Guaranty Security Ins. Co., 399 F.2d 147, 148-49 (5th Cir. 1968); Dobson v. Masonite Corp., 359 F.2d 921, 923-24 (Sth Cir. 1966). oo L-13 (b) The “target area” argument. Preliminarily, defendants urge that plaintiff lacks stand- ing to raise any of his antitrust claims because he cannot, as required by the court in Billy Baxter, Inc. v. The Coca- Cola Company,” “allege a causative link to his injury which is ‘direct’ rather than ‘incidental’ or which indicates that his business or property was in the ‘target area’ of the defendant’s illegal act.” In view of the fact that plaintiff was in direct competition with the defendants,”* their contention is somewhat difficult to understand. To equate plaintiff’s position to one whose alleged injury could be regarded only as “remote,” “inci- dental” or “consequential” rather than “direct” is to dis- regard the reality of the relationship of the parties and the allegations of the complaint. It is true, as defendants argue, that the “target” or objective of the collective efforts of the defendants was not the plaintiff, but rather the oil produc- ing countries, as manifested by defendants’ united front. However, plaintiff certainly was within the “target area” of the oil supply provision of their agreement, which is the crux of his first cause of action. Indeed, according to his claim as a competitor he was in the direct line of fire. Spe- *2 431 F.2d 183. 187 (2d Cir. 1970), cert. denied. 401 U.S. 923. 91 S.Ct. 877, 20 L.Ed. 2d 826 (1971). 8 Cf. Calderone Enterprises Corp. v. United Artists Theatre Cir- cuit, Inc., 454 F.2d 1292, 1295 (2d Cir. 1971). cert. denied. 406 U.S. 930, 92 S.Ct. 1776, 32 L.Ed.2d 132 (1972), where our Court of Appeals stated: “this court has committed itself to the principle that in order to have ‘standing’ to sue for treble damages under § 4 of the Clayton Act, a person must be within the ‘target area’ of the alleged antitrust conspiracy, i.e., a person against whom the conspiracy was aimed, such as a competitor of the persons sued.” (emphabis supplied. ) ** Cf. Data Digests, Inc. v. Standard of Poor’s Corp., 43 F.R.D. 386, 387 (S.D.N.Y. 1967). L-14 cifically, under his version of the facts, plaintiff charges * that the preexisting customer clause was imposed not only over the protest, but was intentionally directed toward him for the very purpose of impairing his existing relationship with his customers and eliminating him from competition, causing him direct losses. Since plaintiff was not merely “incidentally” or “remotely” affected by this provision of the Libyan Producers’ Agreement, as, for instance one of his customers or creditors might have been, the defendants’ reliance upon the recently decided Long Island Lighting Company v. Standard Oil Company of California and Con- solidated Edison Company of New York v. Standard Oil Company of California** is misplaced. Defendants’ related attack for lack of direct causal con- nection between their alleged unlawful conduct and plain- tiffs claimed injury likewise must fail. Apart from the fact that the complaint does plead, in instance after instance, that plaintiff was damaged in that the preexisting customer restriction foreclosed him from new customer and geographi- cal markets, he charges that his existing customers, aided by other defendants and as part of their conspiratorial purpose, exploited the restrictions to force uncompetitive prices upon him, causing him to sustain losses in the millions. In any event, as this court has held, “the causation issue should not be resolved at this [pleading] stage of the action.” (c) The alleged inapplicability of the antitrust laws. _ Here the defendants contend that the antitrust laws were never intended to apply to American companies in their dealings with a foreign government acting in its sovereign 28 §21 F.2d 1269 (2d Cir. 1975). 28 Data Digests v. Standard & Poor’s Corp., 43 F.R.D. 386, 388 (S.D.N.Y. 1967). L-15 capacity. They rely upon the doctrine originally articulated in Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc.," and further elucidated in United Mine Work- ers of America v. Pennington,” that: “the Sherman Act does not prohibit two or more per- sons from associating together in an attempt to per- suade the legislature or the executive to take particular action with respect to a law that would produce a re- straint or a monopoly.”” The so-called Noerr-Pennington doctrine is founded upon the individual’s constitutional right of petition under the First Amendment and upon the corresponding concern that the representatives in the legislatures retain access to the opinions of their constituents, unhampered by collateral regulation.** These interests are not present in plaintiff's first claim, since his primary concern is not with any action on the part of defendants to procure passage or enforcement of any law, but rather with the clause of the Agreement which contains the customer and market restriction which is a strictly “private commercial activity” expressly excluded from the immunity of Noerr-Pennington by the Court in Continental Ore Company v. Union Carbide & Carbon Corporation.” (d) The act of state doctrine. Defendants also urge that plaintiff’s first claim, as well as his two other antitrust claims, are foreclosed by the act of state doctrine. This doctrine was originated in Underhill v. ** 365 U.S. 127, 136, 81 S.Ct. 523, 5 L.E.2d 464 (1961). ** 381 U.S. 657, 669-70, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965). ** Eastern R. R. Presidents Conference v. Noerr Motor Freight Inc., 365 U.S. 127, 136, 81 S.Ct. 523, 529 (1961). ~ *° Id. 137-38, 81 S.Ct. 523. * 370 U.S. 690, 707, 82 S.Ct. 1404, 8 L.Ed. 2d 777 (1962). L-16 Hernandez,** and precludes judicial inqui [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_1108%3A2. Public record. Not legal advice.