The Federalist Society

The View From the Senate of Proposed Multilateral Treaties on Property Rights

International & National Security Law Practice Group Newsletter - Volume 2, Issue 1, Spring 1998

May 1, 1998

Patricia McNerney

The following is an excerpt of comments given by Patricia McNerney at the International and National Security Law Practice Group Breakout Session during the Federalist Society Lawyers Convention, Washington, D.C., October 17, 1997.

I want to be clear at the outset today that although I am from the Senate Foreign Relations Committee, I am not an expert in the Helms-Burton Act, and I am prepared to talk about international property rights issue in general.

In March of 1994, the Republican staff of the Foreign Relations Committee produced a report resulting from months of staff travel and investigation through Honduras, Nicaragua, and Costa Rica. That report set out in precise detail an alarming number of expropriations that were made without prompt, adequate, or effective compensation. Although that would be, of course, the international standard, the efforts of the State Department were spotty at best in raising the red flags with respect to U.S. property being taken illegally.

This was raised at the time with Secretary of State Warren Christopher and this issue was raised when he appeared before the Committee. In addition, a number of efforts to deal with the issue were undertaken in connection with the State Department authorization bill, which is the committee’s normal authorization vehicle.

As the Committee staff continued working on the issue, certainly we became familiar with a number of cases. There was Jencks Caldwell, an American citizen who died last year. Only after his death, - - many years after he had an airplane expropriated by the Argentine government, - - was his estate was paid.

Pierre Talenti, a gentleman from Italy, who died just last month, still has not received compensation for the property that was expropriated by the Italian government, despite many letters written on his behalf by Senators and Congressmen.

Joe Hamilton’s case is one that I know particularly well -- I have visited his property in Costa Rica. For more than 17 years, he has been trying to receive compensation for his property. His property is some of the most beautiful and pristine land in the Guanacaste region of Costa Rica. He has persevered with the assistance of the Committee, (which has sometimes taken heavy-handed action to help, such as withholding of bilateral aid or directing multilateral aid). We have pressed on and the matter is finally in international arbitration. It has taken 17 years, constant letters and constant pressure on the Costa Rican Government are necessary to push this case forward.

I raise these examples to make the point that often governments can outlast claimants. That’s the bottom line in international property law, and that’s the context in which Senator Helms has pushed the Committee’s activities on this front.

Then comes Helms-Burton, with which you are all very familiar. That legislation was basically designed to address a Cuban precedent. We all know that international law is based largely on precedent and on what the international community condones. And certainly, if you look at the Cuba precedent, the international community saw a dramatic example of takings in which there was no pretense of compensation in return for using such property for the public good. In time, the international community not only condoned the actions, but actually became a party to them through direct investment in the Cuban property.

I think there are many components to what constitutes an established legal order, and, in the case of property, it means a system that ensures prompt, adequate, and effective compensation. In exercising the treaty power the committee has been diligent in making sure the administration has that language in every bilateral investment treaty that comes before the Committee and the Senate in exercising the treaty power. And we are very cautious about how these terms are defined. The key question is how these terms are really defined with respect to implementation worldwide.

It is important to understand the history of this issue in terms of where we have been, where we are with Helms-Burton, and where we are not in the discussions on the Multilateral Agreement on Investment [MAI].

Senator Helms gave Assistant Secretary of State Stuart Eizenstat his word that he would in no way obstruct the negotiations that are going on with the European Union, They have lasted 6 months, and now there is to be an extension, certainly a short-term one. There is a willingness to continue those discussions and not, as I say, obstruct them. But at the same time the Senator has made clear that these negotiating efforts should in no way lead to a lessening of enforcement of Helms-Burton or U.S. law.

The negotiations that are going on are a positive step, if in that , they globalize the recognition that there is a problem in terms of enforcement of international property rights. Yet, there is still a lot of work to do on such a treaty, and a number of questions need to be asked. What’s effective? What’s enforceable? Are there going to be strict global sanctions that are implemented fully? Implementation is the key. Indeed, when Mr. Eizenstat came to the Hill to brief the committee on how he expected to proceed, there was interest not only in the creation of a document that set out proper norms, but also in the implementation of such a document. Senators and Congressmen will be asking important questions about implementation.

The agreement also must be able to survive the current occupant of the Office of the Under Secretary of Economic Affairs. Certainly, Mr. Eisenstat has been out in front on this issue and has been doing important work. But I think this issue will only be resolved through a long-term, concrete process.

The Congress is willing to watch what happens on the multilateral front and see what is produced. But the Senate will not be satisfied with going from a bilateral process to a multilateral process that still would enable governments to outlive claimants. There will be a very deaf ear if such document comes up to the Senate. Senator Helms often likes to quote President Reagan’s maxim, "trust but verify." I think that’s probably a good way to summarize how the Senate will look at this process.

*Patricia McNerney is the associate counsel to the United States Senate Committee on Foreign Relations. She is principally responsible for treaties and nominations. She also works on legislation regarding the United States membership in the United Nations and other international organizations.


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