2009 REPORT ON INVESTMENT DISPUTES AND EXPROPRIATION CLAIMS: REQUEST FOR EMBASSY SUBMISSION

Código Fecha Clasificación Origen
09STATE49477 14 May 2009 No clasificado United States Secretary of State in Washington

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UNCLASSIFIED STATE 00049477
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DE RUEHC #9477/01 1341835
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R 141820Z MAY 09
FM SECSTATE WASHDC
TO ALL DIPLOMATIC AND CONSULAR POSTS COLLECTIVE
RUEHTRO/AMEMBASSY TRIPOLI 7323
INFO RUCPDOC/USDOC WASHINGTON DC 5127
RUEATRS/TREASURY DEPT WASHINGTON DC 0377

UNCLAS SECTION 01 OF 05 STATE 049477

E.O. 12958: N/A
TAGS: CASC, EINV, KIDE, OPIC, PGOV
SUBJECT: 2009 REPORT ON INVESTMENT DISPUTES AND
EXPROPRIATION CLAIMS: REQUEST FOR EMBASSY SUBMISSION

REF: 2008 STATE 43784

1. This is an action request.


SUMMARY AND ACTION REQUEST


2. Action Request: Pursuant to the requirements of
Section 527 of the FY 94-95 Foreign Relations
Authorization Act (FRAA), the Department must prepare an
annual, non-public report to Congress on U.S. citizen
expropriation claims and certain other investment disputes
involving foreign governments/economies. The next report
is due October 1, 2009. Given the challenges inherent in
trying to complete a tasking over the summer transfer
period, Posts/AIT are requested to review prior reporting
and update the 2008 report with information on any new
disputes through June 1, 2009. Updated reports are due by
June 15, 2009. Posts/AIT should report all investment
disputes where a U.S. citizen alleges there has been an
expropriation. Inclusion of a claimin the report does not necessarily
mean a country/economy
is or will be targeted for Section 527 Sanctions, nor does
it commit the USG to any particular course of action to
achieve its resolution. We request that all Posts/AIT
reply; if there are no investment disputes that would be
candidates for inclusion in this report, Posts/AIT should
send a response stating that. The report is not
released to the public. This tasker has been cleared with
all regional bureaus, S/ES, and the Interagency.

3. Posts/AIT are requested to e-mail EB/OIA (Heather
Goethert and Kimberly Butler) as soon as possible, identifying the
names, phone numbers and e-mail addresses of both the primary
point of contact at post on issues relevant to the Report
and his or her backup. We will respond to each message
with the 2008 Report for that country/economy and, if
needed, a sample 527 submission conforming to proper
format and drafting guidelines. Posts/AIT should submit
the 2009 submission by cable and e-mail (see paras 6-8).
Points of contact for this tasking are Heather Goethert
(EB/IFD/OIA) goetherthg@state.gov (202) 647-8988, Kimberly Butler
(EEB/IFD/OIA) butlerkm@state.gov (202) 736-4907, and Patrick Pearsall
(L/CID) pearsallpw@state.gov (202)776-8970.


SECTION 527 — "HELMS AMENDMENT"


4. On April 30, 1994, President Clinton signed into law
Section 527 of the FY 1994-95 FRAA, commonly referred to
as the Helms Amendment. The Helms Amendment prohibits
bilateral assistance, and requires the President to
instruct the U.S. Executive Directors of multilateral
development banks and international financial institutions
to vote against financial assistance (except
humanitarian), to any country/economy whose authorities
have:

— Nationalized or expropriated the property of any United
States person (see definitions in paras 14 and 15);

— Repudiated or nullified any contract with any United
States person; or

— Taken any other action which has the effect of seizing
ownership or control of the property of any United States
person;

Unless, within three years after the date on which the
claim was filed, the authorities have:

— Returned the property;

— Provided adequate and effective compensation;

— Offered a domestic procedure providing prompt, adequate
and effective compensation in accordance with
international law; or

— Submitted (or offered to submit) the dispute to binding
international arbitration;

Or unless certain other limited exceptions apply. The Secretary of
State may waive the prohibitions on assistance on
national interest grounds.

5. Given the potential ramifications of Section 527, it
is critical that Posts/AIT respond promptly and
comprehensively to this action cable. We emphasize that
this information will not commit the USG to any particular
course of action to achieve a resolution of outstanding
claims, nor does it necessarily mean any particular
country is or will be targeted for Section 527 Sanctions.
The USG has invoked Section 527 against only one country
— Nicaragua — every year since 1994, and in each year, sanctions
against Nicaragua have been waived by the The Secretary of State.
History demonstrates, that despite the
invocation of 527 Sanctions against only one country to date, the
reactions of foreign governments to the threat of the use of Section
527 sanctions confirms the USG view that this is an effective tool
to persuade countries to resolve longstanding investment
disputes and implement economic reforms.


GENERAL INSTRUCTIONS


6. Section 527 requires the Department to submit an
annual report of all U.S. citizen expropriation claims of
which the USG is aware. To provide information for this
report, all Posts/AIT are requested to provide information
on recent developments such as case status and recent USG
actions. If a case listed in the 2008 report has been
resolved to the satisfaction of the U.S. investor, that fact should
be noted. If a case is new, that should also be noted.
If Post/AIT is not aware of any claims/disputes, the
response should state that fact. Please use the format
indicated in para 15 below, and highlight all changes by
using MSWord "track changes" to identify edits, which will
simplify editing in the Department. We request that
Posts/AIT include developments through June 1, 2009, and
respond by June 15, 2009, by sending their submission in
by e-mail and cable. For significant new investment
disputes, or for significant events in cases already
reported that occur after June 1, Posts/AIT are instructed to
provide an update by cable and e-mail. Please use the
EINV tag as well as the program tag "KIDE" (Investment
Disputes and Expropriations).

7. For multiple-mission countries/economies, embassies
should respond on behalf of all constituent posts, unless
other arrangements are worked out locally. Posts covering
multiple countries/economies should report separately on
all countries to which the relevant ambassadors are
accredited. We ask that Posts/AIT coordinate their
responses among various country team elements, including
consular sections and representatives at post of other
agencies that may have relevant information (e.g.
Treasury, Commerce, USAID, and USDA).

8. In preparing the report, the Department will make the
final determinations, eliminating cases that do not meet
the requirements of the law and adding any unreported
cases which posts may not be aware of but which have come
to our attention and meet the requirements of the law.
EB/IFD/OIA will coordinate review of the report with L, H,
CA, the regional bureaus, and interagency. If you have
questions on these instructions, please contact Ms.
Goethert (contact information provided in para 3), or OIA
Deputy Director Greg Hicks (202) 736-4365.


WHAT TO REPORT


9. Our goal in the report is to be inclusive. Posts/AIT
should report all cases involving an investment dispute or
an expropriation without compensation.
See definitions in paragraphs 11 and 12. Posts/AIT should
not report disputes that involve private parties only, or
trade disputes involving such issues as customs valuations
or slow payment on contracts. However, Posts/AIT should
report disputes over the terms and conditions of contracts
with a foreign government/economy, such as a concession
agreement for oil, timber, mineral or other resources, or
contracts with independent power producers and providers
of telecommunications services.

10. Posts/AIT should include cases that have been
resolved since the last report, and note the settlement in
the case history. In the introduction to the report, we
explain that it includes numerous claims of which the bona
fides have not been fully verified and that inclusion of a
claim does not necessarily mean a country/economy is
or will be targeted for Section 527 sanctions.


DEFINITIONS


11. For reporting purposes, an "investment dispute" means
any dispute between a U.S. person and a foreign government
(including regional and local governments and state-owned
or controlled enterprises) relating to real, personal, or
intangible property or other commercial interests,
including cases of alleged expropriation of property. We
remind posts that "intangible property" may include
contract rights, patent trademark copyrights or other
intellectual property rights.

12. For these purposes, the term "expropriation" is defined as a
foreign government/economy (1) nationalization or confiscation of
property, (2) repudiation or nullification of a contract,
or (3) taking of other action, including the imposition or
enforcement of any discriminatory taxes, duties, or other
encumbrances, that have the effect of seizing ownership or
control of property. When in doubt of whether the dispute would
classify as an expropriation, Posts/AIT are instructed to include the
dispute in their report. The Department will make the final
determination.

13. A "U.S. person" means a U.S. citizen or corporation,
partnership, or association not less than 50 percent
beneficially owned by United States citizens or
corporations. (NOTE: in cases where it is unclear that a
claimant qualifies under this definition, we encourage
posts to report the case with as much detail as possible
and, as mentioned in para 7, the Department will make the
final determination. END NOTE)

14. COMMENT: Posts/AIT are required to report on claims
by U.S. persons who were U.S. citizens when the claim arose.
Posts/AIT are also asked to report on claims of U.S. persons
who were not U.S. citizens when the claim arose if the claim
has received special attention from Posts/AIT, the
Executive Branch, or Congress, or is otherwise
noteworthy. Posts/AIT should also report cases such as a
U.S. company that purchases a non-U.S. company with an
outstanding claim. Posts/AIT should note such a
transaction in their reports. END COMMENT.


FORMAT FOR CASE DESCRIPTIONS


15. This format reflects requirements of Section 527 of
the Foreign Relations Authorization Act:

(A) Claimant designation: Claimant A, Claimant B, etc.
Do not provide claimant’s name in this location (see para
16).

(B) Year or approximate year when the dispute arose: date
of expropriation, date when contract nullified/repudiated,
etc.

(C) Case history: one or two paragraphs, including USG
and foreign government/economy actions taken, if any, to
resolve dispute. Please include in narrative style the
following information:

— Location and description of the property;

— Circumstances of dispute, i.e., what agency/agent of a
foreign government/economy was involved, how, and why
dispute arose, including date of expropriation or when
dispute arose;

— Status of dispute, including claimant’s attempts to
pursue local remedies;

— Estimated value in U.S. dollars, according to AmCit
claimant; differing estimates of value, if any, along with
sources of estimates and reasons for differences (Note:
all values in the report should be in U.S. dollar amounts in
the following format: $123,456); and

— Approximate date when information was last received on
claim.


PREPARE A SEPARATE LIST OF CLAIMANTS’ NAMES


16. Due to provisions of the Privacy Act, the Report
contains few names of claimants. Most claimants are
identified as "Claimant A, Claimant B," etc. Posts/AIT
should provide their updates in the same format and
provide a list of the claimants’ names separately from the
actual information provided about the claim, for example,
at the end of the cable and e-mail, as follows:

Claimant A: Skuteonost Neni Realita, LTD.
Claimant B: Erin and Paul’s Furniture, INC.
Claimant C: John Smith

17. In this list, Posts/AIT should also report on the
citizenship of the claimant at the time of the taking,
whether the claimant has signed a Privacy Act Waiver, when
it was signed, and whom the waiver covers. This list is
critically important for identifying disputes reported to
the Department by other means and for other purposes. The
list is for official use only and will not be part of the
report to Congress. Even without the identifications
list, the report is "business proprietary information"
furnished only to Congress and not available in whole or
in part to the public.


SPECIAL INSTRUCTIONS


18. To Managua: Please follow the procedure used in
2008, in which post prepared a comprehensive annex with
details of claims. Please send via e-mail the completed
annex by June 15 to Ms. Goethert.

19. To Posts/AIT in countries/economies that have reached a
claims settlement agreement with the United States: Posts/AIT
are not required to report any claim that has been
extinguished pursuant to a government-to-government claims
settlement agreement. For purposes of this instruction,
Posts/AIT should consider the following types of claims
extinguished: for Albania, claims arising prior to March
10, 1995; for Bulgaria, claims arising prior to July 2,
1963; for Cambodia, claims arising prior to Oct. 4, 1994;
for China, claims arising prior to May 11, 1979; for the
Czech Republic and Slovakia, claims arising prior to Jan.
29, 1982; for Egypt, claims arising prior to Oct. 27,
1976; for Ethiopia, claims arising prior to Dec. 19, 1985;
for Germany, claims arising from GDR confiscations prior
to Oct. 18, 1976; for Hungary, claims arising prior to
March 6, 1973; for Poland, claims arising prior to July
16, 1960; for Romania, claims arising prior to March 30,
1960; for Vietnam, claims arising prior to Jan. 28, 1995;
and for countries formerly part of Yugoslavia, claims
arising prior to Nov. 5, 1964. (NOTE: although there may
be individual claims that were not extinguished pursuant
to these agreements, the Department is already aware of
such claims and Posts/AIT need not report them. END NOTE)

20. The following 88 countries were included in the 2008
Report, however, the report is not limited to only these countries:

1. Albania
2. Angola
3. Antigua and Barbuda
4. Argentina
5. Azerbaijan
6. Bangladesh
7. Belarus
8. Belize
9. Benin
10. Bolivia
11. Bosnia and Herzegovina
12. Brazil
13. Bulgaria
14. Canada
15. Central Africa Republic
16 China
17. Comoros
18. Congo, Republic of
19. Costa Rica
20. Croatia
21. Cuba
22. Cyprus
23. Czech Republic
24. Democratic Republic of Congo
25. Dominican Republic
26. Ecuador
27. Egypt
28. Eritrea
29. Ethiopia
30. Gabon
31. Georgia
32. Germany
33. Ghana
34. Greece
35. Guatemala
36. Guyana
37. Haiti
38. Honduras
39. India
40. Indonesia
41. Iran
42. Iraq
43. Italy
44. Jamaica
45. Jordan
46. Kazakhstan
47. Kenya
48. Korea, Republic of
49. Kosovo
50. Laos
51. Latvia
52. Lebanon
53. Liberia
54. Madagascar
55. Mauritius
56. Mexico
57. Moldova
58. Montenegro
59. Mozambique
60. Nepal
61. Nicaragua
62. North Korea
63. Oman
64. Pakistan
65. Panama
66. Peru
67. Philippines
68. Poland
69. Romania
70. Russia
71. Rwanda
72. Serbia
73. Slovak Republic
74. Slovenia
75. Sri Lanka
76. St. Christopher (Kitts) and Nevis
77. St. Vincent and the Grenadines
78. Turkey
79. Turkmenistan
80. Uganda
81. Ukraine
82. United Arab Emirates
83. United Kingdom
84. Uzbekistan
85. Venezuela
86. Yemen
87. Zambia
88. Zimbabwe

21. Minimize considered.
CLINTON