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Eleventh Circuit affirms dismissal of complaint filed by Venezuelan entrepreneur for alleged expropriations that occurred in Venezuela; act of state doctrine, in conjunction with the FSIA, precludes U.S. courts from reviewing plaintiff's expropriation claims.

Nelson J. Mezerhane, a successful Venezuelan entrepreneur who ran a number of businesses in that country, filed a seventeen-count complaint against Republica Bolivariana de Venezuela ("Venezuela"), Superintendencia de las Instituciones Del Sector Bancario ("SUDEBAN"), and Fondo de Proteccion Social De Los Depositos Bancarios ("FOGADE"), as well as a number of additional Venezuelan agencies and instrumentalities ("defendants"), alleging that the defendants engaged in a pattern of persecution against him that included numerous violations of human rights law, expropriation of his property in violation of international law, and other tortious acts.

Mezerhane alleged that during Hugo Chavez's term as president of Venezuela, the government targeted him to gain control over his media companies. When he refused, President Chavez retaliated against him, first by attacking him in public speeches, and later by expropriating his and his family's assets through illegitimate judicial proceedings, which caused Mezerhane to suffer damages in excess of $1 billion.

In 2005, Mezerhane learned that the Venezuelan government accused him of playing a role in the murder of a Venezuelan prosecutor. He voluntarily surrendered to Venezuelan authorities, was arrested and incarcerated for 37 days. Upon being released on bail in December 2005, Mezerhane filed an action with the Inter-American Commission on Human Rights for false imprisonment and human rights abuses.

Mezerhane claimed that he was de facto stateless because, as he stated, he was stripped of "all indicia of citizenship," including the rights to travel in and outside of Venezuela, "to live in a non-incarcerated state in Venezuela," to "earn a livelihood," and to acquire, sell, and convey property, seeking asylum in the United States.

In his complaint, Mezerhane describes Venezuela as a "foreign state" for purposes of the Foreign Sovereign Immunities Act (FSIA), and SUDEBAN and FOGADE as "agenc[ies] or instrumentalities] of a foreign state" under 28 U.S.C. [section] 1603(b). He asserts that the district court has personal jurisdiction over SUDEBAN and FOGADE based on their commercial activities in the United States.

Venezuela and SUDEBAN jointly moved to dismiss Mezerhane's Complaint, claiming sovereign immunity under the FSIA, 28 U.S.C. [section][section] 1602-11, while FOGADE filed a separate motion to dismiss on the same ground.

The district court issued an opinion granting the motions to dismiss because it lacked subject matter jurisdiction over Mezerhane's claims. Defendants are entitled to immunity under the FSIA and the claims are barred by the Act of State Doctrine. Mezerhane appealed.

The United States Court of Appeal for the Eleventh Circuit affirms the district court's decision.

The issue here is whether expropriations that violate binding international human rights treaties and norms of customary international law constitute takings in violation of international law under the FSIA, 28 U.S.C. [section] 1605(a)(3), and the Second Hickenlooper Amendment, 22 U.S.C. [section] 2370(e)(2).

The Court reviews de novo district court's conclusion that a defendant is entitled to sovereign immunity under the FSIA, and the applicability of the Act of State Doctrine to Mezerhane's claims against Venezuela.

"Mezerhane asserted federal jurisdiction over Venezuela, and its instrumentalities SUDEBAN and FOGADE, through the FSIA, [section][section] 1602-11. The FSIA is 'the sole basis for obtaining jurisdiction over a foreign state in our courts.' Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434 (1989). The Act provides that 'a foreign state is immune from the jurisdiction of the United States unless an FSIA statutory exemption is applicable.' Calzadilla v. Banco Latino Internacional, 413 F3d 1285, 1286 (11th Cir. 2005) accord 28 U.S.C. [section] 1604. Accordingly, if no statutory exception applies, the district court lacks subject matter jurisdiction. Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 489 (1983); S & Davis Int'l, Inc. v. The Republic of Yemen, 218 F3d 1292, 1300 (11th Cir. 2000)." [Slip op. 3-4]

Relying on 28 U.S.C. [section] 1605(a)(3), which provides that immunity does not apply in any case "in which rights in property taken in violation of international law are in issue", Mezerhane argued that defendants should be denied immunity because this case does fall within an exception to the FSIAs general grant of immunity. Furthermore, he cites four treaties for his argument that the alleged expropriations violated treaty-based "human rights law" and thus international law under 28 U.S.C. [section] 1605(a)(3):

Mezerhane argued that Article 21 of the American Convention on Human Rights, which provides that "[n]o one shall be deprived of his property except upon payment of just compensation", prohibits the takings of his property. Organization of American States, American Convention on Human Rights, Nov. 22, 1969, O.A.S.T.S. No. 36, 1144 U.N.T.S. 123, art. 21. However, the Court states that "Mezerhane conceded at argument [...] that the American Convention is not self-executing. In fact, although the United States signed the American Convention in 1969, the Senate never ratified it. See Flores v. S. Peru Copper Corp., 414 F.3d 233, 258 (2d Cir. 2003) ('[T]he United States has declined to ratify the American Convention for more than three decades....')." [Slip op. 4]

In support of his argument that the takings violated international law, Mezerhane cites Article 13 of the U.N. Convention Relating to the Status of Refugees, July 28, 1951, 189 U.N.T.S. 150. The Court rejects this argument. "Even if Mezerhane were a refugee, the Convention governs the conduct of his host country, the United States, not of the country fled, Venezuela. Mezerhane has made no allegation of mistreatment by the United States." [Slip op. 4]

Mezerhane cites the Treaty of Peace, Friendship, Navigation and Commerce to argue that it entitles him to the same treatment in court as a U.S. citizen would receive. But this treaty requires that the two countries not violate the rights of each other's citizens, and does not address Venezuela's actions against its own citizens. Treaty of Peace, Friendship, Navigation and Commerce, U.S.-Venezuela, Jan. 20, 1836, 8 Stat. 466, art.13.

"To date, the Eleventh Circuit has never held that the exception to sovereign immunity set out in 28 U.S.C. [section] 1605(a)(3) is triggered by human rights treaty-based allegations, and we decline to do so here. If successful, Mezerhane's argument would significantly extend the FSIA exception and open the courts of this country to suits involving takings abroad by foreign governments that have little or no nexus to the United States." [Slip op. 5]

"The Fifth Circuit previously ruled on the scope of 28 U.S.C. [section] 1605(a)(3) in de Sanchez. 770 F2d at 1395. The court held that no violation of international law occurred where Nicaragua placed a stop-payment order on a check payable to a Nicaraguan citizen because the order affected only a foreign country's own national. Id. In doing so, the Fifth Circuit applied a longstanding rule that closes the doors of American courts to international-law claims based on a foreign country's domestic taking of property. See United States v. Belmont, 301 U.S. 324, 332 (1937) ('What another country has done in the way of taking over property of its nationals, and especially of its corporations, is not a matter for judicial consideration here.'). De Sanchez reaffirmed the vitality of this so-called domestic takings rule: '[w]ith a few limited exceptions, international law delineates minimum standards for the protection only of aliens; it does not purport to interfere with the relations between a nation and its own citizens.' de Sanchez, 770 F.2d at 1395." [Slip op. 5]

"More recently, in FOGADE v. ENB Revocable Trust, our own court cited de Sanchez with approval in noting that '[a]s a rule, when a foreign nation confiscates the property of its own nationals, it does not implicate principles of international law.' 263 F.3d 1274, 1294 (11th Cir. 2001). At their core, such claims simply are not international. See id; accord Beg v. Islamic Republic of Pakistan, 353 F.3d 1323, 1328 n.3 (11th Cir. 2003) (stating that '[international law prohibits expropriation of alien property without compensation, but does not prohibit governments from expropriating property from their own nationals without compensation')."

"Although de Sanchez did not address the specific treaties mentioned by Mezerhane, the Fifth Circuit did discuss how the 'violation of international law' exception in the FSIA pertains to human rights law:"

"'The international human rights movement is premised on the belief that international law sets a minimum standard not only for the treatment of aliens but also for the treatment of human beings generally. Nevertheless, the standards of human rights that have been generally accepted--and hence incorporated into the law of nations--are still limited. They encompass only such basic rights as the right not to be murdered, tortured, or otherwise subjected to cruel, inhuman or degrading punishment; the right not to be a slave; and the right not to be arbitrarily detained. At present, the taking by a state of its national's property does not contravene the international law of minimum human rights.'"

"Id. at 1397 (citations omitted). Thus, de Sanchez adopted a limited view of the rights protected under the 28 U.S.C. [section] 1605(a)(3) exception to FSIA immunity and refused to apply the exception to a foreign state's taking of the property of one of its own nationals." [Slip op. 5-6]

The Court also rejects Mezerhane's argument that in the thirty years since de Sanchez, international human rights law has developed such that international takings now fall within the exception to sovereign immunity found in 28 U.S.C. [section] 1605(a)(3):

"[...] [T]he trend in recent Supreme Court cases, if anything, tends to undercut his argument: it signals the Supreme Court's reluctance to allow international law claims based on occurrences between foreign citizens on foreign soil to proceed in U.S. courts. Allowing Mezerhane's claim to proceed would move in the contrary direction; it would broadly expand the availability of U.S. courts to resolve cases arising from events taking place exclusively on foreign soil and with a nexus to the United States that is at best marginal."

"In Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), the Supreme Court emphasized that '[i] t is one thing for American courts to enforce constitutional limits on our own State and Federal Governments' power, but quite another to consider suits under rules that would go so far as to claim a limit on the power of foreign governments over their own citizens, and to hold that a foreign government or its agent has transgressed those limits.' 542 U.S. at 727 (citing Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964)); see also Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659, 1664 (2013) ('Indeed, the danger of unwarranted judicial interference in the conduct of foreign policy is magnified in the context of the [Alien Tort Statute], because the question is not what Congress has done but instead what courts may do.')." [Slip op. 6]

The Court concludes that "[i]n any event, under the domestic takings rule, Mezerhane's allegations of takings do not constitute a 'violation of international law' for purposes of the FSIA exception in 28 U.S.C. [section] 1605(a)(3) and thus Venezuela, SUDEBAN, and FOGADE are entitled to sovereign immunity from suit under the FSIA." [Slip op. 6]

Mezerhane also argued that he has effectively been stripped of his citizenship and that he was de facto stateless. He cited to the 1954 Convention Relating to the Status of Stateless Persons and relied on cases arising from Nazi Germany's treatment of Holocaust victims to argue that Venezuela's actions are international in character and thus subject to international law.

"Even if we were to accept that Mezerhane was de facto stateless, the FSIA exception to sovereign immunity found in [section] 1605(a)(3) does not apply to his claims because his claims do not implicate multiple states--they relate entirely to Venezuela. We note with approval the Fifth Circuit's statement in de Sanchez that '[i]njuries to individuals have been cognizable only where they implicate two or more different nations: if one state injures the national of another state, then this can give rise to a violation of international law since the individual's injury is viewed as an injury to his state.' 770 F.2d. at 1396."

"Attempting to sidestep the single-nation problem in this case, Mezerhane cites cases in the aftermath of Nazi Germany to argue that courts have allowed suits to proceed under [section] 1605(a) (3) where Jewish Holocaust victims brought claims against their countries. These cases are distinguishable, however, because they all involved the taking of property in the context of genocide. For example, in the Holocaust claim case of Abelesz v. Magyar Nemzeti Bank, the Seventh Circuit acknowledged that '[the rule] that a so-called 'domestic taking' cannot violate international law, has been recognized and applied in many decisions in U.S. courts' and noted that '[i]f we were dealing with claims of only expropriation of property, as was true in almost all of the cited cases, we would agree and would apply the domestic takings [rule] here.' 692 F3d 661, 674 (7th Cir. 2012). That court, however, concluded that, because plaintiffs alleged that the expropriation of property was 'an integral part of the genocidal plan to depopulate Hungary of its Jews,' id. at 675, the taking violated international norms against genocide, and thus violated international law, id. at 676. Similarly, in de Csepel v. Republic of Hungary, the D.C. district court noted the 'extraordinary facts' of the case as it described the conditions to which Jews were subjected in Hungary, including 'forced labor inside and outside Hungary, and ultimately genocide.' 808 F Supp. 2d 113, 12930 (D.D.C. 2011), rev'd in part on other grounds, 714 F3d 591 (D.C. Cir. 2013)." [Slip op. 7]

The Court concludes that the cases on which Mezerhane relies arose in the unique context of a mass genocide perpetrated by Nazi Germany, and do not apply to Mezerhane's claims which involve no such allegations. Therefore, these cases do not provide a ground to exempt Mezerhane's case from the domestic takings rule.

The Court then turns to the Act of State Doctrine, as applied to this case:

"Even if defendants were not entitled to sovereign immunity under the FSIA, the act of state doctrine also bars Mezerhane's suit. The act of state doctrine, 'is a judicially-created rule of decision that 'precludes the courts of this country from inquiring into the validity of the public acts a recognized foreign sovereign power committed within its own territory.' Glen, 450 F3d at 1253 (quoting Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 401 (1964)). Adopted for reasons of comity, it forbids U.S. courts from adjudicating the acts of a foreign sovereign in its own territory. See Underhill v. Hernandez, 168 U.S. 250, 252 (1897). 'Every sovereign state is bound to respect the independence 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.' Id.

"Mezerhane argues that the Second Hickenlooper Amendment exempts his takings case from the act of state doctrine. Enacted to overrule, in part, the Sabbatino decision, Fogade, 263 F.3d at 1293, the Amendment states in relevant part that:"

"'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 ... based upon (or traced through) a confiscation or other taking ... by an act of that state in violation of the principles of international law....'"

"22 U.S.C. [section] 2370(e)(2) (emphasis added). Interpreting the Second Hickenlooper Amendment in FOGADE, we held that the Amendment overruled Sabbatino only to the extent that the latter held that the act of state doctrine would apply even when a foreign state had violated international law. 263 F.3d at 1293. Yet, as noted supra, FOGADE concluded that a foreign nation's confiscation of the property of one of its own nationals does not, as a rule, constitute a violation of international law, id. at 1294, and therefore 'the Second Hickenlooper Amendment does not preclude application of the act of state doctrine.' 263 F.3d at 1295. The same is true here."

"Mezerhane argues that the confiscation of his property violated international treaties and therefore 'violat[ed ...] principles of international law' for purposes of the Second Hickenlooper Amendment. 22 U.S.C. [section] 2370(e)(2). However, to apply the act of state doctrine consistently with the FSIA--a reading supported by the similarity of the language in 28 U.S.C. [section] 1605(a)(3) and 28 U.S.C. [section] 2370--a 'violation of the principles of international law' must be interpreted in the same way in both provisions. In Part II of this opinion, we concluded that a violation of a treaty is not a violation of international law for FSIA purposes and we reach the same conclusion for the act of state doctrine." [Slip op. 5]

"In conclusion, notwithstanding the Second Hickenlooper Amendment, because in this case a foreign plaintiff is protesting a taking by a foreign sovereign that took place outside of the United States, the act of state doctrine bars a U.S. court from questioning the sovereign's act. Therefore, both that doctrine and the inapplicability of the statutory exception to sovereign immunity found in 28 U.S.C. [section] 1605(a)(3) preclude our review of plaintiff's claim that the government of Venezuela wrongfully expropriated his property." [Slip op. 9]

The Court affirms the district court's dismissal of Mezerhane's complaint.
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Publication:International Law Update
Geographic Code:1USA
Date:Apr 1, 2015
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