The Foreign Claims Settlement Commission of the United States

The Foreign Claims Settlement Commission of the United States

November 29, 2019
The Foreign Claims Settlement Commission of the United States
The Foreign Claims Settlement Commission (FCSC or
Legal Authority
Commission) offers an avenue to provide compensation to
The FCSC’s current authority to administer claims
Americans who suffered harm due to the acts of foreign
settlement programs arises from three sources. First, the
governments. U.S. nationals (citizens, individuals who owe
FCSC retained the International Claims Commission’s
permanent allegiance to the United States, and U.S.
authority to adjudicate claims for nationalizing or taking
corporations) that are injured by foreign governments often
private property against countries that have a claims
do not have a forum to pursue damages in U.S. or foreign
settlement agreement with the United States.
courts. In many cases, recourse may not be available in
foreign judicial systems, and sovereign immunity often bars
Second, Congress has passed legislation that specifically
suits against foreign governments in U.S. courts. The FCSC
authorizes certain FCSC programs. Such program-specific
provides a forum for U.S. nationals to pursue claims against
legislation defines the country against whom claims can be
foreign governments in some cases, but its authority is
brought and the scope of available claims. For example,
limited to select “programs.” Each program involves
Congress authorized the FCSC to hear claims against the
defined categories of claims against one or more specific
People’s Republic of China (PRC) arising between 1949
countries. As of 2017, the FCSC and its predecessor
and 1966 for either (1) uncompensated taking of private
commissions have exercised jurisdiction over more than
property or (2) the disability or death of U.S. nationals
740,000 claims in 47 programs. It has granted nearly $4
resulting from the PRC’s actions. Congress has passed
billion in awards to U.S. nationals.
program-specific legislation authorizing certain claims
against Czechoslovakia, East Germany, Iran, the Soviet
Background and Origins
Union, and Vietnam, among others.
The FCSC has its origins in two post-World War II claims
commissions. In 1948, Congress created the War Claims
Third, the FCSC may establish programs based on referrals
Commission, which adjudicated claims by American
of categories of claims from the Secretary of State. Most of
prisoners of war and civilian internees that suffered
the FCSC’s programs opened in the last two decades began
maltreatment by enemy nations during World War II. Two
with referrals from the Department of State. For example,
years later, Congress created the International Claims
the FCSC opened three programs involving claims against
Commission, which adjudicated claims against foreign
Libya based on Department of State referrals. The Libya
countries that nationalized (i.e., assumed state ownership
programs allowed certain claims for personal and
and control of) or took U.S. citizens’ private property
commercial injuries arising from terrorist incidents prior to
without compensation. Both commissions were in the
2006. In 2005, the Secretary of State referred a program
executive branch. Federal law limited the International
involving claims against Cuba for the uncompensated
Claims Commission’s jurisdiction to foreign countries that
taking of U.S. nationals’ property after 1967. (An earlier
provided lump sum payments to the United States as a part
Cuban Claims Program for pre-1967 takings closed in
of an international claims settlement agreement.
1972.) The Department of State referred two programs—
one of which is still ongoing—concerning torture,
In Presidential Reorganization Plan No. 1 of 1954,
extrajudicial killing, aircraft sabotage, hostage-taking, or
President Eisenhower combined the functions of the War
material support for such acts by the Iraqi government.
Claims Commission and International Claims Commission
into the newly created FCSC in the executive branch. In
FCSC programs often are open for a defined period of
1980, Congress passed legislation transferring the FCSC to
years, after which the FCSC no longer accepts claims.
the Department of Justice (DOJ) as a separate and
independent agency within DOJ.
Funding for FCSC Programs
FCSC programs differ depending on whether there is a
Composition
source of funds available to pay claimants. Some programs
The FCSC’s statutory authority (22 U.S.C. § 1622c) calls
begin with a defined source of funds to pay U.S. nationals
for the Commission to be composed of a full-time
that receive awards. The FCSC opens other programs with
Chairman and two part-time Commissioners appointed by
the expectation that the United States will adjudicate the
the President with the advice and consent of the Senate. The
total amount owed in all claims and then pursue payment
Chairman and Commissioners may be removed only for
from the foreign country responsible for the harm.
malfeasance in office or neglect of duty. Currently, the
FCSC consists of two Commissioners—one appointed by
Funded Programs
President Obama and one by President Trump. The FCSC
For funded programs, the United States often derives
currently does not have a Chairman.
funding from its international claims settlement agreements.
Under such agreements, the responsible foreign country
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The Foreign Claims Settlement Commission of the United States
provides a lump sum payment to the United States in
Second Iraq Program: In 2014, the Department of State
exchange for the release of all U.S. nationals’ claims
referred to the FCSC three categories of claims against Iraq
against that country within certain parameters. The
related to hostage-taking in violation of international law
executive branch typically negotiates and concludes such
that occurred prior to 2004. A 2010 claims settlement
agreements, treating them as executive agreements that do
agreement with Iraq is the source of funding for the
not require the Senate’s advice and consent.
program. The FCSC concluded a prior Iraq program, also
based on referral from the Department of State, in 2016.
When the United States receives a lump payment under an
international claims settlement agreement, it places the
Guam Claims Program: The Guam World War II Loyalty
monies in a special Treasury fund dedicated to an FCSC
Recognition Act (22 U.S.C. § 1621 note), enacted in 2016,
program. The FCSC then opens a program in which it
authorizes the FCSC to make awards to U.S. nationals or
evaluates the merits of each individual claim and makes
their decedents who suffered death, rape, personal injury,
awards to U.S. nationals that successfully present them. The
severe personal injury, forced labor, forced march,
Department of the Treasury disburses funds to claimants
internment, and hiding to evade internment during the
that receive awards. Although claims settlement agreements
Japanese occupation and American liberation of Guam in
are the most common source of funding, congressional
World War II. Duties, taxes, and fees collected from Guam
appropriations, liquidation of foreign assets in the United
under existing law provide funding for the program.
States, or another source defined by statute may also
provide funding to pay FCSC awards.
Procedure for Resolving Claims
Under 22 U.S.C. § 1623 and 50 U.S.C. § 4109, the
Pre-settlement Adjudication
decisions of the FCSC are final and conclusive on all
In some cases, the FCSC opens programs before there are
questions of fact and law. These statutes provide that the
funds available to pay awards. In unfunded programs, the
Commission’s decisions are not subject to review by any
Commission adjudicates the validity of claims and certifies
other U.S. official or by any court, including in a
its decisions to the Secretary of State as a “pre-settlement
mandamus proceeding. Prior to issuing a final decision, the
adjudication.” The FCSC certifies to the Department of
Commission issues a written proposed decision. Claimants
State the total amount owed to all claimants. After
have an opportunity to object to the proposed decision
certification, the United States may pursue payment of the
before it becomes final. Regulations defining the FCSC’s
aggregate amount from the foreign country as a part of its
procedures are provided in 45 C.F.R. §§ 500.1-509.7.
international negotiations. If the foreign country ultimately
concludes an international claims settlement agreement and
Advisory Function
pays the sought-after amount (in whole or in part), the
An amendment to the Foreign Assistance Act of 1961
United States may distribute funds to U.S. nationals with
known as the Hickenlooper Amendment (codified at 22
awards from the FCSC. Such pre-settlement adjudication
U.S.C. § 2370) authorized the FCSC to assist the President
serves dual purposes of (1) allowing adjudication of U.S.
in evaluating whether to suspend foreign assistance to
nationals’ claims while evidence is still fresh and available,
certain countries. The Hickenlooper Amendment states that
and (2) establishing a negotiating position for the United
the President shall suspend foreign assistance to the
States to pursue in its international relations.
government of any country that has (1) “nationalized,
expropriated, or seized ownership or control” of U.S.
Oftentimes, foreign nations agree to an international claims
nationals’ property; (2) taken steps to repudiate or annul
settlement as part of a broader normalization of relations
U.S. nationals’ contracts; or (3) imposed discriminatory
(e.g., resumption of trade and diplomatic relations) with the
taxation or restrictive conditions that have the effect of
United States. But when a foreign country is not willing to
make a claims settlement payment, the FCSC’s pre
nationalizing, expropriating, or seizing ownership or control
-
of U.S. nationals’ property. The Hickenlooper Amendment
settlement adjudication awards can remain unpaid for many
authorizes the FCSC, upon the request of the President, to
years or even decades. For example, the FCSC processed
provide an advisory report in evaluating whether these
all claims in its East Germany program in 1981, but the
conditions were triggered.
United States did not conclude a claims settlement
agreement funding that program until after the reunification
Congressional Interest
of Germany more than a decade later. To date, the United
Because Congress possesses authority to create new FCSC
States has not obtained funding for either of its two Cuban
programs and define the scope of available claims, it may
Claims Programs. Those programs closed in 1972 and
have interest in the FCSC’s functions and capabilities.
2006, respectively. The FCSC certified more than $1.9
Congress exercised its authority to create new claims
billion in unpaid claims in the two programs combined.
programs most recently in 2016, when it created the Guam
Current Programs
Claims Program. Bills have been introduced in prior
Congresses that would have opened FCSC programs for
The FCSC currently has three open programs:
claims against Turkey involving American-owned property
Albania Claims Program: The FCSC has an ongoing
in Cyprus (H.R. 2597, 112th Cong.) and against Libya for
program to adjudicate U.S. nationals’ claims against
the bombing of Pan Am Flight 103 (H.R. 3713, 112th
Albania for uncompensated taking of property prior to
Cong.), among other things.
1995. A 1995 claims settlement agreement with Albania
provides funding for the program.
Stephen P. Mulligan, Legislative Attorney
IF11376
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The Foreign Claims Settlement Commission of the United States

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