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U.S. 356 [75 S.Ct. 423, 99 L.U. 3891 (1956), in which the Supreme tention that the company and its predecessors never had
Court held that the protection of sovereign immunity is waived when a the legal right to take out oil. All legal remedies in Peru
foreign sovereign enters a U.S. court as plaintiff. While the Court did were exhausted, and the offset was not acceptable to the
' not deal with the act of state doctrine, the basic premise of that case-
that a sovereign entering court as plaintiff opens itself to counterclaims, claimant or to the United States, on ground that seem, at
up to the amount of the original claim, which could be brought against it the very least, reasonably arguable. However, subsection
by that defendant were the sovereign an ordinary plaintiff--is applicable (e)(1) was not formally applied. Within the first 6 months
by analogy to the situation presented in the present case. after the taking, while efforts at diplomatic settlement
In this case, the Cuban government's claim arose from a banking were still in progress, the executive branch consulted with
relationship with the defendant existing at the time the act of state-ex-
propriation of defendant's Cuban property-occurred, and defendant's key congressional figures and obtained their tacit agree-
counterclaim is limited to the amount of the Cuban government's claim. ment for nonapplication. A major reason for this informal
We fmd, moreover, that the foreign policy interests of the United States amendment in the law is that subsection (e) (1), if used,
do not require the application of the act of state doctrine to bar adjudica- would have serious adverse effects on United States
tion of the validity of a defendant's counterclaim or set-off against the foreign policy and possibly on private interests of other
Government of Cuba in these circumstances.
The Department of State believes that the act of state doctrine should Americans in Peru and elsewhere. Subsection (e) (1) has,
not be applied to bar consideration of a defendant's counterclaim or set- as a matter of fact, been used only once, with indifferent
off against the Government of Cuba in this or like cases. results as to its investment-protection objective. 118
7-29. Practical Effects of the Hickenlooper Amend- c. Although the amendment has not been invoked,
ment. a. Legislative constraints. The Hickenlooper both Peru and Chile have complained that the United
Amendment's requirement that the President be satisfied States has not in fact entered into new bilateral aid ar-
within 6 months of an assured solution to a nationalization rangements with them and has opposed international
problem has created foreign affairs problems under sub- lending agency development assistance to them. The con-
section (e) (1), which requires the President to cut off duct was labeled as "illicit intervention."
foreign assistance to the developing country concerned. 7-30. Conclusion. As noted in the introductory para-
Under some other provisions of Section 2370, which lists graphs of this chapter, the concept of state responsibility is
a number of instances in which foreign assistance shall be currently undergoing substantial rnocl%cation in response
suspended, the President has authority to waive suspen- to vary pressures emanating from a number of different
sion when he frnds that it is in the foreign policy interests sources. New approaches toward old problems have
of the United States to do so. However, such is not the resulted in the realization that some degree of com-
case with regard to subsection (e) (1). promise must be reached among those states advocating
b. Examples. In 1968, a military regime in Peru na- widely divergent views in this area. As solutions to cur-
tionalized the properties of the International Petroleum rently existing differences are found, however, the rules
Company, entitled in its own right or through its parent, of law associated with this aspect of international jurispru-
the Standard Oil Company of New Jersey, to United dence will become even more important to the judicial
States diplomatic protection. Peru set off against any com- and economic development of the world community.
pensation that otherwise might have been payable a much
larger claim for "unjust enrichment," based upon a con- 118.. Thii was invoked against Ceylon.