UNCLASSIFIED   STATE   00049477 
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DE RUEHC #9477/01 1341835
ZNR UUUUU ZZH
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