Fashion Industries Corporation owns assets in Vietnam, a country in Asia. The gov-ernment of Vietnam wants to nationalize all assets owned by foreign firms and investors. What can Fashion Industries do? Can it at least obtain payment for the assets?

Answer 1

If a government decides to seize property within its bor-ders, and not to pay for it, there are few remedies available. This is of course a confiscation, which results when a government takes private property for an illegal purpose without paying just compensation. (An expropriation, by contrast, occurs when a government seizes private assets or a private business for a legal purpose and pays for the seizure.) Under most circumstances, it is unlikely that a confiscating nation's courts would order its government to pay just compensation, even if the court had the authority to do so. In a case alleging that a foreign government has wrongfully taken a business firm's property, the defendant government has the burden to prove that the taking was an expropriation, not a confiscation.
But the act of state doctrine can prevent a firm's recovery in a court in the firm's home country. Under that doctrine, a court in one country will not review the validity of a public act of a recognized foreign government within it own territory. (Some na-tions guarantee compensation to for-eign investors in their constitutions, stat-utes, or treaties. Others (such as the United States) pro-vide some in-surance for their citizens' investments abroad. Claims are often resolved by lump-sum settlements after negotiations, as between the United States and the confiscating nation.)

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