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Telling The Story of Indirect Expropriation – Lessons From The Pacific

- Chris Hikida

A state passed laws that significantly impact the value of your investment and you want to bring an indirect expropriation claim.  How do you craft a compelling case?

Indirect expropriation claims against sovereign entities present unique challenges: the facts are often complicated with no clear indication of wrongdoing or harm; there may be competing government policy considerations; and due to the indirect nature of the claim, causation is not always clear.  Success is therefore dependent on how the claimant weaves together the facts of the case and presents important issues.  The presentation of your case will affect decisions on whether intervention is necessary, your claims have merit, and the remedy you seek is justified by the facts.  Our ongoing case—Crawford v. Antonio B. Won Pat International Airport Authority, Guam et al.[1]—showcases our approach to a few of the common issues we face when litigating against a sovereign entity.

During World War II, the United States took property from landowners on Guam for government use.  Following World War II, the United States provided some compensation to the landowners, but payments were much less than the full value of their properties.  Civilian affairs on Guam were administered by the U.S. Navy, which left the landowners with little-to-no method to fight the United States and receive meaningful compensation for their lands.  In 1950, Congress created the Government of Guam to govern the newly established territory of Guam.  The United States transferred property it had taken during the war to the Government of Guam.  Among the property transferred was the Guam Airport, run by the Airport Authority, an independent entity of the Government of Guam.

The Government of Guam recognized that original landowners were never fully compensated for their properties and granted the landowners Ancestral Property Rights—the right to the return of land or full compensation where the land was being used for government purposes.  The Government of Guam promptly began returning lands that were not used for public purposes.  But decades after the Government of Guam first recognized Ancestral Property Rights, they failed to provide any compensation to landowners whose property was being used by the Guam Airport.  We filed a lawsuit on behalf of landowners whose property was being used by the Guam Airport against the Government of Guam and the Airport Authority.  We allege that that the defendants denied landowners their right to due process guaranteed by the United States Constitution by failing to provide adequate procedures to compensate landowners.[2]  Three major issues shape how we have presented our case.

First Issue: Why is this case important?

Perhaps the most important element in an indirect expropriation case is to provide an answer for why the adjudicator should get involved.  Adjudicators may be hesitant to issue adverse judgments against sovereign entities.  It is essential to emphasize the strongest points of your case to demonstrate why the case is worth considering.  In Crawford, we focus on the extent of the deprivation and the defendants’ persistent failure to compensate landowners in recognition of their Ancestral Property Rights.  We begin every major filing by emphasizing how the landowners had been deprived of their land since World War II, and how despite the Government of Guam passing numerous laws recognizing the Ancestral Property Right, no forthcoming relief is expected.  The unreasonableness of the continued deprivation demonstrates a compelling reason why judicial intervention is necessary.

Second Issue: What is the connection between the sovereign entity and the expropriation?

This question is critical in the context of indirect expropriation—where complex facts often present the challenge of clearly linking the government action with property loss.  It is therefore important to clearly explain causation.  In Crawford, our clients need to show a connection between the Government of Guam’s and the Airport Authority’s actions, and the original landowners’ deprivation.  The defendants argue that they should not be liable for expropriation where the land was initially taken by the United States, not the Government of Guam, and that the United States had already provided some compensation for the land.  The key to describing the connection is to take the court step-by-step through our theory of the injury and how the defendants’ actions led to this injury.  We focused on distinguishing between the Ancestral Property Rights and the initial taking by the United States—explaining that while the Government of Guam was not involved in the initial taking, it has continuously deprived landowners of their right to compensation or land returns under the Ancestral Property Right.  We also explained how each defendant individually contributes to the deprivation: the Government of Guam fails to establish procedures to compensate landowners; and the Airport Authority’s continuous occupation of the property denies landowners the land return option.

Third Issue: Is the remedy sought fair?

Finally, it is important to seek a fair resolution for your claim.  The government action and requested relief may implicate various competing policy considerations.  Claimants should request relief that is reasonable and be ready to justify the proposed relief in light of public policy concerns.  In Crawford, the property at issue is the only public airport on Guam and the ongoing operation of the airport is important for the public’s benefit.   We make clear that compensating landowners that would not prevent the Government of Guam or the Airport Authority from operating the airport.

Bringing an indirect expropriation claim against a sovereign entity can be a daunting endeavor.  It is therefore important to strategize how you will frame the issues before filing your case.  By taking the time to develop and craft your presentation of the case, you can significantly increase your chances of success, whether you proceed in court or in an arbitral forum.

[1] Case No. 1:15-cv-00001.  This case is before Chief Judge Frances M. Tydingco-Gatewood in the United States District Court of Guam.

[2] Federal statute, 42 U.S.C. § 1983, serves as the basis for the due process claim.