§ 216. Compulsory acquisition of foreign investment property
§ 217. Transfers of earnings and capital
§ 218. Change in law and regulations
§ 219. Non-discriminatory treatment
(1) There shall be no compulsory acquisition or expropriation of the property of any business entity as to which a Foreign Investment Permit has been issued, except under the following circumstances:
(a) in order to apply sanctions for violation of laws or regulations, as provided for in section 220 of this chapter; or
(b) in extraordinary cases in which
(i) such compulsory acquisition or expropriation is consistent with existing FSM law governing eminent domain;
(ii) such compulsory acquisition or expropriation is necessary to serve overriding national interests and
(iii) the conditions of subsection (2) of this section are met; or
(c) pursuant to generally applicable laws and regulations of the FSM or any State.
(2) Compulsory acquisition or expropriation of a type described in subsection (1)(b) of this section may be undertaken only after:
(a) the National Congress has, following a recommendation to this effect by the Secretary, taken official action to identify in writing
(i) the property to be acquired or expropriated and
(ii) the overriding national interests that make such acquisition or expropriation necessary; and
(b) the Secretary has issued a notification to any holder of a Foreign Investment Permit whose property is to be acquired or expropriated, indicating
(i) what property is affected by the action;
(ii) what compensation will be paid for the acquisition or expropriation of the property; and
(iii) what appeal or other forms of legal recourse are available to the holder of the Foreign Investment Permit affected by the action.
(3) Payment of compensation pursuant to subsection (2)(b) of this section shall be promptly made and adequate in amount.
(4) Neither the National Government nor any State Government nor any other entity within the FSM shall take any action that, although not formally designated or acknowledged as compulsory acquisition or expropriation, indirectly has the same injurious effect ("creeping expropriation").
Source: PL 10-49 § 24; PL 14-32 § 10.
Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code. The statutory provisions on the FSM Congress are found in title 3 of this code.
The official website of the Congress of the Federated States of Micronesia contains the public laws enacted by the Congress, sessions, committee hearings, rules, and other Congressional information at http://www.fsmcongress.fm/.
Case annotations: By statute, the national government guarantees that there will be no compulsory acquisition or expropriation of any foreign investment property for which a Foreign Investment Certificate has been issued and that the national government will not take action, or permit any state or other entity within the FSM to take action that although not formally designated or acknowledged as compulsory acquisition or expropriation, indirectly has the same injurious effect ("creeping expropriation") and that if such action nevertheless takes place, the national government is responsible for the prompt and adequate compensation of any injured noncitizen. This statute creates a cause of action by the aggrieved alien against the FSM for compensation for a state’s conduct in violation of § 216(1) and (4). AHPW, Inc. v. FSM, 12 FSM R. 114, 120 (Pon. 2003).
The national government guarantees that there will be no compulsory acquisition or expropriation of the property of any foreign investment as to which a Foreign Investment Certificate has been issued. AHPW, Inc. v. FSM, 12 FSM R. 164, 166 (Pon. 2003).
When a party has not alleged that the state has dispossessed it of any property, and that property is now in the possession of the state or its designee, the party has not stated a cause of action for expropriation under the FSM foreign investment statutes. AHPW, Inc. v. FSM, 12 FSM R. 164, 167 (Pon. 2003).
There is no meaningful distinction between the terms "compulsory acquisition" and "expropriation." AHPW, Inc. v. FSM, 12 FSM R. 164, 167 (Pon. 2003).
(1) The National Government guarantees that no holder of a currently valid Foreign Investment Permit will be subject to any restrictions on making lawful remittances of profits and carrying out other lawful current international transactions as defined in the Articles of Agreement of the International Monetary Fund.
(2) The National Government guarantees that any holder of a currently valid Foreign Investment Permit will be permitted to lawfully repatriate any amount of capital that was brought into the FSM for, or that lawfully accrued on, a business entity to which such Permit applies.
Source: PL 10-49 § 25; PL 14-32 § 11.
Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code.
Upon payment of such additional fees as the Secretary may prescribe for this purpose, the holder of an FSM Foreign Investment Permit shall be entitled, for a period agreed upon with the Secretary but not to exceed five years, to an exemption from any future changes in:
(1) the customs duties and other regulations or restrictions relating to the importation of machinery, equipment, and other goods used in carrying out the activities authorized in the FSM Foreign Investment Permit; or
(2) gross revenue tax rates and rules applicable to the business entity to which the FSM Foreign Investment Permit applies.
Source: PL 10-49 § 26.
Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code. The statutory provisions on taxes are found in title 54 of this code.
Subject to the provisions of this chapter and regulations promulgated hereunder, and subject further to the express provisions of any other statute applicable to specific business categories, the National Government shall not take action, or permit any State to take action, that would result in a foreign investor being given treatment that is less favorable than the treatment given to citizens, engaging in business in the FSM.
Source: PL 10-49 § 27; PL 14-32 § 12.
Case annotation: A state would have to actually acquire the property in some fashion for there to be an expropriation, and 32 F.S.M.C. 219 only authorizes injunctive relief and does not create a cause of action for damages. Pohnpei v. AHPW, Inc., 14 FSM R. 1, 24 (App. 2006).
While injunctive relief would be available to prospectively enforce 32 F.S.M.C. 219, noticeably absent from this section is any language which creates a cause of action for damages on the aggrieved party’s part. AHPW, Inc. v. FSM, 12 FSM R. 114, 122 (Pon. 2003).
While § 219 of the Foreign Investment Laws admits of a cause of action for prospective, injunctive relief against the FSM, it does not permit an action for damages. Chapter 3 provides a remedy for damages, but notwithstanding the fact that the remedy is against Pohnpei, and not the FSM, it is nevertheless a remedy. If the plaintiff prevails, the conduct alleged will not go unsanctioned. AHPW, Inc. v. FSM, 12 FSM R. 164, 167 (Pon. 2003).
By statute, the national government will not take action, or permit action, or permit action to be taken by any state or other entity within the FSM, that although not formally designated or acknowledged as compulsory acquisition or expropriation, indirectly has the same injurious effect ("creeping expropriation"), and that if such action takes place, the national government will be responsible for the prompt and adequate compensation of any injured noncitizen. Pohnpei v. AHPW, Inc., 14 FSM R. 1, 23 (App. 2006).
By statute, the national government will not take action, or permit any state to take action, that would result in a foreign investor being given treatment that is less favorable than the treatment given to citizens, or business entities wholly owned by citizens, engaging in business in the FSM. Pohnpei v. AHPW, Inc., 14 FSM R. 1, 23 (App. 2006).