was known. Subsection (f) provides that the Secretary of the Treasury shall certify to the Secretary of State the amounts paid to each claimant from the Cuban Claims Compensation Fund.

Section 519. Fees of attorney; limitation; penalty

Section 519 imposes a limitation on the amount that may be paid to an attorney for any claimant for services rendered in connection with presentation of a claim to the Commission.

Section 520. Loans to claimants

III. LOAN PROVISIONS

Section 520 authorizes loans by the Secretary of State to claimants who hold adjudicated Cuban claims. The value of the unpaid claim is the only collateral to be required for such loans. Loans may not exceed 30 percent of an unpaid claim (the amount of the loan is to be reduced by the amount of any tax benefits the claimant has received on account of the loss) except that loans used for projects meeting the requirements of the Alliance for Progress provisions of the Foreign Assistance Act of 1961 may amount to 80 percent of the unpaid claim. Loans cannot run longer than 10 years after the date an unpaid claim has been paid in full or after the property which was the subject matter of the claim has been returned. Loans are to bear 12 percent interest unless the property which was the subject of the unpaid claim is returned in which case the interest rate rises to 5 percent within 3 years. Loans for Alliance for Progress projects bear the same terms as comparable projects under the Foreign Assistance Act of 1961. Section 520 also authorizes such appropriations as are necessary to carry out the loan program.

Mr. SELDEN. Our second witness today is the Honorable Edward D. Re, Chairman of the Foreign Claims Settlement Commission of the United States.

Mr. RE. Thank you very much, Mr. Chairman.

Mr. SELDEN. I see, Mr. Re, accompanying you is Mr. Andrew T. McGuire, general counsel.

Mr. RE. That is correct.

Mr. SELDEN. You may proceed.

STATEMENT OF HON. EDWARD D. RE, CHAIRMAN, FOREIGN CLAIMS SETTLEMENT COMMISSION OF THE UNITED STATES

Mr. RE. Mr. Chairman, members of the committee, I am pleased to appear this morning to present to the subcommittee the views of the Foreign Claims Settlement Commission in connection with H.R. 10327. The purpose of H.R. 10327 is to amend the International Claims Settlement Act of 1949, as amended, and to provide compensation from Cuban assets blocked in the United States to American nationals whose property was nationalized or otherwise taken by the Cuban Government since January 1, 1959.

Provision is also made for claims based on the disability or death of U.S. nationals by actions attributable to the Cuban Government. This bill is one of the series of measures to be considered by the Congress with respect to claims of U.S. citizens whose property has been taken by Communist governments since the end of World War II.

HISTORICAL BACKGROUND

The present proposal, insofar as the adjudication of claims is concerned, is within the general contemplation of the Congress at the time the International Claims Settlement Act was enacted in 1949. The enactment of this statute arose out of our growing concern regarding violations by Communist governments with respect to the treat

ment of property owned by American citizens in those countries, and the failure to compensate these owners. The need for this law, providing some measure of relief to American property owners, was apparent.

In some cases negotiations between the United States and certain Communist governments have resulted in claims settlement agreements wherein the expropriating government has agreed to pay the U.S. Government a lump sum in settlement for the losses suffered by U.S. citizens.

The first agreement of this nature was concluded with the Yugoslav Government under the Yugoslav Claims Agreement of 1948. The International Claims Settlement Act was enacted to implement this agreement by establishing a commission to adjudicate these claims and establish certain adjudication procedures. The act also provided the machinery necessary to adjudicate claims of American citizens included within the terms of any claims settlement agreement concluded thereafter between the Government of the United States and a foreign government.

Reorganization Plan No. 1 of 1954 established the present Commission, the Foreign Claims Settlement Commission, to continue the claims programs as authorized under the International Claims Settlement Act of 1949 and the War Claims Act of 1948.

I must add, for purposes of clarification, that in 1954 there existed two national claims commissions in the United States, the International Claims Commission and the War Claims Commission. The reorganization plan abolished both these Commissions and transferred their functions and jurisdiction to the Foreign Claims Settlement Commission of the United States that today administers both the International Claims Settlement Act and the War Claims Act. over, it authorized the Commission "to administer any additional claims programs financed by funds derived from foreign governments without delay." I underline, "without delay" which has often characterized the initiation of past programs.

LONG-TERM COMPENSATION

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In addition to claims against the Government of Yugoslavia, claims have been adjudicated under title I of the International Claims Settlement Act of 1949 pursuant to the terms of the Panamanian Claims Agreement of 1950 and are presently being adjudicated against the Government of Poland under the terms of the Polish Claims Agreement of 1960.

This agreement is of particular interest as a precedent. Although Poland has agreed to pay $40 million for the property of American citizens that has been taken, it has agreed to make this payment over a 20-year period, since it was not able to pay the $40 million in a lump sum immediately. It has thus far made four payments totaling $8 million.

Title III of the act provided for the settlement of claims against the Governments of Bulgaria, Hungary, Rumania, Italy, and the Soviet Union. Claims against the Government of Czechoslovakia for the nationalization or other taking of American-owned property, were provided for under title IV of the act. No claims settlement agree

ments had been reached with respect to claims against the Governments of Bulgaria, Hungary, Rumania, and Czechoslovakia. Money for the payment of these claims was derived from the vesting and liquidation of all Government and corporate-owned assets of these Governments under the Trading With the Enemy Act. Money for the payment of the Italian and Soviet claims was provided for under the Lombardo Agreement and Litvinov Assignment, respectively. All these programs have been completed within the time limitations prescribed by the statute. The Commission has never asked for an extension of time to complete a program. It has completed all past programs within the statutory deadline prescribed.

CLAIMS AGAINST CUBA

The bill, H.R. 10327, proceeds a step further by providing some measure of relief to American citizens who suffered losses at the hands of the Communist Government of Cuba. In effect, H.R. 10327 adds title V to the International Claims Settlement Act and would authorize the Foreign Claims Settlement Commission to receive and determine, in accordance with applicable substantive law, including international law, the amount and validity of claims by nationals of the United States against the Government of Cuba arising since January 1, 1959, for losses resulting from the nationalization or other taking of property owned by nationals of the United States and for disability or death of U.S. nationals resulting from actions of the Government of Cuba.

As indicated in the chairman's opening statement, this is the heart of the bill, particularly insofar as the Commission is concerned.

DEATH OR DISABILITY CLAIM

With respect to the latter provision, the attention of the subcommittee is invited to the fact that claims for disability or death of U.S. nationals arising from action of foreign governments have never before been dealt with under this type of legislation.

Generally, the payment of compensation for claims of this nature has been limited by law, to American civilian internees of the Japanese who were captured during the World War II in U.S. possessions and territories, and to certain other American citizens who were in the civil or military services of the United States.

More recently, claims based on injury, physical disability or death of American citizens which occurred between September 1, 1939, and December 11, 1941, while passengers on commercial vessels on the high seas were provided for under title II of the War Claims Act of 1948 as amended by Public Law 87-846. This is a program presently being administered by the Commission that is referred to as the general war claims program.

All these claims were the result of wartime actions. No claims have heretofore been authorized resulting from actions by communistic governments. In this connection the question arises as to the feasibility of providing for such claims under this bill to the exclusion of all similar claims against other communistic governments. It should also be noted that there is no money available for the payment of claims of this nature arising in other countries.

NATIONALITY REQUIREMENT

The nationality requirements of claimants under the bill are similar to those under other titles of the act in that such claims must have been continuously owned by nationals of the United States from the date of loss. This provision follows established international law principles which, when applicable, have been applied in all adjudications before the Commission.

CLAIMS FUND

The bill establishes a claims fund out of which the awards would be paid. This fund, as provided by the bill, would consist of net proceeds of vested property which had been blocked in accordance with the Cuban assets control regulations of July 8, 1963. Awards in the amount of $1,000 or less would be paid in full. All others would be paid an initial amount of $1,000 and the remaining balance to be paid in ratable proportions against the remaining money in the claims fund. Payment of an award, unless payment was made in full, under the terms of the bill, would not extinguish the claim for any remaining unpaid portion of an award. Thus, an award holder would not be divested of his rights, or the Department of State on his behalf, to proceed against Cuba for recovery of such unpaid balance under a possible future claims settlement agreement.

These are the basic provisions of the proposed bill which concern the Foreign Claims Settlement Commission. There have also been added certain necessary incidental provisions such as a 6-month filing period, a 10-percent limitation on attorneys fees, provisions relating to claims by stockholders, and other claims procedural matters, including the implementation of certain subsections of section 4 of the International Claims Settlement Act.

Generally, these provisions of the bill are similar in some degree to other titles under the International Claims Settlement Act. However, there are a few departures or differences from other titles of the act with respect to the property claims.

FILING PERIOD

The first item is the provision relating to the claims filing period. The bill provides for the filing of claims within 6 months after the date of enactment of title V, or within 6 months after the date the claim first accrued to the claimant, whichever date last occurred. Under previous bills of this type, which were considered by the committee, there was at least a 12-month filing period. The Commission would prefer and therefore favors the longer filing period since it would benefit both the claimant and the Commission. The claimants would have a longer time to gather evidence in support of their claims thereby resulting in a more orderly and expeditious adjudication of their claims. The second part of section 503 (b) indicates that there would be a continuous claims program by providing that any claimant whose property was taken or suffered an injury or death would be permitted to file a claim within 6 months after the date the claim first accrued. This provision would preclude the establishment of a claims settlement period which is a departure from other claims legislation where the program generally has run for a specific number of years.

CORPORATE CLAIMS

The second item relates to claims of stockholders having an indirect ownership interest in corporations. In the present bill, such claims are permitted if at least 1212 percent of the entire ownership interest in such corporations at the time of loss was vested in nationals of the United States. Heretofore, recoveries based on indirect interest have been limited to corporations having at least 25 percent American ownership at the time of loss. The purpose of this provision was to avoid a multiplicity of very small claims based on fractional indirect American ownership interest in foreign corporations which suffered the loss. The Commission would be more inclined to favor the 25percent limit.

The last item concerns the percentage of American ownership of stock or beneficial interests in corporations. This item is contained. in the definition of the term "national of the United States" on page 2 of the bill. The bill as written provides that in order for a corporation to qualify as a national of the United States, 25 percent of its outstanding capital stock or other beneficial interest must be owned by persons who are nationals of the United States. In previous legislation concerning claims of this type, the Congress has required that at least 50 percent of the stock or beneficial interests be owned by U.S. nationals. By reducing this percentage to 25 percent, corporations would be included in which the ownership would be predominantly foreign. In order to equate the nationality requirements of both individual claimants and corporations, the Commission recommends a change in the bill to require at least 50 percent American ownership in these corporations.

ADJUDICATION

However, on the whole, the Commission's position is favorable with respect to the adjudication and determination of claims aspects of the bill. It is the Commission's opinion that the enactment of such a program appears to be the only orderly procedure to liquidate damages sustained by American citizens who have suffered losses at the hands of the Castro government.

The very desirable and practical result in allowing a presettlement adjudication of these claims at this time, is that all such claims will have been thoroughly investigated and determined, while witnesses, memories, and records are still available and reliable.

Historically, the Commission has learned from experience that long delays in the initiation of claims legislation of this type have a tendency to increase the burdens of adjudication. As a result of a more than reasonable lapse of time which have typified a number of previous claims programs, many claims have been found difficult to substantiate, either by reason of the unavailability of records or witnesses, even when the claimant or the Commission had access to foreign countries. The difficulties are more apparent in countries such as Czechoslovakia and Hungary where there was a total lack of cooperation or access to documents and witnesses.

Unlike claimants under other claims programs, who were required to wait many years for the adjudication of their claims, claimants under this bill, if enacted, will have a relatively short period to wait. If