When President Nixon and Prime Minister Tanaka of Japan, held a summit meeting in Hawaii on August 31-September 1, 1972, doubtless no one expected they were laying the foundation for one of the most curious sovereign immunity cases in the annals of American jurisprudence. The resulting communique, however, which placed the leaders' seal of approval on extensive Japanese purchase commitments in the United States, became the basis for a Japanese claim that half a billion dollars worth of enriched uranium subsequently purchased by ten Japanese utilities from the Atomic Energy Commission (AEC) and stored on its reservation in Oak Ridge, Tennessee enjoyed sovereign immunity from local commercial property taxes. The Japanese claim, apart from posing a diplomatic issue between Japan and the United States, embroiled the Department of State and the AEC (and its successor, the Energy Research and Development Administration (ERDA)) with each other and with the Department of Justice, threatened controversy between Tennessee and Washington, and eventually resulted in the Japanese utilities’ settling the matter for $4.5 million. Although the settlement deprived posterity of a decision on the issue, this unique case remains not simply an entertaining episode but also a useful lesson in defense against claims of sovereign immunity. While the Foreign Sovereign Immunities Act of 1976 was intended substantially to eliminate the role of the Department of State in sovereign immunity disputes, the Act could not have been successfully invoked in this case, even had it been in effect, as related below.
International Real Estate Review