Application instituting proceedings

INTERNATIONALCOUOFJUSTICE
PLEADINGS, ORALARGUMENTS, DOCUMENTS

CASE CONCERNING

ELETTRONICA SICULA S.p.A.
(ELSI)

(UNITED STATEOF AMERICA v.ITALY)

VOLUME I
Application;Mernorial

COUR INTERNATIONALEDE JUSTICE

MEMOIRES,PLAIDOIRIESET DOCUMENTS

AFFAIRE

DE L'ELETTRONICASICULA S.P.A.
(ELSI)

(ÉTATS-UNID'AMÉRIQUE cITALIE)

VOLUME 1
Requêt; émoire INTERNATIONAL COURTOF JUSTICE
PLEADINGS,ORALARGUMENTS,DOCUMENTS

CASECONCERNING
ELETTRONICASICULAS.P.A.

(ELSI)

(UNITED STATES OF AMERIvITALY)

VOLUME 1
Application; Memorial

COUR INTERNATIONALEDE JUSTICE
MÉMOIRESPLAIDOIRIESETDOCUMENTS

AFFAIRE

DE L'ELETTRONICA SICULA S.P.A.
(ELSI)

(ÉTATS-UNIS D'AMÉRIQUE c. ITALIE)

VOLUME 1
Requête; mémoire The case concerning ElerrronicaSiculaS.P.A. (ELSI), entered on the Court's
General List on 6February 1987under number 76, was thesubject of a Judgment
delivered on 20 July 1989 by the Chamber constituted by the Order made hy
the Court on 2 March 1987 (ElertronicaSiculaS.P.A. (ELSI). Judgmeni,I.C.J.
Reports1989. p. 15).
The pleadings and oral argunients in the case are being puhlished in the
following order:

Volume 1.Application instituting proceedings; Mernorial of the United States of
America.
Volume II. Counter-Memorial of Italy; Reply of the United States of America;
Rejoinder of Italy.
Volume III. Oral Arguments; Documents submitted to the Chamber after the
closure of the written proceedings; Correspondence.

In interna1 refcrences, hold Roman numerals are used to refer to Volumes of
this edition; if they are immediately followed by a page reference, this relatesto
the new pagination of the Volume in question. On the other hand, the page
numbers which are oreceded or followed bv a reference to one of the oleadinrs
only or which appear between square hrackets relate to the original pagination
of the document in question, which, in general, is not reproduced in the present
edition.
Neither the typography nor the presentation may be used for the purpose of
interpreting the texts reproduced.

L'araire de I'ElerrronicaSicula S.P.A. (ELSI), inscrite au rOlegénéralde la
Cour sous le numéro 76 le 6 février 1987, afait l'objet d'un arrêt rendu le
20juillet 1989par la Chambre constituéepar ordonnance de la Cour du 2 mars
1987 (ElerrronicrrSiculaS.P.A. (ELSI), arréf, C.I.J. Recueil1989, p. 15).
Les piècesde procédure écriteet les plaidoiries relatives à cette affaire sont
publiéesdans l'ordre suivant:

Volume 1.Requête introductive d'instance; mémoire deE stats-Unis d'Amérique.
Volume II. Contre-mémoire de I'ltalie; répliq. .des Etats-Unis d'Amérique;
duplique de I'ltalie.
Volume III. Procédureorale; documents présentésà la Chambre après la fin de
la procédureécrite; correspond;ince.

S'agissant des renvois, les chiffres romains gras indiquent le volume de la
orésenteédition;s'ilssont immédiatementsuivis var une référence de page. cette
i~f~ ~ ~erenvoie à la nouvelle ."zination du voiume concerné.En re;aiche. les
numérosde page qui ne sont précédéo su suivis que de la seule indication d'une
piècede procédure ouqui ont étémis entre crochets visent la pagination originale
du document en question, qui. en principe, n'a pas étéreproduii dans la présente
édition.
Ni la typographie ni la presentation ne sauraient être utiliséesaux fins de
l'interprétation destextes reproduits. CONTENTS -TABLE DES MATIÈRES

PB&-*
Application Instituting Proceedings Submitted by the Government of the
United Stats of America . Requête introductive d'instance présenp tare
le Gouvernement desEtats-Unis d'Amérique

1. The Chargéd'Araires ad invrim of the United States of America to
the Netherlands to the Deputy-Registrar of the International Court of
Justice ...................... 3
II. Application lnstituting Proceedings ............ 4
1. Statement of facts ................ 4
II. The jurisdiction of the Court ............. 6

IV..Judgment requested the................ .......... 7

Attachment 1.Treaty of Friendship, Commerce and Navigation be-
tween the United States of America and the ltalian Republic . . 9
Additional Protocol ................ 27
Exchangc of Notes ................. 29
38
Attachment 2 . Summary of diplomatic efforts to resolve this dispute . 39
Attachment 3 .Order made on I April 1968hy the Mayor of Palermo

Memorial of the United States of America - Mémoiredes Etats-Unis
d'Amérique
Part 1.Introduction .................. 43
Part 11.Statement of facts ................ 45
45
Chapter 1 . Wickground .................
Section 1.The Treaty of Friendship, Commerce and Navigation . . 45
Section 2.Raytheon's and Machlett's investmentin ELSI .... 46
Section 3.The development of ELSl to 1967 ........ 47
Section 4.Final efforts at self-sufficiency.......... 48
Chapter II .Intervention by the Government of Italy Io prevent the
orderly liquidation of ELSl .............. 51
Section I.The decision to liquidate ELSl .......... 51

Section 3.The resulting bankruptcys a.................. 56

Chapter III .The acquisition of ELSI's assets by IR1 ....... 58
Section I. Public announcenient of the decision to acquire ELSl's
assets ..................... 58
Section2 .The acquisition of ELSI's assets ......... 59
A . IR1 leases and re-opens ELSI ............ 59
B . IR1 acquires ELSl's work in process ......... 61
C . IR1 completes its acquisition of ELSl's assets ...... 62

Chapter IV .Suhsequent Italian court action ......... 64
Section I.The illegality of the requisition and aftermath .... 64 Section2. ltalian bank suits against Raythe. . . . . . . .
Section3. The conclusion of the bankruptcy proceedings. . . .
Part III. The jurisdiction of the Cou. . . . . . . . . . . .
Part IV. The claims of the United States. . . . . . . . . . .
Chapter 1. Introduction . . . . . . . . . . . . . . . .
Chapter II. Interference with the management and control of ELSI.

Section 1. Article Ill of the Tre. . . . . . . . . . . .
Section 2. Article I of the Suppleme. . . . . . . . . . .
Section3.Article VI1of the Treaty. . . . . . . . . . . .
Chapter III. Impairment of investment rights and interes. . . .
Section 1.The requisition. . . . . . . . . . . . . . .
Section2. The subsequent course of conduc. . . . . . . . .

Chapter IV. Wrongful taking of interests in propert. . . . . .
Section 1.The taking of interests in propert. . . . . . . .
Section 2. Absence of due process. . . . . . . . . . . .
Section3.Absence of jus1 compensation . . . . . . . . . .
Chapter V. Failure to provide protection and securi. . . . . .

Section 1.Delay in ruling on the challenge to the requisition .rder
Section 2. Failure to aiïord protection to ELSl's plant and premises
Chapier VI. The compensation due to the United States . . . . .
Section 1.The duty to pay compensation. . . . . . . . . .
Section2. The measure of compensation . . . . . . . . . .

A. Compensation may be measured by the injury to Raytheon and
Machlett . . . . . . . . . . . . . . . . . . .
B. All of the injuries suiïered by Raytheon and Machlett should be
included in the measure of compensatio. . . . . . . .
1. The general principle . . . . . . . . . . . . .
2. The specifictypes of injury. . . . . . . . . . .
(a) Financial losseswith respectto loan guarantee payments,
return of investment, and open accounts. . . . .
(b) Legal expenses in connection with hankruptcy and de-
fense against ltalian bank s. . . . . . . . .
(cj Costs incurred by Raytheon in pursuing its cl. . .
Section3. The award of interest. . . . . . . . . . . . .

A. lnterest should be awarded to comoensate Farthe loss of use of
money over lime . . . . . . . . . . . . . . . .
B. lnterest should he awarded at the United States prime . .e
C. lnterest should be calculated from the date of iniurv 10the date
of payment of the award, and compounded an;uafiy. ., . .
Suhmissions . . . . . . . ... . . . . . . . . . . .

Annexesro rheMemorial of the UniredSiaresofAmerica
Annex 1.Treaty of Friendship, Commerce and Navigation between the
United States of Amenca and the ltalian Republic, signed at Rome,
2 February 1948, entered into force, 26 July 194TlAS 1965; 79
UNTS 171 . . . . . . . . . . . . . . . . . . . ..I,,nr.2 Agrccmcni Supplemtnting thc Tredt! of Friendship. Conimcrce
2nd Ua\,ig~tionof 2 Februdr! 1318,rigncd Jr Wsshingtgin.26 Sepleni-

ber 1951.cnicreil inr<if<ir;e. Z )lach 1961. TIAS 4635: 401 lX7:F
326 ...................... 117
Annex3. Chamher of Deputies, Parliamentary Proceedings, Docu-
ments - Billsand Reports, N. 246-A, page 4. Presentedto the Office
~ ~~ ~ ~r~ ~dent on 2 March 1949 ............ 117
Annex4. Senate of the Republic, Legislature 111,29IstSession, Assembly,
page 13758, 19July 1960 ............... 117
Annex5. Map of Italy, highlighting the Mezzogiorno Region .... 118
Annex6. The ForeignInvesrori Digest ofItalian CorporaieLaw, pages
245-254(1963) ................... 118
Annex7. Raytheon Company Certificate of Good Standing, State of

Delaware, dated 22 December 1986 ............ 118
Annexa. Introductory pages from 1985 Raytheon Company Annual
Report .....................
Annex9. Affidavit of Charles F. Adams, Finance Committee Chairman
and Director, Raytheon Company, dated 17April 1987 .....
AnnexlO. Manufacturing and Sales Agreement between Raytheon
Manufacturing Company and Fabbrica ltaliana Raddrizzatori Appa-
recchi Radiologici, dated 18July 1952 ...........
AnnexII. Letter of Participation from Raytheon Manufacturing Com-
pany to Elettronica Sicula. S.p.A.. dated 21 October 1955, revised
15March 1956 ..................

Annex12. Selected United States dollar-ltalian lireconversion rates from
The Wall Sireei Journal (for dates 29 March 1968, 19April 1968,
29Apnl 1968,30June 1971)and The Waxhington Posl (fordates I Apnl
1968, II July 1969,24January 1974) ...........
Annex13. Affidavit of Arthur Schene, former VicePresident-Controller
of Raytheon Company, dated 17April 1987 .........
Annex14. Affidavit of Herbert Deitcher, Vice President and Treasurer,
Raytheon Company, dated 6 January 1987 .........
Annex 15. Affidavit of John D. Clare, former Chairman, Raytheon
Europe International Company, dated IOJanuary 1987 .....
Annex16. The Machlett Laboratories, Inc.,Certificateof Good Standing,

State of Connecticut, dated 26 December 1986 ........
Anne.r17. Affidavitof Joseph A. Scopelliti, former Chief Financial Offi-
cer and Controller, Raytheon Company, dated 1April 1987 ...
Annex18. "A New Industry in an Ancient Land", Raytheon-ELSI,
S.p.A., brochure, October 1963 .............
Annex19. Sales brochure, Raytheon-ELSI, S.P.A. .......
Annex2O. Aerial photograph of Elettronica Sicula, S.p.A., plant in
Palermo, Sicily, 1962 ................
Annex21. Aiiidavit 01-Rico A. Merluzzo, former Director of Planning,
Raytheon-ELSI, S.p.A., dated 17April 1987 ........
Annex22. "Project for the Financing and Reorganisation of the Com-

pany", 1967Report prepared by Raytheon-ELSI, S.P.A. ....

Chapter 1. Introduction and summary of conclusions .....
Chapter 2. History of Raytheon-ELSI S.P.A. ........
Chapter3. Presentcapability of Raytheon-ELSI .......
Chapter 4. Outline of future new products .........
Chapter S. Financial history to date ...........XII CONTENTS - TABLE DES MATIÈRES

Chapter 6. Future financial plans ............
Chapter 7. Conclusions and requested action ........
Appendix A ...................
Appendix B. ...................
Appendix C ....................

Annex23. Quarterly EconomicRevieivAnnualSupplemenr, The Econo-
mist IntelligenceUnit (1967) ..............
Annex24. IRI, lstituto per la Ricostruzione Industriale, 1967Annuol
Report, pages 38-39,65 (1968) .............
Annex25. The State as Entrepreneur (S. Holland, ed., 1972), pages

45-49, 56-60 ... ..............
Annex26. ~ffidavit of Avv. Giuseppe Bisconti, Studio Legale Bisconti,
Rome, dated 1l December 1986 .............
Anneï27. Affidavit of Joseph Oppenheim, former Chaiman of the
Board, Raytheon-ELSI, S.p.A., dated 22 September 1971 ....
Annex28. Affidavit of Charles H. Resnick, General Counsel, Raytheon
Company, dated 8 September 1971 ............
Annex29. Affidavit of Avv. Giuseppe Bisconti, Studio Legale Bisconti,
Rome, dated 20 August 1971 ..............
Annex30. Affidavit of Dominic A. Nett, former Controller, Raytheon-
ELSI, S.p.A., dated 17April 1987 ............
Anner 31. Minutes of Raytheon-ELSI, S.p.A., Board of Directors Meet-
ing, 16March 1968 .................
Anne.r32. Minutes of Raytheon-ELSI, S.p.A., Shareholders Meeting,
28 March 1968 ..................
Annex33. Requisition Decree, Mayor of the Municipality of Palermo,
I April 1968 ...................
Annex34. Article 7 of Law of 20 March 1865,No. 2248, Attachment E
Annex35. Presidential Decree of 29 October 1955,N. 6 .....
Anner36. Appeal by Raytheon-ELSI, S.p.A., to the Prefect of Palermo
of Requisition Decree of the Mayor of Palenno, dated 19April 1968

Anne.r37. Minutes of Meeting in Palermo between Messrs. Joseph
Oppenheim, Howard Hensleigh, Stanley Hillyer and President Carollo
of Sicily, 19/20April 1968 ...............
Annex38. Memorandum from the President of the Sicilian Region,
20 April 1968 ...................
Annex39. Letter from Joseph Oppenheim, Chairman of the Board, Ray-
theon-ELSI, S.p.A.. toHon. VincenzoCarollo, Presidentofthe Sicilian
Region, dated 26 April 1968 ..............
Annex40. Affidavit of Charles H. Resnick, General Counsel, Raytheon
Company, dated 19January 1987 ............
Annet-41. Article 217 of the Bankruptcy Law of Italy, Royal Decree of
16March 1942,No. 267 ...............
Annex42. Minutes of Meeting of Raytheon-ELSI, S.p.A., Board of
Directors, 25 April 1968 ...............
Anner43. Raytheon-ELSI, S.p.A., Petition for Bankruptcy to the Civil
and Criminal Tribunal of Palermo, dated 26 April 1968 .....
At~nex44. Raytheon-ELSI, S.p.A., Judgment of Bankruptcy, Civil and
Criminal Tribunal of Palermo, decided 7 May 1968,deposited 16May
1968,registered 27 May 1968 ..............
Annex45. Documents filedin the Civiland Criminal Tribunal of Palermo

designating Giuseppe Siracusa Trustee in Bankruptcy and selecting the creditors' committee in the bankruptcy of Raytheon-ELSI, S.p.A..
dated 4 lune 1968 .................
Annex46. Address by Minister of Industry, Commerce, and Crafts
Andreotti to the Italian Parliament, dated 25 July 1968.....
Annex47. Press Releascby the Government of Italy, dated 13Novemher
1968 ......................
Annex48. Photograph of entriince to Elettronica Sicula, S.p.A., plant in
Palermo, Sicily, 1962 ................
Annex49. Photograph of entrance 10 Raytheon-ELSI plant in Palermo,
Sicily,November 1968 ................
Annex50. "IR1 Breaks Its Promise - 200 Workers Remain Johless",
L'Ora, 516December 1968 ...............
Annex51. Notice of auction 10 be held 18January 1969, Corrieredella
Sera, Il Decemher 1968 ...............

Anne-r52. Minutes of 18January 1969Auction of ELSl's assets ...
Annex53. "CGIL: The Undertakings for ELSl Are not BeingFulfilled",
Giornaledi Sicilia.8 December 1968,page 6 .........
Anne.r54. "ELSI: Aer-ement Reached for Workers", Giornaledi Sicilia,
30January 1969,pageZ ...............
Annex55. "The 'Ex' [Employeeso ]f ELSl Protest in Rome", Giornalrdi
Sicilia,30 January 1969,page 5 .............
Annex56. "ELSI: Conclusive Meeting in the Prefecture", Giornale di
Sicilia,19 March 1969,page 14 .............
Annex57. Notice of auction to be held 22 March 1969, The New York
Times, 5 March 1969,page 28 .............
Annex58. Minutes of 22 March 1969auction of ELSl's assets ...
Anner 59. " 'ThereWasan Agreement' SaysCarollo", Giornaledi Sicilia,
6 April 1969 ...................
Anne.r60. Minutes of Raytheon-ELSI, S.p.A., Creditors' Committee
Meeting, 29 March 1969 ...............
Annex61. Submission by Trustee in Bankruptcy Giuseppe Siracusa 10
the Civil and Criminal Court of Palermo, dated 3 April 1969 ...
Anne.r62. Bnef to Civil and Criminal Tribunal of Palermo from Avv.

Giuseppe Bisconti, dated 8 April 1969 ...........
Anne.r63. Submission to Civil and Criminal Tribunal of Palermo by
Avv. Giuseppe Bisconti, dated 10April 1969 ........
Annex64. Decree of the Civil and Criminal Tribunal of Palermo, dated
9 May 1969 ....................
Annex65. Minutes of Creditors' Committee Meeting, Raytheon-ELSI,
S.p.A., dated 2 May 1969 ...............
Annex66. Notice of auction to be held 3 May 1969, The New York
Times, 8 April 1969,page 71 ..............
Annex67. Minutes of 3 May 1969auction of ELSl's assets ....
Annex68. Submission to the Civil Court of Palermo hy ELTEL, S.p.A.,
dated 16April 1969 .................
Anner 69. Submission IOthe Civil and Criminal Tribunal of Palermo by
Trustee Giuseppe Siracusa, dated 3 May 1969,subsequent order by
the Tribunal, daied 5 May 1969 .............
Anne.r70. Submission to the Civil Court of Palermo by ELTEL, S.p.A.,
dated 27 May 1969 .................
Anneii71. Minutes of Creditors' Committee Meeting, Raytheon-ELSI,
S.p.A., 6 June 1969 .................
Annex72. Notice of auction to he held on 12July 1969 ......XIV CONTENTS - TABLE DES MATlERES

Annex73. Letter from Joseph Oppenheim, Vice-President, Raytheon
Comoa.v..,o lndustria Elettronica Telecomunicazioni. ,.0.A..,~~~~d
26June1969 ................... 354
Annex74. Transcript of Bankruptcy Hearing, Civil and Criminal Court
of Palermo. 13Julv 1969 ............... 355
Annex75. IRI, lstituio per la Ricostruzione Industriale, 1Yearbook,
pages260-264. ..................
Annex76. Judgment of Prefect of Palermo, dated 22 August 1969 . .
Annex77. Council of State Opinion regarding Appeal hy Mayor of
Palermo, 19November 1971 ..............
Annex78. Ruling hy President of Italy dismissing Appeal hy Mayor of
Palermo. dated 22 Avril 1972.reeistered 19Mav 1972 .....
Annex79. ~awsuit for damages file2 hy the truste; against the Minister
of the Interior and the Mayor of Palermo, dated 16June 1970 . .
Annex80. Judgment of the Court of Palermo, decided 2 Fehruary 1973,
filed 29 March 1973, registered 4 April 1973.........
Annex8I. Judgment of the Court of Appeals of Palermo, registered
24 January 1974 ...................
Annex82. Judgment of the Supreme Court of Appeals, dated 26 April
1975 ......................
Annex83. Certificate of Good Standing, State of Delaware, Raytheon
ServiceCompany, dated 22 December 1986 .........
Annex84. Proof of Raytheon Company's 100 per cent ownership of
Raytheon ServiceCompany, dated 8 October 1986 ......
Annex85. Senateof the Republic,Billsand Reports, 1948-1949,N. 344-A,
Report of the Majority, page 2, sent to the Officeof the President on
28 May 1949 ...................
Annex86. Commercial treaties: Hearings hefore the Special Subcommit-
tee on Commercial Treaties and Consular Conventions, Committee on
Foreign Relations, United StatesSenate,82dCongress,2dSession(1952)
Annex 87. "Commercial Treaty Program of the United States", Depart-
ment of State Publication 6565,Commercial PolicySeries 163,January
1958 ......................
Annex88. Letter of the Secretary of State, dated 25 January 1952,
contained in the Message from the President of the United States
transmitting the ~upplementary Agreement, Senate Print ExecutiveH,
82d Congress, 2d Session,page 2 ............
Annex89. Senate of the Republic, Parliamentary Proceedings, Legis-
lature III, Bills and Reports - Documents, 1958-1960,N. 931-A,
page 2, sent to the Officeof the President on 1[8]July 1960 ...

Annex90. Chamherof Deputies, Parliamentary Proceedings, Legislature
III, Documents - Billsand Reports, N. 537,page 3, presented to the
Officeof the President, 8 November 1958 ..........
A1rnex91. UniIed States Code, Title 5, Sec. 706 (2) (A) (1982)...
Annex92. Delaware Code Annotated, Title 8, Secs. 271, 275(1983 and
SUDD1 .986) ....................
~nnex93. or mec ti Gcentral Statute, Annotated, Secs.33-372, 33-375
(West 1958and Supp. 1986) ..............
Annex94. Delaware Code Annotated, Title 10, Secs. 6101-6115 (1.75).
Anne.r95. ltalian Criminal Code, Secs. 508, 614, 615, 633,634 ...
Annex96. Table of United States Prime Rates covering the period from
January 1964to March 1987 ..............APPLICATION INSTITUTING PROCEEDINGS

SUBMITTEDBY THE GOVERNMENT OF
THE UNITED STATESOF AMERICA

REQUÊTE INTRODUCTIVED'INSTANCE
PRÉSENTÉEPARLE GOUVERNEMENT

DES ÉTATS-UNISD'AMÉRIQUE 1.THE CHAKGk D'AFI'AIRES AB 1h'WRIM OFTIIE UKITED STATES

OF A.MFKICATO THE SETHFRIANI>S TO .rlIE DEPUTY.
KECiISTKAROF THE INTEKNAI'IONAI COURT OF JCSTICE

EMBASS OYF THE
UNITED STATF SF AMERICA,
THEHAGUE.

February 6, 1987.

On behalf of the Government of the United States of America, and in accor-
dance with Article 40, paragraph 1,of the Statute of the Court. I have the honor

ta notify the Court that the United States wishes to initiate proceedings against
the Republic of Italy. The United States requests that this Court determine
whether Italy has violated the Treaty of Friendship, Commerce and Navigation
between the United States and the Republic of ltaly and the supplementary
agreement ta that treaty, through Italy's actions with respectto an Italian com-
pany wholly owned by two United States corporations, and, if sa, the amount
of compensation due. The facts and contentions al issue in this proceeding are
-.t.iled in the aonlication attached hereto.
The Govern&nt of the United States of America hereby requests, pursuant
to Article 26,~araeraph 3, of the Statute of the Court, that a chamber be formed
composed of fivejÜdges to hear and determine this case. On the understanding
that the Government of ltaly agrees with this request, wewillbe happy to arrange
for consultation with the President ofthe Court pursuant ta Article 17,paragraph

2, of the Rules of Court, so that the President may ascertain the views of the
parties regarding the composition of the chamber.
In accordance with Article 40 of the Rules of Court, the Government of the
United States of Amenca wishes to inform the Court that ils agent will be the
LegalAdviserofthe United States Department ofState, The Honorable Abraham
D. Sofaer.
The address for service of the Agent for the United States of America is:
Embassy of the United States of Amcrica ta the Netherlands, Lange Voorhout
102,2514 EJ The Hague.

(Signed) John P. HEIMANN. II. APPLICATION INSTITUTING PROCEEDINGS

1 have the honor to refer to Article 36 (1) of the Statute of the Court and
Article XXVl of the Treaty of Friendship, Commerce and Navigation between
the United States of America and the ltalian Republic of 1948. Under the
jurisdiction thereby conferred upon the Court, 1 hereby suhmit, in accordance
with Article 40 (1) of the Statute and Article 38 of the Rules of Court. this
Application instiiuiing proceedings in the name of the Government of the United
Statesof Americaagai.st theGovernment of the Republicof ltaly in the following
case.

This dispute arises from the requisition of the Government of ltaly of the plant
and related assets of Elettronica Sicula S.P.A. ("ELSI"), an ltalian company
which was 100 oercent owned hv two United States coroorations. Ravtheon
Çonipdn! ('.~a(thcon") ;ind \l;~chlctt I.aboruioriej. lnc' ("\lachleit"j This

rcquisitiùn uas intcndcd IO. 2nd did in faci. preicni Rlyihcon :ilid Slachlctt from
oro.xedinc uiih ihcir dccision IO conduct ;in ordcrlv Iiuuidaiion of EI.SI. uhich
tauicd si~nific3nifinnncial injury IO Ra)ihcon. AS> re'sultof the rcquisiiiùn,it
ua, nccc>sxryior ELSI tu iilc .Ipciiiion in hdnkrupicy. CLSI'spldnt inJ rel.iicJ
goods were then acquired by a subsidiary of the ltalian government-owned
conelomerate. Istituto oer la Ricostruzione Industriale ("1RI"I. a1,.uhstantiallv
lessihan fair market value.
In 1956,Raytheon, a United States electronics manufacturer incorporated in
the state of ~elaware, became a minoriiy shareholder in ELSI, at that lime a
relatively new ltalian company operating in Palermo, Sicily. Due to ELSl's
requirements for additional capital to which ELSl's ltalian shareholders did not
ELSl durine the next
subscribe..Ravt*eon increased ils owncrshin intcrest in
12years, ultimately acquiring more than 96 percent of the shares. Machlett, a
United States company incorporated in the state of Connecticut, purchased the
remaindcr in 1967.-
By 1967.with the financial and technical assistance of Raytheon and Machlett,
ELSI had become an established manufacturer of sophisticated electronicsequip-
ment, including microwave, x-ray, and cathode ray tubes. ELSl had a large, fully
equipped plant in Palermo, a skilled work force of almost 900 employees, a
reputation for quality products, and a significant volume of sales and export
earnings. ELSl had no1yet becomeprofitable, however,and continued to accumu-
latc losses. Raytheon had made repeated capital contributions to ELSI, without
receivingany return on its investment.

In 1967. Ravtheon decided to launch a maior and final effort to make ELSl
protiiihlc. As part <II'his cilori. Ra)ihcon hroughi in managcmrni. tin3niiaI and
iechnic~lexperts coniprchcnsi\cly IO re~icwand upgrade FI.SI's plant and opera.
tien,. IIxlso mxJc a iurihcr conirihution of work~nr c3-.ital io suhiain ihrir
efforts. In Raytheon's view, however, it was more critical to ELSI's future
financialwell-beingta develop new products and markets for ELSI, and Io secure
ELSl's place in the ltalian electronics industry by finding a suitable ltalian
company as CO-ownerof ELSI. Senior Raytheon and ELSl officersaccordingly APPLICATION 5

made extensive efforts to achieve these objectives, developing detailed plans for

new products and markets and pursuing the possibilities of public and private
participation and support.
In view of Italy's strong official policy of supporting business development in
Sicily, Raytheon and ELSI officersheld numerous discussions in 1967and 1968
with ltalian officials, seekingcooperation in maintaining ELSl's operations. They
explained that, if ELSl could no1 he made profitable, they would have no
alternative but to close the plant. The SicilianGovernment industrial development
agency was very interested in hecoming an investor in ELSI. Similarly, other
Italian and Sicilian Government officials enpressed a strong interest in ELSl's
survival and gave repeated assurances of the availability of incentives and other

support.
In the end, bowever, such support was no1 provided; nor was Raytheon able,
through its own extensive efforts, to make ELSI profitable. Consequently, in
Mar~h~1968.unon .he recommendation of the Board of Directors. ELSI's share-
holder, \,.>icdti>~loicine pl;ini diid Iiquid:itc thc compin) By \i>doing. EI.Sl'5
cr:Jiiori duld bc i.iiirtied dnJ LLSl's <h.irchi)lJcr. i\.oiildiurr.,iall iuriher losses
Thc <>rdc.rl\Iiuiiid.iii<>nroccij h:c.in on ?9 hl.trch I903, uiih the Jimi~s.il oi
al1employéesnot needed to carry Out the liquidation plan.
On 27 and 30 March, the President of Sicily advised ELSI officiaisthat the

Government of Italy would, if necessary, requisition ELSI's plant in order to
prevent the liquidation. This warning was proven true on 1April 1968,when the
Mayor of Palermo, acting as an official of the Government of Italy, issued an
order requisitioning ELSl's plant ;andequipment for six months (Attachment 3).
The order. which noted that the dismissal of emolovees and d la nshutdown had
caused pu'blicand press criticism of local auth'orcies and ihat "unforeseeable
disturbances of public order could take place", concluded that a requisition was
necessary inorder "Io protect the generd economic public interest. .. and public
order . . .".No steps were then taken, however, to rehire the employees or to
reopen the plant; nor did the public authorities take any steps to protect the

plant premises from an occupation by the workers which beganshortly thereafter.
ELSl unsuccessfully appealed to the Mayor and other Italian officials to set
aside the requisition order. On 19April 1968, it filed an appeal with the Prefect
of Palermo. The next day, 20 April, the President of Sicily threatened that the
requisition would be maintained indefinitely unless Raytheon ahandoned its
liquidation plan. With debts continuing to come due and with no prospect of
regaining custody of ELSl's assets and conducting an orderly liquidation in the
near future, ELSl's ltalian counsel advised the Board of Directors that they were
required to file a petition in bankruptcy. A bankruptcy petition was accordingly

filed on 26 April 1968with the Civil and Cnminal Tribunal in Palermo, which
declared ELSI bankrupt on 16 May.
On 25 July, the Government of Italy made public its intention to take over
ELSl's assets through a suhsidiary of IRI. In suhsequent months, representatives
of the Government of Italy and of Raytheon discussed a possible plan for such
a take-over, which was to include a general settlement with ELSl's creditors. In
No~ ~ber~,however. the Government broke off these discussions. announcine
thai IIh:lJ JcaJrJ rimpl\ 1.1.icquire FI.Sl'i.iiieij ihraiigti ons of IR1.rruh\idi:ic
te, iiiihoui cicrirfiior sclilcnieni. In Dx:niber. IR1 L1rinc.1 d ne\! ~ubiidicir!.
Indusrrij lilctiroiiic~ Telc:~imuni;a/i<~ni Sr, A t'FI IEl."j. in order Io iiiililc.

ment this decision.
The bankruptcy judge scheduled three auctions, in January, March, and May
of 1969,at which ELSl's plant and other assets could be purchased as a single
unit, at a minimum set price. Despite the announced intention of the Governmentof ltalv to take over ELSI. ELTEL did not bid at these auctions. Nor were there
other gidders; the p~annedgovernment take-over of the plant had been publicized
and. bv the lime of the second auction, was well on the road to completion. The
terms of the auction, moreover, excluded those whom ~aytheon-had earlier
identified as the most likelypurchasers - foreign companies interested in buying

individual product lines.
ELTEL was similarly interested in buying only some of ELSI's assets - the
plant and related equipment - and no1 al1of the raw material and invenlory of
the particular products which ELSl had manufactured. Unlike others who might
have been interested in acquiring only a portion of ELSl's assets, however,
ELTEL was able to negotiate with the bankruptcy authorities ils own terms of
sale. As a first step, ELTEL leased the plant for a nominal rental, acquired the
work in process al a hargain price, and resumed operations al ELSl's plant. Once
it was firmlv in control of ELSl's assets. ELTEL then oîïered to ~urchase the
plant and kost of the remaining tangible assets for substantially l& than their
fair market value. The bankruptcy iudge accepte* this offer and ordered a fourth
. .. -
auction, at which the minimum bid was setat the negotiated price. On 6 July
1969, therefore, ELTEL purchased ELSl's plant and equipment, and certain of
its other assets, on the terms finally agreed 10.
On 16August 1969, 16months after the requisition began but only six weeks
after ELTEL had acquired ELSl's assets, the Prefect of Palermo annulled the
Mavor's order of reauisition. findin- that it was not iustified.v anv leeal rrounds
and, moreover, appeared to have been motivated hy improper considerations.
The delav in issuina this decision deprived ELSl of any effectiveredress for the
requisilion, which Lad caused ELSl io file a petition in bankruptcy and in turn
provided the opportunity for ELTEL 10 manipulate the sales price of ELSl's

assets to its benefit.
As a result of these events, Raytheon suiiered substantial financial injury. The
planned liquidation, had it been allowed to occur, would have generated sufficient
funds to satisfy a substantial portion of ELSl's outstanding Italian hank loans
which had been guaranteed by Raytheon and of ELSl's debt to Raytheon and a
whollv-owned subsidiarv for aoods and services provided on open account.
~ecause of the hankruptcy, however, Raytheon itseif had to pay the guaranteed
loans in full and recovered nothing of what was owed on the open accounts.
Thus, Raytheon's actual losses were significantly greater than they would have
been, had Raytheon been allowed to proceed with the liquidation. In addition,
Raytheon incurred substantial expenses in defending against lawsuits brought hy

ltalian government-controlled hanks, mitigating the damage to ils reputation and
credit, and pursuing ils claim for redress.

11.THEJURISDICTIO OF THE COURT

As Members of the United Nations, ltaly and the United States are parties 10
the Statute of the Court, Article 36 (1) of which provides that "The jurisdiction
of the Court comprises . . .al1matters specificallyprovided for . . .in treaties
and conventions in force". In 1948,the two countries entered in10 the Treaty of
Fnendship, Commerce and Navigation between the United States of America
~nd~the ltalian Reouhlic (the "Treatv.) ..9 UNTS 171).which remains in effect,
3s siipplcmented hy the ,Igreemc.ni Supplemcnting ihe 1'rt;it) oi Friendrhip.
C'onimerccand N3\,iriition of 1961 ithc "Supplcmc~nt"l(404 1.YT.S326) (~\tt~sh-

ment 1).Article XXV of the ~reat; provides that: APPLICATION 7

"Anydispute betweenthe High Contracting Parties as to the interpretation
or the application of this Treaty, which the High Contracting Parties shall

not satisfactorily adjust by diplomacy, shall be submitted to the International
Court of Justice, unlessthe High Contracting Parties shall agree10settlement
hy some other pacific means."

~ ~.~e~c~r~ ~~ ~ ~~~~~-~c~ are described above and which the Government of
the United States will set Ourmore fully in ils Memorial and subsequent wrilten

and oral oleadines. a disuute exists between the Government of ltaly and the
Governinént of tlhe~nited States concerning the interpretation and application
of the Treaty and Supplement. The United States contends that Italy's actions
with respectto ELSl violated certain of the provisions of the Treaty and Supple-

ment. The Government of Italy kas denied this contention. Efforts to resolve the
dispute through diplornatic means, commencing in 1969 and continuing into
1985,have been unsuccessful (Attachment 2). There are no other efforts toward
settlement pending. nor have the parties agreed 10settlement hy any other means.

Accordingly, the United States submits that the Court has jurisdiction over
this dispute pursuanl to Article 36 (1) of the Statute of the Court.

III.THE CONTENTION OFS THE UNITED STATES

~he~Government of the United States contends that. bv its reauisition and
subscqucnt messures againil Rayihcon's inirreris in ils Itïliïn ruhiidtar). El-SI.
and bv ils discrimination :ie;iinst:ind hilurc ii)alford nalional ireainieni to ELSI.
the Government of Italy has violated the Treaty and the Supplement. In particu-

bar,the United States contends that:

(a) the Government of Iialy's requisition of ELSl's assets, which had the ohject
and effect of preventing the orderly liquidation of ELSl and its subsequent
conduct violated Articles III and VI1 of the Treaty and Article 1 of the
Supplement ;

(b) the requisiiion, culminating in the acquisition of ELSl's assets by a govern-
ment-controlled Company.also violated Article V of the Treaty;
/cl ~ ~ ~ailure of ltalian authorities to afford orotection of ELSI's olant durine
the requisition and subsequent period, and the failure of the Prefect promptly

to rule on the reauisition, violated Article Vof the Treaty and Article 1of
the Supplement; and
(d) the discrimination against ELSl by ltalian authorities and failure to atTord

national treatment violated a number of Articles, including pariicularly
Articles 11, III and V of the Treaty and Articles 1and V of the Supplement.

IV. JUDGMENR TEQUESTED

Accordingly, whilereservingthe right to supplement and amend this suhmission
as aoorooriate in the course of further ~roceedings, the.United States requests
the ëouri 10adjudge and dcclare as follows:

(a) that the Government of ltaly has violated the Treaty of Friendship, Com-
merce and Navigation between the United States of America and the ltalian

Republic of 1948,in parliculnr Articles 11,Ill, V and VI1of the Treaty, and
Articles 1and V of the 1961Supplement; andIbJ that the Government of Italv is resoonsible to oav comoensation to the
United St3tes. in an ;imounir; ix dcicrmincd by ihi<.,iuri.as nic,dsuredby
the injurie. \utErcd hv IJnited Staics nlition4sa resuli ofihc,e i.iolation,.
~nsliidineihe 3ddiiion;il tin:in~.i;ilIuhiih Ka\ihe<~nrull'crcrlin rcriJ\ilic
the zuaGnteed loans and in not recoverine amoints due on ooen accounts. -
as well as expenses incurred in defending against ltalian bank lawsuits, in
mitiratinr the damaw to its reputation and credit, and in pursuing its claim
for redress. -

The Government of the United States kas desienat-d the undersiened as its
Agent for the purpoies of thc,c procecding\. AI1romrnunicrii6)ns rclating IOthis
cdqe should be sent IO the trnb~ssy oi ihe Unite,l Si;iic.. The Hdguc. L.ingc
Voorhout 102

Respectfully submitted,
(Signed) Abraham D. SOFAER,

Agent for the Government of
the United States of America. Attachment 1

FRIENDSHIP, COMMERCE, AND NAVIGATION

Trealy. protocol, additional prolocol, and exchanges of notes signed al Rome
February 2, 1948.

Senareadvice and consent ro rariïjcalion Ju2,1948:
Rotified by the Presidenofthe Unired States June 16. 1949;
Rarified by Iraly June 18. 1949:
Rarifications exchangedal RomeJuly 26, 1949;

Enrered inloforce July 26, 1949:
Proclnimed by the Presidenrofrhc Unired SraresAugusr 5, 1949:
Supplemenredby agreementof Seprember26. 1951 '.

63Stat. 2255; Treatiesand Other
International Acts Series 1965

TREATY OF FRIENDSHIPC , OMMERCA BND NAVIGATION BETWCEN TH UENITED
STATF OSFAMERI<:A AND THE ITALIAN REPUBLIC

The UNITEDSTATESOA FMERICAandthe ITALIAN REPUBLICd ,esirous ofstrength-
.n~n'.the ~ ~d~o~ oeace and the traditional ties of friendshio between the two
couniries and of prurnoiing clobcr iniercoursc betrrccn thcir respective icrriiorier
through provisions rciponsite to the spiritual. cultur~l. ccanoniic and cornmcrsinl

iispir:iiions of thcir pcoplei. hare resoIO,concludc 3 Trcaly of Frirndship.
Cornmerce and Yavigütion bascd in gencral upon the priniiplc,of nation.11and
i~irnosi-Fa\ore<l-naiiontrc:itrncni In ihc unciinrliiii~nal ii~rm.aiid for thdi purpùsc
have appointed as their Plenipolentiaries,

Mr. JAMESCLEMENT DUNN, Arnbassador Extraordinary and Plenipotentiary

of the United States ofrnerica to the ltalian Republic,

and,
THE PRESIDEKT OF THE ITALIAN RI~PUBLIC:

The Honorable CARLOSFORZA.Minister Secretary of State for Foreign
Affairs.

Who, having conirnunicated to cach other their full powers found Io be in due
fom, have agreed upon the following Articles:

' 12 UST 131; TIAS 4685 Arricle I

I Ihc niltiunals oieiihcr High Cuntrücting Party ,hüll hc pcrmiitcd iticnicr
ihc terrilories tiithe othcr Hieh-C~inir3ctinePa-tv. 2nd shall hc wrniiitcd frcclv
to reside and travel therein.
2. The nationals of either High Contracting Party shall, within the territones
of the other High Contracting Party, be permitted, without interference, to exer-
cise. in confonnitv with the ao~licable laws and reeulations. the followine
rights and privilegésupon terms'io less favorable than those nbw or hereaft;

accorded to nationals of such other High Contracting Party:
(a) to engage in commercial, manufacturing, processing, financial, scientific,
educational, religious, philanthropic and professional activities exceptthe practice
~ ~~ ~' :
(b) to acquire, own, erect or lease, and occupy appropriate buildings, and to

lease appropriate lands, for residential, commercial, manufacturing, processing,
financial, professional, scientific,educational, religious, philanthropic and mortu-
ary purposes;
(c) to employ agents and employees of their choice regardless of nationality;
and
(d) to do anything incidental to or necessary for the enjoyment of any of the
foregoing rights and privileges.

3. Moreover, the nationals of either High Contracting Party shall not in any
case. with respect to the matters referred to in paragraphs I and 2 of this Article,
receive treatient less favorable than the treatkentwhich is or may hereafter be
accorded to the nationals of any third country.
4. The provisions of paragraph 1 of this Article shall not be construed to
~recludethe exercisebv either Hirh Contractine Partv of reasonahle surveillance
bicr thc m<i\cmeiit~iidso,ourn o"fillicnsrilihin-il, ie;ritoriîs or ihc enidrccment
oimea*urc,s hr th: c~~lusionor c\pulrion of ülieni for rcdsonj of public ordcr.
morals, health or safety

Arricle II

1. As used in this Treaty the term "corporations and associations" shall mean
corporations, companies, partnerships and other associations, whether or no1
with limited liability and whether or not for pecuniary profit, which have been or
may hereafter be created or organized under the applicable laws and regulations.
2. Corporations and associations created or organized under the applicable

laws and regulations within the territories of either High Contracting Party shall
be deemed to be corporations and associations of such High Contracting Party
and shall have their juridical status recognized within the territories of the other
High Contracting Party whether or no1 they have a permanent establishment,
hranch or agency therein.
3. Corporations and associations of either High ContractingParty shall, within
the territories of the other Hirh Contractinr Partv, .e v.rmitted, without interfer-
cncc. to cxcr~iical1the righicind pri\ilcgc~cnurncr~ied in p3rngraph 2 oi Articlc
1, in conf<mnii) riith ilic applic.~ble Iiiiiiand rcdulations, upon icrrni no les5
favorable than those now or hereafter accorded to corporations and associations
of such other High Contracting Party. The preceding sentence, and al1 other
provisions of thisTreaty according to corporations and associations of the Italian

' See also para.4 of Prolocol, p. 26, infra. APPLICATION 11

Republic rights and privileges upon terms no less favorable than those now or

hereafter accorded to corporations and associations of the United States of
America, shall be construed as according such rights and privileges, in any state,
territory or possession of the United States of America, upon terms no less
favorable than those upon which such rights and privileges are or may hereafter
be accorded therein to coroorations and associations created or oreanized in
other States,territories or p~ssessionsof the United States of ~merica

4. Moreover, corporations and associations of either High Contracting Party
shall not in anv case.with resoectto the matters referred to h this Article.;eceive
treatment lessfavorable than ihc treatment which is or may hereafter be accorded
to corporations and associations of any third country.

Article 111

1. The nationals. coroorations and associations of either Hiah Contracting
Pariy shall cnjoy. ihrou~hout thc icrritorics of ihc oihcr High ~o~traciing t'liri<
right, and privilrges uith respcci IO organiLaiion of and p~riisipaiion incorpora-
iiijns and associ;itions of such oihcr lligh Contraciin>! Pïri>. includine ihc cn-
A .ment of rieh-s~ ~th resnect,to~ ~om<tion and ~~ ~rnoration. the nurchase. r~~~ .
ownership and saleof sharesand, inthe caseof nationals,ihiholding of executive

and official positions, in conformity with the applicable laws and regulations,
uoon terms no lessfavorable thaii those now or hereafter accord~d ~o iationals.
corpor:,t!ons .ind a\io~.iaiis>nrof ;in! Ihird ciiuniry. Corpiir~tions :ind associ.iiiuns
of ciihcr Hich Ciintr~ciiiir P~rty. 61rcan1,edor p:~rtici~atcd in hy n;ition.ils.
coroorationsand associations of ihe oïher Hieh antractine Partv ~ursuant to
- u . .
the rights and privileges enumerated in this paragrdph, and controlled by such
nationals, corporations and associations, shall be permitted to exercisethe func-
lions for which they are created or organized, in conformity with the applicable
laws and regulations, upon terms no less favorable than those now or hereafter
accorded to corporations and associations that are similarly organized or parti-

cipated in, and controlled, by nationals, corporations and associations of any
third country.
2. The nationals, corporations and associations of either Hiah Contracting
Party shall be perrnitted: in conforrnity with the applicable laws and regulation~
within the territories of the other High Contracting Party, to organize. control
and manage cornorations and associations of such other ~iah Conlractine Partv
- - -
for cn@agingin cummerclal. mdnuk4ct~ring. pruccssinp. minlng. eduiational.
philnnthropic. rcligious 2nd scicniilic ;icti\it~cs Corpor;iiiuns ;ind J5soci;iiions.
i~intrallcd h\ n.iiion:ils, corpor.iiidn.; and ~rwci~tiuns oieithcr Hiah Conirsctin,:
Party and ckated or organizcd uiider the applicable laws and reg;lations within
the territories of the other High Contracting Party, shall be permitted to engage
in the aforementioned activities therein, in conîormity with the applicable laws

and reeulations. u.on.terms no less favorable than ihose now or hereafter
accordrd to corporaiions and ïssuciations oi such oihcr Iligh Coniracting Piiriy
conirollcd b) 11sou,n nationals. corporations .ind associations.

Article IV
The national$. corporations and associations of either High Contracting Party

shall be permitted within the territories of the other High Contracting Party to
explore for and to exploit mineral resources, in conformity with the applicable
laws and regulations, upon terms no less favorable than those now or hereafter
accorded to nationals, corporations and associations of any third country. Article V

1. The nationals of each High Contracting Party shall receive, within the
territories of the other High Contracting Party, the most constant protection and
secunty for their persons and property, and shall enjoy in this respect the full
protection and security required hy international law. To these ends, persons
accused of crime shall be brought to trial promptly, and shall enjoy al1the rights
and privileges whichare or may hereafter be accorded by the applicable laws and
regulations; and nationals of either High Contracting Party, while within the
custody of the authorities of the other High Contracting Party, shall receive
reasonable and humane treatment. In so far as the term "nationals" where used
in this paragraph is applicable in relation to property it shall be construed to
include corporations and associations.
2. The oroDertv of nationals. coroorations and associations of either Hieh
<:oniracting Part). ~hiill not bc iahin wiiliin ilic territories oi the oihcr ~igh
Conir~cting Pari) wiihoui duc procc\s oi Icii.ind !iithoui ihs pronipt pJyiiient

51 iust and elfeciive comricn~aiion.The recir>ieriiof suzh :omnr.ns:iti<inrhall. in
c<>ni<>rmi\iiy,ith\uL.~:~ppI~~,ibllaus andregul;iiion$:is3re noi incon\isient wiih
pirigrdph 3 irf Ariicle XVll of [hi, Trc,ii), be pcrmiited wiih<>uiinicrfcrence io
withdraw the compensation by obtaining foreign exchange, in the currency of
the High Contracting Party of which such recipient is a national, corporation or
association, upon the most favorable terms applicable to such currency at the
time of the taking of the property, and exempt from any transfer or remittance
tax, provided application for such exchange is made within one year alter receipt
of the compensation to which it relatesL.
3. The nationals, corporations and associations of either High Contracting
Party shall within the territones of the other High Contracting Party receive
protection and security with respect to the matters enumerated in paragraphs 1
and 2 of this Article, upon compliance with the applicable laws and regulations,
no less than the protection and security which is or may hereafter be accorded
to the nationals, corporations and associations of such other High Contracting
Party and no lessthan that which isor may hereafter be accorded to the nationals,
corporations and associations of any third country. Moreover, in al1 matters
relating to the taking of privately owned enterpnses into public ownership and
the olacine of such entemrises under oubliccontrol. enterorises in which nationals.
corporations and associations of eitLerHigh ~ontiacting'~art~ have a substantiai

interest shall he accorded, within the territories of the other High Contracting
Partv. treatment no lessfavorable than that which isor mav hereafier be accorded
to sikilar enterprises in which nationals, corporations and associations of such
other High Contracting Party have a substantial interest, and no less favorable
than that which is or may hereafter be accorded to similar enterprises in which
nationals, corporations and associations of any third country have a suhstantial
interest.
4. The nationals, corporations and associations of either High Contracting
Party shall enjoy freedom of access to the courts of justice and to administrative
trihunals and agencies in the territories of the other High Contracting Party, in
al1degrees of jurisdiction established by law, both in pursuit and in defense of
their rights; shall be at liberty to choose and employ lawyersand representatives
in the prosecution and defense of their rights before such courts, tribunals and
agencies; and shall be permitted to exercise al1 these rights and privileges, in

' Seealso para. 1of Protocol, p. 26, and paras. 5 and 6 of AdditionaProlocol,p. 28,
infw. APPLICATION 13

iwnforniii) uiih the applic;iblc ILiitssnJ rsgulliionr. upon icrnis ni, Ir',, 1.i\orahlc,
than ihc icrnis which are or m;i) hcrc:iiicr hescci>rdcd io ihc natiiinals. corpora-
lions and associaiions tif ihc oiher Ilish Coniractinc P;iriy and no 1c.r i!i\~orïblc

than are or may hereafter be accorded-to the nationàls, cokporations and associa-
tions of any third country. Moreover, corporations and associations of either
High Contracting Party which are not engaged in business or in non-profit
activities within the territories of the High Contracting Party shall be permitted
to exercise the rights and privileges accorded by the preceding sentencewithout
any requirement of registration or domestication.

Article VI
The dwellings, warehouses, factories, shops, and other placesof business,and
al1premises thereto appertaining, of the nationals, corporations and associations

of either High Contracting Party, located in the terriiories of the other High
Contracting Party, shall no1 be subjeci 10 unlawful entry or molestation. There
shall no1 be made any visit Io, or any search ot any such dwcllings, buildings or
premises, nor shall any books, papers or accounts therein be examined or in-
spected. except under conditions and in conformitv with procedures no less
icii,oriiblc th:in ihs cond~tionsdn<l pr.i<edurr'$ preicribr'd ii~r n;iii.>n;ils. carpora-
lion, and ïssociati,iiis oi such dthcr Iligh C'uniracting l'art! ~ndsr the applisïhlc

laui iind rsgulati<rnr uithin the ierriiorich therr'oC In no c:t\e hall thc n;iiion3lr,
corporaiions or asutiiation. of ciiher Iiigh ('uniracitng Pari) in the ierriiorics
ofihr oihcr Iligh Contraciing Pari) hc irsatcd lr;c fïrorabl? utth rcspeci Io thc
foregoing matters than the nationals, corporations or associations or any third
country. Moreover, any visit, search, examination or inspection which may be
permissible under the exception stated in this Article shall be made wiih due

regard for, and in such a way asto causethe least possibleinterference with, the
occupants of such dwellings, buildings or premises or the ordinary conduct of
any businessor other enterprise.

Arlicle VI1

1. The nationals, corporations and associations of either High Contracting
Party shall be permitted 10acquire. own and dispose of immovable propcrty or
interests therein within the territories of the other High Contracting Party upon
the following terms:

(a) in the case of nationals, corporations and associalions of the Italian
Re~ublic. the rieht to acau.re. .wn and disoose of such nroD...v and interests
shall he dcpçndcni upon ihr laus and rcgul3iions \\hich arc or nia? hcrc3fter bc

in force uiihin the staie. territort or possessiunof the Unitcd Staics oC,\mcr~ia
wherein such property or interesis are situated; and
(b) in the caseof nationals, corporations and associations of the United States
of America, the rieht to acquire. own and dispose of such oro...ty and iiiierests
shall be upon teris no lessfavorable than &ose which are or may hereafter be
accorded by the state, territory or possessionof the United States of America in

which such national is domiciled. or under the laws of which such cornoration
or ;iscuciniion ia creatcd or argnniled. 10nation;3ls,çorporltionr nd .issoo>tionF
of the Italian Rcpublic. pro\ideJ thai the Italian Rcpuhlii shall nui be ohligaied
to accord Io naiionals. Coroorations and associations of the United tacs of
,\mensa riglils in this conneciion more c.tiensive ihan ihoic which arc or may
hrreïfter bcaccordcd wiihin ihc Icrrirorics of surh Republic io niitiunals. romora.

tions and associations of such Republic 2. If a national, corporation or association of either High Contracting Party,
whether or no1 resident and whether or not eneaeed in business or other activi-
tir uithin ihe ierriiories oi ihe other High ~&t;actin~ I1ariy. i\ iin ascouni of
;ilierx~gepre\enicd hy the 3pplic;iblc I3u.sand regul3tions ivithin such ierritories
from Lcceedinr as deviseel or as heir in the case of a national. to immovable
property situatëd therein, or to interests in such property, the"' such national,
corporation or association shall he allowed a term of three years in which to seIl
or otherwise dispose of such property or interests, this term to he reasonably
prolonged if circumstances render it necessary. The transmission or receipi of
such property or interests shall hc exempt from the payment of any estate,
succession, probate or administrative taxes or charges higher than those now or
hereafter imposed in like cases of nationals, corporations or associations of the
High Contracting Party in whose territory the property is or the interests therein
are situated.
3.The nationals of either High Contracting Party shall have full power to
dispose of personal property of every kind within the territories of the other High
Contracting Party, by testament, donation or otherwise and their heirs, legatees
or donees, hcing persons of whatever naiionality or corporations or associations
wherever crcated or oreanized. whether resident or non-resident and whether or
no1engaged in business-withinthe territories of the High Contracting Party where
such property is situated, shall succeed to such property, and shall themselves or
bv their agents he Dermitted to take oossession~ihereof. and to retain or dis~ose
of it at ihëir pleasure. Such disposition, succession and retention shall be subject
to the provisions of Article IX and exempt from any other charges higher, and
from any restrictions more burdensome, than those applicable in like cases of
nationals, corporations and associations of such other High Contracting Party.
The nationals, corporations and associations of either High Contracting Party
shall be pertnitted to succeed, as heirs, legateesand donees, to personal property
of everv kind within the territories of the other Hieh Contractine Partv. lefi or
giwn tothcm by naiionals of ciihcr Iligh ~ontraciing Party or i)! n;ii;on;ils of
an) third couniry. and \ha11themrcl,cs or bv their agents hc pcrmitted to iake
posqescionthereof. and Io reiciinor dispiicr ofint their ple~surc SuchJisposiiion.
succession and retenlion >hall he whlcct io the pro\irions of Articlc IX 2nd
cxcmpt frorn an) oiher ch3rgc~.and l'rom;in? rcs!riciinns. dher or higher ih:in
those applicable in like cases of nationals, corporations and associations of such
other High Contracting Party. Nothing in this paragraph shall he construed to
affect the laws and regulations of either High Contracting Party prohibiting or
restricting the direct or indirect ownership byaliens or foreign corporations and
associations of the shares in, or instruments of indebtedness of, corporations and
associations of such High Coniracting Pariy carrying on particular types of
activities.
4. The nationals, corporations and associations of either High Contracting
Party shall, subject to the exceptions in paragraph 3 of Article IX, receive
treatment in respect of al1 matters which relate to the acquisition, ownership.
lease, possession or disposition of personal property, no less favorable than the
treatment which is or may hereafter be accorded to nationals, corporations and
associations of any third country.

Article Vlll

The nationals. coroorations and associations of eiiher Hieh Contractine Partv
shall enjoy, within the territories of the other High on trac tainy^alÏrighcs
and privilegesof whatever nature in regard to paiienis, trade marks, trade labels, APPLICATION 15

trade names and other industrial vrom.... unon compliance with the annlicable ..
131)sand regulations respecting registraii<,nand oihcr'formalitics. upon icrms no
les, iaiorablc thiin ;ireor ma, hrreïfter bcÿccorded to the nationals. corporations
and associations of such oiher Hieh con tract in^ -artv. and no less favorable
than the treatment now or hereafter accorded to nationals, corporations and
associations of any third country.

Article IX

1. Nationals, corporations and associations of either High Contracting Party
shall not he subiected 10the nayment of internal taxes, feesand charges imposed
upon or applied to income, Capital, transactions, activities or any Gher object,
or to requirements with respect to the levy and collection thereof, within the
territories of the other High Contracting Party:

(a) more burdensome than those borne hy nationals, residents, and corpora-
tions and associations of any third country;
. . more hurdensome than ihosc borne hv nationals. cornorations and associa-
ti<in+iil'such other High Contracting l1arCy,in the ciire of persans rcsidcni or
rn~iiged in hu,intsj aithin ihe tcrriiories of \uL.~other Iligh Coniracting Pariy.

and Fnthe case of corporations and associations engaged in business therein, or
organized and operated exclusivelyfor scientific,educational, religious or philan-
thropic purposes.

2. In the case ol'corporations and associations of eithcr High Contracting
Party, engaged in business within the territories of the other High Contracting
Party, and in the case of nationals of either High Contracting Party engaged in
businesswithin the territories of the other High Contracting Party but no1resident
therein, such other High Contracting Party shall no1impose or apply any internal
tax, fee or charge upon any income, capital or other basis in excess of that
reasonably allocable or apportionable to its territories, nor grant deductions and

exemptions less than those reasonably allocahle or apportionable to its lerritories.
A comparable rule shall apply also in the case of corporations and associations
organized and operated exclusivelyfor scientific,educational, religious or philan-
throo...ourooses.
3. Soiuiihsianding the pro\,isionr uf paragrÿph I of ihe prescnt Ariiile. cach
High Coniractinp I'iirt) rescrits the ripht to (1,e~tenil \pccific ad\;int:tge. .I\
~ ~t~xes. fees and charees to nationals.~residents. and corporations and associa-
tions of'all foreign countries on the basis of reciprqcity; (b) accord to nationals,

residents, and corporationsand associations of a third country specialadvantages
by virtue of an abcement with such country for the avoidance if double taxation
or the mutual protection of revenue; and (c) accord to ils own nationals and to
residents of contieuous countries more favorable exemptions of a personal nature
than are accorded to other nonresident persons

Commercial travelers representing nationals, corporations or associations of

either High Contracting Party engaged in business within the territories therof,
shall, upon their entry into and sojourn within the territories of the other High
C- ~ ~ctine Partv and on deoartiire therefrom. be accorded treatment no less
favorable ;han the treatment now or hereafter accorded to commercial travelers
of any third country in respect of customs and other rights and privileges and,suhject to the exceptions in paragraph 3 of Article lx, in respect of al1taxes and
charges applicable to them or to their samples.

Article XI

1. The nationals of either Hirh Contracting Party shall, within the territories
of the other High Contracting party, he permiced toéxerciseliberty of conscience
and freedom of worship, and they may, whether individually, collectively or in
religious corporations or associations, and wiihout annoyance or molestation of
any kind hy reason of their religious belief, conduct servies, either within their
own houses or within any other appropriate buildings, provided that their teach-

ings or practices are no1contrary to puhlic morals or public order.
2. The High Contracting Parties declare their adherence to the principles of
freedom of the press and of freeinterchange of information. To this end, nationals,
corporations and associations of either High Contracting Party shall have the
right, within the territories of the other High Contracting Party, to engage in
such activities as writing, reporting and gathering of information for dissemina-
lion to the puhlic, and shall enjoy freedom of transmission of material to be used
ahroad for publication by the press, radio, motion pictures, and other means.
The nationals, corporations and associations of either High Contracting Party
shall cnjoy freedom of publication in the territories of the other High Contracting
Party, in accordance with the applicable laws and regulations, upon the same
terms as nationals, corporations or associations of such other High Contracting
Party. The term "information", as used in this paragraph, shall include al1forms
of written communications, printed matter, motion pictures, recordings and
photographs'.

3. The nationals of either Hieh Contractine Partv shall be ~ermitted within
the territories of the other ~i~h'Contractin~ <arty 1; hury thei; dead according
to their religious customs in suitable and convenient places which are or may
hereafter heestahlished and maintained for the ~ur~oselsuhiect Io the a~~iicahie
mortuary and sanitary laws and regulaiions

ArricleXII

1. The nationals of either High Contracting Party, regardless of alienage or
place of residence, shallbe accorded rights and privileges no less favorable than
those accorded to the nationals of the other High Contracting Party, under laws
and regulations within the territones of such other High Contracting Party that
(a) estahlish a civil liability for injury or death, and give a nght of action to an
injured person, or to the relatives, heirs, dependents or personal representative
as the case may he, of an injured or deceased person, or that (b) grant to a wage
earner or an individual receivine"salarv. commission or other remuneration. or
Io his relatives, heirs or dependents, a; the case may be, a right of action, or a
wcuniary compensation or other henefit or service, on account of occupational
disease, injury or death ansing out of and in the course of employmenl or due
to the nature of employment.
2. In addition to the rights and privileges provided in paragraph I of this
Article, the nationals of either High Contracting Party shall, within the territories

of the other High Contracting Party, he accorded, upon terms no less favorable
than those applicable to nationals of such other High Contracting Party, the
henefits of laws and regulations estahlishing systems of compulsory insurance,
under which henefits are paid without an individual test of financial need: (u)

' Secalso parÿ.5 of Protocolp. 26.infra. APPLICATION 17

against loss of wages or earnings due Io old age, unemploymeni or sickness or
other disability, or(6) against loss of financialsupport dueto the death of father,
husband or other person on whom such support had depended.

Arricle Xlll

1. The nationals of each High Contracling Party shall be exempt, except as
otherwise providcd in paragraph 2 of this Article, from compulsory training or
service in the armed forces of the other High Contracting Party, and shall also
be excmpt from al1contributions in money or in kind imposed in lieu thereof.
2. Durine anv oeriod of timc when both of the High Contracting Parties are.
ihrough ;irmed sciion in connc~i~on ivith whiih thire is gcncr;i~coiiipulsory
wrbicc. lu, enforcing nicasdrcs agdinsi thc samc third countr) or ci>untricsin

Dursuanccofoblir;iiion? for ihc mdinicnancc of international Kace and securitv,
or fblconcurreslv conductine hostilities aeainsi the same third countrv or
couni;ier, the ïxcmptions provid'cdin pragra;h I ofthir Article ,hall noi apply
Houci,er, in j~ih an c\c.ni Ihc naiionals ofciiher High Contraciing Party in Ihc
icrriioricb of ihc. oihcr Hich Coiiiraciinr Partv, who hiivc not declared iheir
inteniion to acquire the naÏionality of suih 0th;; High Contracting Party, shall
beexempt from service in the armed forces of such other High Conlracting Party
if within a reasonable oeriod of lime thev elect. in lieu of such service, 10 enter
ihc arnicd forscr 01'the High Contracting P;irty uitvhich they are naiionals In
any such siiuaii<,nihc High Conirasiing Pariirs uill rnakc ihc neccssary arrange-
ments for giving effect tothe provisions of this paragraph.

Arricle XIV

I. In al1matters relating to(ri)customs duties and subsidiary charges of every
kind imposed on imports or exports and in the method of levying such duties
and charges, (b) the rules, formalities, and charges imposed in connection with
the clearing of articles through the custorns, an(c)the taxation, sale,distribution
or use within the country of imported articles and of articles intended for
exportation, each High Contracting Party shall accord to articles the growth,
produce or manufacture of the other High Contracting Party, from whatever

place arriving. or to articles destined for exportation to the territories of such
other High Contracting Party, by whatever route, treatment no less favorable
than the treatrnent now or hereafter accorded to likearticles the growth, produce
or manufacture of, or destined for, any third country.
2. With resoect to the matters referred to in oa.aar-~h 1 of this Article. the
ndÏion;ils. cor~oratiuns and dsocialions of eithcr High'~onrrdcii11gPari) sh311
hc aecorded, uiihin ihe icrriiorics oiihc oihcr High Contraciing Pari). irediment
no less favorable than the treaiment which is O; may hereafter be accorded to
the nationals, corporations and ;issociations of such other High Contracting
Party; and with respect to such malters the naiionals, corporations and associa-
tions. vessels and carroes of eiiher Hiah Contracting Party shall be accorded,
within the territoricsof the other ~igh ~ontracting parti, treatment no less
favorable than the treatment whicli is or may hereafter be accorded to nationals,
corporations and associations, vesselsand cargoes of any third country.
3. No prohibition or restriction of any kind shall be imposed by either High
Contracting Party on the importation, sale, distribution or use of any article the
growth, produce or manufacture of the other High Contracting Party, or on the

exportaiion ofany article destined for the ierritories ofe other High Contracting
Party, unless the importation, sale, distribution or use of the like article the18 ELETTRONICA SICULA

growth. produce or manufacture of al1third countries, or the exportation of the
likearticle to al1third countries. reswctivelv. issimilarlv nrohibiied or restricted'.
4. If eiiher High contract;ng Party imposes an; 'quantitative regulation,
whether made effectivethrough quotas, licensesor other measures. on the impor-
tation or exnortation of anv-article. or on the sale. distribution or use of~anv
imported ariiclc. II rhall as3 gcneral rulc gi\c public noiicc of the toial quantitj
or \,aluc of such ariisle pcrniiited Io bc impurted. exportcd. bold. disiributcd or
used during a specified period, and of any change in such quantity or value.
Furthermore. if either Hieh Contractine Partv allots to anv third countrv a share
of such total quantity or value of an" X;IICIC iI<hich the <;ihcrHigh Contracting
Pariy h:is:in import;<ntinterest. IIsh;illas ;iàcncral rulc allotIO iuch oihcr Hiph
Coniractine ~anv a share of such total auaniitv or value based uDonthe nrooir-
" . .
lion of the 1~131 quantil) or \duc .upplieJ hy. or in ihc caw ciiexports CIshire
h~scd Lpon the proportion cxporlcd IO.ihc territories oi such othcr Iligh Con.
tracting~Partyduring a previous representative period, account being taken in so
far as practicable of any special factors which may have afected or may be
affecting the trade in that article. The provisions of this paragraph relating to
imported articles shall also apply in respect of the quaniity or value of any article
permitted to be imported free of duty or tax, or at a lower rate of duty or tax
than the rate of duty or tax imposed on imports in excess of such quantity or
"llll~
5. If ciihcr High Contraciing Party requires documeniary proof of origin of
imported articles.the rcquircnicnts inipowd thererur shall berc3sonxhle and shall

no1hc such as to constiiuic ;in unncccsrar). hiiidrancc to indirect Irade.

Article XV
I Laus. rcguliiiions oi aJministraii\e authorities and decisions of adminisir3-

iite or judisial 3uihoriiics of cach High Contractin& Pari) ihat h3vc ecneral
application and that pertain to the classification of ariicles for customs pÜrposes
or Io rates of duty shall he puhlished promptly in such a manner as to enahle
traders to hecome acquainted with them. Such laws, regulations and decisions
shall he applied uniformly at al1ports ofeach High Contracting Party, except as
otherwise specifically provided for in statutcs of the United States of America
with respect to the importation of articles into its insular territories and pos-
sessions.
2. No administrative ruline bv the United States of America effectineadvances
in r:iic, oi Juiies or ch;irgc, yp&iiahle undcr ;incsi~blihcd and uniform practicc
IO imporis originating in the tcrriiorics oithc It3li3n Kcpuhlic. or iniposing an!

new requirement with respect to such importations, shall as a geneÏal rule be
applied to articles the growth, produce or manufacture of the Italian Republic
already en route at the lime of publication thereof in accordance with the pre-
ceding paragraph; reciprocally, no administrative ruling by the ltalian Republic
effectine advances in rates of duties or charaes a~nlicable under an established
and unhrm prdcticc IO impori. <>riginating IRthc'tcrriiorics of ihc Uniicd Siaie\
tif t\mcric;i. or imporlng an). ncw rcquiremcnt uilh rcspcci Io such irnportalions.
shall as a general rule be applied to articles the growth, produce or manufacture
of the United States of America alreadv en route at the lime of oublication
thereof in accordance with the precedini paragraph. However, if éither High
Contracting Party customarily exempts from such new or increased obligations
articles entered for consumption or withdrawn from warehouse for consumption

'See alsoparas. I and 2 ofAdditional Protocol,p. 27,i/ra. APPLICATION 19

during a period of thirty days after the date of such publication, such practice
shall be considered full compliance by such High Contracting Party with this
paragraph. The provisions of this paragraph shall not apply to administrative
orders imposing antidumping or countervailing dulies or relating to regulations
for the protection of human, animal or plant life or health, or relating to public
safety, or giving effect to judicial decisions.
3. Each High Contracting Party shall provide some administrative or judicial
orocedure under which the nationals. coroorations and associations of the other
High Contracting Party, and importérsoFarticles the growth, produce or manu-
facture of such other Hirh Contracting Partv, shall be permitted to a~pealagainst
fines and penalties imp&ed upon the& by ihe custo&s authorities, confisc~tions
by such authorities and rulings of such authorities on questions of customs
classification and of valuation of articles for customs purposes. Greater than
nominal ena alti shall not be iin~osed bv either Hieh Contractine Partv in

connccii& wiih 3n) inipor1;ition bj ihc naiionals. cori>or;itionsor a;sociai;ons
of ihc oihcr High Contr~ciing Party. or in conneriion uiih the imporiaiion of
articles the growth, produce or manufacture of such other High Contracting
Party. because oferrors in documentation which are ohviously cierical in origin
or with regard to which good faith can be established.
4. Each High ContractingParty willaccord sympathetic consideration to such
representations as the other High Contracting Party may make with respect to
the operation or administration of import or export prohibitions or restrictions.
quantitative regulations, customs regulations or Cormalities,or sanitary laws, or
regulations for the protection of human, animal or plant life or health.

Article XVI

1. Articles the growth, producc or manufacture of either High Contracting
Partv. imoorted into the territories of the other Hirh Contractine Partv. shall be
accoided'treatment with respect Io al1matters affGting internalïanati&, or the
sale, distribution or use within such territories, no less favorable than the treat-
ment which isor may hereafter be accorded to like articles of national origin'.
2. Articles grown, produced or manufactured within the territories of either
High Contracting Party in whole or in part by nationals, corporations and
associations of the other High Contracting Party, or by corporations and associa-
tions of the Hieu Contractine uartv within the territories of which such articles
are grown. produced or manufactured which are controlled by nationals, corpora-
tions and associations of the other Hirh Contracting Party, shall be accorded
within such territories treatment withresoeci to allÏmattërs aflectine interna1
iIi\Iiii<>n.or ihr ,.de, Jiairihuiion or ucr ihrrein. or rrporiaiigin ihcrcirom. no
Icçrfa~orahle rlian ilic ircatriicriinou or hereriftcraccordet<iIikr.:trirrgroun.
produced or manufactured therein in whole or in part by nationals, corporations
and associations of the Hieh Contractine Partv within the territories of which
the articles are grown, produccd or manufactured, or hycorporations and tissocia-
tions of such High Contracting I'arty which are controlled by such nationals,

corporations and associations.Tlie articles specified in the preceding sentence
shall not in any case receive treatment less favorable than the treatment which is
or may hereafter be accorded to like articles grown, produced or manufactured
in whole or in part by nationals. corporations and associations of any third
country, or by corporations and associations controlled by such nationals. corpo-
rations and associations.

' See also para. of AdditionalProlocol.p. 28.infra20 ELETTRONICA SICULA

3. In al1 matters relating to export bounties, customs drawbacks and the
warehousine of articles inteided foÏ exoortation. the nationals. cornorations and
a\\<,si~iion;of ciihcr High ~onrractini Party sh311 be accordcd uhhin the icrn-
toricq of thc oihcr High Ci>ntristing Pariy trcaimçnt no less füvorablc [han the
treatment which is or may hereafter be accorded to the nationals, corporations
and associations of such other High Contracting Party.

Article XVll

1. The treatment prescribed in this Article shall apply to al1forms of control
of financial transactions, includine(a) limitations won the availabilitv of media
necessary to efect such iransactiks, ib) rates of exchange, and (c) prohibitions,
restrictions. delays. taxes, charges and penalties on such transactions; and shall
apply whether a transaction takes place directly, or through an intermediary in
another countrv. As used in this Article. the term "financial transactions" means
al1international payments and transferi of funds efected through the medium
of currencies, securities, bank deposits, dealings in foreign exchange or other
financial arrangements, regardlessof the purpose or natureof such pajments and
transfers.
2. Financial transactions between the territories of the two High Contracting
Parties shall be accorded by each High Contracting Party treatment no less
favorable than that now or hereafter accorded Io like transactions between the
territories ofuch High Contracting Party and the territories of any third country.
3. Ndtionals, corporations and associations of eiiher High Contracting Party
shall be accorded by the other High Contracting Party treatment no less favorable
than that now or hereafter accorded to nationals, corporations and associations

of such other Hieh Contractine Partv and no less favorable than that now or
hereafter accorded to nationals,corpo~ations and associations of any third coun-
try, with respect 10financial transactions between the territories of the two High
~ontractine~Parties or between the territones of such other Hieh ~ontractiie
Party and of any third country.
4. In general, any control imposed by either High Contracting Party over
financial transactions shall be so administered as no1 to influence disadvanta-
gcousl! the compciiiii,c position oi the commcrcc or in\citmcni of capital OC the
other lligh Coni~iciing Pariy incumpariwn uith thcc<~mmcrseorthe iniesimeni
of capital of any third-country

Arlicle XVlll

1. If either High Contracting Party establishes or maintains a monopoly or
agency for the importation, exportation, purchase, sale,distribution or production
of any article, or grants exclusive privileges to any agency to import, export,
purchase, sell, distribuie or produce any article, such monopoly or agency shall
accord to the commerce of the other High Contracting Party fair and equitable
treatment in resoect of its ourchases of articles the erowth. oroduce or manufac-
ture of foreign countnes and ils sales of articles distined ;or foreign countries.
To this end, the monopoly or agency shall, in making such purchases or sales of
anv article. be influenced solelv bv considerations. such as orice. aualitv. market-
ability, transportation and tenns of purchase or sale, which would ordinarily be
taken inIo account by a private commercial enterprise interested solelyin purchas-

ine or selline such article on the most favorable terms. If either Hieh Contractine
~Lrty estabcshes or maintains a monopoly or agency for the saleof any servi;
or grants exclusive privilegesto any agency to seIl any service, such monopoly APPLlCATlON 21

or a-,ncv shall accord fair and eauitable treatment to the other H-eh Contractine
Party and tu ihr nation;ilr. corpor<itions 3nd aa>i,ciatitin<andIO the commerce
ihrrcoi in respect of trdn<d;ti<>n\inroliing juch service 3s comp;ired aith the
treatment which is or may hereafter be accorded to any third country and 10the
nationals, corporations and associations and to the commerce thereof '.
2. Each High Contracting Party, in the awarding of concessions and other
contracts, and in the purchasing of supplies, shall accord fair and equitable
treatment to the nationals, corporations and associations and to the commerce
of the other High Contracting Party as compared with the treatment which is or
may hereaiïer be accorded to thc nationals, corporations and associations and
to the commerce of any third country.
3.The two High Contracting Parties agree that business practices which re-
strain competition, limit access to markets or foster monopolistic control. and
which are engaged in or made effectiveby one or more private or public commer-
cial enterprises or hy combination. agreement or other arrangement among public
or private commercial enterprises may have harmful etïects upon thc commerce

between their respective territorics. Accordingly, each High Contracting Party
agrees upon the request of the othcr High Contracting Party to consul1 with
respect to any such practices and to take such measures as it deems appropriate
with a view to eliminating such harmful etïects.

ArticleXIX
1. Between the territorics of the High Contracting Parties ihere shallbe free-
dom of commerce and navigation.
2. Vesselsunder the flag of eithcr High Contracting Party. and carrying the
papers required by ils national law in proof of nationality, shall be deemed tube
vessels of that High Contracting Party both within the ports, places and waters

of the other High Contracting Party and on the high seas. As used in this Treaty,
"vessels" shall be construed to include al1 vessels of either High Contracting
Party whether privately owned or operated or publicly owned or operated.
However, the provisions of this Treaty other than this paragraph and paragraph
4 of ArticleXX shall not be construed to accord rights to vesselsof war or fishing
vesselsof theother High Contracting Party; nor shall they be construed to extend
to nationals, corporations and associations, vesselsand cargoes of, or IOarticles
the growth, produce or manufacture of, such other High Coniracting Party any
special privileges restricted to national fisheriesor the products thereof.
3. The vesselsof either High Contracting Party shall have liberty, equally with
the vessels of any third country. to come with their cargoes to al1ports, places
and waters of the other High Contracting Party which are or may hereafter be
open to foreign commerce and navigation.

ArrirleXX

1. The vessels and cargoes of either High Contracting Party shall, within the
ports. places and waters of the other High Contracting Party, in al1respects be
accorded treatrnent no less favorable than the treatment accorded IO the vessels
and cargoes of such other High Contracting Party, irrespective of the port of
departure or the port of destination of the vessel, and irrespective of the origin
or the destination of the cargo.
2. No duties of tonnage, harbor. pilotage, lighthouse, quarantine, or other
similar or corresponding duties or charges, of whatever kind or denomination,
' See alsopara.3 afPratocol,p.26, infra.levied in the name or for the nrofit of the eovernment. oublic functionaries.
pri\<iisinJiviJu<il\, ctirporrtions or cst3hlishnients of:in) kind shall hr.impi>\r.d
in ihc ports, pl~cesxid uatcrs oiciihsr High Cdnirxting Party upon ihc \zsscli
ofihs oiher Hieh C,~ntr<iiiinrPlri\.. whish sliall not c. .ill\ .ind und:r ihe .;inir.
conditions be imposed upon national vessels.
3. No charges upon passengers, passengerfares or tickets, freight moneys paid
or to be paid, billsoflading, contracts of insurance or re-insurance, no conditions
relating to the employment of ship brokers, and no other charges or conditions
of any kind, shall be imposed in a way tending to accord any advantage to
national vesselsas compared with the vesselsof the other High Contracting Party.
4. If a vesse1of either High Contracting Party shall be forced by stress of
weather or by reason of any other distress to take refuge in any of the ports,
places or waters of the other High Contracting Party not open to foreign com-
merce and navigation, it shall receive friendlytreatment and assistance and such
repairs, as well as supplies and materials for repair, as may be necessary and
available. This paragraph shall apply to vesselsof war and fishingvessels,as well
as to vesselsas defined in paragraph 2 of Article XIX.
5. The vessels and cargoes of either High Contracting Party shall no1 in any
case, with respect to the matters referred to in this Article, receive treatment less
favorable than the treatment which is or may hereafter be accorded to the vessels
and cargoes of any third country.

Article XXI

1. It shall be permissible, inthe vessels of either High Contracting Party, to
import into the territories of the other High Contracting Party, or to export
therefrom, al1articles which it is or may hereafter be permissible to import into
such territories, or to exvort therefrom. in the vessels of such other High Con-
trdcting Pdrt) or of an) 'ihird iouniry: 2nd >uchdrticlc>\hall n~t hc s;hlcct io
an) highcr dutics or ch;irgcs wh:iir.i.:r ihdn 1ho.riciahi~,hihc drticlzr uould hr.
subieci if the\ ucrc imp<>rir.or r.xp<~rtr.idn \.L.(S,I1Sth~ oilier Ilieh C'ontr.i:tiiir
pariy or of any third country. . - -
2. Bounties, drawbacks and other privileges of this nature of whatever kind

or denomination which are or may hereafter be allowed, in the territories of
either High Contracting Party, on articles imported or exported in national vessels
or vesselsof any third country shall also and in likemanner be allowed on articles
imported or exported in vessels of the otber High Contracting Party.

Article XXll
1. Vessels of either High Contracting Party shall be permitted to discharge

portions of cargoes, including passengers, at any ports, places or waters of the
other Hieh Contracting P-rtv which are or mav hereafter be ooen to foreien -
commerce and navigation, and to proceed with the remaining portions of such
cargoes or passengers to any other such ports, places or waters, without paying
hieher tonnage dues or Dortcharees in such cases than would bevaid bv national
v&selsin likecircumstances, andthey shall be permitted to load in likémanner,
in the same voyage outward, at the various ports, places and waters which are
or mav hereafter be oven to foreien commerce and navigation. The vessels and
s3rg&s of cithcr llieh ~ontractii~ Part! ,hall k ;ii~or&d. uiih rr.,psci IO ihc
niatiers rsferrcd io in this pdr;igraph. irr..itmr.niin the pcirir. pld.'ssiind waicr,
of the oihsr Hieh Coniraciin' Pari) no Ir.\ fa\<irdhlethan ille iri.atnic,iituhich
is or may hereafter be accordëd to ihe vessels and cargoes of any third country. APPLICATION 23

2. The coasting trade and inlaiid navigation of each High Contracting Party
are excepted from the requirements of national and most-favored-nationreatment.
ArticleXXIII

There shall be freedom of transit througb the territories of each High Con-
tracting Party by the routes most convenient for international transit (a) for
persons who are nationals of any third country, together with their baggage,
directly or indirectly coming from or going to the territories of the other High
Contracting Party, (b) for persons who are nationals of the other High Con-
tracting Party, together with their baggage, regardless of whether they are coming
from or going 10 the territories of such other High Contracting Party, and (c)
for articles directlv or indirectlv comine from o- eo-ne to the territones of the
ither High on trac tainy^Such peions, baggage and articles in transit shall
not be subject to any transit duty, to any unnecessary delays or restrictions, or
to anv discrimination inresvect of charees, facilities or any other matter; and al1
charges and regulations pre;cribed in respect of sucpersan bas,gage or articles
shall be reasonable, having regard to the conditions of the traffic. Either High
Contracting Party may require that sucb baggage and articles be entered at the
. .oercustomhouse and that thev bekeot whether or not under bond in customs
cusiody; hut iuch haggagc and articles \hall becxcmpt iriim XIIcustomi dutics
or similîr charges if suih rcquircmcnis for cniry and reicnlion incust<im\cusiody
are comolied with and if ihev are exoorted within one year and satisfactory
e\idence'uf ,ush cxportdtidn irprc,cnt& IO the cxiomr auihoritic, Such nalion.
als. baggdgc. perhon, and :irticlcs sha11he accorded ircatnicnt \i,ith rcIOea11
charecs. rule, 'ind iornisliiic< in L.unn:<i\iitltransi1 nu lcis ia\or.ihlc thsn
the t;calment which is or may hereafter be accorded to the nationals of any third
country, togetber with their baggage, or to persons and articles coming from or
going to the territories of any third country.

ArricleXXlV
1. Nothing in this Treaty shall be construed to prevent the adoption or enforce-
ment by either High Contracting Party of measures:

(b) relating to the exportation iofobjects the value of which derives primarily
[rom their character as works of art, or as antiquities, of national interest or
[rom their relationship to national history, and which are not in general practice
considered articles of commerce;
(c) relating to fissionable materials, to materials which are the source of
fissionable materials, or to radio-active materials which are by-products of fis-
sionable materials;
(dl relatine to the oroduction (if and trafic in arms, ammunition and imole-
menk <iiu.aFxnd to sbch trafic in ciihcrgoods and matcri3ls 3s is cïrried on-for
ihc purposc of supplying 3 iniliiar) esl;ibl~shrncni:
1c.ncccssar., in.purauancc of ohliediions for ihc mainicnancc of ini:rn:iti<~nal
and security, or necessary 1'o;the protection of the essential interests of
such High Contracting Party in lime of national emergency; or
(f)imposing exchange restrictions, as a member of the International Monetary
Fund, in conformit with the Articles of Agreement thereof signed at Washington
December27, 1945 , but without utilizingils privilegesunder ArticleVI, section 3,

' TlAS 1501,Vol.3. p.1351.of that Agreement so as to impair any provision of this Treaty; provided that
either High Contracting Party may, nevertheless, regulate capital transfers to the
extent nëcessarv to ikure the importation of essential aoods or to elïect a
rcasonahlc rate of incr:Jsc in ver) leu. monciary rescr\cs or tir prc\eni its

monciar) reser\,esfrom Fllling tt?ï \er) lou le\cl Ifihc Inicrnationiil \loneiary
tund sh~iuld iCJjC Io funciion. irr ilcitherHigh Con1ra;tinr. P3r1) should crase
to be a member thereof, the two High ~ontricting parties,iponihe request of
either High Contracting Party, shall consult together and may conclude such
arrangements as are necessary to permit appropriate action in contingencies
relating to international financial transactions comparable with those under which
exceptional action had previously beenpermissible.

2. Subject to the requirement that, under like circumstances and conditions,
there shall be no arbitrary discrimination by either High Contracting Party
against the other High Contracting Party or against the nationals, corporations,
associations. vessels or commerce thereof, in favor of anv third country or the
nationals, corporations, associations, vesselsor commerce thereof, the provisions
of this Treaty shall not extend to prohibitions or restrictions:

(a) imposed on moral or bumanitarian grounds;
(b) dcsigned to protect human, animal or plant life or health;
(c) relating to Fison-made goods; or
(d) relating to the enforcement of police or revenue laws.
3. The provisions of this Treaty according treatment no less favorable than

the treatment accorded to any third country shall not apply 10:
(O) advantages which are or may hereafter be accorded to adjacent countries
in order to facilitate frontier traffic;
IbJ advantaees accorded bv virtue of a customs union of which either Hiah
conCracting party may, afterconsultation with the olher High Contracting

become a member so long as such advantages are not extended to any country
which is not a member ofsuch cusloms union:
(c, lid\antagcs accorded io third countricr pursudni IO a muliilïicral ccononiic
agreement of genrnl .~ppli~ability.including ï trddc arc3 of iuhsiïniilil s11e.
hr\ina ;is lis obiective the Iihcrdl1~3lionand promotion ~Cintcrnaiionlil trcidcor
other;nternatiohal economic intercourse, and open to adoption by al1the United
Nations' ;
(dj advantages now accorded or which may hereafter be accorded by the
ltalian Republic 10 San Marino, to the Free Territory of Trieste or to the State
of Vatican City, or by the United States of America or its territones or possessions
to one another, to the Panama Canal Zone, to the Republic of Cuba, to the
Republic of the Philippines or to the Trust Territory of the Pacific Islands; or
(el advantaees which. Dursuant to a decision made bv the United Nations or
an orgïn ihereof or by an :ippropriïie >pr.ciïli~edagency in rclïiionrhip uiih ihc
United Naiions, mïy hcrcaficr he accorded by rithcr lligh Cuniraciing Party 10

areas other than those enumerated in subparagraph (d) of the present paragraph.
The provisions of subparagraph (d) shall continue to apply in respect of any
advantaees now or bereafter accorded bv the United States of America or its
territories or possessions to oneanother irrespectiveof any change in the political
status of any of the terntories or possessions of the United States of America.

' For an understanding relatingIo para. 3 (e)of ArticleXXIV, see exchanges of noies,
pp.29-31. infra. APPLICATION 25

4. The provisions of this Treaty shall not be construed to accord any nghts
or privileges to persons, corporations and associaiions to engage in political
activities, or to organize or participate in political corporations and associations.
5. Each Hieh Contractine Partv reservesthe rieht to denv anv of the riehts
and privileges"accorded by sis Tréaty to any corporation or+assofiation created
or organized under the laws and regulations of the other High Contracting Party

in ihëownershio or direction of wh~chnationals of anv third-country or countries
h~ ~~~~re~ ~v,o; indirectlv,a conlrolline -nterest
o. ho cnicrprisc of eiihcr tligh Contraciing Party which is publi~l! owncd ur
ciinirolled sh:ill. iIIengage\ in ~>mirncrci31.m:inulact.iring. proccssing.shipping
or othcr hurincxr acii\itici* uith~n ihc icrrii<irlci of the oihcr Hixh Ci)ntr:ictinr

Party, claim or enjoy, either for itself or for its property, immuniÏy therein from
taxation, from suit, from execution of judgment, or from any other liability to
which a privately owned and controlled enterprise is subject therein.
7. The n.ovisions of this Treat~~shall not be construed to affect existine la-s
and rcgulations of eithcr High O,nir;icting Party ln relation 10 ininiigrlition or

ihc right oi'eithcr Hish Contractiiig P3rl) IO aJopt and cnforre Iau and rcgula-
tionsrelating to immigration; provided, however; that nothing in this paraGaph
shall preveni the nationals of either High Contracting Party from entering,
iraveling and residing in the territories of the other High Contracting Party in
order to carry on trade hetween the two High Contracting Parties or to engage

in any commercial activity related thereto or connected iherewith, upon lems as
favorable as are or may hereafter be accorded to the nationals of any third
country entering, traveling and residing in such terriiories in order to carry on
trade between such other High Contracting Party and such third country or to
engagein commercial activity related to or connecied wiih such trade.

Article XXV

Subject to any limitation or exception provided in this Treaty or hereafter
agreed upon bctween the High Contracting Parties, the territories of the High
Contracting Parties to which the provisions of this Treaty extend shall be under-
stood to comprise al1areasof land and water under the sovereignty or aiithority
of either of the High Contracting Parties, other than the Canal Zone, and other

than the Trust Territory of the Pacific Islands except to the extent that the
Prcsident of the Unitcd Statesof America shall by proclamation extendprovisions
of the Treaty to such Trust Territory.

Article XXVl

Any dispute between the High Contracting Parties as to the interpretation or
the application of this Treaty, which the High Contraciing Parties shall not

satisfactorily adjust hy diplomacy, shall be submitted to the International Court
of Justice, unlessthe High Contracting Partiesshall agreeto settlement by some
other pacific means.

ArricleXXVll

1. This Treaty shall be ratified, and the ratifications thereof shall be exchanged

at Rome as soon as possible.
2. This Treaty rhall enter into force on the day of the exchangeof ratifications,
and shall continue in force for a period of ten years from that day.
3. Unless one year before the expiration of the aforesaid period of ten years
either High Contracting Party shall have given writien notice to the other High26 ELETTRONICA SlCULA

Contracting Party of intention to terminate this Treaty upon the expiration of
the aforesaid period, the Treaty shall continue in force thereafter until une year
from the date on which written notice of intention tu terminate it shall have been
given by either High Contracting Party.

IN WITNFSS WHEREOF the respective Plenipotentiaries have signed this Treaty
and have affixed hereunto their seals.

DONEin duplicate, in the English and ltalian languages, hoth equally authentic,
at Rome, this second day of February one thousand nine hundred forty-eight.

For the
Government of the United States For the
of America: ltalian Government :
James Clement DUNN. SFORZA.

At the tirne of signing the Treaty of Friendship, Commerce and Navigation
between the United States of America and the ltalian Republic, the undersigned
Plenipotentiaries, duly authorized by their respective Governments, have further
agreed on the following provisions, which shall be considered as integral parts
of said Treaty :

1. The provisions of paragraph 2 of Article V, providing for the paymenl of
compensation, shall extend to interests held directly or indirectly by nationals,
corporations and associations of either High ContractingParty in property which
is taken within the territories of the other High Contracting Party.

2. Rights and privileges with respectto commercial, manufacturing and pro-
cessing activities accorded, by the provisions of the Treaty, lo pnvately owned
and controlled enterprises of either High Contracting Party within the territories
of the other High Contracting Party shall extend to rights and privileges of an
economic nature granted to publicly owned or controlled enterprises of such
other High Contracting Party, in situations in which such publicly owned or
controlled enterprises operate in fact in competition with pnvately owned and
controlled enternrises. The orecedine sentence shall not, however, aoolv to suhsi-
dies granted to'puhlicly &ned o;controlled enterphses in conkciion with:

(O) manufacturing or processing goods for government use, or supplying goods
and services to the eovernmentfor eovernment use; or (b) supplyin~, al prices
substantially below cornpetitive pri&s, the needs of particular $p;laGon groups
for essential goods and services not othenvise practicahly obtainable by such
groups.
3. The concluding sentence of paragraph I of Article XVIIl shall no1 be
construed as applying tu postal services.
4. The provisions of paragraph 2 (a) of Article 1 shall no1 he construed to

extend to the practice ofprofessions the members of which are designated by law
~~-r~~li~ ~fficiais.
5. The provisions of paragraph 2 of Article XI shall not be construed to affect
measures taken by either High Contracting Party to safeguard military secrets. APPLICATION 27

IN WITNW WHEREOF the respective Plenipotentiaries have signed this Protocol

and have affixed hereunto their seals.
DOSEin duplicate, in the English and ltalian languages. both equally authentic,
at Rome this second day of February one thousand nine hundred forty-eight.

For the
Government of the Unitcd States For the
of America: ltalian Government :

James Clement DUNN. SFORZA.

In view of the grave economic difficulties facing ltaly now and prospectively
as a result of, interuliu, the damage caused by the late military operations on
Italian soil; the looting perpetratcd by the German forces following the Italian
declsration of war against Germany; the present inability of ltaly to supply,
unassisted, the niinimum needs of its people or the minimum requirements of
ltalian economic recovery; and Italy's lack of monetary reserves; at the time of
signing the Treaty of Friendship, Commerce and Navigation between the United
States of America and the ltalian Republic, the undersigned Plenipotentiaries,
duly authorized by their respective Governments, have further agreed on the
following provisions, which shall be considered as integral parts of said Treaty:

1. The provisions of paragraph 3of Article XIV of the abovementioned Treaty
and that part of paragraph 4 of the same Article which relates to the allocation
of shares, shall no1 obligate either High Contracting Party with respect to the
application of quantitative restrictions on imports and exports:
(a) that haveeffectequivalent to exchange restrictions authorized in conformity

with section 3 (6) of Article VI1of the Articles of Agrecment of the lnternational
Monetary Fund;
(b) that are necessary to secure, during the early post-war transitional period,
the equitable distribution among the several consuming countries of goods in
short supply;
(c) that are necessary in order 10 effect, for the purchase of imports, the
utilization of accumulated inconvertible currencies; or
(d) that have effectequivalent to exchange restrictions permitted under section
2 of Article XIV of the Articles of Agreement of the International Monetary
Fund.

?. The privilcgcsaccordcd 10 eiiher High Contraciing Piri). h) subparagrnphs
(cl and (dl. pariigrnph 1. (11ihc prcscnt Proi~col. shall bc liniiied tu situation\
in which lu, ilisncccsrar) for such IIigh Cuniriiiiing Pari). tu .inpl) rc,triili<>ns
on imports'in order Io forestal1 the imminent thrc; of, or to'itop, a serious
decline in the levclof its monetary reserves or, in the case of very low monetary
reserves. to achicve a reasonable rate of increase in ils reserves, and (b) the
application of the necessary restrictions in the manner permitted by the aforesaid
paragraph 1 will yield such High Contracting Party a volume of imports above
the maximum level which would be possible if such restrictions were applied in
the manner prescribed in paragraphs 3 and 4 of Article XIV of the Treaty.28 ELETTRONICA SICULA

3. During the current transitional period of recovery from the recent war, the
provisions of Article XVI, paragraph 1, of the Treaty shall no1 prevent the
application by either High Contracting Party of needed controls to the internal
sale, distribution or use of imported articles in short supply, other than or
diiïerent from controls applied with respect to like articles of national origin.
However, no such controls over the internal distribution of imported articles

shall be . . a..lied b~ either Hiah Contractine Party in such a manner as to
cause unnecessary injuiy to the cornpetitive poction within its territories of the
commerce of the other High Contracting Party, or (b) continued longer than
required by the supply situation.
4. Neither High Contracting Party shall impose any new restriction under
paragraph 1 of the present Protocol without having given the other High Con-
tracting Party notice thereof which shall, if possible, be not less than thirty days
in advance and shall not in any event he kss than ten days in advance. Each
High ('ontr~ctiiig Pari) shallat~ird io the oiher Iligh ~i>ntrd:,ir.rinP~.irty <>pp,>riu-
niiv f~r coniuliaiiun ai an! timc ccinccrning the, nccd ior and 3ppli:.iiion uf
restrictions to which such paragraph relates as well as concerning the application
of paragraph 3; and either High Contracting Party shall have the right to invite
the International Monetary Fund to participate in such consultation, with refer-
ence to restrictions to which subparagraphs (a), (c) and (d) of paragraph 1
relate.
5. Whenever exchange difficulties necessitate that pursuant to Article XXIV,

paragraph I (f), the Italian Government regulate the withdrawals provided for
in Article V, paragraph 2, the Italian Government may give priority to applica-
~ ~ ~ ~ ~ ~ ~~,ationals. ~.ro~r.tions and associations of the United States of
America to withdraw compensation received on account of property acquired on
or before Decemher 8, 1934,or, if suhsequently acquired:
(ri) in the case of immovable property, if the owner at the time of acquisition

had permanent residence outside Italy, or, if a corporation or association, had
itscenter of management outside Italy;
(b) in the case of shares of stock, if at the time of acquisition Italian laws and
regulations permitted such shares to he traded outside Italy;
(c) in the case of bank deposits, if carried on free account al the time of
taking;
(d) in any case, if the property was acquired through importing foreign
exchange, goods or services into Italy, or through reinvestments of profits or
accrued interest from such imports whenever made.

The Italian Government undertakes to grant every facility to assist applicants
in estahlishing their status for the purposes of this paragraph; and to accept
evidence of prohative value as establishing, in the absence of preponderant
evidence to the contrary, a priority claim.
6. Whenever a multiple exchange rate system is in effect in Italy, the rate of
exchanee which shall be annlicable for the ourooses of Article V. ~araeranh 2.
need nit be the most favitable of al1ratesapilicable to internatisnal Enancial
transactions of whatever nature; provided, however, that the rate applicable will
in any event permit the recipient of compensation actually to reaiize the full
economic value thereof in United States dollars. In case dispute arises as to the
rate applicable, the rate shall hc detcrmined hy agreement between the High

Contracting Parties.
IN WITNESS WHEREOF the respective Plenipotentiaries have signed this Protocol
and have affixed hereunto their seals. APPLICATION 29

DONEin duplicate, in the Englishand ltalian languages, both equally authentic,
at Rome, this second day of February one thousand nine hundred forty-eight.

For the
Government of the United States For the
of America: Italian Government:

James Clenient DUNN. SFORZA.

EXCHANGE OSNOTES

The A,>?ericunAmbossurloIro rheMinisler of ForeignAflairs

F.O.NO.827

Rome, February 2, 1948.

Excellency :
I have the honor to refer to the proposais advanced by representatives of your

Government, during the course iof negotiations for the Treaty of Friendship,
Commerce and Navigation signed this day, for facilitating and expanding the
cultural relations between the peoples of Our two countries.
I take pleasure in informing you that my Government, recognizing the impor-
tance of cultural ties betweennations as developing increased understanding and
friendship, will undertake to stimulate and foster cultural relations between Our
two countries, including the interchange of professors, students, and professional
and academic personnel between the territories of the United States of America
and of Italy, and agrees to discuss at a later time the possibility of agreements
designed to establish arrangements whereby such interchange may be facilitated
and whereby the cultural bonds between the two peoples may generally be
strengthened.
Accept, Excellency.the renewed assurances of my highest consideration.

James Clemcnt DUNN.

His Excellency Count Carlo Sforza,
Minister of Foreign Aiïairs,
Rome.

TheMinisrerof ForeignAfiirs ro rheAmericunAmbussudor

THE MINISTEROF FOREIGSAFFAlRS

Rome, February 2. 1948.

Excellency :
1have the honor Io refer to Your Excellency'snote of this date, which reads
as follows:30 ELETTRONICA SICULA

[For rexrof rheUnitedStoresnore,seeobove J.

I have the honor to inform Your Excellencv ihat the ltalian Government will
undertake, for ils part, 10 stimulate and foskr cultural relations, including the
interchange of professors, students and academic personnel, and to discuss the
possibility of cultural agreements between Our two Governments in accordance
with the ideas expressed in Your Excellency'snote.
1take pleasure in availing myself of this occasion, Excellency,to renew to you
the assurances of my highest consideration.

To His ExcellencyJames Clement Dunn,

Ambassador of the United States of America,
Rome.

The AmericanAmbassadorro rheMinisier orForeignAfair.~

EMBASSYOF THE UNITED STATESOF AMERICA

F.O.NO. 3170

Excellency:
1have the honor to refer to paragraph 3 (c) of Article XXlV of the Treaty of
Friendship, Commerce and Navigation between the United States of America
and the ltalian Republic signed al Rome on February 2, 1948, and to inform
Your Excellency that it is the understanding of the Government of the United

States of America that the provisions of the aforesaid Treaty relaiing to the
treatment of goods do no1 preclude action by either of the parties thereto which
is required or specifically permitted by the General Agrecment on Tariîls and
Trade' or by the Havana Charter for an lnternational Trade Organization2,
during such lime as the party applying such measures is a contracting party to
the General Agreement or is a member of the lnternational Trade Organization,
as the case may be.
1shall be glad if Your Excellencywill confirm this understanding on behalf of
the Government of the ltalian Republic.
Accept, Excellency,the renewed assurances of my highest consideration.

James Clemeni DUNN.

Rome, July 26, 1949.
His ExcellencyCount Carlo Sforza,
Minister of Foreign AlTairs,
Rome.

'TIAS 1700,Val.4, p. 641.
Unperfected;forexcerpts.seeA Decodeof Amerim ForeignPoli-. B:oriDucumenrr.
1941-4( 9S.Doc. 123,81slCong, 1stsess.)p.391. APPLICATION

The Minisrerof Foreig nflairs10 thAmerican Ambassador

[TRANSLATION]

MINISTRY OF FOREIGN AFFAIRS

Rome, July 26, 1949.

Excellency:
1 have the honor to refer to your letter dated today in which, referring to
paragraph 3 (c) of Article XXIV of the Treaty of Friendship, Commerce and

Navigation betweenthe United States of America and the Italian Repuhlic, signed
at Rome on February 2, 1948, you inform me that il is the understanding of the
Government of the United States of America that the provisions of the aforesaid
Treaty relating to the treatment of goods do not preclude action by either of the
parties thereto which is required or specifically permitted hy the General
Agreement on Tariffs and Trade or hy the Havana Charter for an International
Trade Organization, dunng such lime as the party applying such measures is a
contracting party to the General Agreement or is a member of the International
Trade Organization.

1 have the honor IO inform you that the ltalian Government agrees to the
foregoing.
Accept, Excellency.the assurances of my high consideration.

SFORZA.

His ExcellencyJames Clement Dunn,
Ambassador of the United States of America,
Rome. FRIENDSHIC P,OMMERC AND NAVIGATION

Agreemenrsupplemenringrhe rreaiy of February 2. 1948.
Signedar WashingronSepiember 26, 1951:
Rarification advisedbv the Senareo/ rhe Unired Srales of America. ivirh an under-
standing,July 21. 1953;

Rotified by the Presidenrof rhe Uniied Sraresof America wirh said undersranding,
Sepiember 22. 1960;
Rarified by lraly Ociober 28, 1960:
lnsirumenis ofrarificaliexchangedor WashingtonMarch 2. 1961;
Proclaimed by the Presidenr of the Uniied States of America March 8, 1961;
Enrered inroforce March 2. 1961.

BY THE PRESIDENT OF THE UNITED STATESOF AMERICA

A PROCLAMATION

WHEREAaS n agreement supplementing the treaty of friendship, commerce and
navigation between the United States of America and the ltalian Repuhlic was
signed at Washington on September 26, 1951,the original of which agreement,
in the English and ltalian languages, is word for word as follows:

AGRI.LM~-S SUI PI>LEMEF;T TII:TRI:ATI Ot FRIISI>5IIIIC.OIIIIERCASD
NAVI<;ATIU H>F.~\I.CITI:UYII~:D STATF SF AAII:RI(.AN> CIIFI.IALIAN

The United States of America and the ltalian Republic, desirous of giving
added encouragement to investments of the one country in useful undertakings
in the other country, and being cognizant of the contribution which may be made
toward this end by amplification of the principlesof equitable treatment sel forth
in the Treaty of Friendship, Commerce and Navigation signed at Rome on
February 2, 1948'. have resolved 10conclude a supplementary Agreement, and

for that purpose have appointed as their Plenipotentiaries,
The President of the United States of America:

Dean Acheson, Secretary of State of the United States of America, and
The Presideni of ihe Iialian Republic:

Giuseppe Pella, Minister of the Budget of the ltalian Repuhlic,

' TIAS 1965:63 Siat..pl2.P.2255 APPLICATION 33

Who, having communicated IO cach other their full powers round Io be in due
form, have agreedas follows:

The natiunals. corporaiions and associaiions ofcither High ConIracting Pcirt)

bhdilndt be,ubiecied 10arhirrary or Jicrimin~it~ry mrasurcsuilhin the terriiorics
of the other High ~ontractin~I>arty resulting particularly in: (a) preventing
their effective control and management of enterprises which they have been
permitted Io establish or acquire therein; or, (6) impaifing their other lcgally
acquired rights and interests in such enterprisesor in the investmentswhich they

ha~e~made. whether in the form of funds (loans. sharesor otherwise). materials,
equipment; services, processesp,atents, te:hniques or otherwise. ~ach~i~h Con-
tracting Party undertakes no1Io discriminate against nationals, corporations and
associaiionsof the other Hieh Co-traciina Party as to their obtainina under .
normal irrms the sapiial. nianuf;icturing proccssss.skiIl, and ieshnology which
ma)1be neededForeçonomic drvcl~~pmeni.

Article II

With referenceto Article 1,paragraph 2 (c), of the said Treaiy of Fricndship,
Commerce and Navigation, laws regarding qualifications for the practice of a
nro-~~sion shall not orevent the niitionals. coroorationsand associationsofeither
High Contracting party from engaging,orcontracting for the servicesof, technical
and administrative experts for the particular purpose of making, exclusively

within the enternr.se. examinations. audits and technical investieatio-s for, and
rendcring report5 IO.qushnation~ls. eorpor;itions and ;tssosisiions in conneciion
w,ih ihe planning and oper~tion ofiheir cnicrprire. and cnicrpriçes in which they
have .I finansial intercri, wiihin ihe tcrriiorirs iii the oiher High Conlr~ciing
Party.

Article III

I. Reeardine the transferabilitv of caoital invested bv nationals. cor~orations
and a.<(;r.iaiio~s oieilher tligh ~ontraciin~ Party in the ierriiories or ihe oiher.
;incl the reiurns ihereon. ihe High Contraciing Pariies underiake to grant each
other the most liberal treatmentpracticable.
2. Each High Contracting Party will permit the nationals, corporations and

associationsof the other High Contracting Party to transfer freely, by obtaining
exchangein the currency of iheir own country:
(a) Earnings, whether in the forin of salaries, interest, dividends, commissions,

rovalties...a.mentsfor technical services.or otherwise, and funds for amorti-
r;iiion of lo;ins and dcprecixiion ofdircct in\e~tnienis. and
Ih, l'und, I;)r c~piial iran,fers

II more ihan one rite of exchange is in force. ihe rlie applicable Io transfers
referred IO in the preseni paragraph $hall k a raie which ISrpccifically approved
-, t~ ~ ~trrnanonal Monetarv Fund' for suchtransactions or. ln ihc ïbrnce of
such specifically approved raie, an effective rate which, inclusive of any tax or
surchargeson exchangetransfers, isjust and reasonable. APPLICATION 35

executed within the territories of either High Contracting Party until after it has
been duly declared enforceable therein.

Arricle VI1
1. The two High Contracting Parties, in order to prevent gaps in the social
insurance protection of their respectivenationals who at difîerent limes accumu-
late substantial periods of coverage under the principal old-age and survivors

insurance systemof one Higb ContractingParty and also under the corresponding
system of the other High Contracting Party, declare their adherence to a policy
of permitting al1such periods to be taken into account undcr either such system
in determining the rights of such nationals and of their families. The High
Contracting Parties will make the necessary arrangements' to carry oui this
policy inaccordance with the following principles:

(a) Such periods ofcoverage shall becombined only to the extent that they do
not overlap or duplicate each other, and only in so Far as both systems
provide comparable types of benefits.
(b) In cases wbere an individual's periods of coverageare combined, the amount
of benefits, if any, payable to him hy either High Contracting Party shall he
determined in such a manner as to represent, so far as practicable and
eauitahle, that ~ro~ortion of the individual's combined coverage which was
aicuniul3tr.d ciide; the sysieiii oi that lligh Contracting P;lrt)-
/< An indisid~al ma? clect tr,h~vr111rsiglit tu hencfiir, .ind theamuuni thcrcol:
Jctcrmincd wiihout rcyrd to thc pruiiritinr of the prcrent p2r:tgraph.

Such arrangements may provide for the extension of the present paragraph to
one or more soecial old-aee and survivors insurance svstems of either Hieh
Contracting pa;ty, or to or extended disabilii~ insurance systemsk'
either High Contracting Party.
2. At such time as the Mainteilance of Migrants' Pension Rights Convention
of 1935 enters into force with resoect to both High Contractine Partie?,. the
provisions of that Convention shall Supersede,to the extent that they arc inconsis-
tent therewith, paragraph I of the present Article and arrangements made
thereunder

Arricle VI11
Each High Contracting Party shall accord sympathetic consideration Io, and
shall afford adequate opportunity for consultation regarding, such questions as

the other High Contracting Party may raise with respect to any matter affecting
the operation of the present Agreement or of the said Treaty.

Article IX
The present Agreement shall be ratified, and the ratifications thereof shall be

exchanged at Washington as soon as possible. It shall enter into force on the day
of exchange of ratifications, and shall thereupon constitute an integral part of
the said Treaty of Fnendship, Commerce and Navigation.
IKwt~hws WHEREOF the respective Plenipotentiaries have signed the present
Agreement and have aliixcd hereunto their seals.

' For understanding of the twoGcivernment sancerning arrangements under Art.Vlt.
para. I,seeposi,p. 36.36 ELETTRONICA SICULA

DONEin duplicate, in the English and Italian languages, bath equally authentic,
at Washington, this tweniy-sixth day of September, one thousand nine hundred
fifty-one.

For the United States of America:

Dean ACHESON.
[SEAL]

For the ltalian Republic:
Giuseppe PELLA.

[SEAL]

WHEREAtS he Senate of the United States of America by their resolution of July
21, 1953, two-thirds of the Senators present concurring therein, did advise and
consent to the ratification of the said agreement "subject ta the understanding
that the arrangements referred to in Article VII, paragraph 1, of the said
agreement shall be made by the United Statesonly in conformity with provisions
ofstaiuie";
WHEREAtS he text of the said understanding was communicated by the Gov-
ernment of the United States of America to the Government of the Italian Repub-
lic by a note dated July 24, 1953,and was accepted by the Government of the

ltalian Republic on a reciprocal basis;
WHERFAtS he said agreement was ratified bythe President of the United States
of America on Sepiembcr 22, 1960, in pursuance of the aforesaid advice and
consent of the Senate and subject to the said understanding, and was ratified on
the part of the ltalian Republic;
WHI~KI~tA heSrespectire instruments oirÿtificïii35ïforesaid. uerc exchanged

ai W~shinrlun un Varch 2. 1961. ïnd a iiroiocol of cxcliiinre. in ihc Enrlish and
ltalian languages, was signed at that piace and on that date by the respective
Plenipotentiaries of the United States of America and the Italian Republic, the
said protocol of exchange declaring that "it is understood that the entry into force
of the arrangements mentioned in Article VII, paragraph 1,of the said agreement
is subordinate in any case to the fulfilling on the part of the United States of
America of its provisions oftatute and on the part of the Italian Republic of its
constitutional requirements";
ANI) WHEREAS it is provided in Article IX of the said agreement that the
agreement shall enter into force on the day of exchange of ratifications;

Now, THEREFORb Ee,it known that 1,John F. Kennedy, President of the United
States of America, do hereby proclaim and make public the said agreement to the
end that the same and every article and clausethereof may bë observed and
fulfilledin good faith on and after March 2, 1961,by the United States of America
and by the citizens of the United States of America and al1other persans subject
to thejurisdiction thereof, subject to the said understanding. APPLICATION 37

INTCST~MONYWHER~F, I have caused the Seal of the United States of Americd
to be hereunto affixed.

DONE al the city of Washington this eighth day of March in the year of Our
Lord one thousand nine hundred and sixty-one and of the independence of the
United States of America the one Iiundred eighty-fifth.

[SEAL]

John F. KENNEDY.

By the President:
Dean RUSK.

Secreiary of Staté. . Attaehment 2

SUMMARY OF DIPLOMATIC EFFORTS TO RESOLVE
THIS DISPUTE

The Governments of the United States and the Republic of ltaly have engaged
in extensive but unsuccessful diplomatic exchanges regarding this dispute.
As early as Apnl 1969, U.S. Commerce Secretary Stans met with ltalian
lndustry and Commerce Minister Tanassi and conveyed the U.S. Government's
desire for the amicable resolution of this dispute. In this and other diplomatic
contacts through the end of 1973, the United States asked ltaly ta negotiate
directly with Raytheon and Machlett and to compensate them for their losses.
These early efforts were unsuccessful.
On February 7, 1974,therefore, the United Statessubmitted its own diplomatic
claim against Italy, asking for monetary reparations for the damages caused by
Italy's wrongfulactions. Included with that claim was a detailed legalmemorial
in which the U.S. alleged that ltaly had violated the FCN Treaty and the
Supplementary Agreement, as wellas customary international law and municipal
ltalian law. On June 25, 1975, at Italy's request, the United States supplied a
complete Italian translation of the factual and legal statements of the claim.
During the next three years, the United States claim was raised repeatedly with
ltalian officiais,including demarches to Italian Foreign Minister Forlani by U.S.
Ambassadors Volpe and Gardner in 1976 and 1977 respectively. ltaly did not
make a formal response.
Finally, on June 13, 1978,ltaly denied the claim in a written Aide-Mémoire.
On April 15, 1979, the United States replied in writing ta the objections ltaly
raised in its denial and again asked for reparations. The United States also
continued its efforts to resolve this claim through diplomatic communications,
including unsuccessfuldiscussions during a May 1979meeting in Rome between
U.S. Secretary of State Vance and ltalian Foreign Minister Forlani.
The United States then determined that this dispute could only be resolved
through third party dispute resolution. On January 6, 1981,and again on May
15, 1981and April 5, 1982, the United States presented Diplomatic Notes to
ltaly asking that the claim be submitted to binding arbitration. The United States
and ltaly were unable ta agree to this or any other method of dispute resolution.
On August 31, 1984and on March 28, 1985,the United States therefore sent
additional Diplomatic Notes ta ltaly asking that the claim be submitted to
binding arbitration. On June 5, 1985,ltaly invited a U.S. delegation to meet with
representatives of the Ministry of Foreign AîTairsto negotiate an arbitration
agreement. United States and Italian deleeations met in Rome in October 1985.
The Italian delegdtiun inJis3icd during thGe meetingr thalidl)riar nui prepdred
tu submii the dispute tu ÿrbitrdiion. Insiedil. the ilclcg~iionscuniurrcd ihcit ih~s
disuute would be resolved throueh a contentious uroceedine before a Chamber
of ihis Court and jointly approvid a press ~eleasesettin~fodh this view Attachment 3

ORDER MADE ON I APRlL 1968BY THE MAYOR
OF PALERMO

THEMAYOR OF THEMUNICIPALIT O FPALERMO,

TAKING INTO CONSIDERATION thai Raytheon-ELSI of Palenno has decided Io
close its plant located in this city at Via Villagrazia 79, because of market
difficultiesand lack of orders;

THATthe company ha furthermore decided ta send dismissal letters to the
personnel consisting of about 1,000persons;
TAKING NOTICE that ELSl's actions, beside provoking the reaction of the

workers and of the unions giving rise 10strikes (both general and sectional) has
caused a wide and general movement of solidarity of al1public opinion which
has strongly stigmatized the action taken considering that about 1,000 families
are suddenly destituted;

THAT, considering the fact that ELSl is the second firm in order of importance
in the District, because of the shutdown of the plant a serious damage will be
caused to the District, which has been so severely tried bythe earthquakes had
during the month of January 1968;

CoNsiDEniNcalso that the local press is taking a great interest in the situation
and that the press is being very critical toward the authorities and is-accusina
them of indifference io thii serious civic problem;

THAT.furthcrmorc. the prescni situaiion is pariicullirly iouihy and unforcsee-
able disiurbanccs of public order could ilike place;

TnKIKG IYTO~'O~slntk~TIOtshal in ihis pliriicular insiancc ihcrc is sulfisieni
grùund for holding thxi ihcrc is a grîvc public nr.~.essityand IOpr<>lcci
lhc eenerîl ecùnùrnic oublie inicrcsi (nlradv scriousl\ comoromised~and nuhlic
order, and that these.reasons justify'requisitioning thand ali equibment
owned by Raytheon-ELSI located here at Via Villagrazia 79;

HAVING NOTED Article 7 of the law of 20 March 1865No. 2248 enclosure e;

HAVING NOTED Article 69 of the Basic Regional Law EE.LL.,

ORDERS
the requisition, with immediate effectand for the duration of six months, except

as may be necessaryto extend such period, and without prejudice for the rights
of the parties and of third parties. of the plant and relative equipment owned by
Rayiheon-ELSI of Palermo.

WITHa subsequent decree, the indemnification to be paid to said company for
the requisition will be established. CERTIFICATIONOF TRANSLATION

1herebycertifythatthe above translation bearingLSNo. 118355was prepared
hy the Officeof Language Servicesof the Department of State and that it is a
correct translationto thebest of my knowledgeand helief.

Dated: Jan. 16, 1987.

(Signed) [Illegible],
Chief,TranslatingDivision.