On May 3, 1978, a subsidiary of INA Corporation (INA), INA International Insurance Company, Ltd. (INA International), acquired 20 percent of the shares of Bimek Shargh (Shargh), an Iranian insurance company. The proposed investment by INA International was approved by Central Insurance of Iran (CII), the government body responsible for the regulation of insurance activities in Iran, by a letter to Shargh management dated December 27, 1977. INA International paid 20 million rials for the shares of Shargh. On June 25, 1979, Iran's government enacted the Law of Nationalization of Insurance and Credit Enterprises. Article 1 provided as follows:
To protect the rights of the insured, to expand the insurance industry and the entire State and to place it at the service of the people, from the date of this law, all Insurance enterprises in Iran are proclaimed nationalized with acceptance of the principle of legitimate ownership.
INA sued for what it alleged to be the going value of its Shargh shares, together with interest and legal costs.
1. What, according to Judge Lagergren, is the general rule relating to compensation for nationalizations?
2. Judge Lagergren notes that the Iranians had conducted a nationalization. Does he apply the rule of compensation of nationalizations? Did he craft an exception to that rule?
3. If Venezuela nationalizes the petroleum industry, what measure of damages would Judge Lagergren apply? Does net book value reward the foreign investor for the appreciation in value of assets due to his entrepreneurial efforts?