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(The report referred to and the decision of the Supreme Court of the United States in Rabinowitz v. Kennedy are as follows:)
PROPOSED AMENDMENTS TO THE FOREIGN AGENTS REGISTRATION ACT OF 1938 AND
THE RABINOWITZ CASE*
By the Committee on International Law and the Committee on Federal
The Foreign Agents Registration Act of 1938, 22 U.S.C. $$ 611–21, has for many years compelled registration of those who act in the United States on behalf of foreign principals in "political” matters. The Act until 1964 had traditionally been interpreted as not requiring lawyers rendering legal services for foreign clients to register, except in certain cases, such as representation of foreign governments in negotiations with United States Government agencies. However, investigations undertaken by the Senate Committee on Foreign Relations disclosing extensive political and publicity activities within the United States by representatives of foreign governments and other foreign principals have given rise to proposals for broadening the scope and tightening the disclosure and enforcement provisions of the Foreign Agents Registration Act. These proposals were embodied in a bill introduced by Senators Fulbright and Hickenlooper in the last Congress. S. 2136, 88th Cong., 2d Sess. (1964). The bill was reported favorably with amendments by the Senate Committee on Foreign Relations and was passed by the Senate on July 6, 1964 with a further amendment suggested by Senator Javits.** It was referred to the House Committee on the Judiciary which took no action on it before the end of the session. The bill was reintroduced in the current session of Congress, S. 693 and H.R. 290, 89th Cong., 1st Sess. (1965), in the form passed by the Senate in 1964 and a hearing was held by the Senate Committee on Foreign Relations on February 16, 1965. The bill was favorably reported by that Committee with further amendments and was passed by the Senate in the form reported.† It is expected that hearings will be held by the House Committee on the Judiciary shortly.
In addition, the recent decision of the Supreme Court in Rabinowitz v. Kennedy, 376 U.S. 605 (1964), which gives an extremely narrow interpretation to the exemption provisions of the existing Act, particularly insofar as they apply to lawyers, focuses renewed attention on the Foreign Agents Registration Act and its applicability to members of the Bar. This Report, which considers some of the problems presented by the proposed amendments and the Rabinowitz decision, was first issued in July 1964 and is now being reissued in revised form to reflect events since that time. It discusses the present Act and its interpretation prior to Rabinowitz, the Rabinowitz case itself, and the amendments to the Act as passed by the Senate and as pending before the House. A. The Present Act and Its Interpretation Prior to Rabinowitz
The statutory purpose of the Act is "to protect the national defense, internal security and foreign relations of the United States by requiring public disclosure by persons engaging in propaganda activities and other activities for or on behalf of foreign governments, foreign political parties, and other foreign principals so that the Government and the people of the United States may be informed of the identity of such persons and may appraise their statements and actions in the light of their associations and activities." 56 Stat. 249 (1942) ; comment following 22 U.S.C. $ 611 (1958). The Act was originally adopted in 1938 and administered by the State Department until 1942, when the President transferred administration of the Act to the Department of Justice.
The Act requires that any person who serves as an agent of a foreign principal register with the Attorney General and file certain information with respect
*This Report makes current the prior Report of the Committees on this subject. 3 Reports of Committees of N.Y.C.B.A. Concerned with Federal Legislation 70 (1964).
**S. Rep. No. 875, 88th Cong., 2d Sess. (1964): Cong. Rec., July 6, 1964, pp. 15485-95, 15498–99 ; see Hearings on s. 2136 Before the Senate Committee on Foreign Relations, 88th Cong., 1st Sess. (1963). H.R. 9212, 88th Cong., 1st Sess. (1963) (Representative Celler) was the companion bill to S. 2136 as originally introduced.
*S. Rep. No. 143, 89th Cong., 1st Sess. (1965), Cong. Rec., April 5, 1965, pp. 6747, 6749–59 ; see Hearing on 8. 693 Before the Senate Committee on Foreign Relations, 89th Cong., 1st Segs. (1965).
to his activities. The information to be furnished, as prescribed by existing forms issued by the Department of Justice, includes: all visits to or residence in foreign countries during the past five years; all clubs, societies, committees and non-business organizations in which the registrant has been a member during the past five years; the nature and purpose of the registrant's representation of the foreign principal for whom he is registering and a full description of all activities of the registrant for or on behalf of said principal; a description of other businesses, occupations and public activities in which the registrant is engaged ; a list of employees and others who have rendered services or assistance to the registrant for or on behalf of the foreign principal; payments received directly or indirectly from the foreign principal, whether in the form of compensation, loans, fees, etc., and the purpose for which received, together with all expenditures made for or on behalf of the foreign principal; all speeches, lectures, talks and radio programs arranged, sponsored or delivered by the registrant during the previous three months, whether related to activities on behalf of the foreign principal or not; publications prepared and distributed by the registrant during the past three months and disclosure of the distribution of such publications; a description of other connections of the registrant with foreign governments, foreign political parties or officers or agents and copies of all agreements, arrangements or authorizations (or descriptions thereof if not written) under which the registrant acts on behalf of or receives funds from each foreign principal.
In general, these requirements apply to corporations and partnerships as well as individuals. In addition, officers and directors of a corporation registering as a foreign agent, partners of a partnership so registering and all eniployees of partnerships or corporations so registering who render services or give assistance to the foreign principal other than in a clerical or secretarial capacity must file individual short-form registration statements. The information to be furnished by such individuals includes information as to all foreign countries visited during the past five years; all clubs, societies, committees and other non-business organizations of which the individual has been a member during the past five years; a full description of his activities for or in the interest of the foreign principal; a brief description of other businesses, occupations and public activities in which he is engaged; all speeches, lectures and talks delivered during the preceding three months, whether or not they relate to his activities as a foreign agent; all articles, pamphlets, press releases and publications prepared or distributed by or for him in the preceding six months, again whether or not relating to his activities as a foreign agent; and a list of all connections with foreign governments, political parties or officers or agents thereof.
Registration statements must be filed when a person becomes or begins to act as agent of a foreign principal and must be kept up to date by amendment and in any event by filings every six months.
The Act also includes provisions which require the filing and labeling of political propaganda by persons required to register under the Act and the preservation of correspondence, memoranda, financial data and other written communications relating to activities on behalf of foreign principals for a period of three years after termination of services for the foreign principal, which documents must be made available for inspection by enforcement officers. Criminal penalties, including imprisonment of up to five years and fines of up to $10.000, are imposed for failing to file a registration statement or for filing a false or incomplete registration statement.
It can immediately be seen from this description of the information to be furnished that the registration requirements are very burdensome, in particular where a registration statement relates to a lawyer's professional activities on behalf of a foreign client. Moreover, if the Act covers a lawyer acting in a purely professional capacity in matters unrelated to political propaganda or nersuasion--for example, when a lawyer represents a foreign principal in litigation or in ordinary commercial transactions—the information to be disclosed relating to his activities is totally unnecessary to effectuate the purposes of the Act, in particular since information unrelated to his activities for the foreign client must also be disclosed. Hence the scope of the Act, determined nrimarily hr the definitions of “foreign principal" and "agent of a foreign principal" and the provisions exempting certain types of activities from the requirements of the Act must be carefully examined.
The term "foreign principal" includes
(2) an individual affiliated or associated with, or supervised, directed, controlled, financed, or subsidized, in whole or in part, by any foreign principal defined in clause (1) of this subsection;
(3) a person outside of the United States, unless it is established that such person is an individual and is a citizen of and domiciled within the United States or that such person is not an individual, is organized under or created by the laws of the United States or of any State or other place subject to the jurisdiction of the United States, and has its principal place of business within the United States. Nothing in this clause shall limit the operation of clause (5) of this subsection;
(4) a partnership, association, corporation, organization, or other combination of individuals organized under the laws of, or having its principal place of business in, a foreign country;
(5) a domestic partnership, association, corporation, organization, or other combination of individuals, subsidized directly or indirectly, in whole or in part, by any foreign principal defined in clause (1), (3), or (4) of this subsection;
(6) a domestic partnership, association, corporation, organization, or other combination of individuals, supervised, directed, controlled, or financed, in whole
in substantial part, by any foreign government or foreign political party; " 22 U.S.C. $ 611(b) (1958; Supp. IV, 1963).
It is clear that the definition of a “foreign principal” is very broad. Section 611 (b) (4) of the Act covers all foreign corporations including foreign subsidiaries of American corporations. Section 611(b) (3) includes any person outside of the United States if such person is not domiciled in the United States even though such person is a citizen of the United States.
The definition of "agent of a foreign principal” is similarly broad. It includes
“(1) any person who acts or agrees to act, within the United States, as, or who is or holds himself out to be whether or not pursuant to contractual relationship, a public-relations counsel, publicity agent, information-service employee, servant, agent, representative, or attorney for a foreign principal;
(2) any person who within the United States collects information for or reports information to a foreign principal; who within the United States solicits or accepts compensation, contributions, or loans, directly or indirectly, from a foreign principal; who within the United States solicits, disburses, dispenses, or collects compensation, contributions, loans, money, or anything of value, directly or indirectly, for a foreign principal; who within the United States acts at the order, request, or under the direction, of a foreign principal;
(3) any person who assumes or purports to act within the United States as an agent of a foreign principal in any of the respects set forth in clauses (1) and (2) of this subsection;
(4) any person who is an officer or member of the active or reserve military, naval, or other armed forces of any foreign principal defined in clause (1) of subsection (b) of this section, or who is an officer of or employed by any such foreign principal; and proof of any affiliation or employment, specified in this clause, of any person within a period of five years previous to the effective date of this subchapter shall create a rebuttable presumption that such person is an agent of a foreign principal; ...” 22 U.S.C. 8 611(c) (1958).
Section 613 of the Act excludes certain agents of foreign principals from the coverage of the Act. Sections 613 (a) through (c), (e) and (f) generally exclude diplomatic officials of foreign governments, members of their staff and persons engaging in activities in furtherance of charitable, educational or artistic matters.
Section 613(d) provides for the exemption relevant to attorneys. It excludes:
"(d) Any person engaging or agreeing to engage only in private and nonpolitical financial or mercantile activities in furtherance of the bona fide trade or commerce of such foreign principal or in the soliciting or collecting of funds and contributions within the United States to be used only for medical aid and assistance, or for food and clothing to relieve human suffering, if such solicitation or collection of funds and contributions is in accordance with and subject to the provisions of sections 441, 444, 445 and 447–457 of this title, and such rules and regulations as may be prescribed thereunder;" 22 U.S.C. 8 613(d) (Supp. IV, 1963).
The regulations issued by the Department of Justice limit and define this exemption. They provide that the exemption is not available to any person "if he engages in any political activity ... on behalf of a foreign principal, on his own behalf, or on behalf of any other person.” 28 C.F.R. 8 5.303(a) (1964). Political activity includes "furnishing information or advice to, or in any way representing, a foreign principal with respect to any matter pertaining to political or public interests, policies, or relations of any foreign government or foreign political party, or the political interests of such foreign principal, or engaging in other activities in furtherance of such political or public interests, policies, or relations"; ... "engaging in any activity to influence the enactment or repeal of any legislation affecting the political or public interests, policies, or relations of a foreign government, a foreign political party, or a foreign principal, or affecting the foreign policies or relations of the United States”; "engaging in any activity devoted, in whole or in part, to the furtherance or influencing of the political or public interests, policies, or relations of a government of a foreign country or a subdivision thereof." 28 C.F.R. 8 5.100(a) (11) (ii), (vi), (vii) (1964).
The Department of Justice regulations do not further define the exempting phrase "private and nonpolitical financial or mercantile activities in furtherance of the bona fide trade or commerce of ... [the] foreign principal.” However, until the Rabinowitz case, it had been the general policy of the Department of Justice (and of the Bar) to interpret the exemption to exclude from the requirements of registration lawyers engaging in litigation activities for foreign clients and lawyers engaged in rendering general legal advice to foreign principals, to the extent that such general legal advice related to non-political matters normally within the scope of a lawyer's activities. Some examples of cases where lawyers have generally been thought to come within the exemption are: repre sentation of a foreign government in connection with a public financing where registration under the Securities Act of 1933 is involved; representation of a foreign corporation involved in negotiations with an American corporation for the licensing of a product or for the acquisition of the domestic corporation; and the advising of foreign clients as to corporate, tax, commercial or other similar legal questions arising under United States laws. On the other hand, the exemption, as a matter of practice, has ordinarily been interpreted not to apply to lawyers engaged on behalf of foreign clients to obtain or negotiate government loans or engaged in other negotiations with governmental agencies; lawyers engaged in nonlegal activities such as attempting to influence Congress or public opinion with respect to legislation or other similar political matters; and lawyers retained by foreign governments or governmental agencies to advise them generally, including with respect to political questions. *
Indeed, the definition of political activities in the existing regulations is limited to matters pertaining to the “political or public interests, policies or relations” of a foreign government or a foreign political party and to the “political interests” of a foreign principal, and to activities intended to influence the enactment or repeal of any legislation among other things "affecting the foreign policies or relations of the United States." There is no reference to the domestic policies of the United States and no reference to representation of foreign nongovernmental principals before administrative agencies in matters that are not political. Hence it would appear that under present law a lawyer may represent a foreign private client and a businessman his foreign principal before administrative agencies in matters that are basically commercial or financial without registration, even though the matter may concern the domestic policies of the United States and even though the lawyer or businessman may be urging a change in such policies. B. Rabinowitz v. Kennedy and the Present Posture of the Act
On March 30, 1964 Mr. Justice Goldberg delivered the opinion of a unanimous Supreme Court in Rabinowitz v. Kennedy. The plaintiffs, who are lawyers, had brought a declaratory judgment action against the Attorney General alleging that they had been retained by the Cuban Government to represent it and its governmental agencies in the United States "in legal matters, including litigation, involving the mercantile and financial interests
* See Note, Attorneys Under the Foreign Agent: Registration Act, 78 Harv. L. Rev. 619 (1965).
of the Republic of Cuba.” 376 U.S. at 606. The complaint alleged that the retainer did not cover "advice or representation involving public relations, propaganda, lobbying, or political or other non-legal matters." Ibid. In face of a demand to register under the Act, a declaratory judgment was requested to the effect that plaintiffs' activities did not subject them to the requirements of registering under the Act.
After the District Court had certified procedural questions to the Court of Appeals for the District of Columbia, the Court of Appeals dismissed the complaint on the grounds of sovereign immunity. The Supreme Court granted certiorari and held on the merits that the Foreign Agents Registration Act plainly and unquestionably required plaintiffs to register and hence affirmed the dismissal of the complaint.
Mr. Justice Goldberg's opinion first reviews the provisions of the Act and its history, in particular the provision exempting a person engaging "in private and nonpolitical financial or mercantile activities.” The Court concludes that in order to come within the exemption, an agent's activities must be either private and non-political and financial, or private and non-political and mercantile. The opinion then continues as follows:
“Although the work of a lawyer in litigating for a foreign government might be regarded as 'private and nonpolitical activity, it cannot properly be characterized as only “financial or mercantile activity. It is clear from the statute and its history that ‘financial or mercantile' activity was intended to describe conduct of the ordinary private commercial character usually associated with those terms. See, e.g., S. Rep. No. 1783, 75th Cong., 3d Sess. Furthermore, although the interest of a government in litigation might be labeled 'financial or mercantile,' it cannot be deemed only 'private and nonpolitical.' Since an attorney may not qualify for exemption '[i]f any one of these characteristics is lacking,' it would be impossible to conclude, under any construction of the statute, that petitioners are engaging 'only in private and non political financial or mercantile activities.'' 376 U.S. at 609–10.*
As can immediately be seen, this language raises serious difficulties with the inte retation of the exemption which had previously prevailed. In the first place, the opinion apparently holds that any litigation activities on behalf of a foreign government or a foreign governmental agency are by their nature political and not financial or mercantile and hence require registration, The opinion can also be read to mean that any representation of a foreign government, whether in litigation or otherwise, cannot be deemed “private and nonpolitical.” If the Department of Justice seeks an extremely broad interpretation of the decision, it might even be contended that litigation activities for any foreign client, whether governmental or private, cannot properly be characterized as "financial or mercantile” and are hence outside the exemption. These interpretations would considerably narrow the scope of the commercial exemption as it has been interpreted in the past with respect to lawyers. Unless a statutory amendment program is successful, the burdensome requirements of the Act might be applied (perhaps by new Department of Justice regulation) to many activities of lawyers which have traditionally been felt to be private, non-political and purely professional and hence outside the scope of the Act.
We believe that the extension of the applicability of the Act which might result from Rabinowitz would be damaging to the enforcement of the Act in areas where it should be effectively enforced and would be unnecessarily burdensome on members of the Bar performing legal services for foreign clients. We believe that lawyers acting in a professional legal capacity for foreign principals in non-political matters should be outside the scope of the Act because information with respect to their activities are unnecessary to the effectuation of the policies of the Act. Thus in litigation, whether for a domestic or foreign client, private or governmental, the identity of a lawyer's principal and his interests in the litigation are in any event disclosed and matters of public record. In addition, when a lawyer acts for a foreign goyernment which, for example, is registering its securities under the Securities Act of 1933, full disclosure of the relationship is required "y the nature of the activity itself.
**It appears that the Court determined the characterization of the agent's activities from the nature of the principal, although the statute appears to focus on the nature of the agent's activities themselves.