Running Head: Nationalization

Nationalization
Jennifer Hood
International Business BUSN 460 01 - Spring 2016
Professor Brown
February 3, 2016

Running Head: Nationalization

2
Nationalization

Nationalizingafirmthatwaspreviouslyunderprivatecontrol(eitherpubliclyor
privatelyowned)meansthat,fromthegovernmentsperspective,therewassomereasonthat
maketakingitovernecessary.Therearemanyreasonsforthis.
Ifthegovernmentbelievesthatacompanyisillegallyhidingprofits,assets,orincome,it
cantakeoverownershiptoensureeverythingisaccountedfor.Itcanhappenifthegovernment
feelstheycanmakeitmoreprofitable.Ifthegovernmentreallywanted,itcouldeventakeovera
companyforideologicalreasons.Preservingjobsisanotherreason,especiallyinthecurrent
worldenvironment;somanyjobshavebeenoutsourcedoffshorethatthereispossiblyaneedfor
thistooccurmore.Insomecases,acompanycanfallbehindonitstaxliabilityorotherodd
reasons,andisrequiredtoturnoveroperationstothegovernment.
Oncethegovernmenttakesover,theyhavetheadvantageofhavinguniqueinsightinto
therulesandregulationsofthegovernment;theycantakeadvantageofthechecksandbalances
thatareinplaces.Also,whileprivatelyownedcompaniesareaccountabletoownersor
shareholders,thegovernmentdoesnothavethisaccountability.InMark10:42,wearereminded
thatlordingthestatusasruleroverothersiswrong,andthisistrulywhatthegovernmentdoes
whenittakesoverandexercisesitsadvantageouspositon.
ItsimportanttounderstandthatTheActofStatedoctrineholdsthatthecourtsofone
countrywillnotsitinjudgmentontheactsofthegovernmentofanother,donewithinitsown
territory(Walsh,2008,p.372).Thisdoctrinepreventsjudicialinquiryintothevalidityof
expropriationmeasures(Baade,1963,p.292).Becauseanexpropriationdecreeisanofficial
actofstate,UScourtswontevenhearaboutanaggrievedpartyslosses(Walsh,2008,p.372).

Running Head: Nationalization

References
Baade,H.W.(1963).NationalizationofforeignownedpropertyandtheActOfStateDoctrine.
DukeLawJournal,1963(28),290303.
Walsh,F.(2008).Flippingtheactofstatepresumption:ProtectingAmerica'sinternational
investorsfromforeignnationalizationprograms.TexasReviewOfLaw&Politics,12(2),
369401.