OAG 11-14

¶22.

In B. Altman, the Court decided that “treaty,” as used in the Circuit Court of Appeals Act allowing direct Supreme Court review of cases involving “ ‘the validity or construction of any treaty,’ ” included a “commercial reciprocal agreement” negotiated between the United State and France “under the authority contained in § 3 of the Tariff Act of 1897.” B. Altman, 224 U.S. at 594, 596 (citation omitted).

While it may be true that this commercial agreement . . . was not a treaty possessing the dignity of one requiring ratification by the Senate of the United States, it was an international compact, negotiated between the representatives of two sovereign nations, and made in the name and on behalf of the contracting countries, and dealing with important commercial relations between the two countries, and was proclaimed by the President. If not technically a treaty requiring ratification, nevertheless it was a compact authorized by the Congress of the United States, negotiated and proclaimed under the authority of its President.

Id. at 601.

¶23.

Against this background, the term “treaty” in Wis. Stat. § 710.02(2)(b) should be interpreted as including the GATS, a Congressional-Executive agreement. Cf. K.S.B. Techical Sales Corp. v. N. Jersey Dist. Water Supply Comm’n,
381 A.2d 774, 778 (N.J. 1977) (concluding that the GATT, an executive agreement, was a “treaty” under the Supremacy Clause); Baldwin-Lima-Hamilton Corp. v. Superior Court, 208 Cal. App. 2d 803, 820 (Cal. Dist. Ct. App. 1962) (same); Territory of Hawaii v. Ho, 41 Haw. 565, 565 (Haw. Terr. 1957) (same). Significantly,
Wis. Stat. § 710.02(2)(b) was adopted in 1983, just one year after Weinberger was decided.
See 2B N. Singer & J.D. Singer, Sutherland Statutory Construction
143 (7th ed. 2012) (“All legislation is interpreted in light of the common law . . . existing at the time of its enactment.”). The legislature presumably adopted the treaty exception with full knowledge of Weinberger’s broad interpretation of the term “treaty” and thus intended to incorporate the Weinberger Court’s interpretation of “treaty” when it used the term in constructing the 1983 amendments. See, e.g., Strenke v. Hogner, 2005 WI 25, ¶ 28, 279 Wis. 2d 52,
694 N.W.2d 296 (“The legislature is presumed to act with full knowledge of existing case law when it enacts a statute.”).

¶24.

The GATS is analogous to the agreements at issue in Weinberger and B. Altman. It was “negotiated between the representatives of . . . sovereign nations, and made in the name and on behalf of the contracting countries, and dealing with important commercial relations between [them].” B. Altman, 224 U.S. at 601.
Like the statutes in those cases, the statute here contains no “affirmative expression of [legislative] intent to abrogate the United States’ international obligations.” Weinberger, 456 U.S. at 31-32. And, like the statute in Weinberger, Wis. Stat. § 710.02(2)(b) recognizes a treaty exception to the enforcement of a general statutory proscription. Id. Construing the GATS to be a “treaty” is consistent with the canon that an ambiguous “act of congress ought never be construed to violate the law of nations if any other possible construction remains.” The Charming Betsy, 2 Cranch at 118. The fact that the law here is an act of the Wisconsin legislature rather than of Congress reinforces the conclusion: unlike the U.S. Congress, a state legislature has no authority to interfere in international agreements. See Belmont, 301 U.S. at 331 (“To counteract [an international compact] by the supremacy of the state laws, would bring on the Union the just charge of national perfidy. . . .”) (internal quotation marks and citation omitted); accord United States v. Pink, 315 U.S. 203, 230-34 (1942).

¶25.

This interpretation is consistent with the Wisconsin legislature’s expression of intent regarding 1983 Wis. Act 335, § 1: “The legislature recognizes the need to modify this state’s restrictions on land ownership by nonresident and foreign business corporations and entities, so as to remove barriers to foreign investment in energy, mining, manufacturing and mercantile activities.”
The liberalizing intent of this declaration would be stymied by a restrictive interpretation of the word “treaty” as limited to Article II treaties.

¶26.

I also conclude that the service suppliers of GATS Members are protected by the treaty exception to the extent that they seek to acquire, own, or hold land for service-related uses enumerated in the U.S. Schedule. The treaty exception exempts “[c]itizens, foreign governments or subjects of a foreign government” from the acreage limitation. Wis. Stat. § 710.02(2)(b). The exception clearly applies to individual nonresident aliens, who are, by definition, either “[c]itizens . . . or subjects of a foreign government.” Less obvious is whether the exception applies equally to corporations, limited liability companies, partnerships, associations, and trusts.[10] The U.S. Schedule guarantees “national treatment” to all GATS Members and their service suppliers. Under the GATS, “ ‘service supplier’ means any person that supplies a service.” GATS art. XXVIII(g). “ ‘[P]erson’ means either a natural person or a juridical person.” Id. at (j). “ ‘[J]uridical person’ means any legal entity duly constituted or otherwise organized under applicable law, whether for profit or otherwise, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, joint venture, sole proprietorship or association.” Id. at (l). The question is whether the “citizen or subject” terminology of Wis. Stat. § 710.02(2)(b) includes these “juridical persons.”

¶27.

Corporations are generally considered legal “persons” under federal and state law. See, e.g., Citizens United v. Fed. Election Comm’n, 558 U.S. 310 (2010); Trs. of Dartmouth Coll. v. Woodward, 17 U.S. (4 Wheat.) 518, 667 (1819); Wis. Stat. § 990.01(26); § 180.0302. The same is true of limited liability companies, partnerships or associations. Wis. Stat. § 178.01(2)(e); accord 1 U.S.C. § 1;
Wis. Stat. § 990.01(26). A corporation created under the laws of a foreign nation is deemed a citizen or subject of that nation. See 28 U.S.C. § 1332(c)(1);
JPMorgan Chase Bank v. Traffic Stream (BVI) Infrastructure Ltd., 536 U.S. 88,
91-92 (2002); Barcelona Traction, Light & Power Co. (Belg. v. Spain), 1970 I.C.J. 3, 42-43 (Feb. 5). The question is most often litigated in federal diversity cases.
See, e.g., JPMorgan, 536 U.S. at 91-92; see also 28 U.S.C. § 1332(a)(2) (federal courts have jurisdiction over civil actions between “citizens of a State and citizens or subjects of a foreign state”).

¶28.

Despite this general approach, the meaning of the terms “citizen” and “subject” must nevertheless be determined independently in each individual statute. The interpretation of these words in a particular act “depends upon the intent, to be gathered from the context and the general purpose of the whole legislation in which it occurs.” Swiss Nat’l Ins. Co. v. Miller,
267 U.S. 42, 46 (1925) (citations omitted); see also Vill. of Tigerton v. Minniecheske,
211 Wis. 2d 777, 783-84, 565 N.W.2d 586 (Ct. App. 1997).

¶29.

I conclude that the phrase “[c]itizens … or subjects of a foreign government” in Wis. Stat. § 710.02(2)(b) includes all “juridical person[s]” “duly constituted or otherwise organized” under the laws of GATS Members. GATS art. XXVIII(l). Given its statutory context, a broad construction of the citizen or subject language clearly comports with the expressed legislative intent “to remove barriers to foreign investment in energy, mining, manufacturing and mercantile activities.” 1983 Wis. Act 335, § 1. Furthermore, like the term “treaty,” this language should be interpreted pursuant to the principle that ambiguous statutes should be construed to accord with “the law of nations.” The Charming Betsy, 2 Cranch at 118.
The construction that best comports with the GATS is the one that broadly equates citizens and subjects with all juridical persons. Meanwhile, the Wisconsin language is very close to the language of the federal diversity statute, which unquestionably treats foreign corporations and other juridical persons as citizens of their place of incorporation or principal place of business. Compare Wis. Stat.
§ 710.02(2)(b) with 28 U.S.C. § 1332(a)(2) and (4).

* * * * *

¶30.

I conclude that Wis. Stat. § 710.02(1) is generally inapplicable to GATS Members, their services, or their service suppliers to the extent they seek to acquire, own, or hold land for service-related uses enumerated in the U.S. Schedule. First, Wis. Stat. § 710.02(2) does not limit land acquisition by nonresident aliens and foreign corporations for most service uses to which the United States agreed to provide national treatment under the GATS. On the contrary, the statutory acreage limitation applies to agricultural or forestry uses only. Second, the treaty exception in Wis. Stat. § 710.02(2)(b) applies to GATS Members, their services, and their service suppliers.

                   

            Sincerely,

            J.B. VAN HOLLEN

            Attorney General

JBV:MFW:mlk

1

“Member” is the term used to identify a nation participating in the World Trade Organization Agreement and other agreements, such as the GATS, engendered by the WTO. See 19 U.S.C. §§ 1677(30), 3501(10).

2

The full cite is: General Agreement on Trade in Services art. XVII(1), Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1B.

3

In Lehndorff, a corporation wholly owned by West German citizens attempted to purchase more than 640 acres of Wisconsin land for agricultural use. The company sought a declaratory judgment that Wis. Stat. § 710.02 violated the Treaty of Friendship, Commerce and Navigation between the United States and West Germany. The court concluded that Wisconsin’s acreage limitation was permitted by treaty language reserving to each party the right to limit the other party’s ability to acquire land for agricultural purposes. Lehndorff, 74 Wis. 2d at 3775-76.

4

See 1953 Wis. Laws ch. 55, amending Wis. Stat. § 234.23 (1953).

5

See 1983 Wis. Act 335. The specified manufacturing and mercantile activities are those catalogued in divisions C-I of “the standard industrial classification manual published by the U.S. printing office, 1972 and later editions.” Wis. Stat. § 710.02(2)(e), (f). The divisions from the manual incorporated in the statute include a wide variety of commercial activities, including fifteen enumerated types of “Services,” and a list of additional “Miscellaneous services.” Exec. Office of the President, Office of Mgmt. & Budget, Standard Industrial Classification Manual 7-9, 53-406 (1987) (“SIC Manual”). The last print version of the SIC Manual was published in 1987. It was superseded in 1997 by the Exec. Office of the President, Office of Mgmt. & Budget, North American Industrial Classification System (2012) (“NAICS”). Updated editions of the bound NAICS appeared regularly between 1997 and 2012. Since 2012, NAICS updates can be found online at www.census.gov/eos/www/naics

6

The divisions of the SIC Manual not incorporated in the statute are Division A: Agriculture, Forestry, And Fishing; Division B: Mining; and Division J: Public Administration. SIC Manual 7, 9, 21-52, 407-19.

7

Given the parenthetical exceptions, it is unclear what services incidental to agriculture and forestry are envisioned here. The General Counsel for the United States Trade Representative (whose office is responsible for implementing the GATS) is unable to answer that question definitively, but explains that services “incidental” to a given activity are distinct from but unique to that activity. He suggests that services incidental to agriculture might include “animal boarding, care and breeding services, services to promote propagation, growth and output of animals,” and that services incidental to forestry might include “timber evaluation, . . . [and] forest management including forest damage assessment services.” This list is taken from Department of International Economic and Social Affairs, Statistical Office of the United Nations, Provisional Central Product Classification (Statistical Papers, Series M No. 77) 76 (1991).

8

Usually referred to as “reservations,” such limitations are common in multilateral agreements. Restatement § 313.

9

Thus, an inconsistent state law is not preempted by the Supremacy Clause. See U.S. Const. art. I, § 10, cl. 3. The U.S. Schedule, including the reservation of any limitations on national treatment imposed by state law, constitutes the United States’ treaty obligation to its fellow GATS Members. If a state law limitation was left out of the U.S. Schedule, it is not subject to preemption, but to the remedial procedures set out in 19 U.S.C. § 3512(b).

10

The acreage limitation applies to nonresident aliens and corporations not created under federal or state law; corporations, limited liability companies, partnerships or associations with more than twenty percent ownership by nonresident aliens or corporations; and trusts with more than twenty percent of their assets held for the benefit of nonresident aliens or foreign corporations. Wis. Stat. § 710.02(1)(a)-(c).