Petitioner Sumitomo Shoji America, Inc., is a New York
corporation and a wholly owned subsidiary of a Japanese general
trading company. Past and present female secretarial employees of
Sumitomo, who, with one exception, are United States citizens,
brought a class action in Federal District Court against Sumitomo,
claiming that its alleged practice of hiring only male Japanese
citizens to fill executive, managerial, and sales positions
violated Title VII of the Civil Rights Act of 1964. Sumitomo moved
to dismiss the complaint on the ground that its practices were
protected under Art. VIII(1) of the Friendship, Commerce and
Navigation Treaty between the United States and Japan. Article
VIII(1) provides that the
"companies of either Party shall be permitted to engage, within
the territories of the other Party, accountants and other technical
experts, executive personnel, attorneys, agents and other
specialists of their choice."
Article XXII(3) of the Treaty defines "companies" as
"[c]ompanies constituted under the applicable laws and regulations
within the territories of either Party." The District Court refused
to dismiss, holding that, because Sumitomo was incorporated in the
United States, it was not covered by Art. VIII(1), but the court
then certified for interlocutory appeal to the Court of Appeals the
question whether the terms of the Treaty exempted Sumitomo from
Title VII's provisions. The Court of Appeals reversed in part,
holding that Art. VIII(1) was intended to cover locally
incorporated subsidiaries of foreign companies, but that the Treaty
language did not insulate Sumitomo's employment practices from
Title VII scrutiny.
Held: Sumitomo is not a company of Japan, and thus is
not covered by Art. VIII(1) of the Treaty. Pp.
457 U. S.
180-189.
(a) Under Art. XXII(3)'s literal language, Sumitomo is a company
of the United States, since it was "constituted under the
applicable laws and regulations" of New York. As a company of the
United States, it cannot invoke the rights provided in Art.
VIII(1), which are available only to companies of Japan operating
in the United States and to companies
Page 457 U. S. 177
of the United States operating in Japan. Where both parties to
the Treaty agree with this meaning and such interpretation follows
from the clear Treaty language, deference will be given to it,
absent extraordinarily strong contrary evidence. Pp.
457 U. S.
180-185.
(b) Adherence to the Treaty language does not overlook the
Treaty's purpose, since the primary purpose of the corporation
provisions was to give corporations of each signatory legal status
in the territory of the other party and to allow them to conduct
business in the other country on a comparable basis with domestic
firms. Pp.
457 U. S.
185-189.
638 F.2d 552, vacated and remanded.
BURGER, C.J., delivered the opinion for a unanimous Court.
CHIEF JUSTICE BURGER delivered the opinion of the Court.
We granted certiorari to decide whether Article VIII(1) of the
Friendship, Commerce and Navigation Treaty between
Page 457 U. S. 178
the United States and Japan provides a defense to a Title VII
employment discrimination suit against an American subsidiary of a
Japanese company.
I
Petitioner, Sumitomo Shoji America, Inc., is a New York
corporation and a wholly owned subsidiary of Sumitomo Shoji
Kabushiki Kaisha, a Japanese general trading company or
sogo
shosha. [
Footnote 1]
Respondents are past and present female secretarial employees of
Sumitomo. [
Footnote 2] All but
one of the respondents are United States citizens; that one
exception is a Japanese citizen living in the United States.
Respondents brought this suit as a class action claiming that
Sumitomo's alleged practice of hiring only male Japanese citizens
to fill executive, managerial, and sales positions violated both 42
U.S.C. § 1981 and Title VII of the Civil Rights Act of 1964, 78
Stat. 253, as amended, 42 U.S.C. § 2000e
et seq. (1976 ed.
and Supp. IV). [
Footnote 3]
Respondents sought both injunctive relief and damages.
Page 457 U. S. 179
Without admitting the alleged discriminatory practice, Sumitomo
moved under Rule 12(b)(6) of the Federal Rules of Civil Procedure
to dismiss the complaint. Sumitomo's motion was based on two
grounds: (1) discrimination on the basis of Japanese citizenship
does not violate Title VII or § 1981; and (2) Sumitomo's practices
are protected under Article VIII(1) of the Friendship, Commerce and
Navigation Treaty between the United States and Japan, Apr. 2,
1953, [1953] 4 U.S.T. 2063, T.I.A.S. No. 2863. The District Court
dismissed the § 1981 claim, holding that neither sex discrimination
nor national origin discrimination are cognizable under that
section. 473 F. Supp 506 (SDNY 1979). The court refused to dismiss
the Title VII claims, however; it held that, because Sumitomo is
incorporated in the United States, it is not covered by Article
VIII(1) of the Treaty. The District Court then certified for
interlocutory appeal to the Court of Appeals under 28 U.S.C. §
1292(b) the question of whether the terms of the Treaty exempted
Sumitomo from the provisions of Title VII.
The Court of Appeals reversed in part. 638 F.2d 552 (CA2 1981).
The court first examined the Treaty's language and its history and
concluded that the Treaty parties intended Article VIII(1) to cover
locally incorporated subsidiaries of foreign companies such as
Sumitomo. The court then held that the Treaty language does not
insulate Sumitomo's executive employment practices from Title VII
scrutiny. The court concluded that, under certain conditions,
Japanese citizenship could be a bona fide occupational
qualification for high-level employment with a Japanese-owned
domestic corporation and that Sumitomo's practices might
Page 457 U. S. 180
thus fit within a statutory exception to Title VII. [
Footnote 4] The court remanded for
further proceedings. [
Footnote
5]
We granted certiorari, 454 U.S. 962 (1981), and we vacate and
remand.
II
Interpretation of the Friendship, Commerce and Navigation Treaty
between Japan and the United States must, of course, begin with the
language of the Treaty itself. The clear import of treaty language
controls unless
"application of the words of the treaty according to their
obvious meaning effects a result inconsistent with the intent or
expectations of its signatories."
Maximov v. United States, 373 U. S.
49,
373 U. S. 54
(1963).
See also The Amiable
Isabella, 6 Wheat. 1,
19 U. S. 72
(1821).
Page 457 U. S. 181
Article VIII(1) of the Treaty provides in pertinent part:
"
[C]ompanies of either Party shall be permitted to
engage, within the territories of the other Party, accountants and
other technical experts, executive personnel, attorneys, agents and
other specialists of their choice."
(Emphasis added.) [
Footnote
6]
Page 457 U. S. 182
Clearly Article VIII(1) only applies to companies of one of the
Treaty countries operating in the other country. Sumitomo contends
that it is a company of Japan, and that Article VIII(1) of the
Treaty grants it very broad discretion to fill its executive,
managerial, and sales positions exclusively with male Japanese
citizens. [
Footnote 7]
Article VIII(1) does not define any of its terms; the
definitional section of the Treaty is contained in Article XXII.
Article XXII(3) provides:
"As used in the present Treaty, the term 'companies' means
corporations, partnerships, companies and other associations,
whether or not with limited liability and whether or not for
pecuniary profit. Companies constituted under the applicable laws
and regulations within the territories of either Party
shall be
deemed companies thereof and shall have their juridical status
recognized within the territories of the other Party."
(Emphasis added.)
Sumitomo is "constituted under the applicable laws and
regulations" of New York; based on Article XXII(3), it is a company
of the United States, not a company of Japan. [
Footnote 8] As
Page 457 U. S. 183
a company of the United States operating in the United States,
under the literal language of Article XXII(3) of the Treaty,
Sumitomo cannot invoke the rights provided in Article VIII(1),
which are available only to companies of Japan operating in the
United States and to companies of the United States operating in
Japan.
The Governments of Japan and the United States support this
interpretation of the Treaty. Both the Ministry of Foreign Affairs
of Japan and the United States Department of State agree that a
United States corporation, even when wholly owned by a Japanese
company, is not a company of Japan under the Treaty, and is
therefore not covered by Article VIII(1). The Ministry of Foreign
Affairs stated its position to the American Embassy in Tokyo with
reference to this case:
"The Ministry of Foreign Affairs, as the Office of [the
Government of Japan] responsible for the interpretation of the
[Friendship, Commerce and Navigation] Treaty, reiterates its view
concerning the application of Article 8, Paragraph 1 of the Treaty:
for the purpose of the Treaty, companies constituted under the
applicable laws . . . of either Party shall be deemed companies
thereof and, therefore, a subsidiary of a Japanese company which is
incorporated under the laws of New York is not
Page 457 U. S. 184
covered by Article 8 Paragraph 1 when it operates in the United
States. [
Footnote 9]"
The United States Department of State also maintains that
Article VIII(1) rights do not apply to locally incorporated
subsidiaries. [
Footnote 10]
Although not conclusive, the meaning attributed to treaty
provisions by the Government agencies
Page 457 U. S. 185
charged with their negotiation and enforcement is entitled to
great weight.
Kolovrat v. Oregon, 366 U.
S. 187,
366 U. S. 194
(1961). [
Footnote 11]
Our role is limited to giving effect to the intent of the Treaty
parties. When the parties to a treaty both agree as to the meaning
of a treaty provision, and that interpretation follows from the
clear treaty language, we must, absent extraordinarily strong
contrary evidence, defer to that interpretation. [
Footnote 12]
III
Sumitomo maintains that, although the literal language of the
Treaty supports the contrary interpretation, the intent of Japan
and the United States was to cover subsidiaries regardless of their
place of incorporation. We disagree.
Contrary to the view of the Court of Appeals and the claims of
Sumitomo, adherence to the language of the Treaty would not
"overlook the purpose of the Treaty." 638 F.2d at 556. The
Friendship, Commerce and Navigation Treaty between Japan and the
United States is but one of a series of similar commercial
agreements negotiated after World War II. [
Footnote 13] The primary purpose of the
corporation provisions of
Page 457 U. S. 186
the Treaties was to give corporations of each signatory legal
status in the territory of the other party, and to allow them to
conduct business in the other country on a comparable basis with
domestic firms. Although the United States negotiated commercial
treaties as early as 1778, and thereafter throughout the 19th
century and early 20th century, [
Footnote 14] these early commercial treaties were
primarily concerned with the trade and shipping rights of
individuals. Until the 20th century, international commerce was
much more an individual than a corporate affair. [
Footnote 15]
As corporate involvement in international trade expanded in this
century, old commercial treaties became outmoded. Because
"corporation[s] can have no legal existence out of the boundaries
of the sovereignty by which [they are] created,"
Bank of
Augusta v. Earle, 13 Pet. 519,
38 U. S. 588
(1839), it became necessary to negotiate new treaties granting
corporations legal status and the right to function abroad. A
series of Treaties negotiated before World War II gave corporations
legal status and access to foreign courts, [
Footnote 16] but it was not until the
Page 457 U. S. 187
postwar Friendship, Commerce and Navigation Treaties that United
States corporations gained the right to conduct business in other
countries. [
Footnote 17] The
purpose of the Treaties was
Page 457 U. S. 188
not to give foreign corporations greater rights than domestic
companies, but instead to assure them the right to conduct business
on an equal basis without suffering discrimination based on their
alienage.
The Treaties accomplished their purpose by granting foreign
corporations "national treatment" [
Footnote 18] in most respects and by allowing foreign
individuals and companies to form locally incorporated
subsidiaries. These local subsidiaries are considered for purposes
of the Treaty to be companies of the country in which they are
incorporated; they are entitled to the rights, and subject to the
responsibilities of other domestic corporations. By treating these
subsidiaries as domestic companies, the purpose of the Treaty
provisions -- to assure that corporations of one Treaty party have
the right to conduct business within the territory of the other
party without suffering discrimination as an alien entity -- is
fully met.
Page 457 U. S. 189
Nor can we agree with the Court of Appeals view that literal
interpretation of the Treaty would create a "crazy-quilt pattern"
in which the rights of branches of Japanese companies operating
directly in the United States would be greatly superior to the
right of locally incorporated subsidiaries of Japanese companies.
638 F.2d at 556. The Court of Appeals maintained that, if such
subsidiaries were not considered companies of Japan under the
Treaty, they, unlike branch offices of Japanese corporations, would
be denied access to the legal system, would be left unprotected
against unlawful entry and molestation, and would be unable to
dispose of property, obtain patents, engage in importation and
exportation, or make payments, remittances, and transfers of funds.
Ibid. That this is not the case is obvious; the
subsidiaries, as companies of the United States, would enjoy all of
those rights and more. The only significant advantage branches may
have over subsidiaries is that conferred by Article VIII(1).
IV
We are persuaded, as both signatories agree, that, under the
literal language of Article XXII(3) of the Treaty, Sumitomo is a
company of the United States; we discern no reason to depart from
the plain meaning of the Treaty language. Accordingly, we hold that
Sumitomo is not a company of Japan, and is thus not covered by
Article VIII(1) of the Treaty. [
Footnote 19] The judgment of the Court of Appeals is
vacated,
Page 457 U. S. 190
and the case is remanded for further proceedings consistent with
this opinion.
Vacated and remanded.
* Together with No. 81-24,
Avaliano et al. v. Sumitomo Shoji
America, Inc., also on certiorari to the same court.
[
Footnote 1]
General trading companies have been a unique fixture of the
Japanese economy since the Meiji era. These companies each market
large numbers of Japanese products, typically those of smaller
concerns, and also have a large role in the importation of raw
materials and manufactured products to Japan. In addition, the
trading companies play a large part in financing Japan's
international trade. The largest trading companies -- including
Sumitomo's parent company -- in a typical year account for over 50%
of Japanese exports and over 60% of imports to Japan.
See
Krause & Sekiguchi, Japan and the World Economy, in Asia's New
Giant: How the Japanese Economy Works 383, 389-397 (H. Patrick
& H. Rosovsky eds.1976).
[
Footnote 2]
Respondents have also filed a cross-petition in this case. Thus,
the past and present secretaries, generally referred to as
respondents, are the respondents in No. 80-2070 and the
cross-petitioners in No. 81-24. Sumitomo is the petitioner in No.
80-2070 and the cross-respondent in No. 81-24.
[
Footnote 3]
Prior to bringing this suit, respondents each filed timely
complaints with the Equal Employment Opportunity Commission. The
EEOC issued "right to sue" letters to the respondents on October
27, 1977. This suit was filed on November 21, 1977, well within the
statutory 90-day period allowed for filing suits after receipt of
an EEOC notice of right to sue. 42 U.S.C. § 2000e-5(f)(1).
[
Footnote 4]
Sumitomo argued in the District Court that discrimination on the
basis of national citizenship, as opposed to national origin, was
not prohibited by Title VII. The District Court disagreed, however.
It relied on
Espinoza v. Farah Manufacturing Co.,
414 U. S. 86,
414 U. S. 92
(1973), in which we noted that
"Title VII prohibits discrimination on the basis of citizenship
whenever it has the purpose or effect of discriminating on the
basis of national origin."
Although discussed at length in the briefs, this issue is not
properly before the Court, and we do not reach it. It was not
included in the question certified for interlocutory review by the
Court of Appeals under 28 U.S.C. § 1292(b), was not decided by the
Court of Appeals, and was not set forth or fairly included in the
questions presented for review by this Court as required by Rule
21.1(a).
[
Footnote 5]
In a nearly identical case, a divided panel of the Court of
Appeals for the Fifth Circuit came to somewhat contrary results.
Spiess v. C. Itoh & Co., 643 F.2d 353 (1981),
cert. pending, No. 81-1496. The Fifth Circuit majority
agreed with the Second Circuit decision that a locally incorporated
subsidiary of a Japanese corporation is covered by Article VIII(1)
of the Treaty, but disagreed with the latter court's decision on
the effect of the Treaty on Title VII. The court held that the
Treaty provision did protect the subsidiary's practices from Title
VII liability.
In dissent, Judge Reavley disagreed with the majority's initial
conclusion. He would have held that, under the plain language of
the Treaty, locally incorporated subsidiaries are to be considered
domestic corporations, and are thus not covered by Article
VIII(1).
[
Footnote 6]
Similar provisions are contained in the Friendship, Commerce and
Navigation Treaties between the United States and other countries.
See, e.g., Article XII(4) of the Treaty with Greece,
[1954] 5 U.S.T. 1829, 1857, T.I.A.S. No. 3057 (1951); Article
VIII(1) of the Treaty with Israel, [1954] 5 U.S.T. 550, 557,
T.I.A.S. No. 551 (1951); Article VIII(1) of the Treaty with the
Federal Republic of Germany, [1956] 7 U.S.T. 1839, 1848, T.I.A.S.
No. 3593 (1954).
These provisions were apparently included at the insistence of
the United States; in fact, other countries, including Japan,
unsuccessfully fought for their deletion.
See, e.g., State
Department Airgram No. A-453, dated Jan. 7, 1952, pp. 1, 3,
reprinted in App. 130a, 131a, 133a (discussing Japanese objections
to Article VIII(1)); Foreign Service Despatch No. 2529, dated Mar.
18, 1954, reprinted in App. 181a, 182a (discussing German
objections to Article VIII(1)).
According to Herman Walker, Jr., who at the time of the drafting
of the Treaty served as Adviser on Commercial Treaties at the State
Department, Article VIII(1) and the comparable provisions of other
treaties were intended to avoid the effect of strict percentile
limitations on the employment of Americans abroad and "to prevent
the imposition of ultranationalistic policies with respect to
essential executive and technical personnel." Walker, Provisions on
Companies in United States Commercial Treaties, 50 Am.J.Int'l L.
373, 386 (1956); Walker, Treaties for the Encouragement and
Protection of Foreign Investment: Present United States Practice, 5
Am.J.Comp.L. 229, 234 (1956). According to the State Department,
Mr. Walker was responsible for formulation of the postwar form of
the Friendship, Commerce and Navigation Treaty and negotiated
several of the treaties for the United States. Department of State
Airgram A-105, dated Jan. 9, 1976, reprinted in App. 157a.
See also Foreign Service Despatch No. 2529,
supra, App. 182a (Purpose of Article VIII(1) of Treaty
with Germany "is to preclude the imposition of
percentile'
legislation. It gives freedom of choice as among persons lawfully
present in the country and occupationally qualified under the local
law").
[
Footnote 7]
The issues raised by this contention are clearly of widespread
importance. As we noted in
n 6,
supra, treaty provisions similar to that invoked by
Sumitomo are in effect with many other countries. In fact, some
treaties contain even more broad language.
See, e.g.,
Article XII(4), Treaty of Friendship, Commerce and Navigation with
Greece, [1954] 5 U.S.T. at 1857-1859 ("Nationals and companies of
either party shall be permitted to engage, within the territories
of the other Party, accountants and other technical experts,
executive personnel, attorneys, agents
and other employees of
their choice. . .") (emphasis added). As of 1979, United
States affiliates of foreign corporations employed over 1.6 million
workers in this country. Howenstine, Selected Data on the
Operations of U.S. Affiliates of Foreign Companies, 1978 and 1979,
in Survey of Current Business 35, 36 (U.S. Dept. of Commerce, May
1981).
[
Footnote 8]
The clear language of Article VII(1) and Article XXII(3) is
consistent with other Treaty provisions. For example, Article
XVI(2) accords national treatment to
"[a]rticles produced by nationals and companies of either Party
within the territories of the other Party,
or y companies of
the latter Party controlled by such nationals and companies. . .
."
(Emphasis added.) This provision obviously envisions that
companies of one party may be controlled by companies of the other
party. If the nationality of a company were determined by the
nationality of its controlling entity as Sumitomo proposes, rather
than by the place of its incorporation, this provision would make
no sense.
Several other Treaty provisions would make little sense if
American subsidiaries were considered companies of Japan. Articles
VII(1), VII(4), and XVI(2) contain clauses dealing with companies
or enterprises controlled by companies of either party. If those
companies or enterprises were themselves companies of the country
of their parents, this separate treatment would be unwarranted.
[
Footnote 9]
State Department Cable, Tokyo 03300, dated Feb. 26, 1982 (cable
from the United States Embassy in Tokyo to the Secretary of State
relaying the position of the Ministry of Foreign Affairs of Japan).
See also Diplomatic Communication from the Embassy of
Japan in Washington to the United States Department of State, dated
Apr. 21, 1982 ("The Government of Japan reconfirms its view that a
subsidiary of a Japanese company which is incorporated under the
laws of New York is not itself covered by article 8., paragraph 1
of the Treaty of Friendship, Commerce and Navigation between Japan
and the United States (the FCN Treaty) when it operates in the
United States").
[
Footnote 10]
Brief for United States as
Amicus Curiae 8-22; Letter
of James R. Atwood, Deputy Legal Adviser, U.S. Department of State,
to Lutz Alexander Prager, Assistant General Counsel, Equal
Employment Opportunity Commission, dated Sept. 11, 1979, reprinted
in App. 307a. ("On further reflection on the scope of application
of the first sentence of Paragraph 1 of Article VIII of the
U.S.-Japan FCN, we have established to our satisfaction that it was
not the intent of the negotiators to cover locally incorporated
subsidiaries, and that therefore U.S. subsidiaries of Japanese
corporations cannot avail themselves of this provision of the
treaty").
The Court of Appeals and Sumitomo dismiss the Atwood letter as
incorrect, and point to a letter written by a previous State
Department Deputy Legal Adviser as taking the contrary view. Letter
of Lee R. Marks, Deputy Legal Adviser, U.S. Department of State, to
Abner W. Sibal, General Counsel, Equal Employment Opportunity
Commission, dated Oct. 17, 1978, reprinted in App. 94a. However
neither of these letters is indicative of the state of mind of the
Treaty negotiators; they are merely evidence of the later
interpretation of the State Department as the agency of the United
States charged with interpreting and enforcing the Treaty. However
ambiguous the State Department position may have been previously,
it is certainly beyond dispute that the Department now interprets
the Treaty in conformity with its plain language, and is of the
opinion that Sumitomo is not a company of Japan, and is not covered
by Article VIII(1). That interpretation, and the identical position
of the Government of Japan, is entitled to great weight.
Kolovrat v. Oregon, 366 U. S. 187
(1961).
[
Footnote 11]
Determining the nationality of a company by its place of
incorporation is consistent with prior treaty practice.
See Walker, 50 Am.J.Intl L.,
supra, n 6, at 382-383. The place-of-incorporation
rule also has the advantage of making determination of nationality
a simple matter. On the other hand, application of a control test
could certainly make nationality a subject of dispute.
[
Footnote 12]
We express no view, of course, as to the interpretation of other
Friendship, Commerce and Navigation Treaties which, although
similarly worded, may have different negotiating histories.
[
Footnote 13]
See, e.g., Treaties of Friendship, Commerce and
Navigation with China, 63 Stat. 1299, T.I.A.S. No. 1871 (1946);
Italy, 63 Stat. 2255, T.I.A.S. No.1965 (1948); Israel, [1954] 5
U.S.T. 550, T.I.A.S. No. 551 (1951); Greece, [1954] 5 U.S.T. 1829,
T.I.A.S. No. 3057 (1951); Japan, [1953] 4 U.S.T. 2063, T.I.A.S. No.
2863 (1953); Federal Republic of Germany, [1956] 7 U.S.T. 1839,
T.I.A.S. No. 3593 (1954); The Netherlands, [1957] 8 U.S.T. 2043,
T.I.A.S. No. 3942 (1956); and Pakistan, [1961] 12 U.S.T. 110,
T.I.A.S. No. 4683 (1959). The provisions of several of the treaties
are compared in tabular form in Commercial Treaties: Hearing on
Treaties of Friendship, Commerce and Navigation with Israel,
Ethiopia, Italy, Denmark, Greece, Finland, Germany, and Japan,
before the Subcommittee of the Senate Committee on Foreign
Relations, 83d Cong., 1st Sess., 7-17 (1953).
[
Footnote 14]
See, e.g., Treaty of Amity and Commerce with France, 8
Stat. 12, T. S. No. 83 (1778); Treaty of Amity, Commerce and
Navigation with Great Britain, 8 Stat. 116, T. S. No. 105 (1794);
Treaty of Commerce and Friendship with Sweden and Norway, 8 Stat.
232, T. S. No. 347 (1816); Treaty of Commerce and Navigation with
the Netherlands, 8 Stat. 524, T. S. No. 251 (1839); Treaty of
Commerce and Navigation with Belgium, 8 Stat. 606, T. S. No.19
(1845); Treaty of Commerce and Navigation with Italy, 17 Stat. 845,
T. S. No. 177 (1871); Treaty of Commerce with Spain, 23 Stat. 750,
T. S. No. 337 (1884); Treaty of Commerce with Germany, 31
Stat.1935, T. S. No. 101 (1900); Treaty of Commerce with China, 33
Stat. 2208, T. S. No. 430 (1903).
[
Footnote 15]
See Walker, 50 Am.J.Int'l L.,
supra, n 6, at 374-378.
[
Footnote 16]
Treaty of Commerce and Navigation with Japan, 37 Stat. 1504, T.
S. No. 558 (1911); Treaties of Friendship, Commerce and Consular
Rights with Germany, 44 Stat. 2132, T. S. No. 725 (1923); Estonia,
44 Stat. 2379, T. S. No. 736 (1925); Hungary, 44 Stat. 2441, T. S.
No. 748 (1925); El Salvador, 46 Stat. 2817, T. S. No. 827 (1926);
Honduras, 45 Stat. 2618, T. S. No. 764 (1927); Latvia, 45 Stat.
2641, T. S. No. 765 (1928); Austria, 47 Stat. 1876, T. S. No. 838
(1928); Norway, 47 Stat. 2135, T. S. No. 852 (1928); Poland, 48
Stat. 1507, T. S. No. 862 (1931); Finland, 49 Stat. 2659, T. S. No.
868 (1934); Treaties of Friendship, Commerce and Navigation with
Siam, 53 Stat. 1731, T. S. No. 940 (1937); Liberia, 54 Stat. 1739,
T. S. No. 956 (1938).
These rights given to corporations by these Treaties were quite
limited. For example, Article VII of the 1911 Treaty with Japan
provided:
"Limited liability and other companies and associations . . .
already or hereafter to be organized in accordance with the laws of
either High Contracting Party and domiciled in the territories of
such Party, are authorized, in the territories of the other, to
exercise their rights and appear in the courts either as plaintiffs
or defendants, subject to the laws of such other Party."
"The foregoing stipulation has no bearing upon the question
whether a company or association organized in one of the two
countries will or will not be permitted to transact its business or
industry in the other, this permission remaining always subject to
the laws and regulations enacted or established in the respective
countries or in any part thereof."
37 Stat. 1506. A similarly limited provision was contained in
the other Treaties.
[
Footnote 17]
The significance of this advance was emphasized in the Senate
hearings on an early set of postwar Friendship, Commerce and
Navigation Treaties:
"Perhaps the most striking advance of the postwar treaties is
the cognizance taken of the widespread use of the corporate form of
business organization in present-day economic affairs. In the
treaties antedating World War II, American corporations were
specifically assured only small protection against possible
discriminatory treatment in foreign countries. In the postwar
treaties, however, corporations are accorded essentially the same
treaty rights as individuals in such vital matters as the right to
do business, taxation on a nondiscriminatory basis, the acquisition
and enjoyment of real and personal property, and the application of
exchange controls. Furthermore, the citizens and corporations of
one country are given substantial rights in connection with forming
local subsidiaries under the corporation laws of the other country
and controlling and managing the affairs of such local
companies."
Commercial Treaties: Hearing on Treaties of Friendship, Commerce
and Navigation Between the United States and Colombia, Israel,
Ethiopia, Italy, Denmark and Greece before a Subcommittee of the
Senate Committee on Foreign Relations, 82d Cong., 2d Sess., 4-5
(1952) (opening statement of Harold Linder, Deputy Assistant
Secretary of State for Economic Affairs).
[
Footnote 18]
"National treatment" is defined in Article XXII(1) of the
Treaty:
"The term 'national treatment' means treatment accorded within
the territories of a Party upon terms no less favorable than the
treatment accorded therein, in like situations, to nationals,
companies, products, vessels or other objects, as the case may be,
of such Party."
In short, national treatment of corporations means equal
treatment with domestic corporations. It is ordinarily the highest
level of protection afforded by commercial treaties. In certain
areas, treaty parties are unwilling to grant full national
treatment; in those areas, the parties frequently grant
"most-favored-nation treatment," which means treatment no less
favorable than that accorded to nationals or companies of any third
country.
See Article XXII(2) of the Treaty.
"The most-favored-nation rule can now, therefore, imply or allow
the status of alien disability, rather than of favor. In applicable
situations nowadays, the first-class treatment tends to be national
treatment; that which the citizens of the country enjoy."
Walker, Modern Treaties of Friendship, Commerce and Navigation,
42 Minn.L.Rev. 805, 811 (1958).
[
Footnote 19]
We express no view as to whether Japanese citizenship may be a
bona fide occupational qualification for certain positions at
Sumitomo or as to whether a business necessity defense may be
available. There can be little doubt that some positions in a
Japanese controlled company doing business in the United States
call for great familiarity with not only the language of Japan, but
also the culture, customs, and business practices of that country.
However, the Court of Appeals found the evidentiary record
insufficient to determine whether Japanese citizenship was a bona
fide occupational qualification for any of Sumitomo's positions
within the reach of Article VIII(1). Nor did it discuss the bona
fide occupational qualification exception in relation to
respondents' sex discrimination claim or the possibility of a
business necessity defense. Whether Sumitomo can support its
assertion of a bona fide occupational qualification or a business
necessity defense is not before us.
See n 4,
supra.
We also express no view as to whether Sumitomo may assert any
Article VIII(1) rights of its parent.