## Facts

- Faysound Ltd., a Hong Kong corporation, purchased a Falcon jet aircraft for over $9 million.
- Faysound leased the aircraft on October 23, 1982, to United Coconut Chemicals, Inc. (UNICHEM), a Philippine corporation, for five years; the lease permitted worldwide use and foreign registration by the lessee.
- The aircraft was registered in the Philippines listing UNICHEM as “operator,” and the registration documentation noted the aircraft was subject to a lease identifying Faysound as owner-lessor.
- After a change in the Philippine government in 1986, the Philippine Presidential Commission on Good Government (PCGG) sequestered the aircraft from UNICHEM as part of efforts to recover alleged “ill-gotten” assets linked to Marcos associates.
- The PCGG proceeded without notice to Faysound and later sold the aircraft to Walter Fuller Aircraft Sales, Inc. (Fuller) without judicial approval.
- Fuller imported the aircraft into the United States and claimed good title as a bona fide purchaser from the PCGG.
- Faysound sued Fuller (and Falcon Jet Corporation) in federal court in Arkansas to recover the aircraft and clear title; both sides moved for summary judgment.

## Issues

1. Whether the act-of-state doctrine barred a U.S. court from examining the validity of the PCGG’s sequestration and sale of the aircraft.
2. Whether the Second Hickenlooper Amendment (22 U.S.C. § 2370(e)(2)) required the court to adjudicate an alleged expropriation in violation of international law.
3. Whether the PCGG’s actions divested Faysound of title such that Fuller acquired good title.

## Decision

- The court granted Faysound’s motion for summary judgment and denied Fuller’s motion.
- The court held the act-of-state doctrine did not preclude adjudication of the aircraft’s title.
- The court concluded the Second Hickenlooper Amendment applied and required a merits determination of the alleged taking.
- The court held Faysound remained the lawful owner because the PCGG did not validly expropriate Faysound’s interest and therefore could not convey title to Fuller.

## Legal Principles

- The act-of-state doctrine does not automatically bar review where the challenged conduct is not treated as a conclusive sovereign act for title purposes and the dispute centers on specific property rights rather than deference to foreign policy choices.
- Under the Second Hickenlooper Amendment, U.S. courts must decide claims to property (or proceeds) within U.S. jurisdiction when the claim asserts a taking in violation of international law, limiting reliance on the act-of-state doctrine.
- A purchaser generally cannot obtain better title than the seller possesses; if a foreign government entity lacked title due to an invalid taking, its buyer acquires no title even if acting in good faith.
- An asserted expropriation that fails to meet basic legality requirements (including required authority and procedural protections) does not extinguish the original owner’s title for purposes of a U.S. title action.

## Conclusion

The court determined that U.S. law required adjudication of the aircraft’s ownership notwithstanding the PCGG’s involvement, and it concluded the PCGG’s seizure and unauthorized sale did not divest Faysound’s title; Fuller therefore took no title and Faysound was entitled to recover the aircraft.


Faysound Ltd. v. Walter Fuller Aircraft Sales, Inc., 748 F. Supp. 1365 (E.D. Ark. 1990)