BANCO NACIONAL DE CUBA V. SABBATINO, 376 U. S. 398 (1964)

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U.S. Supreme Court

Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964)

Banco Nacional de Cuba v. Sabbatino

No. 16

Argued October 22-23, 1963

Decided March 23, 1964

376 U.S. 398

Syllabus

Respondent American commodity broker contracted with a Cuban corporation

largely owned by United States residents to buy Cuban sugar. Thereafter,

subsequent to the United States Government's reduction of the Cuban sugar

quota, the Cuban Government expropriated the corporation's property and

rights. To secure consent for shipment of the sugar, the broker, by a new

contract, agreed to make payment for the sugar to a Cuban instrumentality

which thereafter assigned the bills of lading to petitioner, another Cuban

instrumentality, and petitioner instructed its agent in New York to deliver to the

broker the bills of lading and sight draft in return for payment. The broker

accepted the documents, received payment for the sugar from its customer, but

refused to deliver the proceeds to petitioner's agent. Petitioner brought this

action for conversion of the bills of lading to recover payment from the broker

and to enjoin from exercising dominion over the proceeds a receiver who had

been appointed by a state court to protect the New York assets of the

corporation. The District Court concluded that the corporation's property interest

in the sugar was subject to Cuba's territorial jurisdiction, and acknowledged the

"act of state" doctrine, which precludes judicial inquiry in this country respecting

the public acts of a recognized foreign sovereign power committed within its own

territory. The court nevertheless rendered summary judgment against the

petitioner, ruling that the act of state doctrine was inapplicable when the

questioned act violated international law, which the District Court found had

been the case here. The Court of Appeals affirmed, additionally relying upon two

State Department letters which it took as evidencing willingness by the Executive

Branch to a judicial testing of the validity of the expropriation.

Held:

1. The privilege of resorting to United States courts being available to a

recognized sovereign power not at war with the United States, and not being

dependent upon reciprocity of treatment, petitioner has access to the federal

courts. Pp. 376 U. S. 408408-412.

Page 376 U. S. 399

2. The propriety of the taking was not governed by New York law, since the sugar

itself was expropriated. P. 376 U. S. 413.

3. This suit is not uncognizable in American courts as being one to enforce the

"public" acts of a foreign state, since the expropriation law here involved had

been fully executed within Cuba. Pp. 376 U. S. 413-415.

4. The Government's uncontested assertion that the two State Department

letters expressed only the then wish of the Department to avoid commenting on

the litigation, obviates the need for this Court to pass upon the "Bernstein

exception" to the act of state doctrine, under which a court may respond to a

representation by the Executive Branch that, in particular circumstances, it does

not oppose judicial consideration of the foreign state's act. Pp. 376 U. S. 418-420.

5. The scope of the act of state doctrine must be determined according to federal

law. Pp. 376 U. S. 421-427.

6. The act of state doctrine applies and is desirable with regard to a foreign

expropriation even though the expropriation allegedly violates customary

international law. Pp. 376 U. S. 427-437.

(a) Disagreement exists as to relevant standards of international law concerning

a State's responsibility toward aliens. P. 376 U. S. 430.

(b) The political branch can more effectively deal with expropriation than can the

Judicial Branch. Pp. 376 U. S. 431-432.

(c) Conflicts between the Judicial and Executive Branches could hardly be

avoided were the judiciary to adjudicate with respect to the validity of

expropriations. Even if the combination alleged in this case of retaliation,

discrimination, and inadequate compensation made the expropriation here

violative of international law, a judicial determination to that effect would still be

unwise as involving potential conflict with or embarrassment to the Executive

Branch in later litigation. Pp. 376 U. S. 432-433.

7. A foreign country's status as a plaintiff does not make the act of state doctrine

inapplicable. Pp. 376 U. S. 437-438.

307 F.2d 845 reversed and remanded.