Banco Nacional de Cuba v. Sabbatino

PETITIONER: Banco Nacional de Cuba
RESPONDENT: Peter L.F. Sabbatino et al.
LOCATION: S.S. Hornfels

DOCKET NO.: 16
DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 376 US 398 (1964)
ARGUED: Oct 22, 1963 / Oct 23, 1963
DECIDED: Mar 23, 1964
GRANTED: Feb 18, 1963

ADVOCATES:
C. Dickerman Williams - for the respondent
Nicholas Deb. Katzenbach - for the United States as amicus curiae, urging reversal
Victor Rabinowitz - for the petitioner
Whitney North Seymour - as amicus curiae for Compania Vertientes-Camaguey de Cuba, urging affirmance

Facts of the case

Farr, Whitlock & Co. contracted to buy sugar from a Cuban corporation. The corporation loaded the sugar on to the S.S. Hornfels, but in response to President Eisenhower reducing the Cuban sugar quota, Cuba issued a decree taking possession of the sugar. The Cuban government would only allow the sugar to leave Cuba if Farr, Whitlock entered into a new contract with Banco Nacional de Cuba, an instrumentality of the Cuban government. After the sugar left Cuba, Farr, Whitlock refused to pay Banco Nacional. Banco Nacional sued in the U.S. District Court for the Southern District of New York to recover payment. The court granted summary judgment for Far, Whitlock, holding that Cuba’s taking of the sugar violated international law. The U.S. Court of Appeals for the Second Circuit affirmed.

Question

May the courts of the United States refuse to give effect to decrees of a foreign sovereign government where the decree violates common international law?

Media for Banco Nacional de Cuba v. Sabbatino

Audio Transcription for Oral Argument - October 23, 1963 in Banco Nacional de Cuba v. Sabbatino
Audio Transcription for Oral Argument - October 22, 1963 (Part 2) in Banco Nacional de Cuba v. Sabbatino

Audio Transcription for Oral Argument - October 22, 1963 (Part 1) in Banco Nacional de Cuba v. Sabbatino

Earl Warren:

Number 16, Banco Nacional De Cuba versus Peter L. F. Sabbatino.

Mr. Rabinowitz.

Victor Rabinowitz:

May it please the Court.

I notice that, although the Court does supply quill pens to counsel, it does not supply inkwells as well.

This case is here on a writ of certiorari --

William J. Brennan, Jr.:

Does that bear on this issue?

Victor Rabinowitz:

No sir.

It's just a reference to the last case.

This case is here on a writ of certiorari to the Court of Appeals for the Second Circuit to review that court's affirmance of a judgment of the District Court for the Southern District of New York.

The District Court had entered an order dismissing the complaint on a motion by plaintiff for summary judgment.

We think both of the courts below were in error and that summary judgment should have been entered in favor of plaintiff against the defendant, Farr Whitlock.

The facts are somewhat complex, but I shall take the liberty of sketching them in rather quickly and only in broad outline because the details are really not necessary for a full understanding of the critical issue that confronts the Court on this record.

Some time prior to 19-- to July of 1960 and about April or May, a sugar brokerage firm in New York by the name of Farr Whitlock entered into two contracts with a wholly owned subsidiary of a Cuban corporation, Compania Azucarera Vertientes-Ca Aguey, which is referred to in this proceeding by the initials C.A.V.

Although Farr Whitlock was a sugar broker, it was buying this sugar on its own account.

Under the terms of the contract, the sugar was to be shipped to Morocco, but payment was to be made in New York upon presentation of the bill of ladings and other shipping documents accompanied by a sight draft for the purchase price of the sugar in accordance with normal commercial practice.

The price of the sugar was approximately $175,000.

The record shows that C.A.V. was incorporated in Cuba and that about 90% or in excess of 90% of its stockholders are said to be residents of the United States.

There is nothing into the -- in the record as to the nationality of those stockholders.

On July 6, the Republic of Cuba adopted a decree authorizing the nationalization of property owned by nationals of the United States or properties in which the United States nationals had an interest.

Under the terms of the decree, compensation was to be paid by the issuance of 20-year-bonds and the funds behind the bonds were to come from the proceeds of sales of sugar to the United States.

On that very same day, the President of the United States signed the Sugar Act of 1960, which sharply curtailed the purchases of sugar by the United States from Cuba, although the Act, of course, had been passed by Congress a few days previously.

One month later, on August 6, by a resolution made pursuant to the decree that I have mentioned, the property of C.A.V. and 25 other corporations were nationalized.

This was one of a long series of decrees, which are -- some of which are referred to in a footnote at page 39 of petitioner's brief, which began in May of 1959 and which, in the end, transformed Cuba from a capitalist to a socialist economy.

On the day of the decree, the sugar was being loaded on a freighter which was anchored in territorial waters of Cuba.

Actually, the loading was not completed until August 9.

The ship remained in territorial waters until August 11 and, on that day, new contracts were signed by Farr Whitlock with a Cuban governmental bank.

These contracts were identical in terms, even as to the date, with the original contract signed between Farr Whitlock and C.A.V. and we contend that this contract recognized the ownership of the Cuban government in this sugar.

A day or two later, the sugar went off to Morocco.

The bills of lading were assigned to the petitioner which is the National Bank of Cuba and they were sent to Societe General, a French bank which acted as the New York agent of the petitioner, together with a sight draft in the sum of $175,000.

While the bills of lading were in transit and, on August 16, 1960, in a proceeding commenced in the New York State Supreme Court, a receiver was appointed over the New York assets of C.A.V. pursuant to Section 977 (b) of the Civil Practice Act.