Banco Nacional de Cuba v. Sabbatino Case Brief

Why is the case important?

“The bills of lading for a shipment of sugar contracted between Farr, Whitlock &amp

  • Co an American commodities broker was assigned by Banco Nacional de Cuba (P), but another Cuban bank instituted this action alleging conversion of the bills of lading and sought to recover the proceeds thereof from Farr and to enjoin Sabbatino (D), a court-appointed receiver from exercising control over such proceeds.”

    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

    Does the judiciary have the authority to examine the validity of a taking of property within its own territory by a foreign sovereign even if the taking violated international law?

    Answer

    (Harlan, J). No. The judiciary, in line with the Act of State Doctrine will not examine the validity of a taking of property within its own territory by a foreign sovereign government recognized by this country in the absence of international agreements to the contrary, even if the taking violates customary international law. Even in a situation whereby international law has been violated, the clear implication of past cases is that the Act of State Doctrine is applicable because the Act of State doctrine does not deprive the courts of jurisdiction once acquire over a case. The damages of adjudicating the propriety of such expropriation acts, regardless of whether the State Department has it did in this case, asserted that the act violated international law are too far-reaching for the judicial branch to attempt. Hence the judgment of the court of appeals is reverse and the case remanded back to the district court.

    Conclusion

    The United States Supreme Court held that the act of state doctrine precluded the courts of the United States from inquiring into the validity of the public acts that a recognized foreign sovereign power committed within its own territory. The Court further found that the scope of the act of state doctrine was to be determined according to federal law, and the doctrine proscribed a challenge to the validity of the Cuban expropriation decree. Therefore, the Court found that any counterclaim based on asserted invalidity failed.

    • Case Brief: 1964
    • Petitioner: Banco Nacional de Cuba
    • Respondent: Peter L.F. Sabbatino et al.
    • Decided by: Warren Court

    Citation: 376 US 398 (1964)
    Argued: Oct 22 – 23, 1963
    Decided: Mar 23, 1964
    Granted Feb 18, 1963