Banco Nacional de Cuba v. Sabbatino
Encyclopedia
Banco National de Cuba v. Sabbatino, 376 U.S. 398 (1964), was a United States Supreme Court case that determined that the policy of United States federal courts
would be to honor the Act of State Doctrine
, which dictates that the propriety of decisions of other countries relating to their internal affairs would not be questioned in the courts of the United States
.
n government retaliated against the United States
for various measures imposed against the Castro
government by expropriating property held by U.S. citizens in Cuba. This included the seizure of sugar
owned by a company called C.A.V. A different American company, Farr, Whitlock & Co. had contracted to buy this sugar from C.A.V., but after it was seized, they bought it directly from the Cuban government
. After receiving the sugar, however, Farr, Whitlock & Co. did not pay the Cuban government - instead, they paid C.A.V.'s legal representative, Sabbatino.
The plaintiff
, the national bank of Cuba (acting on behalf of the Cuban government) filed a lawsuit
in the United States District Court for the Southern District of New York
against the defendant
, Sabbatino, to recover the money paid for the sugar. The District Court and the Court of Appeals
ruled in favor of the defendant, and the case was appealed to the Supreme Court.
The defendant contended that the doctrine was inapplicable for three reasons:
, found that the act of state doctrine did apply in this case. The Court refused to hold that the expropriation violated international law, because there was no clear unity of international opinion disapproving the seizure of land or property in a country by the government of that country. It noted also that interposition of the Executive was unnecessary to prevent the courts from interfering in affairs of state, as a single court could upset delicate international negotiations through the assertion of U.S. law
in another country. Finally, the Court found no bar to application of the doctrine should be imposed by the fact that Cuba had brought the suit, comparing this to the sovereign immunity
enjoyed by U.S. States
which can sue, but can not be sued.
The Court also raised and dismissed a potential Erie doctrine
problem, noting that although this suit was brought under diversity jurisdiction
, federal interests so outweighed that of the state that federal common law
must apply, instead of the law of the state where the suit was filed.
wrote a "dismayed" dissenting opinion, asserting that the Court's application of the act of state doctrine was too rigid - more so, in fact than the doctrine as applied by other countries.
. Before the case could be reviewed by the District Court (on remand), Congress passed the so-called Second Hickenlooper Amendment (or Sabbatino Amendment) that revoked this presumption in favor of the validity of the act of state doctrine that the Sabbatino court had established. The Amendment was retroactive and subsequently found constitutional by the District court and the Cuban bank's complaint was dismissed. While this amendment to the Foreign Assistance Act
has clarified that courts may proceed with an adjudication on the merits unless the President states that such adjudication may embarrass foreign policy efforts, the amendment has been construed very narrowly by subsequent court decisions.
United States federal courts
The United States federal courts make up the judiciary branch of federal government of the United States organized under the United States Constitution and laws of the federal government.-Categories:...
would be to honor the Act of State Doctrine
Act of State Doctrine
The Act of State Doctrine says that a nation is sovereign within its own borders, and its domestic actions may not be questioned in the courts of another nation.-United States:...
, which dictates that the propriety of decisions of other countries relating to their internal affairs would not be questioned in the courts of the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
.
Facts
In July 1960, the CubaCuba
The Republic of Cuba is an island nation in the Caribbean. The nation of Cuba consists of the main island of Cuba, the Isla de la Juventud, and several archipelagos. Havana is the largest city in Cuba and the country's capital. Santiago de Cuba is the second largest city...
n government retaliated against the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
for various measures imposed against the Castro
Fidel Castro
Fidel Alejandro Castro Ruz is a Cuban revolutionary and politician, having held the position of Prime Minister of Cuba from 1959 to 1976, and then President from 1976 to 2008. He also served as the First Secretary of the Communist Party of Cuba from the party's foundation in 1961 until 2011...
government by expropriating property held by U.S. citizens in Cuba. This included the seizure of sugar
Sugar
Sugar is a class of edible crystalline carbohydrates, mainly sucrose, lactose, and fructose, characterized by a sweet flavor.Sucrose in its refined form primarily comes from sugar cane and sugar beet...
owned by a company called C.A.V. A different American company, Farr, Whitlock & Co. had contracted to buy this sugar from C.A.V., but after it was seized, they bought it directly from the Cuban government
Politics of Cuba
Cuba is constitutionally defined as a "socialist state guided by the principles of José Martí, and the political ideas of Marx, the father of communist states, Engels and Lenin." The present Constitution also ascribes the role of the Communist Party of Cuba to be the "leading force of society and...
. After receiving the sugar, however, Farr, Whitlock & Co. did not pay the Cuban government - instead, they paid C.A.V.'s legal representative, Sabbatino.
The plaintiff
Plaintiff
A plaintiff , also known as a claimant or complainant, is the term used in some jurisdictions for the party who initiates a lawsuit before a court...
, the national bank of Cuba (acting on behalf of the Cuban government) filed a lawsuit
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
in the United States District Court for the Southern District of New York
United States District Court for the Southern District of New York
The United States District Court for the Southern District of New York is a federal district court. Appeals from the Southern District of New York are taken to the United States Court of Appeals for the Second Circuit The United States District Court for the Southern District of New York (in case...
against the defendant
Defendant
A defendant or defender is any party who is required to answer the complaint of a plaintiff or pursuer in a civil lawsuit before a court, or any party who has been formally charged or accused of violating a criminal statute...
, Sabbatino, to recover the money paid for the sugar. The District Court and the Court of Appeals
Court of Appeals
A court of appeals is an appellate court generally.Court of Appeals may refer to:*Military Court of Appeals *Corte d'Assise d'Appello *Philippine Court of Appeals*High Court of Appeals of Turkey*United States courts of appeals...
ruled in favor of the defendant, and the case was appealed to the Supreme Court.
Issue
The issue taken by the Supreme Court was whether to apply the Act of State doctrine, which would uphold the legality of the expropriation because it was an official act of another country, not subject to question in U.S. courts.The defendant contended that the doctrine was inapplicable for three reasons:
- Because the act in question was a violation of international lawInternational lawPublic international law concerns the structure and conduct of sovereign states; analogous entities, such as the Holy See; and intergovernmental organizations. To a lesser degree, international law also may affect multinational corporations and individuals, an impact increasingly evolving beyond...
; - Because the doctrine should not be applied unless the Executive branch asks the court to do so;
- Because Cuba had brought the suit as a plaintiff and had given up its sovereign immunity.
Result
The Court, in an opinion by Justice John Marshall Harlan IIJohn Marshall Harlan II
John Marshall Harlan was an American jurist who served as an Associate Justice of the Supreme Court from 1955 to 1971. His namesake was his grandfather John Marshall Harlan, another associate justice who served from 1877 to 1911.Harlan was a student at Upper Canada College and Appleby College and...
, found that the act of state doctrine did apply in this case. The Court refused to hold that the expropriation violated international law, because there was no clear unity of international opinion disapproving the seizure of land or property in a country by the government of that country. It noted also that interposition of the Executive was unnecessary to prevent the courts from interfering in affairs of state, as a single court could upset delicate international negotiations through the assertion of U.S. law
Law of the United States
The law of the United States consists of many levels of codified and uncodified forms of law, of which the most important is the United States Constitution, the foundation of the federal government of the United States...
in another country. Finally, the Court found no bar to application of the doctrine should be imposed by the fact that Cuba had brought the suit, comparing this to the sovereign immunity
Sovereign immunity
Sovereign immunity, or crown immunity, is a legal doctrine by which the sovereign or state cannot commit a legal wrong and is immune from civil suit or criminal prosecution....
enjoyed by U.S. States
U.S. state
A U.S. state is any one of the 50 federated states of the United States of America that share sovereignty with the federal government. Because of this shared sovereignty, an American is a citizen both of the federal entity and of his or her state of domicile. Four states use the official title of...
which can sue, but can not be sued.
The Court also raised and dismissed a potential Erie doctrine
Erie doctrine
In United States law, the Erie doctrine is a fundamental legal doctrine of civil procedure mandating that a federal court in diversity jurisdiction must apply state substantive law....
problem, noting that although this suit was brought under diversity jurisdiction
Diversity jurisdiction
In the law of the United States, diversity jurisdiction is a form of subject-matter jurisdiction in civil procedure in which a United States district court has the power to hear a civil case where the persons that are parties are "diverse" in citizenship, which generally indicates that they are...
, federal interests so outweighed that of the state that federal common law
Federal common law
Federal common law is a term of United States law used to describe common law that is developed by the federal courts, instead of by the courts of the various states...
must apply, instead of the law of the state where the suit was filed.
Dissent
Justice WhiteByron White
Byron Raymond "Whizzer" White won fame both as a football halfback and as an associate justice of the Supreme Court of the United States. Appointed to the court by President John F. Kennedy in 1962, he served until his retirement in 1993...
wrote a "dismayed" dissenting opinion, asserting that the Court's application of the act of state doctrine was too rigid - more so, in fact than the doctrine as applied by other countries.
Second Hickenlooper Amendment
Not surprisingly, the Sabbatino case invoked an uproar in the U.S. CongressUnited States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
. Before the case could be reviewed by the District Court (on remand), Congress passed the so-called Second Hickenlooper Amendment (or Sabbatino Amendment) that revoked this presumption in favor of the validity of the act of state doctrine that the Sabbatino court had established. The Amendment was retroactive and subsequently found constitutional by the District court and the Cuban bank's complaint was dismissed. While this amendment to the Foreign Assistance Act
Foreign Assistance Act
The Foreign Assistance Act is a United States Act of Congress. The Act reorganized the structure of existing U.S. foreign assistance programs, separated military from non-military aid, and created a new agency, the United States Agency for International Development to administer those...
has clarified that courts may proceed with an adjudication on the merits unless the President states that such adjudication may embarrass foreign policy efforts, the amendment has been construed very narrowly by subsequent court decisions.