US SUPREME COURT DECISIONS

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. chanrobles.com-red

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. chanrobles.com-red

Page 376 U. S. 400