Brief Moment of Clarity

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

Prior to the Cuban revolution, Cuba’s sugar was controlled by a corporation largely owned by U.S. stockholders. After the revolution, and subsequent to the U.S. reducing their Cuban sugar quota, Cuba expropriated the sugar corporation's property and rights. The U.S. broker for the sugar agreed with the Cuban Government to continue to import and sell the sugar, however, after Cuba exported a shipment of sugar, the broker refused to deliver the proceeds to Cuba and instead paid the then defunct corporation.

Cuba then sued the broker and the corporation in U.S. District Court to recover the proceeds. The court held that the corporation's property interest in the sugar was subject to Cuba's territorial jurisdiction, and acknowledged the "act of state" doctrine, which holds that a nation is sovereign within its own borders, and its domestic actions may not be questioned in the courts of another nation.. The court however rendered summary judgment against Cuba, 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 for the Second Circuit affirmed.

In U.S. Supreme Court reversed holding that “expropriations take place for a variety of reasons, political and ideological, as well as economic” and that “both the national interest and progress toward the goal of establishing the rule of law among nations are best served by maintaining intact the act of state doctrine in this realm of its application.”

Not surprisingly, Congress immediately passed an amendment mandating the courts not to apply the act of state doctrine as a bar against hearing cases of expropriation by a foreign sovereign, thereby destroying Cuba’s claim.

I’ll take mine unsweetened.