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U.S. Supreme Court Review of Petition for Writ of Certiorari in First National City Bank v. Banco Nacional De Cuba*
Published online by Cambridge University Press: 18 May 2017
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- Type
- Judicial and Similar Proceedings
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- Copyright © American Society of International Law 1971
Footnotes
*
[The petition for a writ of certiorari was granted by the U.S. Supreme Court on January 25, 1971. The judgment of the Court of Appeals was vacated and the case remanded to the U.S. Court of Appeals for the Second Circuit for reconsideration in light of the views of the Department of State expressed in its letter of November 17, 1970. The Supreme Court expressed no views on the merits of the case in taking this action.
[The Department of State letter of November 17, 1970, appears at I.L.M. page 89. The decision of the U.S. Court of Appeals for the Second Circuit, dated July 16, 1970, appears at 9 International Legal Materials 1125 (1970). The decision of the U.S. District Court for the Southern District of New York, dated July 20, 1967, from which the appeal was made, appears at 6 International Legal Materials 898 (1967).]
References
1 The district court found that “There is no serious question that the Government of Cuba and Banco Nacional are one and the same for purposes of this litigation”. (App. B-4) Respondent “at various times has argued that defendant's (petitioner's) claim against the Cuban Government cannot be asserted against Banco Nacional, an entirely separate entity.” (App. B-4 n. 3) This argument was renewed on appeal, but the court below did not pass on it.
2 The court below accepted respondent's argument on the effect of the act of state doctrine (App. A7-A8). Its decision is therefore grounded on the assumption that petitioner's offset and counterclaim is otherwise proper.
* Petitioner argued and briefed this point in the district court as well as in the court of appeals. With respect, we urge that it raises a question that deserves an answer.
4 See Restatement, Foreign Relations Law of the United States,§ 190, comment a (Proposed Official Draft, 1962); anderson, Title to Confiscated Foreign Property, 20 Am. J. Int'l L. 528-29 (1926) ;
Basis of the Law Against Confiscating Foreign-Owned Property,21 Am. J. Int'l L. 525 (1927) ; Baxter & Sohn, Convention on State Responsibility, art. 10 (Draft No. 12, 1961) ; Bindschedler, Verstaatlichungmassnahmen and Entschadigungspflicht nach Volkerrecht 111 (1950); Doman, Postwar Nationalization of Foreign Property in Europe, 48 Colum. L. Rev. 1125, 1130-31 (1948) ; Compensation for Nationalized Property in Post-war Europe, 3 Int'l L. Q. 323 (1950) ; Domke, Indonesian Nationalization Measures Before Foreign Courts, 54 Am. J. Int'l L. 305 (1960); Fachiri, Expropriation and International Law, 6 Brit. Yb. Int'l L. 159 (1925); International Law and the Property of Aliens, 10 Brit. Yb. Int'l L. 32 (1929); Fauchille & Sibert, 32 Revue Generale de Droit Int'l Public 5, 22 (1925) ; LaLai Agraire Lithuanienne; Fawcett, Some Foreign Effects of Nationalization of Property, 27 Brit. Yb. Int'l L. 355 (1950);Friedmann, Some Impacts of Social Organization on International Law, 50 Am. J. Int'l L. 475, 505 (1956) ; 1 Hyde, International Law Chiefly as Interpreted and Applied by the United States 710-25 (2d rev. ed. 1947); Kaufman, Regies Generales du Droit de la Paix, 54 Hague Recueil 313, 429 (1935); Kunz, The Mexican Expropriations,17 N.Y.U. L. Rev. 327, 344 (1940) ; Peselj, International Aspects of the Recent Yugoslav Nationalization Law, 53 Am. J. Int'l L. 428 (1959); Rado, Czechoslovak Nationalization Decrees; Some International Aspects, 41 Am; J. Int'l L. 795 (1947) ; Re, The Nationalization of Foreign-Owned Property, 36 Minn. L. Rev. 323, 328 (1952) ;Scelle, 2 Precis de droit des gens 113 (1934) ; Scheuner in Report of 48th Conference of the Int'l Law Association, 164 (1958) ; Schindler,Besitzen konfiskatorische Gesetze ausserterritoriale Wirkung?, 3 Schweizerisches Jahrbuch fur Internationales Recht 65, 94 (1946); 1 Schwarzenberger, International Law 205 (3d ed. 1957) ; Schwebel in Report of 48th Conference of the Int'l Law Association 150 (1958) Verdross, Die Nationalisierung Niederlandischer, Unternehmungen in Indonesian im Lichte des Volkerrects, 6 Netherlands Int'l L. Rev. 278(1959); Weiss-Tessbach in Report of 48th Conference of the Int'l Law Association 179-80 (1958); 2 Whiteman, Damages in International Law 1386 (1937) ; Wortley, Observations on the Public and Private International Law Relating to Expropriation, 5 Am. J. Comp.L. 577, 591 (1956). See generally Wortley, Expropriation in Public International Law 33-36 (1959).5E.g., Chorzow Factory Case (Indemnity), P.C.I.J. Judgment No. 13, September 13, 1928, ser. A. No. 17, 1 Hudson, World Court Reports 646, 677; German Interest in Polish Upper Silesia (Merits),P.C.I.J. Judgment No. 7, May 25, 1926, ser. A., No. 7, 1 Hudson, World Court Reports 510, 523-24; Norwegian Shipowners' Claims (Norway/United States), 1 U.N. Rep. Int'l Arb. Awards, 307 334 (Perm. Ct. Arb. 1921); Arabian-American Oil Company v. Saudi Arabia, Award of Arbitral Tribunal, Geneva, 1956, at 61, 101-02, 109, 127, portions of award quoted in 6 Netherlands Int'l L. Rev. 233-34 (1959) ; Marguerite de Joly de Sabla (United States/Panama), 6 U.N. Rep. Int'l Arb. Awards 358, 366 (1933); Arbitral Award Between Portugal and Germany, June 30, 1930, 2 U.N. Rep. Int'l Arb. Awards 1035, 1039 (1930); Shufeldt Claim (United States/ Guatemala), 2 U.N. Rep. Int'l Arb. Awards 1079, 1095 (1930); Affaire Goldenberg (Germany/Rumania), 2 U.N. Rep. Int'l Arb. Awards 901, 909 (1928); Spanish Zone of Morocco Case (Great Britain/Spain), 2 U.N. Rep. Intl Arb. Awards 615, 647 (1925); Landreau Claim (United States/Peru), 1 U.N. Rep. Int'l Arb. Awards 347,365 (1921) ; Selwyn's Case (United States/Venezuela), Ralston, Venezuelan Arbitrations of 1903, at 322 (1904).
6 In Republic of China, Reed, J., pointed out that the obligations “upon which the City Bank's counterclaims rest are sovereign obligations jure imperii in form of the highest public character” 348 U.S.at 368. Notwithstanding, the obligations were recognized as the basis for legitimate claims by this very petitioner and petitioner was permitted to assert them to offset the claims brought against it in that case. In that case, as in United States v. National City Bank, 83 F.2d 236, the obligation incurred by the sovereign in consequence of its act of state was a promise to pay in the form of a bond, note or other writing. It would be a travesty of justice to suggest that a sovereign obligation evidenced by a promissory note may properly be offset against a claim by the sovereign obligor but that a sovereign obligation evidenced by the solemn laws of the sovereign obligor, imposed by principles of international law, and certified by the United States Government, must be denied validity in a court of the United States.
1 Except as to the precise relationship between respondent and the Republic of Cuba (see pp. 10, 13 below).
2 There may be some question as to whether a simple failure to meet a debt, unaccompanied by any specific act of repudiation, constitutes an act of state within cases such as Sabbatino, Oetjen v. Central Leather Co., 246 U.S. 297 (1918) and Underbill v. Hernandez, 168 U.S. 250 (1897). Cf. the treatment by the New York Court of Appeals of the second cause of action in Holzer v. Deutsche Reichsbahn-Gesellschaft, 277 NY. 474 (1938).
3 It is interesting to note that in its motion for summary judgment in this case, petitioner alleged that the value of its nationalized assets amounted to $3,4-53,000, before setting off respondent's claim, or a net of about $1,650,000 after the setoff. Affidavit of Ernest W. Redeke, dated May 19, 1961, submitted in support of motion for summary judgment, printed in Joint Appendix in Court of Appeals,p. 81a. In its claim filed with the Foreign Gaims Settlement Commission, petitioner claimed $7,513,028.81, after setting off respondent's claim. See Proposed Decision CU3835 of Commission on Claim No. CU2628. The Commission reduced this claim; it found a net loss (after deduction of the respondent's claim) to be $4,014,598.74, about two and one-half times the amount claimed in this case. See decision CU3835. This is some index of the reliability of such ex parte proceedings.
4 In a qui tarn action where the government sues on behalf of an individual (i.e. non governmental) informer, the same rules apply and a counterclaim may only be interposed against the tnie “opposing party”. See United States ex rel. Rodriguez v. Weekly Publications,74 F. Supp. 763, 768-69 (S.D.N.Y. 1947) for a discussion of how this determination of the real “party” is made for Rule 13 purposes.
5 Rule 13 did not change Equity Rule 30 in any respect relevant to this issue (see Notes of Advisory Committee on Rules at 28 U.S.CAl, Note to Rule 13). Southern Raihmy Co. v. Elliott, 86 F. 2d 294 (4th Cir. 1936); Federal Resert-c Bank v. Early, 30 F. 2d 198 (4th Cir. 1929) ; aff'd 281 U.S. 84 (1930); Libby v. Hopkins, 104 U.S. 303 (1881); Sawyer v. Hoag, 84 U.S. (17 Wall.) 610 (1873).
6 This is, of course, exactly the opposite situation to that in National City Bank of New York v. Republic of China, supra, where it was the Republic which sued to collect money deposited in the defendant bank by one of its governmental agencies. Since it was the named party there, a counterclaim was permitted against it as the Republic of China under Rule 13, although no counterclaim would presumably have lain against its agency, the Shanghai-Nanking Railway Administration.
7 The Hickenlooper amendment was a rider to the Foreign Aid Bill of 1964 and became law when the President signed the bill on October 7, 1964, after resolution of the annual dispute over foreign aid between Congress and the President. Congress adjourned on the same day.
8 Most of the cases cited by petitioner and by the text authorities whom petitioner relies upon are from foreign jurisdictions. A note of caution in treating of such cases is in order. The matter was discussed with considerable insight and against the background of a lifetime of experience in this field by the late Harvey Reeves in The Act of State—Foreign Decisions Cited in the Sabbatino Case: A Rebuttal and Memorandum of Law, 33 Fordham L. Rev. 599 (1966). For another post-Sabbatino discussion of the subject, see Friedmann, National Courts and the International Legal Order: Projections on the Implications of the Sabbatino Case, 34 George Washington L. Rev. 443 (1966); for a discussion of the lower court opinions in Sabbatino, see Falk, Toward a Theory of the Participation of Domestic Courts in the International Legal Order: A Critique of Banco Nacional de Cuba v. Sabbatino, 16 Rutgers L. Rev. 1 (1961).
1 The District Court determined that Banco Nacional and the Government of Cuba are one and the same for purposes of this litigation.
2 “(2) Notwithstanding any other provision of law, no court in the United States shall decline on the ground of the federal act of state doctrine to make a determination on the merits giving effect to the principles of international law in a case in which a claim or title or other right to property is asserted by any party including a foreign state (or a party claiming through such state) based upon (or traced through) a confiscation or other taking after January 1, 1959, by an act of that stalo in violation of the principles of international law,including the principles of compensation and the other standards set out in this subsection: Provided, That this subparagraph shall not bo applicable (1) in any case in which an act of a foreign state is not contrary to international law or with respect to a claim of title or other right to property acquired pursuant to an irrevocable letter of credit of not more than 180 days duration issued in good faith prior to the time of the confiscation or other taking, or (2) in any case with respect to which the President determines that application of the act of state doctrine is required in that particular case by the foreign policy interests of the United States and a suggestion to this effect is filed on his behalf in that case with the court.” (Foreign Assistance Act of 1965, Sec. 620(e)(2), 22 U.S.C. § 2370(e) (2)).
3 We regret that our views could not have been brought to the attention of the lower courts. Unfortunately, it was only after tho not-yet-published opinion of the Second Circuit Court of ‘Appeals was handed down that tho question of the appropriateness of State Department action arose, since it did not, become clear until that time that the Sabbatino Amendment would be considered inapplicable. No formal request for a statement by the Department was made in this case until October 14/ 1970, one day after the petition for writ of certiorari was filed.