Alfred Dunhill of London vs.

Republic of Cuba

Facts: In 1960, the Cuban Government confiscated the business and assets of the five leading
manufacturers of Havana cigars. After an intervention (nationalization) by Cuba, interventors
(those named to possess and occupy the seized businesses) nationalized five major cigar plants,
importing the cigars to different places including the United States. The former owners of the
five leading cigar manufacturers in Cuba (most of whom fled to the United States) brought
action against the petitioner and two other importers for the purchase price of cigars that had
been shipped to the importers from the seized Cuban plants. Some purchasers even mistakenly
paid money owed to the original owners for shipments made before the intervention to the
interventors.

Both the former owners and the interventors asserted their right to the sums due from the post-
intervention shipments.

The District Court, acknowledging that under the act of state doctrine, it had to give effect to
the 1960 confiscation as it purported to take the property of Cubans in Cuba, allowing
interventors to collect money for postintervention shipments, but held that the former owners
were entitled to the preintervention accounts receivable. Both District Court and Court of
Appeals held that interventors were not entitled to the preinterventions money collected.

The interventors countered that the repayment obligation is a quasi-contractual debt in Cuba and
that their refusal to pay was an act of state not subject to question in American courts. The
interventors are acting on behalf of the state and are therefore not subject to the American court
system.

Issue: Does the Supreme Court of the United States have jurisdiction to hear this case? Does the
Act of State Doctrine apply to Cuba?

Held:
On the issue of jurisdiction, the Supreme Court has jurisdiction in this case. There is nothing in
the record of this case revealing an act of state with respect to the interventors obligation to
return the sums mistakenly paid to them. There was no statute, decree, or order from the Cuban
Government refusing to pay. The interventors do not acquire state and governmental power by
virtue of their appointment. The interventors refusal to pay the mistakenly received funds does
not constitute an act of state it is merely commercial. Because Cuba is not acting as a state, ut
rather a commercial actor, the doctrine of restrictive sovereign immunity is to be applied. It
provides that foreign heads of state are not immune from repaying debts incurred from
transactions commercial in nature heads of state are not protected in the realm of commercial
action when acting only as commercial actors.