 This 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.
 Banco Nacional de Cuba : petitioner in the
case who filed a lawsuit
 C.A.V : also known as Compania
Azucarera Vertientes-Camaquey de
Cuba
 manufacturers and exporters of
sugar
 FARR : American commodities broker ( buys
then sells goods )
 had a contract with C.A.V prior to the
expropriation enforced by the cuban
government
 Sabbatino: C.A.V’s representative

 received the proceeds of the sugar after the

expropriation instead of the cuban
government
 The bills of lading for a shipment of sugar
contracted between Farr, Whitlock & Co an
American commodities broker was assigned
by Banco Nacional de Cuba (P), but another
Cuban bank instituted this action alleging
conversion of the bills of lading and sought to
recover the proceeds thereof from Farr and
to enjoin Sabbatino (R), a court-appointed
receiver from exercising control over such
proceeds.
 A contract to purchase Cuban sugar from a
wholly owned subsidiary of Compania
Azucarera Vertientes-Camaquey de Cuba
(CAV) a corporation organized under Cuban
law was made by Farr, Whitlock & Co. (Farr)
an American commodities broker. The CAV
stock was principally owned by United States
residents. The agreement was for Farr to pay
for the sugar in New York upon the
presentation of the shipping documents.
 After this deal, a law was enacted in Cuba
which empowered the government to
nationalize forcefully, expropriation of
property or enterprise in which American
nationals had an interest. Hence, the sugar
which Farr had contracted was expropriated
from Compania Azucarera. Farr however
entered into contracts which was similar to
the one made with CAV with the Banco Para
el Comercio de Cuba, which was an
instrumentality of the government.
 This was done by Farr in order to obtain consent
from the Cuban government before a ship
carrying sugar could leave Cuba. A bill of lading
which was also an instrumentality of the Cuban
government was assigned by the bank to Banco
Para el Comercio de Cuba, who presented the bills
and a sight draft as required under the contract to
Farr in New York in return for payment. After CAV
notified Farr of its claim to the proceeds as
rightful owner of the sugar, Farr refused the
documents.
 This action of Farr resulted in a court order which
appointed Sabbatino (R) as receiver of CAV’s New
York assets and enjoined it from removing the
payments from the state. Based on the allegation
of the conversion of the bills of lading seeking to
recover the proceeds thereof from Farr and to
enjoin Sabbatino (R), the receiver from exercising
dominion over such proceeds, the Banco Nacional
(P) instituted this action.
 A summary judgment was granted against Banco
Nacional (P) by the district court on the grounds
that the Act of State Doctrine does not apply
when the foreign act in question is in violation of
international law. The court of appeals also upheld
this judgment.
The defendant contended that the doctrine
was inapplicable for three reasons:
 Because the act in question was a violation
of international law;
 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.
 Whether or not the judiciary have authority to
examine the validity of a taking of property within
its own territory by a foreign sovereign even if the
taking violated international law?
 NO. The judiciary, in line with the ACT OF STATE
DOCTRINE will not examine the validity of a
taking of property within its own territory by a
foreign sovereign government recognized by this
country in the absence of international
agreements to the contrary, even if the taking
violates customary international law.
 The United States Supreme Court applied the
Act of State Doctrine even where the state
action likely violated international law. Despite
the loss suffered by United States nationals,
the Supreme Court upheld the Act of State
Doctrine by assuming the validity of Cuba's
domestic action and therefore rejected the
claim of US nationals against Cuba for their
lost investments
 Hence the judgment of the court of appeals is
reverse and the case remanded back to the
district court.