# First National City Bank v. Banco Nacional de Cuba/Dissent Brennan

* Court Documents
* Case Syllabus
* Opinion of the Court
* Concurring Opinions Douglas Powell
* Dissenting Opinion Brennan
[p776] MR. JUSTICE BRENNAN, with whom MR. JUSTICE STEWART, MR. JUSTICE MARSHALL, and MR. JUSTICE BLACKMUN join, dissenting.
The Court today reverses the judgment of the Court of Appeals for the Second Circuit which declined to engraft the so-called "Bernstein" exception upon the act of state doctrine as expounded in Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964). The Court, [p777] nevertheless, affirms the Court of Appeals' rejection of the "Bernstein" exception. Four of us in this opinion unequivocally take that step, as do MR. JUSTICE DOUGLAS and MR. JUSTICE POWELL in their separate opinions concurring in the result or judgment.
The anomalous remand for further proceedings results because three colleagues, MR. JUSTICE REHNQUIST, joined by THE CHIEF JUSTICE and MR. JUSTICE WHITE, adopt the contrary position, while MR. JUSTICE DOUGLAS finds National City Bank v. Republic of China, 348 U.S. 356 (1955), dispositive in the circumstances of this case and MR. JUSTICE POWELL rejects the specific holding in Sabbatino, believing it was not required by the principles underlying the act of state doctrine.
MR. JUSTICE REHNQUIST's opinion reasons that the act of state doctrine exists primarily, and perhaps even solely, as a judicial aid to the Executive to avoid embarrassment to the political branch in the conduct of foreign relations. [p778] Where the Executive expressly indicates that invocation of the rule will not promote domestic foreign policy interests, his opinion states the view, adopting "Bernstein" exception, that the doctrine does not apply. This syllogism—from premise to conclusion—is, with all respect, mechanical and fallacious. Moreover, it would require us to abdicate our judicial responsibility to define the contours of the act of state doctrine so that the judiciary does not become embroiled in the politics of international relations to the damage not only of the courts and the Executive but of the rule of law.
MR. JUSTICE REHNQUIST's opinion also finds support for its result in National City Bank, and MR. JUSTICE DOUGLAS would remand on the authority of that case alone. In his view, "[f]air dealing" requires that a foreign sovereign suing in our courts be subject to setoffs, even though counterclaims are barred by the act of state doctrine for amounts exceeding the state's claim. I believe that National City Bank is not at all in point, and that my Brother DOUGLAS' view leads to the strange result that application of the act of state doctrine depends upon the dollar value of a litigant's counterclaim.
Finally, MR. JUSTICE POWELL acknowledges that Sabbatino, not National City Bank, controls this case, but, nonetheless, votes to remand on the ground that Sabbatino was wrongly decided. In my view, nothing has intervened in the eight years since that decision to put its authority into question.

## I

On September 16 and 17, 1960, the Government of Cuba nationalized the branch offices of petitioner in Cuba. Petitioner promptly responded by selling collateral that had previously been pledged in security for a loan it had made to a Cuban instrumentality. Respondent— [p779] alleged by petitioner to be an agent of the Cuban Government—in turn, instituted this action to recover the excess of the proceeds of the sale over the accrued interest and principal of the loan. Petitioner then counterclaimed for the value of its Cuban properties, alleging that they had been expropriated in violation of international law. On cross-motions for summary judgment, [p780] the District Court held that petitioner "is entitled to set-off as against [respondent's] claim for relief any amounts due and owing to it from the Cuban Government by reason of the confiscation of [its] Cuban properties." 270 F. Supp. 1004, 1011 (1967). The Court of Appeals for the Second Circuit reversed on the ground that the act of state doctrine, as applied in Sabbatino, forecloses judicial review of the nationalization of petitioner's branch offices. 431 F. 2d 394 (1970).
While a petition to this Court was pending for a writ of certiorari, the Legal Adviser of the Department of State advised us that the act of state doctrine should [p781] not be applied to bar consideration of counterclaims in the circumstances of this case. More particularly, the Legal Adviser stated:
   "Recent events, in our view, make appropriate a determination by the Department of State that the act of state doctrine need not be applied when it is raised to bar adjudication of a counterclaim or setoff when (a) the foreign state's claim arises from a relationship between the parties existing when the act of state occurred; (b) the amount of the relief to be granted is limited to the amount of the foreign state's claim; and (c) the foreign policy interests of the United States do not require application of the doctrine.
   "In this case, the Cuban government's claim arose from a banking relationship with the defendant existing at the time the act of state—expropriation of defendant's Cuban property—occurred, and defendant's counterclaim is limited to the amount of the Cuban government's claim. We find, moreover, that the foreign policy interests of the United States do not require the application of the act of state doctrine to bar adjudication of the validity of a defendant's counterclaim or set-off against the Government of Cuba in these circumstances.
   "The Department of State believes that the act of state doctrine should not be applied to bar consideration of a defendant's counterclaim or set-off against the Government of Cuba in this or like cases."
We granted certiorari, vacated the judgment of the Court of Appeals, and, without expressing any views on the [p782] merits of the case, remanded for reconsideration in light of this statement of position by the Department of State. 400 U.S. 1019 (1971). On remand the Court of Appeals adhered to its original decision, 442 F. 2d 530 (1971), and we again granted certiorari, 404 U.S. 820 (1971).

## II

The opinion of MR. JUSTICE REHNQUIST, joined by THE CHIEF JUSTICE and MR. JUSTICE WHITE, states that "[t]he only reason for not deciding the case by use of otherwise applicable legal principles would be the fear that legal interpretation by the judiciary of the act of a foreign sovereign within its own territory might frustrate the conduct of this country's foreign relations." Even if this were a correct description of the rationale for the act of state doctrine, the conclusion that the reason for the rule ceases when the Executive, as here, requests that the doctrine not be applied plainly does not follow. In Sabbatino this Court reviewed at length the risks of judicial review of a foreign expropriation in terms of the possible prejudice to the conduct of our external affairs. The Court there explained, 376 U.S., at 432-433:
   "If the Executive Branch has undertaken negotiations with an expropriating country, but has refrained from claims of violation of the law of nations, a determination to that effect by a court might be regarded as a serious insult, while a finding of compliance with international law, would greatly strengthen the bargaining hand of the other state with consequent detriment to American interests.
   "Even if the State Department has proclaimed the impropriety of the expropriation, the stamp of approval of its view by a judicial tribunal, however, impartial, might increase any affront and the judicial decision might occur at a time, almost always well [p783] after the taking, when such an impact would be contrary to our national interest. Considerably more serious and far-reaching consequences would flow from a judicial finding that international law standards had been met if that determination flew in the face of a State Department proclamation to the contrary.... In short, whatever way the matter is cut, the possibility of conflict between the Judicial and Executive Branches could hardly be avoided."
This reasoning may not apply where the Executive expressly stipulates that domestic foreign policy interests will not be impaired however the court decides the validity of the foreign expropriation. But by definition those cases can only arise where the political branch is indifferent to the result reached, and that surely is not the case before us. The United States has protested the nationalization by Cuba of property belonging to American citizens as a violation of international law. The United States has also severed diplomatic relations with that government. The very terms of the Legal Adviser's communication to this Court, moreover, anticipate a favorable ruling that the Cuban expropriation of petitioner's properties was invalid.
[p784] Sabbatino itself explained why in these circumstances the representations of the Executive in favor of removing the act of state bar cannot be followed: "It is highly questionable whether the examination of validity by the judiciary should depend on an educated guess by the Executive as to probable result and, at any rate, should a prediction be wrong, the Executive might be embarrassed in its dealings with other countries." Id., at 436. Should the Court of Appeals on remand uphold the Cuban expropriation in this case, the Government would not only be embarrassed but would find its extensive efforts to secure the property of United States citizens abroad seriously compromised.
Nor can it be argued that this risk is insubstantial because the substantive law controlling petitioner's claims is clear. The Court in Sabbatino observed that "[t]here are few if any issues in international law today on which opinion seems to be so divided as the limitations on a state's power to expropriate the property of aliens." Id., [p785] at 428. And this observation, if anything, has more force in this case than in Sabbatino, since respondent argues with some substance that the Cuban nationalization of petitioner's properties, unlike the expropriation at issue in Sabbatino, was not discriminatory against United States citizens.
Thus, the assumption that the Legal Adviser's letter removes the possibility of interference with the Executive in the conduct of foreign affairs is plainly mistaken.

## III

That, however, is not the crux of my disagreement with my colleagues who would uphold the "Bernstein" exception. My Brother REHNQUIST's opinion asserts that the act of state doctrine is designed primarily, and perhaps even entirely, to avoid embarrassment to the political branch. Even a cursory reading of Sabbatino, this Court's most recent and most exhaustive treatment of the act of state doctrine, belies this contention. Writing for a majority of eight in Sabbatino, Mr. Justice Harlan laid bare the foundations of the doctrine as follows, id., at 427-428:
   "If the act of state doctrine is a principle of decision binding on federal and state courts alike but compelled by neither international law nor the Constitution, its continuing vitality depends on its capacity to reflect the proper distribution of functions between the judicial and political branches of the Government on matters bearing upon foreign affairs. It should be apparent that the greater the degree of codification or consensus concerning a [p786] particular area of international law, the more appropriate it is for the judiciary to render decisions regarding it, since the courts can then focus on the application of an agreed principle to circumstances of fact rather than on the sensitive task of establishing a principle not inconsistent with the national interest or with international justice. It is also evident that some aspects of international law touch much more sharply on national nerves than do others; the less important the implications of an issue are for our foreign relations, the weaker the justification for exclusivity in the political branches. The balance of relevant considerations may also be shifted if the government which perpetrated the challenged act of state is no longer in existence, as in the Bernstein case [see n. 1, supra], for the political interest of this country may, as a result, be measurably altered."
Applying these principles to the expropriation before the Court, Mr. Justice Harlan noted the lack of consensus among the nations of the world on the power of a state to take alien property, and stated further that "[i]t is difficult to imagine the courts of this country embarking on adjudication in an area which touches more sensitively the practical and ideological goals of the various members of the community of nations." Id., at 430. He reviewed as well the possible adverse effects from judicial review of foreign expropriations on the conduct of our external affairs, discussed above, and emphasized the powers of the Executive "to ensure fair treatment of United States nationals," id., at 435, in comparison to the "[p]iecemeal dispositions," id., at 432, that courts could make:
   "Following an expropriation of any significance, the Executive engages in diplomacy aimed to assure that [p787] United States citizens who are harmed are compensated fairly. Representing all claimants of this country, it will often be able, either by bilateral or multilateral talks, by submission to the United Nations, or by the employment of economic and political sanctions, to achieve some degree of general redress. Judicial determinations of invalidity of title can, on the other hand, have only an occasional impact, since they depend on the fortuitous circumstance of the property in question being brought into this country." Id., at 431.
   "When one considers the variety of means possessed by this country to make secure foreign investment, the persuasive or coercive effect of judicial invalidation of acts of expropriation dwindles in comparison." Id., at 435.
Only in view of all these considerations did he conclude, id., at 428:
   "[T]he Judicial Branch will not examine the validity of a taking of property within its own territory by a foreign sovereign government, extant and recognized by this country at the time of suit, in the absence of a treaty or other unambiguous agreement regarding controlling legal principles, even if the complaint alleges that the taking violates customary international law."
In short, Sabbatino held that the validity of a foreign act of state in certain circumstances is a "political question" [p788] not cognizable in our courts. Only one—and not necessarily the most important—of those circumstances concerned the possible impairment of the Executive's conduct of foreign affairs. Even if this factor were absent in this case because of the Legal Adviser's statement of position, it would hardly follow that the act of state doctrine should not foreclose judicial review of the expropriation of petitioner's properties. To the contrary, the absence of consensus on the applicable international rules, the unavailability of standards from a treaty or other agreement, the existence and recognition of the Cuban Government, the sensitivity of the issues to national concerns, and the power of the Executive alone to effect a fair remedy for all United States citizens who have been harmed all point toward the existence of a "political question." The Legal Adviser's letter does not purport to affect these considerations at all. In any event, when coupled with the possible consequences to the conduct of our foreign affairs explored above, these considerations compel application of the act of state doctrine, notwithstanding the Legal Adviser's suggestion to the contrary. The [p789] Executive Branch, however extensive its powers in the area of foreign affairs, cannot by simple stipulation change a political question into a cognizable claim.
[p790] Sabbatino, as my Brother REHNQUIST's opinion notes, formally left open the validity of the "Bernstein" exception to the act of state doctrine. But that was only because the issue was not presented there. As six members of this Court recognize today, the reasoning of that case is clear that the representatives of the Department of State are entitled to weight for the light they shed on the permutation and combination of factors underlying the act of state doctrine. But they cannot be determinative.

## IV

To find room for the "Bernstein" exception in Sabbatino does more than disservice to precedent. MR. JUSTICE REHNQUIST's opinion states: "Our holding is in no sense an abdication of the judicial function to the Executive Branch." With all respect, it seems patent that the contrary is true. The task of defining the contours of a political question such as the act of state doctrine is exclusively the function of this Court. Baker v. Carr, 369 U.S. 186 (1962), and cases cited therein; see R. Falk, The Status of Law in International Society 413 (1970). The "Bernstein" exception relinquishes the function to the Executive by requiring blind adherence to its requests that foreign acts of state be reviewed. Conversely, it politicizes the judiciary. For the Executive's invitation to lift the act of state bar can only be accepted at the expense of supplanting the political branch in its role as a constituent of the international law-making community. As Sabbatino, 376 U.S., at 432-433, indicated, it is the function of the Executive to act "not [p791] only as an interpreter of generally accepted and traditional rules, as [do] the courts, but also as an advocate of standards it believes desirable for the community of nations and protective of national concerns." The "Bernstein" exception, nevertheless, assigns the task of advocacy to the judiciary by calling for a judgment where consensus on controlling legal principles is absent. Note, 40 Fordham L. Rev. 409, 417 (1971). This, it countenances an exchange of roles between the judiciary [p792] and the Executive, contrary to the firm insistence in Sabbatino on the separation of powers.
The consequence of adopting the "Bernstein" approach would only be to bring the rule of law both here at home and in the relations of nations into disrespect. Indeed ,the fate of the individual claimant would be subject to the political considerations of the Executive Branch. Since those considerations change as surely as administrations change, similarly situated litigants would not be likely to obtain even-handed treatment. This is all too evident in the very case before us. The Legal Adviser's suggestion that the act of state doctrine does not apply here is carefully couched in terms applicable only to setoffs "against the Government of Cuba in this or like cases," see supra, at 781—that is, where the Executive finds in its discretion that invocation of the doctrine is not required in the interests of American foreign policy vis-à-vis Cuba. Note, 12 Harv. Int'l L.J. 557, 562, 572 (1971). In Zschernig v. Miller, 389 U.S. 429 (1968), this Court struck down an Oregon escheat statute as an unconstitutional invasion of the National Government's power over external affairs, despite advice from the Executive that the law did not unduly interfere with the conduct of our foreign policy. Paraphrasing from what my Brother STEWART said there, id., at 443 (concurring opinion), we must conclude here:
   "Resolution of so fundamental [an] issue [as the basic division of functions between the Executive [p793] and the Judicial Branches] cannot vary from day to day with the shifting winds at the State Department. Today, we are told, [judicial review of a foreign act of state] does not conflict with the national interest. Tomorrow it may." See also id., at 434-435 (DOUGLAS, J.).
No less important than fair and equal treatment to individual litigants is the concern that decisions of our courts command respect as dispassionate opinions of principle. Nothing less will suffice for the rule of law. Yet the "Bernstein" approach is calculated only to undermine regard for international law. It is, after all, as Sabbatino said, 376 U.S., at 434-435, a "sanguine pre-supposition that the decisions of the courts of the world's major capital exporting country and principal exponent of the free-enterprise system would be accepted as disinterested expressions of sound legal principle by those adhering to widely different ideologies." This is particularly so where, as under the "Bernstein" approach, the determination of international law is made to depend upon a prior political authorization. E.g., R. Falk, The Role of Domestic Courts in the International Legal Order 93-94, 136-137 (1964).

## V

MR. JUSTICE REHNQUIST's opinion finds support for the result it reaches in National City Bank v. Republic of China, 348 U.S. 356 (1955), and MR. JUSTICE DOUGLAS bases his decision on that case alone. National City Bank held that, by bringing suit in our courts, a foreign sovereign waives immunity on offsetting counterclaims, whether or not related to the sovereign's cause of action. Nothing in that decision spoke to the applicability of the act of state doctrine. My Brother REHNQUIST's opinion, nevertheless, seizes on language there that a sovereign [p794] suing in our courts "wants our law" and so should be held bound by it as a matter of equity. In a similar vein, my Brother DOUGLAS states that "[i]t would... offend our sensibilities if Cuba could collect the amount owed on... [her claim] and not be required to account for any setoff." Yet, on the assumption that equitable principles are relevant to respondent's cause of action, see Note, 75 Harv. L. Rev. 1607, 1619 (1962), it is by no means clear that the balance of equity tips in petitioner's favor. It cannot be argued that by seeking relief in our courts on a claim that does not involve any act of state, respondent has waived the protection of the act of state doctrine in defense to petitioner's counterclaims. See ibid. Furthermore, as the Court of Appeals pointed out below, 442 F. 2d, at 535, petitioner "is seeking a windfall at the expense of other" claimants whose property Cuba has nationalized. Our Government has blocked Cuban assets in this country for possible use by the Foreign Claims Settlement Commission to compensate fairly all American nationals who have been harmed by Cuban expropriations. Although those assets are not now vested in the United States or authorized to be distributed to claimants, it is reasonable to assume that they will be if other efforts at settling claims with Cuba are unavailing. In that event, if petitioner prevails here, it will, in effect, have secured a preference over other claimants who were not so fortunate to have had Cuban assets within their reach and whose only relief is before the Claims Commission. Conversely, if respondent prevails, its recovery will become a vested asset for fair and ratable distribution to all claimants, including petitioner. See 431 F. 2d, at 403-404.
More important, reliance on National City Bank overlooks the fact that "our law" that respondent "wants" includes the act of state doctrine, to which we have adhered for decades, as the precedents on which Sabbatino [p795] relied demonstrate. See n. 1, supra. As Sabbatino indicated, 376 U.S., at 438, the doctrine, "although it shares with the immunity doctrine a respect for sovereign states," serves important policies entirely independent of that rule. See n. 13, supra. And those polices, with one exception, see n. 10, supra, apply with full force in this case, as we have seen. Indeed, MR. JUSTICE DOUGLAS concedes as much by recognizing that the political-question rationale of Sabbatino would preclude a judgment for petitioner in excess of Cuba's claim. Why petitioner's counterclaims are any the less premised on a political question when they are stated only as offsets is not, and cannot rationally be, explained.
In Sabbatino itself the Court considered "whether Cuba's status as a plaintiff [seeking the recover the proceeds of property it had expropriated]... dictates a result at variance with the conclusions reached [requiring application of the act of state doctrine]." 376 U.S., at 437. The Court held that it did not, noting that "[t]he sensitivity in regard to foreign relations and the possibility of embarrassment of the Executive are, of course, heightened by the presence of a sovereign plaintiff. The rebuke to a recognized power would be more pointed were it a suitor in our courts." Ibid. The Court observed, too, id., at 438:
   "Certainly the distinction proposed would sanction self-help remedies, something hardly conducive to a peaceful international order. Had [the defendant] not converted [the proceeds of the property Cuba had expropriated]..., Cuba could have relied on the act of state doctrine in defense of a claim brought... for the proceeds. It would be anomalous to preclude reliance on the act of state doctrine because of [the defendant's] unilateral action, however justified such action may have been under the circumstances."
[p796] These considerations, equally applicable here, together with the general policies underlying the act of state doctrine caused the Court to conclude that Cuba's status as a plaintiff was immaterial. But the Court went on to determine whether there were any remaining litigable issues for determination on remand and held that "any counterclaim [against Cuba] based on asserted invalidity [of its expropriation] must fail." Id., at 439. Sabbatino thus answered the very point on which some of my Brethren now rely—and, furthermore, did so in the face of National City Bank, as the Court's discussion of that decision in Sabbadino, id., at 438, shows.

## Notes

* ↑ "The classic American statement of the act of state doctrine, which appears to have taken root in England as early as 1674... and began to emerge in the jurisprudence of this country in the late eighteenth and early nineteenth centuries,... is found in Underhill v. Hernandez, 168 U.S. 250 [1897], where Chief Justice Fuller said for a unanimous Court (p. 252): "'Every sovereign State is bound to respect the independence of every other sovereign State, and the courts of one country will not sit in judgment on the acts of the government of another done within its own territory. Redress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves.'" Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 416 (1964). The so-called "Bernstein" exception to this principle derives from Bernstein v. N.V. Nederlandsche-Amerikaansche, 210 F. 2d 375 (1954), where the Court of Appeals for the Second Circuit allowed the plaintiff to challenge the validity of the expropriation of his property by Nazi Germany in view of a letter from the Acting Legal Adviser of the Department of State to the effect: "'The policy of the Executive, with respect to claims asserted in the United States for the restitution of identifiable property (or compensation in lieu thereof) lost through force, coercion, or duress as a result of Nazi persecution in Germany, is to relieve American courts from any restraint upon the exercise of their jurisdiction to pass upon the validity of the acts of Nazi officials.'" Id., at 376. The "Bernstein" exception has been successfully applied only once. As the Court of Appeals noted in this case, 442 F. 2d 530, 535 (1971): "[T]he Bernstein exception has been an exceedingly narrow one. Prior to the present case, a 'Bernstein letter' has been issued only once—in the Bernstein case itself. Moreover, the case has never been followed successfully; it has been relied upon only twice, and in both of those instances, by lower courts whose decisions were subsequently reversed."
* ↑ The District Court, on cross-motions for summary judgment, found respondent to be "one and the same" as the Government of Cuba. 270 F. Supp. 1004, 1006 (1967). Respondent argues that its relationship with Cuba was a disputed issue of fact that could not properly be resolved before trial. This issue, not decided by the Court of Appeals, see 431 F. 2d 394, 397 (1970), is necessarily open for consideration on remand.
* ↑ The complaint also pleaded a second cause of action that is not material to the issues before us.
* ↑ Petitioner actually asserts two counterclaims—first, that the Cuban expropriation was invalid, giving rise to damages, and, second, that Cuba became indebted to petitioner, regardless of the validity of the expropriation decree. Moreover, petitioner invokes Cuban and United States as well as international law in support of both claims. These refinements are of no avail to petitioner. If applicable, the act of state doctrine, of course, bars consideration of both international law claims; although the Court in Sabbatino stated its holding in terms that "the Judicial Branch will not examine the validity of a taking of property within its own territory by a foreign sovereign government..." 376 U.S., at 428 (emphasis added), the holding clearly embraced judicial review not only of the taking but of the obligation to make "prompt, adequate, and effective compensation." Id., at 429. See also id., at 433. Similarly, petitioner's allegations do not state cognizable claims under Cuban law. Sabbatino affirmed that United States courts will not sit in judgment on the validity of foreign act of state under foreign law, for such an inquiry "would not only be exceedingly difficult but, if wrongly made, would be likely to be highly offensive to the state in question." Id., at 415 n. 17. The same rationale applies to petitioner's assertion that it is entitled to compensation under Cuban law. Although foreign causes of action may, of course, be entertained in appropriate circumstances in our courts, the claim in issue presents the same dangers as the claim of invalidity of the expropriation under Cuban law. In any event, as the Court indicated in Sabbatino, ibid., if Cuban law governs, the test to be applied is the success petitioner's claims would receive in Cuba itself. It cannot seriously be contended that Cuban courts would hold the nationalization of petitioner's properties invalid or Cuba liable to petitioner for meaningful compensation. Indeed, although Art. 24 of the Fundamental Law of Cuba provides for compensation for certain public takings, Cuban Law No. 851, pursuant to which petitioner's properties were nationalized, itself declares in Art. 6 that "[t]he resolutions... in the forced expropriation proceedings instituted hereunder may not be appealed, as no remedial action shall be available there against." Moreover, the promise of compensation provided under Law No. 851 may, as the Court said in Sabbatino, id., at 402, "well be deemed illusory." Finally, United States law becomes relevant only if the public- policy-of-the-forum exception to the lex loci conflict-of-laws rule is recognized—that is, if the American forum is free, because of its public policy, to deny, recognition to Cuban law otherwise applicable as the law of the situs of the property seized. But the very purpose of the act of state doctrine is to forbid application of that exception. See generally, e.g., Henkin, Act of State Today: Recollections in Tranquility, 6 Colum. J. of Transnat'l L. 175 (1967). See also Sabbatino, supra, at 438.
* ↑ In arriving at this conclusion, the court found inapplicable the Hickenlooper Amendment to the Foreign Assistance Act of 1961, 78 Stat. 1013, as amended, 22 U.S.C. §2370 (e)(2). I agree with my colleagues in leaving that determination undisturbed.
* ↑ The text of the Legal Adviser's views appears in full in 442 F. 2d, at 536-538.
* ↑ The Legal Adviser states: "Recent events, in our view, make appropriate a determination by the Department of State that the act of state doctrine need not be applied [in cases of this kind].... "The 1960's have seen a great increase in expropriations by foreign governments of property belonging to United States citizens. Many corporations whose properties are expropriated, financial institutions for example, are vulnerable to suits in our courts by foreign governments as plainiff[s], for the purpose of recovering deposits or sums owed them in the United States without taking into account the institutions' counterclaims for their assets expropriated in the foreign country." The implication is clear that the Legal Adviser believes that such corporations are entitled to offsetting redress for the value of their nationalized property. Note, 12 Harv. Int'l L.J. 557, 576-577 (1971). It is also significant that the Government in the past has acknowledged "that a Bernstein letter,' should one be issued in special circumstances where it might be appropriate, plainly does not seek to decide the case in question, but merely removes the act of state bar to judicial consideration of the foreign act." Brief for the United States as Amicus Curiae, in Banco Nacional de Cuba v. Sabbatino, No. 16, O.T. 1963, p. 38. The Government makes no such representation in this case. Note, 12 Harv. Int'l L.J., at 571 and n. 74. To the contrary, the Government now argues: "By dis- regarding [the] statement of Executive policy involving foreign investment by American firms, the court below has seriously restricted the capacity of the government to assist American investors in securing prompt, adequate and effective compensation for expropriation of American property abroad." Memorandum for the United States as Amicus Curiae 3.
* ↑ See Sabbatino, 376 U.S., at 432: "Relations with third countries which have engaged in similar expropriations would not be immune from effect."
* ↑ It bears repeating here what the Court said in a footnote to this statement, id., at 429 n. 26: "We do not, of course, mean to say that there is no international standard in this area; we conclude only that the matter is not meet for adjudication by domestic tribunals." See n. 14, infra.
* ↑ Mr. Justice Harlan also observed that "[a]nother serious consequence" of suspending the act of state bar "would be to render uncertain titles in foreign commerce, with the possible consequence of altering the flow of international trade." 376 U.S., at 433. See also id., at 437 (impact on flow of trade, though not security of title, even where sovereign is plaintiff). This consideration, of course, does not apply where, as here, the property seized is not an exportable commodity.
* ↑ Cf. Baker v. Carr, 369 U.S. 186, 211-212 (1962): "Our cases in this field [of political questions involving foreign relations] seem invariably to show a discriminating analysis of the particular question posed, in terms of the history of its management by the political branches, of its susceptibility to judicial handling in the light of its nature and posture in the specific case, and of the possible consequences of judicial action."
* ↑ A comparison of the facts in the Bernstein case, n. 1, supra, with the circumstances of this case reinforces this conclusion. As the Government itself has acknowledged, Brief for the United States as Amicus Curiae in Sabbatino, n. 7, supra, at 37-38: "The circumstances leading to the State Department's letter in the Bernstein case were of course most unusual. The governmental acts there were part of a monstrous program of crimes against humanity; the acts had been condemned by an international tribunal after a cataclysmic world war which was caused, at least in part, by acts such as those involved in the litigation, and the German State no longer existed at the time of [the] State Department's letter. Moreover, the principle of payment of reparations by the successor German government had already been imposed, at the time of the Bernstein letter,' upon the successor government, so that there was no chance that a suspension of the act of state doctrine would affect the negotiation of a reparations settlement." On these facts the result, though not the rationale, in Bernstein may be defensible. See, e.g., R. Falk, The Status of Law in International Society 407 and n. 12 (1970).
* ↑ My Brother REHNQUIST'S opinion attempts to bolster its result by drawing an analogy between the act of state doctrine and the rule of deference to the Executive in the areas of sovereign immunity and recognition of foreign powers. That rule has itself been the subject of much debate and criticism. See generally, e.g., R. Falk, The Role of Domestic Courts in the International Legal Order 139-169 (1964); Lillich, The Proper Role of Domestic Courts in the International Legal Order, 11 Va. J. Int'l L. 9, 9-27 (1970); Note, 53 Minn. L. Rev. 389 (1968). See also Sabbatino, 376 U.S., at 411 n. 12. The analogy, in any case, is not persuasive. When the Judicial Branch in the past has followed an Executive suggestion of immunity in behalf of a foreign government or accorded significant weight to the failure of the Executive to make such a suggestion, the result has been simply either to foreclose judicial consideration of the claim against that government or to allow the suit to proceed on the merits of the claim and any other defenses the government may have. See, e.g., Mexico v. Hoffman, 324 U.S. 30 (1945); Ex parte Peru, 318 U.S. 578 (1943). Similarly, when the Judicial Branch has abided by an Executive determination of foreign sovereignty, the consequence has been merely to require or deny the application of various principles governing the attributes of sovereignty. See, e.g., United States v. Belmont, 301 U.S. 324 (1937); Russian Republic v. Cibrario, 235 N.Y. 255, 139 N.E. 259 (1923). In no event has the judiciary necessarily been called upon to assess a claim under international law. The effect of following a "Bernstein letter," of course, is exactly the opposite—the Judicial Branch must reach a judgment despite the possible absence of consensus on the applicable rules, the risk of irritation to sensitive concerns of other countries, and the danger of impairment to the conduct of our foreign policy. E.g., Note, 12 Harv. Int'l L.J., at 575-577. See also Sabbatino, supra, at 438.
* ↑ This consideration, it may be noted, resolves the paradox MR. JUSTICE WHITE, dissenting in Sabbatino, saw between the Court's finding there of an absence of consensus on the international rules governing expropriations and the Court's purpose to avoid embarrassment to the Executive in the conduct of external affairs. "I fail to see," he stated, "how greater embarrassment flows from saying that the foreign act does not violate clear and widely accepted principles of international law than from saying, as the Court does, that nonexamtnation and validation are required because there are no widely accepted principles to which to subject the foreign act." 376 U.S., at 465. There is, however, no inconsistency: "The explicit holding in [Sabbatino] makes reference to the capacity of domestic courts and not to the status of the customary norms. All that Sabbatino says is that a domestic court is not an appropriate forum wherein to apply a rule of customary international law unless that rule is supported by a consensus at least wide enough to embrace the parties to the dispute. Such judicial self-restraint may not be appropriate if the forum is an international tribunal entrusted with competence by both sides, but the situation is different for a domestic court. The appearance of impartiality is as important to the formulation of authoritative law as is the actuality of impartiality. The [consequence] is that a domestic court, however manfully it struggles to achieve impartiality, will not be able to render an authoritative judgment when the adjudication requires it to decide whether the forum state or the foreign state is correct about its contentions as to the content of customary international law. The act of state. doctrine, in the absence of a firm agreement on the rules of decision, acknowledges this incapacity of domestic courts." Falk, n. 12, supra, at 415.
* ↑ See Sabbatino, 376 U.S., at 423, 427-428: "The act of state doctrine does... have 'constitutional' underpinnings." And "its continuing vitality depends on its capacity to reflect the proper distribution of functions between the judicial and political branches of the Government on matters bearing upon foreign affairs."
* ↑ For an account of how political considerations may have affected a State Department determination in a specific case, see Note, 75 Harv. L. Rev. 1607, 1610-1611 (1962).