Opinion ID: 393942
Heading Depth: 2
Heading Rank: 2

Heading: Cuban Electric and the Counterclaims

Text: 13 Cuban Electric was a United States corporation, organized under Florida law and controlled by United States nationals. It operated an electric utility in Cuba, and substantially all of its assets were located there. In 1958 and 1959 each of the defendants participated in a series of loans to Cuban Electric, the balances of which were due to be paid, with interest, not later than November 23, 1959. The principal amounts to which the defendants were entitled were: Manufacturers $1,100,000, Irving $750,000, and Chemical $750,000. Cuban Electric did not repay the loans on the due date or thereafter. 14 In 1960, following the deterioration of relations between Cuba and the United States, see generally Chase, supra at Part I.A., the Cuban assets of Cuban Electric, as well as those of many other American companies, were nationalized and expropriated under Resolution No. 1, dated August 6, 1960, pursuant to Law No. 851 of July 6, 1960. Resolution No. 1 stated in part as follows: WE RESOLVE: 15 First: There is hereby ordered the nationalization through compulsory expropriation and, consequently, the appropriation in favor of the Cuban State, with absolute right of ownership, of all properties and entities in the national territory and the rights and interests attaching to the operation of said properties and entities, belonging to juridical persons who are nationals of the United States of America or who operate entities in which the majority interest is in the hands of Americans, as follows: 16
17 Second: Consequently, it is hereby declared that the Cuban State is subrogated in the place and stead of the juridical persons listed in the preceding paragraph with respect to the properties, rights and interests mentioned as well as the assets and liabilities comprising the capital of the entities referred to. 18 Third: It is hereby declared that these compulsory expropriations are effected because of necessity and public utility and in the national interest as set forth in the Whereas clauses of this Resolution. 19 Defendants contend that by these provisions Cuba assumed the obligation to repay Cuban Electric's overdue loans. None of the loans was repaid. 20 Two months later, following the nationalization of the Private Banks, each defendant looked to the accounts of the Private Banks as Cuban assets against which the unpaid loans to Cuban Electric could be offset, and accordingly refused to release those accounts. Their counterclaims seek the dismissal of Banco Nacional's suit to recover the withheld moneys, on the ground that their losses resulting from the expropriation of Cuban Electric and the Cuban Government's failure to pay Cuban Electric's debts, exceed the value of the accounts. 4