Opinion ID: 393942
Heading Depth: 1
Heading Rank: 2

Heading: banco nacional as successor in interest

Text: 27 As a general matter, the act of state doctrine bars the courts from examining the validity of a taking of property by a foreign sovereign within its own territory. Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964); see Chase, supra, Part II.A. The act of state doctrine does not, however, bar inquiry by the courts into the validity of extraterritorial takings. Thus, in Republic of Iraq v. First National City Bank, supra, we stated as follows: 28 Under the traditional application of the act of state doctrine, the principle of judicial refusal of examination applies only to a taking by a foreign sovereign of property within its own territory...; when property confiscated is within the United States at the time of the attempted confiscation, our courts will give effect to acts of state only if they are consistent with the policy and law of the United States. 29 353 F.2d at 51 (citations omitted). The effect of a foreign state's attempt to expropriate property located in the United States has been found to violate United States law or policy when the prior owner of the property has not been compensated and he or his successor protests the taking or resists its judicial enforcement. See, e. g., Republic of Iraq, supra; Menendez v. Saks & Co., supra; United Bank Ltd. v. Cosmic International Inc., 542 F.2d 868 (2d Cir. 1976). 30 On the other hand, when enforcement has promised to further, rather than violate, the policy aims of the United States, our courts have given extraterritorial effect to foreign expropriations. United States v. Belmont, 301 U.S. 324, 57 S.Ct. 758, 81 L.Ed. 1134 (1937), for example, involved the nationalization in 1918 by the Soviet government of the property of a Russian corporation that had deposited money with a New York banker. In 1933, as part of a general attempt to resolve differences between itself and the United States, the Soviet government assigned to the United States all claims that it had against American nationals. Thereafter the United States sought to collect on such claims and thereby amass a fund from which American nationals having valid claims against the Soviet government could be compensated, and it sued to recover the deposit from the banker. Recognizing that the United States had no greater right to the deposit than the Soviet government could convey, the Supreme Court held it appropriate to give effect to the Soviet expropriation of the New York account, because to do so would further, rather than violate, United States policy as it had evolved. 31 In the present case, there appears to be no reason at this late time to invoke the act of state doctrine to bar the court from recognizing Banco Nacional's right to sue as successor to the Private Banks. While United States law of course does not approve the taking of private property without compensation, the former owners of the Private Banks have lodged no protest, either by bringing suit to recover their United States property, or by seeking to intervene in Banco Nacional's suits. In the twenty years during which these suits have been pending, the former owners have not asserted any conflicting claim. Thus we cannot say that the effect in this case of recognizing the Cuban nationalization of the Private Banks would violate United States policy. 32 To the contrary, we conclude that allowing Banco Nacional to sue as successor here will further the goals of the United States, because it will assist in providing funds in the United States from which American nationals who have valid claims against the government of Cuba may be compensated, at least in part, for their claims. Thus, if the defendants here have valid, justiciable claims against Cuba they may set off those claims against the amounts that Banco Nacional would otherwise be awarded as successor. Or, if such counterclaims are impermissible or unmeritorious, the amount awarded to Banco Nacional as successor will, by law, be required to be paid into a frozen account that may eventually be distributed by the United States Foreign Claims Settlement Commission to American nationals it has determined have valid claims against Cuba. 22 U.S.C. §§ 1643-43k (1976); 31 C.F.R. Part 515 (1980). See Chase, supra, Part III. Were we not to recognize Banco Nacional's right to sue in the absence of any conflicting claims, the result apparently would be to cause the deposits to escheat to the State of New York, a result that cannot be said to further the established national policy. 5 33 Accordingly, we conclude that United States policy will be furthered rather than violated by allowing Banco Nacional to sue as successor to the Private Banks, and we reverse the dismissal of its claims in that capacity.