Alfred Dunhill of London, Inc. v. Republic of Cuba
Citation and Court
425 U.S. 682 (1976), Supreme Court of the United States
Facts
After Cuba nationalized the cigar industry, Cuban state-controlled entities sold cigars to American importers including Alfred Dunhill. The importers had already paid for cigars to the pre-nationalization owners and sought repayment of those funds. Cuban officials refused to return the money and claimed the refusal was an act of state.
Issue
Whether the act of state doctrine bars a claim based on Cuba’s repudiation of a commercial obligation incurred by Cuban state enterprises.
Holding
The act of state doctrine does not bar claims based on the commercial acts of a foreign sovereign; a plurality recognized a commercial activity exception to the doctrine.
Rule / Doctrine
The act of state doctrine applies to sovereign, governmental acts of a foreign state taken within its own territory, but a plurality of the Court held that purely commercial conduct by a foreign state is not shielded from judicial scrutiny under the doctrine.
Significance
The case is significant for recognizing (in plurality) a commercial exception to the act of state doctrine, paralleling the commercial activity exception in the FSIA. It signals that courts need not abstain from evaluating a foreign sovereign’s commercial transactions the way they must abstain from reviewing governmental acts.