Banco Nacional de Cuba v. Sabbatino
Citation and Court
376 U.S. 398 (1964), Supreme Court of the United States
Facts
Cuba expropriated a shipment of sugar owned by a U.S. company. Banco Nacional de Cuba, as the Cuban state bank, sued to recover the proceeds. The defendant argued that Cuba’s nationalization decree was invalid under international law. The lower courts agreed and ruled for the defendant.
Issue
Whether U.S. courts may examine and invalidate the act of a foreign sovereign (Cuba’s nationalization) taken within its own territory.
Holding
The act of state doctrine, as a matter of federal common law, bars U.S. courts from sitting in judgment on the validity of a foreign government’s official act within its own territory, even if that act violates international law.
Rule / Doctrine
The act of state doctrine is a rule of federal common law reflecting separation-of-powers and foreign relations concerns: U.S. courts will not declare invalid the official act of a recognized foreign government taken within its own territory. The doctrine does not depend on international law — it is a self-imposed judicial limitation.
Significance
Sabbatino is the foundational act of state doctrine case. It established that the doctrine is federal common law (binding on state courts), applicable even when the foreign act may violate international law, and grounded in judicial deference to the executive in foreign affairs. Congress responded with the Second Hickenlooper Amendment to limit the doctrine in expropriation cases.