376 U.S. 398 (1964), Supreme Court of the United States
Banco Nacional de Cuba v. Sabbatino is the Supreme Court's foundational exposition of the act of state doctrine in modern U.S.
Does the act of state doctrine bar U.S. courts from examining the validity, under international law, of a foreign sovereign's expropriation of property located within its own territory when that sovereign is recognized by the United States?
The act of state doctrine, a principle of federal common law, provides that the Judicial Branch will not examine the validity of a taking of property within its own territory by a foreign sovereign government recognized by the United States at the time of suit, in the absence of a treaty or other unambiguous agreement regarding controlling legal principles, even if the taking is alleged to violate international law. The doctrine is rooted in separation-of-powers and the need for a single national voice in foreign relations, not in state law or ordinary choice-of-law rules.
Yes. The act of state doctrine precludes U.S. courts from judging the validity of Cuba's expropriation of C.A.V.'s property. Accordingly, the Cuban government's taking must be treated as valid for purposes of the litigation, and Banco Nacional de Cuba may recover the proceeds. The Supreme Court reversed the Second Circuit and remanded for proceedings consistent with this rule.
Sabbatino is the modern anchor of the act of state doctrine in U.S. law. It establishes that the doctrine is federal, separation-of-powers-based common law and applies even where international law violations are alleged. The case illustrates how domestic courts calibrate their role when adjudication risks entanglement in foreign policy. The decision also spurred Congress to enact the so-called Second Hickenlooper Amendment, which in certain expropriation disputes prevents U.S. courts from invoking the act of state doctrine to avoid adjudicating the merits of international law claims concerning property (or its proceeds) located in the United States. Later cases, including First National City Bank v. Banco Nacional de Cuba and W.S. Kirkpatrick & Co. v. Environmental Tectonics, refined the doctrine's contours, but Sabbatino remains the baseline for understanding when and why courts abstain from judging the validity of foreign sovereign acts.