BANCO NACIONAL DE CUBA v. SABBATINO

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Argument of Victor Rabinowitz

Chief Justice Earl Warren: Number 16, Banco Nacional De Cuba versus Peter L. F. Sabbatino.

Mr. Rabinowitz.

Mr. Victor Rabinowitz: May it please the Court.

I notice that, although the Court does supply quill pens to counsel, it does not supply inkwells as well.

This case is here on a writ of certiorari --

Justice William J. Brennan: Does that bear on this issue?

Mr. Victor Rabinowitz: No sir.

It's just a reference to the last case.

This case is here on a writ of certiorari to the Court of Appeals for the Second Circuit to review that court's affirmance of a judgment of the District Court for the Southern District of New York.

The District Court had entered an order dismissing the complaint on a motion by plaintiff for summary judgment.

We think both of the courts below were in error and that summary judgment should have been entered in favor of plaintiff against the defendant, Farr Whitlock.

The facts are somewhat complex, but I shall take the liberty of sketching them in rather quickly and only in broad outline because the details are really not necessary for a full understanding of the critical issue that confronts the Court on this record.

Some time prior to 19-- to July of 1960 and about April or May, a sugar brokerage firm in New York by the name of Farr Whitlock entered into two contracts with a wholly owned subsidiary of a Cuban corporation, Compania Azucarera Vertientes-Ca Aguey, which is referred to in this proceeding by the initials C.A.V.

Although Farr Whitlock was a sugar broker, it was buying this sugar on its own account.

Under the terms of the contract, the sugar was to be shipped to Morocco, but payment was to be made in New York upon presentation of the bill of ladings and other shipping documents accompanied by a sight draft for the purchase price of the sugar in accordance with normal commercial practice.

The price of the sugar was approximately $175,000.

The record shows that C.A.V. was incorporated in Cuba and that about 90% or in excess of 90% of its stockholders are said to be residents of the United States.

There is nothing into the -- in the record as to the nationality of those stockholders.

On July 6, the Republic of Cuba adopted a decree authorizing the nationalization of property owned by nationals of the United States or properties in which the United States nationals had an interest.

Under the terms of the decree, compensation was to be paid by the issuance of 20-year-bonds and the funds behind the bonds were to come from the proceeds of sales of sugar to the United States.

On that very same day, the President of the United States signed the Sugar Act of 1960, which sharply curtailed the purchases of sugar by the United States from Cuba, although the Act, of course, had been passed by Congress a few days previously.

One month later, on August 6, by a resolution made pursuant to the decree that I have mentioned, the property of C.A.V. and 25 other corporations were nationalized.

This was one of a long series of decrees, which are -- some of which are referred to in a footnote at page 39 of petitioner's brief, which began in May of 1959 and which, in the end, transformed Cuba from a capitalist to a socialist economy.

On the day of the decree, the sugar was being loaded on a freighter which was anchored in territorial waters of Cuba.

Actually, the loading was not completed until August 9.

The ship remained in territorial waters until August 11 and, on that day, new contracts were signed by Farr Whitlock with a Cuban governmental bank.

These contracts were identical in terms, even as to the date, with the original contract signed between Farr Whitlock and C.A.V. and we contend that this contract recognized the ownership of the Cuban government in this sugar.

A day or two later, the sugar went off to Morocco.

The bills of lading were assigned to the petitioner which is the National Bank of Cuba and they were sent to Societe General, a French bank which acted as the New York agent of the petitioner, together with a sight draft in the sum of $175,000.

While the bills of lading were in transit and, on August 16, 1960, in a proceeding commenced in the New York State Supreme Court, a receiver was appointed over the New York assets of C.A.V. pursuant to Section 977 (b) of the Civil Practice Act.

As a result of subsequent proceedings, that receivership was set aside and vacated.

That happened after the Court of Appeals decision on this case, the court-- Supreme Court in Kings County New York holding that the receivership was improper in the first place.

On August 26, Farr Whitlock and C.A.V. entered into a contract.

By the terms of which, Farr Whitlock agreed that if it could get possession of the sugar or of the proceeds, it would hold those proceeds for C.A.V., instead of turning them over to Societe General.

In return, C.A.V. agreed to hold Farr Whitlock harmless for any loss it might suffer as a result of this transaction and also agreed to pay it 10% of the proceeds so that, although Farr Whitlock has been referred to in this proceeding on a number of occasions as only as stakeholder, actually, it stands to gain some of the sum of $17,500 if it should prevail in this lawsuit.

On August 29, by means of a trick which we think equaled fraud, it certainly resembles fraud, Farr Whitlock managed to get possession of the bills of lading without actually honoring the sight draft.

Using the bills of lading, it negotiated them, sold the sugar, and received $175,000 for it.

It refused to pay that $175,000 over to Societe General and this lawsuit, which alleges a conversion of the bills of lading and the sugar that they represented, was commenced.

A day or two later, the money was turned over to the receiver and, upon determination of the receivership, the money which, together with interest in course, now amounts to something over $200,000 was turned up to a-- over to an escrow agent who now holds those funds awaiting the decision of this Court.

Justice Potter Stewart: Societe General, if I got it right, is the instrument of the Government of Cuba?

Mr. Victor Rabinowitz: No, it's a French bank.

It's a private bank which is owned by French Interest.

It has an agency in New York and it engages in normal commercial business and it was acting as an agent here, not an agency of, but a commercial agent for the Government of Cuba in the transaction of these businesses.

Justice Potter Stewart: Then, how did Banco Nacional De Cuba come into the picture?

Mr. Victor Rabinowitz: Well, Banco Nacional was the assignee--

Justice Potter Stewart: Of Societe?

Mr. Victor Rabinowitz: Of the Cuban Government or the Cuban bank which entered into the contract in the first place.

Societe Generale was merely an agent of the petitioner and the petitioner sued here.

Societe Generale was perhaps liable to Banco Nacional for negligence in handing over the bills of lading without getting the draft, but Banco Nacional chose not to sue Societe Generale, its agent, but rather sue directly for its--

Justice John M. Harlan: Is Banco an instrumentality of the Cuban Government?

Mr. Victor Rabinowitz: Yes.

Justice Potter Stewart: It is?

Mr. Victor Rabinowitz: Yes.

There's no question about that.

Justice Byron R. White: Is there a (Inaudible) obligation (Inaudible)?

Mr. Victor Rabinowitz: No, there was no negotiation--

Justice Byron R. White: A collection agent --

Mr. Victor Rabinowitz: It was purely a collection agent.

There seem to be no question of fact in this case and, accordingly, petitioner moved for summary judgment.

Farr Whitlock defended on two grounds.

First, it claimed that the federal court did not have jurisdiction because of the pendency of the New York State receivership and, second, it raised the series of issues of fact.

Neither of those grounds is raised in this Court and we assume that they have been abandoned.

The district court first considered the question of jurisdiction and decided in favor of the petitioner.

It then considered the factual questions and decided those in favor of petitioner, holding that there were no triable issues of fact.

We would have thought that, under these circumstances, summary judgment would have resulted in favor of the petitioner that the Court then went on to decide the case on a ground that had not been urged before it, that had not been argued before it, that had not been briefed before it, and that I don't think that any counsel had even thought about it because, to us at least, the law seemed so clear that there was no point in arguing the matter.

Despite a long line of cases of this Court and the federal courts known generally as the act of state cases, and I shall of course refer to them again later in my argument, it held that there was an exception to the act of state case, namely that they did not apply where the decree of a foreign government violated international law.

It then examined the decree of the Cuban Government in this case and it found that violation of international law had indeed existed in three respects.

First, that the Cuban decree was discriminatory against citizens of the United States; second, that it was retaliatory and third, that it confiscated a property without adequate compensation.

The Court of Appeals affirmed on somewhat different ground.

It held that the Act of State Doctrine was subject to another exception.

This was the exception which it, the same court, had found, in about 1947 I think, in the second Bernstein case, and that's reported in 210 F.2d 375.

I shall refer to that again later, although I think that the major burden of the argument, at least the major burden of the brief on this subject, will probably be carried by the Solicitor General.

In any event, the court found that the Bernstein exception was present here, relying on fragments of correspondents which were submitted to it, not by us of course and not by Farr Whitlock, but by an amicus which had sought and received leave to file an amicus brief.

And, these fragments of correspondents were handed up to the court and the court relied on these to hold that the Bernstein exception applied in this case.

It then went on to decide that the Cuban decree had violated international law and, while it didn't find the same three violations of international law that the district court had find, it sort of grouped all of them together and, to use its language, it held that there was a violation of international law for a company to fail to pay adequate compensation for the property it seizes from a particular class of aliens when the purpose for the seizure of the property is to retaliate against the homeland of those aliens and when the result of such seizure is to discriminate against them only.

In another words, it took the three grounds that the Court of Appeals said had found and locked them all together to make one single ground.

In our opinion, the basic question before the Court here is the Act of State Doctrine.

Both our brief and, to an even greater extent, the brief of the Solicitor General enters into a rather extensive consideration of the history of the Act of State Doctrine.

Both of us say that this doctrine really dates from 1674 in an English case.

But, in modern times, it may be said to date from Underhill against Hernandez, although there's some language in the Schooner Exchange which does seem to foreshadow this same doctrine.

Now, there are many, many formulations of the Act of State Doctrine in the decision for this Court.

In Oetjen against Central Leather Company, for example, this Court said the conduct of one independent government cannot be successfully questioned in the course of another.

Mr. Justice Holmes earlier, in the American Banana Company case, had said “the general and almost universal rule is that the character of an act as lawful or unlawful must be determined wholly by the law of the country in which the act is done.

”There is similar language in Shapleigh against Mier, in the Belmont case, in the Pink case, all of them in this Court and, most recently, in the case of Pons against the Republic of Cuba which was decided by the Court of Appeals for the District of Columbia and certiorari was denied by this Court, I believe, in 1961 and it presents a Cuba situation.

The others, of course, represented either Latin American nationalizations or Russian nationalizations.

The New York courts hold to the same effect, and this is of some significance because there are some suggestion both in the Court of Appeals and in the decisions of the -- in the briefs of -- the many briefs that have been submitted in opposition to the petitioner, that perhaps, under the Erie against Tompkins case, the New York law applies, but it really doesn't matter because the New York cases are in complete agreement.

Salimoff against Standard Oil, in 1933, is perhaps typical.

It says “the courts of one independent government will not sit in judgment upon the validity of the acts of another done within its own territory, even when such government seizes and sells the property of an American citizen within its boundaries and, to the same effect, the Dougherty case and Holzer against Deutsche Reichsbahn, the last one being a case involving actions by the Nazi Government of Germany.

Justice Arthur J. Goldberg: There's a bit of (Inaudible) it appears the law of (Inaudible).

At some point, the objection is (Inaudible) and they appear to have reached to define, regardless of how this case goes, (Inaudible) of our Act as it appear here.

This is on the (Inaudible) giving him advice when you're treating it as an act of state.

Mr. Victor Rabinowitz: I'll be glad to come to that, Your Honor.

I hope I remember it, and if I don't--

Justice Arthur J. Goldberg: I hope (Inaudible)

Mr. Victor Rabinowitz: Mr. Boudin will remind me if I forget.

I certainly shall.

We, and the Solicitor General, say that this doctrine, the Act of States Doctrine is generally accepted throughout the world by the courts of most other countries.

There's no doubt that it's accepted it in England in Luther against Sagor.

C.A.V. disagrees and so do some of the other amicus briefs.

And, frankly, I see no particular point in spending the time of this Court in discussing decisions in Bremen, Turin, Singapore, Nuremberg, Venice, Aden, and many other cases throu-- many other similar points throughout the world.

All of them are discussed in the brief and to be honest, I really don't see why they make very much difference because the law in the United States and England is identical and I have just stated it, and I don't know why it should make very much difference what the Court of Venice thinks about this question.

Justice Potter Stewart: Now, in the ultimate effect, it doesn't really make much difference what the courts of England think about it.

This is a--

Mr. Victor Rabinowitz: Exactly.

Justice Potter Stewart: Question of what --

Mr. Victor Rabinowitz: Exactly.

Justice Potter Stewart: The law is --

Mr. Victor Rabinowitz: Except --

Justice Potter Stewart: In the United States.

Mr. Victor Rabinowitz: Except that we are in what is sometimes referred to as Anglo-American --

Justice Potter Stewart: Well, I understand that.

Mr. Victor Rabinowitz: System of law and I just want to get the Anglo in.

Justice Potter Stewart: It's the United States court --

Mr. Victor Rabinowitz: I think --

Justice Potter Stewart: The United States court --

Mr. Victor Rabinowitz: That's so, Your Honor.

The --

Justice Potter Stewart: Now -- well, I've -- since I've interrupted you, may I ask you whether the -- or not this doctrine applies in case the foreign government has not been recognized diplomatically by our nation?

Mr. Victor Rabinowitz: Well, there is some suggestion that the doctrine does apply even where the foreign government has not been recognized but that, of course, is not before us because the foreign government has been recognized in this case.

There are no diplomatic relations, but the foreign government has been recognized and there is material, I think it's in this record, but certainly in Ricoeur and many other cases in the United States in which the Secretary of State has written letters to various courts throughout the country saying “the Cuba -- the Cuban Government has been recognized by the United States.”

Justice Potter Stewart: Throughout the --

Mr. Victor Rabinowitz: And still is.

Justice Potter Stewart: Series of transactions involved.

Mr. Victor Rabinowitz: Yes, throughout the period of transactions --

Justice Potter Stewart: And now.

Mr. Victor Rabinowitz: And including today.

The C.A.V. brief says that the Court of Appeals' decision is supported by commentators and decisions of courts in other countries and that may be true, but I don't consider it to be decisive.

Not only is there no legal authority to support the respondent here, but I submit that there are no policy considerations either.

Now, I'm not going to argue that extensively because I think that the brief of the Solicitor General handles this matter rather fully and is -- I'm sure, plans to consider these policy considerations.

I would like just to mention two points, however, which are relevant.

C.A.V. and many of the amicus briefs make quite a point of an argument which we don't make.

They make quite a point in answering an argument that we don't make and that, I believe, the Solicitor General makes either and they say that this Court has the power to decide cases even though they affect foreign relations and it quotes cases like the Familiar Ground against Canal and other similar cases.

Now, I certainly would not argue that this Court doesn't have any power to decide cases which involve foreign relations.

The Court has done so many times, and I would not argue for any such broad proposition.

For example, there is a citation -- there is a reference to Mr. Justice Brennan's decision in Baker against Carr in which the opinion makes some reference to the language in the Ricoeur case, I believe, and says that this language is too broad that the court frequently does handle problems involving foreign relations.

Now, I'm not arguing that question.

I don't think it has anything to do with this case.

All we are saying, so far as this case in concerned, that our court should recognize the validity of the Acts of other states disposing of title to property within their territorial jurisdiction.

That's all I have to say in this case and that's all that I am asking the Court to rule on.

If we have other problems in other cases, we will consider them in due course.

To hold otherwise is to challenge or to question the sovereignty of other nations, as Mr. Justice Holmes said “what is sovereignty, but the right to make decisions as to property within your own territory.”

Justice Arthur J. Goldberg: Do you decide to argue that as it leaves international law if the Court holds that?

Mr. Victor Rabinowitz: I think it's a rule of international law, Mr. Justice Goldberg, but whether it is or not.

I think it's a rule of this Court and I'm willing to rely on this Court.

I think that most courts hold that way.

You see, the difficulty with the whole feel of international law, and we'll come to this a little later, is that there is a general tendency on the part of our courts, and it's natural enough, under the circumstances, to regard international law as being something that the courts of the United States and Western Europe hold.

Now, the fact is that most of the people in the world don't live in United States or Western Europe.

They live in Africa and they live in Asia and they live in Latin America and we do not have from those courts a body of opinion of judicial decisions which enable us to tell at this time what Indonesia or Pakistan or India or China think about these issues.

Most of the people in the world live in those countries, not in the United States and Great Britain and Germany and so the whole question of international law on issues like this is really a matter which is of very, very great value.

So, I can't say “the court say international law is the practice of most civilized nations.

”I don't know and I don't believe that anybody knows what international law is in this rapidly expanding world of today with so many new nations being created almost everyday.

So, it's a pretty hard thing to tell.

Justice Arthur J. Goldberg: (Inaudible) I hope it's in the record that you're taking (Inaudible) and the Court ask you not to stay and (Inaudible)

Mr. Victor Rabinowitz: I have never considered this to be a rule of abstention, Your Honor.

I have always considered this to be a rule of positive law.

Justice Arthur J. Goldberg: And, therefore, a rule of positive law and call it the National Law of Parliament.

Mr. Victor Rabinowitz: It's our law.

Justice Arthur J. Goldberg: Would you, therefore, argue the law using your rule?

Do you have to take the rule?

In our point, (Inaudible) is the nationalization of property (Inaudible) consider your example (Inaudible)

Mr. Victor Rabinowitz: I would say that with one qualification.

I am now talking about nationalization of property within the territorial limits of the nationalizing country.

Now, there are other cases where property in New York is nationalized, and there are other Cuban cases raising tat issue, but we haven't reached those yet.

We may someday, but I am not -- I am not extending myself to that question at the moment because this property was in Cuba.

Justice William J. Brennan: Well, may I ask Mr. Rabinowitz.

You're not arguing either, are you that this is the kind of subject matter which the Constitution commits to the Executive and, in that sense, is nonjusticiable?

In other words, you're not arguing that this is a matter of lack of power in the judiciary.

Mr. Victor Rabinowitz: I should think not, Your Honor.

I don't know what the Solicitor General says about that, but I don't think I am arguing that this is not justiciable in that sense.

I think it's not justiciable for other reasons, but not in that sense.

Justice Byron R. White: Then you must -- you would probably also argue the Executive then has no business questioning the act of a foreign sovereignty.

Mr. Victor Rabinowitz: Whether the Executive may do it is a diplomatic matter. The Executive frequently questions the validity of acts of foreign countries.

This is the --

Justice Byron R. White: We may need to break international law.

Mr. Victor Rabinowitz: This is -- well, I don't know whether it's a question of breaking international law. The Executive frequently --

Justice Byron R. White: Well, they recognized them.

Mr. Victor Rabinowitz: Signs a note saying that this is a violation of international law.

This is all on the give and take of diplomacy and speeches are made and arguments are made and, in diplomatic negotiations.

I think the Executive is entitled to a freehand in this and I certainly would not limit the or -- seek to limit the Executive, even if I could, in any question as to what kind of position the Executive is going to take in the give and take of the politics of the modern world.

I think this is for the Executive to determine and I think that the Executive has a freehand, but I don't believe that it has any role in determining what this Court will decide.

The second point I would like to make in connection with this problem of the policy behind the Act of State Doctrine is an illustration that I would like to present to Your Honors which is not a hypothetical illustration, but is an actual one and which I think is an excellent illustration of why the Court ought to stay out of this area and why the Act of State Doctrine is a sound one and it arose under these circumstances.

On July 24, 1961, an Eastern Airline plane was hijacked by an armed passenger who took the plane from Miami to Havana together with all of the passengers.

The passengers came back the next day but, on August 16th, the plane was returned by the Cuban Government after a great deal of diplomatic negotiation between the Swiss and Czech as these things are handled now.

On the very next day, August 17th, a Cuban freighter was hijacked and was brought into Norfolk harbor.

This presented a political situation of, I think, considerable importance and it was made even more critical by the fact that, on board that freighter, there was a cargo of sugar and it was owned by United Fruit Company or at least United Fruit Company claimed to own it.

It was a cargo of sugar that had been nationalized by the very same decree that we are here considering, and United Fruit came in and said “we don't care about the freighter, but the sugar belongs to us.

” Now, the case of United Fruit was just as strong and just as weak as the case of C.A.V. in this re -- in this circumstance. Every single word of the C.A. brief -- C.A.V. brief, between page 12 and page 58, could have been written by United Fruit merely with a substitution of the name United Fruit for C.A.V.

Chief Justice Earl Warren: We'll recess now.

Mr. Victor Rabinowitz: Thank you.

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Argument of Victor Rabinowitz

Chief Justice Earl Warren: Mr. Rabinowitz, you may continue your argument.

Justice William J. Brennan: (Inaudible) where is this money now?

Mr. Victor Rabinowitz: The money is held by an escrowee, I believe, it's Lehman Brothers.

Justice William J. Brennan: By an escrow?

Mr. Victor Rabinowitz: By an escrowee, under an escrow agreement --

Justice William J. Brennan: Among?

Mr. Victor Rabinowitz: Well, among C.A.V., Farr, Whitlock, and ourselves.

Justice William J. Brennan: I see.

Thank you.

Justice Hugo L. Black: Subject to what?

Mr. Victor Rabinowitz: Subject to the decision of this Court.

Justice Hugo L. Black: Suppose we just dismiss the decision, if the Court says “dismissed.”

Mr. Victor Rabinowitz: Well, I don't have the escrow agreement in front of me and I'm not sure about what would happen in that case, except I'm pretty sure Lehman Brothers wouldn't keep it.

I believe the escrow agreement provides that, in the event of the final order in our favor, the money is to be paid over to us.

Under what circumstances to be paid over to Farr, Whitlock, I'm not sure.

Justice Tom C. Clark: What has been suggested is the Court presents -- the Court should stick its hands off, I think you said.

Perhaps the better thing to do is to vacate all of the orders below and direct it to simply dismiss.

Mr. Victor Rabinowitz: I never suggested, Your Honor, that the --

Justice Tom C. Clark: I know you didn't, but I think, one of the reasons --

Mr. Victor Rabinowitz: Oh, some of the other people suggested that, yes.

Justice Tom C. Clark: Or you used the phrase “the Courts should keep their hands off,” I believe you said.

Mr. Victor Rabinowitz: Well, if I said it, what -- I didn't mean it in the way Your Honor does.

What I meant was that the Courts should recognize the validity of the decrees of a foreign government and should keep hands off in the sense that they should not inquire into the validity of the decree.

Justice William J. Brennan: Which is to say, to accept the plaintiff's title and decide on the issue of conversion.

Mr. Victor Rabinowitz: Pardon me.

I didn't hear the beginning of your --

Justice William J. Brennan: To accept --

Mr. Victor Rabinowitz: Yes.

Justice William J. Brennan: -- the plaintiff's title --

Mr. Victor Rabinowitz: Title.

Justice William J. Brennan: Which then automatically means, I expect, that the plaintiff wins on the issue of conversion.

Mr. Victor Rabinowitz: I should think so.

Justice William J. Brennan: Yes.

Mr. Victor Rabinowitz: I would so argue.

Justice William J. Brennan: Now, what Justice Clark has been suggesting is if we can't reach the defense, why shouldn't the Court throw the case out?

Mr. Victor Rabinowitz: Well, because the Courts haven't thrown the whole case out in similar situations in United States against Pink, in United States against Belmont, in the Court of Appeals in the Pons case.

The Court proceeded, made no distinction between whether the expropriating government for the nationalizing government was a plaintiff for the defendant, and I think that the brief of the United States handles this question quite well, that this is purely a matter of accident in how the case happens to come before the Court.

It really had nothing at all to do with the merits of the situation.

Justice William J. Brennan: So, I suppose it depends on the theory.

If as you -- I understand you to suggest the Act of state doctrine is a rule of positive law, then I expect that you'd be right.

We -- the plaintiff would be entitled to a judgment.

But if it's merely a rule of abstention, it might be more American a suggestion that if we can't -- we're going to abstain from deciding the defense, then we ought to also abstain from deciding the claim.

Mr. Victor Rabinowitz: Well, I don't believe, Your Honor, that there is any authority, aside from the briefs that had been submitted here, for the proposition that it is a rule of abstention in the sense that the Court will abstain from considering the whole case.

Justice Byron R. White: But if the judge made rule in any of event?

Mr. Victor Rabinowitz: If the judge made rule in any event, but it's supported by a long line of authority.

I was discussing the Bahia de Nipe case, that being the name of the freighter that was brought into the Court in Norfolk and, as I said, the arguments there made by United Fruit were identical with the arguments that were made here by C.A.V.

Now, the State Department moved in that case with the greatest rapidity and, in the argument before the Court of Appeals -- I don't know what happened before the District Court because I wasn't there.

But, in the argument before the Court of Appeals, the United States Attorney pointed out the very great importance in political term that the United States could hardly refuse to do what Cuba had done the day before in returning property which had been hijacked, and it urged great speed upon the Court and the Court did, in fact, act with great speed.

Altogether, three weeks, I think, elapsed between the dis -- between the day that the ship came into the harbor and the denial of the State, pending a writ of certiorari by the Chief Justice here.

And, United Fruit argued, relying on the Sabbatino case, this case, that the property, the sugar, belonged to it.

And, the Government argued, as it does here, that the Act of state doctrine meant that the property belonged to the Cuban Government and the Chief Judge denied a stay, citing as authority, therefore, the Underhill and, I think, Ricaud cases.

C.A.V. apparently agrees with that decision and it says in a footnote that the decision was “compelled by urgent considerations.”

I think that's pretty important.

There's a question as to who is to decide what the urge and considerations are.

Are they the litigants to a lawsuit?

Are they the Court or is it State Department?

Who knows what the urge and considerations are in this case?

Who is it that decides what is urgent and what is not urgent?

Are we to read the New York Times and, on the basis of that, decide that initial issue is an important political issue and that the Courts ought to decide one way or the other or are the urgent considerations more properly within the cognizance and the sole -- I suggest in this situation, sole cognizance of the executive department.

I submit that this is not the kind of an issue that a court ought to get into.

Not because it, in broad general terms, affects foreign affairs, but because, in a much more narrow sense, it affects the problem of the sovereignty of other nations and, in this case, it affects the rights, as I shall come to in a few minutes in discussing the problem of the freeze, if I get the time, the very mo -- very important question of the rights of other American property holders and the entire problem of settlement with foreign countries for a na -- with respect to the problem of compensation for nationalized property.

And, this isn't the first time this problem has arisen of course.

It's arisen dozens of times before.

Now, the Court below, the Court of Appeals, relied on the Bernstein exception to the Act of state doctrine and I'm not going to discuss it, except to say that we don't believe there is any such thing as a Bernstein exception and that, even if there were, the respondent doesn't come into it and I'll leave that to the Solicitor General.

Justice William J. Brennan: Well, I do take it though, you would say, because you deny the existence of an exception, that if the doctrine is one of a positive rule of law then it's utterly immaterial whether the Executive tells us that it's like or not like.

Mr. Victor Rabinowitz: Exactly, that's why I don't think there is any exception.

Justice Byron R. White: But on what do you base this positive rule of law, is it based on the constitution?

Mr. Victor Rabinowitz: No, I don't think this is a constitutional question.

I base it on this long line of cases which I have cited, which speak of this in terms of a positive rule of law, namely, that the Courts of United States have no authority or should not test upon the validity of the acts of a foreign government.

And, I don't believe the single exception of the Bernstein case, which was never reviewed by this Court.

I don't believe any of those cases talk in terms of judicial abstention.

They just say “this is not a subject for us to decide,” and I think that it will become clear when we examine the international law problems that are raised here as to why it's not a subject that a court should decide.

Justice Tom C. Clark: If we don't have any authority, why shouldn't we make the decision?

Justice Hugo L. Black: Well, you said --

Mr. Victor Rabinowitz: Your Honor has authority to decide the case.

Justice Hugo L. Black: You just said a moment ago that we don't have it.

Mr. Victor Rabinowitz: I said Your Honor has no auth -- what I meant, whatever I may have said, that --

Justice Hugo L. Black: If we don't have jurisdiction, while certainly --

Mr. Victor Rabinowitz: That the Court --

Justice Hugo L. Black: (Voice Overlap)

Mr. Victor Rabinowitz: -- the Court has no authority to look into the validity of the acts of a foreign government done with respect to property within its territory, and that's all that I'm arguing in this case.

I'm not arguing anything further, that you might --

Justice Hugo L. Black: Your -- your argument, as I understand it, is that if Cuba, under Cuban law, this property went to a certain place.

Mr. Victor Rabinowitz: Yes, sir.

Justice Hugo L. Black: We've got to de -- follow that as the law governing that ownership of that property.

Mr. Victor Rabinowitz: That's right.

Justice Hugo L. Black: But that we still have a duty, under the law, to decide the lawsuit on that premise.

Mr. Victor Rabinowitz: Yes, sir, on that count.

And, as a matter of fact, the United States, before the Court of international justice and elsewhere, has claimed the same thing for itself.

It has claimed, as it did in the General Aniline case, that its disposition of stock of the General Aniline Company, that stock being located in the United States, was exclusively a matter of domestic jurisdiction and that the Department of Court of International Justice had no right to look into the question as to whether the United States decree, seizing property of General Aniline Corporation, was proper or not, whether it belonged to Switzerland or whether it belonged to Swiss nationals or it belonged to German nationals, that -- and the United States so argued and the matter is cited in my brief.

So, we have also taken advantage of the Act of state doctrine when it suited our purpose.

Justice William J. Brennan: I know -- I know it's not really relevant here but, just out of curiosity, Mr. Rabinowitz, the United States has seized a lot of property of Cubans in the United States, hasn't it?

Mr. Victor Rabinowitz: Well, it has the freeze regulation that has the effect of a seizure.

Justice William J. Brennan: I just wonder, do the Cuban courts inquire into the validity of that seizure?

Mr. Victor Rabinowitz: I don't know.

They haven't, as far as I know, but whether they would claim the right to or not, I don't know.

Of course, there isn't really a seizure, and I'll get to it later if I can, it's a sort of conditional seizure because the seizure is subject to administrative license and it may be released by in -- either immediately or in due course.

I assume the Treasury Department will have to decide that for extensions.

Assuming, however, that the act of state doesn't mean what I think it means and assuming that there is a Bernstein exception so that we do get to the question on which the Courts below decided the case, we now get to the question of whether the decree of the Government of Cuba was in fact a violation of international law.

Now, everybody agrees that the -- there is no issue of international law unless C.A.V. is to be treated as an American national because, otherwise, it's just a controversy between Cuba and a Cuban national and there's no international law involved in the situation.

C.A.V. contends that it's to be treated as an American national and it relies on this from the fact that the -- there's something in the record to the effect that 90% or over 90% of the shareholders of C.A.V. are residents of the United States.

Now, in this day of extensive migration from Cuba to the United States, I don't know what that means in terms of nationals of the United States.

Justice Arthur J. Goldberg: (Inaudible) disagree to either the fact that he'd keep this property he has (Inaudible).

Mr. Victor Rabinowitz: The law said property owned by nationals or in which national -- nationals of the United States or in which nationals of the United States have an interest.

Now, how big an interest, I really don't know, but I don't think that really makes any difference.

The fact is that C.A.V. was incorporated in Cuba and the law, as far as I can tell, pretty much without exception, says that a corpo -- the nationality of a corporation is the nationality of its incor -- of the State of its incorporation.

And, the Pedro case is perhaps the leading authority on it in which the Court pointed out that, after all, if a ship owner decides that he wants the advantages of the Spanish flag by registering his ship under the Spanish flag and by incorporating in Spain, he cannot later claim the protection of some other flag.

I believe, in this case, it was the British flag.

C.A.V. chose to incorporate in Cuba, presumably it got tax advantages and other legal advantages from its incorporation in Cuba and, now, at this moment, to come in and claim the protection of the American flag, it seems to me, is somewhat belated.

Justice Byron R. White: Mr. Rabinowitz, did the -- were these issues raised and litigated below?

Mr. Victor Rabinowitz: Of course not because no one thought of this whole problem below, as I've said.

No one ever raised this issue at all in the Court -- in the District Court because the whole problem, no one discussed --

Justice Byron R. White: Yes, but it was raised --

Mr. Victor Rabinowitz: The act of state --

Justice Byron R. White: But it was raised in the Court of Appeals.

Mr. Victor Rabinowitz: Yes, it was raised in the Court of Appeals.

Justice Byron R. White: And you made this argument to the Court?

Mr. Victor Rabinowitz: Exactly.

Justice Byron R. White: And what was that court's -- what was that court's disposition?

Mr. Victor Rabinowitz: The Court merely said, inaccurately, that 90% of the -- of the stockholders of C.A.V. are American nationals.

Now, they equated the word “nationals” and “residents” which, of course, are not equal at all.

But, the record doesn't say anything about the nationality of the stockholders.

the Court of Appeals decision did say that they were nationals.

Justice Arthur J. Goldberg: Suppose you had this case an order to freeze and freezed itself in this Court in order to come to C.A.V. and, when it freezed itself, you had, in effect, a (Inaudible) company is owned by American nationals or if they have a dominating interest, as they did here.

(Inaudible) -- it's either that (Inaudible) he can't say and Cuba, itself, has no freeze involved under that statute of law, granting this is American (Inaudible) are you arguing that they involve, just regarding there (Inaudible)

Mr. Victor Rabinowitz: Is the --

Justice Arthur J. Goldberg: As it purports to nationalize (Inaudible) what they're claiming for is protection in leaving their own system.

Mr. Victor Rabinowitz: Well --

Justice Arthur J. Goldberg: (Inaudible)

Mr. Victor Rabinowitz: Well, I hadn't heard it suggested before the -- this Court or the Courts of the United States were to be their issue -- their view of legal issues is to be determined by what the Cuban law says.

It's true that the Cuban law did refer to the properties or enterprises owned by physical and corporate persons who are nationals of the United States or the enterprises in which such physical and corporate persons have an interest.

Justice Arthur J. Goldberg: There are limitations to the interest here.

Mr. Victor Rabinowitz: Well, 68 of what, Your Honor?

Justice Arthur J. Goldberg: (Inaudible)

Mr. Victor Rabinowitz: There is one -- the law contains this formulation in three places, I think, and, once, it refers to predominant and, the other cases, it refers to just an interest.

Justice Arthur J. Goldberg: Nevertheless, your argument (Inaudible) Cuban national accepted it.

Mr. Victor Rabinowitz: Yes, yes.

I think that's true.

But, I must disagree with Your Honor because it seems to me that this raises a series of problems that are really very difficult if we are to determine the nationality of a -- of a corporation incorporated in Cuba by what the nationality of its shareholders even though Cuba may choose to do so.

I don't believe that our courts have ever done so, and it seems to me that there are extensive problems which are raised in my brief which are covered -- which make this a problem which would be extremely awkward to administer in the Courtroom.

For example, it's suggested that the Court will have to determine what percentage of the corporation was owned by Cubans and what percentage by American citizens, and I don't even know how the Court will go about that.

Let me turn, however, to the question of whether, assuming that it was an American corporation, whether there has been any violation of international law here, and this is the last, assuming everything else is against me.

I submit that there is no violation of international law which here been shown.

And, I would like just to point out that the world of today is not the world of 50 years ago and that the most striking feature of the world today, speaking in international terms, is a revolutionary search which has created scores of new countries and has brought about sweeping changes in the economic systems of many old ones.

No longer can we look to the law of the United States in Western Europe and, on the basis of that research, discover what is international law.

If international law is the practice of civilized nations, and so the Courts so text write it at least and I guess the Courts have also held the decision by Chief Judge Marshall in the Antelope, I think is a very good example, we have to look not only to our law but to the law of Eastern Europe, the law of Africa, the law of Asia, the law of Latin America, to Ceylon, to Indonesia, to Egypt, to Cuba, to China, to name only a few.

And, we can't just look at American presidents, and German presidents, and French presidents.

I submit that there is nothing to show that international law, namely the practice of civilized nations, makes what Cuba did here a violation of any law.

On the contrary, it seems to me that a very large proportion of the nations of the world, perhaps representing a substantial majority of the population of the world, have done exactly what Cuba has done here.

It certainly has been done in Indonesia.

It has been done in China.

It has been done in all of Eastern Europe.

And, it has been done in many parts of Latin America, in Ceylon, and many other places.

Justice Potter Stewart: Is it implicit in what you just said, Mr. Rabinowitz, that, 50 years ago, this would have been a violation of international law?

Mr. Victor Rabinowitz: It might very well be.

I don't know, Your Honor.

I'm not certain.

I think that nationalizations of property go back to the nationalization of the properties of the Church of Rome by Henry VIII and --

Justice John M. Harlan: The eighth --

Mr. Victor Rabinowitz: In 15 -- I don't know when it was but, certainly, no compensation was ever made for that nationalization.

So, I'm not sure about what the situation would have been 50 years or 500 years ago.

But, today, it may be hard for us to take, but private property doesn't quite hold the status in other countries in other parts of the world that it does here.

An international law cited by the respondent and C.A.V. and most commentators are almost all from the older nations of the world.

Justice Arthur J. Goldberg: Did you regard it to say that the national intention is exactly what the conclusion was?

Mr. Victor Rabinowitz: Well, of course, Your Honor, that's a hard case and it's a hard case that -- one of those hard cases that make bad law and I think that I would have come to the same conclusion as the Court of Appeals did in the Bernstein -- first Bernstein case and as the Court of Appeals of the -- United States Court of Appeals and as the Court of Appeals of the State of New York did in the Holzer case, both of which are cited in my brief, and I would have done it with a great deal of regret and I suppose it would've been one of those times when I would have regretted being a judge, had I been one at the time, but I think that that's what the law did.

And, may I call your attention to a case that I cited before, namely, the decision of Judge Marshall in the Antelope in which he was confronted with the problem of whether slave trade was a violation of international law.

And, after excoriating slave trade and pointing to all of the terrible miseries that result into slave trade which was illegal in the United States, he said, “How can we call this a violation of international law when two of the greatest countries in the world, Spain and Portugal, still find it legal?

It's a terrible thing.

It's immoral.

It's a very, very despicable thing but it is not a violation of international law."

Justice Arthur J. Goldberg: (Inaudible)

Mr. Victor Rabinowitz: I said --

Justice Arthur J. Goldberg: (Inaudible)

Mr. Victor Rabinowitz: No, I said the law of civilized nations, and I don't think that the question of whether a nation is civilized is a justiciable question and I certainly think that, for the United States to hold that Ceylon, for example, which has just appropriated large amounts of American property, or Indonesia which has just -- which has recently appropriated all of the Dutch tobacco plantations, I don't believe that, in political terms, for this Court to hold that those countries are not civilized would be helpful.

Now, we have here an Act which is trying to be statutory, retaliatory, and no compensation.

Now, I would like to save some time for rebuttal and I really don't have time to consider all of these things.

They're fully discussed in the brief.

I might say that, so far as the discrimination is concerned, this is was one of a series of decrees which nationalized United States property, Cuban property, English property, Canadian property, Taiwan property, and lots of other property that was located in Cuba and, while this particular decree was directed to a particular group of companies, other decrees were related to other ones and I don't think that there was any difference of treatment.

All of them were rela -- were expropriated in exactly the same way.

Also, there's been no determination anywhere, no facts have been taken to determine whether this was a discrimination and what the -- whether the discrimination was a proper one, that is, equal treatment is not always the same as discrimination because, sometimes, equal treatment is not appropriate where the parties are unequal.

The Government has al -- or the respondent has also claimed that this was retaliatory.

The Court of Appeals said that, well, this was a retaliation for the Sugar Act of 1960 and, whether the Sugar Act was fair or unfair, nevertheless, Cuba had no right to retaliate.

Well, whether it's fair or unfair, in the Court of Appeals' own opinion, is a rather important thing and I don't think we can brush off the standard of fairness just because it's a matter that it is applied to the law of the United States.

If the standard of fairness is to be applied and that's a reason for a court's decision, then it should be applied to all of it and I don't think that the issue of fairness can be applied only to the Cuban decrees and not to American law.

And, finally, I would like to get very briefly to the question of compensation.

the Court of Appeals says there is no international law on the subject of compensation.

The respondent and C.A.V. don't accept that at all.

I suspect that's the issue that they are mostly interested in.

If they could get compensation, I don't think they'd be worried too much about the discriminatory or retaliatory aspect of this.

There are extensive citations in my brief.

I think most of the extensive nationalizations of the world in the past, well, since 1917 and perhaps before that, were without compensation.

Now, it's true that in many cases, compensation was worked out ultimately, but it was worked out by diplomatic methods and, as the Solicitor General suggests here, perhaps, someday, compensation would be worked out by diplomatic methods now.

And, now, I'd want to get to Your Honor's question on the freeze because I think it ties in with it.

In the first place, the freeze is not an absolute freeze.

It's a freeze subject to license.

If we worked to secure a judgment in this case, we would applied to the Treasury Department and we would seek to get a license.

And, the Treasury Department would decide in determining, in the light of its then existing policy, whatever it happened to be, whether it would give us a license on that or not, and that would be handled in the first instance.

Justice Arthur J. Goldberg: If I read the letters of the statute in the record before me, does it indicate that the policy (Inaudible)

Mr. Victor Rabinowitz: That was the policy the day was -- the day the letter was written.

I don't know whether it will be the policy the day that this Court hands down a judgment in our favor or whether it will be the policy 2 years from now, 5 years from now, 10 years from now, or whenever an application for a license is made, because it is a policy question the Treasury Department will have to determine policy on the basis of the facts as they exist at that time.

The second answer is that our previous experience has been, in the case of blocked funds, that when blocked funds are accumulated, and this would be the beginning or at least part of the beginning of an accumulation, it has been the experience in the past that those blocked funds have frequently been used in the future, 5 years, 10 years, in the case of the Soviet Union, 25 years later, to work out some sort of a diplomatic settlement, whereby, all American property owners receive that -- receive some sort of a share of the funds -- the blocked funds that had accumulated.

Perhaps that will happen in this case if we prevail but, if we don't prevail, it means that those funds presumably will belong to Farr, Whitlock and that's the end of it.

Now, there are many, many aspects of the freeze which could be discussed and which, if it ever becomes appropriate, will be discussed but I don't think that the freeze makes the matter moot.

It may raise some question as to how soon, if ever, we will realize the fruits of a victory we may win here and it may take a long time and it may be hard for us to get the fruits of those victory -- of that victory.

But, the alternative is to hand the money over to Farr, Whitlock and, that, we believe, is not justified on the record here and it is not going to be affected by the freeze one way or the other.

Those frozen funds may someday come in handy and, as I say, in connection with the diplomatic settlement or some other kind of settlement.

I really don't know.

Thank you.

Chief Justice Earl Warren: Deputy Attorney General Katzenbach.

Argument of Nicholas DeB. Katzenbach

Mr. Nicholas DeB. Katzenbach: Chief Justice and may it please the Court.

The United States appears today as amicus in this litigation to argue only the act of state question.

That question is phrased on page 2 of the Government's brief, “whether a court of the United States is free to examine the validity of the decree of a recognized foreign government affecting title to property within its territorial jurisdiction.

Now, as Mr. Justice Goldberg has raised the question, it was answered by Mr. Rabinowitz, I'd like, at the outset, to say that I agree that this case is not a moot case for the reasons essentially expressed by Mr. Rabinowitz that the Treasury Department regulations do prevent the transfer, and so forth, of any assets except under a license and that those assets are presently frozen.

However, a judgment is not prohibited and there is a long line of decisions in this Court that says that a -- where a judgment can be rendered to clarify title to something or the rights of someone, even if those proceeds are frozen at that point, that that case is not a moot case.

I would also like to point out that the fact of that regulation has some relevance to matters, which I'll make later in my argument, because it demonstrates, to a degree, a -- an efficient way of dealing with problems of this kind.

That is to say, again Mr. Rabinowitz had paid some note of it, often, these claims for property which is confiscated by a foreign government can be paid from such frozen assets and, in any event, the fact of the frozen assets is sometimes an inducement to a foreign government to discuss the problem of compensation.

I think there's no need for me to go over the essential facts again, but I would like to give emphasis to the two facts in this case.

One is that there is no question that the sugar involved in this case was in Cuba at the time of the relevant decree.

And, the second fact that I would like to give emphasis to is that possession of that sugar was taken on behalf of the Cuban Government and that the title of the Cuban Government at that time was recognized by Farr, Whitlock, at least for the purposes of releasing the sugar to get it on to the ultimate purchaser, so they we're not dealing here with a decree which simply was sort of a bruiting omnipresence.

We're dealing with a decree which was in fact, where measures -- inappropriate measures by those standards were taken by the Cuban Government to reduce that sugar to its possession in Cuba.

Justice John M. Harlan: There's no dispute about the effectiveness of that appropriation as such, is there?

Mr. Nicholas DeB. Katzenbach: No, I -- I think not.

The -- the facts are described in an affidavit from Farr, Whitlock to the effect that the ship was not permitted to move until the purchasers of these sugar put aside their other contracts and entered into identical contracts with the agency of the -- of the Cuban Government.

Justice John M. Harlan: And this has not been a contested issue anywhere in the litigation --

Mr. Nicholas DeB. Katzenbach: No.

Justice John M. Harlan: Has it?

Mr. Nicholas DeB. Katzenbach: No.

Justice John M. Harlan: It was effective appropriation within the territorial limits of Cuba on these sugar.

Mr. Nicholas DeB. Katzenbach: That's correct, Your Honor, as I understand.

I think it might be helpful, again at the outset, if I indicate some of the points that the Government is not arguing.

We feel that the Act of state doctrine is one of judicial creation, that this Court is entirely free to abandon it or to modify it if persuasive reasons exist for this Court taking that action.

The Government does not believe that such reasons exist.

Justice William J. Brennan: You mean that eliminates, at least from your standpoint, any argument that this is a political question in the sense of one non-justiciable because without judicial power to deal with?

Mr. Nicholas DeB. Katzenbach: I think there's no question of judicial power, Your Honor, in this case.

I think this, that there are overtones of foreign relations to it and while, again, the Government would not argue any constitutional allocation or separation in this case, we do believe that considering the proper allocations of governmental functions is something which might lead to this Court's believing it wise to adhere to its prior precedence.

Justice William J. Brennan: That's a very different thing from saying the Court has no power to deal with this offense.

Mr. Nicholas DeB. Katzenbach: It is, Your Honor, and that is the reason that I wish to make it clear.

We were not arguing that.

Justice Potter Stewart: Do you think the -- it's an ingredient of the substantive rule of law, so to speak?

Mr. Nicholas DeB. Katzenbach: Yes, I think that the -- it is -- some of the reasons for the substantive rule of law lie in the fact that the Exect -- in fact that the Executive Branch can, by enlarged, deal better with this problem.

If --

Justice Potter Stewart: And, by enlarged, has been given a great deal of power and discretion in the field of international relations.

Mr. Nicholas DeB. Katzenbach: That's -- that's absolutely correct.

Yes, Your Honor.

Justice John M. Harlan: Does that mean that the consent or non-consent of the -- or assertion or non-assertion by the Executive as to whether this should be -- this case should be justi -- adjudicated or not as an immaterial fact.

Mr. Nicholas DeB. Katzenbach: It could mean that, Your Honor.

The -- the so-called Bernstein exception is not, I believe, before this Court.

While the Court of Appeals took the correspondence in this case, which was, we believe, informal and unofficial, and construed that as a Bernstein type of letter and, therefore, placed its decision on those grounds.

That point, since the Solicitor General in his memorandum made note that the Government did not so intend it, has not been pressed by any of the parties here and I don't believe that it is necessary for this Court to decide that question and, unless the Court wishes otherwise, I do not intend to argue.

Justice John M. Harlan: Well, it's rather academic anyway because, even if the Bernstein exception is an exception here, the Government, in this Court, is saying that they do assert.

Mr. Nicholas DeB. Katzenbach: That's right.

That's correct, Your Honor.

Justice Byron R. White: Solicitor General, I gather that you are in the Court asserting clearly and equivocally that -- to the extent there isn't an Act of state doctrine we want to decide in this case.

Mr. Nicholas DeB. Katzenbach: That's correct, Your Honor.

We believe this case is un --

Justice Byron R. White: Well, but any ambiguity --

Mr. Nicholas DeB. Katzenbach: The case is inappropriate.

Justice Byron R. White: Previous to the time as, hereby, eliminated as far as the views of the Executive Branch.

Mr. Nicholas DeB. Katzenbach: I don't believe that there has been any ambiguity prior to this time in the decisions of this Court or in the decisions of other courts which have followed those decisions.

Justice William J. Brennan: Well, Mr. Attorney, may I -- I'm just a little bothered about this though.

I appreciate that, in this case, you're not suggesting that the Court not apply the Act of state doctrine.

Indeed, you're urging that we do apply it.

Well, are you asking us to decide that, in any instance where the of Act of state doctrine is applicable that, as a positive rule of law, the judiciary shall not deal with that or is there a qualification that, on some occasions, the State may say to the judiciary, “We're not concerned.

If the Court wants to go ahead and decide the question, the Court may do it?"

Mr. Nicholas DeB. Katzenbach: I would suppose that -- again, you're phrasing the Bernstein question --

Justice William J. Brennan: Well --

Mr. Nicholas DeB. Katzenbach: Your Honor -- and --

Justice William J. Brennan: I may be, but I don't --

Mr. Nicholas DeB. Katzenbach: And --

Justice William J. Brennan: I don't really see how we can fail the deal with what's suggested by Bernstein in deciding this case.

Mr. Nicholas DeB. Katzenbach: Well, I am suggesting, Your Honor, that this a positive rule of law and the question is, as you put it, whether this positive rule of law changes if the Department of State should say, in so far is the foreign relations of United States are concerned, “we have no objection to a court's inquiring this far.”

I think this Court would be free to adopt that modification as it would be free to adopt any other modification.

I don't urge the Bernstein exception upon this Court at this time and I don't urge that it not remain --

Justice William J. Brennan: Since it's a judged-made rule, in any event, we may shape it is what you're telling me.

Mr. Nicholas DeB. Katzenbach: That's correct, Your Honor.

And, since it is not necessary to the decision of this case, I was not going to urge it and, by not urging it, I do not be wish to understood as representing the views of the Government that it is opposed --

Justice Byron R. White: Unless --

Mr. Nicholas DeB. Katzenbach: To that.

Justice Byron R. White: Unless some court somewhere comes to silent from the record it sent, the State Department should deal with the subject matter of litigation.

Mr. Nicholas DeB. Katzenbach: I would be opposed to that.

If there is Bernstein exception, it seems to me that it should be made by clear and unequivocal and formal letter from an appropriate official of the Government.

I think it perhaps should, and this may be my parochial views on the Department of Justice, be one that would be submitted through the United States attorney.

Justice Arthur J. Goldberg: The general conversion rule is the rule of substantive law.

It need -- you say the Act of state doctrine is a rule of substantive law and not an extension.

The rule of substantive law, where you got a question presented to the Court, the validity of the Act for a state property (Inaudible) unless the State Department says “okay.” That's the (Inaudible).

Mr. Nicholas DeB. Katzenbach: It would be unique, Your Honor.

I don't know that it would peculiar.

If the reason for the rule -- if the reason for the rule were that, in general, this would interfere with international relations, then an assurance from the appropriate branch of the government that, in this case, it would not would seem to me to be a perfectly sensible and intelligent rule.

I don't think that that would necessarily mean that the Court would then go ahead and do it.

It would merely -- be merely stating to the Court that, insofar as that consideration would govern them, in this case, it did not, in fact, in the judgment of those charges in conducting foreign relations, appear to be applicable.

Justice Arthur J. Goldberg: Whether the State was involved in the facts.

Mr. Nicholas DeB. Katzenbach: Yes.

Justice Arthur J. Goldberg: And, you're here to find a resolution (Inaudible)

Mr. Nicholas DeB. Katzenbach: Yes, Your Honor.

Justice William J. Brennan: Well, then, gather -- would you go this far, Mr. Attorney General, in an appropriate case, maybe this is one, if we are to apply the Act of state doctrine to the defense, we ought then to say, since it is a judge-fashioned rule, “Well, we wouldn't deal with half a case and so we'll complain about it, too?”

Mr. Nicholas DeB. Katzenbach: I don't see why, Your Honor, that would follow.

If this is, as it was called by this Court in the Ricaud case, a rule of decision, if this is what I would call an ironclad complex rule which can appropriately be laid down by this Court and binding upon all.

Because of the reasons for the rule, I don't see why the fact that you have a -- whether it's a plaintiff or a defendant, should make any difference.

Indeed, that point is pressed repeatedly in the briefs of the respondents in this who would seem to make it appear that the issue here is whether or not a court of the United States will enforce a foreign decree of this kind, and they repeatedly use the word "enforce."

Well, it is perfectly true that there's a whole line of decisions and authority with this respect to such decrees which says that courts in the United States will not enforce confiscatory decrees, will not enforce decrees which are penal in their nature, which will not enforce decrees which have public policy exceptions.

There's a whole -- just hundreds of cases to this effect, but this case is not a case of that kind.

This case is not a case of that kind because, here, the property was reduced to the possession of the Cuban Government while in Cuba.

And, it's a mere accident that the case appears in the way in which it does.

As to say, if it had not been for the accident of some negotiable paper being in the hands of Farr, Whitlock in this case, then the only thing that C.A.V. could have done would have been to have attempted to enjoin that payment or to have sought the money from the -- in the hands of the agent of the Cuban Government.

In doing so, I think it would have been blocked either -- be it by sovereign immunity if this case was directly against an agent of the Cuban Government or the Cuban Government, or it would have been blocked by the Act of state doctrine if in the hands of somebody else.

There, it would have been used as a matter of defense.

So, I cannot attach any great significance to the rather odd fact here in the rather unique circumstances that this happens to be an argument made by a plaintiff in defense of his title because the money seems to have -- or what represent of the money slipped out of his hands.

I don't believe it would be wise for this Court or for any court to make that kind of distinction.

To say you contest the title if you are able to get hold of the property, however you get hold of it but, otherwise, it's barred because it makes a difference whether you appear as plaintiff or as defendant.

I don't believe that would be a wise route.

Justice Potter Stewart: Most foreseeable cases, as a matter of fact, this would be -- the Act of state doctrine would be a defense in your Code, wouldn't it?

Mr. Nicholas DeB. Katzenbach: Yes, it would, Your Honor.

Justice Potter Stewart: But, I suppose --

Mr. Nicholas DeB. Katzenbach: In most foreseeable circumstance --

Justice Potter Stewart: In the decided cases, the precedence, it was a defense --

Mr. Nicholas DeB. Katzenbach: That's correct.

Justice Potter Stewart: Wasn't it?

Mr. Nicholas DeB. Katzenbach: That's correct because this is the way it would ordinarily come up in the --

Justice Potter Stewart: Come up as a matter of fact.

Mr. Nicholas DeB. Katzenbach: In the -- in the property cases or, indeed, to go to the earlier precedent, in the cases where tort was being claimed.

Indeed, the origin of the act of state, whatever its origin, it may be old, say that it is, whether it is or not, had its first expression in this country in Underhill against Hernandez which was a suit in tort brought against Mr. Hernandez after he had ceased to be a government official for acts that he had committed in Venezuela in terms of what was called unlawful imprisonment, assault.

And, in that case, this Court first pronounced that doctrine and said that, and the quote which is so often quoted in the cases, “that every sovereign state is bound to respect the independence of every other sovereign state and the Courts of one country will not sit in judgment on the acts of the government of another done within its own territory.”

Justice William J. Brennan: Is there in, your opinion, Mr. Katzenbach, a relationship between the Act of state doctrine and the Doctrine Sovereign Immunity?

Mr. Nicholas DeB. Katzenbach: You can a -- it can be argued that there is and that this is derived in part from sovereign immunity.

In the case such as Underhill against Hernandez, it would seem look like a part of a sovereign immunity.

And, the same argument can be made that if the State takes property and then gives it to a third person, since you couldn't sue the foreign state for it, you can't sue that person.

But, it isn't -- it isn't distinct from sovereign immunity because sovereign immunity can only come to play when the sovereign is in court.

It's a -- it's a jurisdictional matter.

The act of state is not and, in addition to that, it would seem to me that the main motivation of those who are arguing this, derived from sovereign immunity, is to take the next jump and say “we don't like sovereign immunity anymore, so we don't like act of state anymore.”

Now the reasons that sovereign immunity has been cut down in some ways has been because of the extent to which governments were involved in commercial activities rather than in what we regarded as more purely governmental activities and, perhaps, the same exception could be made here, but I wouldn't know how to do it because, clearly, when the Government of Cuba takes this sugar there, it's not acting in a commercial way, even though the product may be commercial.

It's acting -- affecting in a pretty sovereign way, perhaps, too sovereign a way.

Justice John M. Harlan: Are we -- we've been told that Cuba has setup a socialist economy and I suppose this, by definition, implies it could a good deal of involvement of the State in -- but, in a capitalist economy, are thought to be private enterprise.

Mr. Nicholas DeB. Katzenbach: And that's the good reason for cutting down on sovereign immunity where it's engaged in commercial operations.

It does not seem to me that that applies to the acts done in its sovereign capacity and, certainly, expropriation is not an act done in a commercial capacity.

I can't think of a more sovereign act than that kind of seizure.

Now, it's been argued that these cases, the -- primarily, the Underhill case and the Oetjen case and the Ricaud case which are the clearer statements of this -- by this Court, it has been argued by scholars for some time that perhaps this doctrine should be changed and perhaps it's no longer applicable today.

There has been some efforts to distinguish those cases and, to a degree, they can be distinguished.

That is to say, it can be said this point was never made to the Court.

It's never argued to the Court forcibly in those cases or, in at least Oetjen, it couldn't have been international violation.

There was -- a Mexican was involved and, in Underhill, they doubted that it was a violation of international law anyhow and so forth.

These arguments are made in the respondent's briefs.

They're good arguments.

They've been made by scholars.

I think they're respectable arguments, but I think that this Court ought to face the fact quite candidly that what, as I think, the respondents do, that they are asking for a change in this doctrine when they ask that an exception for alleged violations of international law be made to the Act of state doctrine because it is quite clear from those cases and from the way in which the Court spoke in those cases that it had considered this fact.

At least it was aware of this fact, because, in each of those cases, there is a statement that the remedy, if it exists, lie through diplomatic channel, which is certainly a recognition of the fact that international matters were involved.

Justice Potter Stewart: You can't take any position, do you -- or do you, as to whether or not this was a violation of international law?

Mr. Nicholas DeB. Katzenbach: I don't take any position.

Justice Potter Stewart: That isn't the position you --

Mr. Nicholas DeB. Katzenbach: The Department of State has said that it was.

If my argument required me to take a position, I'm acting on the assumption that it was, Mr. Justice, and I believe very firmly that it was on the facts that I know, but that's not a position that's necessary for --

Justice Potter Stewart: And you don't --

Mr. Nicholas DeB. Katzenbach: Our argument and I will assume --

Justice Potter Stewart: Take it in this litigation.

Mr. Nicholas DeB. Katzenbach: That would assume, for the purposes of the -- my argument would be --

Justice Potter Stewart: That it is --

Mr. Nicholas DeB. Katzenbach: The transaction is made --

Justice Potter Stewart: That it is a violation.

Mr. Nicholas DeB. Katzenbach: That it is a clear-cut violation of international law.

I think that the point that I've been making is that the precedent, as it exist, would very clearly apply to the facts of this particular case.

Now, let me use my remaining time, if I may, to deal with what seem to me to be the most important matter before this Court, and that is whether, today, it would be a wise policy to create the exception to this doctrine which respondents have urged so vigorously and which was adopted quite clearly by the District Court and a little more equivocally, I think, by the Court of Appeals because it gone ahead to further Bernstein letter exception.

And, that is that, to the Act of state doctrine, a -- an exception exists wherever there is an allegation that the acts of a foreign state were in violation of international law and the Court is then free to check at least that much and to investigate international law for itself.

Now, it seems to me that, for the Court to examine into a foreign act of state on those grounds, could interfere with the conduct of foreign relations and, indeed, both of the Courts below acknowledged this because both of them give emphasis to the fact that, in this case, it could not.

The District Court, because they said that the foreign state had already said this was in violation of international law so, therefore, it couldn't defend the Cubans anymore than they were already offended and, the Court of Appeals, because it said we have a Bernstein letter coupled with the other.

So, both courts below, at least accept the fact that this Court interfere with -- with the foreign relations.

Now, why is this true?

Well, one thing that's true about it is, because the -- this kind of pronouncement can become a problem of time, as far as the Department of State is concerned, they have other fish to fry than this particular expropriation or this particular act.

And, it may be that the timing of a protest is important to them, whereas, the timing of a judicial pronouncement could not take into account the same factors.

And, there is the problem of phrasing it.

If, after all, the effort here is it to -- is to get compensation for the people involved whose property has been taken, if it is to resolve those relations so the future foreign freight can go on, the very serious problems of phrasing of a protest can come up, can exist.

For example, if the protest that you made, the reasons why it was in violation of law, were phrased in one way, you might be able to secure similar notes from other governments which did not agree with everything that you felt was true of international law, then this situation would agree with some of them and it might be the better part of wisdom to give emphasis to those points so as to secure similar protests from other governments.

And, in addition to that, you have the problem here of -- as a problem of phrasing in an area of developing a law which isn't entirely clear.

What international law is, with respect to its appropriations is, I assure this Court, not a crystal clear proposition, however clear it may be on these facts.

And, different states do have different views on this matter.

For the Courts of this country to pronounce, with respect to what international law presently is, in their view, in this area is, I think, seriously to affect the conduct of our foreign policy for this reason.

The Department of State is, of course, when it invokes international law in these situations, playing the role of an advocate and there is no question as to what the United States would like international law to be within this area because we would like to a have international law which would, in our judgment, protect foreign investment which would encourage development, which would create a climate of investment of that kind.

Now, already, in this case, by the expressions of doubt on the part of the Court of Appeals as to whether, for example, compensation was really required, already, the negotiating position of the Department of State, in this respect, to position it as an advocate, as urging in an external arena, is already, to an extent, hurt by the pronouncement here by the Court below as to how it looked at international law because, now, every time that the Department of State is to urge a position with respect to expropriation, it is going to have that opinion and, should this Court reverse the prior precedent or modify it, it's going to have every opinion by every court state and federal in the United States, by 50 state jurisdictions, by a number of federal jurisdictions.

It's going to have to cope with all those expressions of what international law is.

Is this really -- I would this Court, is this really the way in which international law can develop?

Isn't -- in this development, don't we have certain policy values that we wish to promote and aren't these better promoted in an external arena than by the pronouncement of courts sitting in this country, pronouncements which have to be and should be and properly should be objective decisions, objective views as to what international law is when, really, your arguing what it is as a policy argument in hope that it will become that or something approximately like it?

But, really, is what the Department of State is doing, attempting to get others to take their views, it seems to me that rather than promote international law, judicial decisions of this kind would really be a deadening weight upon its development and, at least upon its developments in lines which I think that -- we would wish to do.

And, if they follow the Department of State in their pronouncements, then all they would have done would have been to impugn their own reputation for objectivity in courts abroad and the decisions would be reviewed not as good decisions with respect to international law, but merely as the expression of parochial and nationalistic views.

The second major point that I would make is that this is not a deterrent to foreign expropriations.

If indeed the -- all of the powers given to the Executive Branch under the Trading with the Enemy Act, if we can freeze all the funds, if we can cut off all aid and assistance, if we can prevent the importation of any of the property, if we can exercise all of our not inconsiderable persuasive powers around the world in this respect it -- and this does not deter the foreign government from a violation of international law with respect to the seizure of property, why on earth is a decision by the Court in the Southern District of New York going to have that momentous effect upon a foreign government?

In fact that the Courts in the United States been widely separated incidental, not very frequent occasions, would declare it to be in violation of international law, as to act as a deterrent?

I'm simply unpersuaded.

And, I'd like to add to the final point, this Court to think very seriously, what it would be doing because I think it would be opening the doors of this Court to a flood of litigation, and let me suggest at least one way in which this might be true.

At the present moment under the law, this Court and others courts of the United States will examine foreign judgments which are unexecuted on certain limited grounds.

And, normally, we get a summary judgment using that foreign judgment to support it, but no court in the United States has ever looked behind an executed foreign judgment, a foreign judgment into which a -- which a foreign court said A owes B so much money besides that, and then A pays B that money.

Now, do you -- that would be, it seems to me, perfectly appropriately and has been suggested by the commentators to be the act of a foreign government, a foreign act of state if, now, on that judgment, a man is to come into court, Mr. B is to co -- or Mr. A is going to come into court and say “B really owes me $25 because I didn't get an international due process in the trial of that case, wherever it may have been.”

Because it seems to me that when you say acts of a foreign government, made effective within their own territory, completely carried out within their own territory are, nonetheless, subject to reexamination if they're in violation of international law, that you buy the whole package when you do it.

You buy everything which has been called or claimed to be a denial of justice under international law when you take that and you open up the doors of American courts to review all of the judgments of foreign courts, executed and unexecuted, where a plaintiff can make an allegation that his rights, under international law, had in some way been deprived.

Justice Byron R. White: Mr. Attorney General, do you understand the Court below to have held that there would be an exception to the Act of state doctrine and that they would have adjudicated this matter or inquired to the act of the Government of Cuba if the Department of State had issued a -- an explicit request to apply the doctrine?

Mr. Nicholas DeB. Katzenbach: No, I do not believe that they would have in that situation because the Court put some emphasis upon the fact that, here, there already been a protest by the State Department.

It has been proposed by some of the commentators and, I think, suggested in the respondent's briefs that the Act of state doctrine should only be used where the Department of State says that it should be invoked.

That would cause a lot of quite obvious problems.

For one thing, you'd have to review a tremendous number of cases in the Department of State and, in second place, the very fact of saying use the Act of state doctrine would unavoidably carry an implication that you did think that international law had been violated by the -- by the foreign government --

Justice Byron R. White: But I gather --

Mr. Nicholas DeB. Katzenbach: Because --

Justice Byron R. White: I gather, there are only two alternatives.

You're either going to state something about a case or you're not, after you've had some notice about it.

And, you would suggest that if you -- that if you request the Court to apply the doctrine, that the Court should apply the doctrine and you also suggest that you're silent if the doctrine applies also.

So that -- and it's only when you're not silent and, say, disregard the doctrine that the Court should then make an inquiry into the validity of the -- of the title.

Mr. Nicholas DeB. Katzenbach: Well Mr. -- Mr. Justice White, let me express my views a little differently than that.

I think it would perhaps clarify them.

I urge that this Court adopt -- affirm what has always been the rule in this situation and, that is, that, as a positive rule of decisions, conflict of laws and rules proscribed for reasons of foreign problems, the Court will not inquire into the acts of a foreign government which are taken within its own territory, and that is not the matter which the Court will inquire into.

I would say that, if that were the rule, there would be no reason at all for the Department of State to constantly call the attention of the Court to that rule since, I think, it would be done by counsel.

Justice Byron R. White: But there would be occasions on which -- on which the Department might not object and might want to say that it is in fact.

Mr. Nicholas DeB. Katzenbach: That's possible, Mr. Justice White --

Justice Byron R. White: But it hasn't, I gather.

Mr. Nicholas DeB. Katzenbach: I haven't taken -- I have taken no position with respect to whether or not that is desirable.

If the --

Justice Byron R. White: But what if it does happen that the Department --

Mr. Nicholas DeB. Katzenbach: I would think, Mr. Justice White, that case could be decided when it happen.

Justice Byron R. White: Well, it has --

Mr. Nicholas DeB. Katzenbach: It's not this case.

Justice Byron R. White: It hasn't been decided here, but it's been decided below, I suppose.

Mr. Nicholas DeB. Katzenbach: It hasn't really been decided below, Your Honor, because the first Bernstein case, Judge Hand gave a very broad hint that the situation might, indeed, be different if the Department of State waive this.

And, the second Bernstein case, such a letter did appear and there was a judgment, as I recollect, in the District Court and the appeal was mooted and the case was settled.

So, it has never been spoken on by any appellate court, except as a suggestion by Judge Hand that, perhaps, the situation would be different if such an informal letter came from the Department of State.

Justice Hugo L. Black: May I ask you and verify my assertion is wholly as your position?

Do I understand that you adopt and say that a positive rule of law, the one that has been and should be followed, is the Statement made by Chief Justice Fuller in the Underhill and Hernandez case?

Mr. Nicholas DeB. Katzenbach: That's correct, Mr. Justice Black.

That statement is obviously a very broad --

Justice Hugo L. Black: Yes.

Mr. Nicholas DeB. Katzenbach: -- statement.

Justice Hugo L. Black: Now --

Mr. Nicholas DeB. Katzenbach: I think, as it has been interpreted and as it has been understood, I would -- that would be the -- our position and not a literal application perhaps of that language.

Justice Hugo L. Black: I understand that.

That's the reason that, if you do have any distinction in your definition of what you say this positive rule of law is, I'd like to know it because I understand it to be this, what you're saying.

When a case comes in the Court by a government recognized by this country has it not acted some kind of a law and taking some kind of administrative action that reposes title to property and somebody, even itself, that the Courts shall not look behind that act and shall act in that case on the premise that the property belong to that person in whom the title has been reposed by the government?

Mr. Nicholas DeB. Katzenbach: That's correct, Justice --

Justice Hugo L. Black: Now, that being the case here, as I understand, your argument is if we should decide this case, whether we decide it one question or another, or dismiss it, whatever is done has to be done on the basis that the Government of Cuba owned this property.

Mr. Nicholas DeB. Katzenbach: Has to be done in the sense that that doctrine would require that you not -- it doesn't -- if that's the result, Mr. Justice Black --

Justice Hugo L. Black: What I'm --

Mr. Nicholas DeB. Katzenbach: You don't --

Justice Hugo L. Black: -- talking about --

Mr. Nicholas DeB. Katzenbach: -- say whether they do or not.

You say a court will not inquire beyond that title.

Justice Hugo L. Black: Well, if it can't -- using non-legal word, what does that mean?

Mr. Nicholas DeB. Katzenbach: I think what it means --

Justice Hugo L. Black: As to this property?

Mr. Nicholas DeB. Katzenbach: I think what it means is that, in the Courts of this country -- in the Courts of this country, that title will not be questioned.

Justice Byron R. White: Well, then you're --

Mr. Nicholas DeB. Katzenbach: But it can be questioned in any international tribunal.

It can be questioned in any diplomatic negotiations.

It can be questioned by any other branch of the Government.

It simply cannot be questioned by courts within United States.

Justice Hugo L. Black: Why does that not mean that, here, we have to decide this case on the basis that Cuba owned this property?

Mr. Nicholas DeB. Katzenbach: You have to -- that's -- I think it would be correct --

Justice Hugo L. Black: And --

Mr. Nicholas DeB. Katzenbach: To say that you have to decide it on that basis, whether true or not.

Justice Hugo L. Black: And, as I understand it, you also say that we have no -- under the rule it has been and is here, that you think it should remain.

It's not up to us to say “we're not going to decide it -- the case because we don't like the way the title came into this people's hands.”

Mr. Nicholas DeB. Katzenbach: Well --

Justice Hugo L. Black: Is that what it means?

Mr. Nicholas DeB. Katzenbach: I think, Your Honor, the effect of saying “we're not going to decide” would in almost all cases have the effect of treating that title that was vested through this act of state as being a good title.

Justice Hugo L. Black: Well, concretely, this is being as --

Mr. Nicholas DeB. Katzenbach: Because, normally, this is the person that has possession.

Now, concretely --

Justice William J. Brennan: It has to mean that here if judgment and conversion is to go for the plaintiff, doesn't it?

Mr. Nicholas DeB. Katzenbach: That's correct.

That's correct but this case is unique and, to make this doctrine -- let me repeat it.

To make this doctrine turn on the question of whether or not you could get possession of some negotiable papers for inspection or for whatever the purpose was, and that's what it's turning on, doesn't seem to me a proper basis for decision.

Justice Byron R. White: Attorney General, I supposed that, as you state this doctrine, it would also apply if the Government of the United States were a party to the litigation and wanted to question the title, and you would apply the doctrine rigidly enough to prohibit the Executive himself, whose conduct to foreign relations supposedly is to be protected from also questioning the title of this in the Courts.

Mr. Nicholas DeB. Katzenbach: That's -- that's -- that's correct Your Honor, unless there is a Bernstein exception, which I have not urged upon this Court and which I have said could remain for the case where --

Justice Byron R. White: So that if --

Mr. Nicholas DeB. Katzenbach: It first --

Justice Byron R. White: Except for sovereign immunity, Cuban -- therefore, Cuba should be able to get an adjudication in our courts and all the frozen assets are really Cuban assets if they arose out of confiscatory -- well, regardless of that.

Mr. Nicholas DeB. Katzenbach: Well, I don't think that --

Justice Byron R. White: Sovereign immunity --

Mr. Nicholas DeB. Katzenbach: I don't know.

Justice Byron R. White: (Voice Overlap)

Mr. Nicholas DeB. Katzenbach: I don't think that follows, Mr. Justice White.

I don't think that follows at all because I'm not suggesting that these Cuban decrees can be or should be enforced within these countries to assets that the Cuban Government doesn't have and didn't take possession of in Cuba.

Justice William J. Brennan: In Cuba, itself.

Mr. Nicholas DeB. Katzenbach: In Cuba, itself, that's right and that's all I'm suggesting.

So, I don't know how.

I don't know what.

I can't envisage the situation that you pose of the Cuban Government going around and collecting lots of things because I would suppose that these were things which were not located within Cuba at the time of this decree --

Justice Byron R. White: Well, I don't suppose --

Mr. Nicholas DeB. Katzenbach: And, if located within Cuba --

Justice Byron R. White: These very proceeds are the perfect example and, I suppose, if these proceeds are judged to be the property of Cuba, they will fall within the freeze order or whatever it is --

Mr. Nicholas DeB. Katzenbach: That's correct.

Justice Byron R. White: (Voice Overlap) standing and I would think then that United States would be in no position whatsoever to question the government -- the Cuban Government's title.

Mr. Nicholas DeB. Katzenbach: In courts of the United States.

Justice Byron R. White: Well, then --

Mr. Nicholas DeB. Katzenbach: But, they're certainly free to question --

Justice Byron R. White: So that your --

Mr. Nicholas DeB. Katzenbach: That title anywhere else.

Justice Byron R. White: Your only protection would be of sovereign immunity, I suppose, in a suit by the -- by Cuba to recover $175,000.

Mr. Nicholas DeB. Katzenbach: From us, from the United -- but it's not in our possession when it's frozen.

Justice Byron R. White: Yes, but it would be.

Mr. Nicholas DeB. Katzenbach: Well, it's just in the possession where it is and nobody can deal with it or transfer it or use it or anything else.

They can remain right in the bank.

Justice Byron R. White: Well, no one should be able though to question the Cuban Government's title to that money.

Mr. Nicholas DeB. Katzenbach: I think nobody can question the Cuban Government's --

Justice Byron R. White: In the Courts.

Mr. Nicholas DeB. Katzenbach: -- title to that money in the Courts.

Now, it may be that, at subsequent time, on an arrangement such as all of the arrangement cited, I think, on pages 30 to 32 of our brief, then the -- Justice White, they agree to give up all of these various assets in this country in return for something, perhaps providing more money.

At which point, you allocate it among all of the people who have suffered as a result of this Cuban decree.

One of the advantages of the decree --

Justice William J. Brennan: But suppose, after the petitioner prevails here, if it does, on your ground, then the petitioner brings an action against whatever bank or escrow agreement --

Justice Byron R. White: To get the money.

Justice William J. Brennan: To get the money, what happens then?

It brings us a brand new action for the Courts.

Mr. Nicholas DeB. Katzenbach: I suppose, for the same reasons that it would not have prevailed here, he would not prevail there.

Justice William J. Brennan: No, I'm assuming now that --

Mr. Nicholas DeB. Katzenbach: So he could --

Justice William J. Brennan: The petitioner here prevails and gets a judgment in conversion.

As I understand it, the $175,000 is now in the hands of an escrowee.

Mr. Nicholas DeB. Katzenbach: The --

Justice William J. Brennan: And, suppose the escrowee would then turn it over to the plaintiff, although, under the terms of the escrow --

Mr. Nicholas DeB. Katzenbach: He can't.

Justice William J. Brennan: -- agreement, it belongs to the plaintiff.

Mr. Nicholas DeB. Katzenbach: But, he can't because that's frozen anyhow.

It can't be transferred.

Justice William J. Brennan: Well, that's why --

Mr. Nicholas DeB. Katzenbach: It can't be -- nothing can happen to it under that license without permission from the treasury -- I mean -- under the regulation.

Justice Byron R. White: yes, but that's --

Mr. Nicholas DeB. Katzenbach: Literally, nothing.

Justice Byron R. White: That doesn't quite follow.

Mr. Nicholas DeB. Katzenbach: It's a very broad order.

Justice Byron R. White: That doesn't quite follow, but nobody can question the title of the Cuban Government as far as your argument.

Justice Hugo L. Black: As I understand it --

Justice Byron R. White: On any basis.

Mr. Nicholas DeB. Katzenbach: It's not a question, Mr. --

Justice Hugo L. Black: On any basis.

Mr. Nicholas DeB. Katzenbach: -- Justice White.

It's questioning the title of the Cuban Government.

In this instance, what would be there would not be the title of the Cuban Government, it would be the ability of the -- of the Cuban Government or of anybody else to do anything with respect to these transferred funds.

We wouldn't have to question their title in order to say, under the treasury regulations, pursuant to the Trading with the Enemy Act, this simply can't be dealt with.

And, in fact, the easy answer to your question --

Justice Byron R. White: This is the way to get it -- (Voice Overlap)

Mr. Nicholas DeB. Katzenbach: (Voice Overlap) as you can't even have a judgment.

Justice William J. Brennan: Can't even get a judgment?

Mr. Nicholas DeB. Katzenbach: Can't even get a judgment --

Justice Hugo L. Black: Well, that's the answer I was --

Mr. Nicholas DeB. Katzenbach: -- without permission.

Justice Hugo L. Black: That's because of the Trading with the Enemy Act, isn't it?

Mr. Nicholas DeB. Katzenbach: That's right, Mr. Justice.

Justice Hugo L. Black: Congress has acted.

Mr. Nicholas DeB. Katzenbach: That's correct.

Justice Hugo L. Black: And even though it was Cuban property or whoever property it is --

Mr. Nicholas DeB. Katzenbach: That's right.

Justice Hugo L. Black: The Government that's opposing it has to wait and that has nothing to do with these other doctrine.

Mr. Nicholas DeB. Katzenbach: That's correct.

Justice Hugo L. Black: And --

Mr. Nicholas DeB. Katzenbach: It has this much to do if they --

Justice Byron R. White: And until and unless --

Mr. Nicholas DeB. Katzenbach: -- Justice Black, it shows that this can be dealt with effectively.

Justice Byron R. White: Until and unless --

Mr. Nicholas DeB. Katzenbach: By the Executive --

Justice Byron R. White: It is the property of the Cuban Government, it is a frozen by the United States.

Mr. Nicholas DeB. Katzenbach: In so far as the Courts of this country are concerned, that will be the property of Cuba.

Justice Byron R. White: Or with your -- on your freeze order.

Mr. Nicholas DeB. Katzenbach: We would deal with it as such, yes.

Justice Arthur J. Goldberg: (Inaudible) -- it certainly doesn't reverse the act, state (Inaudible)

Mr. Nicholas DeB. Katzenbach: That is correct, Mr. Justice Goldberg, although it's difficult for a man to conceive a broader Act than the Trading with the Enemy Act.

Justice Arthur J. Goldberg: (Inaudible)

Chief Justice Earl Warren: Mr. Williams.

Argument of C. Dickerman Williams

Mr. C. Dickerman Williams: May it please the Court.

I appear for the respondent, Farr, Whitlock & Company in support of the judgment of the Court of Appeals.

Briefly and summarily, the situation before the Court is this.

Cuba is an unfriendly power.

Cuba has a power into its courts neither the United States nor its nationals can obtain justice.

Cuba adopted a confiscatory decree directed exclusively at nationals of the United States, a decree which was denounced at the time by our Government as a violation of international law.

Cuba now comes into our courts and asks to use the processes of these courts to enforce that decree against nationals of the United States.

I submit that Cuba must fail.

Mr. Seymour appears here on behalf of C.A.V.

He and I have divided our presentation to this Court in order to avoid repetition.

After a brief discussion of the facts, I shall maintain these propositions.

First, that Cuba has no standing to sue in our courts because Cuba is a foreign sovereign not entitled to comity.

Secondly, that whether or not Cuba is entitled to comity, Cuba is not entitled to prosecute this action in our courts because this is an action to enforce a public law and no sovereign may enforce its public laws in the Courts of another sovereign.

Mr. Seymour will show that the nationalization decree of August 6, 1960 was in breach of international law, that the Act of state doctrine does not apply and the decision here, favorable to Cuba, will violate public policy of the forum.

Now, let me make it clear that our position here is that of a stakeholder.

At the time we got the proceeds of the bill of lading, we were confronted with a claim by C.A.V. to be the owner of the sugar here involved.

That claim was a substantial claim.

It has been upheld by both lower courts.

Under the circumstances, we did what any other stock -- stakeholder would do.

We held on to the money awaiting an orderly determination of the rights of the parties.

We have not concealed that money.

We have not removed it from the jurisdiction.

We have not used it for our own purposes, as it has been brought out in questions directly to Mr. Rabinowitz and Mr. Katzenbach.

That money is now in a special account at Lehman Brothers awaiting the decision of this Court.

Now --

Justice Arthur J. Goldberg: If something happened as merely a physical duty and communication exists, you have to have your own (Inaudible)

Would the escrow agreement cover that agreement?

Mr. C. Dickerman Williams: Well, simply, if the action were dismissed on the merit, certainly, it would be returned to C.A.V.

But, my answer would be that if the action is dismissed, the money will be -- is payable to C.A.V.

I -- I think that's quite clear under the terms of the escrow agreement.

I haven't got it before me, but I participated in its drafting and that's my recollection of it.

Now --

Justice William J. Brennan: It would not be subject, in the hands of C.A.V., to the freeze order wouldn't it -- would it?

Mr. C. Dickerman Williams: No, I don't think so.

That's simply not my interpretation of the freeze order.

Justice William J. Brennan: Even though it's a Cuban corporation?

Is the C.A.V. a Cuban Corporation?

Mr. C. Dickerman Williams: C.A.V. is a Cuban corporation.

I don't -- I don't I'm not fully acquainted with the -- with the application of the freeze order, but it's my understanding that C.A.V., since the freeze order, has been freely able to draw on its funds.

Mr. Seymour, as counsel to C.A.V., can answer that question better than I.

Now, let me describe the circumstances under which the contracts here at issue were made.

These contracts were not entered into freely, as the Government brief suggests.

We were compelled to make these contracts.

In substance, these contracts were confiscated by the Cuban Government by means of a nationalization decree.

That --

Justice Arthur J. Goldberg: (Inaudible)

You were --

Mr. C. Dickerman Williams: What?

Justice Arthur J. Goldberg: Concluded by the Cuban Government (Inaudible)

Mr. C. Dickerman Williams: We -- we were not in Cuba.

We were not subject to arbitrary force, but we were committed on many long-term contracts involving millions of dollars.

To fulfill those contracts, we had to have those sugar -- have those quantities of sugar.

Unless, we can get sugar out of Cuba, we were ruined.

Farr, Whitlock has been referred to here as a broker.

That is a common expression in the sugar trade but it is not strictly accurate from a legal point of view.

From the legal point of view, a sugar broker functions more as a dealer.

In other words, we had bought this sugar as principal.

We had sold the same sugar.

We had sold the sugar here involved to a customer in Morocco.

We were bound not only to that customer in Morocco, but to many other con -- customers.

Justice Arthur J. Goldberg: Suppose you would have it been seizure in (Inaudible) every time you weren't there.

How long (Inaudible) if you were confronted with (Inaudible) this ship, your production would be this crop.

Mr. C. Dickerman Williams: Well --

Justice Arthur J. Goldberg: And you could have just left it and plead the (Inaudible) contract with a purchaser to go ahead, but you have to win the suit.

Mr. C. Dickerman Williams: Well, Farr, Whitlock would have been subjected to suit on many contracts involving millions of dollars, as I say, if we could not have gotten the sugar out of Cuba.

Justice Arthur J. Goldberg: If you get the sugar out of Cuba and commended suit --

Mr. C. Dickerman Williams: At that --

Justice Arthur J. Goldberg: (Inaudible)

Mr. C. Dickerman Williams: I -- I doubt that, Your Honor, the reason being that -- I think that, perhaps, C.A.V. would've had a valid defense because it was the sugar of C.A.V. that was seized.

At that time, it wasn't our sugar.

Actually, it was being loaded to supply us under our contracts with C.A.V.

The -- the Steamer Hornfels which carried the sugar to Morocco was, at that time, being loaded off the Port of Santa Maria and the loading was in process and was completed shortly after the decree was issued.

We needed that sugar to fulfill our contracts, as I say, unless we could fulfill these forward commitments, we were certainly confronted with, as it seemed to us, claims which we could not readily meet.

Justice Arthur J. Goldberg: With record in view, my question is if your view confirms it would probably be encompassed or your view confirms that the property (Inaudible) commission is confirmed.

Mr. C. Dickerman Williams: Our commission -- the commissions involved, although we function as a -- as a dealer, our commissions are relatively small.

We would -- this case involves far more.

I think the commission involved here was only $1,500 and the commissions in these other cases were relatively negligible.

If we could have gotten out of these contracts on the basis of commissions, we would have been very happy to do so.

It was to fulfill the commitments that we had that we were forced by the nationalization decree.

What -- what happened was that the Cuban authorities would not let the Steamer Hornfels sail, unless we entered into contacts with Banco Para el Comercio Exterior.

Justice Arthur J. Goldberg: That goes out in past decision --

Mr. C. Dickerman Williams: That's right.

Justice Arthur J. Goldberg: But you have to -- you have to give the sugar to (Inaudible)

Mr. C. Dickerman Williams: Yes.

Justice Arthur J. Goldberg: (Inaudible)

Mr. C. Dickerman Williams: Your Honor, our commissions were negligible, compared to the amounts involved here.We would have been happy to get out of these situations on the basis of the commissions.

Justice Arthur J. Goldberg: Well, your commissions (Inaudible) concerns the name of that facility?

Mr. C. Dickerman Williams: Yes, because it wasn't our sugar.

We were bound to get, from some source, sugar.

In other words, we had sold sugar, Cuban sugar, to a series of customers throughout the world.

And, the nationalization decree, the refusal of the Cuban authorities to permit the Steam -- Hornfels to sail and similar refusals involving other ships and the holding up of sugar deliveries which under contracts which we had made with the Cuban -- with the United States-owned Cuban planters, confronted us with the inability to get the sugar to fulfill our contracts.

It is not fair to say that we desire to get commissions.

The commissions were nominal.

As I say, we were liable on these forward contracts of principles and we felt rightly or wrongly that we would be sued on these contracts, that we would have a weak defense because it was not our sugar that had been confiscated.

Justice Arthur J. Goldberg: This is not in the record.

Mr. C. Dickerman Williams: Yes.

Justice Arthur J. Goldberg: (Inaudible)

Mr. C. Dickerman Williams: You mean on the United States imposed embargo?

Justice Arthur J. Goldberg: Yes.

Mr. C. Dickerman Williams: Well, the --

Justice Arthur J. Goldberg: (Inaudible)

Mr. C. Dickerman Williams: -- that -- that was applicable only to the importation of sugar into the United States.

This particular sugar was going to Morocco.

The embargo in the United States would have not applied to this cargo.

Justice Arthur J. Goldberg: (Inaudible) embargo would complicate it?

Mr. C. Dickerman Williams: Well, we're not anymore because, since the events of 1960, the United States has prohibited all commercial intercourse with Cuba.

Justice Arthur J. Goldberg: That's what I thought.

Mr. C. Dickerman Williams: That's true.

I mean, as of the present time, we could not do this, but the embargo was not put on until a couple of years later.

Justice Arthur J. Goldberg: Did you have it sectioned in that brief about this?

Mr. C. Dickerman Williams: We did not.

No, Your Honor.

Now, these contracts which we made with Banco Exterior, as a result of the national decree and the procedure of the Cuban authorities under it in refusing to permit the Hornfels to sail, were to be performed in New York.

In other words, the purchase price was payable in New York, in New York funds.

The contracts are in the record.

Section 7 deals with payment, and I think there's no question of that.

Now, I submit that what has happened here is that, in substance, Cuba confiscated the contracts.

That the contracts where New York shows as an action enforceable in c -- in New York -- in New York only and that the substance of what has happened here is that Cuba is now attempting an extra territorial application of the confiscation decree.

In other words, the net result of all that happened was that the Banco Exterior, as the foreign trade agency of Cuba, acquired -- New York shows as an action which Cuba is now coming into the New York courts or into the federal courts sitting in New York in order to enforce.

Now, I come to the first legal proposition which I shall advocate that Cuba has no standing to sue in the Courts of the United States in any kind of case because Cuba is not entitled to comity.

A foreign sovereign may sue in the Courts of the United States only by virtue of comity.

This Court has so held on a number of occasions, and I do not understand that my learned friend questions that proposition.

Now, comity has two elements - first, friendliness and, second, reciprocity.

Neither of those elements exists here.

In my brief, I cite a number of barely hostile statements and actions taken by Cuba and the United States against each other.

I put most of them in the appendix because it did not occur to me that anyone could seriously challenge the fact that Cuba and the United States are unfriendly today.

However, on receiving Mr. Rabinowitz's reply brief last Thursday, I find that he does maintain that, for purposes of comity, Cuba and the United States are friendly powers, and he says that the only cases in which the privilege to sue -- privilege of suit was denied because of unfriendliness are cases in which the countries involved were either at war or did not recognize each other.

And, he points out that, in this situation, Cuba and the United States are not at war and that Cuba and the United States do recognize each other.

I suggest, however, that there is a third type of situation which is inconsistent with friendliness, which affirmatively establishes unfriendliness, and that type of situation is when there has been a severance of diplomatic relations and a prohibition of all commercial intercourse.

And, here, I have to go outside my main brief because I am dealing with arguments that I only learned of on Thursday when I received Mr. Rabinowitz's reply brief.

Now, I want to refer -- and Mr. Rabinowitz makes a persuasive argument, or a plausible argument perhaps, that the Courts cannot sit on statements issued by governments about each other that, in the last four or five months, we have issued critical statements about France, South Vietnam, Haiti, and so on.

And, he argues that there must be some tangible event, and the only tangible events that he says exists are nonrecognition and war.

And, in answer to that, I suggest that there is a third type of tangible situation, namely, as I say, the severance of diplomatic relations and the prohibition of commercial intercourse.

Now, let me recite events -- concrete events which cannot possibly dis -- be dismissed as mere statements, as when, for instance, Assistant Secretary of State Martin says “our policy towards Cuba is not coexistence.

We want to get rid of Castro and Communist influence in Cuba.”

These are definite specific actions as concrete as war or as nonrecognition.

Now, on October 19 -- and all these events had occurred, some events referred to in my brief occurred before the nationalization decree, others have occurred since.

On October 19, 1960, the United States prohibited all exports to Cuba with a few exceptions.

January 3, 1961, the United States terminated diplomatic relations and it terminated those relations under these circumstances.

At 1:20 a.m., on the morning of January 3, 1961, that is to say, in the middle of the night, the Cuba Ministry of Foreign Affairs presented a note at the United States Embassy in Havana, instructing the Embassy to reduce its personnel to 11 people within 48 hours.

The President of the United States regarded that as insulting and terminated diplomatic relations on the same day.

On September 7, 1961, the United States prohibited assistance to any country which assists Cuba, unless the President shall otherwise determine.

On February 3, 1962, the United States proclaimed a complete embargo on all trade with Cuba.

On March 4, 1962, the United States prohibited the import of merchandise from anywhere, made or arrived in whole or in part of products of Cuban origin.

On July 8, 1963, they were issued the freezing orders to which reference had been made here.

The United States blocked all assets of Cuba and residents of Cuba, prohibited all persons subject to the United States jurisdiction from the unlicensed transfer of dollars to Cuba, and prohibited all unlicensed transactions of any kind with Cuba or residents of Cuba.

Now, this, I submit, Your Honors, are measures of war.

They are tangible events.

They do not require a weighing by a court of whether or not a particular statement is so unfriendly that it amounts to unfriendliness in the sense of comity.

These statements -- these actions cannot possibly be reconciled with friendliness.

Now, if we -- if the Court now -- I will say -- I think I can s -- concede it that Mr. Rabinowitz is correct that the only case is not finding friendliness in the sense of comity are cases in which there was either war or nonrecognition.

However, there is no case in which friendliness in the sense of comity was found to exist where diplomatic -- relations had been terminated or where commercial intercourse had been prohibited.

In other words, the question is an open one and I submit that in the sense in which comity is used in the various cases which are referred to in my brief, and as I believe these statements are all admitted by the other side, I submit that these are effective ways of establishing that unfriendliness.

Justice John M. Harlan: What significance, if any, do you credit to the fact that the State Department, itself, has not questioned the right of this plaintiff pursuant to the Court?

Mr. C. Dickerman Williams: Well, I don't understand.

The Department of State is a -- has appeared in the case.

It's only the Department of Justice.

I --

Justice John M. Harlan: Well, I assume that the Attorney General was speaking for the Executive Branch of the Government.

Perhaps I'm wrong.

Mr. C. Dickerman Williams: Well, I -- I don't know.

I have -- I don't -- frankly, I don't understand the brief of the Department of Justice and I don't feel that I'm in the position to interpret it.

However, from the point of view of the legal decisions on the case, the legal decisions on comity, the legal decisions -- the Court decisions are entirely clear that friendliness must exist and I respectfully submit that these statements, actions, prohibitions, severance of diplomatic relations establish that the friendliness does not exist.

Justice John M. Harlan: Well, I would suppose that the Court should be concluded on that issue by the attitude of the State Department or by the attitude of the Executive.

We -- the Courts are not going to pause in the negative inquiries to the degree of platonic relationship between the --

Mr. C. Dickerman Williams: Well, I -- I agree that the Courts cannot enter into whether or not relations are platonic or otherwise, but when there are specific events susceptible to only one interpretation, I submit that the Courts could act accordingly.

I don't -- I do not see that the Courts are dependent upon the Executive in applying the law.

The -- I do not understand the theory of Bernstein which is -- has been referred to here, namely, that the Courts must have the permission of the Executive Branch before deciding any question which is presented to them.

I -- I submit here that there are specific events which fall within the rule which has been laid down by the Courts and there's no suggestion in any of those decisions or any of those opinions that it is necessary to get any particular finding from the Executive Branch.

The Executive Branch has performed its function when it severed diplomatic relations, when it prohibited commercial intercourse.

Now, the consequences of those actions by the Executive Branch is not what the Executive Branch says about them, but what interpretation this Court puts on them.

Certainly, although my learned friends had my brief for some time now, they have not -- they do not affirmatively say here that comity exists.

They have not said that Cuba is a friendly power.

They have not repudiated, for the purposes of this case, any of the -- in any statements by the Executive Branch or any of the actions by the Executive Branch showing that there is no friendliness between the United States and Cuba.

Justice Hugo L. Black: Your argument would result, would it not, to a record saying that the Judicial Department is the department of Government that has the power to determine whether a foreign nation shall be allowed to file a suit in court?

Mr. C. Dickerman Williams: Absolutely, Your Honor, and I don't think that -- I think the case has entirely established that proposition.

Justice Hugo L. Black: Suppose --

Mr. C. Dickerman Williams: It ended --

Justice Hugo L. Black: Suppose the department -- the executive department, Legislative Department, State Department, and all of the others thought (Inaudible) would be contrary for them to policies.

Would -- could the Court still decide it?

Mr. C. Dickerman Williams: I don't think they could, Your Honor.

I think are -- the independent -- the juris -- judiciary is entirely independent branch of our government.

Of course that has not happened here but, even if they did, I would submit that, after such events, as I have described, have taken place, the Executive Branch could not come in and say “oh, we didn't mean it” or there is --

Justice Hugo L. Black: It might -- it might say that it meant to go only this far, but it did not want to add what it might say was additional international insults, one would say, and the other say they couldn't come into the Court.

Mr. C. Dickerman Williams: Well, Your Honor, I certainly think it's up to the Executive Branch to decide whether or not to terminate diplomatic relations and whether or not to prohibit commercial intercourse.

Obviously, the judiciary cannot attempt to do that kind of thing, but when it is a question of what application shall be made in a lawsuit within the jurisdiction of the Courts, that, I think is a judicial question and not an executive question.

Justice Hugo L. Black: Well, you may be right.

It's just a rather eloquent question.

Mr. C. Dickerman Williams: Well I would submit that there is another feature which is persuasive of the rule that I advocate and, that is, the decision of this Court in Ex parte Muir in which the Court said, as I read the opinion, that's 254 United States 522, that a foreign government could litigate in our courts only through official channels, only through an accredited representative, and that an appearance by private counsel was not enough.

Now, because -- well, for what reason, I don't know.

Certainly, in this case, there has been no appearance by an accredited representative.

I'd -- I certainly don't challenge Mr. Rabinowitz's authority to appear, but he appears as private counsel, not as a -- not as an Ambassador of Cuba and, in fact, I understand that, in some related litigation, he insists very clearly, a litigation in which this Court only the last week granted certiorari, that he is only a private counsel.

Now --

Justice Arthur J. Goldberg: Are you saying that this government holds corporations if any government would only hear the ambassador of that government in their courts?

If the French take the statute over the French Government, must there be a reciprocity (Inaudible)

They're suing.

We'd sue, and our courts (Inaudible).

Mr. C. Dickerman Williams: As I read Ex parte Muir, there must be an accredited representative.

Of course, in this particular instance, there isn't any doubt that the sugar belongs to Cuba.

It was Cuba which confiscated the sugar for its own benefit and, my recollection -- if my recollection is correct, the complaint says that Banco Nacional is suing here as financial agent of the Government of Cuba.

I don't think there's any suggestion that this is something that happened in the regular activity of a public corporation.

Justice Arthur J. Goldberg: Well, you're distinguishing your own -- by your last statement --

Mr. C. Dickerman Williams: Well, I'm only saying that I think it's unnecessary to this particular case but, as I read Ex parte Muir and the cases cited in Ex parte Muir, for instance, one of those cases is The Anne.

In The Anne, the Court refused to entertain a claim made on behalf of Spain by the Spanish Consul because the Court regarded the claim as not being commercial but is diplomatic and it regarded an appearance by someone with diplomatic status as necessary to the presentation of the claim of Spain.

And, I suggest also that this requirement of the appearance by an accredited representative, as distinguished from private counsel, has a real application to litigation by Cuba in our courts, and that that is shown by the case of Rich against Naviera Vacuba, a case which is cited with great enthusiasm by my learned friend.

In that case, it appears that Cuba was entitled -- was held entitled to repudiate a formal court stipulation entered into under the most solemn circumstances, by which, Cuba waived sovereign immunity with respect to the execution of the judgment which was entered into in that case.

And, yet, because that stipulation was entered into by private counsel and the Court opinion indicates that private counsel was acting within the scope of his authority, that he was duly authorized to do so, there was no question of the propriety of the behavior of private counsel.

But, because he was only a private counsel and not an accredited representative, therefore, Cuba was permitted to repudiate that stipulation.

I -- I might say that Rich against Naviera Vacuba is the case involving the buoyed need which has been referred to by Mr. Rabinowitz in the course of his argument.

Now, another essential element of comity is reciprocity, and this essential element exists wholly apart from friendliness.

The leading case laying down the law on reciprocity as the essential element of comity is Hilton against Guyot, a case in which the question before the Court was the effect to be given to a judgment of the Courts of France.

At the time of that decision, there was on question of unfriendliness between the United States and France.

The decision came down in 1895, when the two countries were entirely friendly.

The -- this Court, however, went into a most detailed examination of the requirements of re -- of comity, insofar as reciprocity was concerned, and established that our courts would function -- would accord the nationals of foreign sovereigns only the rights that those foreign sovereigns accorded our nationals.

And, in that case, because the judgment of the Courts of France -- in that case, because it appeared that the law of France was that the Courts of France could revise -- could examine and revise court judgments of other countries, therefore, our courts could reexamine judgments of the Courts of France.

Now, there has been a very recent decision by the Court of Appeals of the First Circuit, P&E Shipping Corporation against Banco Exterior, another Cuban litigation, in which the Court of Appeals, of its own motion, raised this question and remanded the case to the district judge to make findings as to whether or not nationals of the United States could get justice in Cuba.

And, pursuant to the mandate of the Court, in fact, the Court instructed the district judge to inquire from the Department of State, which he did, and the Department of State wrote a letter to the district Judge, which is Appendix B to my main brief.

And, in that letter from the Department of State to the district judge, the Department said that there had been a breakdown in the Cuban judiciary as an independent branch of the Cuban Government.

But the Cuban judiciary was now subservient to the present political policies of the Cuban Executive and that the Department had concluded that even if legal remedies theoretically existed under Cuban law, recourse by a United States national to those remedies would be futile.

Now, I learned for the first time when I received Mr. Rabinowitz's reply brief on Thursday that, in this proceeding, Mr. Rabinowitz, on behalf of Cuba, had submitted affidavits that claimed to show that United States nationals could have recourse and could receive fair treatment in the Cuban courts.

I have examined those affidavits and, all I can say -- they are too detailed to review here.

All I can say is, after examining those affidavits, that I profoundly disagree with Mr. Rabinowitz's characterization of that, and I would suggest that if a court is not satisfied with the report of the Department of State as to judicial conditions in Cuba, that it do what the, and it regards this issue as determinative of the question of comity, that it remand this case to the District Court for findings in that respect.

Now, I come to my secondly proposition and that is this, that whether or not Cuba is entitled to comity, Cuba may not prosecute this action because known foreign sovereign may enforce its public laws in the course of the United States.

In fact, the rule is universal.

No -- the Courts of no sovereign will entertain suits by other sovereigns for enforcement of their public laws.

Now, there has been a great deal of reference here to the so-called Act the state doctrine.

There is an equally well-settled Act of state doctrine which I invoke and, that is, that although the Courts will not undue the acts of state in a foreign power, neither will they enforce those acts of state.

Now, as I understand Mr. Katzenbach's distinction of this rule, which he seems to admit thoroughly, in fact, if my recollection is correct, he used the expression “hundreds of times” the Courts have laid down this rule, his dis -- his -- he distinguishes it.

He distinguishes this case on the ground that, as in a general way or they -- more often, it's more frequent that the question of the act of state comes up the other way around.

That is to say, it comes up as a defensive matter between private parties, so to speak, rather than as a suit by the foreign sovereign to enforce that act of state.

Well, I respectfully suggest that that argument is not applicable.

Of course the Court here is dealing with this case, not some theoretical case or not some usual case.

It's dealing with what happens here and my learned friends have sug -- cited no case whatsoever in which a foreign sovereign was held entitled to enforce an act of state, directly or indirectly, in the Courts of another sovereign.

I won't -- I won't go through the -- through the cases.

Apparently, they -- it is conceded that they are applicable and, the only distinction is made, that it is more likely that the question arise because a man is defending on the ground.

It's putting up the defendant who is pleading the act of state rather than the foreign sovereign involved.

Of course, as I say here, we are dealing with a case where the foreign sovereign is asserting the act of state.

And this Court, in Guaranty Trust Company against the United States, was most emphatic in drawing a distinction between those cases in which the act of a foreign sovereign might come up in the course of a litigation, let us say, between private parties and a case in which that foreign sovereign, itself, was seeking to enforce its public laws.

Justice Potter Stewart: I hadn't -- I understood Mr. Katzenbach to be arguing that what we're dealing with here is something that's been executed -- that's been executed, not something executory.

We're dealing with a -- with a feta compli, if you will, that the Court of the -- here, the United States was not being asked to effectuate the seizure of this sugar but simply that the sugar was seized and that the Court didn't have power to go beyond the seizure.

Mr. C. Dickerman Williams: Well --

Justice Potter Stewart: Not even force -- not to enforce the foreign law seeking to appropriate this but simply to recognize that it had been appropriated, as a matter of fact.

Mr. C. Dickerman Williams: Well, I -- I submit that the -- that the posture of the case shows that the foreign sovereign is trying to enforce its law.

The -- the New York cases are quite clear that, when there is a contract between the parties and property is turned over to one of those parties pursuant to the contract, his failure to make use of that property according to the terms of the contract presents a case of breach of contract as distinguished from conversion.

Now, here, we were forced or we were subjected to pressure which lead us to make these contracts.

Those contracts would be to perform in New York.

Cuba is now coming into the New York courts, as I see it, to enforce those contracts.

Justice Potter Stewart: Well, what was seized was the sugar itself, was it not?

Mr. C. Dickerman Williams: Well, actually, it really wasn't seized.

It was onboard the Hornfels.

It was in Cuban territorial waters or is said to be -- said to have been in Cuban territorial waters.

I don't -- I don't think there's any suggestion that any officer of the Cuban Government ever went onboard.

I mean, the possession is a -- such a purely theoretical legal possession.

It was never reduced to actual possession, as I read the record.

What did happen, and what I tried to emphasize, is that, by virtue of these -- of this decree and Cuba's procedure under it, we've made this contract to be performed in New York.

And, in substance, Cuba is trying to enforce that contract now.

It's trying to get the money.

Of course, Cuba is interested in sugar only partly for purposes of consumption.

Primarily, it is interested in sugar from the point of view of foreign exchange.

What Cuba wanted was foreign exchange.

It made a contract by which it was to get that foreign exchange in New York.

Now, it has come into the New York courts or the federal court sitting in New York in order to enforce that contract and get that foreign exchange.

I -- I trust I've answer you question, Your Honor.

Now --

Justice Byron R. White: Mr. Williams, what's your view of this case if there has been an unequivocal assertion in the District Court by the State Department of the so-called Act of state doctrine?

I take it, you would say the Court should disregard the doctrine question entirely.

Mr. C. Dickerman Williams: I don't think -- I don't want to get into act of state, because -- myself, because Mr. Seymour is going to deal with that subject and I don't want to answer it in anyway which might embarrass him or be inconsistent.

We -- as I say, we've divided the argument so that he will --

Justice Byron R. White: Well, yes, but you have touched upon the matter that the foreign sovereign can't use the Courts here and, thereby, enforce something that may be illegal under international law and --

Mr. C. Dickerman Williams: I -- I have said that it isn't --

Justice Byron R. White: I take that you would assert that said -- same thing even though the State Department requested the Courts not to adjudicate the legality, or not, of the -- of the foreign procedure.

Mr. C. Dickerman Williams: Yes, I would.

Mr. Seymour is going to deal with that subject more fully, but that's certainly my own position.

Furthermore, Your Honor, I'd like to make clear this, that is, that foreign sovereigns are not entitled to enforce any public law, even if it's a desirable, commendable public law.

Many of the cases involve taxes.

Tax revenue laws are, of course, public laws and the Courts have been forbidden to enforce the -- the Courts have refused to entertain the claims of foreign sovereigns when directly or indirectly based upon a revenue law.

There wasn't any question of the violation of the -- the revenue law was a perfectly proper exercise of domestic jurisdiction.

It's not suggested that the revenue law, in some of these cases which are referred to in my brief, such as Peter Buchanan Ltd. against McVey, was an improper law.

the Court conceded that it was.

It simply held that no act of state, whether or not it was valid under international law, could be enforced to a subject to enforcement in the Courts of the other sovereign.

Justice Byron R. White: You don't suggest, this one time, that you can't be very social to enforce the contract that they made with an American --

Mr. C. Dickerman Williams: No, but I -- excuse me for interrupting, if I did.

I -- I say that when a foreign sovereign seeks to enforce a contract and the enforcement of that contract is subject to the public policy of the forum, and it's quite clear, both from cases which I cite in my brief and which Mr. Seymour cites in his brief, that a contract of this type, rested on confiscation, violation of the public policy --

Justice Byron R. White: Well, it's just at this point that the United States might come in and say, "Please don't adjudicate that matter -- that matter of our foreign policy."

You just accept it.

You would say the Court should not accept it until the search is complete.

Mr. C. Dickerman Williams: No, I -- I we have an independent judiciary here, as I understand it.

I don't -- I don't understand that the judiciary --

Justice Byron R. White: But you would just reject --

Mr. C. Dickerman Williams: Of the United --

Justice Byron R. White: You would just reject the previous cases in this Court, I suppose.

Mr. C. Dickerman Williams: No, I don't think those cases are involved.

Those -- those previous case --

Justice Byron R. White: Because they didn't involved a foreign sovereign?

Mr. C. Dickerman Williams: Because they didn't involve sover -- foreign sovereign seeking to enforce acts of state.

Those were cases -- and this is an interesting distinction made by a number of the cases, in particular, an opinion of Judge Learned Hand in Moore against Mitchell and a very persuasive and, indeed, eloquent opinion by Justice Kingsmill Moore in Peter Buchanan Ltd. against McVey.

The reason given for refusing to entertain efforts by foreign sovereigns to enforce their public laws in these two opinions is this, that always there is open to the Court of the forum the consideration of whether or not the contract or law, whatever it may be, is consistent with the public policy of the forum.

Now, in private litigation, a court can determine that a particular act of state of a foreign sovereign is not consistent with a public policy or a particular law of the foreign sovereign is not consistent with its public policy.

But, in litigation brought up by a foreign sovereign, it is embarrassing to international relations for a court to have to say "we don't like this law."

And, Justice Moore points out that many of the laws of today may be shocking to the conscience of the forum.

The party says, such laws meaning public laws, have been used for racial and religious discriminations, for the furtherance of social policies and ideals dangerous to the security of adjacent countries, and for the direct furtherance of economic warfare.

Now, it says the forum must always reserve the right to declare a particular law or Act contrary to its public policy and it embarrasses -- it is embarrassing to make that finding in a case in which the foreign government, itself, sues.

Now, in other -- in other words --

Justice William J. Brennan: May I ask this, Mr. Williams?

Mr. C. Dickerman Williams: Surely.

Justice William J. Brennan: If we did not have the plaintiff we do have or the petitioner here, but some bona fide purchaser of these papers, the bill of lading and the draft and so forth, I gather, you'd be making neither of the arguments you've been giving.

Mr. C. Dickerman Williams: Well, of course I'm arguing this particular case, Your Honor.

Justice William J. Brennan: That's what I say, but if -- my point is your argument is based on the identity of the plaintiff in this particular case.

Mr. C. Dickerman Williams: That is true.

But, I -- I would like, if I may, to continue with Justice White's question.

My learned friends, in their briefs, seem to take the position that the Courts, in order to keep foreign relations in a friendly way, must always enforce their acts of state.

What was held in Moore against Mitchell, and Peter Buchanan Ltd., and similar cases, is that because policy is involved, therefore, the Court should never entertain actions by foreign sovereigns involving public laws.

Your Honor, I've completed my argument.

I received, as I think I have said, Mr. Rabinowitz's learned reply brief on Thursday.

As a result of which, I revised to some extent my position, my views, on the subject of friendliness and comity.

I have a rebuttal brief here already printed.

It's only five pages long and I've given copies of it to Mr. Rabinowitz, Mr. Katzenbach, and Mr. Seymour.

And, I would respectfully request leave to file it in the Court.

Chief Justice Earl Warren: You may file it.

Mr. Seymour.

Argument of Whitney North Seymour

Mr. Whitney North Seymour: Mr. Chief Justice and may it please the Court.

With only a couple of minutes, I will, first, say a word about the motion for substitution.

There is, pending before the Court, a motion by C.A.V., my client, to be substituted for Sabbatino, the discharged state court receiver.

Sabbatino was appointed in 1960 as the State court receiver of the assets of C.A.V.

He received the funds which is in question here.

At the end of 1962, he was discharged as state court receiver and that fund was placed in escrow abiding the event of this suit.

Therefore, Sabbatino has no further interest in the litigation.

Mr. Williams filed as an indemnity, which is reflected in the record, and C.A.V. is the only party really in a position to assert an economic interest in the fund and, under the general power of the Court to grant substitutions in such cases, we would hope that the Court would do it.

The only argument on the other side is that these were an application on this Rule 24 (c), which it isn't, and if it were made in a different court, which it's not, there would be problems but it isn't that kind of an application.

It isn't made in a court to which the rules apply and, therefore, we would Your Honors would grant the relief.

Now, on the merits, I would like to discuss the proposition, first, that the Act of state doctrine ought not to be applied where there is a clear violation of international law, and I recognize that there are dicta, which I shall have to work my way around, which would be interposed to such a proposition.

But, those dicta originated at a period when international law did not bulk as large in the views of the American Government or the people of the world or the lawyers or judges of the world as they do now, and I would hope that international law now occupied a place where weighing the complications, some of which, I think are rather exaggerated, suggested by my distinguished friend, the Deputy Attorney General, against the importance of building support for international law, case by case, by courts like the United States courts that are followed all over the world, is far more important.

And, I shall address myself, first, to that tomorrow, and then, at the end, I shall like to say a word about the public policy of New York which is involved here because this is a diversity case and, although the District Court didn't seem to take the point, there is a strong point on the public policy of New York which I'd like to present to the Court.

But, my main emphasis will be on the international law point, that I think the significance of that point is emphasized by the fact that Your Honors have before you briefs presented with great spirit and earnestness on behalf of the Association of the Bar, and the American Bar Association, and the International Law Association, and the Dean of the American Bar, Mr. John Lord O'Brian, and his partner.

And, these all emphasize the importance of the international law aspect of this and, weighing that against what is admitted to be a judge-made rule which the Court can administer as it thinks wisest in the long-range interest of the law of the United States and of the judicial administration of the United States, these indicate that international law should give -- be given great weight in the balance.

Chief Justice Earl Warren: Before you start your main argument, we'll adjourn now.

Print this transcript Transcript: 

Argument of Whitney North Seymour

Chief Justice Earl Warren: Banco Nacional de Cuba, Petitioner, versus Peter L. F. Sabbatino.

Mr. Seymour, you may continue your argument.

Mr. Whitney North Seymour: Mr. Chief Justice and may it please the Court.

I'm going to argue today that the judgment below was right because the confiscatory decree of Cuba was plainly a violation of international law and that the Act of State Doctrine should not be extended to cover violations of international law and that the act of state doctrine should not be extended to cover violations of international law.

And, second, I will argue that the confiscatory decree which was sought to be enforced in New York, to some extent, violated New York public policy and that the judgment is correct on that ground as well.

And, first, I must follow some beaten past but I'll follow those very fast.

Of course I don't need to argue that, since the constitution was adopted, international law has been recognized by this Court as a part of the law of the land stated eloquently in the Paquete Habana and Lola and in the eel case and many other cases.

And, the law of the land is no more obscure in the international law field than in any other field.

The importance of upholding international law was certainly never more important than it is today.

The movements with which Your Honors are familiar, the International Commission of Jurists, the World Peace Through Law Movement, both recognized the great importance of establishing and maintaining the rule of law including the rule of international law.

Mr. Rabinowitz, yesterday, suggested that there were a lot of new countries in Asia and Africa who would think that if the American courts adhere to international law and enforced it in connection with the acts of foreign states that they would be thought to be pursuing a local policy, but international law is not of that character.

The great meetings of lawyers around the world in Asia and Africa, many of the lawyers from these new countries have shown their adherence and devotion to these same principles.

At page 42 and 43 of our brief, we quote in part from the declaration adopted at the final conference in Athens which the Chief Justice attended and which declare the devotion of the lawyers of the world to the cause of the rule of law and to international law.

And that devotion was never more eloquently stated, I think, by the Solicitor General here, a day before yesterday, in the Barnett case.

So, we start from the proposition that the internation law is a part of our law, and then I want to discuss very briefly the question of whether the Cuban action didn't clearly violate international law.

And, here, the Deputy Attorney General very properly conceded that it did.

The United States had taken the position that it did.

The courts below were clearly correct in concluding that it did.

The Cuban decree was, on its face, adopted in retaliation against the action in reducing the Cuban sugar quota.

It was aimed squarely at American interest on its face.

It was, thus, retaliatory and discriminatory and, on those grounds, violated international law.

But, it also represented the confiscation of the property of aliens without compensation and, on that ground as well, was a violation of international law.

Justice Potter Stewart: On that ground alone, would it be a violation?

Mr. Whitney North Seymour: On that ground alone, Mr. Justice, in my view, we do not --

Justice Potter Stewart: You referred to the meeting in Athens.

Wasn't there a -- some difference of opinion at that very meeting as to whether or not confiscation without compensation would be a violation of international law?

Mr. Whitney North Seymour: Well, I have to attempt to reconstruct that meeting, and I have referred to it in the footnote in our brief on page 42.

Mr. Rabinowitz's proof, I think, incorrectly describes the action at Athens as one where there was grave dissension on this point.

I think the fact was that there was a resolution adopted toward the close of the meeting, and then some of the representatives or some of the newer countries thought that the American had unduly dominated the deliberations and asked that this matter be put over for a study by the World Law Center, which was to be created afterwards.

But, this came almost on the heels of the almost unanimous determination by the UN that confiscation without reasonable compensation was a violation of international law and I don't think the Athens action can fairly be regarded as casting any doubt on that question.

Now, let me just touch on the nature of this confiscation without compensation so that there won't be any doubt that the courts below were quite right in re -- in regarding the -- the provision for compensation which was suggested in a kind of a casual way in argument as being real compensation.

It was provided, in effect, that those whose property was con -- was confiscated might be compensated in the form of 30-year-Cuban bonds to be issued after appraisal of the value of the property by Cuban appraisers.

And, these bonds were to be taken care of out a sinking fund, the payments into which were entirely a matter of discretion of the Cuban authorities, and the sinking fund was to be made up in this fashion 25% of the amounts received for Cuba sold to the United States were to be deposited in that sinking fund over a period of years, but only 25% of the sales to the United States over 3 million European long tons at a price higher than had ever been paid for a Cuban sugar in the 10 years before the decree.

And, in only one year, had as much as 3 million long tons been sold to the United States.So, it's perfectly evident that this was an illusory provision and made no provision for compensation in effect.

Now, my learned friend, Mr. Rabinowitz, in his reply brief, quotes from a television interview with Mr. Castro in which he says he might be willing to negotiate with Americans on proper terms, a -- an interview three years after the event, surely, no possible support for their view that this was prompt and adequate compensation.

And so, we have a decree which was confiscatory, retaliatory, and discriminatory and it's settled by repeated declarations of the authorities to which the court looks for international law that such decrees violate international law.

Now, the doubt that the court of appeals had, or at least expressed, in trying to break down the decree is one that need not concern the court, it seems to me, at all.

It's evident that the court of appeals considered this decree to violate international law.

It was a little in doubt whether a decree which merely confiscated would violate international law if adequate compensation or if some compensation were provided.

In the first place, we're not dealing with such a decree.

In the second place, my learned friend suggested yesterday, the Deputy Attorney General, that one of the concerns about -- of the Government about our contention here was that maybe a court would sometimes make an error about international law, and I submit that an error of a lower court is to be corrected here, if there was any error in connection with its conception of international law, but I don't --

Justice Potter Stewart: If they want to, that was conceivable.

Mr. Whitney North Seymour: It's conceivable but it's sufficiently rare, so that I think we would all chance it.

Justice Potter Stewart: If a state court made an error in its understanding of international law, would this Court have jurisdiction to review it?

Would that be a federal question?

Mr. Whitney North Seymour: Well, I'm not sure, but I know it's been suggested that international law is so delicate a plan that it should not be subjected to scrutiny except by those in the State Department.

Justice Byron R. White: Isn't it -- isn't it an adversity suit?

Mr. Whitney North Seymour: Yes, sir.

Justice Byron R. White: Do you (Inaudible)

Mr. Whitney North Seymour: Well, I would suppose that the usual rule was that the -- in a diversity suit, one would look to the law of the state or the forum, but the general principle which has been followed in the federal courts, in the Act of State Doctrine, has been followed in various cases in the federal courts, and the State of New York follows the Act of State Doctrine, too.

And, therefore, there isn't any substantial difference on the Act of State Doctrine in the forum and in the federal rule.

Now, let me just go back to the question that Mr. Justice Stewart, I don't mean to pass over to your question at all, but I think the law of New York and the federal rule would be the same on the Act of State Doctrine.

It doesn't seem to me that the examination of questions of international law by a federal court or a state court is any more difficult than the examination of lots of other question that they have to examine.

Some questions which affect the life and liberties of the people and the appellate courts sit to review those questions and, on the whole, keep the lower courts from committing egregious errors, and I'm going to come a little later on to the question of whether that concern expressed by the Deputy Attorney General ought to keep the court from applying the law of the land in act of state cases.

I don't want to get ahead of myself on that if I could -- if Your Honor will bear with me a moment more.

Now, here, we have not a question of the security of titles but an action by the Cuban Government to enforce, in effect, the Cuban decree, get the avails of the effect of the cuman -- Cuban decree, and then use the Act of State Doctrine to shield its activity so that no inquiry can be made by the court about the nature of the decree and its violation of international law.

And, I submit that no authority requires this Court to permit such an action without that inquiry and, indeed, what the Cuban Government seeks here is very much like what the Chinese Government sought in the National City Bank case.

It seeks to use our law by any other litigant but it wants our law free from the claims of Justice, and I submit that that principle which was there applied in connection with the question of a counterclaim is equally applicable where the foreign government is, in effect, the plaintiff.

Now, the briefs here examine the authorities, our brief and briefs of amicae, beginning with Underhill and going through the Shapleigh case, and they undertake to try to satisfy the court that those cases really didn't decide this question.

That Underhill, at least, is really a sovereign immunity case despite the breath of some of the language in the opinion that the other cases did not involve violations of international law because they involve, in the case of Oetjen, a Mexican citizen, and in the case of Ricaud, an action of a revolutionary force which might very well be regarded as not a violation of international law, and I'm going to -- instead of taking Your Honors' time with the review of those cases in detail, I'd like to rest on the briefs on that proposition.

I say they do not control the decision here.

They do not require the Court to say that, where there is a violation of international law, the courts of the United States will not review that violation because of the Act of State Doctrine and any dicta which may be thought to go beyond that could be appropriately limited.

Your Honors, in Baker against Carr, certainly, limited the sweeping language of Oetjen to the extent that it suggest that all foreign relations matters were beyond judicial competency because they were political questions and I see no reason why, if there is anything in Underhill or the other cases that requires limitation, the Court cannot -- can't do it.

Those cases were all decided before the present development of international law had reached anything like its present state or before the countries of the world was concerned with it as they are or before the international agencies like the UN and the World Court were in existence.

And, I submit that, today, the concept of international law, the importance of international law justifies a fresh look at those questions.

Now, there's one case that my friend Mr. Rabinowitz referred to that I don't want to wholly omit reference to and that was the Bahia case in which, right after an American had hijacked an American plane which was returned by the Cuban Government, a Cuban hijacked a Cuban freighter and it was kept in the custody of the Coastguard off of Norfolk.

It kept it so in their custody that the US Marshall from the district court was not allowed to border and file s -- and file a libel.

A suggestion of sovereign immunity was filed by the State Department and there was, pretty clearly, an executive understanding that, in view of the return of the hijacked airliner, the hijacked ship would be allowed to proceed.

And, in that case, in opposing a stay that the government cited here, the Underhill case and the cour -- and the Chief Justice, in his memorandum denying a stay, referred to the Underhill case.

And, I think they're perhaps quite appropriately because there was a sovereign immunity case basically and the case in which, in effect, the Executive Department had undertaken to deal with this matter and, no doubt, the courts would give effect to executive agreements as they did in Pink, in Belmont, and many other cases and I think this was, in substance, a case of that kind.

Now, we don't need to argue any --

Justice Potter Stewart: Mr. Seymour, was that ship, the Bahia de Nipe, owned by the Cuban Government?

Mr. Whitney North Seymour: Well, it was treated as a Cuban vessel, yes.

It had been --

Justice Potter Stewart: It's Cuban registry but was it --

Mr. Whitney North Seymour: Well, my impression is that it had been -- that it was owned by the Cuban Government.

The claim was principally by the United Fruit Company.

They're part of its cargo which was this sugar.

But, in any event, it was treated -- the State Department, through the Attorney General, filed a suggestion of immunity.

Justice Potter Stewart: With the Fourth -- in the Fourth Circuit or in the District Court --

Mr. Whitney North Seymour: Yes.

Justice Potter Stewart: The question --

Mr. Whitney North Seymour: And, on that basis, the ship was ultimately released.

Justice Potter Stewart: But the issue there was not sovereign immunity, was it?

The issue was act of state, wasn't it?

Mr. Whitney North Seymour: Well, their issue was act of state but it was a sovereign immunity case, and I think that cannot be overlooked in trying to interpret the case.

The act of state argument was made on behalf of the United Fruit Company and, yet, here was a -- here was an emergency situation in which a hijacked airliner had just been returned.

Here was a hijacked ship and with a very difficult case, and I don't know whether it made battle or not, but it was a very difficult case.

But, it was within the area, I submit, of executive understanding or agreement.

Justice Potter Stewart: But doesn't that suggest that -- I don't know if that argument helps you here very much.

Doesn't that suggest that, perhaps, that's the area in which these things ought to be worked out?

Mr. Whitney North Seymour: It doesn't suggest that to me.

Justice Potter Stewart: I mean, tomorrow or the next day, there may be a couple more hijacked American Airlines.

Mr. Whitney North Seymour: Well, and there may be some --

Justice Potter Stewart: And is given to (Inaudible)

Mr. Whitney North Seymour: There may be some Litvinov agreements.

And when there are Litvinov agreements and when there are understandings about hijacked planes, then I suppose the courts will respect them but, in the mean time, the law of the land, the international law, is being obtruded through the Act of State Doctrine in every case, and I s -- I want to come to this point in a little more general way in a moment.

I don't mean to try to winso --

Justice William O. Douglas: Would --

Mr. Whitney North Seymour: Winsome away --

Justice William O. Douglas: Would you --

Mr. Whitney North Seymour: -- from the question.

Justice William O. Douglas: Would your argument, Mr. Seymour, be any different if there was compensation but it was nominal compensation?

Mr. Whitney North Seymour: I don't think so.

Justice William O. Douglas: What you're doing is applying the just compensation?

Mr. Whitney North Seymour: I think the rule of international law is just and prompt compensation for expropriated property and then, when you get less than full compensation, there must be a point at which it's illusory as it was here, and that violates international law.

Now, I'm not -- I no -- don't have to argue because of my friend's concession yesterday in the colloquy with the Court that this is a constitutional matter, that there's any constitutional inhibition on the courts requiring that they defer to the Executive all the time in this matter because it's clear that it isn't full of constitutional requirement.

Justice Byron R. White: Mr. Seymour.

Mr. Whitney North Seymour: Yes?

Justice Byron R. White: This is in connection with what I asked a while ago.

If this case had come up in the state courts, the state and the State Department had asserted the Act of State Doctrine, and the New York courts had said "run along.

We'll apply an ordinary conflicts rule and we shall not enforce something contrary to local public policy” and gave judgment against the Cuban Government, and the case was brought here.

What would be the federal question?

Mr. Whitney North Seymour: Well, I would have to rely on your ingenuity to discover that.

Justice Byron R. White: Yes, but how about yours?

Wouldn't you have to get to the constitution?

Wouldn't it have to become then a matter of separation ofpower?

Mr. Whitney North Seymour: Well, I suppose it would be argued by those who try to bring the case here that, somehow, the separation of powers, while not a constitutional matter, was so established that there was a basic question of federal policy involved.

Justice Byron R. White: Well, now, isn't that exactly the position you're in here when -- since it's a diversity suit?

Mr. Whitney North Seymour: I don't think so.

Justice Byron R. White: Well --

Mr. Whitney North Seymour: I don't think so.

Justice Byron R. White: It seems to me that --

Mr. Whitney North Seymour: Let me -- let me try to deal with that as I go along and if don't deal with it to Your Honor's satisfaction, I will try to come back to it.

Well, now, I want to pass, if I may, to an attempt to deal with Mr. Katzenbach's policy argument, and I'll hope to pick up some of the answers to some of the questions that I've deferred there.

With the greatest respect to the -- to the Government, to government counsel and to those who purport to speak for the State Department on this matter, I submit that this argument really, when Your Honors come to consider it in prospective, exaggerates the importance of the Executive as the upholder of international law and minimizes too much the role of the courts as the upholder and definer and enforcer of international law.

That it, naturally, and I naturally expect, the Executive Department to defend every possible prerogative that may exist.

It naturally tends to suggest that it's only through the declarations of the State Department about international law that international law can be advanced and it doesn't do any good for courts to make decisions about international law or to enforce international law.

That they may only just get in the way of the State Department in this regard and that it would be far better for them to continue the self-denying practice of the past and just keep out of this and let the rogue elephants that may be loose in the family of nations and may be violating international law come into our courts and enforce their decrees and let the State Department protest.

Not all was effective with rogue elephants.

It would be the one voice of the United States in support of international law.

Now, I submit that this view takes too poor a view of the contribution that could be made by the judiciary in this field.

I think it stems from a kind of a mystique about foreign relations, a kind of a feeling that, in this field, you have to leave it to the experts and I submit that, in a day when it is part of defined and declared American policy and has been for a long time, not a policy of the moment but a policy of the United States that international law is to be upheld, that the rule of law is to be upheld, that it's too important a matter to be left solely to non-lawyers and that courts and lawyers can make some contribution to it.

Now, I'm going to just go over it quickly because my time is very short, some of the main points that were made by Mr. Katzenbach in this field because many others will occur to Your Honors if you come to think about this.

And, first, let me lay aside one suggestion that Mr. Rabinowitz makes in his reply brief.

He says that when the lawyers, the amicae curae, and the others, undertake -- try to deal with these policy questions, they are confusing themselves with judges of this Court and with the Secretary of State.

I hope we're not committing that transgression.

I would've supposed that on argument as to the proper role of the various divisions of the government was open as a natural part of the advocacy in the case.

Now, as I understand the Government's brief, and Mr. Katzenbach may have alighted some of these points yesterday.

First, it suggested that the courts ought not to concern themselves with violations of international law in this field but simply let the Act of State Doctrine operate to let confiscatory decrees have their way in the United States because you can't establish a world rule of law by occasional judicial decisions.

Well, of course that's true, but every brick in the wall of international law placed there by an authoritative court respected around the world is better than another hole in the wall which is created when a confiscatory decree in violation of international law is permitted to have its way.

It suggested that if the court looks at international law in connection with such a decree, it may cast out upon international titles and I submit that, first, we don't have any such problem here because this isn't a question of a third party title.

We don't the problem of what you do about purchases, with or without notice, and that sort of thing.

But, I don't really see why it should be clear that the United States could be -- should become the natural thieves market for the sale of goods confiscated in violation of international law around the world and why this should be one of the countries where the courts feel that they must not interfere with titles so obtained.

Now, it suggested that, somehow, Cuba would react adversely, Cuba and other countries similarly situated to a decision of an American Court that they were in violation of international law, whereas, they would naturally acquiesce gracefully in any claim on behalf of the State Department to that effect.

I submit just the opposite is the case.

As Mr. Rabinowitz never more clearly shown -- showed than he did in his statement to the Court yesterday that, of course, the State Department could say anything they wanted to about international law.

That didn't make any difference, but courts shouldn't do it.

It's just this point that I want to emphasize to Your Honors.

When courts deliberately declare that a part of the law of the family of nations has been violated by this decree, the impact of that action is not only on the country involved but on the rest of the judges and lawyers of the world.

And, I submit that the Court should not downgrade its contribution in this field or assume that it's only the Executive Department's declarations that will be given weight.

Now, it suggested that this might interfere somehow with diplomacy.

I submit that that's a much exaggerated claim.

I suppose there are two possible sets of facts.

You can imagine any -- any number.

There is one set of facts in which the court decides if there's a violation of international law and the State Department is in negotiations with the country to try to work out arrangements on the basis that the country has violated international law.

Now, in such a situation, how can a declaration by a court possibly adversely affect those negotiations?

And, if you assume the opposite that a court decide there has been no violation of internal law, isn't it perfectly plain that if the State Department has taken another view since international law and whether or not it's been violated is a matter that scholars and lawyers generally can determine, that they'll see through at once the claim that there's been a violation of international law?

I'm not suggesting that the courts ought to take up the diplomatic post.

I'm suggesting that, as they contrid -- contribute the bricks to the wall of international law, they parallel and do not interfere with the activities of the Executive Department.

And, any concern to the contrary is simply an excessive confidence in the activities of non-lawyers and an excessive doubt about the contributions of judges and lawyers to this field.

Now, one final thing, Mr. Katzenback said yesterday that if you -- if you took this view, the courts would be involved in reexamining foreign judgments on the ground that they might involve violations of foreign law -- of international law.

Well, my understanding of the rule is that the Court now examines foreign judgments for lack of jurisdiction, for fraud, perhaps for lack of procedural due process.

Surely, the fact that a principle of American law, a part of the law of the land, gave an additional subject on which foreign judgments might exam -- be examined would not unduly burden the courts.

And, I submit, taking this in its most authoritative form, this really expresses an exaggerated concern and that the courts, by passing on these cases as they arrive -- arise, applying international law to the applause and enthusiasm of the countries of the world who live by international law, the decisions of this Court and the American courts are the guiding lights for most of the new countries who are trying to work out the principles of their law and, to have our courts showing their devotion to international law rather than their willingness to wink at violations of international because of the Act of State Doctrine would be useful.

And, I do not see the possibility that, occasionally, a lower court decision might need correction should stand in the way in -- to any degree.

Justice Potter Stewart: Mr. Seymour, get to this in your own good course, but am I right in understanding that if C.A.V. is the bona fide of Cuban national, then international law is not involved at all.

Mr. Whitney North Seymour: Well, I don't -- I don't agree with that.

If -- maybe I can dispose of this whole point right now.

I was going to mention it in a moment.

The incorporation of C.A.V. in Cuba with 90% of its stockholders -- American stockholders would put it in the category where, as a matter of international law, based upon the views of commentators and many of these things before Your Honor, the question of violation of international law would be considered and would be involved, and I submit the fact that Cuba picked it out for confiscatory, discriminatory, retaliatory attention shows that it would be in the position to raise the question.

Now, I don't think the fact that it's a Cuban national under those circumstances would stand in the way of consideration of its claim of violation of international law and so the lower courts upheld.

Justice Potter Stewart: We know the lower court upheld it and the honorable court --

Mr. Whitney North Seymour: Well, I think Your Honor will see in our brief extremely respectable authority for that decision, and any contention to the contrary just disregards the estoppel which is really worked by this decree.

And, I'm not going to argue that further because I think the decree itself --

Justice Potter Stewart: That's the language pointed out by my brother, Goldberg, yesterday.

Mr. Whitney North Seymour: Yes, sir.

Now --

Justice Tom C. Clark: I don't wish to interrupt the train of your argument but I wish you would cover somewhere the matter that I've raised before in which you suggested, I believe, in one of the briefs, that we might -- in order not to enforce, as you tell it, the claim of the rogue elephant that we vacate and direct the suit to be dismissed.

Mr. Whitney North Seymour: Well, I think it would be a proper disposition of the matter if the Court felt that it could not consider the international law issue and I think, since the international law issue is a critical factor here, that the Court should dismiss the case and the net result of that might be dubious under the escrow agreement, but that's something the parties would just have to figure out for themselves.

But, the argument that Mr. Laylin makes in his brief amicus and Mr. Brown make that, where the court is unable to consider all issues, the court shouldn't consider part of it and dispose of it on that basis.

It seems to me, they have a good deal of American.

Now, let me --

Justice Potter Stewart: In suggesting -- just so I can follow up as to -- you're suggesting that, under the given circumstances, a dismissal would be proper, a dismissal of this petition for certiorari or a remand with directions to the trial court to dismiss it?

Mr. Whitney North Seymour: Well, I think the proper disposition of this case is an affirmance.

Justice Potter Stewart: Yes, I understand.

Mr. Whitney North Seymour: If Your Honors do not affirm then there are two possible dispositions that would be proper in my view.

One would be to remand to the lower court to try the issues which are raised as to when the Cuban decree became effective, when title passed, if it passed, and so on.

And, the other disposition, which is the one rather intimated in Mr. Justice Clark's question, would be the direct dismissal upon the ground that, since the Court, if Your Honors adhere to the Act of State Doctrine in the teeth of a violation of international law, upon the ground that all the issues can't be considered.

Justice Potter Stewart: Direct the trial court to dismiss it.

Mr. Whitney North Seymour: Yes.Yes.

Mr. Whitney North Seymour: Now, let me just come to -- I just got a couple of minutes more and I'm going to hurry over two points, one, the so-called Bernstein letter question.

In this case, the State Department wrote letters which, amicae thought in the court below and the court below thought, indicated that the State Department did not object to the court considering the questions here.

Mr. Katzenbach and the Government brief take the view that that is a misinterpretation of those letters and I'm not in the position to quarrel with them, although the letters seem to me to go a little beyond ordinary amenities.

But, my view of the proper rule here is this.

Since there's no constitutional inhibition on the consideration of these matters by the courts, the courts saw it not as a matter of course to consider that they have to ask the State Department before they can consider cases or controversies which are committed to them by the constitution.

They're performing a constitutional function in dealing with the case or controversy and they ought to consider the State Department's views only if a matter of paramount national interest may be involved.

I would recognize, although it's not involved in this case, that if there were a situation where the dec -- the momentary decision by a court jeopardize the national interest to the point where everybody would recognize it, the court might decide to defer briefly or at length to the request by the State Department.

I think that's a far different thing from just saying “we won't move unless the State Department says we can.”

In the Bernstein case, it said it could because there was no violation of international law involved.

And so, the Bernstein case is not in point here at all anyhow.

Now, finally, let me come to the New York policy question and, Mr. Justice White, I hope this doesn't -- I hope this may answer your question.

I'm not quite sure.

New York's policy is clear, established by cases on our brief, that where a -- an expropriation decree is sought to be given any effect in New York, the New York courts will not enforce it.

A long line of authorities established that proposition and I think it's not disputable.

Now, in this case, what happened was that C.A.V. had a contract with Farr.

The Cuban Government expropriated.

It purported to expropriate the sugar but, in order to make it effective, must have appropriated some interest under that contract.

And then, it proceeded under duress to force Farr to make a new contract with a representative of the Cuban Government and then presented the documents pursuant to that new contract to Farr in New York and demanded payment.

Now, in substance and effect, that was nothing but a subrogation to the rights of C.A.V.

C.A.V. had a claim with c -- with Farr.

The Cuban Government made an identical contract, dated it back to the same day as in the original contract showing that they were simply trying to affect the same rights, and then they made the demand in New York.

Now, to disregard the form and consider the substance of that transaction is a step which I think is quite consistent with judicial action.

And, I think that the substance of that transaction was that Cuba sought to reach into New York to get payment.

And, whether you say that it was direct or indirect doesn't make much difference because payment could not be made except by enforcing the shows in action in New York, and that's exactly what happened in these cases where New York would not enforce the foreign decree because the foreign decree sought to deal with assets in New York, and this was the substance of that.

Now, Section 977 (b) of the New York Civil Practice Act, under which Sabbatino was appointed receiver, was passed to enforce the New York public policy, as cases on our brief show.

And, the policy was against expropriation in decrees being made effective in New York and these assets, in the hands of Farr, taken under custody by the receiver were taken under custody in connection with that transaction.

Finally, although no New York case deals with this directly, the policy of New York against expropriation and against permitting extraterritorial enforcement of expropriation decrees ought to be plainly more strong in opposing the enforcement of a decree which was retaliatory against the United States and which is sought to be enforced in the New York courts when it was adopted against the very sovereignty which is -- which has established the courts.

And, so, on broad grounds of New York policy, I submit that this judgment might correctively be affirmed.

Now, Judge Dimmick did not deal with the policy question, rejected an argument about policy, but I don't think he dealt with it in these terms.

Thank you, Your Honors.

Justice Byron R. White: (Inaudible)

Mr. Whitney North Seymour: And --

Justice Byron R. White: And any Act of State Doctrine that you (Inaudible)

Mr. Whitney North Seymour: Well, I think the New York policy would recognize an exception to the Act of State Doctrine where extraterritorial effect was sought to be given.

Justice Byron R. White: You mean, affirmed?

Mr. Whitney North Seymour: Yes, yes, they're -- the cases on our brief to that effect.

Justice Byron R. White: Then why -- what's (Inaudible)

Mr. Whitney North Seymour: Well, I would've thought that the federal court might very well have dismissed on that ground but it didn't do so.

I want to show you that you can as -- affirm the gr -- the judgment on that ground, as well as others.

Justice Arthur J. Goldberg: Mr. Seymour, is New York consummately part of international law?

Mr. Whitney North Seymour: Well, the -- let me take it in two steps.

First, it's clear that the act of state policy which is followed by this Court is not a part of international law.

It is clear that the Act of State Doctrine is an American doctrine, perhaps, also followed in England but not followed generally.

Therefore, that doctrine, not being a part of international law, I doubt if New York -- in New York, which must be only a fragment of that doctrine, is a part of international law.

Justice Arthur J. Goldberg: Then, I suppose that the question of international law will be explored and the state policy will controvert international law.

What should this Court do with international law?

Mr. Whitney North Seymour: Well, you -- I would've supposed that the law of the land was international law and if -- and that it would probably override a state policy, but that involves a terribly difficult and elaborate question which I wouldn't like to try to deal with right now.

Justice John M. Harlan: May I ask you one question.

Mr. Whitney North Seymour: Yes, sir.

Justice John M. Harlan: Am I correct in thinking that English courts do not enumerate to get the statement from (Inaudible)

Mr. Whitney North Seymour: I think that's probably correct, although -- and it's also clear, however, that, in various arbitrations and other cases which are cited on our brief involving English interests, there's been an effect by decisions from amelioration of the ct of State Doctrine but, in the decided cases in the courts, I think Sagor is probably still good law.

Chief Justice Earl Warren: Mr. Rabinowitz.

Argument of Victor Rabinowitz

Mr. Victor Rabinowitz: I should like, in the few minutes I have, to discuss some of the points raised by Mr. Seymour and, particularly, this very troublesome problem of what is international law.

It is true that the -- this Court held in Paquete Habana that international law is part of the law of this land but, of course, we must recognize a very essential difference.

In determining what is the law of this land, this Court has the final word and what this Court says is the law of the United States.

But, unfortunately, this Court cannot make the same pronouncements as to what is international law and, therefore, a decision by this Court saying that compensation, for example, is required by international law doesn't make it international law, with all due respect to this Court, because international law, as almost universally defined, is the practice of nations.

And, I submit with all due respect to Mr. Seymour and with all due respect to all of the very voluminous and scholarly briefs that have been written here, there is nothing in those briefs to justify any conclusion that these decrees were a violation of the established practice of nations.

As a matter of fact, if we look at history, we find that, at least since 1917, the established practice of nations has been -- have been to confiscate and to nationalize the property both of citizens and of aliens without paying compensation for it and, frequently, in a retaliatory and discriminatory fashion.

Now, this may be very sad and it may be very unfortunate and we may all regret it, and it may be that all of the commentators say this ought not to be allowed, but if we look at practice, it is what happens.

And, we cannot change the practice and we cannot change the law merely by saying that the law is otherwise.

In the Paquete Habana, which Mr. Seymour cites, the Court warned against this and it said, in looking at international law, we must be careful about the views of learned commentators who tell us what they think the law ought to be because that does not make international law.

We have, today, I think 112 nations in the United Nations.

When Grotius wrote, I suppose there were 10 or 15 or 20 nations which might have a sufficiently high degree of civilization so that they had a judicial system.

Today, we have 10 times as many.

I look forward, as much as Mr. Seymour does and as much as everybody else does, to the day when we can say that there is an established body of international law with respect to these very troublesome questions but we haven't got to that point.

I hope we will, but we aren't there.

And, the established practice of nations give no support and none of the authorities -- none of the briefs that had been submitted in this case show any support for the doctrines that Mr. Seymour has so eloquently argued here for today.

I would agree with him, perhaps, on the question of policy, but I cannot agree with him that there is any such law and all of the law review articles and all of the resolutions by the American Law Institute and all of the articles and comments by learned scholars, for whom I have the greatest respect, do not make international law in the face of a well-established practice to the contrary.

Now, what do we have here?

I disagree.

I wasn't fortunate enough to be at Athens but, from what I read in the papers and from what Mr. Ryan wrote to me, and it's cited in my brief, what happened was that, on one day, the conference of lawyers, which of course was not a legislative body and had no power to make law anyhow, said that there should be compensation for confiscated property and, the next day, they revoked it and said this requires further res -- further discussion.

That isn't the recognition of a rule of law, even if it were a legislative body.

As I point out in my brief, the United Nations confronted with the very problem, that also is not a legislative body incidentally, confronted with the very problem of making compensation for a nationalized property split 30 nations voting one way, 30 nations voting another way, and 33 nations abstaining.

Does this -- and some of the (Voice Overlap)

Justice Hugo L. Black: Suppose 60 -- suppose 60% had voted one way --

Mr. Victor Rabinowitz: I don't think it would've made --

Justice Hugo L. Black: And 40% in another.

Mr. Victor Rabinowitz: I think the result would have been exactly the same, sir.

It would not have established a fairly uniform practice among the nations.

Now, what the percentage point is, I don't know.

Justice Hugo L. Black: What if 75 had voted one way?

Mr. Victor Rabinowitz: I don't think it would make any difference and --

Justice Hugo L. Black: Suppose 90.

Mr. Victor Rabinowitz: Well, I suppose that if we got to 90, and it would then -- I would then have to look and see what the nations were.

And, if the dissenting nations were Chad -- I don't want to mention any nations.

I don't want to make anybody angry.

If the dissenting nations had a total population of 5% of the population of the world and the other nations had 95%, I suppose we could call something the established practice.

Justice Hugo L. Black: So, that'd be an international law that bounds us whether we wanted to be bound or not?

Mr. Victor Rabinowitz: It cert -- no resolution --

Justice Hugo L. Black: Would it be an international law if it didn't bind us?

Mr. Victor Rabinowitz: No resolution by the United Nations could make international law in any event because it is not a legislative body.

But, if this Court holds that international law is a part of the law of our country and if there is some subject on which there is a well established principle of international law, and, these days, I'm not so sure that I can find very many of them, even free passage of the sea is, apparently, not as well-established as it was 50 years ago, then I suppose that, under the Paquete Habana, this Court is as much bound by international law as it is by any other domestic law, at least that's what the -- what the --

Justice Hugo L. Black: Suppose it didn't want to be.

Mr. Victor Rabinowitz: Well, if it didn't want to be --

Justice Hugo L. Black: Could this Court make it so as it didn't want to be in, and that becomes so, by joining in some kind of a union that meant that you did have the power to make laws that are binding on the world?

Mr. Victor Rabinowitz: Well, obviously, this law could not -- this Court could not make the law for the world.

This law could -- this -- if I understand your question correctly, this Court could not decide what is international law and, if this Court decided that it tha -- did not wish to be bound by international law, then, presumably, it would not be bound by it.

Justice Hugo L. Black: Is that correct?

This Court might decide it, but Congress and the Executive might decide otherwise.

Mr. Victor Rabinowitz: That is quite possible also.

I sup -- well, I don't know whether Congress and the Executive --

Justice Hugo L. Black: Are you -- are you saying, even as far as -- are you going far enough to show this Court has a right to establish an international common law that binds all the nations of the world?

Mr. Victor Rabinowitz: Well, I don't -- I don't know --

Justice Hugo L. Black: By finding something -- by finding something other than that the government, itself, has a duty to accept mandates as binding on them.

Mr. Victor Rabinowitz: Well, this Court, I am sure, could not establish international law.

I'd suppose if there is to be, at least in the present state of our civilization, any international law at all, it must be an international common law because we don't have any legislatures that can determine these things.

Certainly, the legislature of the United States would not be --

Justice Hugo L. Black: As I recall, there was a rather vigorous opposition in this country to having even a national common law.

Mr. Victor Rabinowitz: Well, I think there was, but we passed that and I think, in many respects at least, we have it.

My time is up, but I would just like to repeat what I said that I don't believe that there is any justification, however vigorously and with whatever great sincerity and without -- however many footnotes there are.

There is no justification for any finding that there is any international law on this subject.

The nations of the world are split wide-open and most of the nations, or at least most of the people in most of the nations of the world, engage in wide-spread nationalizations frequently, I regret to say, without regard to the Fifth Amendment of the United States Constitution.

Justice Byron R. White: Mr. Rabinowitz, assuming it's a New York law, (Inaudible)

Mr. Victor Rabinowitz: Pardon me, I didn't hear you.

Justice Byron R. White: Assume -- assuming that it was clear under New York Law that, in a New York court, judgment would be against your client.

What authority would the federal courts have and this Court to override that -- not to follow the New York law?

Where do you latch into the federal system with international law or with --

Mr. Victor Rabinowitz: Well, it's a very difficult --

Justice Byron R. White: Act of State Doctrine?

Is there anything like that?

Mr. Victor Rabinowitz: It's a very difficult and baffling question and it's treated in the last footnote of the court of appeals --

Justice Byron R. White: At least without -- well, at least without getting into the federal constitution.

Mr. Victor Rabinowitz: Well, as I say, the last footnote in the court of appeals opinion raises this question and it raises a -- really a horrifying prospect.

If the Act of State Doctrine is to be dropped and if this, then, is determined by Erie against Tompkins and the Klaxon case so that every state is going to decide for itself what is international law and determining the effect of foreign decrees, we are likely to have 50 doctrines, or at least the possibility of 50 doctrines, plus one, namely, the federal system in cases arising in the District of Columbia where one of the Cuba cases of course did arise.

And, the possibility of that, I think, probably was what caused this last footnote.

The court -- the court of appeals did suggest that, and I read from that last footnote, on the other hand -- after quoting Erie against Tompkins and Klaxon, it said “on the other hand, certain cases have indicated that internation law is part of the body of federal law."

For our purpose here, we don't have to resolve these questions because it appears that the New York law is the same as the federal law and, in that, I agree and I think Mr. Seymour agrees also but we just disagree on what that law is.

Now, I think it's a very troublesome problem and --

Justice Byron R. White: You would -- you would urge that if it -- that if the New York law governed, you would urge that New York law has an Act of State Doctrine.

Mr. Victor Rabinowitz: I think New York law clearly has an Act of State Doctrine.

As a matter of fact, the New York State Supreme Court specifically refused to follow this decision.

In Mann against Petrolera, which is quoted in my brief, and it said that if there -- they were discussing, at that point, property which was located in New York and, therefore, under New York -- well-established New York law, it was not affected by the expropriation decree.

But, the court said "if this property had ever been in Cuba, it would have been nationalized even though, later, were brought to the United States" and it said the usual formulation is here, Sabbatino.

And -- so, the court -- courts in New York, at least insofar as we have any decisions in New York on this question, disapprove of the Sabbatino case.

Justice William J. Brennan: Well, Mr. Rabinowitz, on Mr. Justice White's hypothetical, how short of making the Act of State Doctrine a question of separation of powers and, therefore, the question of federal constitutional law?

Can the federal courts reach the decision in the New York courts?

Mr. Victor Rabinowitz: Well, it would be -- it would be difficult.

I might say that, in drawing my complaint here, I alleged not only diversity but also the executive power of the President over -- of the -- that is, the power of the Executive Branch over foreign affairs because I was -- that, as I alleged, separation of powers as a -- is a -- an additional ground of federal jurisdiction.

Now, we never got into that and I'd make --

Justice William J. Brennan: I though in your argument yesterday, in the colloquy you and I had, that you disclaimed that basis of the Act of State Doctrine.

Mr. Victor Rabinowitz: Well, I find it a little difficult to see that the Act of State Doctrine rests on constitutional grounds in the normal sense.

Now, if Mr. Katzenbach's position is a correct one, and of course I agree with it, then it may well be that we will ultimately reach the decision, which I don't think we have to reach in this case, that because, as I say, New York and federal law are the same, we will reach the decision that this is a matter which is within the exclusive prerogative of the Executive Branch of the Government and, therefore, it does come within the constitution insofar as the separation of powers can be said to be, in any event --

Justice William J. Brennan: I suppose that your argument really adds up to this, doesn't it, that, for the purpose of this case, the narrowest possible ground of decision is that, indeed, no international rule of law has been proved?

Mr. Victor Rabinowitz: Yes, sir.

Well, I would go -- I would stop before that.

I would say, for purposes of this case, we don't --

Justice William J. Brennan: Well, I know, but if that's the fact --

Mr. Victor Rabinowitz: Get there --

Justice William J. Brennan: If that's the fact, we don't have to reach act of state or anything else, do we?

Mr. Victor Rabinowitz: I put it the other way, Your Honor.

I would say that if the Act of State Doctrine applies, then we don't ever -- ever have to get to the question as to whether there's an issue of (Inaudible)

Justice William J. Brennan: Well, assuming that's --

Mr. Victor Rabinowitz: It's easier that way, Your Honor.

It's much easier because the Act of State Doctrine -- the Act of State Doctrine is a lot clearer than international law.

Justice William J. Brennan: I wonder if it so easy.

Justice Byron R. White: Well, what business have we got in applying our Act of State Doctrine, if we had one that you find in the federal cases, unless you can find it in a New York law?

Mr. Victor Rabinowitz: But it is in the New York law.

There is no -- there is no suggestion to the contrary in the New York law.

Justice Byron R. White: Well, you and Mr. Seymour obviously have a serious disagreement on this.

Mr. Victor Rabinowitz: I don't think so.

Mr. Seymour --

Justice Byron R. White: Well, he says it's an Act of State Doctrine, but it would not override a -- it would not apply in a case where there's a violation of international law.

Mr. Victor Rabinowitz: Well, he says so but there's no authority to support it.

Justice Byron R. White: Or -- no, the other way.

Mr. Victor Rabinowitz: Well, there are only three cases and, I -- in the Salimoff case, the Court says, and I find it hard to find language that -- that's clearer, that says --

Justice Byron R. White: Just to the New York law, then it's just silent on what would --

Mr. Victor Rabinowitz: Well, I -- I don't think this is silent, Your Honor.

May I just have -- I know my time is long up but, at page 12 of my brief, the Court of Appeals in New York, the courts of our -- of one independent government will not sit in judgment upon the validity of the acts of another done within its territory, even when such government seizes and sells the property of an American citizen within its boundaries.

Now, of course it didn't discuss the question as to whether there was compensation, but we all know there was no com -- this was a Russian case.

We all there was no compensation in the Soviet Union for the -- for the seizure of American property.

Justice William J. Brennan: Mr. Rabinowitz, I still don't understand why, if you are right that there is no international rule of law requiring -- no established rule of law requiring compens -- compensation upon such confiscation, if that is so, why that wouldn't dispose of this case?

Mr. Victor Rabinowitz: I think it would.

Justice William J. Brennan: Alright.

Mr. Victor Rabinowitz: I think it would dispose of it.

Yes, I think it could be done either way.