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A concurring opinion by Mr. Justice Lewis F. Powell, Jr., expressed the view that even in cases deemed to involve purely political acts, it is the duty of the judiciary to decide such cases "[u]nless it appears that an exercise of jurisdiction would interfere with delicate foreign relations conducted by the political branches. . . ."

The dissenting opinion by Mr. Justice Thurgood Marshall disagreed that the Cuban respondents had not met their burden of proof. Justice Marshall said that the statements by counsel for the Cuban respondents showed that respondents were exercising sovereign authority when they refused to return the money Dunhill had sent: "[A]s authoritative representations of the position of counsel's clients,... these statements do confirm that the continued retention of those monies has been undertaken as an exercise of sovereign power." Justice Marshall also questioned the wisdom of attempting the articulation of any broad commercial exception to the act of state doctrine within the confines of a single case.

Application of the act of state doctrine was a principal issue in Hunt v. Mobil Oil Corporation, 410 F. Supp. 10 (1976), decided by the U.S. District Court for the Southern District of New York on November 5, 1975, aff'd January 12, 1977 (U.S.C.A. 2d Cir.). Plaintiff Nelson Bunker Hunt, who was engaged in oil production in Libya, brought action against a number of other Libyan and Persian Gulf oil producers to recover for alleged violation of the antitrust laws and for breach of contract. He charged that prior to and in the course of cooperative efforts by plaintiff and defendants to deal with increasingly aggressive oil producing countries, defendants combined and conspired in violation of section 1 of the Sherman Act (15 U.S.C. 1) and section 73 of the Wilson Tariff Act (15 U.S.C. 8) :

(1) to impose unlawful restrictions on him by insisting he enter into an agreement, thereafter enforced, which limited the resale of Persian Gulf oil supplied to him by defendants to his preexisting Western Hemisphere and European customers;

(2) to boycott him by refusing to deliver 90 million barrels of oil due him under that agreement; and

(3) to use the agreement, and their consequent control over the course of Libyan negotiations, to promote certain defendants' Persian Gulf interests at plaintiff's expense, and ultimately destroy him by preventing him from reaching any agreement with the Libyan Government, thus leading to plaintiff's nationalization and elimination from competition as a producer of Libyan oil.

The defendants moved to dismiss for failure to state a claim. They argued, inter alia, that all three claims were foreclosed by the act of state doctrine.

The U.S. District Court for the Southern District of New York decided that the first two counts were not barred by the act of state doctrine, but that the third count was barred by it. The Court said that the act of state concept had no bearing on the first claim because resolution of the issues raised did not in any way require an inquiry into the judgment, the conduct or acts of the Libyan Government, or any alleged conduct by the defendants which allegedly induced action by the Libyan Government. Likewise on the second claim, the Court held it was premised entirely under a provision of the oil producers' agreement and did not involve any question of Libyan conduct.

On the third claim, the Court found that the defendants' act of state plea rested on a solid foundation. It considered that the manipulative course of conduct attributed to certain oil producers following signing of the oil producers' agreement centered around the defendants' negotiations and dealings with, and action taken thereafter by, the Libyan Government, and therefore was within the proscription of the act of state doctrine. Rejecting plaintiff Hunt's contention that his claim challenged no act by the Libyan Government and did not ask the Court to sit in judgment on the acts of a sovereign, the Court stated:

It may well be that recent public disclosure of the dealings of multinational corporations with foreign governments which have an adverse impact upon American interests justifies a reappraisal of the act of state doctrine to determine whether its scope should be confined. However, in the absence of new doctrinal trends in Supreme Court opinions, reassessment of the range of the doctrine must rest with that Court and not this Court. Accordingly, the defendants' motion to dismiss the third claim is granted.

On plaintiff's breach of contract claim, the Court held that antitrust issues were so involved as to preclude stay of the antitrust proceedings pending arbitration pursuant to the arbitration provision in the oil producers' agreement.

On May 18, 1976, the U.S. District Court for the Southern District of New York, in Stroganoff-Scherbatoff v. Weldon, 420 F. Supp. 18 (1976), held that the act of state doctrine precluded the alleged descendant of the original owner of works of art from recovering such works of art from the present owners in view of the fact that the Soviet Government, which had appropriated the works of art from the original owner in Russia, was recognized by the United States at the time of the law suit.

The art works, known as the Triest Portrait and the Diderot bust. had been sold in Berlin in 1931 by order of the Trade Consulate of the

Soviet Union. The defendants had become owners in due course. The plaintiff alleged that he was the direct descendant of Count Alexander Sergevitch Stroganoff, the original owner of both works of art, and that he was the rightful owner by reason of familial succession. The defendants contended that even if the plaintiff could prove ownership by familial succession the Court was barred from granting relief by reason of the act of state doctrine. The Court agreed with defendants' contention. It stated:

The act of state doctrine requires courts of this country to refrain from independent examination of the validity of a taking of property by a sovereign state where 1) the foreign government is recognized by the United States at the time of the lawsuit, and 2) the taking of the property by the foreign sovereign occurred within its own territorial boundaries.

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Here, the record shows that the works of art, whether in the Stroganoff Palace or in the Imperial Hermitage Museum, were appropriated by the Soviet Government under either Decree No. 111 of the Council of People's Commissars published on March 5, 1921, which nationalized all movable property of citizens who had fled the Soviet Union, or Decree No. 245 of March 8, 1923, promulgated by the All Russian Central Executive Committee and the Council of People's Commissars, which nationalized property housed in State Museums.

While plaintiff contends that the "taking" did not occur within. the territory of the Soviet Union but in Berlin at the Lepke Auction and, under such circumstances, the act of state doctrine is. inapplicable, the record indicates that the works of art were appropriated in Russia, prior to the Lepke Auction, and were transported to Berlin by the Soviet Government solely for the purpose of the public sale.

The Soviet Government had been recognized by the United States as the de jure government of Russia in 1933. Whether the works of art had been appropriated under Decree No. 111 of March 5, 1921, or Decree No. 245 of March 8, 1923, appears to be immaterial. The sale of the Stroganoff Collection was held by order of the [Soveit Trade Consulate] and as such was carried out under the direction and with the consent of the Soviet Government. While the actual sale of the works of art occurred in Berlin, the property had been seized in Russia by the Soviet Government.

Thus, it seems clear that, on this record, plaintiff is precluded from recovery by reason of the act of state doctrine. Banco Nacional de Cuba v. Sabbatino [376 U.S. 398 (1964)].

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United Bank Limited v. Cosmic International, Inc., 542 F.2d 868 (1976), decided by the U.S. Court of Appeals for the Second Circuit on September 30, 1976, involved a dispute between Bangladesh and Pakistani plaintiffs concerning the right to receive payment for jute products which were exported from the former territory of East Pakistan and resold in the United States prior to December 16, 1971, the day that Bangladesh won its independence from Pakistan. The jute was originally supplied by two Pakistani corporations, whose East Pakistani interests were expropriated without compensation by the Bangladesh Government after the termination of hostilities. The Bangladesh plaintiffs claim that by virtue of the nationalization orders they are the successors in interest to all property formerly owned by the Pakistani plaintiffs. Although acknowledging that no compensation was paid for any of the Pakistani property purportedly seized, the Bangladesh plaintiffs maintain that the act of state doctrine precludes American courts from examining the propriety of any taking effected by Bangladesh law.

The U.S. District Court for the Southern District of New York decided in favor of the Pakistani plaintiffs, 392 F. Supp. 262, holding that the act of state doctrine did not govern because at the time the Bangladesh Government attempted to seize the debts their situs was in New York, and the purported confiscations were contrary to U.S. public policy. The U.S. Court of Appeals affirmed.

On appeal, the Bangladesh plaintiffs maintained that the act of state doctrine should govern because the situs was in Bangladesh, and the decrees, while confiscatory, were not extraterritorial in nature. They argued, finally, that, even if the situs was in New York, the seizures in question were consistent with established American standards which permit confiscatory taking in wartime situations. The Court of Appeals held that the situs of the debts was in the United States, relying on Menendez v. Saks and Company, 485 F.2d 1355 (1973), rev'd on other grounds sub nom., Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682 (1976), ante, p. 332, and that since the District Court was not obliged to apply the act of state doctrine to extraterritorial seizures, the Bangladesh decrees were properly denied effect because American public policy "does not recognize the validity of governmental takings without compensation." The opinion stated:

[T]he Bangladesh plaintiffs have not called our attention to any cases which actually applied jurisdictional considerations in fixing situs at a place other than the debtor's domicile. Moreover, since jurisdictional determinations would inevitably require American courts to engage in complex interpretations of foreign statutory and case law pertaining to jurisdiction, resolving situs questions on such a basis would deprive the act of state doctrine of certainty and predictability. Cf. Banco Nacional de Cuba v. Sabbatino, . . . 376

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U.S. at 424-428. An even more fundamental reason for declining to adopt this approach is that the act of state doctrine would thereby be given needless scope. Where an act of state has not "come to complete fruition within the dominion of . . . [a foreign] government,' "no fait accompli has occurred which would otherwise effectively prevent an American court from reviewing the act's validity. More importantly, in the absence of such a fait accompli, there is less likelihood that any ensuing judicial review would jeopardize this country's foreign relations. . [Id. at 874]

Because of territorial constraints and our country's traditional policy against confiscatory expropriations, the Bangladesh plaintiffs obviously would not have been able to seize directly the Cosmic debts located in New York. If the argument they now advance were to prevail, the Bangladesh plaintiffs would effectively be allowed to accomplish in an indirect manner a result which they could not have achieved directly. The act of state doctrine was not intended to permit foreign governments to circumvent American public policy. For this reason, our courts have always been wary of inadvertently extending extraterritorial effect to foreign seizures.

Therefore, since the Bangladesh plaintiffs' argument would, if accepted, undermine American public policy against confiscatory takings, we decline to hold that the Cosmic funds are simply security which passed as incidents to any debts that may have been seized by Bangladesh within its own borders.

The Bangladesh plaintiffs' final argument is that, even if the situs of these debts is in New York, the seizures in question were consistent with established American standards which permit confiscatory taking in wartime situations. Admittedly, there is considerable case law which would support the principle that "[t]here is no constitutional prohibition against confiscation of enemy properties.". . . Indeed, the Trading with the Enemy Act, 50 U.S.C. App. §§ 1 et seq., which gives the President of the United States authority to employ confiscatory measures, has long been considered to be an exercise of congressional warmaking power under the Constitution. . . . However, neither this legislation nor any of the cases we have reviewed suggest even remotely that confiscatory seizures of an extraterritorial nature can ever be consistent with American public policy.

It would hardly be "consistent" with American public policy to create a special exception for extraterritorial seizures committed in wartime. Aside from the antagonistic effect which such an exception would inevitably have on our foreign relations with previously friendly nations, this Court has already recognized that citizens of friendly sovereigns have a legitimate expectation that their property interests in the United States will receive the benefit of any protection our law affords . . . . [Id. at 876-877]

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