defendants, was 28 U.S.C. 1330(a), which provides for "nonjury civil actions". The Court noted that the Foreign Sovereign Immunities Act had expressly removed "foreign states" from the general diversity jurisdictional provision contained in 28 U.S.C. 1332(a)(2), and that the new diversity jurisdictional provision added in 28 U.S.C. 1332(a)(4), provided for such jurisdiction for foreign states "as plaintiff". The Court declined to follow the 1979 interpretation of the United States District Court for the District of Columbia in Icenogle v. Olympic Airways, S.A. (see the 1979 Digest, pp. 946-947); viz., that the Act's definition of "foreign state" in 28 U.S.C. 1603(a) had not been intended to eliminate the general diversity jurisdiction over commercial instrumentalities of foreign states that had existed prior to the Foreign Sovereign Immunities Act.

Ruling that the Icenogle interpretation was a "strained one" and was, in fact, "contrary to Congressional intent", Judge Sifton referred to the Act's legislative history. This, he held, indicated a Congressional intent that jurisdiction over actions against foreign states was "comprehensively treated by the new section 1330" and that a similar jurisdictional basis under section 1332 had become "superfluous". Quoting from H.R. Rept. 94-1497 on the Foreign Sovereign Immunities Act, Judge Sifton found that the Act's exclusion of jury trials in suits against foreign states compared with a similar exclusion in suits against the United States and would tend to "promote a uniformity in decision where foreign governments are involved." Such uniformity, the Court said, would be thwarted by allowing suits to proceed, as well, under section 1332.

The Court also found further evidence of Congressional intent in the Act's "unambiguous" treatment of removal jurisdiction (28 U.S.C. 1441(d)), which specifies that upon removal (from a State court) an action against a foreign state is to be tried by the court "without jury."

The Court referred to indications in the legislative history of the Act that its amendments to sections 1330 and 1332 of title 28, U.S. Code, applied to corporations owned by foreign governments that were not also citizens of a State of the United States as defined in 28 U.S.C. 1332(c) and (d) (i.e., incorporated by, or having their principal places of business in, a State, including the Territories, the District of Columbia, and the Commonwealth of Puerto Rico, with special additional grounds for jurisdiction in direct actions against liability insurers.)

The Court rejected the plaintiffs' Seventh Amendment argument, holding that at the time of the Amendment's enactment, their suits would have been barred under the doctrine of sovereign immunity and hence would not have been considered "suits at common law" within the meaning of the Seventh Amendment.

Stating that its decision involved a “controlling question of law as to which there is substantial ground for difference of opinion,' and [that] an immediate appeal may 'materially advance the ultimate termination of the litigation' within the meaning of 28 U.S.C. 1292(b)," the Court certified the issue of the plaintiffs' entitlement to a jury trial for interlocutory appeal.

In his decision, Judge Sifton had noted that Icenogle had been followed in, among other cases, Rex v. Cia. Pervana de Vapores, 493 F. Supp. 459 (E.D. Pa. 1980). There District Judge Edward N. Cahn had upheld on June 24, 1980 a demand for jury trial in a personal injury damages action brought under the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. 905(b). He rejected the defendant's argument, in which the U.S. Government joined as intervenor, that a jury trial was not a matter of right under the Seventh Amendment in a case against a sovereign. Judge Cahn held that no sovereign had given consent to be sued under the Foreign Sovereign Immunities Act, but that Congress by adopting the restrictive theory of sovereign immunity "as a principle of international law" had conferred the substantive right. Once the Congress granted the right to sue a foreign sovereign as defendant, it could not do so in an unconstitutional manner, i.e., in violation of the Seventh Amendment. A Congressional intent to eliminate jury trials against foreign-state-owned commercial instrumentalities, Judge Cahn said, had not been “unequivocally represented in the statutory language". The Act was "ambiguous", Judge Cahn continued, as to the jury trial issue, which he characterized as a “tangential aspect”. Noting that other cases raising the same question were accruing on the court's docket, Judge Cahn had announced his readiness to grant a motion for certification of an interlocutory appeal under 28 U.S.C. 1292(b). On appeal, the U.S. Court of Appeals for the Third Circuit reversed, in Rex v. Cia. Pervana de Vapores, S.A., 660 F.2d 61 (3d Cir. 1981), cert. denied, 456 U.S. 926 (1982).

Judge Sifton had noted further in Ruggiero, that district courts in Houston v. Murmansk Shipping Company, 87 F.R.D. 71 (D. Md. 1980), and London v. Companhia de Navegação, 85 F.R.D. 71 (E.D. Pa. 1979), had also followed Icenogle, and that in DiMartino v. S.C. India Corp., No. 75 Civ. 1485 (E.D.N.Y. 1979), an unreported decision from the bench, Judge Eugene H. Nickerson of the Eastern District of New York had taken a position on Nov. 20, 1979, regarding nonjury civil actions, contrary to the Icenogle line of cases and consistent with Judge Sifton's own.

Subsequently, on Jan. 4, 1982, the U.S. Court of Appeals for the Fourth Circuit vacated the district court's judgment in Houston v. Murmansk Shipping Company, 667 F.2d 1151, and remanded the case for further proceedings. There the district court had been uncertain whether the Foreign Sovereign Immunities Act required a nonjury trial and knew that an appeal upon that question was pending in the Fourth Circuit in Williams v. Shipping Corp. of India, 489 F.Supp. 526 (E.D. Va. 1980), see post. With the assent of the litigants, the district judge had decided to let a jury try the case and to enter a judgment upon its verdict, but also to record his own nonjury findings. These were to be substituted for the jury findings, if it were decided on appeal that the Foreign Sovereign Immunities Act compelled a nonjury trial.

On May 18, 1980, the jury found for the defendant shipping company, and Judge Frank A. Kaufman entered judgment on May 23, 1980, upon that finding, but indicated that he would have found for the plaintiff (in the amount of $443,000), 87 F.R.D. 71 (D. Md. 1980). Houston appealed.

On the appeal, Houston contended that the district court had no jurisdiction to enter a judgment upon the jury's finding, but that it did have jurisdiction to enter judgment upon its own, nonjury findings. Murmansk, which during the pretrial proceedings on the jury demand had claimed that the requirement in 28 U.S.C. 1330(a) for a nonjury trial was an element of subject matter jurisdiction, contended to the contrary on appeal; namely, that whether a case were tried jury or nonjury was a procedural question, not a matter of subject matter jurisdiction. Murmansk thus argued for affirmance of the jury's verdict in its favor, or, alternatively, that remand for entry of judgment upon the district judge's nonjury findings would be inappropriate because an actual nonjury trial had not been conducted.

On Sept. 1, 1981, Houston v. Murmansk Shipping Company was argued before the U.S. Court of Appeals for the Fourth Circuit, which on July 7, 1981, had affirmed the

ruling of the district court (Eastern District, Virginia) in Williams v. Shipping Corporation of India, ante, that the right of a foreign state under the Foreign Sovereign Immunities Act to have a civil action against it tried by the court without a jury did not violate the Seventh Amendment to the Constitution. See, 653 F.2d 875 (4th Cir. 1981), cert. denied, 455 U.S. 982 (1982).

On Jan. 4, 1982, the Fourth Circuit vacated the judgment rendered by the U.S. District Court for the District of Maryland in Houston v. Murmansk Shipping Company and remanded the case for a new trial without a jury, ordering the trial to be before another judge because "both parties deserve to be satisfied that the new trial not only is, but also appears to be, de novo. . . .” 667 F.2d 1151, 1155.

See, further, Jones v. Shipping Corporation of India, 491 F.Supp. 1260 (E.D. Va. 1980), in which District Judge J. Calvitt Clarke, Jr., on June 16, 1980, rejected the plaintiff's demand for a jury trial under 28 U.S.C. 1332, confirmed an earlier ruling of the Eastern District of Virginia in Williams, that 28 U.S.C. 1330 was the correct basis for federal jurisdictional purposes and that the defendant was a "foreign state" within the meaning of 28 U.S.C. 1603, and denied the defendant's shipping company's motion to dismiss, predicated upon the case involving a jury matter.

See, also, Herman v. El Al Israel Airlines, Ltd., 502 F. Supp. 277 (S.D.N.Y. 1980). Execution Against Checking Account

In Birch Shipping Corporation v. Embassy of the United Republic of Tanzania, 507 F. Supp. 311 (D.D.C. 1980), the plaintiff obtained a writ of garnishment against the defendant's checking account on a judgment of the United States District Court for the Southern District of New York, confirming an award rendered under an agreement to arbitrate a contract dispute. The defendant, which had not entered an appearance in the suit to confirm the arbitral award, moved to quash the writ of garnishment, claiming immunity under section 1609 of the Foreign Sovereign Immunities Act, 28 U.S.C. 1609, and claiming, further, that its property was not within any of the exemptions from such immunity, set forth in section 1610 of the Act, 28 U.S.C. 1610.

On November 18, 1980, District Judge John Lewis Smith, Jr., denied the motion to quash, agreeing with the plaintiff's contention that the checking account was within an exemption to immunity from attachment, specified in 28 U.S.C. 1610(a). Judge Smith held that the Parties' Submission to Arbitration had implicitly waived the immunity of the defendant's property from attachment, and that the waiver could not be unilaterally withdrawn. The Court also found that the checking account attached was being used for a commercial purpose, as defined through the legislative history of the Foreign Sovereign Immunities Act (1976), and that the statute did not require an account to be used solely for commercial activity in order for it to be subject to attachment.

See, however, Liberian Eastern Timber Corporation v. Government of the Republic of Liberia, 659 F.Supp. 606 (D.D.C. 1987).

§8

Acts of Foreign States

Act of State Doctrine

Property Expropriations and Counterclaims

Banco Nacional de Cuba v. Chase Manhattan Bank; Banco Para el Comercio Exterior de Cuba v. First National City Bank, 505 F. Supp. 412 (S.D.N.Y. 1980), were unconsolidated cases decided together at the district court level, as presenting related issues of fact and law, by Judge Charles L. Brieant, Jr., on January 4, 1980. In each case an entity, held by the court to be an "alter ego" of the Cuban Government, had brought an action against an American defendant, which counterclaimed for the value of its expropriated property in Cuba.

Cuban Law No. 851, enacted on July 6, 1960, provided for the nationalization through forced expropriation of businesses and property in Cuba of U.S. nationals. Although it provided for payment of compensation, none was ever paid. Resolution No. 2 in execution of Law No. 851, signed on September 17, 1960 by Cuban President Osvaldo Dorticos Torrado and Cuban Prime Minister Fidel Castro, ordered all the property of the First National City Bank of New York, the First National Bank of Boston, and the Chase Manhattan Bank nationalized and awarded to the Cuban Government, and under Resolution No. 2, Banco Nacional was designated the Cuban Government instrumentality to administer their assets and businesses. Subsequently, under Law No. 891 of October 13, 1960, all national private banking concerns operating in Cuba were nationalized and also taken over by Banco Nacional de Cuba, which had itself been reorganized to become wholly owned by the Cuban Government as sole shareholder, with all its assets and profits vested in or accruing to the Cuban Treasury. Under Law No. 890, also dated October 13, 1960, large industrial and business enterprises, other than banks but including railroads, were nationalized.

In Banco Nacional de Cuba v. Chase Manhattan Bank, Banco, as successor in interest, filed suit against Chase (on November 26, 1960) to recover the net proceeds from Chase's sale of collateral posted by two prerevolutionary institutions (Banco de Desarollo Economico y Social and Fonda de Establizacion de la Moneda, both dissolved by Cuban Law No. 730, enacted February 17, 1960) to secure a 1958 loan. Banco also sued to recover certain of its funds deposited at Chase's home office, plus accrued interest thereon. Chase did not dispute an indebtedness to Banco Nacional in an amount of $9,794,020, but asserted four counterclaims, the value of which exceeded Banco's claim, and requested that Banco's complaint be dismissed. The counterclaims were for: (1) the value of the property of Chase's four Cuban branches, including good will and going busi

ness value, that Chase alleged had been converted in violation of international law; (2) in the alternative, and under an implied contract theory, the indebtedness to the Chase home office of its four seized Cuban branches, amounting to approximately $6 million, to which, Chase claimed, Banco had succeeded as a liability; and (3) and (4) the value of railway equipment seized in 1960, title to which was vested in Chase as trustee for American and other owners of equipment trust certificates, secured by financing leases on the equipment, the leases being to the Cuban Northern Railroad Company and the Cuba Railroad Company, respectively, and the equipment being valued at $4,073,497.01.

In defense to Chase's counterclaims, Banco Nacional argued that: (1) it was a separate entity from the Cuban Government and was not liable for the latter's obligations for confiscated American property in Cuba; (2) even if the Cuban Government and Banco Nacional were indistinguishable entities, Chase's claims for expropriation of its Cuban branches and credits located in Cuba were not actionable because of the doctrine of sovereign immunity; (3) insofar as Chase's claims against the Cuban Government concerned assets and credits specifically located in Cuba, they were barred by the act of state doctrine; (4) the Cuban Government's expropriation or nationalization of Chase's Cuban branches and its seizure of the leased railroad equipment did not violate international law and did not give rise to a claim against the Cuban Government for the property's value; and (5) Chase's claims as trustee for the confiscated railroad property could not be asserted as a counterclaim because they violated the "opposing party doctrine".

In his decision dated January 4, 1980, Judge Brieant held that the issue of Banco's liability on Chase's counterclaim for conversion had been determined in Banco Nacional de Cuba v. First National City Bank, 270 F. Supp. 1004 (S.D.N.Y. 1967), rev'd, 442 F.2d 530 (2d Cir. 1971), rev'd, 406 U.S. 759, reh'g denied, 409 U.S. 897 (1972), on remand, 478 F.2d 191 (2d Cir. 1973) (referred to as "Banco I"), and that Banco was, therefore, liable on Chase's first counterclaim. Having disposed of Banco's first and second defensive arguments on the counterclaim, the Court pointed out that the act of state doctrine, as enunciated in Banco Nacional de Cuba v. Sabbatino, 376 U.S.398 (1964), did not bar set-off up to the amount of the claim asserted by Banco in the instant case. The Hickenlooper, or Sabbatino, amendment to the Foreign Assistance Act, 22 U.S.C. 2370(e)(2), enacted to reverse the effect of Sabbatino, authorized setoff in the circumstances of the instant case, the Court noted, and the right to such setoff had been codified in 28 U.S.C. 1607(c), as enacted by the Foreign Sovereign Immunities Act of 1976. (In setting out the legislative history of the Sabbatino amendment, Judge Brieant cited it as an