61 N.Y.2d 460 (1984)
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The Act of State doctrine prevents U.S. courts from reviewing the validity of a foreign government’s act of confiscation when the debt (property) is located within that country’s borders, defined as when the foreign state has the power to enforce or collect it.
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Summary
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The case concerns certificates of deposit purchased from Chase Manhattan Bank’s Cuban branch, later confiscated by the Cuban government. The plaintiff, administratrix of the certificate holder’s estate, sued Chase for payment in New York. The court addressed whether the Act of State doctrine barred the claim. The court held that the doctrine applied because Chase’s debt to the certificate holder was located in Cuba when confiscated, as Chase had operating branches there and the debt was payable there. This shielded Chase from further liability. The court reversed the appellate division’s order and reinstated the trial court’s judgment for Chase.
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Facts
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Rosa Manas, a Cuban national, bought certificates of deposit from Chase Manhattan’s Marianao, Cuba branch in 1958. The certificates, denominated in Cuban pesos, didn’t specify a place of payment, stating only payment in “moneda nacional” (national currency). After Castro’s rise to power in 1959, the Cuban government confiscated Manas’ accounts in September 1959 under Law No. 78, which aimed to recover misappropriated property. Chase complied, remitting the funds to the Cuban government. Manas first presented the certificates for payment in New York in 1974, which Chase refused.
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Procedural History
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Manas sued Chase in New York. The trial court initially denied summary judgment to both parties. The case was removed to federal court but remanded. A jury found the certificates were repayable in U.S. dollars and presentable at any Chase branch, but that the funds were confiscated. The trial court entered judgment for Chase, applying the Act of State doctrine. The Appellate Division reversed. The New York Court of Appeals then reviewed the decision.
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Issue(s)
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Whether the Act of State doctrine bars a New York court from adjudicating the validity of the Cuban government’s confiscation of bank deposits when the certificates of deposit were (1) issued and payable in Cuba, but (2) presentable at any branch of the bank worldwide.
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Holding
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Yes, because at the time of the confiscation, Chase had operating branches in Cuba and the debt was payable there, giving Cuba the power to enforce or collect it.
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Court’s Reasoning
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The Court of Appeals emphasized that the Act of State doctrine prevents U.S. courts from judging the acts of a foreign government within its own territory. The crucial issue was the debt’s situs at the time of confiscation. The court stated that “for purposes of the Act of State doctrine, a debt is located within a foreign State when that State has the power to enforce or collect it.” Because Chase had branches operating in Cuba when the confiscation occurred, and the jury found the certificates payable there, Cuba had the power to enforce the debt. The court distinguished this case from Sokoloff v. National City Bank and Vishipco Line v. Chase Manhattan Bank, where the banks’ branches had already ceased operations in the foreign state before the confiscation. The court also found the Hickenlooper Amendment inapplicable, as it doesn’t apply to confiscations of a country’s own nationals’ property within its borders. The court concluded that Chase’s debt was extinguished by the payment to the Cuban government, making Chase not liable for a second payment. As the court stated: “In sum, the situs of Manas’ property — the debt due from Chase on her certificates — was Cuba at the time of the government’s confiscation of her property and Chase’s payment.”