French v. Banco Nacional de Cuba (23 N.Y.2d 46, 1968)

Chief Judge Fulo.

On this appeal from a judgment in favor of the plaintiff in an action for a breach of contract, two questions were originally briefed and argued—first, whether the defendant is entitled to sovereign immunity and, second, whether the defendant may invoke the “ act of state” doctrine. We ordered reargument, requesting the parties to address themselves to further questions, the primary one being whether the Hickenlooper Amendment to the Federal Foreign Assistance Act of 1961 (hereafter referred to as the Hickenlooper Amendment) covers this case and bars application of the act of state doctrine.

The case stems from a regulation of the Cuban Government — adopted after Fidel Castro’s accession to power in January of 1959—which, in effect, prevented American and other foreign investors from receiving currency other than Cuban pesos on their Cuban investments. The investor here involved was the plaintiff’s assignor, Alexander Bitter, an American citizen, now living in Florida, who resided in Cuba at the time of the events from which this lawsuit arises. In 1957, some two years before the events in question, he invested about $350,000 in a Cuban farm. At that time, the Cuban Government permitted foreign investors to turn the proceeds from their enterprises into American dollars, or other foreign currency, and exempted such proceeds from Cuba’s tax on the exportation of money. To this end, the Currency Stabilization Fund of the Cuban Government was authorized to issue “ certificates of tax exemption.” In June, 1959, six months after the inception of the Castro regime, Bitter acquired eight such certificates, aggregating $150,000.

Each certificate recites that

“Alexander, S. Bitter or a member Bank of the System, as endorsee hereof, will receive from Banco Nacional de Cuba [defendant herein] against delivery to said Bank of $ Cuban Pesos and surrender of this Certificate, a check on New York for an equal amount of United States Dollars, exempt from the Tax on Exportation of Money.

‘ ‘ This Certificate is issued and delivered inasmuch as the importation and investment in Cuba of the said funds have been duly accredited in accordance with the provisions of Law-Decree No. 548 of November 20, 1952 and its Begulations.”

Although the certificates state that their owner “will receive from [defendant bank] ” the appropriate “ amount ” of American dollars, they are signed by both the defendant and the Cuban Government’s Currency Stabilization Fund.

On July 15, 1959, the Currency Stabilization Fund issued “Decision No. 346.” Aimed at stopping the flow of foreign currency from Cuba and thereby preventing a situation “ very dangerous” to that country, the Decision suspended “for the time being processing of ’ ’ tax exemption certificates ‘ ‘ until reorganization of the system of exemptions ”. The redemption of such outstanding certificates, according to the president of defendant bank, would have wiped out Cuba’s dollar reserves. When, in December of 1959, Bitter tendered his certificates for redemption, together with the appropriate number of pesos, payment in American dollars was refused under the mandate of the Decision.

The plaintiff, Bitter’s assignee, brought the present action, late in 1960, in Supreme Court, New York County, and obtained a judgment against defendant bank in the amount of $150,000, with interest. A closely divided Appellate Division affirmed, rejecting the defendant’s claims (1) that it was entitled to sovereign immunity from suit as an agency of the Cuban Government and (2) that the Decision in question “had the force of law ” and was an act of the sovereign Government of Cuba to which our courts will not deny legal effect.

On the first of these questions, that of sovereign immunity, the entire court is in agreement with the Appellate Division, and we dispose of the point very quickly. In view of the State Department’s conclusion (set forth in a note not included in the record) that the activities out of which the present action arose “were of a jure gestionis [commercial] * * * nature ” and its position that immunity should not be granted in such cases, we must decline to accord the defendant sovereign immunity from suit. It is “ not for the courts to allow immunity ’ ’ on grounds ‘ ‘ which the government has not seen fit to recognize.” (Republic of Mexico v. Hoffman, 324 U. S. 30, 35; see, also, National Bank v. Republic of China, 348 U. S. 356, 360; Victory Transp. v. Comisaria General, 336 F. 2d 354, 360, cert. den. 381 U. S. 934.)

This brings us to the second question presented, namely, whether the act of state doctrine bars the plaintiff’s claim.

It has long been settled, and recently reaffirmed by the Supreme Court in Banco Nacional de Cuba v. Sabbatino (376 U. S. 398, 416 et seq.), that the courts in the United States will not inquire into the validity of the acts of a foreign government done within its own territory. As the Supreme Court stated in Underhill v. Hernandez (168 U. S. 250, 252)—quoted in Sabbatino (376 U. S., at p. 416)—“ [e]very 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. Redress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves.”

Our courts will not examine a foreign law to determine whether it was adopted in conformity with the internal procedures and requirements of the enacting state. The act of state doctrine, it has been well said, is not limited to situations in which “the foreign act is committed in a manner ‘ colorably valid ’ under foreign law. It should make no difference whether the foreign act is, under local law, partially or wholly, technically or fundamentally, illegal. * * * So long as the act is the act of the foreign sovereign, it matters, not how grossly the sovereign has transgressed its own lawsd’ (Banco de Espana v. Federal Reserve Bank, 114 F. 2d 438, 444; emphasis supplied.) The opinion in Sabbatino itself is unequivocal on this point. “The courts below”, the Supreme Court wrote (376 U. S., at p. 415, n. 17), “ properly declined to determine if issuance of the expropriation decree complied with the formal requisites of Cuban law. # * * If no institution of legal authority would refuse to effectuate the decree, its ‘formal’ status—here its argued invalidity if not properly published in the Official Gazette in Cuba—is irrelevant. It has not been seriously contended that the judicial institutions of Cuba would declare the decree invalid.” Nor, it should be noted, does the plaintiff before us make any such claim.

Consequently, there is no basis whatever for the plaintiff’s contention that the action dishonoring and repudiating the certificates held by Ritter was not an ‘ ‘ act of state. ’ ’ Regardless of whether or not Decision No. 346 was published in the Official Gazette or otherwise complied with internal Cuban standards of regularity, it was issued by the Currency Stabilization Fund, an official instrumentality of the Cuban Government. Moreover, in compliance with that Decision — or even if only in purported compliance — Banco Nacional, also an agency of the Cuban Government, refused and continues to refuse to exchange pesos for dollars as the certificates had required. These undisputed facts establish, as matter of law, that the breach of contract, of which the plaintiff complains, resulted from, and, indeed, itself constitutes, an act of state.

On this analysis, there is no issue of burden of proof. Rather, the question is, what need be proved. The defendant introduced evidence showing that Decision No. 346 had been issued by the Currency Stabilization Fund, that it was adopted as a measure to control currency and foreign exchange and that defendant bank had regarded the Decision as binding upon it and as prohibiting performance of the agreement in the tax exemption certificates. The plaintiff adduced evidence to the effect that the Decision did not conform to Cuba’s fundamental law and that it had not been published in the “ Official Gazette.” But that was insufficient, as matter of law, to establish that the action dishonoring and repudiating the certificates was not an act of state. It was incumbent on the plaintiff to prove that the Cuban authorities themselves would deem Decision No. 346' invalid and would disregard it. This she was obviously unable to do.

Since it is thus apparent that there was an act of state, it follows — unless the Hickenlooper Amendment requires the court not to apply the act of state doctrine (infra, pp. 57-62) — that we are barred from all further inquiry in this case concerning Cuba’s action and, in particular, from any inquiry that would test such action by the standards of international law or the public policy of this forum.

In Sabbatino, where the Supreme Court most recently considered the act of state doctrine, it was confronted with a complete and outright expropriation of American property, a quantity of sugar, by Cuba. Nevertheless, taking into consideration the “fluidity of present world conditions ” and the division of opinion upon the “ limitations on a state’s power to expropriate the property of aliens ’ ’, the court was of the opinion that, whether or not an ‘ ‘ international standard in this area” might be discerned, the “matter is not meet for adjudication by domestic tribunals ” (376 U. S., at pp. 428, 429, 434). Accordingly, and having in view the particular facts of the case before it, the Supreme Court said (376 U. S., at p. 428):

‘ ‘ Therefore, rather than laying down or reaffirming an inflexible and all-encompassing rule in this case, we decide only that the Judicial Branch will not examine the validity of a taking of property within its own territory by a foreign sovereign government, extant and recognized by this country at the time of suit, in the absence of a treaty or other unambiguous agreement regarding controlling legal principles, even if the complaint alleges that the taking violates customary international law.”

Indeed, if the act of state doctrine was decisive in the situation presented in the Sabbatino case, then, it must surely be so here — again, unless the Hickenlooper Amendment requires a different result. In the present case, although there are circumstances which undoubtedly imposed serious losses upon the plaintiff’s assignor, manifestly, they do not reach the level of an outright “taking” or “ expropriation ” with which the court was confronted in Sabbatino.

The Government of Cuba, by its Decision No. 346, has actually done nothing more than enact an exchange control regulation similar to regulations enacted or promulgated by many other countries, including our own. (See, infra, pp. 63-64.) A currency regulation which alters either the value or character of the money to be paid in satisfaction of contracts is not a “ confiscation ” or “ taking.” (Cf. Norman v. B. & O. R. R. Co., 294 U. S. 240, Nortz v. United States, 294 U. S. 317, and Perry v. United States, 294 U. S. 330 [Gold Clause Cases].) As one authoritative writer in the field has stated (Mann, Money in Public International Law, 96 Recueil Des Cours [1959] 1, 90), “ A legislator who reduces rates of interest or renders agreements invalid or incapable of being performed or prohibits exports, or renders performance more expensive by the imposition of taxes or tariffs does not take property. Nor does he take property if he depreciates currency or prohibits payment in foreign currency or abrogates gold clauses. Expectations relating to the continuing intrinsic value of all currency or contractual terms such as the gold clause are, like favorable business conditions and good will, ‘ transient circumstances, subject to changes ’, and suffer from ‘ congenital infirmity ’ that they may be changed by the competent legislator. They are not property, their change is not deprivation.” (See, also, 1 Hyde, International Law Chiefly as Interpreted and Applied by the United States [2d rev. ed., 1945], pp. 690-691.)

In the light of Sabbatino, we must recognize that the currency regulations of a foreign state — at least when presented in a context such as this one — are not appropriate subjects for evaluation by state courts applying local conceptions of public policy. The “ continuing vitality ” of the act of state doctrine, the Supreme Court wrote in Sabbatino (376 U. S., at pp. 427-428), “ depends on its capacity to reflect the proper distribution of functions between the judicial and political branches of the Government on matters bearing upon foreign affairs.” As Mr. Justice Hablan observed (p. 432), “Piecemeal dispositions” by courts which refuse to accord validity to the acts of a foreign sovereign within its borders ‘ ‘ could seriously interfere with negotiations being carried on by the Executive Branch and might prevent or render less favorable the terms of an agreement that could otherwise be reached.” (See, also, Zschernig v. Miller, 389 U. ,S. 429, rehearing den. 390 U. S. 974.)

In an area of international law where, for instance, there is a wide divergence “ between the national interests of capital importing and capital exporting nations and between the social ideologies of those countries that favor state control of a considerable portion of the means of production and those that adhere to a free enterprise system ”, judicial restraint is surely indicated (376 U. S., at p. 430): “It is difficult to imagine the courts of this country embarking on adjudication in an area which touches more sensitively the practical and ideological goals of the various members of the community of nations.” Even if, therefore, we were to assume that the decision of the Cuban instrumentality here involved was contrary to our public policy, such considerations would not affect our determination. As the Supreme Court observed in the far harsher context of Sabbatino (pp. 436-437), “However offensive to the public policy of this country and its constituent States an expropriation of this kind may be, we conclude that both the national interest and progress toward the goal of establishing the rule of law among nations are best served by maintaining intact the act of state doctrine in this realm of its application.”

We might properly conclude at this point. The parties themselves raised no other issues in the courts below or on the original argument of this appeal. However, in deference to the views of some of the members of this court, we directed reargument and, as noted above (p. 49), requested the parties to address themselves, in essence, to the further question whether the Hickenlooper Amendment covers this case and bars the court from applying the act of state doctrine.

In our view, the Hickenlooper Amendment is inapplicable. The statute was enacted to “ reverse in part ” the decision in Sabbatino (S. Rep. No. 1188, Pt. I, 88th Cong., 2d Sess., p. 24 [1964]). So far as relevant, the amendment declares that “ no court in the "United States shall decline on the ground of the federal act of state doctrine to make a determination on the merits giving effect to the principles of international law in a case in which a claim, of title or other right to property is asserted by any party including a foreign state * * * based upon (or traced through) a confiscation or other taking * * * by an act of that state in violation of the principles of international law ”. (Emphasis supplied.)

It is plain enough upon the face of the statute — and abundantly clear from its legislative history—that Congress was not attempting to assure a remedy in American courts for every kind of monetary loss resulting from actions, even unjust actions, of foreign governments. The law is restricted, manifestly, to the kind of problem exemplified by the Sabbatino case itself, a claim of title or other right to specific property which had been expropriated abroad. (See Henkin, Act of State Today: Recollections in Tranquility, 6 Colum. J. of Transnatl. L. 175, 185, 186.)

The basic terms of the statute—to come directly to its wording — simply cannot be made to fit the present case. The amendment applies only if there is a “ claim of title or other right to property ” and that claim is “ based upon (or traced through) a confiscation or other taking ’ ’ of such property.

We must thus attempt to identify the “property” — or the proceeds of such property—which was allegedly “ confiscated or taken ” from Ritter by the action of the Cuban Government. It is quite evident that, before the issuance of Decision No. 346, Ritter had only two things that are relevant to this action— (1) some 150,000 pesos or the means of obtaining them and (2) a contract made in Cuba, to be performed in Cuba (by delivery there of a check), and subject, from its inception and at all times since, to the laws of Cuba. He did not, it must be emphasized, have any fund of dollars with which this action is concerned nor did he have rights to any specific fund of dollars in the possession of any other party. What, then, was ‘ ‘ taken ’ ’ 1

Ritter’s loss is due not to a taking of property but, rather, to the breach of a promise upon which he had relied. What had happened— and undoubtedly to Ritter’s financial loss—was that the Cuban law which governed the contract had been changed by the adoption of a government regulation which “ suspended,” perhaps permanently, the conversion of pesos into dollars. In the strictest sense, and within the terms of the statute we are construing, just as no one has “ taken ” the pesos from Ritter, so no one has “ taken ” the contract from him; it is still his or his assignee’s to enforce, or attempt to enforce, as the present action bears witness. No other party claims to be possessed of the contract rights that Ritter had acquired. It is not as though the Cuban Government had assumed title to a contract right or other chose in action that had belonged to Ritter and had then sought to enforce it against the obligor. Indeed, as will shortly appear (infra, p. 61), even if a true, outright confiscation of this kind had occurred — that is, an actual divesting of ownership of a contract right — it would still be outside the compass of the Hickenlooper Amendment.

If there could be any doubt that the amendment is inapplicable to claims for breach of contract, that doubt is dispelled by reference to the legislative history, both of the original enactment in 1964 and the change in wording adopted in 1965.

Throughout the committee hearings and proceedings in Congress, the supporters of the bill and those who commented upon it were quite explicit about the intended purpose of the proposal. That purpose was simply to permit an adjudication “ on the merits ”, despite the holding in Sabbatino, in those cases in which a party asserts “ a claim of title or other right ” to property which has been confiscated or taken and such property becomes the subject of a lawsuit in the United States. Indeed, Senator Hiekenlooper himself expressly declared, at one point, that the purpose of his proposal was to require our American courts to apply international law “ whenever expropriated property comes within the territorial jurisdiction of the United' States ’ ’, noting that, unless his proposal was accepted and the Sabbatino decision overruled, this country might become “ an international ‘ thieves market ’ ” (110 Cong. Rec. 19548).

The words ‘' confiscation ’ ’ and ‘ ‘ taking ’ ’, the debates and committee hearings established, were used synonymously with “ expropriation ” and “ nationalization.” (See, e.g., Hearings Before Senate Committee on Foreign Relations on S. Bill 2659, 2660, 2662, 88th Cong., 2d Sess. [1964], p. 619; S. Rep. No. 1188, Pt. I, 88th Cong., 2d Sess. [1964], p. 24; 110 Cong. Rec. 19548, 19557-19559, 23680, 24076-24077.) Nothing in the lengthy record of the congressional proceedings suggests that the amendment was designed to cover claims of breach of contracts by a foreign government such as the one in this case. Nor was there any intimation that Congress had in view the highly complex problems of exchange control regulations, repudiation of debts or depreciation of currency. Conspicuously absent from the hearings was the kind of expert testimony on international monetary problems which surely would have been sought if the Congress had been addressing itself to problems of that nature.

Further proof of the limited scope intended for the exemption from the act of state doctrine is found in the Senate’s refusal to enact Senator Hiekenlooper’s original, broadly worded, draft of the amendment which would have made the act of state dóctrine inapplicable to any case ‘ ‘ in which an act of a foreign state occurring after January 1,1959 is alleged to be contrary to international law ”. The statute, as actually adopted in 1964, contained the far more restrictive wording which we have already discussed.

In point of fact, to eliminate any possibility that the original language, adopted in 1964, might be construed to cover or encompass ordinary contract rights, or anything other than specific and identifiable and ‘ ‘ traceable ’ ’ property, Congress amended the statute in 1965. In its original form, the amendment referred to cases in which “ a claim of title or other right is asserted * * * based upon (or traced through) a confiscation or other taking.” By the 1965 modification, the words, “ to property ”, were inserted after the words “ other right ”, so that the clarified provision now reads, as already noted, “ a claim of title or other right to property”. As the Senate Report explains, the words were inserted ‘1 to make it clear that the law does not prevent banks, insurance companies and other financial institutions from using the act of state as a defense to multiple liability upon any contract, deposit or insurance policy in any case where such liability [sic] has been taken over or expropriated by a foreign state.” (S. Rep. No. 170 on S. 1837, 89th Cong., 1st Sess. [1965], p. 19; emphasis supplied.) Thus, not even contract rights which are taken over and are sought to be enforced in this country are covered by the Hickenlooper Amendment, much less claims for breach of a contract in a suit between the original parties to the agreement.

We may not ignore, or leave unexplained — as Judge Keating does — the fact that, when Congress, in 1965, wished to assure the preservation of the act of state defense for the benefit of American insurance companies and banks who were sued on contract claims, it chose to do so not by adding a carefully limited exception, but—as noted in the text above—by inserting the words, “ to property ”, after the words, “ claim of title or other right ” (see supra, p. 61). The use of these unqualified words can only signify that Congress decided to eliminate all contract claims from the statute rather than attempt the more subtle task of distinguishing between contract cases in which the act of state defense might be asserted and those in which it might not. Judge. Keating may disapprove of Congress’ choice of a method for accomplishing its purpose, but that choice — by the plain evidence of the 1965 amendment and of the accompanying Senate Report—is the one that was made, and it is binding upon us.

In short, although, as Judge Keating observes, the statute may be “inexpertly drafted” or “inarticulately expressed” (opn., pp. 80, 85), it does not follow, as he intimates, that the court is relieved of the necessity of reading the language of the Statute closely or of drawing plain inferences from its legislative history. Despite its evident defects of draftsmanship, we must treat the Hickenlooper Amendment as nothing less than a serious attempt by Congress to define what it did mean and what it did not mean in a complex and important area of law.

From all that has been said, it is apparent that the Hickenlooper Amendment has no application to the present case. The present lawsuit does not involve the assertion of a claim of title to property and, just as clearly, the Cuban Government’s action did not involve a confiscation or taking of property. Certainly, it is not a case in which title or other right to a specific res (or its proceeds) confiscated by a foreign government is disputed on a claim either asserted by the original owner and defended by the government or asserted by the government and defended by the original owner.

It follows that the Hickenlooper Amendment is not applicable, that the act of state doctrine is decisive and that the defendant must prevail. This being so, it is not necessary to reach the further question whether the action of the Cuban Government offended principles of international law. Since, however, our dissenting brethren have concluded that such action did constitute a taking of property to which a claim of title or other right is asserted and have gone on to urge that it violated international law, we treat that question—of international law— briefly.

This is not an era, surely, in which there is anything novel or internationally reprehensible about even the most stringent regulation of national currencies and the flow of foreign exchange. Such practices have been followed, as the exigencies of international economics have required — and despite resulting losses to individuals—by capitalist countries and communist countries alike, by the United States and its allies as well as by those with whom our country has had profound differences. They are practices which are not even of recent origin but which have been recognized as a normal measure of government for hundreds of years, if not, indeed, as long as currency has been used as the medium of international exchange. (See Winkler, Foreign Bonds, an Autopsy—A Study of Defaults and Repudiations of Government Obligations [1933], p. 21; Mann, The Legal Aspects of Money [2d ed., 1953], p. 337.)

In short, the control of national currency and of foreign exchange is an essential governmental function; the state which coins money has “ power to prevent its outflow ” (Ling Su Fan v. United States, 218 U. S. 302, 311; see, also, Forts v. United States, 294 U. S. 317, 330, supra); and, as the court observed in Perry v. United States (294 U. S. 330, 356, supra), “ [t]he same reasoning is applicable to the imposition of restraints upon transactions in foreign exchange.” (See, also, Restatement, 2d, Foreign Relations Law of the United States, § 198, Comment 6.) The Restatement finds no violation of international law in such a currency measure “if it is reasonably necessary in order to control the value of the currency or to protect the foreign exchange resources of the state ” (§ 198). The Restatement goes on to recite that ҅ ‘ the application to an alien of a requirement that foreign funds held within the territory of the state be surrendered against payment in local currency at the official rate of exchange is not wrongful under international law, even though the local currency is less valuable on the free market than the foreign funds surrendered. ’ ’ Thus, if the Cuban Government could, under the example cited, have properly required an alien within its borders to surrender American dollars ‘ ‘ against payment ’ ’ in pesos, as a measure ‘ ‘ reasonably necessary * * * to protect the foreign exchange resources, of the state ” (Restatement, 2d, Foreign Relations Law of the United States, § 198), the present refusal of the Cuban Government to surrender American dollars in order to protect its dollar reserves, though harsh in its effect, would also seem to be within the limits of international legality.

In the case before us—whatever other economic measures the Cuban Government may have taken (and they are not reflected by evidence in the record) —there is no question that the actions complained of were aimed at protecting Cuba’s scarce “ foreign exchange resources.” The testimony of the defendant’s president that these actions were essential to prevent the wiping out of Cuba’s foreign currency reserves is uncontradicted. Accordingly, that country’s refusal to exchange Ritter’s pesos for dollars, though it may be deplored, may not be characterized as so unreasonable or unjust as to outrage current international standards of governmental conduct. Even if the present case,' then, involved “ a claim of title or other right to property ” within the meaning of the Hickenlooper Amendment, the amendment would not permit us to disregard the act of state doctrine since the Cuban action did not violate international law.

In sum, then, it is our conclusion that the actions complained of constituted an act of state; that, under the rule announced in Sabbatino, we are required to give effect to that act of state; and that, since the record before us establishes that there was no taking of property to which a claim of title or other right is asserted, the Hickenlooper Amendment does not apply to require us to disregard the act of state doctrine. Consequently, the plaintiff or her assignor may seek a remedy in this country only through diplomatic efforts by the United States and arrangements established by Congress for the protection of the interests of all American claimants against Cuba.

The order of the Appellate Division should be reversed, with costs, and the complaint dismissed.

. U. S. Code, tit. 22, § 2370, subd. (e), par. (2); 78 U. S. Stat. 1009 (1964), as amd. 79 U. S. Stat. 653 (1965).

. These certificates alone, and no other property of Bitter’s, are the subject of this action.

. Jurisdiction over the defendant was acquired by attaching an account which it maintained in a bank in New York City.

. See Underhill v. Hernandez, 168 U. S. 250; Oetjen v. Central Leather Co., 246 U. S. 297, 303; Ricaud v. American Metal Co., 246 U. S. 304, 310; Hewitt v. Speyer, 250 F. 367; Banco de Espana v. Federal Reserve Bank, 114 F. 2d 438, 443; Bernstein v. Van Heyghen Freres, 163 F. 2d 246, cert. den. 332 U. S. 772; Salimoff & Co. v. Standard Oil Co., 262 N. Y. 220; Dougherty v. Equitable Life Assur. Soc., 266 N. Y. 71; Holzer v. Deutsche Beichsbahn-Gesellsehaft, 277 N. Y. 474. The decision in Banco Nacional de Cuba v. Sabbatino (376 U. S. 398, 427) establishes that the scope of the act of state doctrine “must be determined according to federal law”.

. It is immaterial what form an act of state takes—whether it be an expropriation or confiscation, a conversion or a breach of contract (see, e.g., Hewitt v. Speyer, 250 F. 367; Holzer v. Deutsche Reichsbahn-Gesellschaft, 277 N. Y. 474, 479; Dougherty v. Equitable Life Assur. Soc., 266 N. Y. 71, 87-88) —as long as such act is committed by the foreign government within its own territory.

. We may note, initially, that we have not been cited to any “treaty or other unambiguous agreement regarding controlling legal principles” to which the Supreme Court’s reservation in Sabbatino might apply. In point o£ fact, Cuba withdrew, in 1964, from the International Monetary Fund Agreement, the only arguably applicable international instrument, and the defendant does not claim its benefits. In the absence of any such compact by which the court may be guided, we must conclude that the case is precisely within the sensitive area of fluid and uncertain foreign relations which Sabbatino declared to be outside the province of the judicial branch.

. This is the full text of the questions which we asked the parties to discuss on reargument:

“ (1) Whether or not the suspension of redemption of the tax exemption certificates here involved constituted or now constitutes a confiscation or taking within the meaning of the Hickenlooper Amendment to the Federal Foreign Assistance Act of 1961 *• * * so as to bar the defense of ‘act of state’; and “ (2) Assuming that the first question be answered in the affirmative, whether or not, applying principles of international law, the suspension above referred to constituted a reasonable currency control regulation aimed at the protection of foreign exchange reserves or was otherwise valid under the Hickenlooper Amendment and whether or not the continued suspension of redemption constitutes a reasonable currency control regulation aimed at the protection of foreign exchange reserves which conforms with principles of international law.”

. In somewhat greater detail, the Hickenlooper Amendment recites (U. S. Code, tit. 22, § 2370, subd. [e], par. [2]; 78 U. S. Stat. 1009, 1013 [1964], as amd. 79 U. S. Stat. 653 [1965]):

“Notwithstanding any other provision of law, no court in the United States shall decline on the ground of the federal act of state doctrine to make a determination on the merits giving effect to the principles of international law in a case in which a claim of title or other right to property is asserted by any party including a foreign state (or a party claiming through such state) based upon (or traced through) a confiscation or other taking after January 1, 1959, by an act of that state in violation of the principles of international law including the principles of compensation and the other standards set out in this subsection: Provided, That this subparagraph shall not be applicable (1) in any ease in which an act of a foreign state is not contrary to international law 6 6 * or (2) in any case with respect to which the President determines that application of the act of state doctrine is required in that particular case by the foreign policy interests of the United States and a suggestion to this effect is filed on his behalf in that case with the court.” (Emphasis supplied.)

. It has been suggested (opn. of Keating, J., p. 86) that the phrase, “ a claim of title or other right to property ”, should be construed broadly to include any property of a confiscating state which comes into the possession or control of our courts — even though that property is not itself the subject of the lawsuit but has simply been attached in this country for the purpose of acquiring jurisdiction. We find no basis for such a suggestion. It seems plain that the Hiekenlooper Amendment comes into operation only where there has been a confiscation of the very property to which a claim (of title or other right) is asserted. The Federal District Court Judge’s decision in Banco Nacional de Cuba v. First Nat. City Bank of N. Y. (270 F. Supp. 1004) —i to which Judge Keating points— is not to the contrary. The fact is that the claim to which the amendment was held applicable in that case was not the plaintiff’s claim for bank deposits and other funds held by the defendant First National — which, concededly, were at all times owing to the plaintiff — but, rather, the defendant’s claim for its own property in Cuba which had been • confiscated by the Cuban Government and the value of which First National demanded as a setoff in the action. Consequently, the Federal District Court actually had no occasion to express any opinion in the First National City Bank case as to whether the monies held by the defendant First National were covered by the language, “ right to property ”.

Moreover, the confiscation alleged in the First National case included a divesting of the defendant bank’s contracts, not a breach of them, by the Cuban Government. Indeed, the District Court Judge did not hold that First National could recover compensation for the loss of these contract rights. Not even referring expressly to the subject of contract rights, he merely noted that “ [t]he actual amount of the set-off which can be asserted here poses delicate questions of fact and law requiring further careful consideration” (270 F. Supp., at p. 1011).

. There can be ho doubt that this would be the appropriate choice of law, under “ traditional ” as well as more recently formulated standards. (See, e.g., Auten v. Auten, 308 N. Y. 155, 160; Matter of Havemeyer, 17 N Y 2d 216.)

. In addition, Congressman Adair, who spoke in support of the enactment, pointed out that it was designed to permit a party who had suffered an “expropriation” in violation of international law to bring suit “to assert his claim to the expropriated property if there is an attempt to market it in the United States ” or to enable him to “ resist a suit by the expropriating government to seize the property ” (Congressman Adair, 110 Cong. Rec. 23680) and the Attorney General of the United States (Mr. Katzenbach), who spoke in opposition to the bill, noted in the course of his remarks that the amendment dealt with a “ very isolated, infrequent occurrence * * * when American property that has been nationalized * * * finds its way back in the United States.” (Hearings Before House Committee on Foreign Affairs on H. R. 7750, 89th Cong., 1st Sess. [1965], p. 1235; see, also, Prof. Olmstead, Hearings Before House Committee, ibid., 578; Prof. Metzger, ibid., 1025, 1026, 1028, 1030-1031.)

. Senator Hickenlooper’s proposal, made as an amendment to the Foreign Assistance Act of 1964 (H. R. 11380), was included in the full bill as reported out of the Senate Committee on Foreign Relations (S. Rep. 1188 [July 10, 1964], at pp. 24, 37),

. The plaintiff, in order to prevail under the Hickenlooper Amendment (supra, n. 8, p. 57), must show not only that the action complained of constituted a taking of property but also that it violated principles of international law.

. It may be noted that this country’s Cuban Assets Control Regulations (Code of Fed. Reg., tit. 31, Pt. 515)—promulgated by the Secretary of the Treasury — provide that all transactions in foreign exchange between the United States and Cuba or the citizens of those countries are prohibited unless licensed by the Treasury Department.

Hopkins, J. (concurring).

I concur wholly in the comprehensive opinion of Chief Judge Ftjld. Only because certain aspects of the case possess particular emphasis for me do I add the following.

For the reasons so admirably stated by Chief Judge Fuld I do not find that the Hickenlooper Amendment controls the disposition of this case. We must then return to Banco Nacional de Cuba v. Sabbatino (376 U. S. 398) to determine whether the act of state doctrine applies. If, indeed, an act of state was committed, Sabbatino, as a statement of Federal law from which the States may not dissent (id., p. 427), obliges us to observe the rule that we may not inquire into the plaintiff’s cause, no matter how meritorious it may be.

Sabbatino did not pronounce a sweeping and compendious rule; it dealt with a taking of property by a foreign sovereign within the latter’s territory, and expressly limited its holding to the presence of these circumstances, in the absence of a pertinent treaty or agreement (p. 428). No operative treaty or agreement has been asserted by the parties to be decisive of the issues here. On the other hand, it is true that no taking of plaintiff’s property has occurred—for the same reasons which support the conclusion that the Hickenlooper Amendment does not govern the case.

The question then is whether the breach of contract which is plaintiff’s grievance constitutes an act of a sovereign within its territory. In the setting of this litigation, the defendant was an instrumentality of the sovereign, though involved in a purely commercial transaction, and, therefore, unshielded by any immunity from the jurisdiction of our courts (cf. Victory Transp. v. Comisaria General, 336 F. 2d 354, cert. den. 381 U. S. 934; Petrol Shipping Corp. v. Kingdom of Greece, 360 F. 2d 103, cert. den. 385 U. S. 931). In the issuance of the tax exemption certificates to the plaintiff’s assignor, whether accomplished during or before the Castro regime, the defendant was performing a power delegated to it, and discharging a duty cast upon it, by the Cuban Government for the advancement of Cuban interests. Quite clearly, what the defendant did vis-a-vis the plaintiff’s assignor in this case served not its concerns but the concerns of Cuba.

Moreover, the contract was made by the parties in Cuba, and the performance of the contract — the delivery of the check— was due to occur in Cuba. Indeed, the breach of the contract occurred in Cuba. At the time the'defendant refused to perform its obligation, that refusal was an act of state committed within the territory of Cuba. Thus, when the plaintiff proved the breach of contract as an essential element of her case, at the same time' her proof established the commission of the act of state; and no burden rested on the defendant to do more.

The defendant did, however, do more by proving the existence of currency regulations adopted by governmental agencies to preserve the economic stability of Cuba. Those regulations prohibited the consummation of the contract. But from my view, the act of state was the defendant’s refusal to perform; the currency regulations, though equally the product of an act of state, were simply the justification for the refusal. Under this analysis, whether the defendant honored its obligation under some of the tax exemption certificates after the adoption of the currency regulations becomes immaterial: the sovereign might waive the regulations on occasion, and on another occasion enforce them. However it exercised its power, the exercise remained an act of state.

Before Sabbatino a breach of contract was considered an act of state both in the Federal courts and in our courts (Hewitt v. Speyer, 250 F. 367; Holser v. Deutsche Reichsbahn-Gesellschaft, 277 N. Y. 474; Dougherty v. Equitable Life Assur. Soc., 266 N. Y. 71). In Holser, for example, the act of state rule was recognized, even though the abrogation of the contract by the defendant was based on a foreign law particularly odious and offensive to our institutions. A question of the sufficiency of plaintiff’s complaint and of a defense in the defendant’s answer was before the court. Plaintiff, a German Jew, sued on an employment contract made before the accession of Hitler with the defendant, a German corporation and an instrumentality of the German Government formed for the purpose of operating the governmental railroad system. Plaintiff alleged two causes of action, the first of which asserted that he had been discharged prior to the terminal date of the contract on the sole ground that he was a Jew. Damages for the breach of contract were demanded. In the second cause of action plaintiff alleged that he had been seized and held in a concentration camp, so that he had been prevented from continuing his employment. He claimed that the contract provided that, if he were unable, without fault on his part, to serve during the period of the contract, the defendant would pay him a stipulated sum in satisfaction of its obligations. The defendant interposed a defense that under a German law enacted in 1933 persons of non-Aryan descent employed in the government and governmental corporations were required to be retired, and that the contract was, therefore, lawfully terminated.

After consideration of the complaint and the defense, upon certified questions, it was held that in the face of the defense the first cause of action could not survive, since the act of state rule intervened. ‘ ‘ Within its own territory every government is supreme (United States v. Belmont, 301 U. S. 324) and our courts are not competent to review its actions.” (Holser v. Deutsche Reichsbahn-Gesellschaft, 277 N. Y. 474, 479, supra.) As to the second cause of action the court held that questions of fact arose concerning the meaning of the German words used in the contract providing for payment of the stipulated sum and concerning the interpretation of German law to be applied to the contract. That is to say, it might be found as a fact after a trial that the contract contemplated payment of the agreed sum upon the occurrence of the very act of state which prevented plaintiff’s performance.

The case before us, of course, does not present the latter contingency, for the certificates owned by Ritter contained no provision for payment of any sum in the event of a dishonor by the defendant for any reason. Thus, no question of fact, either as to an act of state or as to the meaning of the language of the contract became material here. Rather, the case resembles the fact pattern in the first cause of action alleged in Holzer, which was declared to be vulnerable under the act of state rule.

Both Holzer and Dougherty (266 N. Y. 71, supra) were cited in S abb atino as expressions of the law of New York which “ echo those of federal decisions ” (Banco Nacional de Cuba v. Sabbatino, 376 U. S. 398, 424-425, supra), which recognized the act of state doctrine. To this limited degree, then, Sabbatino treated a breach of contract as an act of state. Nor is it without significance that Sabbatino enforced the doctrine even where the sovereign invoked the drastic course of confiscation, whereas we deal here with the exercise of a less extreme measure of sovereign power.

Accordingly, I think that Federal law may fairly be said to direct the application of the act of state rule, denying us a review of the merits of the case. Once " it is made to appear that the foreign government has acted in a given way on the subject-matter of the litigation, the details of such action or the merits of the result cannot be questioned but must be accepted by our courts as a rule for their decision.” (Ricaud v. American Metal Co., 246 U. S. 304,309.)

. If the defendant had been a private institution and not an instrumentality of Cuba, then the defendant would have been required to establish the act of state — the currency regulations—which prevented performance and sustained its refusal to deliver the check. But that is not the fact in this litigation. Here, in effect, the defendant was executing the will of Cuba.

. It should be observed that nothing turns on the circumstance that in Holzer the plaintiff was a German national. The act of state doctrine applies equally to an alien or a national with respect to action of the state as to local assets. (Ricaud v. American Metal Co., 246 U. S. 304, 310.)

Burke, J. (dissenting).

I concur in Judge Keating’s dissent and agree with his analysis of the Hickenlooper Amendment. However, cognizant of the limited jurisdiction of this court, I do not find it necessary to reach that issue.

It has been long settled by our court (Holzer v. Deutsche Reichsbahn-Gesellschaft, 277 N. Y. 474, cited in Banco Nacional de Cuba v. Sabbatino, 376 U. S. 398, 425) that the applicability of the act of state doctrine in a particular litigation may be a question of fact. It is also well established that an affirmed finding of fact, based upon substantial evidence, will not be reviewed by this court. (See, e.g., the majority and dissenting opinions in Matter of City of New York [Fifth Ave. Coach Lines], 22 N Y 2d 613.) Considering the present appeal in this context, I would affirm the order of the Appellate Division. ■

Before showing that the finding of the Trial Judge, as affirmed by the Appellate Division — that the act of state defense was not established—is nonreviewable, it is first essential that the entire factual background of this case be fully described. Bather than duplicate the majority’s recitation of the “ undisputed facts ” of this case, I begin by supplementing that effort with additional£ £ undisputed facts ’ ’.

Alexander Bitter, at the invitation of Cuba’s Agricultural' Department, purchased a 350-acre farm in Cuba in 1957. In August of that year, he obtained certificates of tax exemption for $345,000 from the Currency Stabilization Fund of the Cuban Government. In January, 1959, Fidel Castro’s revolutionary forces seized control of the Cuban Government. On January 7, 1959, the United States extended recognition to the Castro regime as the “provisional government of the Republic of Cuba.” Such recognition merely noted that Castro had seized control of the country and that he had indicated his intention to comply with the international obligations and agreements of Cuba. In extending recognition in this manner, we in effect insured the revolutionary forces of an ample supply of American dollars as a result of our continued underwriting of the sugar subsidy and through the virtually uninterrupted patronage of American tourists. Shortly thereafter, in either February or March of 1959, Ritter approached Mr. Betancourt, director of the afore-mentioned Currency Stabilization Fund, ■to ascertain whether Banco Nacional was going to fulfill its contractual agreement with him, as embodied in the certificates of August, 1957. In uncontroverted testimony, he related that Mr. Betancourt advised him that Banco Nacional would “ definitely honor the obligation ” IF UPON INVESTIGATION he was found not to be politically implicated (presumably with the overthrown government) and if his business was conducted without graft. In June, 1959, the eight certificates involved in this litigation were given to Ritter by the Currency Stabilization Fund in exchange for his 1957 certificates, purportedly conveying a “guarantee” that Banco Nacional would indeed honor its obligation.

On July 23, 1959, eight days after Decision No. 346 was enacted by the Fund, Ritter presented one of his “ guaranteed certificates” and immediately received payment on it, thus confirming the guarantee given him by Mr. Betancourt. On December 11, he tendered his remaining certificates to Mr. Betancourt. As he recalled the event at trial, ‘ ‘ Mr. Betancourt then said to me that he was sorry * * * he thought he would be able to give us [he and his representative bank] the dollars for the certificates but that he could not.” He further testified that the only reason then offered by Mr. Betancourt for not making the- payment was that “he didn’t have the money.” He also noted that he had waited until December to tender his certificates at the request of the Currency Stabilization Fund. “ In the early Fall of 1959 [after Decision No. 346 was enacted] Mr. Betancourt said to me that the dollar account of the Banco Nacional was low on funds and that he would appreciate it if I would wait until the sugar harvest * * * they would have more funds available later in the year. ’ ’

While Bitter patiently waited for Banco Nacional to acquire these funds, the economic condition of Cuba was continuously deteriorating as Castro repeatedly indicated his willingness to accept Communist assistance with its attached philosophy. Thus, the economic crisis which precipitated Decision No. 346 was brought about by the government itself. This self-imposed financial plight was not lessened by Decision No. 346. Indeed, the Cuban Government effectively seized all property of the United States and its nationals, with the exception of our naval base at Guantanamo Bay, by the end of 1960. It was in accordance with this general policy of confiscation that they first informed Bitter, in a letter dated January 8, 1960, that his certificates were within the ambit of Decision No. 346.

I now turn to the two claims advanced by defendant in this litigation— (1) that it was entitled to sovereign immunity from suit as an agency of the Cuban Government and (2) that Decision No. 346 was an act of the sovereign Government of Cuba, an act of state immune from examination by our court.

As the majority quite properly declares (p. 51), “the entire court is in agreement ” in rejecting the -sovereign immunity claim. I ,am opposed, however, to the majority’s acceptance of the act of state claim as a matter of law in this' litigation. Their conclusion, in effect, contradicts even the position adopted by the defendant at the time of the trial. At that time defendant presented only one witness, a Cuban lawyer, who gave expert testimony concerning both Decision No. 346 and its applicability to Bitter. It would, therefore, appear that even the defendant considered the applicability to be a question of fact. Moreover, while testimony was presented by an expert witness, it cannot be said that this alone proved conclusively that Decision No. 346 applied here as a matter of law. As Judge Bebgan stated so recently in another case ‘' few things are better settled than that the trier of the fact is not bound helplessly by opinion evidence offered by a party having the burden [of proof].” (Matter of City of New York [Fifth Ave. Coach Lines], 22 N Y 2d 613, 629, supra.)

It is plaintiff’s contention that Decision No. 346, an act of the Cuban Government, was not intended to and did not apply to these eight “ guaranteed certificates ”.

While plaintiff’s certificates bear the legend that they were issued “ in accordance with the provisions of Law-Decree No. 548 of November 20, 1952 ” plaintiff has distinguished them from the other certificates in many ways. Thus, Law-Decree No. 548 and Decision No. 346 both specifically limit their applicability to money imported into Cuba for the purpose of investment. Ritter’s certificates were not issued as a direct result of such investment. Bather, they were issued by the Currency Stabilization Fund solely because, upon investigation, Bitter was found free from political implication and because his business was conducted without graft. Plaintiff has shown that nothing was invested at the time these certificates were issued. She intimates that, had this guarantee not been given by the Castro officials of the Currency Stabilization Fund, Bitter would have redeemed his certificates in February or March of 1959—prior to the proclamation of Decision No. 346.

Whether or not these specific eight certificates are within the ambit of Decision No. 346 as stated above is and was treated by all parties at the trial, as a question of fact. Thus, when Supreme Court Justice Mabkewich dismissed the act of state defense for failure of proof, he concluded that the record before him which included expert testimony was inadequate to establish defendant’s claim that Decision No. 346 applied to these eight certificates. The singular issue before this court with respect to the act of state defense is whether there is sufficient evidence in this record to sustain the determination of our lower courts. If there is, then we, an appellate court, possessing very limited jurisdiction, must affirm.

The significance of determining who has the burden of proof in this case is now academic, since proof has been presented. The majority nevertheless takes issue with the lower court’s determination that defendant had the burden of proof by stating that “ It was incumbent on the plaintiff to prove that the Cuban authorities themselves would deem Decision No. 346 invalid and would disregard it. This she was obviously unable to do.” (Emphasis added.) Employing the majority’s criteria, the act of state claim will hinge upon whether plaintiff has shown that the Cuban authorities—in this case, the Currency Stabilization Fund—had treated Decision No. 346 as either invalid or inapplicable to her eight certificates. The record, I submit, establishes that the Cuban authorities did disregard Decision No. 346 when dealing with the plaintiff’s certificates.

On July 23, 1959, eight days after Decision No. 346 was enacted, Bitter received a check for $45,000, as payment for a certificate of that amount. Plaintiff has established that payment. Defendant has not denied that the payment was made, it has not suggested that the payment was made in error. Is this evidence that the Cuban authorities did disregard Decision No. 346 insofar as Bitter was concerned? Could this indicate that his certificates were unaffected by Decision No. 346? Can we then say that the trial court had sufficient evidence before it to consider the application of the act of state doctrine as a question of fact? The answer in each instance must be in the affirmative.

Other acts of the Fund raise doubts regarding the genuineness of the act of state defense, tardily invoked by the defendant.

Five months after his first certificate was honored by the Currency Stabilization Fund, Bitter tendered his remaining certificates to Mr. Betancourt of the Currency Stabilization Fund. According to Bitter’s undisputed testimony, he waited until December to tender his certificates at the request of the Currency Stabilization Fund. This Fund is the official instrumentality of the Cuban Government. This Fund issued the first set of certificates in 1957, and later replaced them with new certificates at Bitter’s insistence. This Fund issued Decision No. 346 temporarily suspending the “ processing of certificates of exemption”. Nevertheless, despite the clear terms of Decision No. 346, this is the Fund that honored one of Ritter’s certificates on July 23, and then, in the fall, expressed an intention to honor his remaining certificates. Thus plaintiff has shown how the Cuban authorities, specifically the Currency Stabilization Fund, at times did disregard Decision No. 346 in dealing with Ritter’s certificates.

The majority has assumed that because the courts in the United States will not inquire into the validity of the acts of a foreign sovereign done within its own territory, then a fortiori, neither can it question whether ,a conceded act of state applies in a particular instance. If this be so, then prior decisions of our courts, cited with approval by the Federal courts, are this day overruled.

A prior decision of this court, cited at the outset of Ibis opinion, Holzer v. Deutsche Reichsbahn-Gesellschaft (277 N. Y. 474, supra) seems directly in point with this present litigation. The plaintiff in that case, a German Jew, was employed by a German corporation which was an instrumentality of the German Government, under a contract of employment which provided that ‘ ‘ in the event the plaintiff should die or become unable, without fault on his part, to serve during the period of the contract the defendants would pay to him or to his heirs the sum of 120,000 marks, in discharge of their obligations, under the hiring aforesaid”. On April 7, 1933, the German Government issued a law, allegedly intended to “ purify” the Civil Service System of that country. In effect, that law required that persons of non-Aryan descent, engaged in any of the leading commercial, industrial or transportation enterprises, be retired immediately. Plaintiff spent his first months of retirement in prison, and was then removed to a concentration camp. Upon his release, he brought an action in this country, against his employer, acquiring jurisdiction by attaching property. Plaintiff’s complaint set forth alternative causes of action. In his first cause of action, he stated that he had fulfilled all the requirements of this contract and that ‘1 defendants discharged [him] * * * upon the sole ground that [he] is a Jew.” He further pleaded that “As a result of such discharge the plaintiff was damaged in the sum of upwards of $50,000, no part of which has been paid although duly demanded.” His second cause of action stated in part that he “ became unable, without any fault on his part, to continue his services from the month of April, 1933, when he was imprisoned * * * The plaintiff accordingly became entitled under his contract to the sum of 120,000 marks, the payment of which was prescribed in the terms of his hiring for that event, no part of which has been paid to him although duly demanded. * * * By reason of the premises the plaintiff was damaged in the sum of about $50,000.”

The responsive pleadings in that case are also significant. The second separate defense, interposed against both causes of action, was as follows: “ The plaintiff was of non-Aryan descent and was within the classes specified and required to be retired by said laws and decrees of said Government, and the plaintiff was duly retired * * * and the plaintiff’s employment thereunder [was] duly and lawfully terminated * * * under