The American Act of State Doctrine

Abstract

The act of state doctrine as the Supreme Court has enunciated it directs American courts to decide cases on the assumption that acts of foreign governments taken in their own sovereign territory have the legal effect they purport to have. In the leading case of Banco Nacional de Cuba v. Sabbatino, the Court applied that principle to a Cuban expropriation decree concerning property located in Cuba, finding the decree effective to transfer title whether or not Cuba’s expropriation had violated international law. The act of state doctrine is not a principle of immunity or abstention, nor does it require courts to assume that foreign sovereign acts are consistent with any relevant legal duty. The doctrine is wholly about validity. Although the Court’s current statements of the doctrine are quite clear, its content is obscured by its history. The case that usually is taken as the doctrine’s source was about immunity, not validity. Later act of state cases made the doctrine a principle of validity, and immunity is now addressed under other statutory and common-law rules. Although the Court’s formulation is clear, a number of lower court decisions have seriously misapplied the doctrine, treating it as a rule of abstention or as a requirement that foreign government acts be assumed to comply with applicable duties, for example those imposed by federal statutes. Those cases are inconsistent with the Supreme Court’s holdings, and rely on a version of the act of state doctrine that conflicts with established principles of immunity, abstention, statutory construction, and public international law.