International Law – Sovereign Immunity – Act of State

In 1953 the government of Peru authorized the issuance of scrip certificates to holders of certain of its bonds. Plaintiffs were members of a class of former bondholders who were not among the distributees of the scrip under the terms of the Peruvian enabling act. They alleged that they were entitled to share in the scrip by reason of contracts with the government of Peru and that defendants tortiously had induced Peru to breach these contracts by excluding the plaintiffs from the terms of the legislative enactment. The defense interposed was that litigation of the cause would make it necessary for the court to pass on the validity of an act of a foreign government, and that this is beyond the power of the court. On appeal from an order to strike this defense, held, reversed. The validity of the acts of one sovereign government cannot be adjudicated in the courts of another; the defense therefore should be allowed. Frazier v. Foreign Bondholders Protective Council, Inc., 125 N.Y.S. (2d) 900 (1953).