Sabbatino Doctrine Modified in Foreign Assistance Act of 1964

Prior to Banco Nacional de Cuba v. Sabbatino, one of the United States Supreme Court’s most controversial recent decisions touching on matters of international law, it had been held that American courts could not question titles to property acquired by virtue of a public taking decreed by a recognized foreign government and carried out within its territory. This concept of judicial abstention, embodied in the “act of state doctrine,” was held applicable in Sabbatino even though it was alleged that the asserted claim to the property stemmed from a confiscation that violated customary international law. This decision led Congress to incorporate into the Foreign Assistance Act of 1964 a provision substantially modifying the rule laid down in Sabbatino. The Sabbatino Amendment for-bids American courts to refuse, under the act of state doctrine, to decide the merits of any claim of title or other rights asserted on the ground that a foreign confiscation contravened international law, which Congress defined to include the principle of full compensation. The statute affects only claims arising out of takings after January I, 1959 and only if suit is filed prior to January I, 1966. It does not apply to rights claimed under short-term letters of credit issued in good faith before the taking. Furthermore, the amendment does not apply if the President notifies the court that the interests of American foreign relations require that it not inquire into the circumstances of the particular confiscation.