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First Nat'l City Bank v. Banco Para El Comercio Exterior De Cuba

Supreme Court of the United States

March 28, 1983, Argued ; June 17, 1983, Decided

No. 81-984

Opinion

 [****5]  [*613]  [***50]  [**2593]     JUSTICE O'CONNOR delivered the opinion of the Court.

 In 1960 the Government of the Republic of Cuba established respondent Banco Para el Comercio Exterior de Cuba (Bancec) to serve as "[an] official autonomous credit institution for foreign trade . . . with full juridical capacity . . . of its own . . . ." Law No. 793, Art. 1 (1960), App. to Pet. for Cert. 2d. In September 1960 Bancec sought to collect on a letter of credit issued by petitioner First National City Bank (now Citibank) in its favor in support of a contract for delivery of Cuban sugar to a buyer in the United States. Within days after Citibank received the request for collection, all of its assets in Cuba were seized and nationalized by the Cuban Government. When Bancec brought suit on the letter of credit in United States District Court, Citibank counterclaimed, asserting a right to set off the value of its seized Cuban assets. The question before us is whether Citibank may obtain such a setoff, notwithstanding the fact that Bancec was established as a separate juridical entity. Applying principles [****6]  of equity common to international law and federal common law, we conclude that Citibank may apply a setoff.

Resolution of the question presented by this case requires us to describe in some detail the events giving rise to the current controversy.

Bancec was established by Law No. 793, of April 25, 1960, as the legal successor to the Banco Cubano del Comercio Exterior (Cuban Foreign Trade Bank), a trading bank established by the Cuban Government in 1954 and jointly owned by the Government and private banks. Law No. 793 contains detailed "By-laws" specifying Bancec's purpose, structure, and administration. Bancec's stated purpose was "to contribute to, and collaborate with, the international trade policy of the Government and the application of the measures concerning foreign trade adopted by the 'Banco Nacional de Cuba,'" Cuba's central bank (Banco Nacional). Art. 1,  [*614]  No. VIII, App. to Pet. for Cert. 4d. Bancec was empowered to act as the Cuban Government's exclusive agent in foreign trade. The Government supplied all of its capital and owned all of its stock. The General Treasury of the Republic received all of Bancec's profits, after deduction of amounts for [****7]  capital reserves. A Governing Board consisting of delegates from Cuban governmental ministries governed and managed Bancec. Its president was Ernesto Che Guevara, who also was Minister of State and president of Banco Nacional. A General Manager appointed by the Governing Board was charged with directing Bancec's day-to-day operations in a manner consistent with its enabling statute.

 [**2594]  In contracts signed on August 12, 1960, Bancec agreed to purchase a quantity of sugar from El Institutio Nacional de Reforma Agraria (INRA), an instrumentality of the Cuban Government which owned and operated Cuba's nationalized sugar industry, and to sell it to the Cuban Canadian Sugar Company. The latter sale agreement was supported by an irrevocable letter of credit in favor of Bancec issued by  [***51]  Citibank on August 18, 1960, which Bancec assigned to Banco Nacional for collection.

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462 U.S. 611 *; 103 S. Ct. 2591 **; 77 L. Ed. 2d 46 ***; 1983 U.S. LEXIS 69 ****; 51 U.S.L.W. 4820

FIRST NATIONAL CITY BANK v. BANCO PARA EL COMERCIO EXTERIOR DE CUBA

Prior History:  [****1]  CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT.

Disposition:  658 F.2d 913, reversed and remanded.

CORE TERMS

instrumentality, enterprise, foreign trade, entity, juridical, foreign state, Ministry, counterclaim, courts, circumstances, international law, nationalized, dissolved, principles, functions, sugar, setoff, sovereign, Empresa, seized, banks, foreign government, legal status, obligations, contends, sovereign immunity, letter of credit, third party, alter ego, transactions

Civil Procedure, Pleadings, Counterclaims, General Overview, International Law, Foreign & International Immunity, Sovereign Immunity, Foreign Sovereign Immunities Act, Business & Corporate Law, Foreign Corporations, Corporate Formation, Place of Incorporation, Federal & State Interrelationships, Federal Common Law, Shareholder Actions, Actions Against Corporations, Internal Corporate Affairs, Dispute Resolution, Conflict of Law, Administrative Law, Sovereign Immunity, Act of State Doctrine, Diversity Jurisdiction, Alienage Jurisdiction, Separation of Powers, Legislative Controls, Corporate Existence, Powers & Purpose, Judgments, Enforcement & Execution, Writs of Execution, Duties & Liabilities, Unlawful Acts of Agents, Fraud & Misrepresentation, Shareholder Duties & Liabilities, Piercing the Corporate Veil, Governments, State & Territorial Governments, Claims By & Against