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When a court concludes that the situs of the property is in the United States, the act of state doctrine is not applicable.
Appellant Allied Bank International's (Allied) brought an action to recover on notes issued by appellees, Costa Rican banks, after Costa Rican Central Bank refused to authorize debt payments in United States dollars. The appellees moved the district court to dismiss the complaint, claiming lack of subject matter jurisdiction due to sovereign immunity, lack of in personam jurisdiction and insufficiency of process and service. Appellant moved for summary judgment. The trial court held that the act of state doctrine barred entry of summary judgment for appellant. On appeal, the court affirmed. The matter was before appellate court on rehearing, because the court believed its earlier interpretation of United States policy was wrong.
Did the act of state doctrine bar entry of judgment for appellant?
On rehearing, the court vacated its previous decision, reversed the trial court's denial of appellant's motion for summary judgment and dismissal of the action, and directed the trial court to enter judgment for appellant. The court found that the act of state doctrine did not apply because the property at issue was appellant's right to receive payment from appellees in accordance with promissory notes. The situs of the debts at issue was the United States. There was no taking of property by Costa Rica within its own territory. Further, to give effect to the Costa Rican directive would vitiate an express provision of the contracts between the parties. Appellees had provided that their obligation to pay would not be excused in the event that the Central Bank failed to provide necessary United States dollars for payment.