Contested Cargo

With one sweeping decree on Aug. 6, 1960, Fidel Castro expropriated Cuban enterprises that were wholly or largely owned by U.S. citizens. On that very day, in the port of Santa Maria, a ship was being loaded with sugar that had been produced by one of the expropriated companies, Compania Azucarera de Vertientes-Camaguey de Cuba, otherwise known as C.A.V. That white cargo set off on a four-year cruise through the U.S. courts.

At the time of the expropriation decree, the sugar had already been sold to a U.S. commodity broker, Farr, Whitlock & Co., but C.A.V. had not yet received payment. Before the Castro authorities would let the ship clear Cuban waters, Farr, Whitlock had to agree to pay the Cuban government for the sugar. Later on, after the cargo was delivered to its destination in Morocco, Farr, Whitlock found itself confronted with two insistent claimants. The Castro government, acting through a New York agent, demanded its money. So did the surviving corporate shell of C.A.V., now in the U.S.

Up Through the Courts. The resulting legal battle between C.A.V. and the Banco Nacional, an instrument of the Cuban government, stirred up interest out of all proportion to the $175,251 that was at stake. Rooting for C.A.V. were the stockholders of all the Castro-expropriated companies, once worth hundreds of millions. The U.S. State Department considered the case momentous because it involved a basic principle of U.S. law: "the act of state doctrine" that originated in England nearly 300 years ago. The doctrine was spelled out by the Supreme Court back in 1897: "Every sovereign State is bound to respect the independence of every other sovereign State, and the courts of one country will not sit in judgment on the acts of the government of another done within its own territory." Since then, the Supreme Court has consistently held that if a person protected by U.S. law has a grievance against a foreign government, it is up to the Executive and Legislative branches, riot the' Judiciary, to help him secure redress.

Despite the act of state doctrine, the U.S. District Court in Manhattan decided the sugar claim in favor of C.A.V. Castro's expropriations of U.S.-owned enterprises, said the court, violated international law in several ways, notably by failing to provide adequate compensation. The Court of Appeals agreed. When Banco Nacional appealed to the Supreme Court, the U.S. Justice and State departments urged the court to invoke the traditional doctrine and rule in favor of the Castro government. Castro's expropriations did indeed violate international law, said the State Department, but grievances arising from the seizures should be handled by the methods of diplomacy.

Into the Freezer. In an 8-to-l decision, the Supreme Court saw things the State Department's way. Impairing the act of state doctrine, said the opinion written by John Marshall Harlan, "would work serious inroads on the maximum effectiveness of United States diplomacy." And preserving the doctrine intact, even when an expropriation violates international law, will best serve "both the national interest and progress toward the goal of establishing the rule of law among nations."

For Castro it was a less than satisfactory victory. He will not get the money, at least not until he mends his ways. The U.S. Government has frozen all Cuban assets in the U.S.. and the $175,251 will go into the freezer too.

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