^* [The concurring opinion and concurring statement appear at I.L.M. page 753. The dissenting opinion appears at page 754.]

^* Part III of this opinion is joined only by THE CHIEF JUSTICE, MR. JUSTICE POWELL, and- MR. JUSTICE REHNQUIST.

¹ When the prior owners sued the importers, the interventors and the Republic of Cuba brought separate litigation against the prior owners' attorneys seeking to restrain the further prosecution of the actions brought by the prior owners. The interventors were there beld entitled to the proceeds of sales made to American buyers after intervention but the prior owners’ trademark litigation was permitted to continue. Palicio v. Brush, supra.

² Prior to intervening in this lawsuit, interventor—respondent Pinera had replaced the original interventors as to the four companies on whose behalf he has pursued this suit. For convenience sake we will refer to those representing the tobacco businesses as “interventors” both in discussing their conduct prior to the lawsuit and in discussing the single intervener's conduct as a party to the lawsuit.

³ The District Court also disagreed with interventors that there was .insufficient evidence to show that they had actually received the sums assertedly paid them by the importers. Neither could the District Court agree that the importers, if they were entitled to the funds at all, were entitled to be repaid only in pesos. The Court of Appeals did not disturb these holdings.

⁴ The Court of Appeals rejected the importers’ contention that the Hickenlooper Amendment to the Foreign Assistance Act of 1964, 22 U. S. C. § 2370 (e) (2) precluded interventors from invoking the act of state doctrine. The correctness of that judgment is not before us in this litigation.

⁵ Our order granting certiorari directed counsel to brief and argue two questions:

“1. Can statements by counsel for the Republic of Cuba, that petitioner's unjust enrichment counterclaim would not be honored, constitute an act of state?

“2. If so, is an exception to the act of state doctrine created, under First National City Bank v. Banco Nacional de Cuba, 406 U. S. 759 (1972), where petitioner's counterclaim does not exceed the net balance owed to Cuba on its claims by petitioner's codefendants, and where all claims and counterclaims arise out of the subject matter in litigation in this case?”

When the case was restored to the calendar for reargument, — U. S. , the Court directed that:

“In addition to other questions presented by this case, counsel are requested to brief and discuss during oral argument: Should this Court's holding in Banco Nacional de Cuba v. Sabbatino, 376 U. S. 398, be reconsidered?”

⁶ In addition to the present petition the Court has before it the petition of the interventors, The Republic of Cuba v. Saks and Co., No. 73-1287, challenging, on the ground that the intervention successfully seized the accounts receivable and that the $477,000 properly belonged to them, the propriety of permitting even a setoff, and the conditional cross-petition of the importers, Saks and Co. v. The Republic of Cuba, No. 73-1289, challenging the propriety of the judgment against them and in favor of the owners for the $477,000 due on preintervention shipments. Today we deny these petitions.

⁷ The traditional formulation of the act of state doctrine is that in Underhill v. Hernandez, 168 U. S. 250:

“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. Redress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves.”

⁸ Their entitlement to the $477,000 derived under this theory from the initial act of state—i. e., the intervention of the owners’ business. All parties agree that intervention is to be given effect with respect to all of the owners' tangible property in Cuba at the time of intervention. The Court of Appeals held, however, that since the accounts receivable were not in Cuba at the time of intervention, the intervention did not reach them. The dissent points to a statement by trial counsel that when Dunhill's money arrived in Cuba after the intervention “the Cuban government took this money and under the act of state doctrine it belongs to the Cuban government.” The statement was made during counsel's closing argument in the District Court and is not and does not purport to be a factual representation that a second act of state occurred. Indeed in his brief in this Court the same counsel states “counsel's in-court statements were ‘no more than statements of a litigating position,’” Respondents' Brief, at p. 16, and “The statement of … a lawyer is not proof of anything.” Respondents' Brief, at p. 17. Indeed, if counsel's statements were proof of anything, petitioner would have been entitled to cross-examine him under oath. As a legal argument that the original act of state automatically matured when Dunhill's money arrived in Cuba and transformed the account receivable from an intangible to a tangible asset, the statement was rejected by the Court of Appeals which held that the original intervention did not seize the accounts receivable from the prior owners even with respect to accounts later paid by Dunhill. Finally, we are unwilling, absent proof, to infer from the fact that Cuba seized the assets of the cigar business from Cuban nationals that they must necessarily have intended to make and have made a later discriminatory and confiscatory seizure of money belonging to the United States companies. Indeed, respondents have argued vigorously before this Court that no international law issue is raised precisely because “All of the acts of the Cuban sovereign have been directed at its nationals …” and “there was no intent to divest Dunhill of ownership.” Respondents' Brief on Reargument, pp. 4 and 5. In supporting its conclusion that Cuba necessarily did intend to seize Dunhill's money when it arrived in Cuba, the dissent quotes a remark by counsel—in the third brief filed in this Court by respondents—that they had contended below that the “refusal to acquiesce in the quasi-contractual obligation sought to be imposed by a foreign court, was … an act of State.” Once again, this is merely a statement of respondents' incorrect litigating position that the failure to pay Dunhill established a refusal by Cuba to acquiesce in an admitted obligation and was therefore an act of state. The litigating position is incorrect because, as stated supra, at 8, respondents have never admitted an obligation to Dunhill and therefore their failure to pay Dunhill, without more, is inadequate to establish a sovereign repudiation of such an obligation.

⁹ “The Anne, 3 Wheat. 435, reaffirmed by The Sao Vicente, 260 U. S. 151, is enough to show that the immunity could not have been successfully set up by a duly recognized consul, representative of his sovereign in commercial matters, in the ordinary course of his official duties, and there seems no adequate reason to presume that the master of the Gul Djemal had any greater authority in respect thereto. Although an officer of the Turkish Navy, he was performing no naval or military duty, and was serving upon a vessel not functioning in naval or military capacity but engaged in commerce … . He was not shown to have any authority to represent his sovereign other than can be inferred from his position as master … .” (Emphasis added.) 264 U. S., at 95.

¹⁰ There the commander of a successful revolution, in control of the City of Bolivar, refused a passport to Underhill. Upon suit by Underhill for his detention, this Court refused to inquire into the propriety of the detention because “the acts complained of were the acts of a military commander representing the authority of the revolutionary party as government, which afterwards succeeded and was recognized by the United States.” Id., at 254.

¹¹ The dissent, assuming that the Republic of Cuba purported to exercise sovereign powers in refusing to return Dunhill's money, asserts that there is no distinction between the refusal to honor its obligation to return Dunhill's money and the original expropriation of the cigar businesses; and that the case therefore does not involve a purely commercial act. The dissent is wrong. Cuba's debt to Dunhill arose out of the conduct by Cuba's agents of a commercial business for profit. The same may not be said of conventional expropriations of foreign assets located ab initio inside a country's territorial borders. Dunhill was continuing to buy cigars from the interventors after intervention and Dunhill knew when the payments were made that the interventors would receive them. 485 F. 2d, at 1367-1368. The debt would never have arisen if Cuba's agents had not gone into the cigar business and sold to Dunhill. This case is therefore no different from any case in which a buyer overpays for goods sold by a commercial business operated by a foreign government—a commonplace event in international commerce.

¹² The letter also takes the position that sovereign immunity, as such, does not prevent entry of an affirmative judgment on a counterclaim arising out of the same “transaction or occurrence that is the subject matter of the claim of the foreign state,” and inferentially that the act of state doctrine is likewise unavailable as a method of avoiding such an affirmative judgment. In light of our conclusion that repudiation by a sovereign of a commercial debt is not an act of state, we do not reach the State Department's alternate position. The letter also takes the position that the overruling of Sabbatino, so that acts of state would hereafter be subject to adjudication in American courts under international law, would not result in embarrassment to the conduct of United States foreign policy. We need not resolve this issue either.

¹³ “This salutary principle was not followed in Berizzi Bros. Co v. The Pesaro, 271 U. S. 562, where the court allowed the immunity, for the first time, to a merchant vessel owned by a foreign government and in its possession and service, although the State Department had declined to recognize the immunity. The propriety of thus extending the immunity where the political branch of the government had refused to act was not considered.

“Since the vessel here, although owned by the Mexican Government, was not in its possession and service, we have no occasion to consider the questions presented in the Berizzi case. It is enouglj that we find no persuasive ground for allowing the immunity in this case, an important reason being that the State Department has declined to recognize it.”

¹⁴ Mr. Justice Frankfurter, with Mr. Justice Black, said:

“The fact of the matter is that the result in Berizzi Bros. Co. v. The Pesaro, supra, was reached without submission by the Department of State of its relevant policies in the conduct of our foreign relations and largely on the basis of considerations which have steadily lost whatever validity they may then have had. Compare the over-ruling of The Thomas Jefferson, 10 Wheat. 428 (1825), by The Genesee Chief, 12 How. 443 (1851), The views of our State Department against immunity for commercial ships owned by foreign governments have been strongly supported by international conferences, some held after the decision in the Pesaro case. See Lord Maugham in Compania Naviera Vascongado v. The Cristina [1938] A. C. 485, 521-523. But the real change has been the enormous growth, particularly in recent years, of ‘ordinary merchandising’ activity by governments. See The Western Maid, 257 U. S. 419, 432. Lord Maugham in the Cristina thus put the matter:

“ ‘Half a century ago foreign Governments very seldom embarked in trade with ordinary ships, though they not infrequently owned vessels destined for public uses, and in particular hospital vessels, supply ships and surveying or exploring vessels. These were doubtless very strong reasons for extending the privilege long possessed by ships of war to public ships of the nature mentioned; but there has been a very large development of State-owned commercial ships since the Great War, and the question whether the immunity should continue to be given to ordinary trading ships has become acute. Is it consistent with sovereign dignity to acquire a tramp steamer and to compete with ordinary shippers and ship-owners in the markets of the world? Doing so, is it consistent to set up the immunity of a sovereign if, owing to the want of skill of captain and crew, serious damage is caused to the ship of another country? Is it also consistent to refuse to permit proceedings to enforce a right of salvage in respect of services rendered, perhaps at great risk, by the vessel of another country?’ [1938] A. C. 485, 521-522.

“It is my view, in short, that courts should not disclaim jurisdiction which otherwise belongs to them in relation to vessels owned by foreign governments however operated except when 'the department of the government charged with the conduct of our foreign relations,’ or of course Congress, explicitly asserts that the proper conduct of these relations calls for judicial abstention. - Thereby responsibility for the conduct of our foreign relations will be placed where power lies. And unless constrained by the established policy of our State Department, courts will best discharge their responsibility by enforcement of the regular judicial processes.” 324 U. S., supra, at 40-42. 15Austria: Holoubek v. United States, 40 Int’l L. Rep. 73 (Sup. Ct. 1961). Belgium: Socobel v. Greek State, 18 Int’l L. Rep. 3 (Trib. Civ. Brussels 1951). Canada: Penthouse Studios, Inc. v. Republic of Venezuela, 8 D. L. R. 3d 686 (Ct. App. Quebec, 1969). England: Thai-Europe Tapioca Services, Ltd. v. The Government of Pakistan (Court of Appeal) (see The Times (London), July 16, 1975). The Phillippine Admiral (Privy Council, Nov. 6, 1975) (see The Times (London), Nov. 11, 1975, p. 14). Egypt: Federated People's Republic of Yougoslavia v. Kajr El-Zayat Cotton Co., Ltd., 18 Int’l L. Rep. 225 (Civ. Trib. Alexandria 1951). France: Administration des Chemins de Fer Iraniens v. Societe Levant Express Transport, 73 Rev. Gen. Dr. Int’l Pub. 883 (Sup. Ct. 1969). Germany: Claim Against The Empire of Iran Case, 45 Intl L. Rep. 57 (Fed. Const. Ct. 1963). Greece: Papaevangelou v. United State Government (Athens Ct. First Inst., April 23, 1960). Hong Kong: Midland Investment Co., Ltd. v. The Bank of Communications, 40 H. K. L. Rep. 42, 23 Int’l L. Rep. 234 (S. Ct. 1956). . Italy: United States v. /. R. S. A. Co., Ltd., 86 II Foro Ital. 1405 (Sup. Ct., en banc, Mar. 13, 19G3). Pakistan: Gammon- Layton Co., Ltd. v. United States of America (High Court of West Pakistan Karachi Bench, Jan. 2, 1965). Philippines: Carried Lumber Co. v. The United States of America (Ct. App. Manila, Sept. 24, 1974). Yugoslavia: Zarko v. Office of International Trade Fairs, U. S. Department of Commerce (Dist. Ct. Zagreb, June 10, 1966).

¹⁶ In Banco Nacional de Cuba v. Sabbatino, 376 U. S. 398, 428, the Court noted in the context of the act of state doctrine: “It is also evident that some aspects of international law touch more sharply on national nerves than do others; the less important the implications of an issue are for foreign relations, the weaker the justification for exclusivity in the political branches.”

¹⁷ Schmithoff, The Unification or Harmonization of Law by Means of Standard Contracts and General Conditions, 17 Int’l and Comp. L. Q. 551, 563-564 (1968)Google Scholar (footnotes omitted). See also Lowenfeld, International Private Trade, pp. 1-2 (Matthew Bender 1975)Google Scholar; Gal, The Commercial Law of Nations and the Law of International Trade, 6 Corn. Int’l L. J. 55, 64 (1972); Trommer, The Law of Foreign Trade in the Legal Systems of the Countries of Planned Economy, in The Sources of the Law of International Trade 41 (Schmitthoff ed. 1964) (hereinafter “SCHMITTHOFF”); Knapp, The Function, Organization and Activities of Foreign Trade Corporations in the European Socialist Countries, SCHMITTHOFF 52; Goldstajn, International Conventions and Standard Contracts as Means of Escaping from the Application of Municipal Law, SCHMITTHOFF 103; Ionasco, The Limits of Party Autonomy, SCHMITTHOFF 167; and Schmitthoff, Introduction, SCHMITTHOFF at ix.

¹⁸ The dissent states that the doctrines of sovereign immunity and act of state are distinct—the former conferring on a sovereign “exemption from suit by virtue of its status” and the latter “merely [telling] a court what law to apply to a case.” It may be true that the one doctrine has been described in jurisdictional terms and the other in choice of law terms; and it may be that the doctrines point to different results in certain cases. It cannot be gainsaid, however, that the proper application of each involves a balancing of the injury to our foreign policy, the conduct of which is committed primarily to the Executive Branch, through judicial affronts to sovereign powers, compare Mexico v. Hoffman, 324 U. S., supra, 35-36 (sovereign immunity), with Banco National de Cuba v. Sabbatino, 376 U. S. 398, 423, 427^428 (act of state), against the injury to the private party, who is denied justice through judicial deference to a raw assertion of sovereignty, and a consequent injury to international trade. The State Department has concluded that in the commercial area the need for merchants “to have their rights determined in courts” outweighs any injury to foreign policy. This conclusion was reached in the context of the jurisdictional problem of sovereign immunity. We reach the same one in the choice of law context of the act of state doctrine.

¹ Since First National City Bank was decided, the Department of State has taken the position in the sovereign immunity area that even where a counterclaim exceeds the foreign state's claim, the courts may adjudicate the counterclaim if it arises from the same “transaction or occurrence that is the subject matter of the claim of the foreign state.” S. 566, 93d Cong., 1st Sess., § 1607 (1); see, ALI, Restatement, Foreign Relations Law of the United States, Second, §70(2)(b). In our view, the adjudication of counterclaims against a foreign state, arising from the same transaction, occurrence or subject matter as the claim of the foreign state, does not pose foreign relations difficulties.

² See, e. g., In The Matter of Minera El Teniente, S. A., 12 Int’l Legal Materials 251 (Superior Ct. Hamburg, 1973) (a foreign state's act of expropriation that violates international law will not be recognized by German courts if the subject matter of the litigation has a substantial contract with Germany); Braden Copper Company v. Le Groupement d’Importation des Metaux, 12 Int’l Legal Materials 187 (Ct. of Extended Jurisdiction Paris, 1972) (rejecting sovereign immunity of a state trading company that marketed expropriated copper); Compagnie Francaise de Credit et de Banque v. Consorts Atard, Clunet, J de Droit Int’l, 98 (1971), p. 86 (France: Cour d’Appel Amiens, 1970) (foreign expropriation decrees will not be recognized in France absent the payment of prompt, adequate and effective compensation)Google Scholar; Credit Foncier d’Algerie et de Tunisi’e v. Narbcmne, Clunet, J du Droit Int’l 96 (1969), p. 912 (France: Court de Cassation, 1969) (acts of expropriation not recognized in France unless equitable compensation is first determined);Google Scholar Obester Gerichtshof (Austrian Supreme Court), decision of 22 December 1965, Osterr. Juristenzeitung 21 (1966), p. 204, Clunet, J. du Droit Int’l, 94 (1967), p. 941 (an expropriation without compensation violates international law, but no recovery against purchasers of expropriated property)Google Scholar; N. V. Assurantie Maatschappij de Nederlanden van 1845 v. P. T. Escomptobank, 33 Int’l L. Rep. 30 (D. Ct. The Hague, 1962) (rejecting act of state defense where there is a violation of international law).

³ Banco de Vizcaya v. Don Alfonso de Borbon y Austria, [1935] 1 K. B. 140, 50 T. L. R. 284; Re Helbert Wagg cfc Co. Ltd., [1956] Ch. 323, 346; 1 Lauterpacht, Oppenheim's International Law, 267-268 (8th ed. 1955)Google Scholar. See also Republic of Peru v. Peruvian Guano Co., [1887] 36 Ch. D. 489 and Republic of Peru v. Dreyfus Brothers & Co. [1888] 38 Ch. D. 348, where British courts, under international law, refused to give effect to Peruvian laws annulling acts of the preceding Peruvian government; cf. Buttes Gas and Oil Co. v. Hammer [1975] 2 W. L. R. 425, at 343-435.

¹ The classic American formulation of the doctrine, see Banco Nacional de Cuba v. Sabbatino, 376 U. S. 398, 416 (1964), appears in UnderhiU, v. Hernandez, 16S U. S. 250, 252 (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. Ik-dress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves.”

² Actually only one of the interventors is a party in this Court; he has apparently been designated as the single intervcntor for the five intervened tobacco companies. For the sake of convenience, I shall continue to refer to “the interventors.”

³ The Republic of Cuba v. Saks & Co., No. 73-1287. 4 Payment was made to collecting banks that had previously acted as agents for the former owners. The District Court expressly found that “the importers [including Dunhill] well knew that, following intervention, the collecting banks were acting as agents for the interventors and not the [former] owners, and also knew that the payments they were making to the collecting banks were ultimately received by the interventors in Cuba.” 345 F. Supp., at 542. These findings were sustained by the Court of Appeals. 4S5 F. 2d, at 13G7-13G8.

⁵ The quoted statement appears in the concurring opinion of Judge Hopkins, 23 N. Y. 2d, at 66, 242 N. E. 2d, at 717, which was joined by the same majority that subscribed to the opinion of Chief Judge Fuld, in which the court held: “[T]he breach of contract, of which the plaintiff complains, resulted from and, indeed, itself constitutes an act of state.” 23 N. Y. 2d, at 53, 242 N. E. 2d, at 709.

⁶ In another brief filed in this Court, respondents' counsel observed:

“It matters not that the interventor may be wrong in the eyes of the United States court [in claiming that the September 15th decree nationalized the prcintervention accounts receivable] …. Since the monies taken by the interventor were in Cuba, and he was a representative of the sovereign, it can hardly be denied that his conduct amounted to ‘a taking of property within its own territory by a foreign sovereign government.’ [Banco National de Cuba v. Sabbatino, 376 U. S. 398, 428 (1964)].” Brief for Respondents, at 18.

⁷ The Court acknowledges that this statement reflects an alternative contention by respondents that, assuming the ineffectiveness of the September 15th decree in reaching the preintervention accounts receivable and the existence of a quasi-contractual obligation to return the monies at issue to Dunhill, their repudiation of that obligation was an act of state. Ante, at 9 n. 8. But the Court emphasizes the fact that respondents have not admitted the existence of an obligation to Dunhill, and concludes that it remains unclear whether respondents have determined to retain the monies even if a United States court declares the obligation to exist. The very fact that respondents are making the alternative argument referred to herein, however, should remove any doubt as to their intentions.

⁸ Compania Espanola de Navegacion Maritima v. The Navemar, 303 U. S. 68 (1938), is not to the contrary. That was a suit in admiralty by the alleged owner of a Spanish merchant vessel to recover possession. The Spanish Ambassador sought leave to intervene as a claimant and produced an “affidavit of the Spanish Acting was the property of the Republic of Spain, by virtue of a decree of attachment promulgated by the President of the Republic, appropriating the vessel to the public use, and that it was then in the possession of the Spanish Government.” Id., at 70. The District Court, we held, “was not bound … to accept the allegations of the suggestion as conclusive” on the question of possession, id., at 75. where there was no proof whatever that the foreign sovereign had ever held possession and no claim that “the alleged seizure of the vessel by the members of the crew was an act of or in behalf of the Spanish Government.” Id., at 72.

By contrast, in the present case it is settled that the interventors received the payments for preintervention shipments on behalf of the Cuban Government, 345 F. Supp., at 532, and any lingering doubt that their retention was by virtue of a claim of right was dispelled by counsel for Cuba and the interventors at trial. Had possession been established in The Navemar, and the decree of appropriation been in doubt, the case would be in point, but in fact the contrary was true and the case is inapposite.

It was in response to the .suggestion that The Navemar case controlled this one that counsel for respondents made the statement, relied upon by the Court, ante, at 8 n. S, that: “The statement of an ambassador, like the statement of a lawyer, is not proof of anything. It is merely an assertion made by the representative of a sovereign as to the position taken by that sovereign in litigation.” Brief for Respondents, at 17 n. S. In this case, unlike in The Navemar case, it is precisely the position of the foreign sovereign with respect to property in its possession that is significant.

⁹ The appellation “Bernstein letter” stems from the case Bernstein v. N. V. Nederlandsche-Amcrikaamchc, 210 F. 2d 375 (CA2 1954).

¹⁰ It is noteworthy that while the Department of State now takes the position that Sabbatino can be overruled without embarrassment to the conduct of foreign policy, the result in Sabbatino had been urged by the Solicitor General at the time. Sec Brief for the United States as Amicus Curiae in Sabbatino.

¹¹ See also Falk, R , The Role of Domestic Courts in the International Legal Order 96-102 (1964)Google Scholar; Henkin, Act of State Today: Recollections in Tranquility, 6 Colum. J. Transnat’l L. 175, 178-180, 187-188 (1967)Google Scholar.

¹² While Sabbatino found the act of state doctrine to reflect the “distribution of functions between the judicial and political branches of-the Government,” 376 U. S., at 427-428, it has also been suggested that a doctrine of deference based upon the absence of consensus as to controlling principles of international law allocates legal competence among nations in a manner that promotes the growth of international law. See generally Falk, R The Status of Law in International Society 403-442 (1970)Google Scholar; Falk, R The Role of Domestic Courts in the International Legal Order 64-138 (1964)Google Scholar. Whether considerations of its contribution to the development of international law provide a basis for the act of state doctrine-independent of the notion of separation of powers is a question that the Court has not addressed and that we need not consider. It is worth noting, however, that the Sabbatino Court, was sensitive to the fact that a court's invalidation of a foreign sovereign's acts on the basis of principles of international law that are not the subject of “unambiguous agreement,” 376 U. S., at 428, is unlikely to be regarded as impartial. Id., at 434—435. In the area of state responsibility for expropriations, the Court viewed the potential contribution of United States courts to the growth of international law as “highly conjectural,” id., at 434, and concluded that “progress toward the goal of establishing the rule of law among nations [is] best served by maintaining intact the act of state doctrine.” Id., at 437.

¹³ At least one commentator has proposed discarding the doctrine of sovereign immunity (except with respect to diplomatic and military activity), while retaining the nonreviewabilitv accorded by the act of state doctrine to official acts of a sovereign performed within its territory. Falk, R The Role of Domestic Courts in the International Legal Order 139-145, 164-169 (1964)Google Scholar.

¹⁴ The precise contours of the restrictive theory of sovereign immunity, on which the commercial act exception is based, are themselves unclear. See, e. g., Victory Transport Inc. v. Comisaria General, 336 F. 2d 354, 359-360 (CA2 1964); Falk, The Immunity of Foreign Sovereigns in United States Courts, 6 N. Y. U. J. Int’l L. & Pol. 473, 477 (1973)Google Scholar; Lauterpacht, The Problem of Jurisdictional Immunities of Foreign States, 2S Brit. Y. B. of Int’l L. 220, 222-226 (1951)Google Scholar.

¹⁵ The general observation that “more discernible rules of international law have emerged with regard to the commercial dealings of private parties in the international market” than with regard to “exercises of governmental powers,” ante, at 21, does not, however, approach the finding of “unambiguous agreement regarding controlling legal principles” contemplated by Sabbatino. 376 U. S., at 428. Nor is the argument in favor of a broad “commercial act” exception advanced by the observation that “in their commercial capacities, foreign governments do not exercise their sovereign powers,” and that the issues involved are therefore “unlikely to touch very sharply on ‘national nerves.’” Ante, at 21. Of course, to the extent that an act does not reflect the exercise of sovereign power, it is not covered by any version of the act of state doctrine. But the assumption on which Mil. JUSTICE WHITE proceeds is that “the Cuban government itself had purported to exercise sovereign power to confiscate” the funds at issue. Ante, at 11. Speaking generally, without reference to any particular case, whether a nation purports to be acting in a sovereign capacity would appear to be as good an indicator as any of the sensitivity of the issues involved.

¹⁶ Quite apart from the significance that may be attached to the label, I find it difficult to accept MR. JUSTICE WHITE'S characterization of the course of conduct involved here as “purely commercial.”

¹⁷ Under its view of tho case as a run-of-the-mill commercial case, Dunhill does assert in its Supplemental Brief that the retention of the monies constitutes a discriminatory taking—the notion evidently being that Cuba has not generally repudiated its commercial debts. Supplemental Brief for the Petitioner, at 15-17. But there has been no claim that Cuba has retained only those preintervention- ishipment payments made by United States citizens, or that the intervention program was in any other sense discriminatory.

¹⁸ This was done by entry of judgment for the interventors against Dunhill for 893,000 and in favor of Dunhill against the interventors for $141,000.

¹⁹ Whether Citibank's approval of a setoff is applicable to the facts of this litigation is questioned in the petition in No. 73-1287.

²⁰ The bar of sovereign immunity, which yields to the extent of a counterclaim against a sovereign plaintiff and no further, National City Bank v. Republic of China, 34S U. S. 356 (1955), would be absolute quite apart from the availability of .the act of state defense, unless the restrictive theory of sovereign immunity is followed and the case is considered purely commercial.

²¹ When this case was initially briefed and argued, Dunhill attempted to distinguish an excessive counterclaim from a simple principal claim on the ground that the former was covered by the Bernstein letter in Citibank, in which the State Department advised the Court that foreign policy considerations did not require application of the act of state doctrine “to bar consideration of a defendant's counterclaim in |that| or like cases.” The letter in Citibank provided little support for Dunhill. since it contained several qualifications to its determination that the act of state doctrine need not be applied, one of which was that “the amount of the relief to be granted is limited to the amount of the foreign state's claim.” 442 F. 2d, at 537. Since the State Department has now made known its view tha’l the act of state doctrine need not be applied in this case, it is no longer necessary lor Dunhill to rely on the letter in Citibank- But as I have already noted, the significance of any views expressed by the State Department is minimal after Citibank.

²² “[Consolidation is permitted as a matter of convenience and economy in administration, but does not merge the suits into a single cause, or change the rights of the parties, or make those who are parties in one suit parties in another.” Johnson v. Manhattan R. Co., 289 U. S. 479, 496-497 (1933) (footnote omitted).

²³ See 9 Wright, C & Miller, A , Federal Practice and Procedure § 2382, at 254-256 (1971)Google Scholar.

²⁴ We are informed that the interventors had pending at least four other cases against tobacco importers in the District Court at the time the present cases were tried. See Brief for Respondents, at 26. The reason they were not consolidated with the present cases is not a matter of record here.

²⁵ 31 CFR § 515.201(b) prohibits all transactions and transfers that “‘involve property in which [Cuba], or any national thereof, has at any time on or since TJuly 8, 1963] had any interest of any nature whatsoever, direct or indirect.” Transfer is defined to mean any act or transaction the purpose, intent, or effect of which is to “create, surrender, release, transfer, or alter, directly or indirectly, any right, remedy, power, privilege, or interest with respect to any property,” including execution of a judgment. 31 CFR § 515.310. Property is defined to include a judgment. 31 CFR §515.311. Discharge of a judgment debt on behalf of Cuba, even if by execution of a judgment against Cuba, would thus be prohibited.

²⁶ After certiorari was granted in this case, counsel for respondents corresponded with the Acting Director of the Office of Foreign Assets Control, stating:

“Dunhill had assumed that if it secured a judgment against Cuba, it could execute that judgment against money owing to Cuba from other creditors and it had in fact attempted to attach funds owing to Cuba by Fabcr, Coe & Gregg, another cigar importer whose claim is likewise in litigation… .

“It would be helpful if you would confirm my understanding that, generally speaking, you will not issue a license to permit a judgmentcreditor of Cuba to execute against assets of Cuba which have been frozen pursuant to the Foreign Assets Control regulations… .”

The Acting Director responded by a letter confirming this understanding of the licensing policy. Both letters appear in Brief for Respondents, at App. B.

²⁷ Execution of an affirmative judgment would, of course, be barred whether the basis for that judgment were the presence of other parties with judgment debts to Cuba, the absence of a sovereign act, or the application of a commercial act exception to the act of state doctrine. The point is particularly appropriate, however, in response to the contention that the presence of other parties with judgment debts to Cuba justifies an affirmative judgment in this case; this contention proceeds on the assumption that the policies behind the act of state doctrine would otherwise bar affirmative recovery by Dunhill, and permits affirmative recovery only because of the purported unfairness that would result if Cuba's debt to Dunhill were not deducted from its recovery from the other importers. As has been shown, granting an affirmative judgment to Dunhill in this way would not affect the fairness of the disposition, since execution of the judgment would be barred by the Treasury Department's freezing of Cuban assets for the benefit of all American nationals with claims against Cuba.

^* [Reproduced from the Slip Opinion provided by the U.S. Supreme Court. [The Order of the U.S. District Court for the District of Columbia, dated February 21, 1975, appears at 14 I.L.M. 1270 (1975). The Decision of the U.S. Court of Appeals for the District of Columbia, of August 11, 1975, appears at 14 I.L.M. 1247 (1975).]