International Law: Diplomatic Escape Hatch

Not the least among victims of Fidel Castro’s Communism are the many foreign creditors whose claims have been ignored or laughed at by the Cuban government. Some 4,000 claims — totaling well over $1 billion — are pending against Cuba. They have been filed mostly by big rubber, oil and sugar companies whose assets were grabbed by Castro. Their chances of collection? Under present conditions, exactly zero. The firms are blocked by the hoary doctrine of “sovereign immunity.”

In its original form, the doctrine entitled a foreign nation to immunity from all suits in another country’s courts, on the theory that embarrassing suits would obstruct foreign relations. The U.S. Supreme Court under Chief Justice John Marshall accepted the doctrine in 1812, holding that unless the State Department directs otherwise, any foreign government’s claim of immunity is binding on U.S. courts.

Ducking the Check. After World War II, as more and more governments nationalized such normally commercial enterprises as airlines, railroads and shipping firms, one country after another concluded that the old concept of immunity was being abused. The U.S. in 1952 modified its position a bit to strip away some of the immunity from commercial operations of foreign nations; a government could be sued in U.S. courts, but even if it lost the case, its U.S. holdings would still be immune from attachment. U.S. firms dealing with a government like Castro’s were back where they started from.

Typical of their frustration is the case of the Panamanian-based Mayan Line steamship company. Under the 1952 ruling, Mayan went into two U.S. courts in Louisiana with a $668,000 claim against Cuba for unpaid shipping charges, and won uncontested judgments in both. When defectors sailed a Cuban freighter into Norfolk harbor in 1961, Mayan was ready, attached the ship and its cargo of sugar bound for Russia. But the Czech embassy, caretaker for Castro in Washington, invoked sovereign immunity. The State Department assented, and the attachment was thrown out. (Backing up the doctrine was an informal agreement between the U.S. and Cuba to return “hijacked” property; the day before the defection, Castro’s officials had returned an Eastern Airlines Electra that had been hijacked at gunpoint from Miami.)

Mayan got its second chance this June, when the Cuban freighter Aracelio Iglesia collided with a Norwegian ship near the Panama Canal and had to be towed to the U.S.-controlled Canal Zone for repairs. Again Mayan filed for attachment, again the Czech embassy intervened, and again—last month —the claim was dismissed.

Castro Is No Exception. State Department officials recognize the inconsistency of the present doctrine and its sour aspects when applied to the likes of Castro. They maintain, however, that it works well with friendly countries, which voluntarily pay judgments against them. Says State Department Lawyer Carl Salano: “We believe that the U.S. should not deviate from adherence to domestic and international law just because certain other countries, such as Castro’s Cuba, do so.” But the doctrine appears ripe for further revision. Switzerland and Italy have dropped all immunity for certain types of commercial activity. Some State Department insiders predict that the U.S. will eventually follow suit.