De Sanchez v. Banco Central de Nicaragua

770 F.2d 1385 (1985)

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De Sanchez v. Banco Central de Nicaragua

United States Court of Appeals for the Fifth Circuit
770 F.2d 1385 (1985)

Facts

Anastasio Somoza was Nicaragua’s president in 1978. Josefina Navarro de Sanchez (plaintiff) was the wife of a former Somoza cabinet member. In 1978, Sanchez purchased a $150,000 certificate of deposit (CD) from the Banco Nacional de Nicaragua (Banco Nacional). The CD was not redeemable until October 1982. In September 1978 and May 1979, Nicaragua restricted the ability of Nicaragua’s national bank, the Banco Central de Nicaragua (Banco Central) (defendant), to sell foreign currency. Sanchez fled Nicaragua for the United States in June 1979 due to the imminent collapse of Somoza’s government. Soon thereafter, Sanchez tried to redeem the CD early. After some resistance, Banco Central issued Sanchez a check drawn on its account with a Louisiana bank. Sometime between July 11 and 13, purported representatives of the incoming Sandinista regime that had deposed Somoza caused the Louisiana bank to stop clearing Banco Central’s checks. Additionally, Banco Central’s new president, Arturo Cruz, asked the Louisiana bank to freeze Banco Central’s account. Due to these actions, the Louisiana bank refused to honor Sanchez’s check. Cruz subsequently decided that Sanchez’s check should not be paid because paying Sanchez would contravene Nicaragua’s foreign-currency priorities. Nicaragua’s ruling junta agreed. Sanchez then sued Banco Central, alleging claims for misrepresentation and the unjust taking of property. Banco Central moved for summary judgment, arguing that (1) it was immune under the Foreign Sovereign Immunities Act and (2) the act-of-state doctrine barred Sanchez’s suit. The district court awarded summary judgment to Banco Central on act-of-state grounds. Sanchez appealed, arguing, among other things, that Banco Central was not entitled to sovereign immunity because of the act’s exceptions for commercial activity, expropriation in violation of international law, and tortious activity.

Rule of Law

Issue

Holding and Reasoning (Goldberg, J.)

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