First National City Bank v. Banco Para El Comercio Exterior De Cuba
United States Supreme Court
462 U.S. 611 (1983)
Cuba created Bancec (plaintiff) in 1960 as an 'official autonomous institution for foreign trade' with 'full juridical capacity' of its own. Bancec sought to collect on a letter of credit that Citibank (defendant) had issued in Bancec's favor to support a sugar-delivery contract, but days after Citibank received the collection request, Cuba seized and nationalized all of Citibank's assets in Cuba. Bancec sued Citibank on the letter of credit in federal court, and Citibank counterclaimed for a setoff equal to the value of its seized Cuban assets, arguing the Foreign Sovereign Immunities Act (FSIA) shouldn't immunize a separately incorporated government instrumentality from liability for its parent government's own wrongdoing. The court of appeals agreed Cuba's seizure violated international law and allowed the setoff.
Whether an instrumentality of a foreign state that has been given its own separate juridical status may still be held liable, through claims or counterclaims, for actions taken by the foreign state that created it.