## Facts

- Landlords owned an office building at 767 Third Avenue in New York City and leased floors/space to three entities associated with the Socialist Federal Republic of Yugoslavia (SFRY): the Consulate, a press/cultural center, and a chamber of economy.
- In 1981, the parties entered three ten-year commercial leases with options for two five-year extensions.
- The original terms expired in 1991; extension agreements extended one lease to 1994 and two leases to 1996.
- Beginning in 1991, the SFRY dissolved into five successor states (Bosnia-Herzegovina, Croatia, Macedonia, Slovenia, and the Federal Republic of Yugoslavia (Serbia and Montenegro)).
- The United States took the position that the SFRY ceased to exist, that no single state continued it, and that five successor states emerged.
- After rent allegedly went unpaid, the landlords claimed more than $2.2 million in unpaid rent plus interest.
- The landlords previously pursued claims against the original tenant entities, obtaining a default judgment against one and a settlement with another, and alleged remaining nonpayment.
- The landlords then sued the successor states, alleging successor liability for the SFRY entities’ lease obligations; one successor state asserted cross-claims seeking allocation of any ultimate responsibility among the successors.
- The Executive Branch expressed that successor-state liability for the former SFRY’s private debts was a matter for diplomacy and political determination rather than judicial decision.

## Issues

1. Whether claims seeking to impose liability on SFRY successor states for unpaid rent under leases signed by SFRY entities present a nonjusticiable political question.
2. If the claims are nonjusticiable, whether the district court may impose an indefinite stay pending possible future Executive action instead of dismissing the claims.

## Decision

- The court held the landlords’ claims against the successor states were nonjusticiable because they required determinations about state succession and allocation of a dissolved sovereign’s assets and liabilities—matters committed to the political branches.
- The court relied heavily on the Executive Branch’s position that no political determination had been made allocating responsibility for the SFRY’s private debts and that judicial allocation risked conflict with foreign-relations decisions.
- The court held the district court erred by staying the case indefinitely; the proper disposition of nonjusticiable political-question claims is dismissal, not an open-ended stay.
- The court directed dismissal of the claims against the successor states on political-question grounds, while distinguishing those claims from ordinary contract claims against the original tenant entities.

## Legal Principles

- Courts lack authority under the political question doctrine to decide issues constitutionally committed to the political branches, including recognition-related determinations and allocation of a dissolved sovereign’s liabilities among successor states where the Executive has reserved the matter for diplomacy.
- When adjudication would require assigning successor-state responsibility for a predecessor state’s debts in a way that could conflict with U.S. foreign policy, the claim is nonjusticiable absent an Executive political determination providing a governing position or standard.
- An indefinite stay is not an appropriate remedy for a nonjusticiable political question; dismissal is required when the court lacks competence to decide the claim.
- Standard lease-breach claims against the original contracting entities are conceptually distinct from claims that seek to impose liability on successor sovereigns based on state succession.

## Conclusion

The Second Circuit held that allocating liability among the successor states for lease debts of SFRY entities is a nonjusticiable political question reserved to the political branches, and it ordered dismissal of the successor-state claims rather than an indefinite stay.


767 Third Ave. Assocs. v. Consulate Gen. of Socialist Fed. Republic of Yugoslavia, 218 F.3d 152 (2d Cir. 2000)