## Facts

- Arnold Bernstein, a Jewish shipowner, alleged he was the sole shareholder of a German corporation that owned the vessel *Gandia*.
- In 1937, Bernstein alleged Nazi officials forcibly imprisoned him in Hamburg and, under threats of harm, indefinite detention, death, and business ruin, compelled him to sign documents transferring his shares to a Nazi designee.
- The designee allegedly took control of the corporation’s assets, including the *Gandia*, and the vessel was then transferred to a Belgian corporation, Van Heyghen Freres Societe Anonyme, without fair consideration and with notice of the coercion.
- The *Gandia* was later chartered for wartime transport, was sunk in 1942, and insurance proceeds were paid in connection with the loss.
- Bernstein, later a naturalized U.S. citizen, sued to reach funds allegedly owed to Van Heyghen and to recover damages for conversion arising from the vessel’s transfer and loss.
- Bernstein filed in New York state court and obtained an attachment against a debt allegedly owed to Van Heyghen; Van Heyghen removed to federal court and moved to vacate the attachment and dismiss.
- The district court quashed the attachment and dismissed the complaint, treating the alleged coerced transfer as a foreign sovereign act not reviewable in U.S. courts.

## Issues

1. Whether claims challenging a coerced transfer of property carried out by Nazi officials within Germany are nonjusticiable under the act of state doctrine.
2. Whether a New York attachment may stand when the underlying claim requires a U.S. court to adjudicate the validity of an alleged foreign governmental act within the foreign state’s territory.

## Decision

- The Second Circuit affirmed the district court by a divided panel.
- The court quashed the attachment and dismissed the complaint.
- The majority held that the alleged expropriation was an official act of the German state within its territory and therefore could not be examined by U.S. courts under the act of state doctrine.
- The majority declined to assess whether the officials’ conduct was unlawful under German municipal law.
- A dissent would have denied act of state deference on these facts and would have permitted adjudication.

## Legal Principles

- U.S. courts generally will not pass on the validity, under a foreign state’s municipal law, of acts of that state’s officials performed as official acts within the foreign state’s territory (act of state doctrine).
- Recognition of a foreign government can require U.S. courts to treat that government’s internal official acts as sovereign acts for act of state purposes.
- The doctrine applies even where the challenged conduct is alleged to be coercive and wrongful, and even where it is argued to have been unauthorized under the foreign state’s own law.
- Concerns about interference with foreign relations and reparations or state-to-state settlement mechanisms support judicial abstention absent a contrary signal from the political branches.

## Conclusion

The Second Circuit held that Bernstein’s attempt to recover for a Nazi-forced transfer of property required a U.S. court to evaluate an official act of a recognized foreign sovereign within its own territory, and therefore the act of state doctrine barred the suit, requiring dismissal and vacatur of the attachment.


Bernstein v. Van Heyghen Freres Societe Anonyme, 163 F.2d 246 (2d Cir. 1947)