## Facts

- Josefina Najarro de Sanchez, a Nicaraguan national later residing in Miami, purchased a $150,000 (U.S. dollar) certificate of deposit from Banco Nacional de Nicaragua in 1978.
- In July 1979, before maturity, she sought early redemption; Banco Nacional obtained U.S. dollars through Banco Central de Nicaragua, which issued a $150,000 check drawn on its account at Citizens & Southern International Bank (C&S) in New Orleans.
- After leaving Nicaragua amid political upheaval, De Sanchez presented the check for payment in New Orleans; C&S refused payment, citing account issues and/or insufficient funds.
- Following the Sandinista takeover and a severe foreign-exchange shortage, Nicaragua’s government directed Banco Central to stop payment on the check.
- De Sanchez sued Banco Central (and C&S) in federal court in Louisiana, asserting contract and tort-style claims (including misrepresentation and conversion) seeking the face value of the check plus interest and costs.

## Issues

1. Whether Banco Central, as a foreign state instrumentality, was immune from suit under the Foreign Sovereign Immunities Act (FSIA).
2. Whether the FSIA commercial-activity exception applied to the issuance and stop-payment of the check.
3. Whether the FSIA expropriation exception applied to the alleged deprivation of payment.
4. Whether the FSIA tortious-activity exception applied to claims framed as misrepresentation or conversion.
5. Whether the case could be resolved on FSIA immunity grounds rather than the act of state doctrine relied on by the district court.

## Decision

- The Fifth Circuit affirmed judgment for Banco Central.
- The court held Banco Central was immune under the FSIA because the challenged conduct was sovereign in nature and no FSIA exception applied.
- The court affirmed on FSIA grounds even though the district court had granted summary judgment based on the act of state doctrine.

## Legal Principles

- FSIA immunity is a threshold, jurisdictional bar; if immunity applies, courts must dismiss without reaching other defenses.
- For FSIA “commercial activity,” courts look to the nature of the conduct (whether comparable to private-market acts), not its purpose.
- Central-bank actions connected to foreign-exchange controls and management of national reserves are sovereign functions, even if implemented through instruments resembling private banking (e.g., issuing and stopping payment on a check).
- The commercial-activity exception does not apply where the action is based on sovereign monetary or foreign-exchange decisions, even if a financial effect occurs in the United States.
- The expropriation exception generally requires a taking that violates international law; claims involving a state’s treatment of its own nationals’ property interests typically do not satisfy that standard, and nonpayment of a debt is not classic expropriation.
- The tortious-activity exception is construed narrowly and does not convert a nonpayment/property-rights dispute into a tort claim sufficient to defeat immunity.

## Conclusion

The Fifth Circuit concluded that a central bank’s issuance of, and stop-payment on, a check undertaken as part of foreign-exchange control measures constitutes sovereign conduct under the FSIA, leaving the bank immune from suit and placing the dispute outside the statute’s commercial-activity, expropriation, and tort exceptions.


De Sanchez v. Banco Cent. de Nicaragua, 770 F.2d 1385 (5th Cir. 1985)