## Facts

- FOGADE, a Venezuelan government agency similar to the FDIC, provided roughly $300 million in financial support to Corpofin, C.A., a struggling Venezuelan bank.
- When Corpofin’s condition did not improve, FOGADE placed Corpofin into receivership (intervention) and removed certain directors, including Juan Santaella, Julio C. Leanez, and Oscar L. Zamora.
- Corpofin held shares in Eastern National Bank (ENB), a U.S. bank located in Florida.
- After taking control, FOGADE discovered that ENB shares valued at about $30 million had been sold to ENB Revocable Trust for under $1 million.
- ENB Revocable Trust was controlled by the removed Corpofin insiders (the individual defendants), who had interests in related entities involved in the transaction.
- FOGADE sued in the U.S. District Court for the Southern District of Florida seeking to recover the ENB shares (and related relief tied to the alleged improper transfer).
- Defendants asserted an affirmative defense that FOGADE lacked standing because FOGADE’s Venezuelan receivership actions allegedly unlawfully confiscated defendants’ rights in Corpofin; defendants argued that awarding the ENB shares to FOGADE would ratify that confiscation.
- FOGADE moved to bar that defense under the act-of-state doctrine, which generally prevents U.S. courts from judging the validity of public acts of a foreign sovereign within its own territory.
- Defendants responded that the Second Hickenlooper Amendment prevented the court from applying the act-of-state doctrine where a claim of right depends on a foreign confiscation that violates international law.
- The district court granted summary judgment for FOGADE, and defendants appealed.

## Issues

1. Whether the act-of-state doctrine barred defendants from opposing FOGADE’s claim by arguing that Venezuela’s receivership/intervention was an unlawful confiscation that stripped defendants of rights in Corpofin (and thus defeated FOGADE’s standing to recover the ENB shares).
2. Whether the Second Hickenlooper Amendment required the court to consider the alleged illegality of Venezuela’s actions (thereby limiting use of the act-of-state doctrine) in this dispute over the ENB shares.

## Decision

- The Eleventh Circuit affirmed the district court’s summary judgment for FOGADE.
- The court held that the act-of-state doctrine prevented a U.S. court from adjudicating defendants’ challenge to the validity of Venezuela’s receivership/intervention measures as a means to defeat FOGADE’s claim to recover the ENB shares.
- The court rejected defendants’ reliance on the Second Hickenlooper Amendment on the facts presented, and it did not allow defendants to proceed with a defense that required the U.S. court to declare Venezuela’s sovereign acts invalid.

## Legal Principles

- Under the act-of-state doctrine, U.S. courts generally will not sit in judgment on the validity of a foreign sovereign’s public acts carried out within that sovereign’s own territory.
- The act-of-state doctrine may bar not only affirmative claims but also defenses that depend on proving that a foreign state’s official acts were unlawful or invalid.
- The Second Hickenlooper Amendment is a statutory limit on the act-of-state doctrine in a defined set of confiscation-related disputes; it does not automatically apply merely because a party labels a foreign government action a “confiscation” or claims it violated international law.
- Summary judgment may be granted when the opposing party’s material defense is unavailable as a matter of law (including because it is barred by the act-of-state doctrine), leaving no genuine dispute of material fact for trial on that defense.

## Conclusion

FOGADE v. ENB Revocable Trust holds that defendants could not defeat FOGADE’s U.S. action to recover ENB shares by attacking the legality of Venezuela’s receivership/intervention measures, because that challenge was barred by the act-of-state doctrine and was not saved by the Second Hickenlooper Amendment; the Eleventh Circuit therefore affirmed summary judgment for FOGADE.


FOGADE v. ENB Revocable Trust, 263 F.3d 1274 (2001)