## Facts

- Plaintiffs, former Russian owners of oil lands, claimed title to properties later taken by Soviet nationalization decrees after the Bolshevik Revolution.
- The Soviet government confiscated oil lands in Russia and sold oil derived from those lands into commercial channels.
- Defendants, Standard Oil Co. of New York and Vacuum Oil Co., purchased and distributed oil originating from the confiscated lands.
- Plaintiffs alleged the Soviet decrees could not lawfully divest title because the Soviet regime was not recognized by the United States at the time.
- Plaintiffs sued in New York in equity for an accounting of proceeds traceable to oil extracted from the confiscated properties.
- Trial-level courts dismissed the complaints; the Appellate Division affirmed and certified questions to the Court of Appeals.

## Issues

1. Whether New York may grant tort-like relief (through an equitable accounting theory) for a confiscation occurring in Russia when Russian (Soviet) law created no cause of action treating the confiscation as wrongful.
2. Whether New York courts must give effect to Soviet nationalization decrees as acts of a de facto foreign government within its territory, despite lack of contemporaneous U.S. de jure recognition, such that plaintiffs’ title was extinguished and defendants could take good title.

## Decision

- The Court of Appeals affirmed dismissal of the complaints.
- It answered the certified question on the legal sufficiency of the complaint in the negative and declined to answer remaining certified questions as unnecessary.
- It held that New York would not recognize a tort-based recovery for a foreign confiscation where the law of the place of the alleged wrong created no right of action.
- It treated the Soviet regime as a government exercising authority in Russia and gave effect to its official acts within its territory, including nationalization and resulting transfers.

## Legal Principles

- Under lex loci delicti, a forum will not allow recovery for a tort occurring elsewhere if the law of the place of the wrong provides no cause of action for that conduct.
- Domestic courts generally will not sit in judgment on the validity of public acts of a foreign sovereign performed within its own territory when those acts determine title to property there (act-of-state rationale).
- A functioning foreign regime may be treated as a de facto government for purposes of giving effect to its internal acts affecting property, even if it lacked contemporaneous de jure recognition by the United States.
- Recognition by the political branches, when later extended, is treated as validating the foreign government’s acts from the beginning of its existence for purposes of domestic adjudication of rights derived from those acts.

## Conclusion

Because the alleged wrong occurred in Russia and Russian law supplied no actionable wrong, and because the Soviet nationalization decrees were treated as effective governmental acts within Russia that extinguished plaintiffs’ title, New York courts would not compel defendants to account for proceeds from the oil, and the complaints were properly dismissed.


M. Salimoff & Co. v. Standard Oil Co. of N.Y., 262 N.Y. 220, 186 N.E. 679 (N.Y. 1933)