## Facts

- Chase Manhattan Bank, N.A., a New York bank, operated a branch in Saigon, South Vietnam, that accepted deposits in South Vietnamese piastres.
- Vishipco Line and affiliated South Vietnamese maritime corporations maintained demand deposit accounts in piastres at the Saigon branch.
- As Saigon’s fall became imminent, Chase closed and evacuated the branch on April 24, 1975, without notice to depositors.
- Saigon fell on April 30, 1975; on May 1, 1975, the new government announced confiscation of banks and their assets.
- Vishipco demanded payment in New York in U.S. dollars for the balances credited at the time of the branch’s closure; Chase refused.
- Chase argued that (i) the Vietnamese confiscation extinguished the deposits and the act-of-state doctrine barred suit, (ii) performance was impossible in Saigon, and (iii) any conversion to dollars at judgment would yield no meaningful recovery because piastres became worthless.
- The Southern District of New York, after a bench trial, dismissed the claims based on the act-of-state doctrine; Vishipco appealed.

## Issues

1. Whether the act-of-state doctrine barred adjudication of depositors’ contract claims based on a foreign sovereign’s confiscation of bank assets in its territory.
2. Whether New York law governed Chase’s deposit obligations and, under that law, whether the deposits constituted a general debt of the bank rather than an obligation limited to the Saigon branch.
3. Whether Chase’s refusal to pay in New York constituted breach, and how the piastre balances should be valued in U.S. dollars for damages.

## Decision

- The Second Circuit reversed the dismissal and remanded.
- The act-of-state doctrine did not bar the action because the court could accept the foreign confiscation as effective within Vietnam while still adjudicating whether a New York bank owed a New York-law debt payable in New York.
- Applying New York choice-of-law principles, New York substantive law governed the bank’s obligation to its depositors.
- Under New York law, the deposits created a general debtor–creditor obligation of the bank itself, not merely of the Saigon branch.
- Chase’s refusal to honor demand for payment in New York constituted breach of contract.
- The case was remanded for determination of an exchange rate to convert the piastre balances into U.S. dollars and to calculate damages.

## Legal Principles

- The act-of-state doctrine limits inquiry into the validity of a foreign sovereign’s territorial acts but does not necessarily control the extraterritorial effect of such acts on obligations governed by domestic law.
- A bank deposit under New York law generally creates a debtor–creditor relationship and a general obligation of the bank, absent an enforceable restriction tying payment exclusively to a particular branch or place.
- Impossibility of payment at a foreign branch does not discharge a bank’s broader obligation when performance remains feasible at another proper place of payment under the governing law.
- When liability is established on a foreign-currency deposit, the court must determine an appropriate conversion methodology and exchange rate to express damages in U.S. dollars.

## Conclusion

The Second Circuit held that Chase remained liable under New York law for the Saigon-branch demand deposits despite Vietnam’s confiscation decree, that the act-of-state doctrine did not bar the contract action, and that Chase breached by refusing to pay in New York; it remanded for conversion-rate findings and damages.


Vishipco Line v. Chase Manhattan Bank, N.A., 660 F.2d 854 (2d Cir. 1981)