In the case of Banco Nacional de Cuba v. Sabbatino, Receiver, et al., 1963, the U.S. Supreme Court was asked to decide whether American courts should recognize a foreign government's act of expropriation. The dispute arose when the Cuban government nationalized sugar purchased by an American company from a Cuban firm and sold it in New York through its own bank (Banco Nacional). When payment was made to Banco Nacional instead of to the original seller or its receiver (Sabbatino), litigation ensued over who had rightful claim to these funds. The court ruled in favor of Banco Nacional de Cuba based on what is known as "the act of state doctrine," which holds that every sovereign state is bound to respect the independence of every other sovereign state and therefore must not sit in judgment on another government's acts. This decision effectively barred U.S courts from questioning the legality under international law of actions taken by foreign governments within their own territories.

In the dissenting opinion for Banco Nacional de Cuba v. Sabbatino, Justice Harlan argued that the Court should not have intervened in this case as it was essentially a political issue rather than a legal one. He believed that by deciding on matters of foreign policy and international law, which are traditionally within the purview of Congress and the Executive branch respectively, the Court had overstepped its constitutional boundaries. Furthermore, he disagreed with majority's interpretation of "act of state" doctrine - according to him it did not apply here because expropriation violated established principles of international law. Thus, he would have allowed American courts to pass judgment on validity or legality of such acts committed by foreign governments against U.S citizens' property abroad.