In the 1982 case First National City Bank v. Banco Para El Comercio Exterior de Cuba, the US Supreme Court ruled that a foreign state's government-owned corporation does not have sovereign immunity from lawsuits in U.S. courts if it engages in commercial activity within the United States. The case involved a dispute between Citibank (formerly First National City Bank) and Banco Para El Comercio Exterior de Cuba (Bancec), a Cuban bank owned by the Cuban government. Bancec sued Citibank for breach of contract after Citibank offset debts owed to it by other Cuban entities against deposits held by Bancec at its New York branch following Fidel Castro’s nationalization of private banks in Cuba without compensation to their owners. The court found that while generally separate legal personalities would be respected, exceptions could be made when justice required such as where an entity is so extensively controlled by its owner that they are essentially one and same or where recognizing separateness would work fraud or injustice.

The dissenting opinion in the case of First National City Bank v. Banco Para El Comercio Exterior de Cuba argued that the majority's decision was inconsistent with previous rulings and principles of international law. The dissenters believed that a foreign state should be immune from jurisdiction in U.S courts unless it waives its immunity or falls under one of the exceptions outlined by Congress. They contended that Bancec, as an instrumentality of the Cuban government, did not fall into any exception and had not waived its immunity. Therefore, they felt it was improper for Citibank to offset debts owed to Bancec against claims on other Cuban entities simply because they were all part of the same government structure. The dissent also criticized what it saw as an overly broad interpretation by the majority regarding when separate juridical entities could be considered alter egos or agents for purposes of piercing their corporate veil.