In the case of National City Bank of New York v. Republic of China et al., 1954, the Supreme Court ruled in favor of the Republic of China (ROC). The ROC had borrowed $200,000 from National City Bank and failed to repay it. When sued by the bank for repayment, they invoked sovereign immunity as a defense. Initially, lower courts sided with National City Bank stating that commercial activities were not protected under sovereign immunity laws. However, upon reaching the Supreme Court, this decision was overturned on grounds that there was no legal precedent or law specifying which actions could be considered commercial and thus outside protection from sovereign immunity laws. Therefore since such specification did not exist at time when loan agreement occurred between parties involved in lawsuit - ROC's claim to sovereignty should stand valid against any claims made by bank for repayment.

In the dissenting opinion for National City Bank of New York v. Republic of China et al., Justice Robert H. Jackson argued that the majority's decision to allow a foreign government to be sued in U.S courts was inconsistent with past precedent and international law principles, which generally grant sovereign immunity to foreign states. He expressed concern about potential diplomatic repercussions if other nations reciprocated by allowing lawsuits against the United States in their courts. Furthermore, he contended that it should not be within the jurisdiction of American courts to decide whether or not a foreign nation has waived its right to sovereign immunity; such decisions should instead fall under executive branch discretion as part of its power over foreign affairs.