In the case of Oliver American Trading Company, Inc. v. Government of the United States of Mexico and National Railways of Mexico (1923), the plaintiff, Oliver American Trading Company, sued for damages resulting from a breach in contract by the Mexican government and its railway system. The company claimed that it had entered into an agreement with these entities to transport goods across Mexico but was prevented from doing so due to alleged unlawful actions on their part. However, the U.S Supreme Court ruled in favor of defendants -the Mexican government and its railways- stating they were immune from such lawsuits under international law principles recognizing sovereign immunity which protects foreign governments from being sued in other countries' courts without their consent or unless certain exceptions apply.

The dissenting opinion in the case of Oliver American Trading Company, Inc. v. Government of the United States of Mexico and National Railways of Mexico argued that the majority's decision to dismiss on grounds of sovereign immunity was incorrect. The dissent contended that while foreign governments are generally immune from suit in U.S courts, this principle should not apply when a government engages in commercial activities outside its territorial boundaries. In this case, it was argued that by operating a railway system for profit, the Mexican government had stepped out of its role as sovereign and into the realm of commerce - thus making it subject to legal action like any other business entity would be under similar circumstances.