Plaintiff, the holder of bonds of defendant, the state of Sao Paulo, one of the federated states of the United States of Brazil, attached funds belonging to the defendant and deposited them in a New York bank to meet payments on the bonds. During the depression there had been a general default by Brazil and its states on their external debts because of the unfavorable trade conditions and consequent lack of dollar exchange. The Aranha plan was devised in 1934 to combat these conditions through control of foreign exchange. Each state was required to deposit with the Bank of Brazil full service on its debts and whenever sufficient dollar exchange became available, the government of Brazil ordered payments to be made. Complete control over any disposition of the funds was in the government of Brazil, but ownership remained in the several states. The Brazilian Ambassador through the United States Department of State raised a claim of sovereign immunity on behalf of both Brazil and Sao Paulo. The district court granted immunity from suit to Brazil and dissolved the attachment. Plaintiff appealed. Held, by Justices Chase and Clark, affirmed, because of the sovereign immunity of Sao Paulo; the interests of Brazil in the funds were found insufficient to support immunity. Justice Learned Hand, concurring, affirmed, because the claim of Brazil has been "recognized and allowed" by the State Department. Sullivan v. Sao Paulo, (C. C. A. 2d, 1941) 122 F. (2d) 355.
INTERNATIONAL LAW - SOVEREIGN IMMUNITY - IMMUNITY FROM SUIT OF FUNDS BELONGING TO A POLITICAL SUBDIVISION OF A STATE,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol40/iss6/14