Republic of Argentina v. NML Capital, Ltd. (No. 12-842): The Supreme Court (and this Website) Got It Right

Yesterday, the Supreme Court ruled against the Republic of Argentina (7 to 1) in the NML case.  In correctly rejecting Argentina and the United States’ interpretation of the Foreign Sovereign Immunities Act, Justice Scalia’s majority opinion echoed the arguments made on this website two months ago.

Recap: In the NML case, Argentina and the United States argued that the district court’s order permitting broad discovery regarding Argentina’s extraterritorial assets violated the FSIA.  The key premise of Argentina and the United States’ contention was that the FSIA conferred execution immunity over a foreign state’s property held overseas.  See Brief for Petitioner on the Merits (No. 12-842), filed Feb. 24, 2014, at 6, 21; Brief for the United States as Amicus Curiae in Support of Petitioner (No. 12-842), filed Mar. 3, 2014, at 12, 18.  Argentina and the United States advanced their argument by largely ignoring the plain language of 28 U.S.C. section 1609, which conferred execution immunity only upon a foreign state’s property “in the United States.”  28 U.S.C. § 1609 (emphasis added); see also The Republic of Argentina v. NML Capital, Ltd. (No. 12-842): Why Both Sides Are Wrong (“NML Article”) at 6, 7 n.9.

While NML raised the section 1609 argument (Brief for Respondent on the Merits (No. 12-842), filed Mar. 26, 2014 (“NML Br.”) at 9, 46, 52), it was not the focus of its brief in the Supreme Court.  NML Br., passim.

On April 11, 2014, I posted the NML Article on this website.  In the article and a follow-up post regarding Argentina’s reply brief, I made three major contentions regarding Argentina and the United States’ position.  First, I argued that “the threshold issue” in the NML case was “whether foreign assets are accorded a statutory presumption of immunity from execution” under the FSIA.  NML Article at 1.  I stated that “[u]nder section 1609’s plain language, the FSIA does not accord Argentina’s foreign assets with presumptive immunity from execution.  Since Argentina’s property overseas is not presumptively immune under the FSIA, the FSIA does not provide such property with protection from discovery.”  NML Article at 5; see also id. at 5-10.

Second, with regard to Argentina’s contention in its reply brief that pre-FSIA common law controls, I stated that “Argentina nowhere shows that the pre-FSIA regime accorded immunity to a foreign state’s property abroad.  In the absence of such a showing, it is just as likely that immunity issues relating to foreign property were treated as matters of foreign law before the FSIA’s enactment, just as they are now.”  See Republic of Argentina v. NML Capital, Ltd.: Reaction to Argentina’s Reply Brief.

Third, I argued that “[s]ince the FSIA does not accord presumptive sovereign immunity upon a foreign state’s assets overseas, the discovery dispute between Argentina and NML should not be analyzed under the FSIA.  Instead, the Supreme Court’s decision in Société Nationale Industrielle Aérospatiale v. USDC,  482 U.S. 522 (1987), controls.”  NML Article at 2; see also id. at 14-19.  I also noted that while NML cited Société Nationale Industrielle Aérospatiale in its Supreme Court brief, neither party had raised the Société Nationale Industrielle Aérospatiale comity issue in the district court or in the Second Circuit.  Ibid. at 18-19 n.27.

The Supreme Court’s Opinion: In rejecting Argentina and the United States’ position, the Supreme Court’s opinion echoed the analysis I set forth in the NML Article and the subsequent post. 

First, the Supreme Court concluded that the plain language of the FSIA undermined the central premise of Argentina and the United States’ position.  The Supreme Court squarely held that section 1609 “immunizes only foreign-state property ‘in the United States’” and thus does “not shield from discovery a foreign sovereign’s extraterritorial assets.”  Republic of Argentina v. NML Capital, Ltd., No. 12-842, 573 U.S. ___ (2014) (slip op., at 9) (emphasis in original).

Second, with regard to pre-FSIA common law immunity, the Supreme Court observed that “Argentina cites no case holding that, before the Act, a foreign state’s extraterritorial assets enjoyed absolute execution immunity in United States courts. No surprise there. Our courts generally lack authority in the first place to execute against property in other countries, so how could the question ever have arisen?”  NML Capital, 573 U.S. ___ (slip op., at 9).

Third, the Supreme Court agreed that Société Nationale Industrielle Aérospatiale applies with regard to NML’s discovery requests.  See NML Capital, 573 U.S. ___ (slip op., at 11-12 n.6).

Final Thoughts Regarding Argentina and the United States’ Argument: In the end, the NML case was not a close call.  Argentina and the United States’ position – that the FSIA conferred execution immunity over a foreign state’s extraterritorial assets – was simply irreconcilable with the plain language of section 1609.  While I understand why Argentina nevertheless made the argument given the precarious legal situation that it finds itself in, I am disappointed that the Solicitor General supported a position that was contrary to the plain language of the FSIA.  The United States’ untenable legal position may have been driven by overarching political and economic concerns, but the Solicitor General’s brief was, in my view, inconsistent with the responsibilities of the “Tenth Justice” of the Supreme Court.   

Note: I will post another article regarding the NML case in the next few weeks, this time focused on the effect (if any) of the decision with respect to FSIA jurisdictional discovery.

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