Tag Archives: Post-Judgment Proceedings

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

June 17, 2014 By in Discovery Tags: , , , , , , , , Leave a comment

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.

Republic of Argentina v. NML Capital, Ltd.: Reaction to Argentina’s Reply Brief

April 15, 2014 By in Discovery, Uncategorized Tags: , , , , , , , , , , Leave a comment

I only have time for a short post today, but — especially in light of my article about the NML case last week (“NML Article”) — I wanted to share my thoughts about the reply brief filed by Argentina yesterday.

Argentina repeats its claim that “the FSIA make all foreign-state property presumptively immune from judgment execution.”  Reply Brief for Petitioner (“Arg. Reply”) at 3 (emphasis added); see also id. at 14.  As I explained in my article, Argentina’s contention is untenable given the plain language of the FSIA.  NML Article at 5-9.  Section 1609, the statutory provision that confers presumptive execution immunity on a foreign state’s property, is expressly limited to property “in the United States.”  28 U.S.C. § 1609 (emphasis added).  Contrary to Argentina’s argument, nothing in the FSIA confers presumptive immunity upon foreign state property throughout the world. 

Argentina’s response to section 1609’s clear limitation appears to be relegated to a footnote in the middle of its brief, where it states the following: “NML is wrong that foreign-state property outside the United States is not ‘immune,’ but in any event does not dispute that U.S. courts may not execute on such property, and acknowledged as much to the Second Circuit.”  Arg. Reply at 10 n.4 (emphasis in original) (citations omitted).  The fact that Argentina did not even repeat the full argument it made to the Second Circuit on the issue does not, in my opinion, bode well for its position in the Supreme Court.  Cf. NML Article at 7-8.  Moreover, as I stated last week, section 1609’s “in the United States” limitation means that it “neither provides immunity to foreign property nor empowers U.S. courts to order execution against assets held abroad.”  NML Article at 8.  That the FSIA fails to accord United States courts with the power to execute upon property located in foreign jurisdictions does not mean that such property receives “presumptive immunity” under the statute.  Instead — and as Argentina has previously conceded in this litigation — the status of foreign state property overseas is simply a matter of foreign law properly resolved by foreign courts.  Cf. NML Article at 7-8.

Argentina also appears to argue that the pre-FSIA common law should govern with respect to a foreign state’s property overseas.  Arg. Reply at 4-5, 11.  But principles of statutory construction — including those relating to adherence to pre-statutory common law — do not trump a statute’s plain language.  Cf. Sebelius v. Cloer, — U.S. —, 133 S. Ct. 1886, 1895-96 (2013).  Moreover, 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.

Finally, Argentina’s waiver argument (Arg. Reply at 20-23) — which disregards that the issue of waiver with respect to foreign assets is a question of foreign law — fails for the reasons I explained more fully in my article last week.  See NML Article at 10-11.

Republic of Argentina v. NML (No. 12-842) – Why Both Sides Are Wrong

April 11, 2014 By in Discovery Tags: , , , , , , , , , , , , , , , , , , Leave a comment

NML, a Cayman Islands hedge fund, obtained numerous federal judgments against Argentina arising out of Argentina’s default on payment of its public debt. Argentina refuses to satisfy any of the judgments. Because NML has had little success in finding Argentinian assets in the United States subject to execution under the Foreign Sovereign Immunities Act (FSIA), the district court granted NML broad discovery from non-party banks relating to Argentina’s assets overseas. The discovery dispute between NML and Argentina is currently pending in the United States Supreme Court, with oral argument scheduled for April 21, 2014.

The FSIA has been called a “statutory labyrinth” with “many deliberately vague provisions.” While that characterization may hold true regarding certain sections of the FSIA, the statute is a model of clarity and simplicity with respect to the threshold issue in this case: whether foreign assets are accorded a statutory presumption of immunity from execution. Section 1609 provides that only a foreign state’s property “in the United States” is presumptively immune from execution. Nowhere does the FSIA confer presumptive immunity on a foreign state’s assets held outside the United States.

Notwithstanding section 1609’s plain language, the central contention advanced in the Supreme Court by Argentina and the United States (as amicus) is that Argentina’s assets overseas are entitled to presumptive statutory immunity and, as a result, are immune from discovery under the FSIA. Because Argentina and the United States’ argument cannot be squared with section 1609 itself, it is wrong as a matter of law.

Since 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. The district court and the Second Circuit should have reviewed NML’s discovery requests under the comity analysis set forth in Société Nationale, which is broad enough to accommodate all of the interests and policy considerations raised by the parties and the United States.

With regard to NML’s main argument in the Supreme Court, NML fails to recognize the protections afforded by immunity under United States law. NML contends that because the text of the FSIA does not mention “discovery,” the FSIA does not limit the discovery available to plaintiffs in post-judgment proceedings. With respect to domestic assets, NML’s contention is contrary to settled law. Under Supreme Court and circuit precedent, protection from discovery inheres in the very concept of immunity itself. Moreover, with regard to foreign assets, NML does not undertake the comity analysis required under the Supreme Court’s decision in Société Nationale.

In the end, while the discovery dispute between NML and Argentina may be of critical importance to the parties, this case does not belong in the Supreme Court. There is no circuit split with regard to the threshold issue, namely whether foreign assets are protected from execution under the FSIA. Instead, the NML case simply involves the lower courts’ erroneous failure to apply the Société Nationale comity analysis to NML’s discovery requests targeting Argentina’s assets overseas. To avoid issuing an unnecessary decision in the sensitive area of foreign sovereign immunity law, the Supreme Court should consider remanding the matter with instructions to analyze the requested discovery under Société Nationale.

Read the full article via the PDF version below:

The Supreme Court’s Grant of Certiorari in Republic of Argentina v. NML Capital, Ltd.

January 10, 2014 By in Discovery Tags: , , , , , , , Leave a comment

The United States Supreme Court granted certiorari today in Republic of Argentina v. NML Capital, Ltd., Case No. 12-842.  For all of the reasons I discussed in a previous post, the NML Capital case has the potential of becoming a major development in FSIA jurisprudence, particularly with respect to the “nuts and bolts” of federal litigation involving foreign sovereigns.