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NML Capital, Ltd. v. Banco Cent. De La Republica Arg.

United States Court of Appeals for the Second Circuit

August 25, 2010, Argued; July 5, 2011, Decided

Docket Nos. 10-1487-cv(L), 10-1488-cv(CON), 10-1493-cv (CON), 10-1507-cv(CON), 10-1510-cv(CON), 10-1524-cv(CON), 10-1529-cv(CON), 10-1545-cv(CON), 10-1603-cv(CON), 10-1629-cv(CON)

Opinion

 [*174]  Jose A. Cabranes, Circuit Judge:

The question presented is whether certain assets held in the United States in an account of interested non-party-appellant Banco Central de la República  [**4] Argentina ("BCRA") at the Federal Reserve Bank of New York ("FRBNY") are immune  [*175]  from attachment and execution under the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. §§ 1602 et seq. ("FSIA").1 For ease of reference, we refer to those assets as the "FRBNY Funds."

In order to decide whether the FRBNY funds are immune from attachment or execution, we must first decide two questions of first impression in this Circuit: (1) does the exercise of sovereign immunity for "property . . . of a foreign central bank or monetary authority held for its own account" pursuant to 28 U.S.C. § 1611(b)(1)2 depend upon whether the central bank or monetary authority is entitled to a presumption of independence under First National City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 103 S. Ct. 2591, 77 L. Ed. 2d 46 (1983) ("Bancec"); and (2) what is the proper meaning of the phrase "property . . . of a foreign central bank or monetary authority held for its own account" in § 1611(b)(1)?

BACKGROUND

This is the parties' second appearance before this Court to litigate whether the FRBNY Funds are immune from attachment under the FSIA. See EM Ltd. v. Republic of Argentina, 473 F.3d 463 (2d Cir. 2007) ("EM I"). We assume familiarity with the facts and procedural history of the dispute as recounted in EM I, as well as knowledge of the preeminence of the Republic of Argentina ("Argentina" or the "Republic") in the sorry history of defaults on sovereign debt. Id. at 466 n.2 (recording Argentina's "many contributions to the law of foreign insolvency through its numerous defaults on its sovereign obligations, as well as through . . . a diplomacy of default").

In December 2001, the President of Argentina declared a temporary moratorium on principal and interest payments on more than $80 billion of public external debt—that is, money the Republic had  [**7] borrowed from foreign creditors. Since the 2001 default, Argentina has not made principal or interest payments on its non-performing debt. Plaintiffs-appellees EM Ltd. and NML Capital, Ltd. are beneficial owners of debt instruments on which the Republic has defaulted. The Republic has  [*176]  waived its right to assert its sovereign immunity from suit in any claims arising under those instruments.3 See Part C(v) at 36, post.

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652 F.3d 172 *; 2011 U.S. App. LEXIS 13655 **

NML CAPITAL, LTD. and EM LTD., Plaintiffs-Appellees, v. BANCO CENTRAL DE LA REPÚBLICA ARGENTINA, Interested Non-Party-Appellant, THE REPUBLIC OF ARGENTINA, Defendant-Appellant.

Subsequent History: As Corrected November 9, 2011. As Amended September 1, 2011.

Later proceeding at EM Ltd. v. Republic of Argentina, 132 S. Ct. 1133, 181 L. Ed. 2d 974, 2012 U.S. LEXIS 875 (U.S., 2012)

US Supreme Court certiorari denied by EM Ltd. v. Republic of Argentina, 133 S. Ct. 23, 183 L. Ed. 2d 692, 2012 U.S. LEXIS 4819 (U.S., 2012)

Related proceeding at NML Capital, Ltd. v. Republic of Arg., 2012 U.S. Dist. LEXIS 149661 (N.D. Cal., Oct. 17, 2012)

Prior History: EM Ltd. v. Republic of Argentina, 720 F. Supp. 2d 273, 2010 U.S. Dist. LEXIS 34613 (S.D.N.Y., 2010)

Disposition:  [**1] The Republic of Argentina ("the Republic") and interested non-party-appellant Banco Central de la República Argentina ("BCRA") appeal from orders of the United States District Court for the Southern District of New York (Thomas P. Griesa, Judge) granting motions of plaintiffs-appellees EM Ltd. and NML Capital, Ltd. to attach funds held in BCRA's account at the Federal Reserve Bank of New York on the theory that, pursuant to First National City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 103 S. Ct. 2591, 77 L. Ed. 2d 46 (1983) ("Bancec"), those funds are attachable interests of the Republic. This case raises several questions of first impression in this circuit, including (1) whether sovereign immunity for central bank property "held for its own account" pursuant to the Foreign Sovereign Immunities Act § 1611(b)(1), 28 U.S.C. § 1611(b)(1), depends upon a presumption of the central bank's independence under Bancec, and (2) the proper definition of central bank property "held for its own account" under § 1611(b)(1). We hold that, irrespective of BCRA's status under Bancec, the funds in BCRA's account are immune from attachment pursuant to § 1611(b)(1). The orders of the District Court are therefore  [**2] vacated and the cause is remanded with instructions to dismiss the orders of attachment and for such further proceedings as may be appropriate and consistent with this opinion.

CORE TERMS

Funds, attachment, immunity, district court, banks, foreign state, own account, reserves, monetary, motions, plaintiffs', billion, instruments, functions, waived, deposit, juridical, commercial activity, default, vacated, Global, final judgment, sovereign, Unrestricted, restraining, Fiscal, orders, federal court, dollar-denominated, transactions

Civil Procedure, Appeals, Reviewability of Lower Court Decisions, Adverse Determinations, Judgments, Enforcement & Execution, General Overview, International Law, Sovereign Immunity, Foreign Sovereign Immunities Act, Exceptions, Waivers, Banking Law, International Banking, Commercial Banks, Bank Accounts, Evidence, Inferences & Presumptions, Presumptions, Creation, Commercial Activities, Appellate Jurisdiction, Collateral Order Doctrine, Interlocutory Orders, Federal & State Interrelationships, Federal Common Law, Applicability, Preclusion of Judgments, Standards of Review, Clearly Erroneous Review, De Novo Review, Questions of Fact & Law, Res Judicata, Preliminary Considerations, Estoppel, Collateral Estoppel, Abuse of Discretion, Appellate Review of Decisions, Jurisdiction, Subject Matter Jurisdiction, Construction & Interpretation, Governments, Legislation, Interpretation, Rebuttal of Presumptions