District Court Finds Chabad Compliant with Post-Judgment Enforcement Procedures

District Court Finds Chabad Compliant with Post-Judgment Enforcement Procedures

OneWorld Int'l Practice Blog

By Louis M. Solomon

 

Rules that Cultural Exchange Property Is Not Subject to Seizure under FSIA; and Denies Sanctions without Prejudice

Agudas Chasidei Chabad of United States v. Russian Federation, et al., 05-cv-1548 (RCL) (D.D.C. July 2011) [enhanced version available to lexis.com subscribers], is a decision by Chief Judge Lambert addressing several noteworthy issues of international practice that we have posted on previously. The decision also shows a U.S. federal court going to extraordinary lengths to show deference and comity to a non-U.S. sovereign - who walked away from U.S. litigation after being actively involved for four years - without abrogating the rights of U.S. litigants protected under international and U.S. law.

The case involves Chabad's efforts to recover from Russia a collection of religious books and artifacts concerning the cultural heritage of Chasidism. The objects include a library and archives of tens of thousands of pages.  The objects came into Russia's hands through the violation of international law, the Court had earlier ruled. The former Soviet Union had officially determined that it had no right to the property, but its orders requiring the return of the property to Chabad were nullified by the new Russian Federation.

Defendants in the suit are the Russian Federation, a "foreign state" under the FSIA, along with three Russian instrumentalities. Defendants had withdrew from the case after "nearly four years of active litigation" on the statement that, "The Russian Federation views any continued defense before this Court and, indeed, any participation in this litigation as fundamentally incompatible with its rights as a sovereign nation".

Earlier in the litigation the Court had granted a motion for entry of a default judgment, having earlier made the laborious and specific findings required by the FSIA in order to do so. See 441 F. Supp. 2d 6 (D.D.C. 2006) [enhanced version ].  The current decision rules:

First, that Chabad had properly served defendants with notice of the default, a requirement of the FSIA before enforcement proceedings can commence and no mean task both given the intricacies of the statute and the recalcitrance of the defendants.

Second, the Court found that due notice had been given to defendants of the entry of the default judgment, which is a separate and specific requirement of FSIA enforcement procedures. See our posting on Rubin v. Islamic Republic of Iran, 637 F.3d 783, 800 (7th Cir. 2011) [enhanced version  / unenhanced version available from lexisONE Free Case Law] ("[E]ven when the foreign state fails to appear in the execution proceeding, the court must determine that the property sought to be attached is excepted from immunity under § 1610(a) or (b) before it can order attachment or execution.").

Third, the Court addresses the position taken the U.S., who expressed concern that Chabad would try to attach Russian property in the U.S. as a result of cultural exchange.  Such seizures are is specifically exempt from attachment under 22 U.S.C. § 2459, which provides:

Whenever any work of art or other object of cultural significance is imported into the United States from any foreign country, pursuant to an agreement entered into between the foreign owner or custodian thereof and the United States or one or more cultural or educational institutions within the United States providing for the temporary exhibition or display thereof within the United States at any cultural exhibition, assembly, activity or festival . . . no court of the United States, any State, the District of Columbia, or any territory or possession of the United States may issue or enforce any judicial process . . . for the purpose or having the effect of depriving such institution . . . of custody or control of such object.

The Court determined that Chabad was not seeking to attach any impermissible property but included in its order a statement to that effect, without objection from Chabad. At the same time, the Court did not address the question whether Chabad had any right to seize specific property other than the property that is the subject of its judgment. This is not a case where a money judgment was entered (as is the case, for example, in the enforcement proceedings relating to Argentina, about which we have posted previously). Rather, according to the Court itself, this was a specific judgment for specific items of personalty (see the order granting the default, referring to Chabad's claims as one seeking the return of property, finding a property interest, and describing the relief sought in the case as seeking only declaratory and injunctive relief.  See also, for example, New York's attachment statute, which requires that attachment be in aid of a suit seeking money damages.  CPLR 6201).  Without a right to seize substituted property, the entire issue of what Chabad could or couldn't seize does not even seem to arise.

Finally, the Court determined that sanctions were available in principle (consistent with the D.C. Circuit's treatment earlier this year) but were not appropriate at this juncture in the case since defendants had not had specific notice that sanctions would be imposed. The Court denied that part of the motion without prejudice.

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