U.S. Supreme Court: FSIA Does Not Limit Scope Of Post-Judgment Discovery

U.S. Supreme Court: FSIA Does Not Limit Scope Of Post-Judgment Discovery

WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court on June 16 held 7-1 that the Foreign Sovereign Immunities Act (FSIA) does not shield the Republic of Argentina from post-judgment discovery requests issued by a debt collection company seeking information about the country’s extraterritorial assets (Republic of Argentina v. NML Capital Ltd., No. 12-842, U.S. Sup.) [enhanced opinion available to lexis.com subscribers. Lexis.com subscribers may access Supreme Court briefs for this case].

The majority upheld a Second Circuit U.S. Court of Appeals’ ruling upholding a decision granting NML Capital Ltd.’s motion to compel compliance with subpoenas served on the country. 

NML filed 11 debt collection lawsuits against Argentina in the Southern District of New York, claiming that the country owed approximately $2.5 billion.  After winning the suits, NML attempted to collect on the judgments by attempting to execute them against the country’s property.  NML attempted to pursue discovery into Argentina’s property since 2003.  In 2010, NML served subpoenas on two nonparty banks, Bank of America N.A. and Banco de la Nacion Argentina (BNA), seeking information related to accounts maintained by or on behalf of Argentina. 

Argentina attempted to quash the subpoenas, but U.S. Judge Thomas P. Griesa of the Southern District of New York denied the motion, finding that the extraterritorial discovery attempts did not offend Argentina’s sovereign immunity.  The parties later agreed to narrow the scope of the subpoenas 

No Infringement 

Argentina appealed Judge Griesa’s ruling to the Second Circuit, which upheld the judge’s decision.  The appeals panel concluded that Argentina’s sovereign immunity was not infringed upon because the subpoenas were served on third-party banks, not Argentina itself.  The panel also held that the ruling involved discovery of the information about the country’s assets, not its sovereign property.  Argentina filed a petition for a writ of certiorari in January 2013.  In its petition, the country asked the high court to decide only if the FSIA imposes a limit on a U.S. court’s authority to order blanket post-judgment discovery on the assets of a foreign country. 

“Argentina maintains that, if a judgment creditor could not ultimately execute a judgment against certain property, then it has no business pursuing discovery of information pertaining to that property,” Justice Antonin Scalia wrote for the majority.  “But the reason for these subpoenas is that NML does not yet know what property Argentina has and where it is, let alone whether it is executable under the relevant jurisdiction’s law.  If, bizarrely, NML’s subpoenas had sought only ‘information that could not lead to executable assets in the Unites States or abroad,’ then Argentina would likely be correct to say that the subpoenas were unenforceable — not because information about nonexecutable assets enjoys a penumbral ‘discovery immunity’ under the Act, but because information that could not possibly lead to executable assets is simply not ‘relevant’ to execution in the first place.  But of course, that is not what the subpoenas seek.  They ask for information about Argentina’s worldwide assets generally, so that NML can identify where Argentina may be holding property that is subject to execution.” 

Justice Ruth Bader Ginsburg dissented from the majority. 

“Unless and until the judgment debtor, here, NML, proves that other nations would allow unconstrained access to Argentina’s assets, I would be guided by the one law we know for sure — our own,” Justice Ginsburg noted.  “That guide is all the more appropriate, as our law coincides with the international norm.  Accordingly, I would limit NML’s discovery to property use here or abroad ‘in connection with . . . commercial activities.’” 

Justice Sonia Sotomayor took no part in the ruling. 

Counsel 

Argentina is represented by Jonathan I.  Blackman of Cleary Gottlieb Steen & Hamilton in New York. 

Theodore B. Olson of Gibson Dunn & Crutcher in Washington is counsel for NML.

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