Argentina v. NML Capital, Ltd. (No. 12-842) – Why Both Sides Are Wrong

The Republic of Argentina v. NML Capital, Ltd.(No. 12-842):

Why Both Sides Are WrongBy Alexis Haller

TABLE OF CONTENTS

TABLE OF AUTHORITIES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

TABLE OF SHORT CITATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi

I. INTRODUCTION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II. RELEVANT FACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

III. RELEVANT STATUTORY PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

IV. ARGENTINA AND THE UNITED STATES ARE WRONG. . . . . . . . . . . . . . . . . . . . . . . 5

A. Under Section 1609s Plain Language, the FSIAs Presumption of Execution Immunity Does Not Extend to Foreign Assets. . . . . . . . . . . . . . . . . . . 6

B. Because the FSIAs Presumption of Execution Immunity Does Not Cover Foreign Assets, Argentinas Claim of FSIA Immunity from Discovery Fails. . . . . . 9

C. Because the FSIAs Presumption of Execution Immunity Does Not Cover Foreign Assets, Argentinas Waiver Argument Fails.. . . . . . . . . . . . . . . . . 10

V. NML IS WRONG. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

A. NMLs Textual Argument is Wrong with Regard to Foreign State Property in the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

B. NML Fails to Undertake the Requisite Comity Analysis With Respect to Foreign State Property Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

VI. THE CORRECT ANALYSIS UNDER SOCIT NATIONALE INDUSTRIELLE AROSPATIALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

A. The Importance of the Documents Requested. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

B. Degree of Specificity of the Request. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

C. Whether the Information Originated in the United States. . . . . . . . . . . . . . . . . . . . 16

D. Availability of Alternate Means. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

E. Balance of Sovereign Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

VII. CONCLUSION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

2014 ALEXIS HALLER. ALL RIGHTS RESERVED.(Published on the website FSIA Law (www.fsialaw.com) on April 11, 2014) i

TABLE OF AUTHORITIES

CASES

Aero Union Corp. v. Aircraft Deconstructors Intl LLC, 1:11-CV-00484-JAW, 2012 WL 3679627 (D. Me. Aug. 24, 2012). . . . . . . . . . . . . . . . . . 13

Af-Cap, Inc. v. Chevron Overseas (Congo) Ltd., 475 F.3d 1080 (9th Cir. 2007). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Alpha Therapeutic Corp. v. Nippon Hoso Kyokai, 199 F.3d 1078 (9th Cir. 1999). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 n.20

Anderson v. Creighton, 483 U.S. 635 (1987). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Arriba Ltd. v. Petroleos Mexicanos, 962 F.2d 528 (5th Cir. 1992). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 n.20

Ashcroft v. Iqbal, 556 U.S. 662 (2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Autotech Technologies LP v. Integral Research & Dev. Corp., 499 F.3d 737 (7th Cir. 2007). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 n.12,9 n.14

Butler v. Sukhoi Co., 579 F.3d 1307 (11th Cir. 2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-13

Conn. Bank of Commerce v. Republic of Congo, 309 F.3d 240 (5th Cir. 2002). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,13

Crawford-El v. Britton, 523 U.S. 574 (1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Crist v. Republic of Turkey, 995 F. Supp. 5 (D.D.C. 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 n.20

Demarest v. Manspeaker, 498 U.S. 184 (1991). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Doe v. Holy See, CV 02-430-MO, 2011 WL 1541275 (D. Or. Apr. 21, 2011). . . . . . . . . . . . . . . . . . . 13 n.20

Doe v. Roman Catholic Diocese of Galveston-Houston, 408 F. Supp. 2d 272 (S.D. Tex. 2005). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 n.25

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EM Ltd. v. Republic of Argentina, 473 F.3d 463 (2d Cir. 2007). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

EM Ltd. v. Republic of Argentina, 695 F.3d 201 (2d Cir. 2012). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,3,4,8,9 n.14,10,13 n.21

FBI v. Abramson, 456 U.S. 615 (1982). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Fed. Ins. Co. v. Richard I. Rubin & Co., 12 F.3d 1270 (3d Cir. 1993). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

FG Hemisphere Associates, LLC v. Democratic Republic of Congo, 637 F.3d 373 (D.C. Cir. 2011). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 n.14

Fid. Partners, Inc. v. Philippine Exp. & Foreign Loan Guarantee Corp., 921 F. Supp. 1113 (S.D.N.Y. 1996). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 n.14

First Natl City Bank v. Banco Para el Comercio Exterior de Cuba (Bancec), 462 U.S. 611 (1983). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Gibbons v. Udaras na Gaeltachta, 549 F. Supp. 1094 (S.D.N.Y. 1982). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 n.3

Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445 (6th Cir. 1988). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Guar. Trust Co. of New York v. United States, 304 U.S. 126 (1938). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Hansen v. PT Bank Negara Indonesia (Persero), TBK, 601 F.3d 1059 (10th Cir. 2010). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Harlow v. Fitzgerald, 457 U.S. 800 (1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1 (2000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Hilton v. Guyot, 159 U.S. 113 (1895). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Howland v. Hertz Corp., 431 F. Supp. 2d 1238 (M.D. Fla. 2006). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 n.20

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Idas Res. N.V. v. Empresa Nacional de Diamantes de Angola E.P., No. 06-00570 (ESH), 2006 WL 3060017 (D.D.C. Oct. 26, 2006). . . . . . . . . . . . . . 13 n.20

Kelly v. Syria Shell Petroleum Dev. B.V., 213 F.3d 841 (5th Cir. 2000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909 (D.C. Cir. 1984). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Mitchell v. Forsyth, 472 U.S. 511 (1985). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

NML Capital, Ltd. v. Republic of Argentina, 03 CIV. 8845 TPG, 2011 WL 3897828 (S.D.N.Y. Sept. 2, 2011). . . . . . . . . . . . . . . . . . . . 3

Permanent Mission of India to the United Nations v. City of New York, 551 U.S. 193 (2007). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Phoenix Consulting Inc. v. Republic of Angola, 216 F.3d 36 (D.C. Cir. 2000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Raccoon Recovery, LLC v. Navoi Mining & Metallurgical Kombinat, 244 F. Supp. 2d 1130 (D. Colo. 2002). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 n.20

Readco, Inc. v. Marine Midland Bank, 81 F.3d 295 (2d Cir. 1996). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 n.15

Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468 (9th Cir. 1992). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Rubin v. The Islamic Republic of Iran, 637 F.3d 783 (7th Cir. 2011). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 n.14,13,16 n.23,17

Rush-Presbyterian-St. Lukes Med. Ctr. v. Hellenic Republic, 877 F.2d 574 (7th Cir. 1989) .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Sandifer v. U.S. Steel Corp., U.S. , 134 S. Ct. 870 (2014). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Sebelius v. Cloer, U.S. , 133 S. Ct. 1886 (2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 n.13

Siegert v. Gilley, 500 U.S. 226 (1991). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

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Socit Internationale Pour Participations Industrielles et Commerciales, S.A. v. Rogers, 357 U.S. 197 (1958). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Socit Nationale Industrielle Arospatiale v. USDC, 482 U.S. 522 (1987). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,14-15,19

United States v. Brown, 333 U.S. 18 (1948). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Walters v. Peoples Republic of China, 672 F. Supp. 2d 573 (S.D.N.Y. 2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 n.14

STATUTES

28 U.S.C. 1603(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,7 n.8,7 n.10,8

28 U.S.C. 1604. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,12

28 U.S.C. 1605(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,4-5,10

28 U.S.C. 1606. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,14 n.22

28 U.S.C. 1609. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 n.4,5,6-7,7 n.10,8,9,11,12

28 U.S.C. 1610(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,8,11

OTHER AUTHORITIES

Chamlongrasdr, FOREIGN STATE IMMUNITY AND ARBITRATION (2007). . . . . . . . . . . . . . . . . 17 n.24

Dellapenna, SUING FOREIGN GOVERNMENTS AND THEIR CORPORATIONS (2d ed. 2003). . . . . 8 n.12

Denza, DIPLOMATIC LAW (3d ed. 2008). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 n.24

Fox, THE LAW OF STATE IMMUNITY (2d ed. 2008). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 n.24

RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW 442(1)(c) (1987). . . . . . . . . . . . . . . . . . . 15

VIENNA CONVENTION ON DIPLOMATIC RELATIONS, Apr. 18, 1961, 23 U.S.T. 3227, 500 U.N.T.S. 96. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Watts, The Legal Position in International Law of Heads of State, Heads of Governments and Foreign Ministers, 247 RECUEIL DES COURS 9 (1994). . . . . . . . . . . . . . . 18 n.25

Yang, STATE IMMUNITY IN INTERNATIONAL LAW (2012). . . . . . . . . . . . . . . . . . . . . . . . . 11,17 n.24

2014 ALEXIS HALLER. ALL RIGHTS RESERVED.(Published on the website FSIA Law (www.fsialaw.com) on April 11, 2014) v

TABLE OF SHORT CITATIONS

Abbreviation Full Name

Arg. Br. Brief for Petitioner on the Merits (No. 12-842), filed Feb. 24,20141

Arg. App. Br. Corrected Brief of Defendant-Appellant The Republic ofArgentina (2d Cir. Case No. 11-4065-cv(L)), filed Nov. 18, 2011

Arg. App. Reply Corrected Reply Brief of Defendant-Appellant The Republic ofArgentina (2d Cir. Case No. 11-4065-cv(L)), filed Nov. 18, 2011

Argentina Republic of Argentina

BNA Banco de la Nacin Argentina

BOA Bank of America

FSIA Foreign Sovereign Immunities Act, 28 U.S.C. 1602 et seq.

JA Joint Appendix on Appeal (2d Cir. Case No. 11-4065-cv(L)),filed Nov. 15, 2011

NML NML Capital, Ltd.

NML App. Br. Response Brief of Plaintiff-Appellee NML Capital, Ltd. (2d Cir.Case No. 11-4065-cv(L)), filed Dec. 7, 2011

NML Br. Brief for Respondent on the Merits (No. 12-842), filed Mar. 26,2014

U.S. Br. Brief for the United States as Amicus Curiae in Support ofPetitioner (No. 12-842), filed Mar. 3, 2014

1 Copies of the Supreme Court briefs can be found at http://www.americanbar.org/publications/preview_ home/12-842.html. The decision of the Second Circuit can be found at http://www2.bloomberglaw.com/public/desktop/document/EM_Ltd_v_Republic_of_Argentina_695_F3d_201_2d_Cir_2012_Court_Opin. The appellate briefs and the joint appendix can be downloadedthrough the Second Circuits online Pacer system.

2014 ALEXIS HALLER. ALL RIGHTS RESERVED.(Published on the website FSIA Law (www.fsialaw.com) on April 11, 2014) vi

The Republic of Argentina v. NML Capital, Ltd.(No. 12-842):

Why Both Sides Are WrongBy Alexis Haller2

I. INTRODUCTION

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

The FSIA has been called a statutory labyrinth with many deliberately vague provisions.3 While that characterization may hold true regarding certain sections of the FSIA, the statute is amodel of clarity and simplicity with respect to the threshold issue in this case: whether foreign assetsare accorded a statutory presumption of immunity from execution. Section 1609 provides that onlya foreign states property in the United States is presumptively immune from execution. Nowheredoes the FSIA confer presumptive immunity on a foreign states assets held outside the UnitedStates.

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

2 Alexis Haller is a trial and appellate attorney with over thirteen years of litigationexperience under the Foreign Sovereign Immunities Act (FSIA). Mr. Haller has won numerousdismissals in FSIA actions and has successfully litigated FSIA discovery issues in courts throughoutthe United States. He regularly provides commentary on FSIA jurisprudence on the website FSIALaw (www.fsialaw.com).

This article solely reflects the views of the author based upon publicly-available information. The article is subject to the disclaimer found at www.fsialaw.com/disclaimer/.

3 Gibbons v. Udaras na Gaeltachta, 549 F. Supp. 1094, 1105 (S.D.N.Y. 1982).

2014 ALEXIS HALLER. ALL RIGHTS RESERVED.(Published on the website FSIA Law (www.fsialaw.com) on April 11, 2014) 1

Since the FSIA does not accord presumptive sovereign immunity upon a foreign states assetsoverseas, the discovery dispute between Argentina and NML should not be analyzed under the FSIA. Instead, the Supreme Courts decision in Socit Nationale Industrielle Arospatiale v. USDC, 482U.S. 522 (1987), controls. The district court and the Second Circuit should have reviewed NMLsdiscovery requests under the comity analysis set forth in Socit Nationale, which is broad enoughto accommodate all of the interests and policy considerations raised by the parties and the UnitedStates.

With regard to NMLs main argument in the Supreme Court, NML fails to recognize theprotections afforded by immunity under United States law. NML contends that because the text ofthe FSIA does not mention discovery, the FSIA does not limit the discovery available to plaintiffsin post-judgment proceedings. With respect to domestic assets, NMLs contention is contrary tosettled law. Under Supreme Court and circuit precedent, protection from discovery inheres in thevery concept of immunity itself. Moreover, with regard to foreign assets, NML does not undertakethe comity analysis required under the Supreme Courts decision in Socit Nationale.

In the end, while the discovery dispute between NML and Argentina may be of criticalimportance to the parties, this case does not belong in the Supreme Court. There is no circuit splitwith regard to the threshold issue, namely whether foreign assets are protected from execution underthe FSIA. Instead, the NML case simply involves the lower courts erroneous failure to apply theSocit Nationale comity analysis to NMLs discovery requests targeting Argentinas assetsoverseas. To avoid issuing an unnecessary decision in the sensitive area of foreign sovereignimmunity law, the Supreme Court should consider remanding the matter with instructions to analyzethe requested discovery under Socit Nationale.

II. RELEVANT FACTS

The following facts are relevant to the legal analysis below:

In December 2001, Argentina defaulted on payment of its external debt. EMLtd. v. Republic of Argentina, 695 F.3d 201, 203 (2d Cir. 2012) cert. granted,134 S. Ct. 895 (2014).

The underlying debt instruments contained Argentinas broad waiver ofimmunity from jurisdiction and execution, as follows:

To the extent the Republic [of Argentina] or any of its revenues,assets or properties shall be entitled . . . to any immunity from suit,. . . from attachment prior to judgment, . . . from execution of ajudgment or from any other legal or judicial process or remedy, . . .the Republic has irrevocably agreed not to claim and has irrevocablywaived such immunity to the fullest extent permitted by the laws ofsuch jurisdiction (and consents generally for the purposes of theForeign Sovereign Immunities Act to the giving of any relief or the


issue of any process in connection with any Related Proceeding orRelated Judgment). . . .

JA 1127.

NML purchased Argentinian debt on the secondary market. Arg. Br. 10; seealso NML Br. 36 n.3.

NML filed eleven actions against Argentina in the United States DistrictCourt for the Southern District of New York to recover the face value of thedefaulted debt. EM Ltd., 695 F.3d at 203; Arg. Br. 11.

NML established jurisdiction over Argentina under the FSIAs waiverexception to sovereign immunity. EM Ltd., 695 F.3d at 203; U.S. Br. 5; seealso 28 U.S.C. 1605(a)(1).

NML obtained five valid and enforceable judgments against Argentinatotaling $1.6 billion. The district court has also granted summary judgmentto NML in the remaining six actions, in which NMLs claims total $900million. EM Ltd., 695 F.3d at 203.

Argentina has not satisfied any of the judgments. EM Ltd., 695 F.3d at 203.

The parties have been litigating execution issues for over a decade. See, e.g.,January 15, 2004 Hearing, JA 1801-02.4

Argentina has little or no assets in the United States that would be subject toexecution under the FSIA. See, e.g., The Republic of Argentinas Responsesand Objections to Plaintiffs First Set of Interrogatories, dated Dec. 19, 2003,JA 756 (the Republic states that it has no property located in the UnitedStates and used for a commercial activity in the United States); see alsoNML Capital, Ltd. v. Republic of Argentina, 03 CIV. 8845 TPG, 2011 WL3897828, at *1 (S.D.N.Y. Sept. 2, 2011) affd sub nom. EM Ltd. v. Republicof Argentina, 695 F.3d 201 (2d Cir. 2012) (The efforts of plaintiffs to attachand execute upon assets in the United States have thus far met with verylimited success.).

The district court ordered that NML should be permitted to discoverinformation from Bank of America (BOA) and Banco de la Nacin Argentina(BNA) two non-party banks regarding Argentinian property in the United

4 For the sake of convenience, this article will refer to execution instead of attachment inaid of execution or execution. Cf. 28 U.S.C. 1609.


States and overseas in order to conduct a forensic exercise to uncoverassets and gain an understanding of Argentinas global financial circulatorysystem. August 30, 2011 Hearing, JA 1870; EM Ltd., 695 F.3d at 203.

The subpoenas covered, inter alia, information related to the property ofArgentinas diplomatic corps, military, and sitting head of state. EM Ltd.,695 F.3d at 204; U.S. Br. at 10-11; see also BOA Subpoena, JA 663-80;BNA Subpoena, JA 900-909.

Although served on BOA and BNA in New York, the subpoenas soughtinformation that was located at least in significant part overseas. SeeDeclaration of Miguel Angel Mandrile 8, JA 1594; see also August 30,2011 Hearing, JA 1883 (attorney for BNA stating that [i]nformation aboutaccounts and documents in New York, that has all been provided. So we areonly talking here about extraterritorial information.).

The only active issue on appeal related to the subpoenas requests forinformation regarding Argentinas assets outside the United States. See EMLtd., 695 F.3d at 207 n.6; see also id. at 206 n.5.5

III. RELEVANT STATUTORY PROVISIONS

28 U.S.C. 1603(c):

The United States includes all territory and waters, continental or insular, subjectto the jurisdiction of the United States.

28 U.S.C. 1604:

[A] foreign state shall be immune from the jurisdiction of the courts of the UnitedStates and of the States except as provided in sections 1605 to 1607 of this chapter.

28 U.S.C. 1605(a)(1):

(a) A foreign state shall not be immune from the jurisdiction of courts of the UnitedStates . . . in any case--

(1) in which the foreign state has waived its immunity eitherexplicitly or by implication, notwithstanding any withdrawal of thewaiver which the foreign state may purport to effect except inaccordance with the terms of the waiver[.]

5 Assets in Argentina were specifically excluded. See August 30, 2011 Hearing, JA 1883-84.


28 U.S.C. 1606:

As to any claim for relief with respect to which a foreign state is not entitled toimmunity under section 1605 or 1607 of this chapter, the foreign state shall be liablein the same manner and to the same extent as a private individual under likecircumstances[.]

28 U.S.C. 1609:

[T]he property in the United States of a foreign state shall be immune fromattachment arrest and execution except as provided in sections 1610 and 1611 of thischapter.

28 U.S.C. 1610(a)(1):

(a) The property in the United States of a foreign state, . . . used for a commercialactivity in the United States, shall not be immune from attachment in aid ofexecution, or from execution, upon a judgment entered by a court of the UnitedStates . . . , if--

(1) the foreign state has waived its immunity from attachment in aidof execution or from execution either explicitly or by implication,notwithstanding any withdrawal of the waiver the foreign state maypurport to effect except in accordance with the terms of the waiver[.]

IV. ARGENTINA AND THE UNITED STATES ARE WRONG

Argentina and the United States contend that Argentinas foreign assets are presumptivelyimmune from execution under the FSIA. Based upon this asserted presumptive immunity, Argentinaand the United States argue that broad discovery related to Argentinas assets overseas violates theFSIA. In addition, Argentina and the United States claim that Argentinas waiver of executionimmunity does not undermine its presumptive statutory immunity from discovery regarding foreignassets.

Argentina and the United States are wrong. Under section 1609s plain language, the FSIAdoes not accord Argentinas foreign assets with presumptive immunity from execution. SinceArgentinas property overseas is not presumptively immune under the FSIA, the FSIA does notprovide such property with protection from discovery. Moreover, the FSIA does not control whetherArgentina has waived its immunity with regard to assets overseas.


A. Under Section 1609s Plain Language, the FSIAs Presumption of ExecutionImmunity Does Not Extend to Foreign Assets

Argentina and the United States contend that all property of a foreign state irrespective ofits location is presumptively immune from execution under the FSIA. See, e.g., Arg. Br. 6 (Aforeign states property is immune from attachment arrest and execution except as provided insections 1610 and 1611. See 28 U.S.C. 1609.); id. (Foreign-state property here is . . . immunefrom post-judgment proceedings in aid of execution, as is foreign-state property outside the UnitedStates.); id. at 21 (Under the Act, even where a sovereign is subject to the jurisdiction of U.S.courts, its property remains presumptively immune from judgment enforcement unless it is bothlocated in the United States and used for a commercial activity here.);6 see also U.S. Br. 12 ([T]heproperty of a foreign state is immune from attachment, arrest, or execution unless an exception tothat distinct rule of execution immunity applies.); id. at 18 (Congress provided foreign states withan independent entitlement to immunity in connection with litigation to enforce a judgment, evenif they are subject to the courts jurisdiction and attendant discovery for purposes of adjudicatingthe merits of the underlying suit.).

Argentina and the United States contention cannot be squared with section 1609s plainlanguage.

In discerning the meaning of the FSIA, the Supreme Court begin[s], as always, with the textof the statute. Permanent Mission of India to the United Nations v. City of New York, 551 U.S. 193,197 (2007).7 The role of the Supreme Court is to apply the statute as it is written even if we thinksome other approach might accord with good policy. Sandifer v. U.S. Steel Corp., U.S. , 134S. Ct. 870, 878 (2014). [W]hen [a] statutes language is plain, the sole function of the courts atleast where the disposition required by the text is not absurd is to enforce it according to its terms.Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6 (2000).

Section 1609 plainly states that the property in the United States of a foreign state shall beimmune from attachment arrest and execution except as provided in sections 1610 and 1611 of this

6 Argentina advanced similar arguments on appeal. See, e.g., Arg. App. Br. 30 (It isindisputable that sovereign property is immune from attachment and execution unless it is both inthe United States and used for a commercial activity there. See 28 U.S.C. 1609, 1610(a).)(emphasis in original); Arg. App. Br. 31 (Because the [discovery order] is targeted at assetsindisputably located outside the United States there is no factual question to address: the propertyat which the Order is directed is immune from the post-judgment jurisdiction of United Statescourts.) (emphasis in original).

7 Emphasis is added, and internal citations and quotations are omitted, throughout this article,except as otherwise indicated.


chapter. 28 U.S.C. 1609.8 Section 1609 is silent regarding the status of a foreign states foreignassets. Because section 1609 only provides that a foreign sovereigns assets in the United Statesare afforded a presumption of execution immunity, no statutory presumption of immunity attachesto a foreign states assets overseas.9

While Argentina did not address this issue in its opening Supreme Court brief, Argentinaargued on appeal that an interpretation of section 1609 that excludes foreign assets would beabsurd because it would grant United States courts broader power over sovereign assets outsidethe United States than they have over those in the United States. Arg. App. Reply 15. To the extentthat Argentina attempted to invoke the rule that a statutes plain language should not be followedwhere it would yield absurd results, that principle of statutory construction applies only where thelanguage would lead to patently absurd consequences United States v. Brown, 333 U.S. 18, 27(1948), that Congress could not possibly have intended. FBI v. Abramson, 456 U.S. 615, 640(1982) (OConnor, J., dissenting); see also, e.g., Demarest v. Manspeaker, 498 U.S. 184, 190 (1991)(When we find the terms of a statute unambiguous, judicial inquiry is complete except in rare andexceptional circumstances.). There is nothing patently absurd about Congresss refusal to conferpresumptive statutory immunity over a foreign states assets all over the world.10 Section 1609simply reflects Congresss decision to leave the status of foreign assets to foreign courts and foreignlaw, which courts (and Argentina) have recognized is appropriate. See, e.g., Arg. App. Reply 17-18(agreeing that the immunity of foreign assets is a question of foreign law, to be decided by foreign

8 The FSIA defines United States to comprise only territory and waters, continental orinsular, subject to the jurisdiction of the United States. 28 U.S.C. 1603(c).

9 Both Argentina and the United States occasionally rely on section 1609 in their briefswithout quoting the key in the United States language. See, e.g., Arg. Br. 6 (A foreign statesproperty is immune from attachment arrest and execution except as provided in sections 1610 and1611. See 28 U.S.C. 1609.); Arg. Br. 1-2 (The statute provides that all property of a foreign stateis presumptively immune from the authority of U.S. courts, unless it is both located in and used fora commercial activity in the United States. 28 U.S.C. 1609-1611.); see also Arg. Br. 25, 28;Arg. App. Br. 30 (It is indisputable that sovereign property is immune from attachment andexecution unless it is both in the United States and used for a commercial activity there. See 28U.S.C. 1609, 1610(a).) (emphasis in original); U.S. Br. 12 (the property of a foreign state isimmune from attachment, arrest, or execution unless an exception to that distinct rule of executionimmunity applies. See 28 U.S.C. 1609-1611.).

10 In fact, the opposite is true: it would be absurd to conclude that the FSIA conferspresumptive immunity sub silentio over assets that are neither within the territorial jurisdiction ofthe United States (cf. 28 U.S.C. 1603(c), 1609) nor necessarily even entitled to immunity underthe laws of the foreign jurisdiction in which the assets are located.


tribunals);11 see also, e.g., NML Br. 9 (By their terms, neither Section 1609 nor Section 1610extends attachment immunity to property outside the United States. Instead, the immunity fromattachment (if any) of such assets is a question of foreign law, to be decided by foreign tribunals.);JA 1528-32 (foreign court decision under foreign law relating to NMLs attempt to execute onArgentinas foreign assets).

Nor does section 1609 confer courts with broader power over sovereign assets outside theUnited States than they have over those in the United States. Arg. App. Reply 15. In fact, allparties and the lower courts agree that section 1609 confers on U.S. courts no powers to executeupon assets held overseas. See, e.g., Arg. Br. 25 (Sections 1609 through 1611 of the FSIA addressthe enforcement of judgments against foreign states, and provide that the only property over whicha U.S. court may exercise its authority is property used for a commercial activity in the UnitedStates.); Arg. App. Reply 18 (Execution over foreign assets by United States courts is clearly notpermitted by the FSIA); April 30, 2008 Hearing, JA 1658 (district court stating I have nojurisdiction over property that is solely in a foreign country. I just dont, period.); EM Ltd., 695F.3d at 208 (We recognize that a district court sitting in Manhattan does not have the power toattach Argentinian property in foreign countries.).12 Because it applies solely to property in theUnited States, section 1609 neither provides immunity to foreign property nor empowers U.S.courts to order execution against assets held abroad. 28 U.S.C. 1609; see also 28 U.S.C. 1603(c), 1610(a).

The United States, for its part, claims that the statutes exclusive focus on property locatedwithin the United States simply confirms the fundamental proposition that it would be unthinkablefor a U.S. court . . . to presume to order the attachment of or execution against property of a foreignsovereign abroad and that [b]roader discovery of extraterritorial foreign-state assets that are notsubject to execution under the FSIA would be irreconcilable with the principles of comity andreciprocity embodied in the statute. U.S. Br. 25-26. The first proposition is true but irrelevant. A United States court does not have the power to order the execution of foreign property, but thatdoes not mean that the FSIA itself confers a presumptive immunity over all foreign state propertythroughout the world. It only means that U.S. courts do not have territorial jurisdiction over propertyheld overseas hardly a controversial conclusion. See supra at 7-8; see also 28 U.S.C. 1603(c). With regard to the United States second contention, the fact that foreign assets lack presumptive

11 This concession alone undermines Argentinas argument, since it cannot explain howforeign assets can at the same time be both covered by the FSIAs presumption of executionimmunity and not subject to United States law.

12 See also, e.g., Autotech Technologies LP v. Integral Research & Dev. Corp., 499 F.3d 737,751 (7th Cir. 2007) (If assets exist in another country, the person seeking to reach them must tryto obtain recognition and enforcement of the U.S. judgment in the courts of that country.);Dellapenna, SUING FOREIGN GOVERNMENTS AND THEIR CORPORATIONS 744 (2d ed. 2003) (nothingin the Immunities Act authorizes a court in the United States to order execution against propertylocated outside the United States).


immunity does not necessarily mean that a plaintiff can seek boundless discovery against such assets. In fact, the required comity analysis may result in discovery roughly analogous to that permittedagainst presumptively immune property in the United States. See infra at 18. Moreover, the correctanalysis would require courts to consider the very principles of comity and reciprocity identifiedby the United States but such principles would be evaluated through application of the doctrine ofinternational comity, and not under the FSIA. See infra at 17-18.13

The bottom line is that section 1609 expressly does not confer presumptive immunity overa foreign states assets overseas. 28 U.S.C. 1609. Neither Argentina nor the government identifiesany other provision of the FSIA that does so, and the case law does not support such a majorexpansion of the execution immunity conferred by the statute.14 With regard to foreign assets, thisdiscovery dispute cannot be resolved under the FSIA.

B. Because the FSIAs Presumption of Execution Immunity Does Not CoverForeign Assets, Argentinas Claim of FSIA Immunity from Discovery Fails

Argentinas claim of immunity from discovery relies upon the presumptive immunitysupposedly conferred by section 1609. Because section 1609 nowhere confers presumptiveimmunity upon foreign assets, Argentina and United States discovery argument fails.

Argentina and the United States both explicitly base their discovery argument upon thenotion that Argentina enjoys presumptive immunity with regard to its foreign assets. See, e.g., Arg.

13 In addition, under established rules of statutory construction, the policy considerationsidentified by the United States do not justify disregard of the FSIAs plain language. See, e.g.,Sebelius v. Cloer, U.S. , 133 S. Ct. 1886, 1895-96 (2013) (stating that rules of thumb instatutory construction give way when the words of a statute are unambiguous); see also Sandiferv. U.S. Steel Corp., 134 S. Ct. at 878 (stating that a courts conclusions regarding good policy doesnot trump a statutes plain language).

14 A single district court case which nowhere cited or quoted section 1609 stated eighteenyears ago that [u]nder the FSIA, assets of foreign states located outside the United States retain theirtraditional immunity from execution to satisfy judgments entered in United States courts. Fid.Partners, Inc. v. Philippine Exp. & Foreign Loan Guar. Corp., 921 F. Supp. 1113, 1119 (S.D.N.Y.1996). While the Fid. Partners courts unsupported conclusion has twice been quoted in other cases(Autotech Technologies LP, 499 F.3d at 750; Walters v. Peoples Republic of China, 672 F. Supp.2d 573, 574 (S.D.N.Y. 2009)), no circuit court has ever adopted that view. In fact, both the D.C.Circuit and the Second Circuit have expressly declined to reach the issue. See FG HemisphereAssociates, LLC v. Democratic Republic of Congo, 637 F.3d 373, 379 (D.C. Cir. 2011); EM Ltd.,695 F.3d at 208. The Seventh Circuits decision in Rubin v. The Islamic Republic of Iran, 637 F.3d783 (7th Cir. 2011) the main case relied upon by Argentina and the United States did not involveforeign assets. The lack of a circuit split regarding the issue at the heart of this case raises thequestion of whether the Supreme Court granted certiorari improvidently.


Br. 29-30 (stating that circuit courts have afforded discovery protections to sovereigns [i]n light ofthe presumption of immunity codified in the FSIA); U.S. Br. 9 (Broad, general discovery intopresumptively immune foreign-state property would impose the very costs and burdens that theimmunity is intended to shield against in the first place.); id. at 15 ([D]iscovery must be tailoredin a manner that respects the general rule of immunity from execution set forth in Section 1609.);see also id. at 17.

However, as discussed above, Argentina enjoys no presumptive immunity with regard to itsforeign assets under section 1609. Moreover, Argentina long ago lost its presumptive immunityfrom suit under section 1604, since jurisdiction in the district court was based upon Argentinaswaiver of immunity under 28 U.S.C. section 1605(a)(1). EM Ltd., 695 F.3d at 203; U.S. Br. 5. Asa result, contrary to Argentina and the United States central argument, there is no statutorypresumptive immunity that limits discovery regarding Argentinas foreign assets. Absentpresumptive immunity conferred by the FSIAs provisions, the argument that Argentina is statutorilyimmune from discovery fails.

C. Because the FSIAs Presumption of Execution Immunity Does Not CoverForeign Assets, Argentinas Waiver Argument Fails

The lack of presumptive immunity over Argentinas foreign assets undermines Argentina andthe United States waiver argument.

Argentina and the United States argue that Argentinas waiver of execution immunity did notoperate to remove section 1610(a)s two prerequisites for execution against foreign state propertyin the United States. See, e.g., U.S. Br. 30 n.14 (the FSIA makes clear that waiver does not alonesuffice to lift immunity from execution; a waiver of such immunity is effective only with respect toproperty present in the United States and used for a commercial activity.); Arg. Br. 19 (Awaiver of immunity accordingly opens the door to the limited universe of property defined in thepreceding text of Section 1610(a); it does not expand that universe.).15 It is indeed true that awaiver of execution immunity does not remove section 1610(a)s requirement that property subjectto execution by a United States court must be (a) in the United States and (b) used in a commercialactivity. See 28 U.S.C. 1610(a); see also, e.g., Conn. Bank of Commerce v. Republic of Congo,309 F.3d 240, 247 (5th Cir. 2002) (Even when a foreign state completely waives its immunity fromexecution, courts in the U.S. may execute only against property that meets these two statutory

15 Argentina and the United States also argue that NML waived the waiver argument byfailing to raise it below. See Arg. Br. 19 n.15; U.S. Br. 30 n.14. That procedural issue, which isunrelated to the FSIA, is not addressed here. However, given that the facts relating to Argentinaswaiver appear to be undisputed and that the effect of its waiver is a purely legal question, it isdoubtful whether Argentina and the United States waiver of the waiver argument is meritorious. See, e.g., Readco, Inc. v. Marine Midland Bank, 81 F.3d 295, 302 (2d Cir. 1996) (stating that anissue raised for the first time on appeal may be considered if it is purely legal and there is no needfor additional fact-finding).


criteria.).

While true, Argentina and the United States waiver argument is also a red herring vis--visArgentinas foreign assets. Since Argentinas foreign assets are not covered by general immunityconferred by section 1609, such assets are also not governed by the exceptions to that immunity setforth in section 1610. See 28 U.S.C. 1609; see also 28 U.S.C. 1610(a) (discussing exceptionsto immunity for property in the United States). Once again, as Argentina concedes (see supra at7-8), the immunity of foreign assets is governed by foreign law. As a result, the effect of Argentinasbroad waiver of immunity at least with regard to those foreign assets constitutes an issue offoreign law. See, e.g., JA 1530-31 (decision of French court discussing effect of Argentinas waiverupon property in France); Yang, STATE IMMUNITY IN INTERNATIONAL LAW 190 (2012). Contraryto the position taken by Argentina and the United States, nothing in the FSIA governs whether sucha waiver is effective with regard to foreign assets.16

The effect of Argentinas waiver upon the execution of foreign assets is a matter that wouldproperly be considered in the comity analysis discussed below. See infra at 18. It is not, however,an issue that can be resolved under the FSIA.

In sum, the central thesis of Argentina and the United States argument that the FSIAconfers presumptive immunity over foreign assets, and therefore controls whether discovery isappropriate and whether Argentinas waiver is effective fails ab initio. Under the plain languageof section 1609, the FSIA does not confer presumptive immunity upon Argentinas foreign assets. At least with respect to foreign assets, this discovery dispute is controlled by Socit NationaleIndustrielle Arospatiale and not by the FSIA. See infra at 14-19.

V. NML IS WRONG

While NML is right about section 1609 and foreign assets,17 the central analysis of its brief which argues that foreign sovereigns are not entitled to any discovery protections under the FSIAin post-judgment proceedings fails under settled law.18

16 Even with respect to Argentinas assets in the United States, the question is not whetherArgentina waived execution immunity for property that failed to meet section 1610(a)s two statutoryprerequisites. Instead, the issue is whether Argentinas waiver of immunity from any . . . legal orjudicial process or remedy and consent to the giving of any relief or the issue of any processeffectuated a waiver of immunity from discovery and other burdens of litigation. See JA 1127.

17 NML raises the section 1609 argument (see NML Br. 9, 46, 52; NML App. Br. 54), butit is not the focus of its Supreme Court brief. NML Br., passim.

18 NMLs argument is also largely irrelevant, since post-judgment discovery relating toforeign assets is not even governed by the FSIA. See supra at 5-10. However, since the textualargument is central to NMLs brief and would, if accepted by the Supreme Court, largely eviscerate


A. NMLs Textual Argument is Wrong with Regard to Foreign State Property inthe United States

NMLs basic argument is that the FSIA does not mention discovery, and that thereforenothing in the FSIA limits post-judgment discovery. See, e.g., NML Br. 1 (the statute says nothingabout post-judgment discovery); id. at 2 (The statutory text alone . . . compels the conclusion thatthe FSIA does not limit post-judgment discovery.); id. (nowhere does the FSIA displace theordinary rules for post-judgment discovery under the Federal Rules of Civil Procedure); id. at 18([T]he FSIA contains no language limiting post-judgment discovery.). According to NML, theFSIA provides no hint about the scope of, or limitations on, any immunity from post-judgmentdiscovery. NML Br. 26 (emphasis in original). While NMLs argument focuses on post-judgmentdiscovery, and although NML makes a cursory attempt to distinguish discovery at the jurisdictionalstage (NML Br. 43-44), NMLs argument logically extends to jurisdictional discovery as well. Afterall, the FSIA nowhere mentions discovery with regard to jurisdiction either,19 and NMLs stricttextual analysis if accepted by the Supreme Court could effectively preclude an assertion ofimmunity from discovery at the initial stages of FSIA litigation.

Contrary to NMLs contention, the FSIA in fact contains much more than a mere hint thatthe statute limits discovery against foreign sovereigns. The FSIA provides that foreign sovereignsare presumptively immune from suit and that a foreign states property in the United States ispresumptively immune from execution. 28 U.S.C. 1604, 1609. Under established precedent,the term immunity includes immunity from all of the burdens of litigation, including discovery. See, e.g., Ashcroft v. Iqbal, 556 U.S. 662, 685 (2009) (The basic thrust of the qualified-immunitydoctrine is to free officials from the concerns of litigation, including avoidance of disruptivediscovery.); Crawford-El v. Britton, 523 U.S. 574, 598 (1998) (discussing the need to resolveimmunity without unnecessary and burdensome discovery or trial proceedings); Anderson v.Creighton, 483 U.S. 635, 646 n.6 (1987) (stating that immunity seeks to protect public officials frombroad-ranging discovery); Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982) (Until th[e] thresholdimmunity question is resolved, discovery should not be allowed); see also, e.g., Siegert v. Gilley,500 U.S. 226, 231 (1991); Mitchell v. Forsyth, 472 U.S. 511, 526 (1985); compare Guar. Trust Co.of New York v. United States, 304 U.S. 126, 134 and n.2 (1938) (stating that a foreign sovereign whosues as a plaintiff abandons its immunity from suit and must give discovery).

As circuit courts have held for over a quarter century, the same holds true under the FSIA aswell. See, e.g., Hansen v. PT Bank Negara Indonesia (Persero), TBK, 601 F.3d 1059, 1063 (10thCir. 2010) (The immunity provided under the FSIA protects foreign sovereigns from all the burdensof litigation, including the general burden of responding to discovery requests.); Butler v. SukhoiCo., 579 F.3d 1307, 1314 (11th Cir. 2009) (discussing a foreign sovereigns legitimate claim to

sovereigns immunity protections it is worth addressing here.

19 The statute mentions discovery in the context of terrorism cases, but that is inapplicablehere. Cf. 28 U.S.C. 1605(g).


immunity from discovery); Kelly v. Syria Shell Petroleum Dev. B.V., 213 F.3d 841, 849 (5th Cir.2000) (FSIA immunity is immunity not only from liability, but also from the costs, in time andexpense, and other disruptions attendant to litigation.); Phoenix Consulting Inc. v. Republic ofAngola, 216 F.3d 36, 39 (D.C. Cir. 2000) (stating that foreign sovereign immunity is an immunityfrom trial and the attendant burdens of litigation, and not just a defense to liability on the merits);Fed. Ins. Co. v. Richard I. Rubin & Co., 12 F.3d 1270, 1284 n.11 (3d Cir. 1993) (discovery andfact-finding should be limited to the essentials necessary to determining the preliminary question ofjurisdiction); Rush-Presbyterian-St. Lukes Med. Ctr. v. Hellenic Republic, 877 F.2d 574, 576 n.2(7th Cir. 1989) (sovereign immunity is an immunity from trial and the attendant burdens oflitigation); Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445, 451 (6th Cir. 1988), abrogatedon other grounds by Republic of Argentina v. Weltover, Inc., 504 U.S. 607 (1992) (extensivediscovery and other extended proceedings at this stage may frustrate the significance and benefit ofentitlement to immunity from suit).20 In other words, the FSIA did not need to use the termdiscovery because immunity from discovery inheres in the very concept of immunity itself. Byreading the protection against discovery out of the statute, NML seeks to redefine immunity in amanner directly contrary to established Supreme Court and circuit precedent.

NML cannot escape this conclusion by claiming a different rule in the post-judgment context. As noted above, with regard to domestic assets, section 1609 provides presumptive immunity fromexecution. There may be certain differences between section 1604 immunity and section 1609immunity, but presumptively immune property in the United States should be protected fromdiscovery given the basic principle underlying all immunity doctrines. See supra at 12-13. That is,in fact, what most courts have concluded. See, e.g., Rubin, 637 F.3d at 799; Af-Cap, Inc. v. ChevronOverseas (Congo) Ltd., 475 F.3d 1080, 1095-96 (9th Cir. 2007); Conn. Bank of Commerce, 309 F.3dat 261 n.10; Aero Union Corp. v. Aircraft Deconstructors Intl LLC, 1:11-CV-00484-JAW, 2012WL 3679627, at *8 (D. Me. Aug. 24, 2012).21 Nothing in NMLs textual analysis an analysisthat ignores the meaning of the term immunity undercuts the principle that the FSIA limits

20 See also, e.g., Alpha Therapeutic Corp. v. Nippon Hoso Kyokai, 199 F.3d 1078, 1088 (9thCir. 1999), withdrawn on other grounds in 237 F.3d 1007 (9th Cir. 2001); Arriba Ltd. v. PetroleosMexicanos, 962 F.2d 528, 534-37 (5th Cir. 1992); Doe v. Holy See, CV 02-430-MO, 2011 WL1541275, at *2 (D. Or. Apr. 21, 2011); Idas Res. N.V. v. Empresa Nacional de Diamantes de AngolaE.P., No. 06-00570 (ESH), 2006 WL 3060017, at *11 (D.D.C. Oct. 26, 2006); Howland v. HertzCorp., 431 F. Supp. 2d 1238, 1244-45 (M.D. Fla. 2006); Raccoon Recovery, LLC v. Navoi Mining& Metallurgical Kombinat, 244 F. Supp. 2d 1130, 1141 (D. Colo. 2002); Crist v. Republic of Turkey,995 F. Supp. 5, 12 (D.D.C. 1998).

21 In this regard, the Second Circuits conclusion that the FSIA does not limit post-judgmentdiscovery at least when applied to a foreign states assets in the United States was in error. SeeEM Ltd., 695 F.3d at 208-10. Moreover, for the reasons identified by the United States, the SecondCircuits holding that a foreign states immunity is unaffected by third party discovery also lacksmerit. Id. at 210; see also U.S. Br. 11, 29-30, 32-33.


discovery related to a foreign states property in the United States.22

B. NML Fails to Undertake the Requisite Comity Analysis With Respect to ForeignState Property Overseas

NMLs argument fails in another respect. While NML concedes that comity considerationsapply with regard to post-judgment discovery involving foreign sovereigns, NML Br. 24-25, NMLnever undertakes such an analysis to defend the district courts discovery order. As set forth below,the discovery order entered by the district court gives rise to serious comity concerns on a numberof fronts. See infra at 17-18. By failing to address the comity implications of the district courtsorder, NML does not explain how the district courts order is justifiable under applicable SupremeCourt precedent.

VI. THE CORRECT ANALYSIS UNDER SOCIT NATIONALE INDUSTRIELLEAROSPATIALE

The absence of presumptive immunity under section 1609 does not leave Argentinaunprotected from discovery in United States courts with respect to its foreign assets. As NMLconcedes (NML Br. 24-25), and as required under Supreme Court precedent, United States courtsmust examine any discovery request targeting a foreign sovereign under principles of internationalcomity.

Comity refers to the spirit of cooperation in which a domestic tribunal approaches theresolution of cases touching the laws and interests of other sovereign states. Socit NationaleIndustrielle Arospatiale, 482 U.S. at 544 n.27; see also Hilton v. Guyot, 159 U.S. 113, 164 (1895). Comity serves our international system like the mortar which cements together a brick house. Noone would willingly permit the mortar to crumble or be chipped away for fear of compromising theentire structure. Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 937 (D.C.Cir. 1984).

The Supreme Court has held that comity concerns must inform a courts treatment of anyforeign discovery request:

American courts, in supervising pretrial proceedings, should exercise specialvigilance to protect foreign litigants from the danger that unnecessary, or undulyburdensome, discovery may place them in a disadvantageous position. Judicial

22 NML indicates that discovery in the post-judgment context is not limited because section1606 provides that, if a foreign sovereign is not immune under section 1604, the foreign state shallbe liable in the same manner and to the same extent as a private individual under likecircumstances. 28 U.S.C. 1606; see also NML Br. 43-44. However, section 1606 addresses aforeign states liability which is not contested here and nowhere addresses post-judgmentproceedings under the FSIA.


supervision of discovery should always seek to minimize its costs and inconvenienceand to prevent improper uses of discovery requests. When it is necessary to seekevidence abroad, . . . the district court must supervise pretrial proceedings particularlyclosely to prevent discovery abuses. . . . Objections to abusive discovery thatforeign litigants advance should therefore receive the most careful consideration. Inaddition, we have long recognized the demands of comity in suits involving foreignstates, either as parties or as sovereigns with a coordinate interest in the litigation. American courts should therefore take care to demonstrate due respect for any specialproblem confronted by the foreign litigant on account of its nationality or the locationof its operations, and for any sovereign interest expressed by a foreign state.

Socit Nationale, 482 U.S. at 546.

The Socit Nationale Court identified the test in the RESTATEMENT (THIRD) OF FOREIGNRELATIONS LAW (1987) (RESTATEMENT) as setting forth factors relevant to any comityanalysis[:]

(1) the importance to the . . . litigation of the documents or other information requested;

(2) the degree of specificity of the request;

(3) whether the information originated in the United States;

(4) the availability of alternative means of securing the information; and

(5) the extent to which noncompliance with the request would undermine importantinterests of the United States, or compliance with the request would undermineimportant interests of the state where the information is located.

Socit Nationale, 482 U.S. at 544 n. 28; see also RESTATEMENT 442(1)(c); Richmark Corp. v.Timber Falling Consultants, 959 F.2d 1468, 1474-75 (9th Cir. 1992).

Given the complexity of the multi-factor test and the fact-intensive nature of the inquiry, thisarticle will not attempt to resolve the comity analysis with respect to the BOA and BNA subpoenas. However, with regard to the discovery dispute in the NML case, the comity test is broad enough toaccommodate the interests of all parties including the interests of the foreign sovereign itself. Socit Nationale, 482 U.S. at 546. To show how the comity analysis set forth in Socit Nationalerepresents a satisfactory method to resolve the discovery dispute at issue, the article will identifyarguments that both sides could raise under each factor.

A. The Importance of the Documents Requested

With regard to the first factor, NML could argue as it did below that the documentsrequested are essential to its efforts to collect on valid judgments. Years of litigation have yielded


little or no tangible results, and the BOA/BNA subpoenas represent NMLs best chance to locateArgentinian assets overseas that could be subject to execution under foreign law. Argentina wouldlikely counter that the breadth of the documents requested and NMLs contention that it seeks toa forensic analysis of Argentinas entire financial circulatory system demonstrate that thesubpoenas are nothing more than a fishing expedition. See August 30, 2011 Hearing, JA 1879.

B. Degree of Specificity of the Request

Both sides would also have plausible arguments regarding the specificity of the subpoenas. NML can point to the fact that the subpoenas list the specific entities whose account information issought, as well as the type of account information requested (such as account balance, transactionhistory, and Customer Relationship Management (CRM) information). Argentina, on the other hand,could argue that the large number of target entities and the breadth of certain requests such as arequest for information relating to assets or property of any kind directly or indirectly owned byArgentina and all related entities reveal the lack of specificity in NMLs requests.23

C. Whether the Information Originated in the United States

The subpoenas initially requested a significant amount of information in the United States,but it is unclear to what extent such information remains outstanding. See, e.g., August 30, 2011Hearing, JA 1883. If NML can show that a substantial portion of the requested informationoriginated or is held in the United States, this factor could help NML argue in favor of the discovery. However, given the focus on foreign assets, it appears that this factor may weigh against thediscovery requested.

D. Availability of Alternate Means

In light of the decade-long effort to execute upon Argentinas property, NML would likelybe in a position to argue that it has tried alternate means of gathering the information it needs tolocate Argentinian assets. In fact, NML already made that contention in the district court, when itstated that NML had sought to attach assets in the United States for seven years through attemptsto get discovery from Argentina and that such efforts have gone almost nowhere. December 17,2010 Hearing, JA 1021. NMLs position would appear to be strengthened by the prior conclusionsof the district court. The lower court recognized over a decade ago that in the absence of centralizeddiscovery in the forum that issued the judgments, NML would be placed in the position of havingto scout around blindfolded in foreign countries, and thats just an impossible situation. January15, 2004 Hearing, JA 1801-02. The district court also found that the discovery was justified as aresult of Argentinas own conduct, which again would weigh in NMLs favor. See, e.g., August 30,2011 Hearing, JA 1880 (district court asking Argentina counsel What do you expect these people

23 The specificity factor in the comity analysis would provide Argentina with the opportunityto raise similar specificity arguments that are available under the FSIA with regard to domesticproperty. Cf. Rubin, 637 F.3d at 785.


to do? They have to engage in these maneuvers because of your clients behavior.); December 17,2010 Hearing, JA-1042 ([W]hen you stand up and say what difficulties, the difficulties are reallycaused by the Republic of Argentina, and thats it. Really, they are not caused by these plaintiffs. They are not caused by the Bank of America. They are caused by the Republic.); see also February2, 2005 Conference, JA 766.

Argentina could, however, contend that NML has alternative means to discover theinformation abroad, either through legal proceedings instituted in other countries or through its owninvestigation. Cf. Rubin, 637 F.3d at 798 (stating that judgment creditors can use private means toidentify potentially attachable assets of foreign states located in the United States).

E. Balance of Sovereign Interests

The balance of sovereign interests will be the critical factor in determining whether thediscovery sought is appropriate.

NMLs argument would likely focus on the United States strong interest in having validjudgments entered by its courts respected and satisfied by a defendant, and in not permitting adefendant to use a variety of affirmative means to avoid payment. In support of its contention, NMLcould rely on the district courts repeated findings over years of litigation with regard to Argentinasconduct. See, e.g., August 30, 2011 Hearing, JA 1897 (We have a party that is trying in every waypossible to avoid paying its debts. . . . It is an abnormal situation, not a normal situation.);December 17, 2010 Hearing, JA 1051 (district court assuming that Argentina has taken steps toavoid paying these judgments, that they avoid having deposits of money in New York banks, andthat they engage in transactions with a very strong purpose, to not have money flowing into theUnited States which could possibly get applied to the judgments); May 28, 2009 Conference, JA986 ([Argentina is] doing everything [it] can to resist paying legitimate judgment debts.); February2, 2005 Conference, JA 765 ([T]he Republic was trying to avoid paying these judgements, period.. . . And they have certainly done their best.). Given that Argentina has failed to satisfy valid andenforceable judgments in the United States, and that it may have taken affirmative steps to avoidexecution, NML will have a strong argument that the sovereign interests of the United States weighin favor of the discovery.

However, there are also compelling sovereign interests against the discovery requested. Forexample, the discovery seeks information related to diplomatic and military assets. In light offundamental principles of international law as demonstrated by, for example, the VIENNACONVENTION ON DIPLOMATIC RELATIONS, Apr. 18, 1961, 23 U.S.T. 3227, 500 U.N.T.S. 96 suchassets could be beyond the scope of legitimate discovery.24 Similarly, the requests seek account andother financial information regarding Argentinas sitting head of state an individual who is

24 Arg. Br. 43; see also, e.g., Yang, STATE IMMUNITY IN INTERNATIONAL LAW 407-10, 417;Fox, THE LAW OF STATE IMMUNITY 639-45 (2d ed. 2008); Denza, DIPLOMATIC LAW 156-59, 197-99(3d ed. 2008); Chamlongrasdr, FOREIGN STATE IMMUNITY AND ARBITRATION 270-98 (2007).


protected by the doctrine of head-of-state immunity under international law and who should beimmune from any discovery.25 The requests seek information regarding a wide range of separatejuridical entities; in the absence of a showing that such entities are agents or alter egos of Argentinaunder First Natl City Bank v. Banco Para el Comercio Exterior de Cuba (Bancec), 462 U.S. 611(1983), Argentina can contend that the entities should be protected from discovery. See Bancec, 462U.S. at 626-27; see also, e.g., EM Ltd. v. Republic of Argentina, 473 F.3d 463, 479 (2d Cir. 2007). Moreover, as set forth above, the question of whether foreign assets are immune is a question offoreign law. To the extent that targeted assets are immune under foreign law and that such immunityhas not been waived, or if the requested information is otherwise confidential under foreign law, thatshould be taken into consideration in evaluating the propriety of the discovery requests. Cf. SocitInternationale Pour Participations Industrielles et Commerciales, S.A. v. Rogers, 357 U.S. 197, 204-06 (1958).

Argentina will also be able to argue that countervailing interests of the United States itselfweigh against disclosure. The United States has filed a brief supporting Argentina that identifiessignificant comity, reciprocity and foreign relations concerns that are negatively impacted by thedistrict courts discovery order. See, e.g., U.S. Br. 18-19, 24. While such considerations do notweigh in favor of applying the FSIA in a manner directly contrary to its plain language (see supra at9), they should be accorded substantial weight in determining whether discovery is appropriate underSocit Nationale.26

In short, the policy arguments raised by Argentina, the United States and NML in theirSupreme Court briefs can simply be addressed in a comity analysis. Socit Nationale is flexibleenough to accommodate consideration of the interests of both parties and the United States.

It is, of course, unclear how a court would resolve the careful balancing required by SocitNationale in this case. A proper comity analysis may yield a result similar to that already adoptedby the district court and the Second Circuit, or it may result in far narrower discovery. What istroubling, however, is that neither court below ever appears to have undertaken the comity analysisrequired under Socit Nationale.27 Broad discovery requests targeting a foreign sovereigns

25 Ar. Br. 43; see also, e.g., Doe v. Roman Catholic Diocese of Galveston-Houston, 408 F.Supp. 2d 272, 277-79 (S.D. Tex. 2005) (discussing head-of-state immunity principles); Watts, TheLegal Position in International Law of Heads of State, Heads of Governments and ForeignMinisters, 247 RECUEIL DES COURS 9 (1994).

26 Argentina could also argue that other foreign states i.e., the foreign countries in whichthe assets are located have strong interests in controlling discovery relating to property within theirjurisdiction.

27 It is hard to blame the lower courts for their failure to engage in the requisite comityanalysis, since neither party appears to have cited Socit Nationale below. See Arg. App. Br.,passim; NML App. Br., passim; Arg. App. Reply, passim; see also Memorandum of Law in Support


sensitive financial information should be justifiable under the factors set forth in Socit Nationale,and it is the courts duty to undertake the relevant analysis. Socit Nationale, 482 U.S. at 546. Inlight of the lower courts failure to do so, and given that this discovery dispute is not controlled bythe FSIA, the Supreme Court should consider remanding with instructions to evaluate the discoveryrequested under its holding in Socit Nationale.

VII. CONCLUSION

With regard to foreign assets, this is a relatively straightforward discovery dispute governedby Socit Nationale. The main risk for the Supreme Court is that the parties briefs will entice itto rule in a manner that impacts the sensitive area of foreign sovereign immunity law. This case doesnot merit such a ruling. The argument of Argentina and the United States is contrary to the FSIAsplain language, and the argument proffered by NML is largely irrelevant with respect to foreignassets. The lower courts erred in failing to apply the requisite comity analysis, but there is no circuitsplit either with respect to the status of foreign assets under the FSIA or with regard to theapplication of Socit Nationale to discovery relating to foreign assets. The Supreme Court shouldavoid being lured by the parties into a far-reaching FSIA decision, and should instead remand withinstructions to undertake the analysis required by its existing precedent. That is all that thisdiscovery dispute warrants.

of Defendant The Republic of Argentinas Motion to Quash Subpoena, Dist. Ct. No. 03 Civ. 8845(TPG), Docket No. 308, passim; Plaintiff NML Capital, Ltd.s Memorandum of Law in Oppositionto Defendant The Republic of Argentinas Motion to Quash, Dist. Ct. No. 03 Civ. 8845 (TPG),Docket No. 315, passim; Reply Memorandum of Law in Support of Defendant The Republic ofArgentinas Motion to Quash Subpoena, Dist. Ct. No. 03 Civ. 8845 (TPG), Docket No. 320, passim;Supplemental Memorandum of Law of the Republic of Argentina in Support of Motions to Quashand in Opposition to Motions to Compel Subpoenas, Dist. Ct. No. 03 Civ. 8845 (TPG), Docket No.400, passim; Plaintiffs Consolidated Reply Memorandum Regarding Motions to Quash and toCompel, Dist. Ct. No. 03 Civ. 8845 (TPG), Docket No. 412, passim.
