I. Introduction
Undoubtedly, not all debtors are created equal. While American courts have grown
accustomed to creditors seeking foreclosure judgments and other legal remedies against debtors
that have defaulted on their obligations, most of these proceedings frequently involve a private
entity or individual and an underlying debt obligation of at most seven-figures. However, when
the debtor in question is the Republic of Argentina, a sovereign nation, and the underlying debt
obligation resulted in the largest sovereign debt default in history, the stakes are exponentially
higher. 2 The property subject to attachment in aid of execution not only includes land and other
conventional assets, but also naval ships in Africa and even the Argentine presidential plane.3 In
attempting to address and resolve the disputes arising from Argentina’s 2001 default, American
courts are faced with an intricate mix of common law, statutory construction, and foreign policy
issues. In Republic of Argentina v. N.M.L Capital,4 which the Supreme Court is set to hear this
term,5 all these concerns come to bear. The Court is expected to adjudicate on whether foreign
sovereign state immunity prohibits courts from mandating discovery of a foreign state’s assets in
the United States and abroad from domestic financial institutions. Whatever balance the Court
strikes between the competing interests and varying legal precedents could not only impact the
fate of Argentina’s bond debt, but also that of every other nation facing default.
II. Factual and Procedural Background
J.F. Hornbeck, Congressional Research Service, Argentina’s Defaulted Sovereign Debt:
Dealing with the “Holdouts” 1 (2013), https://www.fas.org/sgp/crs/row/R41029.pdf.
3
Steven Davidoff, Argentina Takes Its Debt Case to the U.S. Supreme Court, N.Y. TIMES, Jan.
25, 2014, http://dealbook.nytimes.com/2014/02/25/argentina-takes-its-debt-case-to-the-u-ssupreme-court/?_php=true&_type=blogs&_r=0.
4
NML Capital, Ltd. v. Republic of Argentina, 695 F.3d 201 (2nd Cir. 2012), cert. granted, 134
S.Ct. 895 (2014).
5
134 S.Ct. 895 (2014).
2
1
On December 20, 2001, soon after the resignation of Argentine President de la Rua, the
Republic of Argentina defaulted on $81.8 billion dollars of public debt held by private investors.6
Vast political unrest enveloped the country as the government stopped paying pension funds and
froze bank accounts.7 The Argentine government, subsequently, attempted to restructure their
debt obligations by reaching an agreement with the bondholders. It argued that “bondholders
would have to share in the misery that affected the whole country, and that the government had a
moral duty to ensure this outcome.”8 By 2005, the government and the bondholders were unable
to reach a settlement for restructuring the $102 billion dollars (including interest) of outstanding
debt.9 Thus, Argentina proposed a settlement whereby bondholders would receive new bonds
valued at twenty-five to twenty-nine cents on the dollar.10 While most bondholders agreed to the
proposal, twenty-four percent of them rejected the offer and retained their existing claims.11
Argentina again attempted to settle the remaining claims in 2010. However, 8.7 percent of all
2001 bondholders, holding $11.2 billion worth of Argentine bonds, retained their claims.13
In 2003, NML Capital, Ltd. (NML), one of the remaining holdouts, filed eleven actions
in the Southern District of New York seeking to collect on its debt claims against Argentina.14
Because Argentina waived its right to sovereign immunity in the bond indenture agreements,15
6
Hornbeck, supra note 2, at 3.
Argentina Plunges Into Turmoil, B.B.C., Dec. 20, 2001,
http://news.bbc.co.uk/2/hi/americas/1720607.stm.
8
Hornbeck, supra note 2, at 4.
9
Hornbeck, supra note 2, at 5.
10
Davidoff, supra note 3.
11
Hornbeck, supra note 2, at 4–5.
13
Hornbeck, supra note 2, at 7.
14
NML Capital, Ltd. v. Republic of Argentina, 695 F.3d 201, 203 (2nd Cir. 2012), cert. granted,
1345 S.Ct. 895 (2014).
15
“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 a judgment or from any other legal or judicial process or remedy, . . . the Republic
7
2
the district court possessed jurisdiction despite the sovereign immunity doctrine and awarded
NML $2.5 billion.16
After securing these judgments, NML sought discovery of Argentina’s assets in the
United States in order to identify property subject to attachment in aid of execution. NML
subpoenaed Bank of America and Banco de la Nación Argentina for information on accounts
belonging to Argentina “in order to locate how Argentina move[d] it assets through New York
and around the world, and accurately identify the places and times when those assets might be
subject to attachment and execution . . . .”17 The banks moved to squash the subpoenas, but after
NML narrowed its requests, the district court denied the banks’ motions.18 However, the district
court indicated that the subpoenas must include “some reasonable definition of the information
being sought.”19 After some further negotiations regarding the particularity of the information
sought, Bank of America began producing documents. However, Banco de la Nación Argentina
did not, and the district court once again ordered them to comply. Thereafter, Argentina, not the
banks, appealed the district court’s discovery order, arguing that it contravened sovereign
immunity doctrine and the Foreign Sovereign Immunities Act (FSIA).20
The Second Circuit Court of Appeals held in favor of NML. While recognizing that it
was contravening Seventh Circuit precedent, the Second Circuit found that the FSIA’s
has irrevocably waived such immunity to the fullest extent permitted by the laws of such
jurisdiction (and consents generally for the purposes of the Foreign Sovereign Immunity Act to
the giving of any relief or the issue of any process in connection with any Related Proceeding or
Related Judgment”). NML, 695 F.3d note 1 (emphasis added).
16
Id.
17
Id.
18
Id. at 204.
19
main case 204 JA 1868
20
Brief for the Defendant, NML Capital, Ltd. v. Republic of Argentina, 695 F.3d 201, 203 (2nd
Cir. 2012).
3
requirements for attachment in aid of execution did not extend to discovery requests.21 The
discovery requests, according to the court, did not infringe on Argentina’s foreign sovereign
immunity because (1) Argentina had waived sovereign immunity at the beginning of the
litigation and, therefore, the district court retained jurisdiction to enforce the judgment;22 and (2)
the requests were directed at third parties, not Argentina itself.23 Thus, the court “could exercise
its judicial power over Argentina as over any other party”24 and, even though it could not attach
assets outside the United States, it could mandate discovery of them.25 Argentina subsequently
appealed to the Supreme Court26 and was granted certiorari.27
III. Legal Precedent
Courts possess broad discovery powers for identifying assets subject to attachment in aid
of execution.28 These powers not only extend to parties directly involved in the litigation, but
also encompass third parties.29 However, it remains unclear whether and to what extent this
21
NML, 695 F.3d. at 209.
Id. at 209–10.
23
Id. at 210.
24
Id. at 209.
25
Id. at 208–209.
26
Petition for Writ of Certiorari, Republic of Argentina (No. 12-842).
27
134 S.Ct. 895.
28
“In aid of judgment or execution, the judgment creditor or a successor in interest whose
interests appears of record may obtain discovery from any person – including the judgment
debtor – as provided in these rules or by the procedure of the state where the court is located.”
Fed. R. Civ. P. 69(a)(2) (emphasis added).
29
E.g. id.; Caisson Corp. v. Cnty. W. Bldg. Corp., 62 F.R.D. 331, 335 (D. Penn. 1974) (“There is
no doubt that third parties can be examined in relation to the financial affairs of the judgment
debtor.”); Burak v. Scott, 29 F.Supp. 775, 776 (D.D.C. 1939) (holding that, even though the
plaintiff may seek discovery from third parties to enforce a judgment, the requests must only
seek information regarding the assets of the defendant and not the third party itself).
22
4
discovery power survives the foreign sovereign immunity doctrine, which was codified in the
Foreign Sovereign Immunity Act (FSIA).30
A. Foreign Sovereign Immunity and FSIA
Even though codified in the 20th Century,31 foreign sovereign immunity has longstanding roots in common law jurisprudence.32 The Supreme Court first addressed the issue in
Schooner Exchange v. McFaddon, where the plaintiffs sought to seize a French naval vessel
docked in Philadelphia.33 It explained that even though “[t]he jurisdiction of the nation within its
own territory is . . . exclusive and absolute[,]” it can be limited with the nation’s consent,34 and
held that “national ships of war, entering the port of a friendly power” were exempted from the
jurisdiction of American courts.35 This was necessary, according to the Court, to ensure “the
common interest impelling [sovereign nations] to mutual intercourse and an interchange of good
offices with each other . . . .”36 Thereafter, the doctrine was expanded to include all suits brought
against sovereign states in American courts.37 And because sovereign immunity is not a
constitutional doctrine,38 absolute deference was afforded to the Executive Branch on whether
immunity applied.39
Foreign Sovereign Immunities Act (FSIA), Pub. L. No. 94-583, 90 Stat. 2891 (1976), codified
at 28 USC §§ 1330, 1602-11.
31
Id.
30
32
Curtis A. Bradley & Laurence R. Helfer, International Law and the U.S. Common Law of
Foreign Official Immunity, 2010 SUP. CT. REV. 213, 216 (2010).
33
7 Cranch 116, 117 (1812).
34
Id. at 135.
35
Id. at 145–46.
36
Id. at 137.
37
Supra note 29 at 217.
38
Verlinden B.V. v. Central Bank of Nigeria, 461 U.S 480, 486 (1983).
39
Navemar, 303 U.S. 68, 74 (1938).
5
In 1952, the Department of State announced a major overhaul of the foreign sovereign
immunity doctrine.40 No longer would it advise courts to bar all suits brought against foreign
states.41 Rather, it reasoned that “the widespread and increasing practice . . . of governments of
engaging in commercial activities [made] it necessary . . . [for] persons doing business with
them to have their rights determined in the courts.”42 Thus, the Department of State adopted a
restrictive theory of sovereign immunity, whereby “the immunity of the sovereign is recognized
with regard to sovereign or public acts, but not with respect to private acts.”43
Congress, at the urging of the Executive branch, codified this restrictive approach to
foreign sovereign immunity in the FSIA.44 By doing so, Congress sought to “transfer the
determination of sovereign immunity from the executive branch to the judicial, thereby reducing
the foreign policy implications of immunity determinations and assuring litigants that these often
crucial decisions are made on purely legal grounds . . . .”45 Therefore, the FSIA enumerates
certain instances in which foreign sovereign immunity will not circumscribe a court’s
jurisdiction.46 Among the enumerations are actions in which the foreign state has waived
immunity47 and actions “based upon commercial activity carried on in the United States by a
foreign state.”48 The statute also specifies what particular types of property are subject to
40
Letter from Jack B. Tate, Acting Legal Adviser, U.S. Dept. of State, to Acting U.S. Attorney
General Philip B. Perlman (May 19, 1952), reprinted in 26 Dept. State Bull. 984 (1952).
41
Id. at 985.
42
Id.
43
Id. at 984.
44
Foreign Sovereign Immunities Act of 1976, H.R. Rep. No 94-1487, 94th Cong., 2d Sess. 6
(1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6605.
45
Id.
46
47
48
28 USC § 1605(a)(1) (2012).
28 USC § 1605(a)(2) (2012).
6
attachment in aid of execution of a judgment,49 the most litigated of which is “any property in the
United States of an agency or instrumentality of a foreign state engaged in commercial activity in
the United States . . . regardless of whether the property is or was involved in the act upon which
the claim is based.”50 Furthermore, when the assets in question are bank accounts, plaintiffs are
required “to identify the specific accounts or funds held by banks upon which they [seek] to
execute judgment . . . [and] show that such specific assets [fall] within one of FSIA’s exceptions
to immunity.”51
B. Discovery and FSIA
Even though the FSIA clarified what property would be subject to attachment and
execution in aid of judgment, it failed to explicitly address whether a court can mandate
discovery of a foreign state’s assets prior to attachment or execution. Courts have interpreted this
omission by taking either a strict or permissive approach to the foreign sovereign immunity
doctrine and FSIA.
a. Strict Interpretation
The strict interpretation finds that FSIA enumerates a finite list of exceptions to foreign
sovereign immunity.52 Anything not included in the statute, such as discovery procedures, is
outside a court’s jurisdiction.53 In Rubin v. Islamic Republic of Iran, the Seventh Circuit Court
of Appeals adopted this view and held that the plaintiff could not seek general asset discovery to
28 USC § 1610.
28 U.S.C. § 1610(b).
51
Walters v. Indus. & Commercial Bank of China, 651 F.3d 280, 297 (2nd Cir. 2011); Autotech
Tech. LP v. Integral Research & Dev. Corp., 499 F.3d 737, 749 (7th Cir. 2007).
52
Rubin v. Islamic Republic of Iran, 637 F.3d 783, 796 (7th Cir. 2011).
53
Id.
49
50
7
execute a judgment against a foreign sovereign state.54 There, the plaintiff had already identified
property possibly subject to attachment and then sought discovery of the defendant’s other assets
in the United States.55 The court found that FSIA espoused the common-law rule “that property
of a foreign state in the United States is presumed immune from attachment and execution.”56
And to overcome this presumption “the plaintiff must identify the particular foreign-state
property he seeks to attach and then establish that it falls within a statutory exception,” without
utilizing the district court’s broad discovery powers.57 While the court recognized that this might
hinder the plaintiff’s ability to execute a judgment, it reasoned that this was “a consequence of
the balance struck by the FSIA.”58
b. Permissive Interpretation: Limited Jurisdictional Discovery
Other courts, however, have stuck a different balance by seeking to further protect a
plaintiff’s ability to execute a judgment against a foreign state under FSIA whilst safeguarding
the state from the unnecessary burdens of litigation.59 These courts recognize “the tension
between permitting discovery to substantiate exceptions to statutory foreign immunity and
protecting a sovereign’s legitimate claim to immunity from discovery.”60 Thus, even though they
54
See Id. (explaining that, because the FSIA does not explicitly waive foreign sovereign
immunity for discovery procedures, a presumption of immunity applies)
55
Id. at 787-788.
56
Id. at 796.
57
Id.
58
Id. at 798.
59
E.g. Licea v. Curacao Drydock Co., Inc., 870 F.Supp.2d 1360,1366 (D. Fl. 2012) (“As the
plaintiff has the burden to identify assets that come within the Section 1610(a)(2) exception,
courts have recognized the necessity of limited jurisdictional discovery to establish whether a
claim comes within the exception.”); Gabay v. Mostazafan Found. of Iran, 151 F.R.D. 250, 257
(D.N.Y. 1993) (“Because permitting discovery may tend to undercut immunity from litigation
that foreign instrumentalities were intended to enjoy, the court must ensure that factfinding . . . is
limited to the essentials necessary to determining the preliminary question of jurisdiction.”)
(internal citations omitted).
60
Arriba Ltd. v. Petroleos Mexicanos, 962 F.2d 528, 534 (5th Cir. 1992).
8
seemingly agree that general asset discovery violates foreign sovereign immunity, they find that
limited jurisdictional discovery, “ordered circumspectly and only to verify allegations of specific
facts crucial to an immunity determination,” does not.61
First utilized in 1961 by a district court,62 jurisdictional discovery allows a court to
ascertain whether it has jurisdiction over the defendant prior to permitting discovery on the
merits.63 The Supreme Court endorsed the procedure in 1978 by holding that “where issues arise
as to jurisdiction or venue, discovery is available to ascertain the facts bearing on such issues.”64
However, while the Court has clearly deemed jurisdictional discovery a proper recourse for trial
courts, it has not provided clear guidance on its appropriate extent.65 Two possible interpretations
have arisen: discovery is limited to the question of jurisdiction or limited only to a small number
of documents.66 To defendants’ detriment, the former is the most commonly held.67 Even though
limiting discovery only to the issue of jurisdiction safeguards defendants from general discovery,
defendants may still be subject to extensive requests because jurisdictional questions have
become “increasingly complex and fact-intensive.”68 Thus, as the Sixth Circuit Court of Appeals
states, “the district court may consider affidavits, allow discovery, hear oral testimony, [or] order
an evidentiary hearing . . . if the question of jurisdiction is intertwined with the merits.”69
gradually distorting the line between merit-based and jurisdictional discovery.70
61
Id.
Gen. Ind. Co . v. Birmingham Sound Producers, Ltd., 26 F.R.D. 559, 561 (D.N.Y. 1961).
63
S.I Strong, Jurisdictional Discovery in United States Federal Courts, 67 WASH. & LEE L. REV.
489, 497–198 (2010).
64
Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 n. 13 (1978).
65
Strong, supra note 63, at 532.
66
Strong, supra note 63, at 532.
67
Strong, supra note 63, at 532.
68
Strong, supra note 63, at 535.
69
Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445, 451 (6th Cir. 1988).
70
Id.
62
9
Arguments
On appeal, Argentina vehemently contests the broad extent of discovery the Second
Circuit deemed appropriate, whereby the respondent is allowed to seek discovery not only of
assets located in the United States but also those abroad, even though those assets are not subject
to attachment or execution. This, Argentina finds, contravenes the basic purpose of foreign
sovereign immunity: safeguarding the foreign sovereign from the burdens of litigation.71 In
support of its argument, Argentina also relies on the strict interpretation of the FSIA espoused by
the Seventh Circuit to argue that there is a “distinction between immunity from suit and
immunity from attachment and execution.”72 Therefore, the district court’s jurisdiction by
waiver of consent as to the underlying claims did not extend to enforcing the judgment, as the
Second Circuit finds.73 Interestingly, even though Argentina mentions the Fifth Circuit for
support, it fails to cite any Fifth Circuit caselaw.74
NML, on the other hand, frames the issue differently by fixing its argument around the
fact that the subpoenas were directed at domestic financial institutions, not a foreign sovereign
state.75 Thus, NML argues, the FSIA and the Fith and Seventh Circuit precedent Argentina cites
71
Petition for Writ of Certiorari at 15, NML Capital, Ltd. v. Republic of Argentina, (No. 12842).
72
See Id. at 15–16 (citing the 7th Circuit for the proposition that the FSIA safeguard a foreign
sovereign state from discovery prior to attachment or execution).
73
Id.
74
Argentina probably fails to cite any particular Fifth Circuit precedent because the Fifth Circuit
would still permit the trial court to order limited jurisdictional discovery, which undermines
Argentina’s argument that it should not be subjected to any form of discovery. See, id. at 15-22,
(mentioning the 5th Circuit in support of its argument but at no point citing any particular 5th
Circuit case).
75
Supplemental Brief for Respondent at 2, NML Capital, Ltd. v. Republic of Argentina (No. 12842) (“The only question presented by this case is whether the FSIA’s attachment immunity
limits the scope of discovery in aid of execution that a judgment creditor may obtain from a nonsovereign third party. There is no circuit split on that question.”).
10
are irrelevant.76 By doing so, NML advocates an unconstrained permissive interpretation of
foreign sovereign immunity and the FSIA. NML states that “[a]lthough Sections 1609 and 1610
define in detail the contours of the attachment immunity conferred by the FSIA, those provisions
say nothing about discovery.”77 In other words, because the FSIA does not address whether a
trial court has jurisdiction to order discovery, the foreign sovereign immunity doctrine does not
circumscribe a court’s authority to mandate discovery of a foreign sovereign state or a domestic
financial institution.78 Whether a trial court can actually attach and eventually execute
Argentina’s assets, according to NML, is a distinct issue from whether discovery is appropriate.79
The United States, in support of Argentina, seemingly takes the middle road and borrows
from both the restrictive and permissive approaches to the FSIA. Even though the United States
finds that the district court improperly ordered discovery of Argentina’s assets outside of the
United States,80 it argues that limited jurisdictional discovery of assets located in the United
States would not violate the foreign sovereign immunity doctrine.81 It reconciles these two
positions by drawing a nexus between the possibility of attachment under the FSIA and proper
discovery. Thus, the United States concludes that a court can only order limited discovery in
relation to assets, located in the United States, that could be subject to attachment under the
FSIA.82
76
Id.
Brief in Opposition at 3, NML Capital v. Republic of Argentina, (No. 12-842).
78
Id.
79
Id.
80
Brief for the United States as Amici Curiae Supporting Petitioners at 14, (No. 12-842) (“FSIA
authorizes courts to order execution – and therefore discovery – only with respect to limited
categories of foreign-state property that are located in the United States.”).
81
Id. at 12 (“[D]iscovery concerning a foreign state’s assets should be ordered circumspectly and
only to verify allegations of specific facts crucial to an immunity determination.”) (internal
citations omitted).
82
Id.
77
11
III. Analysis
At first glance, the question presented before the Court appears to revolve around a
mundane statutory construction issue that has seemingly resulted in a Circuit split: whether the
FSIA exceptions to foreign sovereign immunity from attachment in aid of execution of a
judgment also implicitly permit discovery of assets located in the United States and abroad.
However, upon careful analysis, Argentina’s contention that the weight of the caselaw is
completely in its favor is not evident. Furthermore, in order to meaningfully answer the question
presented, the Court will not only have to consider the statutory language but also determine to
what extent a court’s broad discovery powers survive the foreign sovereign immunity doctrine.
A. Same Balance, Different Rules
The Seventh Circuit Court of Appeals reasoned that its strict interpretation of the FSIA
attachment immunity exceptions, whereby the plaintiff was precluded from seeking discovery of
assets in the United States even though they might be subject to attachment in aid of execution,
was a result of the “balance struck by the FSIA.”83 Thus, the plaintiffs’ only recourse was to
utilize “private means to identify potentially attachable assets of foreign states located in the
United States.”84 However, while the Seventh Circuit’s holding observed the balance between
the plaintiff’s ability to recover and a foreign sovereign’s claim to immunity, applying it to
resolve NML’s dispute with Argentina might sway such balance drastically in the foreign
sovereign’s favor.
In Rubin, the plaintiff had already identified some of the foreign sovereign’s assets in the
United States that could be subject to attachment and was seeking to utilize “the coercive power
83
84
Rubin v. Islamic Republic of Iran, 637 F.3d 783, 798 (7th Cir. 2011).
Id.
12
of the court to identify other attachable foreign state assets.”85 Therefore, the plaintiff could still
seek attachment and execution of the assets it had already identified without utilizing court
mandated discovery. NML, on the other hand, has been unable to identify any Argentine
property in the United States.86 Thus, without court-mandated discovery, NML is practically
barred from enforcing its judgments in United States courts. When the Department of State
adopted the restrictive theory of foreign sovereign immunity and Congress codified it in the
FSIA, the intent was to provide recourse against foreign sovereigns in American courts, not to
further inhibit claims.87 The bill sought to “remedy . . . the predicament of a plaintiff who has
obtained a judgment against a foreign state . . . [by] provid[ing] the judgment creditor some
remedy if . . . a foreign state or its enterprise failed to satisfy a final judgment.”88 Some form of
court mandated discovery is necessary to further this goal.
Furthermore, allowing NML to seek discovery of Argentina’s assets in the United States
would not subject Argentina to significantly increased litigation burdens. Even though foreign
sovereign immunity is intended to safeguard foreign sovereigns from such burdens,89Argentina
has been involved in a multi-year litigation since it waived sovereign immunity as to the
judgment.90 Consenting to waiving foreign sovereign immunity protection, one could argue, is
tantamount to consenting to the significant burdens of litigation. In Rubin, on the other hand, the
85
Id.
See Brief in Opposition, supra note 77, at 6–8 (at no point indicating that NML has been able
to identify assets without utilizing the court’s authority to mandate discovery).
87
Jake Tate, supra note 40.
88
Foreign Sovereign Immunities Act of 1976, H.R. Rep. No 94-1487, 94th Cong., 2d Sess. 6
(1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6606.
89
Republic of Philippines v. Pimentel, 553 U.S. 851, 865 (2008).
90
NML Capital, Ltd. v. Republic of Argentina, 695 F.3d 201, 203 (2nd Cir. 2012).
86
13
district court possessed jurisdiction without the foreign sovereign’s presence or consent 91 and
issued a default judgment.92 Requiring the defendant to comply with extensive discovery
requests would have forced it to engage in a contested litigation process, which it had been able
to avoid until then. In contrast, Argentina, by its own making, has already been engaged in an
extensive litigation process.93 Indeed, while the Seventh Circuit’s perception of the balance
struck in the FSIA justified its holding in Rubin,94 the possibility that NML will not be able to
execute the district court’s judgment without discovery, and the fact that Argentina consented to
the court’s jurisdiction as to the judgment, suggests that a different rule should apply in NML v.
Republic of Argentina to preserve such balance.
B. Proper Limitations
Even though the FSIA limited foreign sovereign immunity in order to provide a remedy for
certain causes of actions, it retained a presumption of immunity for all matters not excused in the
statute.95 Even under a permissive interpretation of the FSIA, the Second Circuit undermined
this presumption when it held that NML could discover Argentine assets around the world.96 As
the United States argues, there must be some nexus between discovery and the possibility of
attachment in aid of execution.97 Otherwise, the statutory text is rendered meaningless.
Rubin v. Islamic Republic of Iran, 637 F.3d 783, 784 (7th Cir. 2011) (“In [the plaintiff’s]
underlying suit against Iran, the plaintiffs established jurisdiction via ... an exception to
jurisdictional immunity for action in which money damages are sought against a foreign state for
personal injury or death that was caused by an act of torture, extrajudicial killing, aircraft
sabotage, hostage taking, or the provision of material support or resources for such an act.”
(internal citations and quotations omitted).
92
Id. at 786.
93
NML, 695 F.3d. at 203.
94
Rubin, 637 F.3d at 798.
95
“[A] foreign state shall be immune from the jurisdiction of the courts of the United States and
of the States except as provided in sections 1605 to 1607 of this chapter.” 28 U.S.C. § 1604.
96
NML, 695 F.3d at 209.
97
Brief for the United States, supra note 80.
91
14
By permitting discovery of assets outside the United States, the Second Circuit not only
circumvented long-standing precedent in other Circuits, but also its own.98 In EM Ltd. v.
Republic of Argentina, the Second Circuit held that a court could not order discovery of a foreign
state’s assets when they are not subject to attachment under the FSIA.99 Even though it clarified
that “EM did not hold that the discovery request would violate the FSIA,” there is no apparent
discrepancy between the two cases.100 The court seemingly justifies the distinction by espousing
a rather extreme permissive interpretation of the FSIA, whereby courts can mandate any form of
discovery.101 Surely, this was not Congress’ intention when it codified a presumption of
immunity for foreign sovereigns in United States’ courts.
The more difficult issue arises in defining the proper scope of discovery for a foreign
sovereign’s assets in the United States. While courts have agreed that limited jurisdictional
discovery protects foreign sovereigns whilst also providing some recourse for plaintiffs, the
Supreme Court has not defined the proper scope of limited discovery.102 However, neither the
plaintiff nor defendant directly addressed this matter in their briefs, even though it has been
mentioned by a number of district courts and the Fifth Circuit Court of Appeals.103 Due to the
multitude of other legal issues raised by this suit, it is unlikely that the Court will attempt to
define the proper scope of limited discovery as a general discovery procedure. Instead, it can
98
See cases cited supra note 59 to 62 (limiting discovery only to assets that could be subject to
attachment); EM Ltd. v. Republic of Argentina, 473 F.3d 463, 485 (2nd Cir. 2007).
99
EM Ltd., 473 F.3d at 485 (“Because the record makes clear that the [assets] were never an
attachable asset of the Republic and . . . that [an] exception to immunity from attachment does
not apply, [the plaintiff] was not entitled to any other discovery, as it has failed to show a
reasonable basis for assuming jurisdiction over [the defendant].”) (internal quotations omitted).
100
NML Capital, 695 F.3d at 209.
101
Id.
102
See cases cited supra 59.
103
See cases cited supra 59; Arriba Ltd. v. Petroleos Mexicanos, 962 F.2d 528, 534 (5th Cir.
1992).
15
define the proper scope of discovery of a foreign sovereign’s assets by determining the extent of
the foreign sovereign immunity doctrine. Doing so, allows it to avoid the limited jurisdictional
discovery question altogether.
Conclusion
In Republic of Argentina v. NML Capital, Ltd., the Court will have to define how the
balance struck in the FISA between providing plaintiffs a judicial recourse against foreign
sovereigns in some instances and shielding foreign sovereigns from the burdens of litigation in
others circumscribes a court’s discovery powers. The Second Circuit clearly upended this
balance when it held that plaintiffs could seek discovery of assets located outside the United
States, which are not subject to attachment in aid of execution under the FSIA. However, the
more difficult question is to what extent a court can mandate discovery of domestic assets.
While some form of limited jurisdictional discovery would be appropriate, such discovery could
become wide-ranging. Thus, to truly circumscribe limited jurisdictional discovery, the plaintiff
must show some logical nexus between the property he seeks to discover and an exception in the
FSIA. Otherwise, foreign sovereigns will face an onslaught of litigation in American courts.
16