Bank of N.Y. v. Yugoimport
| Decision Date | 10 February 2014 |
| Docket Number | Docket No. 11–1990–cv. |
| Parties | The BANK OF NEW YORK, Interpleader–Plaintiff, v. YUGOIMPORT, Interpleader–Defendant–Appellant, v. Republic of Croatia, Republic of Slovenia, Interpleader–Defendants–Appellees. |
| Court | U.S. Court of Appeals — Second Circuit |
OPINION TEXT STARTS HERE
Richard A. Jacobsen, Orrick, Herrington & Sutcliffe LLP, New York, NY, for Interpleader–Defendant–Appellant.
Boaz S. Morag, Cleary Gottlieb Steen & Hamilton LLP, New York, NY, Samuel spital (Richard L. Mattiaccio, on the brief), Squire, Sanders & Dempsey LLP, New York, NY, for Interpleader–Defendants–Appellees.
Before: WINTER, SACK, and RAGGI, Circuit Judges.
The Bank of New York commenced this interpleader action to determine ownership of $2,551,785.37 plus interest held on deposit in an account in the name of the Federal Directorate of Supply and Procurement (“FDSP”), an entity organized under the laws of the former Socialist Federal Republic of Yugoslavia (“SFRY”). The account was frozen in 1992 pursuant to executive order during the Bosnian War.
The Interpleader–Defendants, Yugoimport and the Republics of Croatia and Slovenia, all—asserted competing claims to the funds. Yugoimport, a Serbian entity, claimed full ownership of the disputed funds as successor-in-interest to the FDSP. The Republics of Croatia and Slovenia contend that the funds should be divided among the states succeeding the SFRY pursuant to a multilateral treaty, the Succession Agreement. See Agreement on Succession Issues Between the Five Successor States of the Former State of Yugoslavia, June 29, 2001, 41 I.L.M. 3 (2002). The district court granted summary judgment to the Republics. We hold that interpretation of the Succession Agreement is governed by the Vienna Convention and that the FDSP was an agency of the SFRY. As such, the funds are subject to division under that Agreement. We, therefore, affirm.
We summarize only the facts relevant to this appeal. Those seeking a more detailed account should go to the district court's opinion. Bank of N.Y. v. Yugoimport SDPR J.P., 780 F.Supp.2d 344, 346–49 (S.D.N.Y.2011).
This case arises from the violent breakup of the SFRY. The ethnic, racial, and religious tensions of the Balkans, and the consequences of these tensions spanning generations, have been the subject of commentary so extensive and well-known as not to require citation. While somewhat controlled after World War II, these tensions erupted into bloodshed with the weakening of communist states in the 1980's. Beginning in 1989, the constituent states of the SFRY sought independence, leading to nearly a decade of armed conflict. Slovenia formally declared independence on June 25, 1991. Croatia, Bosnia–Herzegovina, and Macedonia followed suit shortly thereafter. See Yucyco, Ltd. v. Republic of Slovenia, 984 F.Supp. 209, 212–213 (S.D.N.Y.1997) (describing the collapse).On April 27, 1992, the remaining territories, Serbia and Montenegro, issued a joint declaration formally dissolving the SFRY and establishing themselves as the “Federal Republic of Yugoslavia” (“FRY”). See id. The FRY purported to be the sole successor of the SFRY. See id. The other Republics disputed the FRY's claim, and the United Nations Security Council issued a resolution declaring that the claim was not “generally accepted” by the world community. U.N.S.C. Res. 757, U.N. Doc. S/RES/757, 31 I.L.M. 1427, 1454 (May 30, 1992). Additionally, the Security Council denied the FRY's request to step into the shoes of the SFRY for the purpose of continuing the SFRY's U.N. membership. U.N.S.C. Res. 777, U.N. Doc. S/RES/777, 31 I.L.M. 1427, 1473 (Sept. 19, 1992).
In December 1995, due in large part to American efforts and armed NATO intervention, representatives of Bosnia–Herzegovina, Croatia, and the FRY signed the Dayton Accords, bringing a qualified measure of peace to the region. The three Republics agreed to recognize and respect each other's sovereignty and authorized the deployment of a U.N.—led multinational military implementation force in Bosnia. See General Framework Agreement for Peace in Bosnia and Herzegovina (“Dayton Accords”), Bosn. & Herz.-Croat.-Fed. Repub. Yugo., Dec. 14, 1995, 35 I.L.M. 75, 89, 92 (1996).
Because the Dayton Accords did not address a number of issues arising from the breakup of the SFRY, Annex 10 of the Accords established the Office of the High Representative to assist in the implementation of the peace. Id. at 147. The High Representative was to be appointed by the U.N. and was charged with overseeing the creation of mutual agreements among the signatory states concerning various issues. Id. One such issue was distribution of financial assets of the SFRY. See U.N.S.C. Res. 1022, U.N. S/RES/1022, 35 I.L.M. 259, 260 (November 22, 1995).
After the signing of the Dayton Accords, armed conflict between the FRY and Kosovars and continuing sole-successor sentiments in the FRY stymied the ability of the signatory states to reach an agreement. See Carsten Stahn, The Agreement on Succession Issues of the Former Socialist Federal Republic of Yugoslavia, 96 Am. J. Int'l L. 379, 379 (2002). On June 29, 2001, after NATO intervention in the Kosovo conflict and political shifts weakened FRY sole-successor sentiments, the emerging successor states, under the supervision of the High Representative, finally came to an agreement.
The Succession Agreement recognizes five SFRY successor states—Croatia, Slovenia, Bosnia–Herzegovina, Macedonia, and the FRY. See Succession Agreement, 41 I.L.M. at 3.1 It contains seven Annexes, each of which deals with the division of particular types of assets and/or liabilities. Annexes C and G are relied upon by the parties.
Annex C deals with the division of “financial assets and liabilities.” Article 1 of Annex C defines the financial assets of the SFRY to include “accounts and other financial assets in the name of the SFRY Federal Government Departments and Agencies.” Id. at 25. Article 5 provides that SFRY's foreign financial assets, including funds held in foreign banks, shall be distributed in the following proportions: Bosnia and Herzegovina 15.50%; Croatia 23.00%; Macedonia 7.50%; Slovenia 16.00%; and the FRY 38.00%. Id. at 27.2 Whether the funds at issue here were held in the name of an SFRY “agency”— i.e. FDSP—for purposes of the Succession Agreement is the principal issue in this appeal.
Annex G deals with private property. Article 1 thereof states that “[p]rivate property and acquired rights of citizens and other legal persons of the SFRY shall be protected by successor States in accordance with the provisions of this Annex.” Id. at 35. We mention this provision only because Yugoimport attaches importance to it. However, if the funds were held in the name of an SFRY agency, Annex G would be inapplicable; if not, Yugoimport would succeed on this appeal even without Annex G.
We trace the history of Yugoimport in mind-numbing detail because the nature of its governance and functions is critical—decisive, actually—to the disposition of this appeal.
We begin with a summary that will suffice for casual readers, who can then move on to the next section. Yugoimport functioned primarily as an arms dealer for the successive sovereign states referred to generally as Yugoslavia, from 1949 until the events giving rise to this case. It was owned, controlled, managed, and supervised at all times by the government—in particular, by officials responsible for national defense. Its earnings were put to public purposes.
We now turn to the details. The original Yugoimport was created on June 27, 1949 by the Federal People's Republic of Yugoslavia (the “FPRY”).3 Basic Law on State Business Enterprises (Act No. 5585/49)(June 27, 1949). Its enabling statute described it as “[a] state business ... of state-wide significance” created to engage in the “import and export of all types of goods.” Id. arts. 1, 3. Yugoimport's initial assets were provided by the FPRY's Minister of Finance, id. art. 2, and it operated under the administrative and operational supervision of the FPRY's Ministry of Foreign Trade. Id. art. 4.
On July 28, 1971, after the FPRY became the SFRY, a new law established the basic form and substance of SFRY agencies. See Law on Organizational Structure and Scope of Operations of Federal Administration Bodies and Federal Organizations, art. 1 (Act No. 1045/71) (July 28, 1971) (hereinafter referred to as the “Law on Agencies”). One such agency was the Federal Secretariat of National Defense. Id. arts. 3, 5. In 1974, the SFRY amended the Law on Agencies in several ways. See Act on the Amendment of the Act on the Organization and Scope of Functions of Federal Administrative Authorities and Federal Organizations (Act No. 21/74) (April 26, 1974) (hereinafter referred to as the “Amending Act”). Article 3 of the Amending Act set forth amendments pertaining to the SFRY Federal Secretariat of National Defense. One amendment merged Yugoimport into a new sub-agency known as the “Federal Directorate of Trade and Special Purpose Commodity Reserves” or the “Federal Office for Trading and Reserves of Special Purpose Goods” (the “Federal Office for Trading and Reserves”). See id. art. 3; Statute of the Public Enterprise “Jugoimport–SDPR,” art. 2 (FRY Gazette No. 89/9) (Jan. 27, 1997) (FRY) (describing the merger in 1974 of Yugoimport into the Federal Office for Trading and Reserves). The Amending Act further stated that the Federal Office for Trading and Reserves was “established within the Federal Secretariat of National Defense for the purpose of performing tasks associated with the sale and accumulation of commodity reserves ... for the national defense.” Amending Act, art. 3 (Act. No. 21/74). In other words, the Federal Office for Trading and Reserves was the SFRY's arms dealer.
In 1991, the SFRY reconstituted the Federal...
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