__ U.S. __ (2014), 12-842, Republic of Argentina v. NML Capital, Ltd.

Docket Nº:12-842
Citation:__ U.S. __, 134 S.Ct. 2250, 189 L.Ed.2d 234, 82 U.S.L.W. 4485
Opinion Judge:Scalia Justice
Party Name:Republic of Argentina, Petitioner v. NML Capital, Ltd
Attorney:Jonathan I. Blackman argued the cause for petitioner. Edwin S. Kneedler argued the cause for the United States, as amicus curiae, by special leave of court. Theodore B. Olson argued the cause for respondent.
Judge Panel:SCALIA, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, THOMAS, BREYER, ALITO, and KAGAN, JJ., joined. GINSBURG, J., filed a dissenting opinion. SOTOMAYOR, J., took no part in the decision of the case. JUSTICE SOTOMAYOR JUSTICE GINSBURG, dissenting.
Case Date:June 16, 2014
Court:United States Supreme Court

Page __

__ U.S. __ (2014)

134 S.Ct. 2250, 189 L.Ed.2d 234, 82 U.S.L.W. 4485

Republic of Argentina, Petitioner

v.

NML Capital, Ltd

No. 12-842

United States Supreme Court

June 16, 2014

Argued April 21, 2014

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

Affirmed.

SYLLABUS

[134 S.Ct. 2251] After petitioner, Republic of Argentina, defaulted on its external debt, respondent, NML Capital, Ltd. (NML), one of Argentina's bondholders, prevailed in 11 debt-collection actions that it brought against Argentina in the Southern District of New York. In aid of executing the judgments, NML sought discovery of Argentina's property, serving subpoenas on two nonparty banks for records relating to Argentina's global financial transactions. The District Court granted NML's motions to compel compliance. The Second Circuit affirmed, rejecting Argentina's argument that the District Court's order transgressed the Foreign Sovereign Immunities Act of 1976 (FSIA or Act).

[134 S.Ct. 2252] Held : No provision in the FSIA immunizes a foreign-sovereign judgment debtor from postjudgment discovery of information concerning its extraterritorial assets. Pp. 4-12.

(a) This Court assumes without deciding that, in the ordinary case, a district court would have the discretion under Federal Rule of Civil Procedure 69(a)(2) to permit discovery of third-party information bearing on a judgment debtor's extraterritorial assets. Pp. 4-5.

(b) The FSIA replaced an executive-driven, factor-intensive, loosely common-law-based immunity regime with " a comprehensive framework for resolving any claim of sovereign immunity." Republic of Austria v. Altmann, 541 U.S. 677, 699, 124 S.Ct. 2240, 159 L.Ed.2d 1. Henceforth, any sort of immunity defense made by a foreign sovereign in an American court must stand or fall on the Act's text. The Act confers on foreign states two kinds of immunity. The first, jurisdictional immunity (28 U.S.C. § 1604), was waived here. The second, execution immunity, generally shields " property in the United States of a foreign state" from attachment, arrest, and execution. § § 1609, 1610. See also § 1611(a), (b)(1), (b)(2). The Act has no third provision forbidding or limiting discovery in aid of execution of a foreign-sovereign judgment debtor's assets. Far from containing the " plain statement" necessary to preclude application of federal discovery rules, Societe Nationale Industrielle Aerospatiale v. United States Dist. Court for Southern Dist. of Iowa, 482 U.S. 522, 539, 107 S.Ct. 2542, 96 L.Ed.2d 461, the Act says not a word about postjudgment discovery in aid of execution.

Argentina's arguments are unavailing. Even if Argentina were correct that § 1609 execution immunity implies coextensive discovery-in-aid-of-execution immunity, the latter would not shield from discovery a foreign sovereign's extraterritorial assets, since the text of § 1609 immunizes only foreign-state property " in the United States." The prospect that NML's general request for information about Argentina's worldwide assets may turn up information about property that Argentina regards as immune does not mean that NML cannot pursue discovery of it. Pp. 5-10.

695 F.3d 201, affirmed.

Jonathan I. Blackman argued the cause for petitioner.

Edwin S. Kneedler argued the cause for the United States, as amicus curiae, by special leave of court.

Theodore B. Olson argued the cause for respondent.

SCALIA, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, THOMAS, BREYER, ALITO, and KAGAN, JJ., joined. GINSBURG, J., filed a dissenting opinion. SOTOMAYOR, J., took no part in the decision of the case.

OPINION

[134 S.Ct. 2253] Scalia Justice

We must decide whether the Foreign Sovereign Immunities Act of 1976 (FSIA or Act), 28 U.S.C. § § 1330, 1602 et seq., limits the scope of discovery available to a judgment creditor in a federal postjudgment execution proceeding against a foreign sovereign.

I. Background

In 2001, petitioner, Republic of Argentina, defaulted on its external debt. In 2005 and 2010, it restructured most of that debt by offering creditors new securities (with less favorable terms) to swap out for the defaulted ones. Most bondholders went along. Respondent, NML Capital, Ltd. (NML), among others, did not.

NML brought 11 actions against Argentina in the Southern District of New York to collect on its debt, and prevailed in every one. 1 It is owed around $2.5 billion, which Argentina has not paid. Having been unable to collect on its judgments from Argentina, NML has attempted to execute them against Argentina's property. That postjudgment litigation " has involved lengthy attachment proceedings before the district court and multiple appeals." EM Ltd . v. Republic of Argentina, 695 F.3d 201, 203, and n. 2 (CA2 2012) (referring the reader to prior opinions " [f]or additional background on Argentina's default and the resulting litigation" ).

Since 2003, NML has pursued discovery of Argentina's property. In 2010, " '[i]n order to locate Argentina's assets and accounts, learn how Argentina moves its 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 (whether under [United States law] or the law of foreign jurisdictions),'" id., at 203 (quoting NML brief), NML served subpoenas on two nonparty banks, Bank of America (BOA) and Banco de la Nacion Argentina (BNA), an Argentinian bank with a branch in New York City. For the most part, the two subpoenas target the same kinds of information: documents relating to accounts maintained by or on behalf of Argentina, documents identifying the opening and closing dates of Argentina's accounts, current balances, transaction histories, records of electronic fund transfers, debts owed by the bank to Argentina, transfers in and out of Argentina's accounts, and information about transferors and transferees.

Argentina, joined by BOA, moved to quash the BOA subpoena. NML moved to compel compliance but, before the court ruled, agreed to narrow its subpoenas by excluding the names of some Argentine officials from the initial electronic-fund-transfer message search. NML also agreed to treat as confidential any documents that the banks so designated.

The District Court denied the motion to quash and granted the motions to compel. Approving the subpoenas in principle, it concluded that extraterritorial asset discovery did not offend Argentina's sovereign [134 S.Ct. 2254] immunity, and it reaffirmed that it would serve as a " clearinghouse for information" in NML's efforts to find and attach Argentina's assets. App. to Pet. for Cert. 31. But the court made clear that it expected the parties to negotiate further over specific production requests, which, the court said, must include " some reasonable definition of the information being sought." Id., at 32. There was no point, for instance, in " getting information about something that might lead to attachment in Argentina because that would be useless information," since no Argentinian court would allow attachment. Ibid. " Thus, the district court . . . sought to limit the subpoenas to discovery that was reasonably calculated to lead to attachable property." 695 F.3d, at 204-205.

NML and BOA later negotiated additional changes to the BOA subpoena. NML expressed its willingness to narrow its requests from BNA as well, but BNA neither engaged in negotiation nor complied with the subpoena.

Only Argentina appealed, arguing that the court's order transgressed the Foreign Sovereign Immunities Act because it permitted discovery of Argentina's extraterritorial assets. The Second Circuit affirmed, holding that " because the Discovery Order involves discovery, not attachment of sovereign property, and because it is directed at third-party banks, not at Argentina itself, Argentina's sovereign immunity is not infringed." Id., at 205.

We granted certiorari. 571 U.S. ___, 134 S.Ct. 895; 187 L.Ed.2d 701 (2014).

II. Analysis

A

The rules governing discovery in postjudgment execution proceedings are quite permissive. Federal Rule of Civil Procedure 69(a)(2) states that, " [i]n aid of the judgment or execution, the judgment creditor . . . may obtain discovery from any person--including the judgment debtor--as provided in the rules or by the procedure of the state where the court is located." See 12 C. Wright, A. Miller, & R. Marcus, Federal Practice and Procedure § 3014, p. 160 (2d ed. 1997) (hereinafter Wright & Miller) (court " may use the discovery devices provided in [the federal rules] or may obtain discovery in the manner provided by the practice of the state in which the district court is held" ). The general rule in the federal system is that, subject to the district court's discretion, " [p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense." Fed. Rule Civ. Proc. 26(b)(1). And New York law entitles judgment creditors to discover " all matter relevant to the satisfaction of [a] judgment," N.Y. Civ. Prac. Law Ann. § 5223 (West 1997), permitting " investigation [of] any person shown to have any light to shed on the subject of the judgment debtor's assets or their whereabouts," D. Siegel, New York Practice § 509, p. 891 (5th ed. 2011).

The meaning of those rules was much discussed at oral argument. What if the assets targeted by the discovery request are beyond the jurisdictional reach of the court to which the request is made? May the court nonetheless permit discovery so long as the judgment creditor shows that the assets are recoverable under the laws of the jurisdictions in which they reside, whether that be Florida or France? We need not take up those issues today, since Argentina has not put them in contention. In the Court of Appeals, Argentina's only asserted ground for objection to the...

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