TIG Ins. Co. v. Republic of Argentina

• Decision Date: 28 July 2020
• Docket Number: No. 19-7087,19-7087
• Citation: 967 F.3d 778
• Parties: TIG INSURANCE COMPANY, as successor by merger to International Insurance Company and International Surplus Line Insurance Company, Appellant v. REPUBLIC OF ARGENTINA, as successor to Caja Nacional De Ahorro y Seguro and Caja Nacional De Ahorro y Seguro, Appellees
• Court: U.S. Court of Appeals — District of Columbia Circuit

967 F.3d 778

TIG INSURANCE COMPANY, as successor by merger to International Insurance Company and International Surplus Line Insurance Company, Appellant

v.REPUBLIC OF ARGENTINA, as successor to Caja Nacional De Ahorro y Seguro and Caja Nacional De Ahorro y Seguro, Appellees

No. 19-7087

United States Court of Appeals, District of Columbia Circuit.

Argued May 13, 2020

Decided July 28, 2020

Mark N. Bravin, Washington, DC, argued the cause for appellant. With him on the briefs was Theresa B. Bowman, Washington, DC.

David A. Edelstein, Washington, DC, argued the cause for appellees. With him on the brief were Christopher Taggi and Charles M. Asmar, Washington, DC.

Before: Tatel and Pillard, Circuit Judges, and Sentelle, Senior Circuit Judge.

Pillard, Circuit Judge:

TIG Insurance Company sought to satisfy a long-pending judgment by attaching a building that the Republic of Argentina listed for sale in the District of Columbia. The Foreign Sovereign Immunities Act (FSIA) prevents parties from executing against the property of foreign states in the United States unless the property falls into one of the statute's enumerated exceptions. See 28 U.S.C. § 1609. A prerequisite common to those exceptions is that the property be "used for a commercial activity" in the United States. Id . § 1610(a). Three days after TIG filed its emergency motion for attachment-related relief and a writ of execution, Argentina removed the property from the market. The district court concluded that the property was immune from execution because Argentina's removal meant the property would not be "used for a commercial activity" at the time the court's writ would issue. TIG contends the district court erred in looking only to the use of the property at the time of its order. We hold that whether a property is "used for a commercial activity" depends on the totality of the circumstances existing when the motion for a writ of attachment is filed, not when the writ would issue. We accordingly vacate and remand for further proceedings consistent with this opinion.

BACKGROUND

Beginning in 1979, Argentina (through its predecessor-in-interest, a state-owned commercial insurance company called Caja Nacional) incurred debts under reinsurance contracts ultimately payable to TIG Insurance Corporation. First in 2000 (through its own predecessor-in-interest), and again in 2017, TIG sought and ultimately obtained commercial arbitral awards against Argentina for failure to pay under the reinsurance contracts. TIG confirmed those arbitral awards in the Northern District of Illinois in 2001 and 2018. Together, those awards are now worth more than $33 million. Despite the parties’ various efforts to reach a settlement over the last fifteen years, Argentina has yet to pay TIG any of the money owed.

In 2018, TIG learned that Argentina was planning to sell real estate in the District of Columbia. Several decades ago, Argentina used the property, located at 2136 R Street Northwest, to house both diplomats and commercial tenants. See NML Capital, Ltd. v. Republic of Argentina , No. 04-cv-0197 (CKK), 2005 WL 8161968, at *1, *4, *14 (D.D.C. Aug. 3, 2005). A creditor sought to attach the property in the early 2000s. Id . at *1. In the ensuing litigation, the district court noted that, "since 1997, the building has been uninhabited and in a state of disrepair with heavy restoration cost estimates." Id . at *4. The property remains uninhabited today; Argentina says that it still stores some diplomatic files there.

On September 25, 2018, after Argentina had received multiple offers to buy the property, TIG registered its judgments from the Northern District of Illinois in the District of the District of Columbia, see 28 U.S.C. § 1963, and simultaneously filed an omnibus motion for emergency relief, attachment-related relief, and a writ of execution on the property. Three days later—before the matter had even been assigned to a judge—Argentina took the property off the market. The district court then denied TIG's motion for emergency relief, concluding that "a property is immune from attachment unless it is ‘used for a commercial activity’ at the time a writ of attachment issues." TIG Ins. Co. v. Republic of Argentina , No. 18-mc-0129 (DLF), 2019 WL 3017618, at *1-2 (D.D.C. July 10, 2019) (quoting 28 U.S.C. § 1610(a) ). TIG timely appealed the district court's denial. Our review is de novo . See, e.g. , Bennett v. Islamic Republic of Iran , 618 F.3d 19, 21 (D.C. Cir. 2010) ; FG Hemisphere Assocs., LLC v. Republique du Congo , 455 F.3d 575, 583-84 (5th Cir. 2006).

ANALYSIS

A. Legal Framework

In enacting the FSIA, "Congress established ... a comprehensive framework for resolving any claim of sovereign immunity." Republic of Argentina v. NML Capital, Ltd. , 573 U.S. 134, 141, 134 S.Ct. 2250, 189 L.Ed.2d 234 (2014) (internal quotation marks omitted). That framework "confers on foreign states two kinds of immunity." Id . at 142, 134 S.Ct. 2250 ; see generally Walters v. Indus. & Comm. Bank of China, Ltd. , 651 F.3d 280, 286-89 (2d Cir. 2011). The first and more familiar is "jurisdictional immunity," according to which "a foreign state shall be immune from the jurisdiction of the courts of the United States ... except as provided in sections 1605 to 1607." 28 U.S.C. § 1604. The second is "execution immunity," which further protects foreign sovereigns by ensuring that, in the event of an adverse judgment, the sovereign's property in the United States "shall be immune from attachment[,] arrest[,] and execution except as provided in sections 1610 and 1611 of this chapter." Id . § 1609. To enforce an award against a foreign state in the United States, a party must therefore establish both that the foreign state is not immune from suit and that the property to be attached or executed against is not immune. Importantly, execution immunity is not itself jurisdictional—unlike jurisdictional immunity. See Weinstein v. Islamic Republic of Iran , 831 F.3d 470, 482 (D.C. Cir. 2016), abrogated on other grounds by Rubin v. Islamic Republic of Iran , ––– U.S. ––––, 138 S. Ct. 816, ––– L.Ed.2d –––– (2018). Execution immunity confers only a "default presumption" against execution against a foreign sovereign's U.S. property that the "judgment creditor must defeat at the outset." Id . (internal quotation marks omitted).

In suits involving the attachment of a foreign sovereign's property, section 1610(a) governs how that "default presumption" may be overcome. Creditors must satisfy the two general requirements outlined in the opening language of that section and fit their claim into one of the seven enumerated exceptions to the otherwise applicable immunity codified in section 1609. The two general requirements and the specific exception invoked in this case are as follows:

(a) The [1] property in the United States of a foreign state, as defined in section 1603(a) of this chapter, [2] used for a commercial activity in the United States, shall not be immune from attachment in aid of execution, or from execution, upon a judgment entered by a court of the United States or of a State after the effective date of this Act, if—

[...]

(6) the judgment is based on an order confirming an arbitral award rendered against the foreign state, provided that attachment in aid of execution, or execution, would not be inconsistent with any provision in the arbitral agreement[.]

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) (noting the two "statutory criteria" of § 1610(a) ).

The only issue before us is whether the second general requirement of section 1610(a) —that the property be "used for a commercial activity in the United States"—is met. The first requirement is satisfied because there is no dispute that the building at 2136 R Street NW is Argentinian property in the United States. And it is uncontested that at least one of the judgments confirming one of TIG's arbitration awards satisfies the sixth enumerated exception, allowing attachment where the movant relies on a "judgment ... based on an order confirming an arbitral award rendered against the foreign state." 28 U.S.C. § 1610(a). All we must decide is how a district court is to determine whether the property is one "used for a commercial activity" here.

As a preliminary matter, Argentina contends that we need not resolve even that narrow question because TIG has taken contrary positions in the district court and before this court, thereby forfeiting both the argument it made below and the one it now advances. See generally Argentina Br. 31-36. According to Argentina, TIG asked the district court to evaluate whether the property was "used for a commercial activity" at the time of filing, but now argues that the court should have examined the totality of the circumstances surrounding the property to make that determination.

We see no forfeiture here. TIG's arguments speak to different questions, both of which must be answered to resolve this case. First, at what moment in time should a district court assess whether a property is one "used for a commercial activity"? And, second, what circumstances should a district court examine to make that determination? As explained below, we agree with TIG on both counts: Courts should determine whether a property is "used for a commercial activity" based on the totality of circumstances at the time of filing.

B. District Courts Should Determine Whether a Property Is "Used for a Commercial Activity" at the Time of Filing

We begin with the question of timing. Argentina argues, and the district court agreed, that the phrase "used for a commercial activity" means that the property must "be in use for a commercial purpose at the time a writ of attachment and execution issues." Argentina Br. 9; see also TIG Ins. Co. , 2019 WL 3017618, at *2 (requiring ongoing use for a commercial purpose at the "moment that a court makes [its] immunity determination"). By...