Walker Intern. Holdings Ltd. v. Republic of Congo

• Decision Date: 22 December 2004
• Docket Number: No. 04-20301.,04-20301.
• Citation: 395 F.3d 229
• Parties: WALKER INTERNATIONAL HOLDINGS LIMITED, Plaintiff-Appellant, v. The REPUBLIC OF CONGO; Caisse Congolaise D'amortissement, Defendants-Appellees, and Murphy Exploration & Production Company International, Garnishee-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

395 F.3d 229

WALKER INTERNATIONAL HOLDINGS LIMITED, Plaintiff-Appellant, v. The REPUBLIC OF CONGO; Caisse Congolaise D'amortissement, Defendants-Appellees, and Murphy Exploration & Production Company International, Garnishee-Appellee.

No. 04-20301.

United States Court of Appeals, Fifth Circuit.

December 22, 2004.

COPYRIGHT MATERIAL OMITTED

Laura Metcoff Klaus, Sanford M. Saunders, Jr., C. Allen Foster (argued), Greenberg Traurig, Washington, DC, Jane M.N. Webre, Quentin Doug Sigel, Scott, Douglass & McConnico, Austin, TX, for Plaintiff-Appellant.

Stacey Michelle Keith, Akin Gump Strauss Hauer & Feld, Houston, TX, for Defendants-Appellees and for Garnishee-Appellee.

Michael K. Swan, James Stephen Barrick, Akin Gump Strauss Hauer & Feld, Houston, TX, Jerry E. Rothrock (argued), Akin Gump Strauss Hauer & Feld, Washington, DC, for Garnishee-Appellee.

Appeals from the United States District Court for the Southern District of Texas.

Before SMITH and GARZA, Circuit Judges, and VANCE^*, District Judge.

EMILIO M. GARZA, Circuit Judge:

The Republic of Congo ("ROC") refuses to pay a judgment it owes Walker International Holdings Limited ("Walker"). In an effort to collect its judgment, Walker filed a garnishment action against Murphy Exploration & Production, International ("Murphy"), which owed the ROC money. Walker appeals the district court's decision dismissing the action and vacating a temporary restraining order ("TRO") and writs of attachment and garnishment. We previously ordered a stay of the district court's order pending this appeal. Walker claims that under the Foreign Sovereign Immunities Act ("FSIA"), the property is attachable because it is "used for a commercial activity in the United States." We find that the district court correctly vacated the TRO, dissolved the writs of attachment and garnishment, and dismissed the action.

I

The ROC and Sadelmi Cogepi SpA ("Sadelmi"), an Italian company, entered into a contract for the construction of electric infrastructure in the ROC. Sadelmi completed the construction and the ROC defaulted on its payments. Walker purchased the debt from Sadelmi in an assignment agreement. Under the terms of the contract between Sadelmi and the ROC, Walker brought an arbitration proceeding before the International Chamber of Commerce ("ICC") in Paris, France. The ICC found that the ROC was liable to Walker. After French courts upheld the award, Walker registered the $26,093,251 award in the United States District Court for the District of Columbia.

Walker then filed a garnishment action in the Southern District of Texas against Murphy to obtain signing bonuses and other payments that Walker suspected Murphy owed the ROC and its national oil company, Societe Nationale des Petroles du Congo ("SNPC"). In addition, Walker filed a motion for a TRO to prevent Murphy from making any payments to the ROC or SNPC. Murphy filed motions to vacate the TRO, to dissolve writs of attachment and garnishment, and to dismiss. The magistrate judge granted these motions on the basis that the property was not "used for commercial activity" under the FSIA. Walker appealed, and this court upheld a stay pending appeal. Murphy paid the ROC its signing bonus payment and placed the equivalent, $6,360,000, into a surety bond which requires payment to Walker on "any final, non-appealable judgment that Walker ... obtains in [this] garnishment action...."

II

The parties first contend that three arguments determine the controversy without FSIA analysis. We find that these arguments lack merit. First, Murphy asserted in oral argument that the writ of garnishment was filed prematurely and, hence, there was nothing to attach. Murphy failed to brief this argument. Therefore, the argument is deemed waived. United States v. Thames, 214 F.3d 608, 612 n. 3 (5th Cir.2000).

Second, Walker argues that it is entitled to the surety bond because it is not the property of the ROC and, hence, the FSIA is inapplicable. Walker cites Flatow v. Islamic Republic of Iran, 74 F.Supp.2d 18 (D.D.C.1999), which ruled that property held by the United States as an award to Iran was property of the United States, and therefore not subject to attachment under the FSIA. In Flatow, the plaintiff sought to garnish U.S. Treasury funds earmarked for payment of Iran-United States Claims Tribunal awards. The court denied garnishment because "creditors may not attach funds held by the U.S. Treasury or its agents." Id. at 21. The court reasoned, "In other words, funds held in the U.S. Treasury — even though set aside or `earmarked' for a specific purpose — remain the property of the United States until the government elects to pay them to whom they are owed." Id. Here, Liberty Mutual Insurance Company, a private corporation which does not enjoy sovereign immunity, holds the surety bond. Therefore, the Flatow analysis is inapplicable.

Third, Walker claims that the bond requires payment to Walker on "any final, non-appealable judgment that Walker International Holdings Limited obtains in the garnishment action styled Walker International Holdings Limited v. The Republic of Congo, et al., Civil Action No. 03-CV-3497 (S.D.Tex.)." Walker argues that since there was a judgment, payment is required. Walker's argument fails because Civil Action No. 03-CV-3497 is, of course, on appeal here.

Walker also makes a standing argument: specifically, it argues that only the ROC has standing to raise the issue of the ROC's sovereign immunity. In response, Murphy contends that under Texas garnishment law, it had a duty to raise any known defenses of the judgment debtor. This and Walker's standing argument are irrelevant to the FSIA. Walker cites Princz v. Federal Republic of Germany, 26 F.3d 1166, 1171 (D.C.Cir.1994) ("It is the burden of the foreign sovereign in each case to establish its immunity by demonstrating that none of the exceptions is applicable."). Princz is irrelevant for our purposes. In Princz, the plaintiff sued the foreign sovereign directly; it was not a garnishment action involving an additional party. There was no need for the Princz court to make a distinction between the foreign sovereign and third parties.

Walker cites no authority and we were unable to find any authority for the proposition that it is the sovereign's exclusive right to raise the issue of sovereign immunity under the FSIA. In fact, the very language of the FSIA makes clear that the ROC's presence is irrelevant: "The property in the United States of a foreign state ... shall not be immune from attachment... if(1) the foreign state has waived its immunity ... either explicitly or by implication." 28 U.S.C. § 1610(a). The FSIA sets parameters in which property may be attached: "the court may order the attachment or execution only as `referred to in subsections (a) and (b).'" Conn. Bank of Commerce v. Republic of Congo, 309 F.3d 240, 250 (5th Cir.2002) (emphasis added). Neither 28 U.S.C. § 1610(a) nor (b) requires the presence of the foreign sovereign or gives the sovereign exclusive standing to raise the waiver element. Hence, we find no merit to Walker's standing argument and we need not address Murphy's response.

III

Finding the FSIA applicable, we turn to whether the ROC waived its sovereign immunity "either explicitly or by implication." 28 U.S.C. § 1610(a)(1). When a district court's decision involves mixed questions of law and fact, we review the factual findings for clear error, and legal conclusions and application of law to fact de novo. Af-Cap v. Republic of Congo, 383 F.3d 361, 368 (5th Cir.2004) reh'g granted, 389 F.3d 503 (per curiam).

The FSIA codifies the restrictive theory of foreign sovereign immunity and is the only basis for obtaining in personam jurisdiction over a foreign sovereign. In re B-727 Aircraft Serial No. 21010, 272 F.3d 264, 270 (5th Cir.2001). This statutory immunity is subject to several exceptions. The relevant provision states

The property in the United States of a foreign state, as defined in section 1603(a) of this chapter, 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 —

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

28 U.S.C. § 1610(a) (emphasis added). Therefore, a waiver of immunity only applies "against property that meets ... two statutory criteria," namely, that the property in question be "in the United States" and "used for commercial activity in the United States." Af-Cap, 383 F.3d at 365 (citations omitted).

A

Walker contends that the ROC waived its sovereign immunity explicitly in its contracts with Murphy. "An explicit waiver must be an intentional and knowing relinquishment of the legal right." Good v. Aramco Services Co., 971 F.Supp. 254, 258 (S.D.Tex.1997). In Atwood Turnkey Drilling, Inc. v. Petroleo Brasileiro, 875 F.2d 1174 (5th Cir.1989), we found that the national oil company of Brazil had waived its immunity in its financing agreement. The provision stated

The Borrower ... expressly and irrevocably waives any such right of immunity (including any immunity from the jurisdiction of any court or from any execution or attachment in aid of execution prior to judgment or otherwise) or claim thereto which may now or hereafter exist, and agrees not to assert any such right or claim in any such action or proceeding, whether in the United States or otherwise.

Id. at 1177. Similarly, the ROC signed an agreement that waives sovereign immunity defenses. The Production Sharing Contract states, "[t]he Congo hereby irrevocably renounces to claim any immunity during any procedure relating to any...