WASHINGTON (CN) - Argentina failed Monday to persuade the Supreme Court that it has immunity from a discovery order aimed at enforcing a judgment against it.
NML Capital had filed 11 federal lawsuits in Manhattan against the republic after Argentina defaulted on its government debt in 2001.
The Cayman Island hedge fund eventually won judgments totaling about $2.5 billion with interest, and the 2nd Circuit created a circuit split in supporting NML's effort to enforce those judgments by ordering two banks to release information about assets Argentina owns outside the United States.
The Supreme Court sided against Argentina, 7-1, on Monday, finding no reason to limit
post-judgment discovery to assets in the United States under the Foreign Sovereign Immunities Act.
Assuming that the District Court would have been within its discretion to order the discovery from third-party banks about a judgment debtor's assets located outside the United States "in a run-of-the-mill execution proceeding," this case asks only "whether the Foreign Sovereign Immunities Act specifies a different rule when the judgment debtor is a foreign state," the 16-page opinion states.
Writing for the majority, Justice Antonin Scalia said Argentina "founders with each step" of its argument.
"To begin with, Argentina cites no case holding that, before the act, a foreign state's extraterritorial assets enjoyed absolute execution immunity in United States courts," he wrote. "No surprise there. Our courts generally lack authority in the first place to execute against property in other countries, so how could the question ever have arisen?
Scalia also emphasized that NML is in this predicament because it "does not yet know
what property Argentina has and where it is, let alone whether it is executable under the relevant jurisdiction's law." (Emphasis in original.)
"To be sure, that request is bound to turn up information about property that Argentina regards as immune," he added. "But NML may think the same property not
immune. In which case, Argentina's self-serving legal assertion will not automatically prevail; the District Court will have to settle the matter."
Justice Ruth Bader Ginsburg wrote in dissent that NML's discovery should have been limited "to property used here or abroad 'in connection with ... commercial activities."
"A court in the United States has no warrant to indulge the assumption that, outside our country, the sky may be the limit for attaching a foreign sovereign's property in order to execute a U. S. judgment against the foreign sovereign," the brief opinion states. "Without proof of any kind that other nations broadly expose a foreign sovereign's property to arrest, attachment or execution, a more modest assumption is in order.
"Unless and until the judgment debtor, here, NML, proves that other nations would allow unconstrained access to Argentina's assets, I would be guided by the one law we know for sure - our own. That guide is all the more appropriate, as our law coincides with the international norm."
Justice Sonia Sotomayor took no part in the decision of the case, but
By ruling narrowly, the court declined to address whether FISA, as adopted by the 1976 Congress, "really ... meant not to protect foreign states from postjudgment discovery 'clearinghouses.'"
Though Argentina and the United States warned that affirming the lower court would bring "worrisome international-relations consequences," Scalia said "these apprehensions are better directed to that branch of government with authority to amend the act - which, as it happens, is the same branch that forced our retirement from the immunity-by-factor-balancing business nearly 40 years ago."