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Sovereign immunity.

SECOND CIRCUIT FINDS THAT CLAUSES IN ARGENTINE OFFERING CIRCULARS FOR GOVERNMENT BONDS WAIVING SOVEREIGN IMMUNITY IN FRANKFURT AND BUENOS AIRES COURTS, AS WELL AS FOR ENFORCEMENT IN OTHER COURTS, ALSO WAIVED IMMUNITY UNDER FOREIGN SOVEREIGN IMMUNITIES ACT THUS SUPPORTING JURISDICTION OF U.S. COURT

Capital Ventures International (CVI) owns certain bonds issued by the Republic of Argentina. German law governs one group of bonds, denominated in German Marks and Euros (the German bonds). According to the offering circulars, Argentina submits to jurisdiction in Frankfurt, Germany, and in Buenos Aires, and waives any objection as to forum non conveniens. The prevailing party may enforce a final judgment in other jurisdictions as provided by law. The other group of bonds is listed in U.S. dollars.

In December 2001, Argentina declared a moratorium on its foreign debt and stopped paying. CVI reacted by accelerating the bonds it owned, making the principal due immediately. CVI filed this action in New York federal court in April 2005 . The district court gave summary judgment to CVI on the U.S. bonds. As for the German bonds, the court found that it lacked subject matter jurisdiction under the Foreign Sovereign Immunities Act, 28 U.S.C. [section][section] 1330(a), 1604 (FSIA). On these bonds, Argentina had tried to limit its waivers of sovereign immunity to the courts of Frankfurt and Buenos Aires.

CVI appealed. The U.S. Court of Appeals for the Second Circuit affirms in part and vacates in part.

The main question here is whether Argentina has explicitly waived its sovereign immunity from suit in the U.S. The FSIA is the statutory source for determining subject matter jurisdiction over any civil action against a foreign state. It preserves the traditional immunity of all foreign states unless a specific statutory exception applies. Section 1605 (a) (1) provides an exception to sovereign immunity where "the sovereign state has waived immunity either explicitly or by implication." The language in the offering circulars clearly waives Argentinas immunity.

"Argentina advances the argument that [section] 13(4), read in conjunction with [section] 13(3), merely allows for judgments obtained pursuant to [section] 13(3) to be enforced in other courts. However, the language of subsection 4 is not so limited. Subsection 4 refers to 'any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise),' language that contemplates actions other than those to enforce judgments."

"Further, subsection 3 ends with the provision that 'a final judgment in any such suit ... in the courts mentioned above ... may be enforced in other jurisdictions by suit on the judgment or any other method provided by law.' If the Republic's interpretation of subsection 4 were adopted, this last sentence in subsection 3 would render subsection 4 superfluous, a result that should be avoided. ... Further, if subsection 4 were intended to discuss enforcement in other jurisdictions, we would expect that the same terms in the last sentence of subsection 3 would be repeated in subsection 4--but they are not. Accordingly, we do not read [section] 13(4) as applying only to the enforcement of judgments."

"Argentina also argues that reading [section]13(4) as a waiver of sovereign immunity in any court renders subsection 3 superfluous, a result which, as just discussed, is disfavored. ... According to Argentina, under such a reading, Argentina has 'agree [d] to jurisdiction in Germany and Argentina in subsection 3 and also 'agree[d] to jurisdiction everywhere' in subsection 4. Of course, such an interpretation of [section]13(4) would render subsection 3 superfluous--but that is not what subsection 4 says. Subsection 4 is a waiver of Argentinas 'immunity (sovereign or otherwise),' but it does not waive other objections to suit that Argentina might have, such as objections based on lack of personal jurisdiction, improper venue, or forum non conveniens."

"Section 13(3), on the other hand, provides that Argentina 'submits to the non-exclusive jurisdiction' of the courts in Frankfurt and Buenos Aires as well as 'waives ... the defense of an inconvenient forum ... and any ... objection ... on the grounds of venue, residence or domicile.' It is thus clear that reading subsection 4 as a waiver of sovereign immunity in any court does not render subsection 3 superfluous."

"Argentina also presses the argument that the case law reveals a requirement that, to be explicit, a waiver must contain a reference to the United States or a specific jurisdiction within the United States. We do not find such a requirement in the cases. Of course, a specific reference to the United States can be helpful in determining that a waiver meets the FSIA's requirement of explicitness, ... but the statutory requirement is only that the waiver be 'explicit.' There can be explicit waivers without a reference to the United States, as the waiver of immunity in 'any court' in this case illustrates. ... Any other result would stray from the plain meaning of the statutory language." [294-5].

On the other hand, the Court finds that there is subject matter jurisdiction over the claims regarding the German bonds; Argentina had expressly waived its sovereign immunity in U.S. courts on those claims.

CITATION: Capital Ventures Int'l, Republic of Argentina, 552 F.3d 289 (2d Cir. 2009).
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Publication:International Law Update
Geographic Code:3ARGE
Date:Jan 1, 2009
Words:871
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