Case of the Day: Scheck v. Republic of Argentina revisited

In the case of the day from June 6, 2011, Scheck v. Republic of Argentina, the district court rejected a challenge by Argentina to service of process in an action to enforce a German judgment brought by unhappy investors in Argentina’s German bonds. Today’s case of the day brings the case to a conclusion (maybe). Having overcome the threshold service of process issue, the plaintiffs moved for summary judgment. The only substantive issue Argentina raised in its opposition to the motion was the plaintiffs’ failure to submit proof as to the award of costs relating to the German judgments. But the plaintiffs supplemented their briefs with copies of the award of costs,which Argentina apparently did not challenge. The court therefore granted the motion for summary judgment.

I just wrote that the decision “brings the case to a conclusion.” We’ll see whether that’s true. The long-suffering Schecks now have to collect. Presumably they hope to collect in the United States.  Under 28 U.S.C. § 1609:

 Subject to existing international agreements to which the United States is party at the time of the enactment of this Act the property in the United States of a foreign state shall be immune from attachment arrest and execution except as provided in sections 1610 and 1611 of this chapter.

There is, however, a statutory exception for property of a foreign state “used for a commercial activity in the United States” if “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)(1). The offering circulars here provided:

To the extent that the Republic has or hereafter may acquire any immunity (sovereign or otherwise) from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise), with respect to itself or its revenues, assets or properties, the Republic hereby irrevocably waives such immunity in respect of its obligations under the Bonds to the extent it is permitted to do so under applicable law.

But notwithstanding this exception, the property is nevertheless immune if it “is that of a foreign central bank or monetary authority held for its own account, unless such bank or authority, or its parent foreign government, has explicitly waived its immunity  attachment in aid of execution, or from execution …”   28 U.S.C. § 1611. We saw this central bank immunity in the case of the day from July 8, 2011, NML Capital Ltd. v. Argentina. So if the Schecks are hoping to chase the same accounts that NML Capital sought to chase, they will likely have trouble. Argentina appears to have waived its own immunity under § 1610, but not the Argentine Central Bank’s immunity under § 1611.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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