Case of the Day: Delizia Ltd. v. Eritrea

The case of the day, Delizia Ltd. v. Eritrea (S.D.N.Y. 2012), is a short, fun decision. Delizia had a contract to sell $12 million dollars of equipment to the Eritrean Ministry of Defense. The Ministry stopped making payments. The contract had an agreement to arbitrate, so Delizia commenced an arbitration in Sweden. Eritrea did not participate in the arbitration, and an award entered in Delizia’s favor.

Delizia sought confirmation of the award. Eritrea defaulted, and the judge entered a default judgment against it. Delizia owned a commercial condominium unit in New York City (one of the tenants was the Marshall Islands’ permanent mission to the United Nations). Delizia sought to attach the Marshall Islands mission’s rent payments to Eritrea. Although Eritrea did not oppose Delizia’s request, the judge denied it on the grounds that Delizia had failed to comply with 28 U.S.C. § 1608(a), which requires service of a copy of a default judgment on the foreign state, because 22 C.F.R. § 93.2(e) requires that a copy of the FSIA itself be served with the default judgment. According to the clerk’s certificate of mailing, only the default judgment itself, not a copy of the statute, was served.

The judge also suggested that if Delizia did properly serve the default judgment on Eritrea and renewed its motion, it might run into difficulties because of the Vienna Convention, which, some courts have held, makes rental payments as immune from execution before they are deposited into the foreign state’s bank account as they are after they are deposited.

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