Case of the Day: Chabad v. Russian Federation

We return today to the case of the day from July 29, 2011, Agudas Chasidei Chabad v. Russian Federation. The case involves an effort by Chabad, the ultra-orthodox Jewish movement, to recover possession of its library and archives from the Russian state.

In 2010, after the entry of the default judgment, the judge had ordered Russia to “surrender to the United States Embassy in Moscow or to the duly appointed representatives of … Chabad … the complete collection.” Russia had failed to comply. Before embarking on sanctions for contempt of court, the judge ordered Chabad to serve its order on Russia under the FSIA. In the earlier decision, the judge held that service of the order on Russia was sufficient under the FSIA, and that Chabad could therefore proceed to try to enforce the judgment, leaving open whatever arguments Russian had on the immunity of its assets from execution or attachment. The issue of contempt then came before the court. The judge initially found that he had the authority to impose contempt sanctions on Russia, but the United States then asserted, on Russia’s behalf, that the court lacked the power to impose sanctions on Russia under the FSIA. Today’s decision, then, was the judge’s reconsideration of his earlier decision in light of the US government’s position.

In FG Hemisphere Assocs. v. Dem. Rep. of the Congo, 637 F.3d 373 (D.C. Cir. 2011), the DC Circuit held that the courts have the power to sanction foreign sovereigns for contempt. The United States sought to distinguish the Congo case on the grounds that Congo involved a failure to obey a discovery order, whereas the Chabad case involved a failure to obey an order essentially granting the plaintiff final relief. The judge saw no sound distinction. In both cases, the point is that even if the FSIA has something to say about whether a plaintiff can enforce a contempt sanction, it has nothing to say about whether the court has the power simply to issue the sanction. That is, even if it is ultimately impossible to collect the monetary contempt sanction imposed on Russia, nothing in the FSIA, according to the judge, forbids him from declaring Russia in contempt and imposing the sanction.

Having made this point, the judge imposed a sanction of $50,000 per day. But future litigation is certain if and when Chabad seeks to enforce the sanction.

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.

2 thoughts on “Case of the Day: Chabad v. Russian Federation

  1. Not mentioned in any of the various posts is that Chabad first sued in the Russian Courts in Moscow, and won every decision and appeal all the way to the Supreme Commercial Court, only to be thwarted by the politicians. Also not mentioned is that several Russian Presidents promised US Presidents the books would be returned to Chabad HQ in the US, only to go back on their word. It was only after all this, as a last resort, that Chabad sued in US courts. At the start Russia argued the US courts had no jurisdiction. They lost that argument (as was proper under US law when a Foreign State engages in commercial activity in the US, as was proven). The Russians then picked up their marbles and went home, rather than continue in US court—kinda like little kids that lost an argument. The US federal court then found for Chabad.

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