Argentina v. NML Capital, Ltd.

PETITIONER: Republic of Argentina
LOCATION: Banco de la Nación Argentina

DOCKET NO.: 12-842
DECIDED BY: Roberts Court (2010-2016)

CITATION: 573 US (2014)
GRANTED: Jan 10, 2014
ARGUED: Apr 21, 2014
DECIDED: Jun 16, 2014

Facts of the case

During an economic crisis in 2001, the Republic of Argentina (Argentina) failed to make payments on bonds owned by foreign investors. One such bondholder, NML Capital, Ltd. (NML), later prevailed in several actions it filed against Argentina in federal district court, which entered judgments totaling more than US$2 billion in NML's favor. In order to execute the judgments against Argentina, NML served subpoenas on two banks requesting information about Argentina's assets held worldwide. Argentina moved to quash the subpoenas and argued that they violate the Foreign Sovereign Immunities Act (FSIA) by requiring the disclosure of assets that are immune from collection by NML. The district court ordered the banks to comply with the subpoena requests. The U.S. Court of Appeals for the Second Circuit affirmed, reasoning that the FSIA did not apply to the subpoena because it was a discovery order directed at commercial entities that did not have a claim to sovereign immunity.


Does a subpoena that requires a bank to disclose information about all assets of a foreign state, without respect to their location or use, violate the Foreign Sovereign Immunities Act?

Media for Argentina v. NML Capital, Ltd.

Audio Transcription for Oral Argument - April 21, 2014 in Argentina v. NML Capital, Ltd.

Audio Transcription for Opinion Announcement - June 16, 2014 in Argentina v. NML Capital, Ltd.

Justice Scalia has our opinion in case 12-842, the Republic of Argentina versus NML Capital.

This case is here on writ of certiorari to the United States Court of Appeals for the Second Circuit.

In 2001, petitioner here, the Republic of Argentina defaulted on its foreign held debt.

In 2005 and 2010, it restructured most of the debt by offering creditors new less favorable securities to swap out for the defaulted ones.

Most bond holders went along but the respondent here, NML Capital did not.

Instead, it filed 11 actions to recover on its investment and prevailed in all them, acquiring judgments totaling around $2.5 billion.

Since Argentina has refused to pay those judgments, NML has tried to execute them against Argentine property.

NML's most recent move, the subject of this appeal was to subpoena two New York banks where Argentina maintains accounts.

Generally, the subpoenas seek the sort of information that would allow NML to learn how Argentina moves its assets through New York and around the world and accurately identify the places and times when those assets might subject to attachment and execution.

Argentina and the banks subjected to the subpoenas, but the District Court compelled compliance.

Only Argentina appealed arguing that the District Court's Discovery Order transgressed the Foreign Sovereign Immunities Act of 1976.

The Second Circuit affirmed.

We granted certiorari and today we affirm.

We begin by assuming without deciding what the Second Circuit took for granted and what the government conceded here at oral argument.

In the ordinary case, a District Court would have the discretion under the federal rules to permit discovery of third-party information bearing on a judgment debtor's extraterritorial assets.

Argentina has not preserved an argument to the contrary.

Therefore, the single narrow question before us is whether the Foreign Sovereign Immunities Act specifies a different rule when the judgment debtor is a foreign state.

It does not.

The FSIA replaced an executive driven factor-intensive, loosely common-law-based immunity regime with what we have repeatedly called “A comprehensive framework for resolving any claim of sovereign immunity.”

In the post FSIA world, any sort of immunity defense made by a foreign sovereign in an American court must stand or fall on the Act's text.

The Act confers on foreign states two kinds of immunity.

The first, jurisdictional immunity was waived by Argentina when it executed the bonds that are sued upon here.

The second, what our opinion calls execution immunity, generally shields property in the United States of a foreign state from attachment, arrest, and execution, and that's basically it.

The Act has no third provision forbidding or limiting discovery in aid of execution of a foreign-sovereign judgment debtor's extraterritorial assets.

Far from containing the plain statement necessary to preclude application of federal discovery rules, the Act says not a word about post judgment discovery in aid of execution.

Argentina would have us draw meaning from that silence, but its argument fails on its own terms.

Even if Argentina were correct that FSIA execution immunity implies coextensive discovery in aid of execution immunity, the latter would not shield from discovery a foreign-sovereign's extraterritorial assets since the Act's main execution provision, a main execution immunity provision immunizes only foreign state property in the United States, but what a foreign state property that would enjoy execution immunity under the Act such as Argentina's military property.

Argentina argues generally that if a judgment creditor could not ultimately execute a judgment against certain property, then it has no business pursuing discovery of information pertaining to that property.

But the reason for these subpoenas is that NML does not yet know what property Argentina has and where it is, let alone whether it is subject to execution under the relevant jurisdiction's law.

The subpoenas may turn up information about property that Argentina regards as immune, but that NML thinks is subject to execution, in which case, Argentina's self-serving legal assertion will not automatically prevail.