Enforcement immunity
Domestic law
Describe your jurisdiction’s law governing the scope of enforcement immunity (ie, whether the property of a state may be subjected to any process for the enforcement of a judgment or arbitration award or, in an action in rem, for its arrest, detention or sale).
Section 1609 of the Foreign Sovereign Immunities Act of 1976 (FSIA) provides that ‘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’. Section 1610 establishes several exceptions to enforcement immunity, and section 1611 identifies certain types of property that are immune from execution, notwithstanding the exceptions to enforcement immunity in section 1610. Such property includes: the property of organisations that are ‘entitled to enjoy the privileges, exemptions, and immunities provided by the International Organizations Immunities Act’; property of a central bank ‘held for its own account’; and property used in connection with military activity.
The exceptions to enforcement immunity in section 1610 are somewhat similar to the exceptions to jurisdictional immunity under sections 1605 to 1607. Further, under the Supreme Court’s decision in Bancec a plaintiff may not execute on the property of an agency or instrumentality of a foreign state to satisfy a judgment against a foreign state, unless the plaintiff rebuts the presumption of separateness.
Application of civil procedure codes
When enforcing a judgment against a state in your jurisdiction, would debt collection statutes and the enforcement sections of domestic civil procedure codes or similar codes also apply (eg, debt or third-party debt orders, charging orders)?
Yes, to the extent enforcement immunity would not be applicable. Specifically, under the FSIA and the Federal Rules of Civil Procedure, state law governs the circumstances and manner of attachment and execution proceedings. When a foreign state is not protected by sovereign immunity, the foreign state shall be liable in the same manner and to the same extent as a private individual under like circumstances (see section 1606). In attachment and execution proceedings involving foreign states, the federal courts will generally apply Rule 69(a) of the Federal Rules of Civil Procedure, which states that execution procedures ‘must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies’. For example, in an action in which the judgment creditors had obtained default judgments awarding compensatory damages against Cuba, the award creditors sought turnover orders under Rules 13 and 69 of the Federal Rules of Civil Procedure and section 5225(b) of the New York CPLR against garnishees that held funds belonging to entities that allegedly were agencies and instrumentalities of Cuba (see Weininger v Castro, 462 F Supp 2d 457, 462 (SDNY 2006)).
Consent for further enforcement proceedings
Does a prior submission by the state to the jurisdiction of a court or tribunal constitute consent for any further enforcement proceedings against the property of the state?
Prior submission to the jurisdiction of a court or tribunal does not establish waiver or consent to further enforcement proceedings against state assets. Enforcement proceedings require a judgment against the state and a corresponding waiver of enforcement immunity under sections 1609 to 1611 for the property at issue. The FSIA provides, among other things, that a foreign state shall not be immune from execution or attachment if the ‘foreign state has waived its immunity from attachment in aid of execution or from execution either explicitly or by implication’ (section 1610(a)(1)) or when ‘judgment is based on an order confirming an arbitral award rendered against the foreign state, provided that attachment in aid of execution, or execution, would not be inconsistent with any provision in the arbitral agreement’ (section 1610(a)(6)).
Property or assets subject to enforcement or execution
Describe the property or assets that would typically be subject to enforcement or execution (e.g., property which is in use or intended for use for commercial purposes).
Where a plaintiff seeks to execute on the property of a foreign state, the property that would be subject to enforcement, execution and attachment would be property used for commercial activity in the United States, provided that one of the exceptions to enforcement immunity in section 1610(a) applies.
Where a plaintiff seeks to execute on the property of an agency or instrumentality of a foreign state, the property of the agency or instrumentality would be subject to enforcement, execution and attachment, provided that the agency or instrumentality is ‘engaged in commercial activity in the United States’ and one of the exceptions to enforcement immunity in section 1610(b) applies.
Additionally, where a judgment has been entered against a foreign state under section 1605A’s terrorism exception to immunity, section 1610(g) provides that the property of an agency or instrumentality of a foreign state is subject to attachment and execution to satisfy a judgment against the foreign state, regardless of the presumption of separateness set forth in Bancec. The Supreme Court explained in Rubin v Islamic Republic of Iran, that section 1610(g) identifies property available for attachment and execution but ‘it does not in itself divest property of immunity’ (138 Supreme Court 816, 820 (2018)). Instead, plaintiffs may only attach and execute against property after they have established the property is exempt from immunity under one of the exceptions to attachment immunity in section 1610.
Assets covered by enforcement immunity
Describe the property or assets that would normally be covered by enforcement immunity and give examples of any restrictive or broader interpretations of enforcement immunity adopted by the courts in your jurisdiction (eg, diplomatic premises, embassy accounts, ‘mixed’ embassy accounts).
Generally, property used for commercial activity in the United States or property of an agency or instrumentality of a foreign state that is engaged in commercial activity in the United States would be potentially exempted from enforcement immunity. For example, in Aurelius Capital Partners, LP v Republic of Argentina, the US Court of Appeals for the Second Circuit held that Argentinian social security funds were immune from attachment because those funds had not been used for any commercial activity whatsoever (see 584 F3d 120, 131 (2d Cir 2009)).
In addition, section 1610(a)(4)(B) provides that immovable property will not be subject to execution where it is ‘used for purposes of maintaining a diplomatic or consular mission or the residence of the Chief of such mission’. In Connecticut Bank of Commerce v Republic of Congo, the US Court of Appeals for the Fifth Circuit observed that in determining whether sovereign bank accounts are used for commercial activity in the United States, a court focuses ‘on how the money from the accounts was spent, not where it came from’ (309 F3d 240 No. 7 (5th Cir 2002)). In making this observation, the court referred to a District Court for the District of Columbia decision, which ‘held that bank accounts “utilized for the maintenance of the full facilities of Liberia to perform its diplomatic and consular functions . . . including payment of salaries and wages of diplomatic personnel and various ongoing expenses incurred in connection with diplomatic and consular activities” were not “used for” a commercial activity within the meaning of the FSIA’ (quoting Liberian Eastern Timber Corp v Republic of Liberia, 659 F Supp 606 (DDC 1987)).
Section 1611 of the FSIA further provides that, notwithstanding the exceptions to enforcement immunity in section 1610, certain property ‘shall not be subject to attachment’. This property includes: the property of organisations that are ‘entitled to enjoy the privileges, exemptions, and immunities provided by the International Organizations Immunities Act’; property of a central bank ‘held for its own account’; and property used in connection with military activity.
Explain whether the property or bank accounts of a central bank or other monetary authority of a state would be covered by enforcement immunity even when such property is in use or is intended for use for commercial purposes (eg, section 14(4) of the UK State Immunity Act; article 21(1)(c) UNCSI).
Under section 1611(b)(1), the property of a foreign state shall be immune from attachment and execution, if:
the property 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 from attachment in aid of execution, or from execution, notwithstanding any withdrawal of the waiver which the bank, authority or government may purport to effect except in accordance with the terms of the waiver.
For example, the US Court of Appeals for the Second Circuit held that funds deposited with Argentina’s central bank were immune from attachment and the ‘commercial activity’ exception to enforcement immunity in section 1610(a)(2) did not apply because the central bank used those funds for central banking purposes and therefore held the funds ‘for its own account’ (see NML Capital, Ltd v Banco Cent De La Republica Arg, 652 F3d 172 (2d Cir 2011) cert denied).
Test for enforcement
Explain whether domestic jurisprudence has developed any further test that must be satisfied before enforcement against a state is permitted (eg, the test applied in Switzerland according to which the legal relationship giving rise to the decision whose enforcement is sought must have a sufficiently close nexus to Switzerland).
A plaintiff must generally show that it has a judgment against a foreign state before enforcement against a foreign state is permitted. Then the plaintiff must apply to the court for an order under section 1610(c) establishing that ‘a reasonable period of time has elapsed following the entry of judgment and the giving of any notice required under section 1608(e)’ and, as such, the plaintiff should be permitted to begin enforcement proceedings. Once the plaintiff has identified potentially attachable property, it must establish that one of the exceptions to enforcement immunity applies to the property on which they seek to execute.
Service of arbitration award or judgment
How is a state served with process or otherwise notified before an arbitral award or judgment against it (or its organs and instrumentalities) may be enforced?
Process must be served on a state in accordance with section 1608 of the FSIA. In Mobile Cerro Negro, Limited v Bolivarian Republic of Venezuela, the US Court of Appeals for the Second Circuit held that because ‘actions to enforce [arbitral] awards against a foreign sovereign fall within the FSIA’s comprehensive scheme, plaintiffs pursuing such actions must satisfy the FSIA’s procedural requirements’, including the service of process requirements in section 1608(a) or (b) (863 F3d 96, 99 (2d Cir 2017)). In Crystallex International Corporation v Bolivarian Republic of Venezuela, the US Court of Appeals for the Third Circuit agreed that when a plaintiff files an action to confirm an arbitral award in the United States, the complaint for that action must be served in accordance with section 1608(a) or (b) (932 F3d 126 (3d Cir 2019)). Once a court enters a judgment in that action, however, the plaintiff may register the judgment in other US courts to enforce the judgment and need not serve the registration in accordance with section 1608(a) or (b) (Id at 137). Nevertheless, if the judgment confirming the arbitral award is a default judgment, it must be served in accordance with section 1608(a) or (b), and the requirements of section 1610(c) must be satisfied before enforcement may commence.
History of enforcement proceedings
Is there a history of enforcement proceedings against states in your jurisdiction? What portion of these proceedings is based on arbitral awards?
Yes, there is a long and ever-increasing line of cases relating to proceedings against states or state entities in the United States. A significant number of these proceedings are for the enforcement and execution of both commercial and investor-state awards.
Public databases
Are there any public databases in your jurisdiction through which property or assets held by states may be identified?
Yes, assets held by states may be identified by undertaking a variety of searches of public information, including, among others, searches on corporate registries or searches for real property through land registries (such as the office of the county tax assessor and the county recorder’s and registrar’s offices).
Court competency
Would a court in your jurisdiction be competent to assist with or otherwise intervene to help identify property or assets held by states in the territory?
In principle, yes (see section 1606), but discovery is subject to the limitations under section 1605(g)(1)(A), which applies in actions brought under the terrorism exceptions to immunity in sections 1605A and 1605B:
the court . . . shall stay any request, demand, or order for discovery on the United States that . . . would significantly interfere with a criminal investigation or prosecution, or a national security operation, related to the incident that gave rise to the cause of action, until such time as the Attorney General advises the court that such request, demand, or order will no longer so interfere.
