- All U.S. and many non-U.S. jurisdictions allow some form of pre-judgment attachment of assets at the outset of a lawsuit.
Practice Tip: An order of attachment generally is applicable only to assets within the jurisdiction of the Court issuing the order. Therefore, it is prudent to investigate the location of an adversary’s assets when choosing a forum for litigation.
- U.S. Pre-Judgment Attachment
- The requirements for attachment generally are governed by state law.
- Federal courts apply attachment law of the state in which they sit, regardless of the basis for the federal court’s jurisdiction (i.e. even in non-diversity cases). Fed. R. Civ. P. 69(a).
- Using New York law as an example, pre-judgment attachment is available under New York CPLR 6201 if the plaintiff can show:
Note: NY CPLR 6201 provides additional grounds for attachment that are not relevant to cross-border disputes.
- A claim for monetary damages that exceeds all known counterclaims;
- A likelihood of success on the merits of the claim; and
- Reason for attachment, namely:
- Defendant is not domiciled in and resides outside of the state;
- Defendant is a foreign (i.e., non-New York) corporation not qualified to do business in the state;
Practice Tip: These extra-jurisdictional bases for attachment may immediately raise questions of personal jurisdiction, which must be separately established. Shaffer v. Heitner, 433 U.S. 186 (1977). Counsel should separately analyze and be prepared to establish a basis for personal jurisdiction over the defendant and may want to include such basis in papers seeking attachment.
- Defendant is disposing, assigning, or secreting assets to avoid its creditors or a judgment, or is about to do such things; OR
- Plaintiff is seeking enforcement of a foreign judgment entitled to recognition. See NY CPLR 6201.
- Ex Parte Nature: An order of attachments may be sought on an ex parte basis or upon notice. See, e.g., NY CPLR 6211. If sought ex parte, the attaching party will be required promptly (i.e. within five days after levying on the assets) to give notice to the defendant and seek an order confirming the attachment.
- Special case of non-U.S. sovereigns and instrumentalities.
- As explained in detail in Chapter 9 of this Guide, U.S. courts have jurisdiction under the Foreign Sovereign Immunity Act (“FSIA”) over certain claims against foreign sovereign states, as well as the “agencies or instrumentalities” of such sovereigns, including majority state-owned private businesses.
- In addition to certain other restrictions on such claims, the FSIA provides certain immunities from or limitations on the attachment of the assets of a foreign sovereign or sovereign agencies and instrumentalities.
- Sovereign State Assets: The assets of a non-U.S. state are immune from attachment unless (a) the assets are used for a “commercial activity in the United States” and (b) the non-U.S. state has expressly waived immunity from pre-judgment attachment and “the purpose of the attachment is to secure satisfaction of a judgment that has been or may ultimately be entered against the foreign state, and not to obtain jurisdiction.” 28 U.S.C. § 1610(d).
In EM Ltd. v. Republic of Argentina, 473 F.3d 463 (2d Cir. 2007), the Second Circuit held that participation in IMF loans and repayment of such loans is not “commercial activity” because the IMF and IMF loans are essentially governmental and not commercial in nature. Compare Republic of Argentina v. Weltover, 504 U.S. 607 (1992) (issuance of commercial debt by sovereign constitutes “commercial activity” for purposes of FSIA).
- Assets of an Agency or Instrumentality: The assets of an agency or instrumentality of a non-U.S. state are not immune from pre-judgment attachment (although they enjoy limited immunity for attachment in aid of execution of judgment and from execution of judgment itself (28 U.S.C. § 1610)).
- International Organizations Immunities: Even if assets of a non-U.S. state otherwise can be attached, no order of attachment can “impede the disbursement of funds” to or on order of a non-U.S. state from an “International Organization” (such as the U.N.) that has been designed by the President under the International Organizations Immunities Act. 28 U.S.C. § 1611(a).
- Central Bank Funds: Even if assets of a non-U.S. state otherwise can be attached, the property of a non-U.S. central bank or monetary authority “held for its own account” cannot be attached absent an explicit waiver. 28 U.S.C. § 1611(b)(1). At least one court has held that funds continued to be “held for” the central bank’s own account where the non-U.S. state (Argentina) had issued a decree that central bank funds would be used to repay multi-lateral debt (IMF), but Argentina had not specifically designated the funds in question (held in the Federal Reserve Bank of New York) for use in repayment. EM Ltd. v. Republic of Argentina, 473 F.3d 463 (2d Cir. 2007).
- Military Property: Even if assets of a non-U.S. state otherwise can be attached, property that is or is intended to be used for military purposes cannot be attached if it is “military in nature” OR “under the control of a military authority or defense agency.” 28 U.S.C. § 1611(b)(2). show: