Proskauer Rose International Practice Guide Proskauer Rose LLP |
      Proskauer on International Litigation and Arbitration:
       Managing, Resolving, and Avoiding Cross-Border Business or Regulatory Disputes
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  1. 28 U.S.C. § 1609 provides that the property of a foreign state is immune from “attachment arrest and execution” except as provided under 28 U.S.C. §§ 1610-1611.
  2. Exceptions for property “used for commercial activity” in the U.S. under certain conditions.
    1. Generally, only post-judgment attachment is permitted. 28 U.S.C. § 1610(d).
    2. Pre-judgment attachment requires an express waiver to this effect AND a showing that the attachment is to secure satisfaction of later judgment, not to obtain jurisdiction.
    3. Thus, again, express waivers should be considered in drafting agreements and stipulations.
  3. As a practical matter, the exceptions to immunity that permitted jurisdiction over the claims against the foreign state also will permit attachment and execution against the state’s property. See 28 U.S.C. § 1608(a) (seven exceptions paralleling exceptions to immunity from jurisdiction under § 1605).
  4. Different rules again for foreign state v. agency or instrumentality.
  5. Foreign State
    1. Waiver: an express or implied waiver of immunity from execution. This is not necessarily the same as waiver of immunity from suit and, therefore, it would be prudent to include express waivers of immunity from execution in any agreements or stipulations.
    2. Commercial activity: no immunity for property used as part of the relevant commercial activity.
    3. Expropriation: the execution “relates” to a judgment concerning property taken in violation of international law.
    4. Gifts/Real Property: the execution “relates” to a judgment establishing inheritance rights and the like or rights in real property in the U.S. (except for diplomatic or consular missions or the residence of the chief of such mission).
    5. Insurance: “the property consists of any contractual obligation or any proceeds from such a contractual obligation to indemnify or hold harmless the foreign state or its employees under a policy of automobile or other liability or casualty insurance covering the claim which merged into the judgment.”
    6. Arbitration award: where the judgment concerns confirmation of an arbitration award against the state and the execution is not inconsistent with the arbitration agreement.
    7. Torture: The judgment relates to a claim of torture, etc. for which there is no immunity under § 1605(a)(7).
  6. Agencies or instrumentalities
    1. Fewer restrictions on execution and attachment.
    2. Same waiver exception as above.
    3. Regardless of whether the property was used in the underlying claim, no immunity from execution of judgment on a claim as to which any of the following exceptions to immunity applied:
      1. Commercial activity
      2. Expropriation
      3. Non-commercial torts
      4. Torture, etc.
  7. Practice Tip: To avoid later disputes in the collection stage, it may be advisable to seek rulings early in the case establishing all applicable exceptions to immunity.
  8. Timing: No execution or attachment until court finds that there has been “reasonable period of time” for the defendant to pay the judgment or on proof of an effort to evade judgment. 28 U.S.C. § 1610(c). Prudence would recommend that counsel document post-judgment collection efforts to demonstrate at the earliest opportunity that execution and attachment is appropriate.
  9. Exceptions for certain property: Section 1611 renders certain property immune from attachment and execution notwithstanding the provisions of § 1610. These include:
    1. Property of central banks (unless there has been an express waiver)
    2. Military property
  10. Organizations designated by the President under the International Organizations Immunity Act (e.g. Inter-American Development Bank).

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