The third case decided by the Supreme Court on Monday comes from litigation surrounding Argentina’s external debt default in 2001. The case is Republic of Argentina v. NML Capital, Ltd. (12-842). As Justice Scalia tells us, Argentina managed the crisis by swapping out some securities with others. This wasn’t the best deal debtors could get. They took it nonetheless as it meant getting something back from the bad investment. NML Capital, Ltd., a creditor holding some $2.5 billion is Argentinian debt, decided to sue instead. The case was heard in the Southern District of New York. Argentina waived immunity under the Foreign Sovereign Immunities Act of 1976 (FSIA). NML won 11 different judgments against Argentina.
The next step in the process for NML was to discover assets to satisfy the judgments. It issued subpoenas to non-party banks Bank of America and Banco de la Nación Argentina (there was a branch in New York City) for transactional information relating to Argentina’s property in the United States and elswhere. Argentina objected. The District Court refused to quash the motion and the Second Circuit affirmed.
The Supreme Court affirmed as well. The FSIA limits attachment to a foreign nation’s property that is used for commercial purposes. The laws of other countries may limit attachment in those jurisdictions as well. That, however, does not stop subpoenas or other asset discovery as there is a difference between what is attachable and what is discoverable. NML and the courts may make the distinction later on as proceedings require. FSIA makes no reference to discovery of post-judgment assets. As such, the proceedings are proper. Justice Scalia issued the opinion for the Court and was joined by Chief Justice Roberts, and Justices Kennedy, Thomas, Breyer, Alito, and Kagan. Justice Ginsburg filed a dissenting opinion. Justice Sotomayor did not take part in the case, presumably because she was a judge on the Second Circuit when the initial litigation was pending. Justice Ginsburg would limit the scope any order of discovery to attachable assets that are proven to be so.—Mark