Republic of Argentina v. NML Capital, Ltd.
Republic of Argentina v. NML Capital, Ltd., 573 U.S. 134 (2014), is a U.S. Supreme Court opinion regarding foreign sovereign immunity. After defaulting on its debt and losing a federal collection action, Argentina claimed that its foreign assets were immune from discovery. The Court found that no such immunity existed. On the same day as it announced this opinion the Supreme Court denied Argentina's appeal of a court order prohibiting Argentina from giving preference to certain creditors. This was the third case involving Argentina that term, with BG Group Plc v. Republic of Argentina involving Argentina's refusal to obey a neutral arbitrator's order and Daimler AG v. Bauman involving atrocities committed by the Argentinian military junta during its Dirty War. Background In 2001 Argentina was in a severe economic depression. NML Capital, a 'vulture fund' that specializes in distressed sovereign debt, purchased Argentine public bonds at extreme discounts off a panicking market. Argentina then defaulted on $103 billion of debt. After announcing that it would not pay its debts Argentina offered its creditors a choice: accept new bonds worth 70% less, or receive nothing. The vast majority of bondholders accepted the new bonds. NML Capital did not. Instead, NML Capital brought a collection action against Argentina in Manhattan federal district court. Finding that Argentina did have to pay its debt, District Judge Thomas Griesa ordered Argentina to pay plaintiff $2.4 billion and, pari passu, to stop favoring other creditors over NML Capital. Argentina responded by pulling its assets out of the United States. Seeking to satisfy the judgment order, NML Capital undertook a worldwide search for Argentina's assets, at one point convincing Ghana to seize the Argentine Navy's and forcing Argentina's president to charter private airplanes to avoid having her state aircraft confiscated. As part of its search for attachable assets NML Capital served subpoenas on Bank of America and Banco de la Nación Argentina. Argentina moved to quash, claiming that as a sovereign the locations of its assets were immune from discovery. Judge Griesa disagreed, ordering discovery on all assets "reasonably calculated to lead to attachable property." On Argentina's appeal the Second Circuit affirmed the discovery order. Still refusing to comply, Argentina then petitioned for a writ of certiorari from the Supreme Court of the United States, and the petition was granted. Arguments were held on April 21, 2014, with Deputy Solicitor General Edwin Kneedler appearing as an friend supporting Argentina and Theodore Olson appearing for the hedge funds. Opinion The Supreme Court affirmed, with Justice Scalia writing for the seven member majority. Scalia first traces the history of foreign sovereign immunity in the United States, from initially undisturbed Executive discretion, to the "muddling" noncommercial acts distinction the State Department adopted in 1952, to Congress's creation of the "comprehensive " Foreign Sovereign Immunities Act of 1976. Scalia then turns to the statute's text finding the FSIA does not expressly address post judgment discovery. Argentina claimed that there is "meaning from this silence ", and since discovery is not expressly