Republic of Argentina v. NML Capital, Ltd.
Headline: Allows creditors to seek a foreign government’s global bank records; Court rules the Foreign Sovereign Immunities Act does not bar postjudgment discovery, aiding bondholders hunting for assets abroad.
Holding: The Court held that the Foreign Sovereign Immunities Act does not immunize a foreign government from postjudgment discovery about its extraterritorial assets, so creditors may seek bank records to locate assets for execution.
- Allows creditors to subpoena banks for a foreign government's worldwide account records.
- Makes it easier for bondholders to search for assets abroad to satisfy judgments.
- Keeps district courts able to limit discovery for privilege, burden, or respect for other countries.
Summary
Background
A foreign government, Argentina, defaulted on external debt in 2001 and later restructured most bonds in 2005 and 2010. NML Capital, a bondholder that refused the swaps, won eleven judgments in New York federal court and is owed about $2.5 billion. To find assets to satisfy those judgments, NML served subpoenas on two nonparty banks in New York for account records and transfer information. The district court ordered the banks to comply; Argentina appealed, arguing the Foreign Sovereign Immunities Act (a federal law that sets when foreign states are protected from U.S. court actions) prevents discovery about assets abroad.
Reasoning
The Court framed the narrow question as whether the Act limits postjudgment discovery of a foreign state’s extraterritorial assets. It assumed federal discovery rules would otherwise allow such searches but held the FSIA contains no text that bars discovery of a foreign sovereign’s assets outside the United States. The Act grants execution immunity only for “property in the United States,” and it does not create a separate discovery immunity. The Court therefore affirmed the Second Circuit and allowed discovery to proceed, while noting the district court must still resolve disputes about particular materials and may apply ordinary discovery limits.
Real world impact
The decision lets creditors seek information from third-party banks about a foreign state's worldwide accounts to locate attachable assets. It does not automatically let creditors seize property that is immune, and standard limits—privileges, burdens, and respect between countries’ legal rules—remain applicable. The Court acknowledged international-relations concerns and suggested Congress could alter the law if broader protection was intended.
Dissents or concurrances
Justice Ginsburg dissented, arguing discovery should be limited to property used for commercial activity and to assets that could be executed under foreign-law standards.
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