Republic of Argentina v. NML Capital, Ltd.

Background

A foreign government, Argentina, defaulted on external debt and restructured most bonds in 2005 and 2010. One creditor, a company called NML Capital, refused the swaps and won multiple U.S. judgments totaling about $2.5 billion. To find assets to satisfy those judgments, NML subpoenaed two banks in New York for account records and transfer information. Argentina objected, arguing the Foreign Sovereign Immunities Act (FSIA) barred discovery about its assets outside the United States. The District Court ordered production with some limits, and the Second Circuit affirmed.

Reasoning

The Court assumed for the case that ordinary postjudgment discovery rules could reach information about assets abroad, but the narrow question was whether the FSIA itself forbids that discovery. The Court explained that the FSIA creates a text-based immunity scheme and that its execution-immunity provision protects only “property in the United States.” The statute says nothing about postjudgment discovery. Because the FSIA does not contain a clear statement barring such discovery, the Court held the Act does not immunize a foreign sovereign from discovery about extraterritorial assets.

Real world impact

The decision allows U.S. judgment creditors to use subpoenas served here to seek information about a foreign state's assets abroad, making it easier to locate possible attachment targets. The ruling does not itself authorize attachment in other countries and leaves diplomatic and comity concerns to the political branches.

Dissents or concurrances

Justice Ginsburg dissented, arguing discovery should be limited to property used for commercial activity consistent with the FSIA's execution exceptions.