Billions in bonds

Shutterstock_161391038You have a $2.5 billion judgment in a U.S. court against Argentina on bonds it defaulted on, but you have a problem. You can't find assets in the U.S. to satisfy the judgment. The pesky Argentines keep all of their seizable valuables overseas.

Can you get help from the U.S. court?

The U.S. Supreme Court today confirmed that principles of sovereign immunity do not prevent the court from giving you broad discovery about Argentina's assets in foreign lands.

No sovereign immunity from discovery

Argentina cited the penumbras and emanations of the Foreign Sovereign Immunities Act of 1976 as grounds for blocking the post-judgment discovery requests of NML, which owned Argentine bonds. It thus sought to prevent NML from getting documents and information out of the New York branches of two foreign banks. While acknowledging that the FSIA grants immunity to some assets of a foreign sovereign, the 7-1 Court gave the extra-textual arguments about immunity from discovery about assets the back of its judicial hand (unsurprisingly in view of the fact that Justice Antonin Scalia wrote the majority opinion).

The Court also dismissed Argentina's worries that the discovery would relate to assets that NML may ultimately prove unable to seize. The Court said:

[NML's subpoenas] ask for information about Argentina’s worldwide assets generally, so that NML can identify where Argentina may be holding property that is subject to execution. To be sure, that request is bound to turn up information about property that Argentina regards as immune. But NML may think the same property not immune. In which case, Argentina’s self-serving legal assertion will not automatically prevail; the District Court will have to settle the matter.

Republic of Argentina v. NML Capital, Ltd., No. 12-842, slip op. at 10 (U.S. June 16, 2014) (emphasis in original).