By Andrew C. Hall
The King cannot be sued without his consent. These famous words are no longer absolute. If this phrase were first coming into existence today, the more appropriate phrase would be, “another King cannot be sued without the consent of the King in whose nation the tribunal sits.”
Until 1976, the issue of sovereign immunity of a sovereign nation, or its agencies or instrumentalities, was left to the exclusive decision of the U.S. State Department. The rationale was that in disputes between nations, or between the citizens of one nation and another foreign nation, the matter should be left to a resolution employing diplomatic means and was inappropriate for resolution by the judiciary. After concluding that the United States was providing sovereign immunity routinely when most nations were not, Congress passed the Foreign Sovereign Immunities Act (FSIA) in 1976 that controls all questions in this area.
Under the FSIA, a foreign nation may be sued in the courts of the United States when a claim has accrued in the United States or has caused harm here, and involved any of the following: commercial activity; was in admiralty as part of commercial activity; tortious misconduct; the enforcement of an award in international arbitration; or, was brought by an American victim of terrorism.
Let us assume that you have filed a claim and recovered a judgment against a foreign nation. What do you do to collect? First, if the dispute involves commercial activity, the judgment may be executed against all property of the foreign nation used for the commercial activity in the United States. Typically, property falling in this category would include all property purchased by the foreign nation for export, not involving defense procurements, and would include food, fuels, machinery and deposits in American banks. The property expressly excluded from execution would be property of a foreign central bank or monetary authority held for its own account and military property.
The question remains how to proceed on collection. The most difficult part is identifying what property is available for execution. Foreign governments are not likely to comply with the standard discovery tools normally available. I recommend two places as the starting point. Most foreign nations rely upon the international banking system. Therefore, discovery directed towards large banks coupled with appropriate restraining orders can be effective. Alternatively, the securing of a large contract by a public company is widely publicized. Those assets, once purchased, or funds deposited for purchase are available for execution. Once the execution process begins, the actual procedure is governed by the state law for execution of the forum, regardless of whether the judgment is state or federal. Therefore, traditional writs as well as supplementary proceedings are available.
Victims of terrorism have some advantages and some disadvantages involving the execution process. The advantages are that the separateness of government-owned corporations may be ignored in favor of this category of judgment but not any other. Similarly, once a foreign state is designated a state sponsor of terrorism, all assets in the United States owned by that nation are frozen and controlled by the Office of the Foreign Assets Control. Even so, the process is time-consuming and can take years to collect. It requires diligence and perseverance almost on a daily basis.
One area that has been particularly helpful to clients of mine who were victims of state sponsored terrorism is airplanes. In the early 1970s Libya purchased five large cargo airplanes from Lockheed. The planes were assembled and delivered to Lockheed in Marietta, Georgia, for the installation of avionics. Shortly thereafter, Libya was declared to be a state sponsor of terrorism, its assets were frozen. These five airplanes remained in Georgia rotting away for the next 30 years. When Libya was about to come off the list of state sponsors of terrorism, we obtained a judgment in favor of two Americans who were tortured in Libya.
When Libya came off the list, it removed all cash previously frozen in US banks and boldly claimed that there were no assets available for execution. While Libya forgot its airplanes, we did not. U.S. marshals seized the airplanes in the Lockheed facility in Marietta. The threat of auctioning these aircrafts for scrap metal value was sufficient for Libya to offer an amount sufficient to satisfy the judgment.
But not all stories have happy endings. Last year we learned that Cuba was providing its presidential aircraft to the President of Venezuela for a trip from Venezuela to China and then to meetings at the United Nations during the week of September 23, 2013. While that airplane was owned by Cuba and being used by Venezuela, it did not qualify as property ancillary to the diplomatic missions of either nation. As a result, we requested the U.S. District Court in New York to issue a Writ of Attachment and it did. The U.S. Marshals Office, after verifying our right to execute through the Department of Justice and State Department, confirmed that it would attach the airplane as long as we had a hangar at JFK, security personnel and a ground pilot available. We made arrangements for all the above. But as the airplane was few hours from JFK there was a leak and Venezuelan president learned about our efforts. While en route over Canada he announced that he was cancelling his trip to the United States because the United States could not “protect him or assure his safety.” The State Department issued its own declaration stating that the cancellation was to avoid execution on this Cuban aircraft by victims of terrorism who had a judgment against Cuba.
While I would have preferred to have executed on the airplane, it still made a great story.
Andrew C. Hall is the founder and managing partner of Hall, Lamb and Hall, P.A., a Miami-based law firm specializing in complex corporate, business, and securities litigation. Hall can be reached at 2665 S. Bayshore Dr., PH 1 Miami, FL 33133 or (305) 374-5030 www.hlhlawfirm.com
South Florida Legal Guide 2014 Financial Edition