Export-Import Bank of Republic of China v. Grenada
2014 U.S. App. LEXIS 17943
| 2d Cir. | 2014Background
- Ex-Im Bank obtained a 2007 New York federal judgment for ≈$21M against Grenada on defaulted loans; FSIA limits attachment of sovereign property in the U.S. unless an exception (28 U.S.C. §1610) applies.
- Ex-Im Bank sought to attach two categories of funds in the U.S.: (1) the “Grynberg Funds” — ≈$300K Grenada recovered in an arbitration and deposited in the Southern District of New York; and (2) the “Restrained Funds” — ongoing payments (fees, taxes, charges) that airlines/cruise lines and IATA remit to several Grenadian statutory corporations (e.g., GAA) for use of ports/airports.
- District Court held both sets immune from attachment under §1610(a): the Grynberg Funds were not yet “used for commercial activity in the United States,” and the Restrained Funds were devoted to public functions in Grenada (not commercial use in the U.S.); it denied Ex-Im Bank post‑judgment discovery.
- The Grynberg Funds were later disbursed to Grenada (after a denied stay), prompting Ex-Im Bank’s appeal; the Restrained Funds (mostly) remain at issue.
- On appeal the Second Circuit: dismissed the Grynberg Funds issue as moot; affirmed immunity for the bulk of the Restrained Funds because they are used for public functions in Grenada; but vacated and remanded the denial of discovery limited to certain IATA/bond‑related funds because the record is insufficient to decide whether those funds are Grenadian property or are used for commercial activity in the U.S., and NML Capital allows broader post‑judgment discovery.
Issues
| Issue | Plaintiff's Argument (Ex‑Im Bank) | Defendant's Argument (Grenada/Statutory Corps) | Held |
|---|---|---|---|
| 1) Are the Grynberg Funds attachable under §1610(a)? | Funds were deposited in U.S. court and were designated for payment to Freshfields (U.S. commercial use), so attachable. | Funds are not subject to attachment or were not "used" in the U.S.; funds were later disbursed, mooting the issue. | Dismissed as moot: funds were disbursed; no live controversy. |
| 2) Are payments to Grenadian statutory corporations (Restrained Funds) "used for commercial activity in the United States"? | Fees/charges collected (e.g., airport usage, parking, baggage screening) are commercial in nature and thus attachable. | These payments fund public functions in Grenada (maintenance/regulation); they are not used for commercial activity in the U.S. | |
| Held: Majority of Restrained Funds are immune — not used for commercial activity in the U.S. | |||
| 3) Are the IATA‑remitted funds (IATA Funds) used to service GAA bonds attachable under Weltover? | IATA Funds may flow to bondholders (including U.S. holders) and thus could be "used for" commercial activity in the U.S.; Weltover treats sovereign bond transactions as commercial. | Record is too thin; IATA funds may not belong to Grenada or be used in the U.S.; payments may be foreign/public. | Vacated/Remanded: record inadequate to determine ownership/use; remand for discovery. |
| 4) Was the District Court’s denial of post‑judgment discovery an abuse of discretion? | Ex‑Im sought discovery about ownership/use of IATA funds and bond servicing; broad discovery is appropriate under NML Capital. | Discovery unnecessary because funds are immune; limited factual showing required. | Vacated as to bond‑related discovery: NML Capital authorizes broader post‑judgment discovery; remand to reconsider discovery request. |
Key Cases Cited
- Republic of Argentina v. NML Capital, Ltd., 134 S. Ct. 2250 (2014) (Supreme Court authorizing broad post‑judgment discovery re: sovereign assets)
- Republic of Argentina v. Weltover, Inc., 504 U.S. 607 (1992) (commercial‑activity inquiry focuses on nature of conduct; sovereign bond issuance can be commercial)
- Connecticut Bank of Commerce v. Republic of Congo, 309 F.3d 240 (5th Cir. 2002) (§1610(a) "used for" requires inquiry into how sovereign uses funds, not how funds were raised)
- Af‑Cap Inc. v. Chevron Overseas (Congo) Ltd., 475 F.3d 1080 (9th Cir. 2007) (adopts Fifth Circuit's "used for" reading of §1610(a))
- EM Ltd. v. Republic of Argentina, 695 F.3d 201 (2d Cir. 2012) (post‑judgment discovery in aid of execution may proceed even if assets later prove immune; affirmed by Supreme Court in NML)
- Samantar v. Yousuf, 560 U.S. 305 (2010) (background on common‑law sovereign immunity and FSIA's transfer of immunity determinations to courts)