Walters v. INDUSTRIAL AND COMMERCIAL BANK OF CHINA
651 F.3d 280
2d Cir.2011Background
- Walters sought a turnover order under NY CPLR 5225(b) to collect a $10 million Missouri default judgment against the People’s Republic of China (PRC).
- Missouri court entered the default judgment in 1996 under FSIA exceptions for commercial activity and tort, against China itself, not its agencies.
- Walters registered the judgment in SDNY in 2009 and sought to restrain and reach assets of Chinese banks holding PRC assets.
- SDNY granted partial dismissal in 2010: assets outside the US and non-1610(a)(2) assets were dismissed with prejudice; within-1610(a)(2) assets could be pursued by a narrowly tailored petition.
- Walters appealed, arguing banks lacked standing, China waived immunity, petition satisfied FSIA, and assets of agencies/instrumentalities could be reached.
- Court affirmed dismissal, holding execution immunity can be raised sua sponte and that Walters failed to meet 1610(a)(2) and 1610(c) requirements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether banks have standing to raise execution immunity | Walters: Banks lack standing to invoke immunity for China. | Banks may assert execution immunity on PRC’s behalf; China’s absence not fatal. | Yes; immunity may be applied sua sponte to dismiss. |
| Whether China waived execution immunity via conduct or failure to appear | Walters: China’s conduct and silence waive immunity. | Waiver requires explicit/implicit intent; mere conduct or failure to appear is insufficient. | No waiver. |
| Whether petition satisfied §1610(a)(2) and §1610(c) | Walters: petition sufficient to reach 1610(a)(2) assets and court need not identify assets first. | Need explicit asset identification and applicable 1610(a)(2) connection before execution. | Petition not satisfied; dismissal without prejudice maintained. |
| Whether agencies/instrumentalities assets may be reached | Walters: PRC agencies/instrumentalities can be pursued under 1610(b). | Missouri judgment against China itself; no basis to pierce separate instrumentality status. | No; record shows no applicable 1610(b) waiver or instrumentality-based reach. |
| Whether FSIA immunity may be determined sua sponte without the foreign state's appearance | Walters argues need not rely on appearance; court can decide immunity. | FSIA permits sua sponte consideration of immunity issues. | Court may apply execution immunity sua sponte; no error in dismissal. |
Key Cases Cited
- Rubin v. Islamic Republic of Iran, 637 F.3d 783 (7th Cir. 2011) (execution immunity may be considered without sovereign appearance)
- De Letelier v. Republic of Chile, 748 F.2d 790 (2d Cir. 1984) (separate status of instrumentality; limits on execution against subsidiary assets)
- First City, Texas-Houston, N.A. v. Rafidain Bank, 281 F.3d 48 (2d Cir. 2002) (waiver/collection context in 1605 context; distinguish jurisdiction from execution)
- Republic of Philippines v. Marcos, 806 F.2d 344 (2d Cir. 1986) (immunity from jurisdiction not same as execution immunity; third-party standing concerns)
- Aurelius Capital Partners v. Republic of Argentina, 584 F.3d 120 (2d Cir. 2009) (execution immunity and asset location; 1610(a) requirements)
- EM Ltd. v. Republic of Argentina, 473 F.3d 463 (2d Cir. 2007) (agency/instrumentality immunity distinctions under FSIA)