The Supreme Court issued its decision yesterday in Republic of Argentina v.  NML Capital, No. 12-842, holding that the Foreign Sovereign Immunities Act  (FSIA) does not limit the scope of discovery available to a judgment creditor  in post-judgment execution proceedings against a foreign sovereign.

As part of NML’s efforts to collect on various litigation judgments entered  against Argentina following its default on bond obligations, NML sought  discovery of Argentina’s assets around the world in an attempt to locate  Argentine property that might be subject to attachment and execution. Those  efforts included subpoenas served on Bank of America and Banco de la  Nacion Argentina, both of which had offices in New York. The subpoenas  generally sought information about Argentina’s accounts, balances,  transaction histories and funds transfers. Argentina and the banks sought  to quash the subpoenas, contending that they violated the FSIA by seeking  discovery of Argentina’s extraterritorial assets that were beyond the reach of  U.S. courts. The district court denied the motion to quash, and the Second  Circuit affirmed. Only Argentina sought review in the Supreme Court.

Justice Scalia, writing for a majority of seven justices, affirmed. The Court  held that the FSIA does not limit discovery in post-judgment execution  proceedings against a foreign sovereign. The core of Argentina’s argument  was that FSIA prohibits the execution or attachment of a foreign sovereign’s  property except in certain narrowly defined circumstances (e.g., the  sovereign’s commercial property in the United States). So, according to  Argentina, the FSIA must also limit discovery in aid of execution as to that  immune property—if a judgment creditor could not ultimately execute on  particular property, Argentina argued, it has no business seeking discovery  about it, as the discovery would not be “relevant.” But the Court pushed  aside that argument, relying on the FSIA’s plain language. The FSIA,  the Court observed, enacted a “comprehensive” set of legal standards  governing claims of immunity that is completely silent as to discovery in aid  of execution. What’s more, nothing in the FSIA’s text suggests that Congress  intended to confer absolute immunity to a foreign state’s extraterritorial  assets anywhere in the world: rather, the FSIA’s text immunizes only the  foreign state’s assets “in the United States” (subject to certain enumerated  exceptions); and the foreign state’s extraterritorial assets might well be  subject to attachment and execution under the laws of some other jurisdiction  where the property is located. 

To be sure, it may turn out that NML ultimately cannot  execute against certain extraterritorial property, but  the whole point of the subpoenas, the Court noted, is  that NML “does not yet know what property Argentina  has and where it is, let alone whether it is executable  under the relevant jurisdiction’s law.” In other words,  the decision whether Argentina’s extraterritorial  property may be subject to attachment or execution  under the laws of the relevant jurisdiction is a question  for another day. For now, NML may proceed with  discovery to find out where Argentina’s property is.  Finally, the court noted that if international-relations  concerns really were worrisome, Congress could jump  in and amend the FSIA accordingly.

One practical effect of the opinion, of course, is  that here NML can continue its efforts in the district  court to seek information about Argentina’s assets  around the world. It is not a foregone conclusion  that the opinion will open the floodgates for similar  discovery in other litigations, as the impact of the  decision could be limited by how it came to the  Supreme Court. Argentina, the opinion notes, waived  several arguments it might have made to resist the  subpoenas. For example (although perhaps only  because Argentina belatedly raised it in its reply  brief), the Court notes the question whether, even  in the ordinary case involving private litigants, the  federal rules permit a U.S. court to order discovery  about the judgment debtor’s assets outside the United  States courts’ jurisdiction. Argentina never made the  argument, so the Court assumed, without deciding  for now, that the courts had that power. Furthermore,  the Court emphasized that a district court always  retains discretion to limit discovery when, for example,  concerns of international comity or burdens on foreign  states might warrant. Argentina’s history of attempts  to avoid its judgments certainly did not do it any favors  on the equities. The decision, however, certainly  must be read as reaffirming the broad scope of postjudgment discovery in aid of enforcement, including  against foreign sovereigns.