FSIA Does Not Abrogate Court’s Inherent Power to Impose Contempt Sanctions on Foreign Sovereign (Circuit Split) — Enforcement May Be Another Matter — Views of U.S. Government on FSIA Entitled to No Deference

From FG Hemisphere Assocs., LLC v. Democratic Republic of Congo, 2011 U.S. App. LEXIS 5012 (D.C. Cir. Mar. 15, 2011):

This case, once pared down, is really less than meets the eye. To be sure, we encounter for the first time a contempt sanction imposed on a foreign sovereign in a proceeding brought under the Foreign Sovereign Immunities Act ("FSIA"). But there has been as yet no attempt to enforce the sanction (which could prove problematic).

FG Hemisphere's predecessor-in-interest *** brought suit against the Democratic Republic of Congo ("DRC") under a provision of the FSIA permitting a plaintiff to confirm an arbitration award secured against a foreign sovereign. Following entry of a default judgment, and after the DRC began participating in the litigation, the district court sanctioned the DRC for failing to respond to court-ordered discovery. The DRC, supported by the United States as amicus, argues that such contempt sanctions are unavailable under the FSIA, and, in any event, are an abuse of discretion. We disagree. ***

The FSIA is a rather unusual statute that explicitly contemplates that a court may have jurisdiction over an action against a foreign state and yet be unable to enforce its judgment unless the foreign state holds certain kinds of property subject to execution. *** Otherwise a plaintiff must rely on the government's diplomatic efforts, or a foreign sovereign's generosity, to satisfy a judgment. Therefore, it is not anomalous to divide, as Hemisphere does, the question of a court's power to impose sanctions from the question of a court's ability to enforce that judgment through execution. Hemisphere's contention that whether the court can enforce its contempt sanction is irrelevant to the availability of a contempt order is consistent with the statutory scheme. ***

As the Seventh Circuit has recognized, there is not a smidgen of indication in the text of the FSIA that Congress intended to limit a federal court's inherent contempt power. Autotech Techs. v. Integral Research & Dev., 499 F.3d 737, 744 (7th Cir. 2007). Nor is there any legislative history supporting such a claim. Indeed, the House Report to the FSIA demonstrates that Congress kept in place a court's normal discovery apparatus in FSIA proceedings. See H.R. Rep. No. 94-1487, at 23 (1976) ("The bill does not attempt to deal with questions of discovery. Existing law appears to be adequate in this area."). And the same report illustrates that Congress specifically contemplated that contempt sanctions would be available under the FSIA as a remedy for discovery violations:

[If] a private plaintiff sought the production of sensitive governmental documents of a foreign state, concepts of governmental privilege would apply. Or if a plaintiff sought to depose a diplomat in the United States or a high-ranking official of a foreign government, diplomatic and official immunity would apply. However, appropriate remedies would be available under Rule 37, F.R. Civ. P., for an unjustifiable failure to make discovery. ***

The government points only to the testimony of a State Department deputy legal advisor asserting that although the FSIA does not "explicitly preclud[e] a court from imposing a fine on a foreign state [for] failure to comply with a court order," the legislative history of the statute "suggests" that such sanctions would be unavailable. [Citation omitted.] But this statement seems to us to be more a wish than an interpretation — the legislative history supports precisely the opposite proposition. Paradoxically, the deputy legal advisor took a different position a year earlier, urging Congress to limit the availability of contempt sanctions against foreign states. ***

To be sure, the Fifth Circuit in Af-Cap Inc., upon which the government and the DRC heavily rely, held that a contempt order requiring the Republic of Congo to pay money into the court's registry and send its business associates notice of an outstanding judgment was inconsistent with the FSIA. The court concluded that "[sections 1610 and 1611 of the FSIA] describe the available methods of attachment and execution against property of foreign states. Monetary sanctions are not included." Af-Cap, 462 F.3d at 428. Although the Seventh Circuit in Autotech distinguished Af-Cap on the grounds that the Fifth Circuit did not purport to decide the antecedent "power" question, i.e. whether the statute precluded the contempt order, see Autotech Techs., 499 F.3d at 745, it does seem to us that the Fifth Circuit accepted the government's litigating effort to conflate the power to impose a contempt sanction with the authority to enforce it (as we noted, the government apparently filed a similarly confusing brief in that case). In any event, since the Fifth Circuit never considered the distinction between the two types of orders, we do not regard its decision as persuasive. We agree with the Seventh Circuit that contempt sanctions against a foreign sovereign are available under the FSIA.

Footnote 2. The government requests that we give deference to its conclusion that the FSIA does not permit a court to enforce a contempt sanction. But that is not the issue before us, and in any event, the request for deference is doctrinally unsound. Although the views of the United States on the meaning of FSIA "are of considerable interest . . ., they merit no special deference." Republic of Austria v. Altmann, 541 U.S. 677, 701 (2004). ***

We hold today only that the FSIA does not abrogate a court's inherent power to impose contempt sanctions on a foreign sovereign, and that the district court did not abuse its discretion in doing so here.

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