On August 13, 2015, the U.S. District Court for the Southern District of New York found that the Republic of Argentina failed to comply with a post-judgment discovery order. The awarded sanctions are quite heavy: any property of the Republic of Argentina in the U.S. “is deemed to be used for commercial activity”.

The Foreign Sovereign Immunities Act (FSIA) limits execution against foreign governments to property used for commercial activities. With the recent order, the Judge shifted the burden of proof to the foreign State, which – in order to avoid execution – has to now demonstrate that a certain piece of property in the U.S. is not used for commercial activity. The case is particularly relevant to creditors trying to locate assets and enforce judgments against foreign sovereigns.

The order is one the most recent decision in a long dispute concerning Argentina’s default on its sovereign debt instruments in 2001. The Second Circuit issued several decisions. NML Capital, Ltd. v. Republic of Argentina, Case No. 08-cv-6978 (TPG), Doc. 456 (Aug. 13, 2015), is available here

For more information, Francesca Giannoni-Crystal