08-5621-cv
Aurelius Capital Partners v. The Republic of Argentina


                   UNITED STATES COURT OF APPEALS

                        FOR THE SECOND CIRCUIT

                            August Term, 2008

(Argued: May 11, 2009                       Decided: October 15, 2009)

Docket No. 08-5621-cv(L),08-5619-cv (con), 08-5620-cv (con),
08-5622-cv (con), 08-5623-cv (con), 08-5624-cv(xap), 08-5626-
cv(con), 08-5630-cv-(con), 08-5691-cv(con), 08-5692-cv(con),
08-5693-cv(con), 08-5694-cv(con), 08-5695-cv-(con), 08-5696-
cv(con), 08-5697-cv(con), 08-5698-cv-(con), 08-5699-cv(con),
08-5700-cv(con), 08-5701-cv(con), 08-5702-cv(con), 08-5703-
cv(con), 08-5705-cv(con), 08-5708-cv(con), 08-5709-cv(con),
08-5710-cv(con), 08-5711-cv(con), 08-5712-cv(con), 08-5713-
cv(con), 08-5714-cv(con), 08-5723-cv(con), 08-5726-cv(con),
08-5727-cv(con), 08-5729-cv(con), 08-5730-cv(con), 08-5731-
cv(con), 08-5734-cv(con), 08-5735-cv(con), 08-5737-cv(con),
08-5738-cv(con), 08-5740-cv(con), 08-5741-cv(con), 08-5744-
cv(con), 08-5746-cv(con), 08-5747-cv(con), 08-5748-cv (con),
08-5749-cv(con), 08-5750-cv(con), 08-5751-cv(con), 08-5753-
cv(con), 08-5754-cv(con), 08-5755-cv(con), 08-5756-cv(con),
08-5757-cv(con), 08-5758-cv(con),08-5759-cv(con), 08-5760-
cv(con), 08-5761-cv(con), 08-5762-cv(con), 08-5769-cv(con),
08-5771-cv(con), 08-5774-cv(con), 08-5775-cv(con), 08-5776-
cv(con), 08-5778-cv(con), 08-5779-cv(con), 08-5780-cv(con),
08-5782-cv(xap), 08-5783-cv(con), 08-5790-cv(con), 08-5792-
cv(con), 08-5793-cv(con), 08-5794-cv (con), 08-5796-cv(con),
08-5799-cv(con), 08-5800-cv(con), 08-5802-cv(con), 08-5803-
cv(con), 08-5807-cv(con), 08-5808-cv(con), 08-5811-cv(con),
08-5817-cv(con), 08-5821-cv(con), 08-5825-cv(con), 08-5829-
cv(con) 08-5869-cv(con), 08-5870-cv(con), 08-5872-cv(con), 08-
5885-cv(con),08-5910-cv(con),08-5913-cv(con), 08-5981-cv(con),
08-6133-cv(con), 08-6135-cv(con), 08-6136-cv(xap), 08-6137-
cv(con), 08-6138-cv(con), 08-6242-cv(con), 08-6243-cv(con),
08-6249-cv(con), 08-6250-cv(con), 08-6251-cv(con), 08-6252-
cv(con), 08-6253-cv(con), 08-6254-cv(con), 08-6255-cv(con),
08-6256-cv(con), 08-6257-cv(con), 08-6260-cv(con), 08-6261-
cv(con), 08-6269-cv(con), 08-6270-cv(con), 09-0151-cv(con),
09-0155-cv(con), 09-0158-cv(con), 09-0160-cv(con), 09-0161-
cv(con), 09-0163-cv(con), 09-0164-cv(con), 09-0165-cv(con),
09-0525-cv(con), 09-0803-cv (con), 09-0812-cv (con).
- - - - - - - - - - - - - - - - - - - -x

A URELIUS C APITAL P ARTNERS, LP, et al.,

                  Plaintiffs-Appellees,

            - v.-

T HE R EPUBLIC OF A RGENTINA,

                  Defendant-Appellant,

A RAUCA B IT AFJP S.A., et al.,

                  Interested-Non-Party Appellants,

A DMINISTRACIÓN N ACIONAL DE S EGURIDAD S OCIAL,

                  Interested-Non-Party-Appellant.

- - - - - - - - - - - - - - - - - - - -x


      Before:           WALKER and WALLACE, * Circuit Judges. **

      The Republic of Argentina appeals from the district

court’s orders of attachment and execution entered in late

2008 over Argentine social security funds, which under

proposed Argentine legislation were to be transferred to the


      *
       The Honorable J. Clifford Wallace, United States
Court of Appeals for the Ninth Circuit, sitting by
designation.
      **
       The Honorable Sonia Sotomayor, originally a member
of the panel, was elevated to the Supreme Court on August 8,
2009. The two remaining members of the panel, who are in
agreement, have determined the matter. See 28 U.S.C.
§ 46(d); Local Rule 0.14(b); United States v. Desimone, 140
F.3d 457 (2d Cir. 1998).

                                       2
Administración Nacional de Seguridad Social (the

Administration), an Argentine governmental entity.      The

orders were confirmed in the district court’s opinion and

order dated December 11, 2008, immediately after the

legislation transferring the funds to the Administration

became effective.   We reverse the decision of the district

court and vacate the orders.

    J ONATHAN I. B LACKMAN, Cleary Gottlieb Steen & Hamilton
    LLP (Carmine D. Boccuzzi, Christopher P. Moore,
    Rahul Muhki, Benjamine J. A. Sauter, and Michael
    J. Byars, on the brief), New York, New York, for
    Defendant-Appellee-Cross-Appellant Republic of
    Argentina.

    M ARCO E. S CHNABL, Skadden, Arps, Slate, Meagher &
    Flom LLP (Lauren E. Aguiar, Timothy G. Nelson, and
    Sarah E. McCallum, on the brief), New York, New
    York, for Non-Party Appellant Administración
    Nacional de Seguridad Social.

    B ARRY R. O STRAGER, Simpson, Thacher & Bartlett LLP
    (Tyler B. Robinson and David Elbaum, on the
    brief), New York, New York, for Plaintiffs-
    Appellees Aurelius Capital Partners, LP, Aurelius
    Capital Master, Ltd. and Blue Angel Capital I LLC.

    D AVID D UNN, Hogan & Hartson LLP, New York, New York,
    for Plaintiffs-Appellees GMO Emerging Country Debt
    L.P., GMO Emerging Country Debt Investment Fund
    PLC, GMO Emerging Country Debt Fund, and Teachers
    Insurance and Annuity Association of America.

    T HEODORE B. O LSON, Gibson, Dunn & Crutcher LLP
    (Matthew D. McGill and Jason J. Mendro, Gibson,
    Dunn & Crutcher LLP, Robert A. Cohen and Dennis H.
    Hranitzky, Dechert LLP, and David W. Rivkin, John


                               3
    B. Missing, and Suzanne M. Grosso, Debevoise &
    Plimpton LLP, on the brief), New York, New York,
    for Plaintiffs-Appellees NML Capital, Ltd. and EM
    Ltd.

J. CLIFFORD WALLACE, Senior Circuit Judge:

    The Republic of Argentina (Republic) appeals from the

district court’s orders of attachment and execution (Thomas

P. Griesa, Judge) entered in late 2008 over Argentine social

security funds, which under proposed Argentine legislation

were to be transferred to the Administración Nacional de

Seguridad Social (the Administration).   The orders were

confirmed in the district court’s opinion and order dated

December 11, 2008, immediately after the legislation

transferring the funds to the Administration became

effective.   The district court had jurisdiction pursuant to

28 U.S.C. § 1330.   We have jurisdiction over the appeal from

the district court’s December 11, 2008 order and opinion

pursuant to 28 U.S.C. § 1291, and we have jurisdiction over

the restraining orders, orders of attachment and writs of

execution pursuant to 28 U.S.C. § 1292(a)(1) and the

collateral order doctrine described in Cohen v. Beneficial

Industrial Loan Corp., 337 U.S. 541, 546-47 (1949).    Because

we conclude that the funds were immune from attachment under

the Foreign Sovereign Immunities Act (Act), 28 U.S.C. §§

                              4
1602-1611, we reverse the decision of the district court and

vacate its orders.

                             I

    In 2001, the Republic defaulted on payments on debt

instruments issued to bondholders.   In connection with the

issuance of the Argentine bonds, the Republic had agreed to

a waiver of sovereign immunity.   As a result of the default,

many bondholders, including the majority of the plaintiffs

in this case, obtained judgments against the Republic.

Since the judgments against the Republic were entered, the

bondholders have attempted to recover on the judgments.

Most of these attempts have been unsuccessful “because they

concerned property that was immune from execution under the

[Act] or property that did not belong to the Republic.”     See

Br. of Def.-Appellant Republic of Argentina at 4-5, citing,

inter alia, Capital Ventures Int’l v. Republic of Argentina,

280 F. App’x 14, 15 (2d Cir. 2008) and EM Ltd. v. Republic

of Argentina, 473 F.3d 463, 475-76 (2d Cir. 2007).

    On October 21, 2008, the President of the Republic

announced that private pension funds, held and managed on

behalf of Argentine workers and pensioners, would be

transferred to the Administration.   This appeal stems from


                             5
certain judgment holders’ attempts to execute upon some of

those funds in order to satisfy their judgments.     Before

describing the proceedings in the district court whereby the

plaintiffs attempted to execute against the pension funds,

background on the Administration and the private pension

funds is necessary.

     The Argentine constitution requires that the government

provide social security benefits to its citizens.     Const. of

the Argentine Nation, First Part, Ch. 1, § 14bis, available

at

http://www.argentina.gov.ar/argentina/portal/documentos/cons

titucion_ingles.pdf (requiring that “[t]he State shall grant

the benefits of social security, which shall be of an

integral nature and may not be waived”).     In 1991, the

Republic adopted a decree creating a unified social security

system, known as the “Distribution System.”     Later that

year, the Administration was established for the purpose of

administering the Distribution System.     The Administration

also administered other programs, including welfare and

unemployment benefits.   In 1993, the Argentine government

reformed the pension system to create a hybrid regime that

allowed Argentine workers and pensioners to choose between


                              6
the Distribution System and a new private plan, the

“Capitalization System.”   Under the Capitalization System,

workers made contributions to individual accounts managed by

private corporations, which administered the retirement and

pension funds and provided payments and benefits due to the

pensioners in exchange for management fees.   By law, the

assets in the funds were only to be used to provide social

security benefits, and the private corporations did not have

property rights in the funds’ assets.   Some of the funds

were held in New York, where the private corporations

invested the funds to grow for the benefit of the

pensioners.

    Dissatisfied with the Capitalization System, in 2007,

the Argentine Congress passed a law that allowed

Capitalization System participants to switch back to the

Distribution System.   In order to facilitate this

transition, the Argentine Congress passed a decree

establishing the Sustainability Guarantee Fund (Guarantee

Fund), which received the social security funds transferred

from the Capitalization System and was managed by the

Administration.   The law establishing the Guarantee Fund




                              7
provided that its assets could be used only to provide

social security benefits to qualifying participants.

    Then, on October 21, 2008, proposed legislation was

introduced in the Argentine legislature requiring the

reunification of the bifurcated social security system.    The

proposed legislation required all of the assets in the

Capitalization System to be transferred to the Guarantee

Fund.   The proposed legislation also reaffirmed that assets

in the Guarantee Fund may only be used to provide social

security benefits for Argentine pensioners.

    On October 29, 2008, the district court signed an Order

to Show Cause in three of the cases brought by Aurelius

Capital Partners and Blue Angel Capital against the Republic

based on defaulted bonds.   The Order to Show Cause set for

hearing a motion to authorize the United States Marshals

Service to serve a writ of execution covering the retirement

and pension funds, and related property located in New York

and belonging to the Republic, the Administration, and the

private corporations holding the funds under the

Capitalization System.   Although the plaintiffs in the three

initial cases moved for relief only against the Republic and

did not name either the Administration or the private


                              8
corporations as parties, the district court nevertheless

authorized the plaintiffs to make immediate service of

restraining notices to the Republic, the Administration and

the private corporations, which prevented removal of the

retirement and pension funds or any of their assets from the

United States.    The restraining notices did not prohibit the

parties from engaging in daily trading activities, provided

that no property left the United States.    The theory behind

the orders was that once the proposed legislation had been

enacted and the property had been transferred to the

Administration, it would essentially become property of the

Republic; if the property belongs to the Republic, then,

because the Republic had waived sovereign immunity with

respect to the bondholders’ judgments, judgment could be

executed against it.

    Two days after the October 29 order, EM Ltd. and NML

Capital, Ltd. obtained “me too” ex parte writs of execution

and restraining notices in their respective post-judgment

cases, as well as restraining orders and attachments of the

funds managed by the Administration and/or the private

corporations.    By the end of November 2008, plaintiffs in 72

actions had obtained either writs of execution and


                               9
restraining notices in post-judgment cases or restraining

orders and orders of attachment in cases where judgment had

not yet been entered (together, the Orders).     The district

court found that, as a result of the Orders, approximately

$200 million was frozen in New York accounts, primarily

investment accounts.

    On November 12, 2008, the Republic moved to vacate the

Orders, and the district court held a hearing on the motion

on November 14, 2008.   The Republic argued that it had no

interest in the social security assets managed by the

private corporations or the property administered by the

Administration.   It also argued that the Administration is

an “agency or instrumentality” separate from the Republic

for purposes of the Act, and that therefore, its assets are

not available to creditors of the Republic.     The Republic

further argued that the property managed by the

Administration and the private corporations is used for a

non-commercial purpose – payment of pension benefits – and

that therefore, the Republic’s creditors were precluded from

executing upon the property under the Act.     The

Administration and the private corporations, appearing on a

limited and special basis as interested non-parties,


                              10
likewise opposed the plaintiffs’ motions, arguing that the

Administration was a juridically distinct, independent

political subdivision of the Republic and therefore not

liable for the Republic’s debts.        At the conclusion of the

hearing, the district court continued the Orders.        In

ordering continuation of the previously entered orders, the

court stated that it was exercising its “equitable power to

simply hold the status quo and prevent assets from getting

spirited out of the country.”        The court opined that it had

previously only entered a “freeze order,” and not an

“attachment,” which the court said would have been

inappropriate at the time.

    The district court also directed the parties to engage

in discovery concerning, inter alia, the Republic’s use of

the social security assets, the Administration’s

institutional relationship to the executive branch of the

Argentine government, and the location of any additional

custodial assets that may be held in the United States.

However, the Administration declined to participate in

discovery, claiming that it was not required to submit to

discovery because it was not a party to the action, and




                                11
because the court lacked jurisdiction over it pursuant to

the Act.

    On December 9, 2008, the proposed legislation became

law, mandating that the majority of the funds previously

administered by the private corporations be transferred in

kind to the Guarantee Fund administered by the

Administration in Argentina.     The Argentine law states that

the assets of the funds shall be invested “by applying

criteria of sufficient security and profitability while

contributing to the sustainable development of the real

economy.”    Law 26,425, art. 8, Dec. 9, 2008.   The law states

that “[t]he total amount of the funds may only be employed

to make payments in the Argentine Integrated Pension

System.”    Id.   The law further provides that social security

funds managed by the Administration may be invested only in

Argentine securities.     Id.

    On December 11, 2008, the district court issued an

Opinion and Order granting the motions for writs of

execution and confirming its prior Orders authorizing

restraints and attachment of pension funds managed by the

Administration and the private corporations.     In its

opinion, the district court held that the Administration is


                                12
a political subdivision of the Republic, and therefore, the

Administration is subject to the jurisdiction of the court

because the Republic is subject to the court’s jurisdiction;

and similarly, the assets of the Administration are subject

to attachment and execution to the same degree as are the

assets of the Republic.

    Next, the district court considered whether the

plaintiffs had established that the funds were being “used

for a commercial activity in the United States” as required

by the Act.   See 28 U.S.C. § 1610(a), (d).   The district

court recognized that the social security funds were

required by Argentine law to be used solely to maintain the

social security system, and that those funds were, at the

time the orders were signed, in the hands of the

corporations, which were indisputably private entities.

However, applying the Supreme Court’s holding in Republic of

Argentina v. Weltover, 504 U.S. 607 (1992), the district

court held that the funds were “used for a commercial

activity in the United States” because the funds were

invested in the hope of profit while under the

administration of the private corporations, and because the

transfer of the funds to the Administration was undertaken


                              13
not for the benefit of the pension funds, but instead “to

effectively appropriate funds for non-pension governmental

uses.”   The district court concluded that the funds were not

immune from attachment and execution under the Act.     The

district court also held that the restraining orders filed

before the Argentine legislation took effect were valid.

    On March 4, 2009, the district court issued an order

authorizing the U.S. Marshal Service to serve the

plaintiffs’ writs of execution on garnishee financial

institutions where the funds are currently held.    However,

the district court directed that the assets not be seized

until further order of the court.   Nevertheless, because the

district court’s prior orders “froze” the funds in the

United States, the Administration has been unable to take

possession of the funds, and the new law transferring the

funds to the Administration has not been implemented.     The

Republic, the Administration, and the private corporations

appeal from the district court’s orders.

                              II

    Before we discuss the appeal’s substance, we must

address a threshold jurisdictional question: whether the




                              14
Administration, a non-party appellant, has standing to

challenge the district court’s issuance of the Orders.

    In this case, the plaintiffs did not name the

Administration as a party to the actions to enforce

judgments against the assets of the Administration.     The

Administration appeared on a special and limited basis

before the district court to argue in favor of vacating the

district court’s Orders regarding attachment and execution.

The Administration filed a memorandum and declarations in

opposition to the Order to Show Cause and restraining

orders.   On appeal, the Administration filed a brief as a

non-party appellant and appeared at oral argument.

Plaintiffs-Appellees GMO Emerging Country Debt L.P., GMO

Emerging Country Debt Investment Fund PLC, GMO Emerging

Country Debt Fund, and Teachers Insurance and Annuity

Association of America (together, GMO) argue that the

Administration, as a non-party to this action, does not have

standing to offer argument in the appeal from the district

court’s decision because the Administration did not

intervene in the district court proceedings.

    Although “[s]tanding to appeal is an essential

component of our appellate jurisdiction,... [t]he question


                              15
of nonparty standing to appeal ‘does not implicate the

jurisdiction of the courts under Article III of the

Constitution.’”   Official Comm. of Unsecured Creditors of

WorldCom, Inc. v. S.E.C., 467 F.3d 73, 77 (2d Cir. 2006)

quoting Devlin v. Scardelletti, 536 U.S. 1, 6 (2002).

“Rather, the issue is whether an appellant should be treated

as a party for purposes of appealing a judgment when it was

not a party in the proceedings below.”   Id.    “As a general

rule, only a party of record in a lawsuit has standing to

appeal from a judgment of the district court.”     Hispanic

Soc’y of the N.Y. City Police Dep’t v. N.Y. City Police

Dep’t, 806 F.2d 1147, 1152 (2d Cir. 1986).     There is,

however, an exception to this rule when "the nonparty has an

interest that is affected by the trial court’s judgment."

Id.   The putative appellant must be able to “identify an

‘affected interest.’”   Kaplan v. Rand, 192 F.3d 60, 67 (2d

Cir. 1999), quoting United States v. Int’l Bhd. of

Teamsters, 931 F.2d 177, 183-84 (2d Cir. 1991); see

WorldCom, 192 F.3d at 78 (a nonparty need not “prove that it

has an interest affected by the judgment,” but only “stat[e]

a plausible affected interest”).



                              16
    In Karaha Bodas Co. v. Perusahaan Pertambangan Minyak

Dan Gas Bumi Negara, we addressed an analogous challenge to

a non-party’s standing to appeal.      313 F.3d 70, 81-82 (2d

Cir. 2002).     In that case, a limited liability company

sought to enforce an arbitral award against Pertamina, an

oil and gas company owned and controlled by the Republic of

Indonesia.     Id. at 75.   Pertamina was deemed an “agency or

instrumentality” of Indonesia for purposes of the Act.         Id.

at 75-76.     The Republic of Indonesia was not named as a

party.   Id. at 81.     On appeal, we acknowledged that in

general, a party’s absence from the initial proceedings and

its failure to intervene would preclude its participation in

the appeal.     Id.   However, we held that because the Republic

of Indonesia had alleged that it “owns the property

encompassed by the garnishment order . . . this constitutes

an ‘affected interest,’ which entitle[d] the [Republic of

Indonesia] to join this appeal.”      Id. at 82.

    In the case before us, the Administration clearly has

an interest that is affected by the district court’s orders.

The Orders attach and execute upon funds that, on

implementation of the December 2008 Argentine law, are

administered by the Administration.      The position of the


                                 17
Administration is analogous to that of the non-party

Republic of Indonesia in Karaha Bodas, except that, in

Karaha Bodas, the agency was named as a party but the parent

republic was not, whereas in this case the Republic was

named as a party and the Administration was omitted.     If

anything, the appropriateness of the Administration’s

standing to appeal is even stronger in this case than in

Karaha Bodas, because it is the Administration’s property at

stake.   The Administration, as the entity that manages the

funds, has an even more direct interest in the property

deemed subject to attachment and execution than the Republic

of Indonesia had in Karaha Bodas.

    GMO argues that where a proposed appellant had an

opportunity to intervene but failed to do so before the

district court, the nonparty does not have standing to

appeal, even if it has an interest affected by the district

court’s judgment.   Relying on a Supreme Court case, Marino

v. Ortiz, 484 U.S. 301 (1988), GMO argues that, for policy

reasons, the Administration should not reap the benefit of

being allowed to make arguments on appeal where it failed to

intervene in the district court proceedings.   In Marino,

petitioners, a group of individuals who claimed to have been


                              18
adversely affected by a settlement in an employment

discrimination case, chose not to intervene in the district

court proceedings.   Id. at 303.        Instead, the petitioners

filed their action during the time between the district

court’s interim approval of a settlement and its issuance of

a final consent decree.      Id.    The district court dismissed

the petitioners’ action, and the court of appeals upheld the

dismissal, holding that it constituted an impermissible

collateral attack on a consent decree by persons who could

have intervened in the action but chose not to.         Id. at 303-

04.   The issue in that case was whether the district court

may dismiss an impermissible collateral attack by

non-parties.   Id. at 304.     The Court affirmed the district

court’s disallowance of the action by the petitioners.         Id.

(stating “[w]e think the better practice [than to allow a

nonparty to appeal in an action like Marino] is for such a

nonparty to seek intervention for purposes of appeal;

denials of such motions are, of course, appealable”).

      The Administration’s interest in this litigation is

qualitatively different from the Marino petitioners’

interest.   The plaintiffs in this case are attempting to

execute upon the property of the Administration.         The


                                   19
plaintiffs chose not to make the Administration a party to

the action, even though the Administration’s interest is

directly affected.     Unlike the petitioners in Marino, who

claimed a tangential harm from a settlement but chose not to

intervene, it is difficult to imagine a situation where the

property of a party will be more affected by the court’s

decision than the property of the Administration here.        Cf.

Hispanic Soc’y, 806 F.2d at 1152 (dismissing non-party

appellant’s appeal because the putative appellants had no

affected interest in the employment discrimination

litigation as they had no right to promotion and did not

allege any discrimination against themselves).     Further, in

Marino, the district court had dismissed the petitioners’

action.     In this case, the district court permitted the

Administration to participate in the district court

proceedings as a non-party.     Marino does not govern this

case.

    GMO also argues that the interest of the Administration

is fully and amply protected by the Republic’s arguments on

appeal.     GMO does not offer persuasive support for this

argument.     Instead, GMO cites Federal Rule of Civil

Procedure 24, which governs the rules of intervention.        The


                                20
Administration did not seek to intervene in the district

court proceedings, so Rule 24 does not apply to this case.

    We therefore hold that the Administration has standing

to appeal the district court’s orders as a nonparty

appellant.

                             III

    GMO also argues that the district court erred in

allowing the Administration to submit memoranda and

declarations, and to offer argument in the district court

proceedings in opposition to the Orders, because the

Administration invoked sovereign immunity during the

discovery process.   To the extent GMO raises an evidentiary

challenge, GMO does not point to any evidence that it

believes should have been stricken from the record;

therefore, there is no evidentiary ruling for us to consider

on appeal.   Further, insofar as GMO challenges the district

court’s decision to allow the Administration to submit

memoranda of points of law regarding the Orders, we have

stated that it is “essential for the district court to

afford the parties the opportunity to present evidentiary

material . . . on the question of FSIA jurisdiction.     The

district court should afford broad latitude to both sides in


                              21
this regard.”     Reiss v. Société Centrale du Groupe des

Assurances Nationales, 235 F.3d 738, 748 (2d Cir. 2000).

Although this statement is not directly controlling because

the Administration was not a party to the case, it supports

the idea that a district court is afforded broad discretion

in its determination of jurisdictional issues.     The district

court acted well within its discretion to consider arguments

presented by the Administration to secure a full

understanding of the jurisdictional issues.



                                IV

    We next turn to the primary issue on appeal:     whether

the funds administered by the Administration are subject to

attachment.     We review de novo legal conclusions denying Act

immunity to a foreign state or its property.     In re

Terrorist Attacks on Sept. 11, 2001, 538 F.3d 71, 79 (2d

Cir. 2008).     We review the district court’s ruling on a

request for an order of attachment for abuse of discretion.

EM Ltd. v. Republic of Argentina, 473 F.3d 463, 472 (2d Cir.

2007).   The district court abuses its discretion if it

applies legal standards incorrectly, relies on clearly




                                22
erroneous findings of fact, or proceeds on the basis of an

erroneous view of the applicable law.   Id.

    Under section 1609 of the Act, property in the United

States of a foreign state is immune from attachment or

execution unless the property fits within one of the limited

exceptions enumerated in sections 1610 or 1611 of the Act.

28 U.S.C. § 1609.   The provisions of section 1611 are not

applicable to this case.   See 28 U.S.C. § 1611.   We

therefore focus on section 1610(a), which authorizes

execution against property of a foreign state located in the

United States only if the property is “used for a commercial

activity in the United States,” even if the foreign

sovereign has waived its immunity.   28 U.S.C. § 1610(a); see

also EM Ltd., 473 F.3d at 481 n.19 (“[I]f a foreign

sovereign waives its immunity from execution, U.S. courts

may execute against ‘property in the United States . . .

used for a commercial activity in the United States.’”

(quoting Conn. Bank of Commerce v. Republic of Congo, 309

F.3d 240, 247 (5th Cir. 2002))).

    Thus, the property that is subject to attachment and

execution must be “property in the United States of a

foreign state” and must have been “used for a commercial


                              23
activity” at the time the writ of attachment or execution is

issued.   “Even when a foreign state completely waives its

immunity from execution, courts in the U.S. may execute only

against property that meets these two statutory criteria.”

Conn. Bank, 309 F.3d at 247.      This clearly follows from the

plain language of section 1610(a).         Section 1610(a) does not

say that the property in the United States of a foreign

state that “will be used” or “could potentially be used” for

a commercial activity in the United States is not immune

from attachment or execution.         More is required: the

property in the United States of a foreign state must be

used for a commercial activity in the United States “upon a

judgment entered by a court of the United States or of a

State.”   28 U.S.C. § 1610(a).        “To conclude otherwise would

render meaningless the provisions of §§ 1610(a) & (d), which

subject to attachment property of a foreign state when the

property is ‘used for a commercial activity’ and when the

foreign state ‘has waived its immunity from attachment.’”

EM Ltd., 473 F.3d at 481 n.19; cf. FG Hemisphere Assocs.,

LLC v. République du Congo, 455 F.3d 575, 594 (5th Cir.

2006) (holding that “[p]rior to issuing a garnishment order,

a district court must make factual findings that support


                                 24
application of the § 1610(a) exception to executional

immunity,” and therefore, the court must determine the

location of each form of property at time of issuance of the

order to ensure that it governs property located in the

United States).

    On appeal, the parties focus largely on whether the

Administration qualifies as an “agency or instrumentality”

of the Republic under section 1610(b) of the Act.    However,

even if the Administration is not a separate “agency or

instrumentality” for purposes of the Act, but instead is a

political subdivision of the Republic, we must first

determine whether the funds were being used for a commercial

activity in the United States as of the effective date of

the Argentine legislation transferring the funds to the

control of the Administration.    If not, the funds are not

subject to attachment or execution, regardless of the

Administration’s independent juridical status or lack

thereof.

    The district court issued its opinion two days after

the Republic adopted the legislation authorizing the

retirement and pension funds to be transferred to the




                             25
Administration.    The order attaching the assets of the

Administration was effective immediately upon the transfer.

    The Act is clear: “The property in the United States of

a foreign state” must be “used for a commercial activity in

the United States” before it is susceptible to attachment

and execution.    28 U.S.C. § 1610(a) (emphasis added).     The

commercial activities of the private corporations who

managed these assets are irrelevant to this inquiry.       The

plaintiffs do not argue that the private corporations were

acting as the alter ego of the Republic.    Therefore, before

the retirement and pension funds at issue could be subject

to attachment, the funds in the hands of the Republic must

have been “used for a commercial activity.”    Because the

order attaching the assets of the Administration became

effective immediately upon the passage of legislation

transferring the assets from the private corporations to the

Administration, neither the Administration nor the Republic

had the opportunity to use the funds for any commercial

activity whatsoever.    The only activity that the Republic

had engaged in with regard to the funds at the time that the

district court confirmed the Orders was the adoption of a

law transferring legal control of the funds from the private


                               26
corporations to the Administration.     As we read “used for a

commercial activity,” we hold that a sovereign’s mere

transfer to a governmental entity of legal control over an

asset does not qualify the property as being “used for a

commercial activity.”   A contrary conclusion would

essentially nullify the Act’s commercial activity

requirement in cases involving attachment and execution of a

foreign state’s property.

    Thus, we conclude that the district court abused its

discretion in issuing the Orders.     The Republic had not used

the funds for any commercial activity at the time of

attachment.   Under the plain language of 28 U.S.C.

§ 1610(a), the funds are immune from attachment.

                              V

    On appeal, the Administration argues that it is an

“agency or instrumentality” separate from the Republic, and

therefore, its interest in the funds is not subject to

attachment or execution because the Administration has not

waived its sovereign immunity.     The district court held that

the Administration is not a separate “agency or

instrumentality,” but rather, it is a political subdivision

of the Republic.   We need not reach this issue, as we have


                              27
determined that neither the Administration nor the Republic

used the funds for a commercial activity in the United

States.    We therefore need not determine whether the

Administration is a juridically independent “agency or

instrumentality” separate from the Republic for purposes of

the Act.

    The Republic and the Administration also argued that

the funds at issue are expressly designated by Argentine law

as social security assets, and therefore, their investment

(and concomitant payment to Argentine pensioners) is a

quintessentially governmental activity, and not a commercial

activity under the Act.    See 28 U.S.C. § 1610(a) and (b).

Again, we need not reach this issue, as we have determined

that neither the Administration nor the Republic used the

funds for a commercial activity in the United States for the

same reason as stated above: the accounts were attached as

soon as the Administration gained legal title to them.    Even

assuming (without deciding) that there may have been

commercial activity prior to that time in the form of

investment of the assets, it is undisputed that such

activity was undertaken by private corporations, on behalf

of pensioners, not by the Republic or the Administration.


                               28
    Also, because we hold that the retirement and pension

funds are not property subject to attachment and execution

under the Act, we need not address the propriety of the

district court’s issuance of the restraining orders prior to

the passage of the legislation transferring the funds, when

the funds were still the property of the private

corporations.

                         CONCLUSION

    We understand the frustration of the plaintiffs who are

attempting to recover on judgments they have secured.

Nevertheless, we must respect the Act’s strict limitations

on attaching and executing upon assets of a foreign state.

    For the foregoing reasons, we reverse the district

court’s judgment and vacate all of the associated orders, as

well as its opinion confirming those orders.




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