Article: Default Judgment Against A Foreign State
- Foreign Sovereign Blog
- Articles
- Article: Default Judgment Against A Foreign State
Article: Default Judgment Against A Foreign State
A default judgment is a judgment issued by a court when a defendant fails to appear or otherwise defend itself in a lawsuit. In default cases where the plaintiff has asked to be awarded a particular sum of money, the court generally will award that sum of money following adequate proof of damages. The resulting default judgment is binding on the defendant and may be enforced.
Special rules apply, however, in cases where the defaulting defendant is a foreign state.
First, in the event a defendant foreign state does not appear, the court will nonetheless determine whether the foreign state is immune from the jurisdiction of the U.S. court under the Foreign Sovereign Immunities Act (“FSIA”). This is so because federal courts generally are obliged to consider their own jurisdiction, see Bender v. Williamsport Area School Dist., 475 U.S. 534, 541 (1986) (“every federal appellate court has a special obligation to ‘satisfy itself not only of its own jurisdiction, but also that of the lower courts in a cause under review,’ even though the parties are prepared to concede it.”), and foreign states are presumed to be immune from U.S. courts’ jurisdiction unless an exception to immunity applies, see 28 U.S.C. §1604 (“a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607 of this chapter.”). See also Republic of Austria v. Altmann, 541 U.S. 677, 691 (2004) (“At the threshold of every action in a district court against a foreign state, . . . the court must satisfy itself that one of the exceptions applies, as subject-matter jurisdiction in any such action depends on that application.”) (internal citations and quotations omitted).
For example, in Davis v. Republic of Equatorial Guinea, 2013 U.S. Dist. LEXIS 120561 (D.D.C. Aug. 26, 2013), a law firm sued the Republic of Equatorial Guinea when the nation failed to pay the law firm’s fees. Although Equatorial Guinea did not appear in the lawsuit or otherwise participate in the litigation, the court carefully adjudicated whether that nation was immune under the FSIA. Ultimately, it held that the case fell within the “commercial activity” exception because the lawsuit was based upon a breach of a commercial contract for U.S. legal services. Id. at *9-14.
Second, even assuming an exception to immunity does apply, a court still will not grant a default judgment unless the plaintiff proves its claim in an evidentiary hearing. Indeed, FSIA §1608(e) provides that “No judgment by default shall be entered by a court of the United States or of a State against a foreign state, a political subdivision thereof, or an agency or instrumentality of a foreign state, unless the claimant establishes his claim or right to relief by evidence satisfactory to the court. . . .”
Hence, in the Davis case, after considering subject-matter jurisdiction, the court considered documentary evidence submitted by the law firm and concluded that, based upon that evidence, Equitorial Guinea had breached the contract, entitling the firm to $141,941.11 in damages. See Davis, 2013 U.S. Dist. LEXIS 120561, at *17-25. The court also determined that the law firm was entitled to pre-judgment interest totaling $16,750.94, for a total default judgment of $158,692.05. Id. at *25-29.
By contrast, the court in Abdulla v. Embassy of Iraq, 2013 U.S. Dist. LEXIS 127914 (E.D. Penn. Sept. 9, 2013), found that, although there was FSIA jurisdiction over the contract case pursuant to the commercial activity exception, the plaintiff had not submitted evidence sufficient to demonstrate that the Embassy had in fact breached the contract at issue. (Note that this case is currently pending before the U.S. Court of Appeals for the Third Circuit, Case No. 14-3430).
Finally, even if a court finds that (a) it has jurisdiction because the foreign nation is not immune, (b) the plaintiff’s claim is meritorious, and (c) issuance of a default judgment is proper, all is not lost for the foreign state. Under Federal Rule of Civil Procedure 60(b), a court may relieve a party from a final judgment, order for the following reasons:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
(6) any other reason that justifies relief., a party may
(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
(6) any other reason that justifies relief., a party may
The most common ground raised by foreign states seeking to undo default judgments is ground (4) – the judgment is void. Indeed, a court will declare a judgment to be “void” if the court lacked subject-matter jurisdiction to adjudicate the case in the first place. See Aurum Asset Managers, LLC v. Bradesco Companhia de Seguros, 441 Fed. Appx. 822, 823 (3d Cir. 2011).
Publisher - Laina C. Lopez
Ms. Lopez is an attorney in Washington, DC. She represents foreign countries, including their embassies and consulates, in U.S. court proceedings.
Latest Articles
Tags
arbitration archives argentina artbench trial bonds breach of contractcommercial activity common law immunity consul consular corpsconsulate cultural heritage cultural property diplomat diplomatic missiondiscovery discriminationembassy employment lawexpropriation foreign official foreign sovereign immunity foreign state fsia honorary consul
Leave a Comment