The opinion of the court was delivered by: THOMAS GRIESA, Senior District Judge
Plaintiff Ottavio Lavaggi brings this putative class action
against defendant The Republic of Argentina seeking to recover
unpaid interest and principal on multiple series of bonds issued
by the Republic. The Republic moves pursuant to Fed.R.Civ.P.
12(b)(1) and 12(b)(6) to dismiss the amended complaint for lack
of subject matter jurisdiction and for failure to state a claim.
Plaintiff opposes the motion.
The Republic's motion is granted in part and denied in part.
Plaintiff putatively represents a class of persons who, since
December 23, 2001, have continued to own certain bonds issued by
the Republic. The bonds at issue here are 27 series of bonds
issued by the Republic. The series are denominated in various
currencies seven are denominated in U.S. Dollars, seven are denominated in Euros, nine
are denominated in German Deutsche Marks, and one each is
denominated in Japanese Yen, Italian Lira, British Pounds, and
Swiss Francs. The series were issued under different prospectuses
and offering documents.
Plaintiff's complaint does not specify which bonds he owns.
Indeed, the amended complaint merely states that plaintiff "owns
bonds issued by the Republic of Argentina." However, in his
memorandum opposing the instant motion, plaintiff asserts that he
owns the following bonds:
(1) a 12.125% U.S. Dollar bond due February 25, 2019
(the "U.S. Bond");
(2) a 10% British Pound bond due June 25, 2007 (the
(3) a 3.5% Japanese Yen bond due November 8, 2009
(the "Japanese Bond");
(4) a 11.75% German (Euro) bond due May 28, 2026 (the
"Euro Bond"); and
(5) a 7% Swiss Franc bond due December 4, 2003 (the
Plaintiff does not own any bonds from the 22 other series which
he purports to include in this class action.
The U.S. Bond was issued under the 1994 Fiscal Agency Agreement
("1994 FAA"). Section 22 of the 1994 FAA states that the Republic waives sovereign immunity and consents to jurisdiction in any
state or federal court in the Borough of Manhattan in the City of
New York. The British Bond and the Japanese Bond were issued as
part of the Republic's European Medium-Term Note Programme. In
the Trust Deed dated July 27, 1993, which set out the terms and
conditions for bonds issued as part of that Programme, the
Republic expressly agreed to submit to the jurisdiction of any
state or federal court in the Borough of Manhattan in the City of
Plaintiff's description of the Euro Bond as a "German (Euro)"
bond has caused the Republic to question the identity of that
bond. The Republic claims that the bond is in fact a 11.75%
German Deutsche Mark bond due on November 13, 2026 bearing
International Securities Identification Number ("ISIN")
DE0001348100. However, the Court finds that plaintiff is
referring to a 11.75% Euro bond due on May 28, 2026 bearing ISIN
US04011NAQ16. The Court makes this finding based on the
denomination, the interest rate, and the date on which the bond
become due. The current record does not contain any details about
the Euro Bond's prospectus. However, plaintiff concedes that the
Republic did not explicitly waive immunity or consent to
jurisdiction in the United States for claims involving the Euro
The Swiss Bond was issued pursuant to a Prospectus dated
November 25, 1998. Page 2 of the Prospectus is titled "Sales
Restrictions and Investment Considerations", and states that
Each Syndicate Bank represents and agrees that it has
not offered or sold, and will not offer or sell, any
Bonds constituting part of its allotment within the
United States except in accordance with Rule 903 of
Regulation S under the Securities Act and neither it
nor any of its affiliates or any persons acting on
its behalf have engaged or will engage in any
directed selling efforts in the United States with
respect to the Bonds.
The Prospectus also states that "the Bonds and the Coupons shall
be subject to and governed by Swiss Law." As to jurisdiction, the
Prospectus states that the Republic submits to the "non-exclusive
jurisdiction of the above mentioned Swiss courts and any Federal
court sitting in the City of Buenos Aires."
On December 24, 2001, the Republic declared a moratorium on
payments of principal and interest on the external debt of the
Republic. Since then, the Republic has not made any payments of
principal or interest on any of the bonds at issue here.
On June 28, 2004 plaintiff brought this putative class action
for recovery of unpaid interest and principal. The complaint
alleges three causes of action on behalf of the putative class.
First, the complaint alleges a breach of contract premised on the
Republic's failure to pay interest and principal on the bonds.
Second, it alleges that the Republic breached an implied covenant
of good faith and fair dealing when it failed to pay interest and
principal on the bonds. Third, it alleges that the Republic was unjustly enriched
by its failure to pay interest and principal. The complaint seeks
punitive damages as part of the second and third causes of
In deciding a motion to dismiss for lack of subject-matter
jurisdiction, the Court may consider materials outside the
complaint. The party invoking the Court's authority bears the
burden of establishing, by a preponderance of the evidence, the
existence of subject matter jurisdiction. Makarova v. United
States, 201 F.3d 110, 113 (2d Cir. 2000). It is also
black-letter law that standing is an essential element of subject
In order to have standing to assert a claim on behalf of a
class, the proposed class representative must allege that he has
been personally injured, not that injury has been suffered by
other unidentified members of the class which he purports to
represent. Warth v. Seldin, 422 U.S. 490, 502 (1975). Plaintiff
does not allege and cannot show that he suffered any damages with
respect to the bonds that he does not own. Therefore, plaintiff
lacks standing to assert claims regarding those bonds on behalf
of a class. The purported class claims regarding the 22 series of
bonds which plaintiff does not own are dismissed because
plaintiff lacks standing to bring those claims on behalf of a
class. As for the bonds that plaintiff does own, the Foreign Sovereign
Immunities Act (the "FSIA") provides the sole source of subject
matter jurisdiction over a foreign state. 28 U.S.C. § 1604. Under
the FSIA, a foreign state is presumptively immune from the
jurisdiction of United States courts unless a specified exception
applies. Drexel Burnham Lambert Group Inc. v. Comm. of Receivers
for A.W. Galadari, 12 F.3d 317, 325 (2d Cir. 1993). One ...