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Libancell S.A.L. v. Republic of Lebanon

May 16, 2006


The opinion of the court was delivered by: Hon. Harold Baer, Jr., District Judge


On April 10, 2006, Libancell S.A.L. ("Libancell" or "petitioner") moved ex parte for a temporary restraining order ("TRO") preventing, inter alia, Deutsche Bank Trust Company Americas ("Deutsche Bank") from transferring or disposing of any assets in which the Republic of Lebanon ("Lebanon") had an interest. This Court issued the TRO and required Lebanon to show cause on April 18, 2006 why a preliminary injunction and order of attachment should not issue. Prior to the hearing, Caisse Nationale des Caisses d'Epargne, S.A. ("CNCE"), IXIS Corporate & Investment Bank, S.A. ("IXIS"),*fn1 and Banque du Liban ("Central Bank of Lebanon" or "Central Bank")*fn2 moved by order to show cause to intervene in the action in opposition to Libancell's motion. Lebanon and non-party Deutsche Bank also submitted memoranda and appeared at the hearing. On April 18, 2006, I vacated the TRO. For the reasons that follow, Libancell's motion for a preliminary injunction and order of attachment is DENIED.


The following facts are taken from the parties' affidavits submitted in connection with this motion and, except as where otherwise noted, are not in dispute. Libancell, a Lebanese corporation, is involved in the telecommunications industry in Lebanon. Beginning in 1994, Libancell contracted with Lebanon to provide cellular telephone service. Disputes arose between Libancell and Lebanon regarding their agreement, and the parties proceeded to arbitration under the aegis of the United Nations Commission on International Trade Law ("UNCITRAL"). The bulk of the arbitration occurred in Beirut. On July 11, 2005, the UNCITRAL tribunal issued an award in favor of Libancell in the amount of $265,158,184.00, plus interest. On September 26, 2005, the Supreme Court of Paris, France entered an order of "Exequatur" (analogous to confirmation here) permitting enforcement of the award by Libancell.

On April 10, 2006, simultaneous with the filing of its ex parte motion for a TRO, Libancell filed a petition in this court to confirm the UNCITRAL award or, in the alternative, to recognize and enforce the French judgment. In support of its request for a TRO, Libancell represented that it had reason to believe that Lebanon would issue several hundred million dollars in capital notes through New York financial institutions on April 12, 2006. Libancell sought to prevent Lebanon from transferring the proceeds of this bond sale outside of this jurisdiction. However, having apparently received word of an impending attachment, Lebanon cancelled the offering. Instead, acting upon the TRO, Deutsche Bank restrained $162,911,250.00 in funds claimed by the Central Bank of Lebanon. These funds comprised two wire transfers between the Central Bank and IXIS, for which Deutsche Bank acted as intermediary.


A. Motions to Intervene

Rule 24(a) provides for intervention as of right when "the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that the disposition of the action may . . . impair or impede the applicant's ability to protect that interest, unless the applicant's interest is adequately represented by existing parties." Fed. R. Civ. P. 24(a)(2). See also Washington Elec. Coop., Inc. v. Massachusetts Mun. Wholesale Elec. Co., 922 F.2d 92, 96-97 (2d Cir. 1990).

By Order to Show Cause dated April 17, 2006, the Central Bank sought to interevene "for the limited purpose of asserting [its] immunity from pre or post judgment attachment or execution (and any related injunctive relief) with respect to the Central Bank's property held for its own use. . ." This motion was unopposed, and the Central Bank was permitted to appear and present argument at the April 18th hearing. Thus, the Central Bank's motion to intervene for the limited purpose of opposing the April 10th TRO is granted, nunc pro tunc. In addition, CNCE and IXIS, by Order to Show Cause dated April 18, 2006, moved to intervene and to assert a counterclaim for damages against Libancell. CNCE and IXIS appeared at the April 18th hearing. However, on May 2, 2006 Libancell filed an opposition to CNCE and IXIS' motion to intervene. By Notice dated May 12, 2006, CNCE and IXIS' motion was withdrawn. Therefore, CNCE and IXIS' motion to intervene is denied as moot.

B. Order of Attachment

Pursuant to Rule 64, "all remedies providing for seizure of person or property for the purpose of securing satisfaction of the judgment ultimately to be entered in the action are available [as] . . . provided by the law of the state in which the district court is held. . ." Fed. R. Civ. P. 64. New York law provides for attachment in actions for money damages when, inter alia, "the defendant is a nondomicilliary residing without the state" or "the cause of action is based on a [foreign] judgment . . . which qualifies for recognition under the provisions of article 53." N.Y. C.P.L.R. §§ 6201(1), (5). In addition, New York allows for the entry of an ex parte temporary restraining order pending the outcome of a motion on notice for an order of attachment. See N.Y. C.P.L.R. § 6210 ("Upon a motion on notice for an order of attachment, the court may, without notice to the defendant, grant a temporary restraining order prohibiting the transfer of assets by a garnishee. . ."). Libancell concedes that the attachment sought here would be "prejudgment" because the arbitration award has not yet been reduced to a judgment in the United States. (See Petioner's Memorandum of Law dated April 10, 2006 ("Petitioner's Mem.") at 9 n.2).

1. Foreign Sovereign Immunities Act

The Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1602, et seq., "'sets forth the sole and exclusive standards to be used in resolving questions of sovereign immunity raised by foreign states before Federal and State courts . . .'" Banco de Seguros del Estado v. Mutual Marine Office, Inc., 344 F.3d 255, 260 (2d Cir. 2003) (quoting H.R. Rep. No. 94-1487, 94th Cong., 2d Sess. (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6610). Thus, the FSIA "governs actions against foreign states and agencies or instrumentalities of foreign states." Concord Reinsurance Co., Ltd. v. Caja Nacional de Ahorro Y Seguro, No. 93 Civ. 6606, 1994 WL 86401, *1 (S.D.N.Y. March 16, 1994). Petitioner does not dispute that both the Republic of Lebanon and the Central Bank of Lebanon are subject to the FSIA.

Pursuant to the FSIA, "[f]oreign states are immune from prejudgment attachment of their assets used for commercial activity in the United States, unless 'the foreign state has explicitly waived its immunity from attachment prior to judgment . . .'" Banco de Seguros, 344 F.2d at 261 (quoting 28 U.S.C. ยง 1610(d)(1)) (emphasis in original). "[A] waiver of immunity from prejudgment attachment must be explicit in the common sense meaning of that word: 'the asserted waiver must demonstrate unambiguously the foreign state's intention to waive its immunity from prejudgment ...

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