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The Export-Import Bank of the Republic of China v. Grenada

December 29, 2010


The opinion of the court was delivered by: Hon. Harold Baer, Jr., District Judge:*fn1


For over three years Plaintiff, the Export-Import Bank of the Republic of China ("Plaintiff" or the "Bank") has sought satisfaction of a judgment against defendant Grenada for $25 million. Plaintiff now seeks contempt sanctions of $10,000 per day based on Grenada's alleged failure to comply with a court order regarding post-judgment discovery, and an additional $10,000 in attorneys' fees.*fn2 Plaintiff also seeks an order compelling complete responses to interrogatories and a second Rule 30(b)(6) witness.

Following oral argument, the parties submitted supplemental briefing on the propriety of imposing sanctions on a sovereign nation. For the reasons below, I conclude that sanctions are appropriate and Plaintiff's motion is GRANTED in part and DENIED in part.


The Court entered summary judgment against the sovereign nation of Grenada on February 6, 2007. Plaintiff served interrogatories on October 3, 2007. Grenada did not respond. On Plaintiff's motion, the Court on April 9, 2009 ordered an answer be served within ten days.

When the time to answer passed without a re sanctions. A newly-installed Grenadian government retained new counsel, and on July 2, 2009 the Court denied the motion for sanctions, accepting that the new administration intended to respond to the interrogatories diligently. On September 4, 2009, Grenada responded to the interrogatories.

Unsatisfied with Grenada's responses, Plaintiff sought leave to move to compel compliance in January 2010. On March 1, 2010, during a telephone conference, the Court issued an order (the "Order") requiring Grenada to provide information on two developers, Cinnamon 88 and Levera, listed in Grenada's response to Interrogatory 6 as owing Grenada approximately $15 million and $3 million, respectively. On March 12, 2010, Grenada provided a letter with information related to the two developers. The alleged inadequacy of this response forms the basis for the present sanctions motion.

Plaintiff refrained from seeking further Court intervention in the hope that a scheduled 30(b)(6) deposition would supplement the deficient responses. The deposition occurred, but Plaintiff found it also deficient. Grenada admits that its 30(b)(6) witness was not prepared to answer all questions. It has professed some level of willingness to address these concerns, but has failed to do so. Grenada claims it has complied with its discovery obligations, and in any case further discovery is futile because it has no money to satisfy the judgment. Its general thesis is that it fully intends to comply with the judgment as soon as financial conditions allow.


1.The motion for sanctions based on noncompliance with the March 1, 2010 Order.

A district court has discretion to impose contempt sanctions for violations of post-judgment discovery orders. Daval Steel Prods. v. M/V Fakredine, 951 F.2d 1357, 1363 (2d Cir. 1991).*fn3 However "courts should proceed with care in pursuing the assets of foreign governments and their instrumentalities." First City, Texas-Houston, N.A. v. Rafidain Bank, 281 F.3d 48, 54 (2d Cir. 2002). I have carefully considered the propriety of jurisdiction, whether it includes the power to impose sanctions, and whether sanctions are appropriate.

a.Jurisdiction is based on waiver A foreign sovereign may waive its immunity from suit under the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. § 1605(a) (listing various grounds for waiver). Waiver may be effected "either explicitly or by implication." 28 U.S.C. § 1605(a)(1). Grenada waived its sovereign immunity explicitly in its loan agreements, in which it subjected itself to the jurisdiction of this Court, see Complaint ¶ 27; Answer, at ¶ 1, and implicitly by participating in these proceedings without objection.

b.Jurisdiction includes the power to impose sanctions Once a court may exercise jurisdiction, it may issue contempt orders. "The waiver by a foreign state under [the FSIA's waiver provisions], rendering it party to an action, is broad enough to sustain the court's jurisdiction through proceedings to aid collection of a money judgment rendered in the case, including discovery pertaining to the judgment debtor's assets." First City, Texas-Houston, N.A. v. Rafidain Bank, 281 F.3d 48, 53 (2d Cir. 2002). In Rafidain the Second Circuit affirmed the district court's order of civil contempt imposing a $1,000 per day fine to compel Rafidain, Iraq's state-owned commercial bank, to comply with discovery demands intended to assist a judgment creditor collect an unsatisfied default judgment.*fn4

Grenada argues in a footnote that any waiver should be construed narrowly and not extend to the imposition of contempt sanctions. It notes that "in general, explicit waivers of sovereign immunity are narrowly construed 'in favor of the sovereign' and are not enlarged 'beyond what the language requires.'" World Wide Minerals, Ltd. v. Republic of Kazakhstan, 296 F.3d 1154, 1162 (D.C. Cir. 2002) (citing Library of Cong. v. Shaw, 478 U.S. 310 (1986)). However, Grenada points to no language limiting its waiver, and its mere consent to jurisdiction here provides the Court with discretion to impose contempt sanctions. See Rafidain, 281 F.3d at 53. See also Autotech Techs., 499 F.3d at 744 (upholding contempt sanction where party was found to have waived immunity based on Grenada reasons that its waiver of immunity extended only to suit in connection with the loan agreements with the Bank and does not compromise its immunity from contempt sanctions. It cites a Fifth Circuit case holding that a waiver of sovereign immunity for commercial activities does not include a waiver of the immunity that a sovereign otherwise enjoys from the imposition of fines or collection of penalties from its assets. See Af-Cap, Inc. v. Republic of Congo, 462 F.3d 417, 429-29 (5th Cir. 2006), cert. dismissed, 549 U.S. 1275 (2007). Grenada's arguments are unpersuasive. In Af-Cap the court found no waiver at all because no language in the parties' agreements waived immunity and the relevant pleadings "consistently raised an immunity defense." Af-Cap, Inc. v. Republic of Congo, 462 F.3d 417, 427 (5th Cir. 2006), cert. dismissed, 549 U.S. 1275 (2007). In contrast, as noted above Grenada has not raised an immunity defense and has submitted to jurisdiction in its loan agreements. See Complaint ¶ 27; Answer, at ¶ 1. Moreover, Af-Cap found sanctions inappropriate in part based on a request from the United States government as amicus curiae, see id. at note 8, and no such request has been lodged in this case. Finally, the Af-Cap ...

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