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Export-Import Bank of Republic of China v. Central Bank of Liberia

United States District Court, S.D. New York

April 12, 2017

THE EXPORT-IMPORT BANK OF THE REPUBLIC OF CHINA, Plaintiff,
v.
CENTRAL BANK OF LIBERIA as successor to the NATIONAL BANK OF LIBERIA, Defendant.

          MEMORANDUM OPINION

          ANDREW L. CARTER JR., United States District Judge

         Plaintiff The Export-Import Bank of the Republic of China ("Ex-Im Bank") brings this action to enforce two defaulted loan agreements against Defendant Central Bank of Liberia ("CBL") as successor to the National Bank of Liberia ("NBL"). CBL seeks to dismiss the Amended Complaint pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § § 1602-1611. On March 31, 2017, the Court denied CBL's motion to dismiss.

         The primary issue here is whether CBL waived sovereign immunity on its loan agreements and is amenable to this Court's jurisdiction. The Court holds that CBL explicitly waived sovereign immunity for reasons that follow in this memorandum opinion.

         FACTUAL BACKGROUND[1]

         NBL and its successor, CBL, are national banks established by the Republic of Liberia. Am. Compl. ¶ 3-4. NBL was formed in July 1974 pursuant to the National Bank of Liberia Act of 1974 ("NBL Enabling Act") and was succeeded in business and interest by CBL in October 1995. Id. at ¶ 4. Ex-Im Bank is a bank organized and existing under the laws of the Republic of China. Id. at ¶3.

         On December 7, 1989, Ex-Im Bank and NBL executed two loan agreements (the "Loan Agreements"), where Ex-Im Bank loaned NBL $44 million dollars. Id. at ¶¶ 9-16. The Loan Agreements contain a number of provisions.[2] A choice of law provision states that the "Agreement and the rights and obligations of the parties hereunder and under the Note shall be construed by and interpreted in accordance with and governed by the laws of the State of New York, United States of America (without however giving effect to the conflict of law rules thereof)." Loan Agreements § 9.04. A jurisdiction provision designates the United States District Court for the Southern District of New York as one of several, non-exclusive fora for any suit or action concerning the Loan Agreements. Id. § 9.08. A service of process provision requires that NBL appoint a process agent in New York. Id. § 9.08(a).

         Section 9.06 of the Loan Agreements, entitled "Waiver of Sovereign Immunity, " provides:

"The Borrower represents and warrants that this Agreement and the Loan being made hereunder is a commercial and not a public or governmental act and that the Borrower is not entitled to claim immunity from legal process with respect to itself or any property owned by it and/or held for its own account on the ground of sovereignty or otherwise under any law or in any jurisdiction where an action may be brought for the enforcement of any of the obligations arising under this Agreement, the Note or any related documentation. To the extent that the Borrower or any property owned by it and/or held for its account has or hereafter may acquire any right of immunity from set-off, legal proceedings, attachment prior to judgement, other attachments or execution of judgement, on the grounds of sovereignty or otherwise, the Borrower hereby irrevocably waives such right to immunity for itself and such property in respect of its obligations arising under this Agreement, the Note and such related documentation. The waiver of any such rights to sovereign immunity in this Section 9.06 is irrevocably binding on the Borrower's successors or assigns."

         The Loan Agreements were each signed by Thomas D.V. Hanson, who was NBL's Chairman of the Board and Governor. Loan Agreements, at 23. On December 14, 1989, NBL's Board of Directors also authorized the loans by resolution. Days Decl. Exs. A and B. Also on the same day, as required by Section 7.04 of the Loan Agreements, Liberia's Minister of Justice, Jenkins Scott, issued two legal opinions to Ex-Im Bank in connection with both loan agreements confirming that the NBL was authorized to enter into the transactions, that the loans were authorized by the NBL, and that the NBL did not enjoy sovereign immunity in connections with the Loan Agreements. Days Decl. Exs. E and F.

         Pursuant to the Loan Agreements, NBL appointed process agents in New York for the First Loan Agreement in December 1989 and for the Second Loan Agreement in January 1990. Days Decl. Exs. D and I. In January 1990, NBL received the $24 million disbursed by Ex-Im Bank pursuant to the First Loan Agreement. Days Decl. Ex G. In March 1990, NBL received $20 million disbursed by Ex-Im Bank pursuant to the Second Loan Agreement. Days Decl. Ex K. There have been subsequent acknowledgements by Liberia of the debts incurred to Ex-Im Bank. On March 23, 2001, Liberia's Ministry of Finance acknowledged that payment was owed to Ex-Im Bank in a letter to the bank. Days Decl. Ex L and M. On June 30, 2008, Antoniette M. Sayeh, the Liberian Minister of Finance, wrote to Ex-Im Bank, requesting a reschedule of the debt payments due under the Loan Agreements. Days Decl. Ex N.

         Neither the NBL nor the CBL has ever made any principal or interest payments under the Loan Agreements. Am. Compl. ¶ 69. On December 7, 2015, Ex-Im Bank filed a complaint seeking the money disbursed and unpaid interest and subsequently amended its complaint on April 4, 2016. CBL moved to dismiss for lack of subject matter jurisdiction on August 26, 2016.

         STANDARD OF REVIEW

         Rule 12(b)(1) of the Federal Rules of Civil Procedure provides for the dismissal of a claim when a federal court lacks subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). Congress has given district courts original jurisdiction over any civil actions against a foreign state, provided that the foreign state is not entitled to immunity. 28 U.S.C. § 1330(a). Where, as here, a defendant challenges the legal sufficiency of the plaintiff s jurisdictional allegations (Def. Mem. at 8), "the court must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of plaintiff' but may also consider any relevant evidence before the Court. Robinson v. Gov't of Malay., 269 F.3d 133, 140 (2d Cir. 2001).

         The FSIA "provides the sole basis for obtaining jurisdiction over a foreign state in federal court." Permanent Mission of India to the United States v. City of New York,551 U.S. 193, 197 (2007). The parties do not dispute that NBL was an agency or instrumentality as defined in 28 U.S.C. § 1603(b). Am. Compl. ¶ 4. Under the FSIA, a foreign state is presumptively immune from suit unless a specific exception applies. Saudi Arabia v. Nelson,507 U.S. 349, 355 (1993). "Once the defendant presents a prima facie case that it is a foreign sovereign [or an instrumentality of a foreign sovereign], the plaintiff has the burden of going forward with evidence that, under the exceptions to the FSIA, immunity should not be granted, although the ultimate burden of ...


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