Second Circuit Rules that a Judgment-Creditor is Entitled to Broad Discovery Concerning Foreign State Judgment-Debtor's Assets

On August 20, 2012, the United States Court of Appeals for the Second Circuit issued its ruling in EM Ltd. v. Republic of Argentina,i which clarifies the scope of protection afforded to foreign states and their instrumentalities under the Foreign Sovereign Immunities Act (FSIA) in connection with post-judgment enforcement proceedings. The decision, which held that a party that has obtained a valid judgment against a foreign state is entitled to broad post-judgment discovery concerning the foreign state’s assets located both within the United States and abroad, re-affirmed existing Second Circuit precedent establishing a court’s authority to order post-judgment discovery against foreign states in aid of enforcement, and expressly disagreed with a recent ruling of the Seventh Circuit which found that a district court’s power to order post-judgment discovery into a foreign state’s assets was much more strictly limited under the FSIA. The Second Circuit’s decision provides considerable aid to judgment-creditors holding judgments against foreign states, and moves the Second Circuit’s FSIA-jurisprudence further toward reconciling the tension between respecting the sovereignty of foreign nations who are hauled into U.S. courts by affording parties holding judgments against foreign states a meaningful ability to enforce those judgments, particularly judgments against foreign states who have made a pre-dispute contractual waiver of sovereign immunity, but nonetheless continued to invoke it as an impediment to satisfying a duly-rendered U.S. court judgment.