Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca2-13-03819/USCOURTS-ca2-13-03819-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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13‐3819‐cv (L)

EM Ltd. et al. v. Banco Central de la República Argentina et al.

In the 

United States Court of Appeals 

for the Second Circuit    

AUGUST TERM 2014

No. 13‐3819‐cv (L)

No. 13‐3821‐cv (CON)

EM LTD., NML CAPITAL, LTD.,

Plaintiffs‐Appellees,

v.

BANCO CENTRAL DE LA REPÚBLICA ARGENTINA,

REPUBLIC OF ARGENTINA,

Defendants‐Appellants.

   

Appeal from the United States District Court for the

Southern District of New York.

No. 1:06‐cv‐7792―Thomas P. Griesa, Judge.

   

ARGUED:  DECEMBER 10, 2014

DECIDED:  AUGUST 31, 2015

   

Before: CABRANES, WESLEY, and HALL, Circuit Judges.

   

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Appeal from an order entered in the United States District

Court for the Southern District of New York (Thomas P. Griesa,

Judge) denying a motion to dismiss for lack of subject matter

jurisdiction filed by defendant‐appellant Banco Central de la

República Argentina (“BCRA”). We hold that the District Court

erred in: (1) imputing Argentina’s waiver of sovereign immunity to

BCRA based on an alter‐ego theory; and (2) applying the

commercial‐activity exception to BCRA’s use of its account with the

Federal Reserve Bank of New York. Accordingly, we REVERSE the

District Court’s order of September 26, 2013, and we REMAND the

cause with instructions to dismiss the complaint on sovereign‐

immunity grounds.       

   

JOSEPH E. NEUHAUS (Michael J. Ushkow

and Zeh S. Ekono, Sullivan & Cromwell

LLP, New York, NY; Jeffrey B. Wall,

Sullivan & Cromwell LLP, Washington,

DC, on the brief), Sullivan & Cromwell LLP,

New York, NY, for Banco Central de la

República Argentina, Defendant‐Appellant.

CARMINE D. BOCCUZZI, JR. (Jonathan I.

Blackman, Daniel J. Northrop, and Michael

M. Brennan, on the brief), Cleary Gottlieb

Steen & Hamilton LLP, New York, NY, for

Republic of Argentina, Defendant‐Appellant.  

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THEODORE B. OLSON (Matthew D. McGill

and Jason J. Mendro, Gibson, Dunn &

Crutcher LLP, Washington, DC; Robert A.

Cohen and Dennis H. Hranitzky, Dechert

LLP, New York, NY, on the brief), Gibson,

Dunn & Crutcher LLP, Washington, DC, for

NML Capital, Ltd., Plaintiff‐Appellee.

DAVID W. RIVKIN, Debevoise & Plimpton

LLP, New York, NY, for EM Ltd., Plaintiff‐

Appellee.

   

JOSÉ A. CABRANES, Circuit Judge:

In December 2001, in the midst of a severe financial crisis, the

Republic of Argentina (“Argentina” or “the Republic”) declared a

moratorium on principal and interest payments for more than $80

billion in sovereign debt, including bonds that were issued under a

Fiscal Agency Agreement (“FAA”). Pursuant to two “exchange

offers” in 2005 and 2010, Argentina “restructured” over 91% of the

then‐existing FAA bonds.1  

 1 “Debt restructuring” is a process that allows corporations and sovereign

nations facing financial distress to reduce and renegotiate their debts. See David

L. Scott, Wall Street Words: An A to Z Guide to Investment Terms for Today’s Investor

97 (3d ed. 2003) (“Creditors having difficulty making interest and/or principal

payments often restructure their debt to reduce the size of the interest payments

and to extend debt maturity.”). We previously described Argentina’s

restructuring as follows:

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Plaintiffs‐appellees EM Ltd. (“EM”) and NML Capital, Ltd.

(“NML”) (jointly, “plaintiffs”) own FAA bonds that were not

restructured. Since 2001, Argentina has refused to make any

scheduled payments on these defaulted bonds. In 2003, plaintiffs

filed suit in the United States District Court for the Southern District

of New York, seeking to recover their unpaid principal and interest.

Plaintiffs eventually obtained judgments against Argentina, which

now total approximately $2.4 billion.

This appeal concerns plaintiffs’ ongoing efforts to satisfy their

judgments against Argentina by attaching funds held by Argentina’s

central banking authority, the Banco Central de la República

Argentina (“BCRA”). In their third amended complaint (“TAC”),

plaintiffs seek a declaratory judgment that BCRA is Argentina’s

“alter ego” and that, therefore, BCRA is liable for Argentina’s debts.

If successful, plaintiffs’ stated intent is to use the declaratory

judgment to attach unspecified funds that BCRA holds in unnamed

foreign jurisdictions.  

 

In 2005, Argentina initiated an exchange offer in which it

allowed FAA bondholders to exchange their defaulted bonds for

new unsecured and unsubordinated external debt at a rate of 25 to

29 cents on the dollar. In exchange for the new debt, participants

agreed to forgo various rights and remedies previously available

under the FAA.  

. . . .

In 2010, Argentina initiated a second exchange offer with a

payment scheme substantially identical to the 2005 offer.

NML Capital, Ltd. v. Republic of Argentina, 699 F.3d 246, 252 (2d Cir. 2012).

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As an instrumentality of a sovereign state, BCRA is ordinarily

immune from lawsuits in American courts under the Foreign

Sovereign Immunities Act, 28 U.S.C. §§ 1330, 1602 et seq. (“FSIA”).2

Accordingly, BCRA moved to dismiss the TAC for lack of subject

matter jurisdiction on sovereign‐immunity grounds, as well as for

lack of personal jurisdiction and for failure to state a claim upon

which relief can be granted. On September 26, 2013, the United

States District Court for the Southern District of New York (Thomas

P. Griesa, Judge) issued an order denying BCRA’s motion.  

Relevant to this appeal, the District Court concluded that

BCRA had waived its sovereign immunity under two statutory

exceptions. First, the District Court held that the FAA’s express

waiver of sovereign immunity also waived BCRA’s immunity—

 2 28 U.S.C. § 1603 provides, in pertinent part, the following:

(a) A “foreign state” . . . includes a political subdivision of

a foreign state or an agency or instrumentality of a foreign

state as defined in subsection (b).

(b) An “agency or instrumentality of a foreign state”

means any entity—

(1) which is a separate legal person, corporate or

otherwise, and

(2) which is an organ of a foreign state or political

subdivision thereof, or a majority of whose shares

or other ownership interest is owned by a foreign

state or political subdivision thereof . . . .

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under 28 U.S.C. § 1605(a)(1)3—because BCRA is Argentina’s “alter

ego.” Second, the District Court held that BCRA’s use of its account

with the Federal Reserve Bank of New York (“FRBNY”) constituted

“commercial activity” in the United States, which waived BCRA’s

sovereign immunity under 28 U.S.C. § 1605(a)(2).4

Because neither of these statutory exceptions applies to this

case, the District Court erred in denying BCRA’s motion to dismiss

for lack of subject matter jurisdiction. Accordingly, we REVERSE

the District Court’s order of September 26, 2013, and we REMAND

the cause with instructions to dismiss the TAC with prejudice.  

BACKGROUND

I. The Underlying Debt

In 1994, Argentina began issuing debt securities pursuant to a

Fiscal Agency Agreement (“FAA bonds”). In light of Argentina’s

“history of defaulting on, or requiring restructuring of, its sovereign

obligations,”5 investors demanded that the FAA include a waiver of

 3 28 U.S.C. § 1605(a)(1) states in relevant part that a foreign state shall not

be immune from jurisdiction if it “has waived its immunity either explicitly or by

implication.”

4 28 U.S.C. § 1605(a)(2) states in relevant part that a foreign state is not

immune from any action “based upon a commercial activity carried on in the

United States.”

5 EM Ltd. v. Republic of Argentina, 473 F.3d 463, 466 n.2 (2d Cir. 2007)

(“BCRA I”); see also id. (recording Argentina’s “many contributions to the law of

foreign insolvency through its numerous defaults on its sovereign obligations, as

well as through . . . a diplomacy of default”).

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Argentina’s foreign sovereign immunity as to “any suit, action, or

proceeding against it or its properties, assets or revenues with

respect to the” FAA bonds, and any suit brought “for the purpose of

enforcing or executing” a judgment obtained in a related

proceeding.6 Argentina agreed to include this waiver of sovereign

immunity in the FAA. 7

In December 2001, Argentina declared a moratorium on

principal and interest payments on more than $80 billion of foreign

debt, including the FAA bonds.8 Since then, Argentina has not made

principal or interest payments on these bonds. In 2005 and 2010,

Argentina successfully restructured over 91% of its debt by

launching “global exchange offers,” pursuant to which creditors

holding the defaulted bonds could exchange them for new securities

with modified terms that substantially reduced their value.9  

Plaintiffs EM and NML own FAA bonds that were not restructured.   

Beginning in 2003, plaintiffs filed multiple actions against

Argentina in the Southern District of New York in an effort to

recover the full amounts due on their defaulted bonds. Argentina

 6 J.A. at 329‐30, 343‐44.

7 Argentina “concedes that in the [FAA] governing the debt instruments

owned by plaintiffs it clearly and unambiguously waived its right to assert its

sovereign immunity from suit in claims regarding those instruments.” NML

Capital, Ltd. v. Banco Central de la República Argentina, 652 F.3d 172, 176 n.3 (2d Cir.

2011) (“BCRA II”).

8 See id. at 175.  

9 Id. at 176 & n.4.  

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did not dispute that its sovereign immunity had been waived in the

FAA. Plaintiffs eventually obtained numerous final judgments

against Argentina, which now total approximately $2.4 billion.10

These judgments remain unpaid.  

II. Litigation Against BCRA

On December 15, 2005, Argentina’s President, Néstor

Kirchner, issued two emergency executive decrees—Decree

1599/2005 and Decree 1601/2005 (jointly, the “Decrees”)—both of

which involved funds held by BCRA.11 The first decree provided

that reserves held by BCRA in excess of the amount needed to

support Argentina’s monetary base12 could “be used for payment of

obligations undertaken with international monetary authorities.”13

The decree labeled these excess reserves “unrestricted reserves.” The

second decree directed the Ministry of Economy and Production to

take the necessary steps to repay Argentina’s debt to the

International Monetary Fund (“IMF”) out of the unrestricted

reserves. As we previously noted:  

 10 Id. at 176 & n.6.   

11 Reproductions of Decree 1599/2005 and Decree 1601/2005—in Spanish

and English translation—are provided in the J.A. at 579‐88.   

12 See BCRA I, 473 F.3d at 468 (defining “monetary base” as being

“composed of the monetary circulation of Argentine pesos plus the demand

deposits of the financial entities with BCRA, in checking accounts or special

accounts”) (citing Law No. 23,928 of 3/27/91 art. 6, as amended by Law No. 25,561

of 1/7/02 art. 4) (internal quotation marks and brackets omitted).  

13 Id. at 468 (quoting Decree 1599/2005 art. 1, J.A. at 581).  

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At the time of the Decrees, BCRA had

approximately $26.8 billion in reserves and

needed $18.4 billion to cover the monetary

base; thus, approximately $8.4 billion in

reserves became Unrestricted Reserves

pursuant to the Decrees. On December 29,

2005, the Ministry issued Resolution No.

49, directing BCRA to repay [Argentina’s]

debt to the IMF and providing that, in

exchange, [Argentina] would give BCRA a

non‐transferrable note.14

Soon after these Decrees were issued, plaintiffs made their

first attempt to satisfy their judgments against Argentina by

attaching funds held by BCRA. On December 30, 2005, plaintiffs

moved in the Southern District of New York for an ex parte order to

restrain funds held by BCRA. Plaintiffs asserted that the Decrees had

the effect of transferring ownership of certain BCRA assets—

including funds held in BCRA’s account with the FRBNY—from

BCRA to Argentina. The District Court entered temporary

restraining orders with respect to, inter alia, the property held by

BCRA in eight garnishee banking institutions, including the

FRBNY.15  

 14 Id.

15 Id. at 469. On January 3, 2006, the BCRA paid Argentina’s debt to the

IMF out of the BCRA’s funds. The FRBNY funds that were subject to the

restraining notices were not used in connection with that payment, although the

parties disputed “whether the funds might have been used for this purpose in

the absence of the court‐ordered restraints on the transfer of the funds.” Id.

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On January 12, 2006, the District Court vacated the temporary

restraining orders.16 Plaintiffs appealed the District Court’s decision,

maintaining that the Decrees amounted to an expropriation by

Argentina of BCRA’s assets in order to pay Argentina’s debt to the

IMF, and that, consequently, the funds in BCRA’s FRBNY account

had become Argentina’s property.  

On January 5, 2007, we rejected plaintiffs’ argument and

affirmed the District Court’s order, holding that “the Decrees did not

alter property rights with respect to the FRBNY Funds” because they

“did not create an attachable interest on the part of [Argentina] in

the FRBNY Funds.”17 Although we thus rejected plaintiffs’ transfer‐

of‐ownership argument, we noted the difference between two

theories of attachment—(1) that “the Decrees transferred to the

Republic ownership or control over the assets of BCRA”; and (2) that

Argentina controlled “BCRA itself”—i.e., that BCRA was Argentina’s

alter ego.18 We concluded that plaintiffs had not established that

BCRA’s funds were transferred to Argentina, but we noted that

plaintiffs’ allegations regarding Argentina’s “misdeeds . . . might

have lent some credence to” the alter‐ego theory.19 That is, we

suggested that plaintiffs could potentially argue that BCRA was “so

extensively controlled by [Argentina] that a relationship of principal

 16 Id. at 470.  

17 Id. at 472.  

18 Id. at 475 (emphasis in the original).  

19 Id. at 480.  

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and agent is created,” or that recognizing BCRA’s separate juridical

status would “work fraud or injustice”20—and that, if successful, this

claim would subject all of BCRA’s assets to potential attachment by

Argentina’s judgment creditors.  

In September 2006, while BCRA I was pending, plaintiffs

commenced a new action seeking a declaratory judgment that,

pursuant to First National City Bank v. Banco Para El Comercio Exterior

de Cuba, 462 U.S. 611 (1983) (“Bancec”), BCRA was liable for

Argentina’s debts. Specifically, plaintiffs argued that Argentina’s

consistent disregard for BCRA’s independence had vitiated any

presumption of separateness to which BCRA was entitled,

transforming BCRA into Argentina’s “alter ego.”

In this new action, plaintiffs also pursued attachment orders

against BCRA’s FRBNY funds based on this alter‐ego theory. On

April 7, 2010, the District Court granted plaintiffs’ attachment

motions and ruled that, at the time of BCRA’s repayment of

Argentina’s debt to the IMF (December 2005), BCRA was

Argentina’s alter ego.21 The District Court also concluded that the

attachment of BCRA’s FRBNY funds did not violate § 1611(b)(1),

which immunizes “property . . . of a foreign central bank . . . held for

 20 First Nat’l City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S.

611, 629 (1983) (“Bancec”) (internal quotation marks omitted) (applying

corporate‐law principles to determine circumstances under which separate

juridical status of government instrumentality must be disregarded).  

21 See EM Ltd. v. The Republic of Argentina, 720 F. Supp. 2d 273, 302‐04

(S.D.N.Y. 2010).

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its own account.” Accordingly, the District Court authorized the

attachment of the $105 million deposited in BCRA’s FRBNY account.  

This order was appealed and in 2011, in BCRA II, we vacated

the attachment on the sole ground that the funds held in BCRA’s

FRBNY account were “immune” from execution under

§ 1611(b)(1).22 We declined to reach the District Court’s alter‐ego

determination and instead concluded that these funds were immune

from attachment “without regard to whether the [BCRA] is

independent from its parent state pursuant to Bancec.”23 We thus

intimated no view as to “whether the District Court correctly

determined that [Argentina’s] control of BCRA was sufficient to

disregard the presumption of juridical separateness under Bancec.”24

Accordingly, we vacated the District Court’s attachment orders with

respect to the FRBNY funds and remanded the cause to the District

Court for further proceedings.

III. This Case Upon Remand

On remand, plaintiffs filed the TAC—the operative complaint

for purposes of this appeal.25 Pursuant to our ruling in BCRA II,

funds held in BCRA’s accounts with the FRBNY are immune from

attachment. Accordingly, the TAC is framed more broadly—the

 22 See BCRA II, 652 F.3d at 186‐87.  

23 Id. at 187–88.  

24 Id. at 196 n.24.

25 See J.A. at 3026–83 (filed August 31, 2012).  

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declaratory judgment it seeks would establish: (1) that BCRA is the

alter ego of Argentina; and (2) that BCRA is thus liable for any and

all of Argentina’s debts.26 Plaintiffs’ stated purpose for seeking this

judgment is to enable them to attach any asset held by BCRA

anywhere in the world in satisfaction of their judgments against

Argentina.27 This option was arguably left open by BCRA II, which

foreclosed the possibility of attaching assets deposited in BCRA’s

own accounts in the United States, but did not otherwise address

plaintiffs’ ability to reach BCRA assets elsewhere.

In November 2012, Argentina and BCRA moved to dismiss

the TAC for lack of subject matter jurisdiction, lack of personal

jurisdiction, and failure to state a claim. Oral argument on this

motion was held at a conference of the District Court on September

25, 2013. Plaintiffs argued that BCRA had waived its sovereign

immunity on two grounds. First, plaintiffs asserted a theory of

implied waiver—that is, because BCRA is the alter ego of Argentina,

Argentina’s express waiver of immunity in the FAA should be

imputed to BCRA.28 Second, plaintiffs asserted that BCRA waived its

 26 J.A. at 3027 (TAC ¶ 1).

27 See Special App. (“SPA”) at 4 (9/25/13 Tr. 3:21‐23) (“We would like to be

able to have a judgment that holds BCRA liable for the judgments entered

against Argentina that we may enforce as a judgment if we find assets

anywhere.”); id. at 10‐13 (9/25/13 Tr. 9:10‐12:15) (arguing that plaintiffs could take

the declaratory judgment to California, Switzerland, or Germany and use it to

attach BCRA’s assets held in those jurisdictions).  

28 See id. at 27‐28 (9/25/13 Tr. 26:24‐27:1).  

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immunity by engaging in “commercial activity” in New York

through its FRBNY account.29   

In denying the motion to dismiss, the District Court explicitly

adopted plaintiffs’ arguments for jurisdiction. In its bench order, the

District Court stated:  

What I’m going to do this afternoon is to

deny the motions to dismiss the [TAC]. I

believe there is jurisdiction in the way

[plaintiffs’ counsel] Mr. Cohen describes

jurisdiction which makes it appropriate to

entertain the action; and considering the

provisions of the Foreign Sovereign

Immunities Act, I believe that there is an

implied waiver here and I believe there’s

commercial activity so that the provisions

of 28 U.S.C. 1605(a)(1) and (a)(2) are

applicable.

This really is, denying a motion to dismiss,

exactly what would emerge from a

litigation that has problems. The plaintiffs’

position has problems, as I’ve indicated.

But I think those problems do not require

the dismissal of the action.

And I want to repeat something which I’m

sure I’ve said maybe more than once this

afternoon; and that is, we don’t have a

 29 See id. at 29‐31 (9/25/13 Tr. 28:1‐30:2).  

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republic which is acting in a normal way as

far as its debts. We don’t have a situation

[where] there is a completely regular

dealing between the [R]epublic and BCRA

the way that I’m sure would exist with the

Bank of England or the Central Bank of

Germany or France or certainly with the

Federal Reserve Bank. We don’t have that.

We have irregularities.  

The reason that I believe the action should

be held open is I think there is a very

legitimate claim by the plaintiffs here that

for certain purposes BCRA is the alter ego

of the [R]epublic.  

In the papers before me, the plaintiffs have

made a very powerful case of that, and I so

held in my earlier decision, and that

holding was not what was disturbed by the

Court of Appeals. So, there’s a very good

case of alter ego.  

I believe that the Court should entertain the

idea that it would be desirable to have this

Court with its experience in this case and

its background in this case make some kind

of formal ruling of alter ego which could be

legitimately used in a proceeding in

another state or a foreign country so that

the plaintiffs do not have to go to the other

state or the foreign country and start in

again, once again, and maybe more than

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once again with this presentation about

alter ego.

The motion to dismiss the action is

denied.30

This appeal followed.31  

DISCUSSION

I. Appellate Jurisdiction

In general, our appellate jurisdiction is limited to “final

decisions” of district courts;32 the District Court’s order here is

interlocutory. BCRA asserts, however, that we have jurisdiction

under the “collateral order” exception to review BCRA’s claim of

sovereign immunity as a defense to subject matter jurisdiction.33   

Under this exception, an interlocutory appeal is available for

“a small class of ‘collateral’ rulings that do not terminate the

litigation in the court below but are nonetheless sufficiently ‘final’

and distinct from the merits to be appealable without waiting for a

 30 Id. at 32‐34 (9/25/13 Tr. 31:19‐33:7).

31 The TAC names both BCRA and the Republic of Argentina as

defendants in this lawsuit, and both BCRA and the Republic have appealed the

District Court’s denial of their joint motion to dismiss the TAC.  

32 28 U.S.C. § 1291.

33 See MasterCard Intʹl Inc. v. Visa Intʹl Serv. Assʹn, 471 F.3d 377, 383 (2d

Cir. 2006).

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final judgment to be entered.”34 To fit within the exception, the

interlocutory order must: (1) “conclusively determine the disputed

question,” (2) “resolve an important issue completely separate from

the merits of the action,” and (3) “be effectively unreviewable on

appeal from a final judgment.”35  

A denial of foreign sovereign immunity generally satisfies the

conditions necessary to invoke the collateral order doctrine.36 For

instance, in Rein v. Socialist People’s Libyan Arab Jamahiriya,

37 we held

that all three prongs of the above test were satisfied because: (1) the

district court’s ruling on sovereign immunity conclusively

determined the issue of subject matter jurisdiction; (2) the issue of

jurisdiction is separate from the merits; and (3) an appeal from final

judgment cannot repair the damage caused to a sovereign that is

improperly required to litigate a case.38

 34 Liberty Synergistics Inc. v. Microflo Ltd., 718 F.3d 138, 146 (2d Cir. 2013)

(citing Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949)).

35 Whiting v. Lacara, 187 F.3d 317, 320 (2d Cir. 1999) (quoting Coopers &

Lybrand v. Livesay, 437 U.S. 463, 468 (1978)) (internal quotation marks omitted).

36 See Blue Ridge Invs., L.L.C. v. Republic of Argentina, 735 F.3d 72, 80 (2d

Cir. 2013) (collecting cases); Kensington Int’l Ltd. v. Itoua, 505 F.3d 147, 153 (2d Cir.

2007); see also Gupta v. Thai Airways Int’l, Ltd., 487 F.3d 759, 763 n.6 (9th Cir. 2007)

(“[E]ach of our sister circuits that has considered whether a denial of a motion to

dismiss on grounds of foreign sovereign immunity is an appealable collateral

order ha[s] unanimously held that it is.”) (collecting cases).

37 162 F.3d 748, 755‐56 (2d Cir. 1998).

38 See id. (“A sovereign that is required to litigate a case on the merits

before it can appeal the assertion of jurisdiction over it has not been afforded the

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Notwithstanding the collateral‐order doctrine, plaintiffs assert

that we lack appellate jurisdiction here because the “immunity

question cannot be decided without addressing [plaintiffs’]

underlying claims on the merits.”39 According to plaintiffs, BCRA’s

alter‐ego status is a predicate to holding that the FAA’s sovereign‐

immunity waiver binds BCRA and, therefore, resolving the

immunity issue now would require an unnecessary and

burdensome inquiry into the extent of Argentina’s control over

BCRA. Accordingly, plaintiffs urge us to defer review until the

District Court issues a final judgment.40

These arguments are unpersuasive. We have consistently held

that the threshold sovereign‐immunity determination is

 

benefit of the immunity to which it is entitled.”); Foremost–McKesson, Inc. v.

Islamic Republic of Iran, 905 F.2d 438, 443 (D.C. Cir. 1990) (“[S]overeign immunity

is an immunity from trial and the attendant burdens of litigation[.]”) (internal

quotation marks omitted); Puerto Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy,

Inc., 506 U.S. 139, 145‐46 (1993) (same in the context of state sovereign immunity

under the Eleventh Amendment).

39 Plaintiffs‐Appellees Br. at 21 (quoting Grp. Health Inc. v. Blue Cross

Ass’n, 793 F.2d 491, 497 (2d Cir. 1986)).  

40 In so arguing, plaintiffs principally rely on two cases from this Circuit,

neither of which concerned motions to dismiss based on sovereign immunity. In

White v. Frank, 855 F.2d 956 (2d Cir. 1988), we denied interlocutory review of a

failed absolute‐immunity defense, because immunity turned on whether

defendants were liable for the constitutional tort of malicious prosecution. In

Grp. Health Inc. v. Blue Cross Ass’n, 793 F.2d 491 (2d Cir. 1986), we similarly

denied appellate review where absolute immunity turned on whether the

defendant acted within the scope of its authority.  

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immediately reviewable under the collateral‐order doctrine.41 In fact,

this case is similar to U.S. Fidelity & Guaranty Co. v. Braspetro Oil

Services Co.,

42 in which we also reviewed the denial of a motion to

dismiss brought by a purported foreign‐state alter ego, and in which

we held that a court reviewing a district court’s sovereign‐immunity

decision must assess whether plaintiffs “have made a sufficient

showing [of alter ego] at this point in the litigation.”43 As the Supreme

Court has held, “a question of immunity is separate from the merits

of the underlying action . . . even though a reviewing court must

consider the plaintiff’s factual allegations in resolving the immunity

issue.”44   

At this stage in the case, we must (1) assume the truth of the

TAC’s factual allegations, and then (2) assess whether these

allegations are sufficient to establish that BCRA waived its sovereign

immunity. If we are able to determine conclusively that the

pleadings do not establish, as a matter of law, that BCRA waived its

 41 See ante note 36.  

42 199 F.3d 94 (2d Cir. 1999).  

43 Id. at 98 (emphasis supplied).  

44 Mitchell v. Forsyth, 472 U.S. 511, 528‐29 (1985); see also Johnson v. Jones,

515 U.S. 304, 314 (1995) (a claim of immunity is immediately appealable even

though it is “sometimes practically intertwined with the merits”); cf. Ashcroft v.

Iqbal, 556 U.S. 662, 672‐75 (2009) (jurisdiction proper over qualified immunity

appeal concerning legal sufficiency of pleadings because “[e]valuating the

sufficiency of a complaint is not a ‘fact based’ question of law”); Cowan ex rel.

Estate of Cooper v. Breen, 352 F.3d 756, 760‐61 (2d Cir. 2003) (existence of qualified

immunity under plaintiffs’ version of the facts “turns on an issue of law” and is

thus immediately appealable).

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sovereign immunity, it would be inconsistent with the underlying

purpose of the foreign‐sovereign‐immunity doctrine to subject

BCRA to further burdensome litigation.45

Accordingly, we conclude that we have jurisdiction under the

collateral‐order doctrine to review the District Court’s threshold

determination that BCRA waived its sovereign immunity pursuant

to 28 U.S.C. § 1605(a)(1) (the express waiver exception) and 28 U.S.C.

§ 1605(a)(2) (the commercial activity exception).46

 45 See Republic of Philippines v. Pimentel, 553 U.S. 851, 865 (2008) (the

foreign‐sovereign‐immunity doctrine “is designed to ‘give foreign states and

their instrumentalities some protection from the inconvenience of suit.’” (quoting

Dole Food Co. v. Patrickson, 538 U.S. 468, 479 (2003))).

46 Because we conclude that the TAC fails to establish that BCRA waived

its sovereign immunity, see post Section II, we need not and do not reach the issue

of whether we have appellate jurisdiction (or pendent appellate jurisdiction) over

BCRA’s other asserted grounds for dismissal, which the District Court also

rejected. These grounds include: (1) that plaintiffs lack Article III standing,

because it is speculative whether the declaratory judgment sought by plaintiffs

would redress their injury (i.e., permit them to recover funds in other

jurisdictions); and (2) that the TAC fails to state a plausible claim that BCRA is

Argentina’s alter ego. As to the first ground, we take no position on whether a

declaratory judgment of the type sought here would satisfy the requirements of

Article III. As to the second ground, plaintiffs’ Rule 12(b)(6) argument overlaps

substantially with our discussion of sovereign immunity, but we decline to

exercise pendent appellate jurisdiction to review the District Court’s denial of

plaintiffs’ 12(b)(6) motion. Rather, as we explain in detail below, the TAC is to be

dismissed solely on sovereign‐immunity grounds.  

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II. Sovereign Immunity

Moving to the merits of this appeal, the sole issue we consider

is whether the District Court erred in its conclusion that BCRA

waived its sovereign immunity. We review this conclusion de novo.

47   

There is no dispute that BCRA is an instrumentality of

Argentina and that, unless one of the FSIA’s exceptions applies,

BCRA is entitled to invoke its sovereign immunity as a defense to

this lawsuit.48 Here, the District Court concluded that two exceptions

applied. First, it held that the FAA’s express waiver of sovereign

immunity under § 1605(a)(1) is imputable to BCRA (as Argentina’s

“alter ego”). Second, it held that BCRA’s use of its account at the

FRBNY constituted “commercial activity” in the United States

within the meaning of § 1605(a)(2).  

We address each exception in turn.

 47 See Aurelius Capital Partners, LP v. Republic of Argentina, 584 F.3d 120, 129

(2d Cir. 2009) (“We review de novo legal conclusions denying [FSIA] immunity to

a foreign state or its property.”).  

48 See Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 485 n.5 (1983)

(“[I]f none of the exceptions to sovereign immunity set forth in the [FSIA]

applies, the District Court lacks both statutory subject matter jurisdiction and

personal jurisdiction. The District Court’s conclusion that none of the exceptions

to the Act applied therefore signified an absence of both competence and

personal jurisdiction.”).

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A. Alter Ego  

1. Legal Standards

The controlling case for when an instrumentality of a

sovereign state becomes the “alter ego” of that state is First National

City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611

(1983)—known as Bancec. In Bancec, the Supreme Court created a

presumption that “government instrumentalities established as

juridical entities distinct and independent from their sovereign

should normally be treated as such.”49 According to the Court,

[f]reely ignoring the separate status of

government instrumentalities would result

in substantial uncertainty over whether an

instrumentality’s assets would be diverted

to satisfy a claim against the sovereign, and

might thereby cause third parties to

hesitate before extending credit to a

government instrumentality without the

government’s guarantee. As a result, the

efforts of sovereign nations to structure

their governmental activities in a manner

deemed necessary to promote economic

development and efficient administration

would surely be frustrated.50

 49 Bancec, 462 U.S. at 626‐27.

50 Id. at 626 (footnote omitted).

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The Supreme Court drew support for this proposition in the

legislative history of 28 U.S.C. § 1610(b),51 the provision of the FSIA

addressing the circumstances in which a judgment creditor may

execute upon the assets of a foreign government’s instrumentality:  

Section 1610(b) [of the FSIA] will not

permit execution against the property of

one agency or instrumentality to satisfy a

judgment against another, unrelated

agency or instrumentality. There are

compelling reasons for this. If U.S. law did

not respect the separate juridical identities

of different agencies or instrumentalities, it

might encourage foreign jurisdictions to

disregard the juridical divisions between

different U.S. [public] corporations or

between a U.S. [public] corporation and its

 51 28 U.S.C. § 1610(b) reads, in pertinent part, as follows:

(b) . . . any property in the United States of an agency or

instrumentality of a foreign state engaged in commercial

activity in the United States shall not be immune from

attachment in aid of execution, or from execution, upon a

judgment entered by a court of the United States or of a

State after the effective date of this Act, if—

(1) the agency or instrumentality has waived its

immunity from attachment in aid of execution or

from execution either explicitly or implicitly,

notwithstanding any withdrawal of the waiver the

agency or instrumentality may purport to effect

except in accordance with the terms of the waiver

. . . .  

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independent subsidiary. However, a court

might find that property held by one

agency is really the property of another.52

Therefore, Bancec recognizes a statutory “presumption that a

foreign government’s determination that its instrumentality is to be

accorded separate legal status” will be honored.53 But this

presumption of separateness may be rebutted by evidence

establishing an alter‐ego relationship between the instrumentality

and the sovereign state that created it. Specifically, the presumption

may be overcome and an alter‐ego relationship established if: (1) the

instrumentality “is so extensively controlled by its owner that a

relationship of principal and agent is created”; or (2) the recognition

of an instrumentality’s separate legal status would work a “fraud or

injustice.”54 As we previously noted, “both Bancec and the FSIA

legislative history caution against too easily overcoming the

presumption of separateness.”55

 52 Bancec, 462 U.S. at 627–28 (quoting H.R. Rep. No. 94‐1487, at 29‐30

(1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6628‐29).  

53 Id. at 628.  

54 Id. at 629 (internal quotation marks omitted); see Letelier v. Republic of

Chile, 748 F.2d 790, 794 (2d Cir. 1984) (“[A] foreign state instrumentality is

answerable just as its sovereign parent would be if the foreign state has abused

the corporate form, or where recognizing the instrumentality’s separate status

works a fraud or an injustice.”).  

55 Letelier, 748 F.2d at 795; see also Seijas v. Republic of Argentina, 502 F.

App’x 19, 22 (2d Cir. 2012) (non‐precedential summary order) (Bancec sets forth a

“strong presumption” that an instrumentality has a “separate legal identity”).  

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2. Analysis

Under Bancec, we are thus required to presume that BCRA is

legally separate and distinct from Argentina. This presumption is

overcome only if the TAC alleges facts sufficient to establish that

either: (1) Argentina so extensively controlled BCRA that a

relationship of principal and agent was created; or (2) recognizing

BCRA as a separate entity would work a fraud or injustice.56  

For the reasons that follow, neither prong of this test has been

satisfied. Therefore, the presumption that BCRA is separate from

Argentina has not been rebutted. Because Argentina’s express

 56 The District Court did not clearly indicate which of these two theories it

relied upon in making its alter‐ego determination. It did, however, observe “that

a general declaration of alter ego could . . . have effects or implications beyond

what [the Court] would intend,” and that “the idea that BCRA is in a general

way liable for the debts of the republic goes way too far.”  SPA at 31‐32 (9/25/13

Tr. 30:19‐21, 30:25‐31:2). While the District Court ultimately concluded that

plaintiffs have a legitimate claim that BCRA is the alter ego of Argentina for

“certain purposes,” id. at 33 (9/25/13 Tr. 32:17), it did not specify what those

purposes were.  

Our precedent supports the view, however, that once an instrumentality

of a sovereign state has been deemed to be the alter ego of that state under

Bancec, the instrumentality and the state are to be treated as one and the same for

all purposes. See Letelier, 748 F.2d at 794 (“The Bancec Court held that a foreign

state instrumentality is answerable just as its sovereign parent would be if the

foreign state has abused the corporate form, or where recognizing the

instrumentality’s separate status works a fraud or an injustice.”) (emphasis

supplied). Because we conclude that the TAC fails to plead facts that would

establish that BCRA has become Argentina’s alter ego for any purpose, we need

not address the District Court’s novel conclusion that an instrumentality may

become an “alter ego” for just some, but not all, purposes.  

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waiver of sovereign immunity in the FAA does not apply to BCRA,

plaintiffs’ reliance on the § 1605(a)(1) exception necessarily fails.  

a. Extensive Control

We address first Bancec’s “extensive control” prong. While

measuring the level of control exercised over an instrumentality by a

foreign sovereign is fact‐intensive, courts have articulated several

indicia to guide the inquiry.57 Among the factors that have been

deemed relevant are whether the sovereign nation: (1) uses the

instrumentality’s property as its own; (2) ignores the

instrumentality’s separate status or ordinary corporate formalities;

(3) deprives the instrumentality of the independence from close

political control that is generally enjoyed by government agencies;

(4) requires the instrumentality to obtain approvals for ordinary

business decisions from a political actor; and (5) issues policies or

directives that cause the instrumentality to act directly on behalf of

the sovereign state.58    These factors are relevant to answering the

touchstone inquiry for “extensive control”: namely, whether the

 57 For instance, the Fifth Circuit in Bridas S.A.P.I.C. v. Gov’t of

Turkmenistan, 447 F.3d 411, 416‐18 (5th Cir. 2006), listed 21 factors to consider to

determine whether the foreign state “complete[ly] control[led]” the

instrumentality. See also Letelier, 748 F.2d at 794.

58 See, e.g., McKesson Corp. v. Islamic Republic of Iran, 52 F.3d 346, 352 (D.C.

Cir. 1995); Hester Int’l Corp. v. Fed. Republic of Nigeria, 879 F.2d 170, 178 (5th Cir.

1989).  

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sovereign state exercises significant and repeated control over the

instrumentality’s day‐to‐day operations.59  

BCRA was founded in 1935 as Argentina’s Central Bank.60 By

statute, it is “a self‐administered institution,” which is charged with

acting as Argentina’s agent and depository before international

monetary, banking, and financial entities, as well as with regulating

the Argentine banking system and financial sector.61 BCRA’s

primary responsibility is to maintain the value of legal tender in

Argentina—accordingly, it shall “exclusively issue banknotes and

coins in the Argentine Nation,” and “invest a portion of its external

 59 See LNS Invs., Inc. v. Republic of Nicaragua, 115 F. Supp. 2d 358, 363

(S.D.N.Y. 2000) (alter‐ego test requires a showing that “the government exercises

extensive control over the instrumentality’s daily operations and abuses the

corporate form”), aff’d sub nom. LNC Invs., Inc. v. Banco Central de Nicaragua, 228

F.3d 423 (2d Cir. 2000) (affirming “for substantially the reasons stated by the

district court”); Seijas, 502 F. App’x at 22 (Bancec requires extensive control of

subsidiary’s “day‐to‐day activities” or abuse of the corporate form.); First Inv.

Corp. of the Marshall Islands v. Fujian Mawei Shipbuilding, Ltd., 703 F.3d 742, 753

(5th Cir. 2012) (“[W]e look to the ownership and management structure of the

instrumentality, paying particularly close attention to whether the government is

involved in day‐to‐day operations, as well as the extent to which the agent holds

itself out to be acting on behalf of the government.” (internal quotation marks

omitted)); Doe v. Holy See, 557 F.3d 1066, 1080 (9th Cir. 2009) (Bancec requires

allegations “of day‐to‐day control” in order “to overcome the presumption of

separate juridical status”).  

60 BCRA II, 652 F.3d at 177 (citing Law No. 24,144/92, ch. I, § 1 (Oct. 22,

1992, as amended) (“BCRA Charter”)). An English translation of the BCRA

Charter is provided in the J.A. at 2786‐2800.  

61 BCRA Charter, arts. 1, 3‐4 (J.A. at 2786‐87); see also id. arts. 17‐18, 21‐22,

25 & 28‐29 (J.A. at 2791‐95).   

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assets in deposits or other interest‐bearing transactions with foreign

banking institutions.”62 Moreover, BCRA is managed by an

independent Board of Directors appointed by the “National

Executive Power” with the consent of the national Senate.63 BCRA

has the authority to purchase and sell property, hold accounts, and

sue and be sued in courts under its own name.64    

Thus far, “on paper,” BCRA appears to be a typical

government instrumentality entitled to separate legal status.  

However, plaintiffs argue, and the District Court presumably

accepted, that BCRA’s formal independence is belied by Argentina’s

extensive control over BCRA’s day‐to‐day operations. Plaintiffs

attempt to buttress this conclusion with three categories of factual

allegations. Nonetheless, even if we assume the truth of all of them,

these facts do not support a claim of “extensive control,” because

whatever control Argentina exerted was not tied to BCRA’s day‐to‐

day operations.  

First, the TAC alleges that Argentina systematically

eliminated BCRA’s legal independence by: (1) permitting the

President to appoint BCRA officers for an unspecified period

without Senate approval; and (2) removing BCRA governors who

supported the central bank’s independence from the executive

 62 Id. Arts. 30 & 33 (J.A. at 2795‐96).  

63 See BCRA I, 473 F.3d at 479 n.15.  

64 Id.

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branch.65 But courts have consistently rejected the argument that the

appointment or removal of an instrumentality’s officers or directors,

standing alone, overcomes the Bancec presumption.66 The hiring and

firing of board members or officers is an exercise of power incidental

to ownership, and ownership of an instrumentality by the parent

state is not synonymous with control over the instrumentality’s day‐

to‐day operations. Governments commonly exercise some measure

of control over their instrumentalities, much like parent corporations

commonly control certain aspects of otherwise independent

subsidiaries. Missing from plaintiffs’ allegations are any claims that

Argentina’s appointment of board members then caused it to

interfere in and dictate BCRA’s daily business decisions. Ensuring

that a board of directors of an instrumentality shares the sovereign’s

goals and policies for the instrumentality is not, by itself, extensive

control. The sovereign must instead use its influence over these

directors in order to interfere with the instrumentality’s ordinary

business affairs.  

 65 See J.A. at 3056‐66 (TAC ¶¶ 76‐96).

66 See Transamerica Leasing, Inc. v. La República de Venezuela, 200 F.3d 843,

849 (D.C. Cir. 2000) (“If majority stock ownership and appointment of the

directors were sufficient, then the presumption of separateness announced in

Bancec would be an illusion.”); Foremost‐McKesson, 905 F.2d at 440 (“[M]ere

involvement by the state in the affairs of an agency or instrumentality does not

answer the question whether the agency or instrumentality is controlled by the

state for purposes of FSIA.”); Hester Int’l Corp., 879 F.2d at 181 (“The two factors

of 100% ownership and appointment of the Board of Directors cannot by

themselves force a court to disregard the separateness of the juridical entities.”).  

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Second, the TAC alleges that Argentina issued executive

decrees and legislative amendments to make it easier for the

government to borrow from BCRA, and that Argentina

subsequently borrowed tens of billions of dollars from BCRA in

order to pay Argentina’s debts to the IMF and other private

creditors (but not to these plaintiffs).67 However, as the United States

argued before us as amicus in BCRA II,

68 the repayment by BCRA of

Argentina’s other debts does not establish the existence of an alter‐

ego relationship, because “central banks commonly perform

payment functions for their governments, including central banks

that are relatively independent from their governments.”69 Although

the United States also argued that the IMF’s status as a preferred

 67 See J.A. at 3036‐56 (TAC ¶¶ 33‐75) (BCRA’s loans to Argentina between

2005 and 2010 included: (1) $8 billion to pay its debt to the IMF in 2005; (2) $6.7

billion to pay its debt to the Club of Paris in 2008; (3) $6.6 billion to pay its debt to

private creditors in 2010; and (4) $17 billion from 2010 to 2012 to pay a variety of

other debts). The “Club of Paris” is “an international organization established for

the purpose of settling controversies concerning debts that were guaranteed or

owed by LDC [Less Developed Country] governments to creditor governments.”  

BCRA I, 473 F.3d at 466 n.2 (internal quotation marks omitted) (alteration in the

original).

68 In BCRA II, we did not reach the District Court’s earlier holding that

BCRA was Argentina’s alter ego. However, the United States—which appeared

as amicus in BCRA II in support of the position of BCRA—argued in the

alternative that the District Court’s analysis of the alter‐ego issue in that earlier

case was flawed. The amicus brief of the United States from BCRA II has been

included in the record for this appeal. See J.A. at 3543‐3573.

69 J.A. at 3569; see also id. at 3552 (“[T]he United States urges the Court to

clarify that the BCRA’s involvement in repaying the IMF does not support

disregarding the BCRA’s separate juridical status.”).

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creditor justified the payments,70 that question goes to whether

Argentina’s choice to pay one set of creditors over another was

legitimate—an inquiry that is unrelated to whether Argentina

controlled BCRA in order to accomplish those payments.

   Here, the Republic’s plan to borrow money from BCRA was

not executed by the Argentine government alone. Instead, the

proposals received the necessary review and approval by BCRA’s

legal advisers and BCRA’s Board of Directors,71 and one BCRA

 70 Specifically, the United States argued that Argentina’s use of BCRA

funds to repay the IMF did not justify ignoring BCRA’s separate juridical status,

because the  

decision to pay the IMF in preference to its other creditors was

consistent with the long‐standing policy of the United States and

the other sovereign members of the IMF to recognize the preferred

creditor status of the IMF. In order to protect the funds of its

member states (including the funds invested by the United States),

the IMF rightly expects to be paid even when other creditors are

not. See, e.g., International Monetary Fund, Financial Risk in the

Fund and the Level of Precautionary Balances (Feb. 3, 2004) at 4

(“Member governments and other creditors have agreed to treat

the Fund as a preferred creditor to help achieve its purposes.  

Preferred creditor status is fundamental to the Fund’s financial

responsibilities and the Fund’s financing mechanism as this

means that members give priority to repayment of their

obligations to the Fund over other creditors thus protecting the

reserve assets that other members have placed in the custody of

the Fund.”).

Id. at 3568‐69. In fact, “[a]ccording to the IMF staff, many other countries had

repaid the IMF out of international reserves held by the debtor country’s central

bank.”  Id. at 3569.

71 See id. at 3049‐50 (TAC ¶ 61).

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Governor testified before Argentina’s Congress that it made policy

sense to permit the government to borrow funds from BCRA while

its reserves earned relatively low interest.72 Therefore, the Republic’s

decision to use BCRA to repay its debt to the IMF and other

creditors is not indicative of the extensive control that concerned the

Supreme Court in Bancec.

73   

Finally, the TAC alleges that Argentina and BCRA

coordinated their activities in implementing an “inflationary”

monetary policy.74 However, governments and central banks—

including the U.S. Government and the U.S. Federal Reserve—often

consult and coordinate their actions with respect to monetary

policy.75 Whether the resulting policy is considered by some

commentators as too “inflationary” or “deflationary” is irrelevant to

the question of whether Argentina exercised day‐to‐day control over

BCRA. It is not our role to second‐guess monetary policy decisions

made by foreign governments. We thus agree with the position of

 72 See id. at 3056 (TAC ¶ 75).

73 In Seijas, Banco de la Nación also allegedly made favorable loans to

Argentina “in violation of its governing charter” and “to individuals and

corporations” at the Republic’s behest, but we held that this was not sufficient to

establish that the bank lacked independence. See 502 F. App’x at 21; ante note 55.  

74 See J.A. at 3066‐76 (TAC ¶¶ 97‐113).

75 See, e.g., id. at 3593 (U.S. Treasury Department’s Annual Report to

Congress, covering Nov. 1, 1996 to Oct. 31, 1998) (describing the coordinated

June 1998 intervention in the foreign exchange markets by U.S. monetary

authorities); id. at 3610 (handbook published by the Centre for Central Banking

Studies) (“[H]owever independent a central bank is, the ultimate decisions on a

country’s currency . . . are usually taken by the government[.]”).

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the United States in BCRA II—“central banks ordinarily have a high

degree of interaction with their parent foreign governments,” and as

such, “courts should give significant deference to a foreign

government’s conduct vis‐à‐vis its central bank.”76 The alleged

“coordination” of monetary‐policy actions between Argentina and

BCRA is simply not sufficient to establish “extensive control.”  

Considered cumulatively, these allegations certainly establish

that the Republic sought the assistance of BCRA in responding to an

extremely severe debt crisis, and that Argentina took steps to ensure

that BCRA shared its policies and goals during this time. They do

not establish, however, that the Republic so extensively controlled

BCRA’s day‐to‐day operations as to transform BCRA into the

Republic’s alter ego. Most of the actions allegedly taken by BCRA

are governmental functions performed by most central banks—i.e.,

paying a nation’s creditors, controlling currency flows, and keeping

foreign exchange deposits. Plaintiffs have not sufficiently alleged

that these actions, or any others, were the result of Argentina’s

substantial control over the business decisions or daily functions of

BCRA.77 Thus, these actions, standing alone, are not the type of

 76 Id. at 3570‐71 n.*.

77 See, e.g., McKesson Corp., 52 F.3d at 352 (finding Bancec presumption

rebutted where “[r]outine business decisions, such as declaring and paying

dividends to shareholders and honoring [the instrumentality’s] contractual

commitments” were dictated by the sovereign state); Hester Int’l Corp., 879 F.2d at

178 (giving example of extensive control where “all checks in excess of a certain

amount [had to] be signed by a government‐appointed director, a governmental

agency was required to approve all invoices for shipments exceeding a certain

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activities that illustrate a complete takeover of BCRA’s day‐to‐day

operations by the Republic.78

Because the facts alleged do not establish that the Republic

exercised extensive control over BCRA’s day‐to‐day operations, the

first prong of the Bancec test has not been met.

b. Fraud or Injustice

The second prong of the Bancec alter‐ego test asks whether the

recognition of BCRA as a separate entity would work a “fraud or

injustice.” The purpose of this prong is to prevent foreign states

from “avoid[ing] their obligations by engaging in abuses of

corporate form.”79  

For instance, in Bancec itself,80 the presumption that Cuba’s

instrumentality—Bancec—was a separate juridical entity was

rebutted, because Cuba had dissolved Bancec and taken complete

control of its assets in 1961. Because Cuba effectively absorbed

Bancec, the Supreme Court granted Citibank recourse against Cuba

 

amount, and the . . . government generally exercised direct control over its

operation”).  

78 By rejecting plaintiffs’ argument that BCRA should be held liable for all

of Argentina’s debts—see SPA at 20‐21 (9/25/13 Tr. 19:25‐20:1) (“I don’t buy the

idea that BCRA is liable for all the debts of the [R]epublic.”)—the District Court

implicitly agreed that the pleadings do not demonstrate that BCRA has become

the Republic’s alter ego for all purposes. See also ante note 56.  

79 Letelier, 748 F.2d at 794.

80 462 U.S. at 615‐16, 632.

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as the controlling principal and real beneficiary of the lawsuit that

Bancec had filed against Citibank. Similarly, in Bridas S.A.P.I.C.,

81 the

Fifth Circuit found “fraud or injustice” where Turkmenistan

dissolved a state‐owned oil company that was in breach of a joint

venture with plaintiff, and replaced it with an under‐capitalized

state‐owned oil company endowed with newly‐enacted immunity

protection. And in an unpublished district court case relied on by

plaintiffs, Kensington International Ltd. v. Republic of Congo,

82 the

Republic of Congo structured its relationship to its purportedly

independent oil company by, inter alia: (1) designing the company’s

corporate structure to allow Congo to engage in “unnecessarily

complex transactions and charades for the purpose of confounding

its creditors”;83 (2) passing all proceeds from oil sales on to the

government, rather than permitting the company to exercise its right

to collect a percentage on transactions; and (3) commingling state

and company assets.

The common thread in these cases is that the sovereign states

at issue abused the corporate form. In Bancec, Cuba sought relief in a

court of the United States while simultaneously trying to shield itself

from liability by asserting its claim through its dissolved

instrumentality. In Bridas, Turkmenistan transferred assets from one

 81 447 F.3d at 417.

82 No. 03 Civ. 4578 (LAP), 2007 WL 1032269 (S.D.N.Y. Mar. 30, 2007).

83 Id. at *9.

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instrumentality to another in order to escape liability.84 And in

Kensington, Congo created a “sham” entity with purported sovereign

immunity in order to shield its own assets from judgment creditors.  

Plaintiffs’ allegations here fall far short of the flagrant frauds

and injustices exhibited in these other cases. At bottom, plaintiffs’

claim is that it would be a fraud or injustice to allow Argentina to

use funds from BCRA to pay certain “preferred” creditors while at

the same time “stiffing” plaintiffs. As noted above, at least in the

case of the IMF, there is nothing irregular or fraudulent about

Argentina recognizing a preference for repaying one set of creditors

over another.  

Moreover, plaintiffs do not allege that BCRA’s separate

juridical status has been actively used by Argentina to block

plaintiffs’ enforcement attempts against Argentina itself, or that

Argentina has transferred its funds to BCRA in order to shield them

from plaintiffs. Although plaintiffs do allege that BCRA transferred

some of the funds deposited in its FRBNY account to the Bank of

International Settlements in Switzerland, this action did nothing to

frustrate plaintiffs’ ability to collect on their judgments against

Argentina. As we held in BCRA II, funds deposited in BCRA’s own

account were in any event immune from attachment.85 Therefore, as

 84 See also Patin v. Thoroughbred Power Boats, Inc., 294 F.3d 640, 648‐49 (5th

Cir. 2002) (piercing the corporate veil where a company transferred its operations

from one party to another to avoid liability).

85 BCRA II, 652 F.3d at 196‐97 (citing 28 U.S.C. § 1611(b)(1)).

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a practical matter, BCRA was only guilty of moving funds from one

attachment‐proof account to another.  

Plaintiffs’ factual allegations simply do not show that

Argentina has used BCRA to frustrate the collection efforts of its

creditors, or that Argentina treated BCRA as a “sham” entity to hide

its own assets. These allegations simply do not establish that the

recognition of BCRA’s separate status would work a “fraud or

injustice” within the meaning of Bancec.    

Because the TAC fails to counter, much less overcome, the

presumption that BCRA and Argentina are legally separate entities,

BCRA does not constitute Argentina’s “alter ego” for the purposes

of this suit. Argentina’s express waiver of its own sovereign

immunity in the FAA, therefore, may not be imputed to BCRA.

Accordingly, we conclude that the express waiver exception—

§ 1605(a)(1)—does not apply to this case.86  

 86 If we were to determine that these allegations did rebut the Bancec

presumption, we would then be required to resolve two additional legal

questions before recognizing a waiver of BCRA’s sovereign immunity under

§ 1605(a)(1): (1) whether Argentina’s waiver of immunity in the FAA covered a

declaratory judgment such as the one requested here—i.e., one designed to

permit attachment of unspecified funds in unnamed foreign jurisdictions; and

(2) whether that waiver may be imputed to BCRA, such that BCRA would then

be held liable for all of plaintiffs’ judgments against Argentina. Because we

conclude that the TAC fails at the first step—i.e., that the TAC does not rebut the

presumption that BCRA is a separate juridical entity—we need not, and do not,

reach these additional questions.

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B. Commercial Activity

The second exception to sovereign immunity relied upon by

the District Court is the “commercial activity” exception codified at

28 U.S.C. § 1605(a)(2), which, in relevant part, provides that a

foreign state is not immune in an action “based upon a commercial

activity carried on in the United States.” This exception applies only

when there exists “a degree of closeness” between the gravamen of

plaintiffs’ complaint and the commercial activities engaged in by the

foreign state or instrumentality.87  

Here, the gravamen of the TAC is that BCRA, as Argentina’s

purported alter ego, is liable for the judgments resulting from

Argentina’s default on its FAA bonds.88 As noted above, BCRA was

 87 Kensington Int’l Ltd. v. Itoua, 505 F.3d 147, 156 (2d Cir. 2007) (internal

quotation marks omitted); see also Saudi Arabia v. Nelson, 507 U.S. 349, 357 (1993)

(in order for a suit to be based upon commercial activity carried on in the United

States, that commercial activity must form the foundation for “those elements of

a claim that, if proven, would entitle [the] plaintiff to relief under his theory of

the case”); Reiss v. Société Centrale Du Groupe Des Assurances Nationales, 235 F.3d

738, 747 (2d Cir. 2000) (“To sustain jurisdiction on this basis, there must be a

significant nexus . . . between the commercial activity in this country upon which

the exception is based and a plaintiff’s cause of action.”) (citation and internal

quotation marks omitted); Transatlantic Shiffahrtskontor GmbH v. Shanghai Foreign

Trade Corp., 204 F.3d 384, 390 (2d Cir. 2000) (the FSIA’s commercial activity

exception requires “a degree of closeness between the acts giving rise to the

cause of action and those needed to establish jurisdiction that is considerably

greater than common law causation requirements”). See also ante note 4.

88 As stated above, the TAC’s claim on the merits is that the BCRA is the

“alter ego” of Argentina and, therefore, BCRA’s funds should be generally

attachable to satisfy Argentina’s debts. Separately, plaintiffs have invoked

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not a party to the FAA and was not involved in Argentina’s decision

to cease making principal and interest payments on FAA bonds.

Therefore, the gravamen of plaintiffs’ claim on the merits is based on

a series of actions taken by BCRA after 2001.   

However, none of these actions after 2001—loans made by

BCRA to Argentina, coordination of monetary policy, the

appointment and removal of BCRA governors—are commercial

activities that occurred in the United States.89 In fact, BCRA’s only

alleged commercial activity in the United States was its use of its

FRBNY account to purchase dollars. Plaintiffs assert that these

dollars allowed BCRA to make loans to Argentina, which Argentina

then used to repay dollar‐denominated debts to creditors other than

plaintiffs.90  

 

BCRA’s “alter ego” status as a basis for waiving BCRA’s sovereign immunity.

Accordingly, the facts underlying plaintiffs’ merits and jurisdictional claims

overlap significantly. This opinion concerns only the basis for jurisdiction—i.e.,

the waiver of BCRA’s sovereign immunity—not the merits of plaintiffs’ request

for a declaratory judgment.    

89 See 28 U.S.C. § 1605(a)(2) (stating in relevant part that a foreign state is

not immune from any action “based upon a commercial activity carried on in the

United States”) (emphasis supplied).

90 As we previously noted, it is entirely unremarkable that BCRA

maintained a foreign‐central‐bank account at the FRBNY. See BCRA II, 652 F.3d

at 177 (“Like many central banks around the world, BCRA maintains a foreign

central bank account at the FRBNY in which, among other things, it manages

dollar‐denominated reserve holdings.”); see also id. at 177 n.7 (“FRBNY provides

accounts in which approximately 250 foreign central banks and monetary

authorities manage foreign exchange reserve holdings and other property.”).

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The fact that these dollars were delivered to BCRA’s account

with the FRBNY, however, is entirely incidental to plaintiffs’ claim

on the merits—that claim would be no different had BCRA

deposited those dollars in any other bank abroad. In this way,

plaintiffs’ claims are similar to those asserted in Kensington

International Ltd. v. Itoua.

91 There, a creditor of the Republic of Congo

alleged that a state‐owned oil company had entered into pre‐

payment agreements in exchange for oil rights, which caused

Congo’s oil revenues to be diverted away from the creditor. The

creditor attempted to invoke the FSIA’s commercial activity

exception on the grounds that: (1) the oil at issue was shipped to the

United States; and (2) the premium payments were made in the

United States. We rejected the creditor’s argument, however,

reasoning that the requisite nexus did not exist between the

commercial activity in the United States (the shipment of oil and the

premium payments), and the gravamen of the complaint (the pre‐

payment agreements executed in France). Because the alleged

activity in the United States was entirely incidental to the improper

conduct, we declined to apply the commercial‐activity exception to

waive sovereign immunity.92  

As in Kensington, the claim here also lacks any nexus between

BCRA’s commercial activity in the United States (the purchase of

dollars through the FRBNY account) and the gravamen of the

 91 505 F.3d 147 (2d Cir. 2007).

92 Id. at 156‐58.

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complaint (the alter‐ego claim, which turns on loans made by BCRA

to Argentina in Argentina). It is similarly incidental that BCRA

purchased these dollars using an account in the United States.

Whatever adverse consequences plaintiffs allegedly suffered from

the BCRA’s loans to Argentina, they would have suffered the same

consequences had BCRA used any other bank account in the United

States or abroad.  

Accordingly, adopting plaintiffs’ theory for jurisdiction here

would dramatically expand the scope of the commercial‐activity

exception to sovereign immunity. Any allegation of the wrongful

use of dollars outside the United States would conceivably lead to a

sovereign immunity waiver, so long as the plaintiff could show that

these dollars were acquired in U.S.‐based transactions. Given New

York’s role as a financial center, every country and every central

bank would be at risk of losing their sovereign immunity on this

basis. As the United States argued as amicus in BCRA II, weakening

the immunity from suit or attachment traditionally enjoyed by the

instrumentalities of foreign states could lead foreign central banks,

in particular, to “withdraw their reserves from the United States and

place them in other countries. Any significant withdrawal of these

reserves could have an immediate and adverse impact on the U.S.

economy and the global financial system.”93      

 93 J.A. at 3550‐51 (citation omitted); cf. Shipping Corp. of India v. Jaldhi

Overseas Pte Ltd., 585 F.3d 58, 62 (2d Cir. 2009) (“Undermining the efficiency and

certainty of [electronic] fund transfers in New York could, if left uncorrected,

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Because such a capacious understanding of the commercial‐

activity exception is inconsistent with the FSIA’s presumption that

foreign states and instrumentalities enjoy sovereign immunity, we

decline to adopt plaintiffs’ proposed rule. Accordingly, we hold that

the commercial‐activity exception to sovereign immunity—

§ 1605(a)(2)—does not apply to this case.  

CONCLUSION

We do not condone or excuse Argentina’s continuing failure

to pay the judgments duly entered against it by the District Court.

Our decision that BCRA may invoke its own sovereign immunity in

this lawsuit is not intended to allow the Republic to avoid its

bargained‐for obligations, or to continue shirking the debts it has the

ability to pay, although we suspect that this will be a predictable and

unfortunate outcome of our decision.  

Nonetheless, BCRA is entitled to invoke its own sovereign

immunity as a defense to this lawsuit, unless one of the exceptions

codified in the Foreign Sovereign Immunities Act (“FSIA”) applies.

Because both of the exceptions relied upon by plaintiffs fail as a

matter of law, the District Court erred in denying BCRA’s motion to

dismiss under the FSIA.  

 

discourage dollar‐denominated transactions and damage New Yorkʹs standing

as an international financial center.”).

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In summary, we hold the following:

(1) We have jurisdiction under the collateral‐order doctrine to

review the District Court’s threshold determination that BCRA

waived its sovereign immunity pursuant to 28 U.S.C. § 1605(a)(1)

(the express waiver exception) and 28 U.S.C. § 1605(a)(2) (the

commercial activity exception).

(2) First National City Bank v. Banco Para El Comercio Exterior de

Cuba, 462 U.S. 611 (1983) (“Bancec”) sets a high bar for when an

instrumentality will be deemed an alter ego of its sovereign state. On

these facts, neither prong of the Bancec test is satisfied—Argentina

does not exercise sufficiently extensive control over BCRA’s day‐to‐

day operations, and recognizing BCRA’s separate status would not

constitute a “fraud or injustice” within the meaning of Bancec.

Accordingly, Argentina’s sovereign‐immunity waiver in the FAA

may not be imputed to also waive BCRA’s independent sovereign

immunity.  

(3) BCRA’s use of its FRBNY account is too incidental to the

gravamen of plaintiffs’ claim to serve as the basis for waiving

BCRA’s sovereign immunity under the commercial‐activity

exception to the FSIA.  

Accordingly, we REVERSE the District Court’s order of

September 26, 2013, and we REMAND the cause with instructions

to dismiss the Third Amended Complaint with prejudice.  

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