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76–980PDF 2012

JUDGMENT EVADING FOREIGN STATES

ACCOUNTABILITY ACT OF 2011

MARKUP

BEFORE THE

SUBCOMMITTEE ON 

THE WESTERN HEMISPHERE

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

ON

H.R. 1798

NOVEMBER 29, 2012

Serial No. 112–188

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

ILEANA ROS-LEHTINEN, Florida, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

DANA ROHRABACHER, California 

DONALD A. MANZULLO, Illinois 

EDWARD R. ROYCE, California 

STEVE CHABOT, Ohio 

RON PAUL, Texas 

MIKE PENCE, Indiana 

JOE WILSON, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

GUS M. BILIRAKIS, Florida 

JEAN SCHMIDT, Ohio 

BILL JOHNSON, Ohio 

DAVID RIVERA, Florida 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

ANN MARIE BUERKLE, New York 

RENEE ELLMERS, North Carolina 

ROBERT TURNER, New York 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

BRAD SHERMAN, California 

ELIOT L. ENGEL, New York 

GREGORY W. MEEKS, New York 

RUSS CARNAHAN, Missouri 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

BEN CHANDLER, Kentucky 

BRIAN HIGGINS, New York 

ALLYSON SCHWARTZ, Pennsylvania 

CHRISTOPHER S. MURPHY, Connecticut 

FREDERICA WILSON, Florida 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

YLEEM D.S. POBLETE, Staff Director 

RICHARD J. KESSLER, Democratic Staff Director 

SUBCOMMITTEE ON THE WESTERN HEMISPHERE

CONNIE MACK, Florida, Chairman 

MICHAEL T. MCCAUL, Texas 

JEAN SCHMIDT, Ohio 

DAVID RIVERA, Florida 

CHRISTOPHER H. SMITH, New Jersey 

ELTON GALLEGLY, California 

ELIOT L. ENGEL, New York 

ALBIO SIRES, New Jersey 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

GREGORY W. MEEKS, New York 

(III)

C O N T E N T S 

Page

MARKUP OF 

H.R. 1798, To prevent foreign states that do business, issue securities, or 

borrow money in the United States, and then fail to satisfy United States 

court judgments totaling $100,000,000 or more based on such activities, 

from inflicting further economic injuries in the United States, from undermining the integrity of United States courts, and from discouraging responsible lending to poor and developing nations by undermining the secondary 

and primary markets for sovereign debt ............................................................ 2

Amendment in the nature of a substitute to H.R. 1798 offered by the 

Honorable Connie Mack, a Representative in Congress from the State 

of Florida, and chairman, Subcommittee on the Western Hemisphere ....... 21

APPENDIX 

Markup notice .......................................................................................................... 42

Markup minutes ...................................................................................................... 43

The Honorable Connie Mack: Prepared statement ............................................... 45

(1)

JUDGMENT EVADING FOREIGN STATES 

ACCOUNTABILITY ACT OF 2011

THURSDAY, NOVEMBER 29, 2012

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON THE WESTERN HEMISPHERE, 

COMMITTEE ON FOREIGN AFFAIRS, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 2:06 p.m., in room 

2172, Rayburn House Office Building, Hon. Connie Mack (chairman of the subcommittee) presiding. 

Mr. MACK. The subcommittee will come to order. 

Pursuant to notice, for purposes of a markup I call up H.R. 1798, 

the Judgment Evading Foreign States Accountability Act. Without 

objection, the measure is considered read and open for amendment 

at any point. 

[H.R. 1798 follows:]

2


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112m CONGRESS H R 1798 hl'1' S8SS101\ 

• • 

Tn prev~llt foreign stateR that dn bnsilless, issue securities, nr bnrrnw money 

in the Lnited States, and then fail to satisfy United States court. judgmellis totaling $100,000,000 or more based on such activities, from 

inflicting further economic injuries in the United States, from undermining the integrity of F nited States courts, and from discouraging 

responsible lending' to poor and dcwlopillg natio11s by nndermiJling' t11" 

~eeolldary and primary rnarket~ for soven~igl1 (["Ilt. 

1K THE HOUSE OF REPRESE:'-JTAT1VES 

.\'11\'16, 2011 

}Ir. lVL\CK (for himself, Mr. IUl\G of New York. Ms. LOl~B'l"l'A SANCllBZ of 

California, Mr. C:ARNAlL'l.N, and }Irs. ]VUIDNEY) introduced the following 

bill; whicll was r<'fcrrcrl t.o the COl11mir.trr on i"inancial Scrv~ces, alld in 

a(ldition to t.he Commit.tee on For8igl1 Affair~, for a pm'iort to be snbs8-

qltenUy determined by tbe Speaker, ill each case lor consideration of such 

proyisions as fall v;ithin the jurisdiction of the committee concerned 

A BILL 

To prevent foreign states that do business, Issue securities, 

or borrow money in the United States, and then fail 

to satis~y United States cmut judgmcllts totaling' 

$100,000,000 or more based on such activities, from 

inflieting further e(~onomie il1,iurieH in the Unitt~d States, 

from undermining the integrity of United States courts, 

and from discouraging responsible lending to poor and 

aeveloping nations by undermining the Heeondary and 

primary markets for sovereign debt, 
3


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2 

Be it enaded by the Senate and IIouse (if Repn:sentl1-

2 tives of the Fndecl States of ~4meTI:ca in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the "J udgment Evading 

:) Foreign States Accountability Act of 2011 ". 

6 SEC. 2. STATEMENT OF PURPOSE. 

7 The purpose of this Act is to prevent foreign states 

8 that do business, is:-;ne Recnrities, or horrow money in the 

9 United States, and then fail to satis~y United States court 

10 judgments totaling $100,000,000 or more based on sueh 

11 aetivitie 0-; , from inflidjng further eeonollli(~ in,jurieo-; in the 

12 United States, from undermining the integrity of rnited 

13 States couris, and from discouraging responsible lending 

14 to pOOl' and developing nations by undermining the sec15 ondary and primary markets for sovereign debt. 

16 SEC. 3. FINDINGS. 

17 Congress finds the following: 

18 (1) Foreign states that do business, lssue secu19 rities, or borrow money in the United States, and 

20 then refuse to satisfy judgments of United States 

21 courts entered against them in connection with dis22 putes resulting from these or other commercial ac23 tivlties, directly or indirectly inflict billions of dollars 

24 of aarnage in the United Stateo-;, and umlerrnine the 

25 credibility of the United States courts. 
4


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(2) Foreign states that engage in sueh hehavior 

2 can infect the management of corporations and 

3 other entities that they own or eontrol "'lith their 

4 proiligatc and irrcsponsiblc habits. \i\1lCIl ncgligcnt 

5 ethical standards permit government officials to re6 lJudiatc lawful jud121HCuts, thc ll~Jur'y to L nitcd 

7 States tax"payers is multiplied. 

8 (8) The Republic of Argentina IS a primary ex9 ample of a foreign state that has incurred large 

10 debts in the r luted States, defalllted on those debts, 

11 and then refused to honor Imvfnl judgment.s of 

12 United States and other C'ourts ordering repayment. 

13 In 2001, Argentina defaulted on more than 

14 $81,000,000,000 in sovcreign dcbt, the largest such 

15 default in history. In 2005, after refusing all efforts 

16 by ereaitors to negotiate the terms of an exehange 

17 offer, Argentina UIulaterally offered lenders approxi18 mately 27 cents on the dollar in its restructnring 

19 deal, far below the interllatiollal norm for sovereign 

20 debt restructurings. Argentina repudiated the debts 

21 owed to the unprecedented proportion of bomlholders 

22 who rejected that offer. 

23 (4) Argentina still owes rnited States bond 

24 holders more than $o,500,000,000. Overall, the de25 fault and restructuring by Argentina have cost 
5


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4: 

Uniterl States hondholders, t~j}qJayers, and share 

2 holders more than $10,000,000,000. 

3 (5) Argentina has the eapaeity to pay its exter4 Hal creditors. 1\.r2:tentina llOW holds more thatl 

5 $54,000,000,000 in reserves. Argentina chose to pay 

6 off its $9,800,000,000 debt to the International 

7 Monetary Fund in full in 2005, years before it was 

8 due, and hat; t;imilarly announced an intention to 

9 pay sovereign creditors of the Paris Club, of which 

10 the United States is owed $360,000,000. 

11 (G) United States bondholders have "von numer12 ous court rulings against Argentina relating to Ar13 gentina's default on debt owed to such bondholders 

14 and l\.rgclltina's dccision to repeatecUy il2IlOre these 

15 judgments threatens the l Tnited States legal system. 

16 Despite having agreea to suhmit to the juris!lietion 

17 of the State of New York and to waive claims of sov18 ereign immunity, Argentina is now contesting at 

19 least 170 lawsuits aud refusing to h0110[, 100 judg20 ments against it, totaling more than 

21 $7,000,000,000. 

22 (7) ~~rgentina has demonstrated a similar dis23 regard for rlaims brought by United States investors 

24 lwfore the International Centre for Settlement of In25 vestment Disputes (IeSID), a tribunal of the World 
6


76980a-5.eps

I) 

Bank. Argentina is the respondent in more reBID 

2 cases than any other nation, now accounting for 

3 more than a (lllarter of the tribunal's easeloaa. It is 

4 important to note that J\rg-entina's arguments for 

S nonpayment have been outright rejected by both the 

6 Department of State and the 1CS1D. -L\rgentilla is 

7 currently receiving $5,810,000,000 from the World 

8 Bank and has requested an additional 

9 $1,630,000,000 in funding. ~~rgentina has behaved 

10 in a manner that undermines the viability of the 

11 IeBID proeess, therehy alarming the vmrldwiae in12 vestments of United States businesses that rely upon 

13 this forum for adjudication of disputes. 

14 (8) J\rgentilla's debts are legitimate. l~Il'y assel"-

15 tion that the Argentine debt now outstanding was 

16 ineurred by the repressive, nonderrl()(~ratie regimes 

17 that ruled Argentina in the late 1970s and early 

18 1980s is inaccurate. 1'he honds currently held by 

19 United States creditors were Hot illcurred b,Y llOIl20 democratic regimes; rather, they were issued by 

21 demoeratically electerl ",,~rgentine governmenti':. 

22 (D) While it is true that the Argentine military 

23 junta-whieh eaused tremendous suffering during a 

24 tyrannieal 7 -year reign-horrowed from foreign 

25 banks, 96 percent of that debt was refinaneed in 
7


76980a-6.eps

6 

188:1 'when Argentina's "Brady Plan" restnwturing 

2 was completed. That restructuring was underwritten 

3 by the United States Government. Prior to the 

4 Brady Plan rcstructuring, .. Argcntina had undergolle 

5 two "major restructurings" of its foreign debt-the 

6 first in 1985, and thc second in Hl87. 

7 (10) Kone of the debt now held by rnited 

8 StateR creditor:;; dateR from the daYR of the Argen9 tine military junta. Further, even if it were fair to 

10 characterize the debt issued in the 1993 Brady Plan 

11 restrueturing as somehow derivative of junta-era 

12 debt-a notion that maligns the United States pol13 icymakers who approved and umlenvrote the Drady 

14 Plan on bchalf of thc l\Jllcricall pcoplc-only five 

15 percent of the defaulted debt now held by rnited 

16 States (~n-·aitors was issued during or before 199:1. 

17 Ninety-five percent of the defaulted debt held by 

18 United States creditors was incurred after 199;3 by 

19 frcely electcd .Argcntinc governmcntal offieials and 

20 has no relationship to the military jnnta. 

21 (11) Argentina':;; default:;; have raiRed the CORtR 

22 of borrowing for both the public and private sectors. 

23 If the country took action to remediate its debts, its 

24 annual interest expense would eertainly dedine. Ar25 gentina's defaults have discouraged foreign direct in-
8


76980a-7.eps

7 

vestment. One study from 2007 states that Argen2 tina loses over $6,000,000,000 in foreign direct in3 vestment every year as a result of its default and 

4 debt repudiation and the resultant risk profile. 

S (12) An October 2010 evaluation report by the 

6 Fimmcial Action 'l'ask }1'orce (PA1'F), an intergov7 ernmental body that analyzes financial systems for 

8 criminal activity, gave Argentina the mOl"t negative 

9 evaluation of any 0-20 nation. FATF evaluated ArlO gentina on 49 financial standards, of which Argen11 tina failed to meet 47 out of the 49 standard8. ~\r12 gentina was given an original timeline of three 

13 months, then an additional ten months to c1em14 onstrate compliance to the standards or face being 

15 blacklisted due to financial corruption and defi16 eieneie8 in ('ornhating finaneing of terrori8Hl (CFT) 

17 and anti-money laundering U\lVIL) systems. 

18 (13) Draw-illg further conclusions, FATF re19 ported several shol'teomings ill Argcntilla's financial 

20 sector, most notably corruption and the poor en21 forcement of Argentine financial laws. The lack of 

22 enforcement has prompted vvide-spread money lauu23 dering ill Argentina's financial sector creating an en24 vironment that puts A.rgentinH at ri8k of heeorning 
9


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M 

a huh for terrorism and a1'ug' trafficking m the 

2 "Western Hemisphere. 

3 (14) :\flany persons in the United States are un4 aWal'c of Argentina's irresponsiblc behavior and dis5 regard for the rule of law. Further, United States 

6 citi:.ocns continue to invest in, lelld to, and do busi7 ness vvith ~!lrgentina and are unfamiliar with the as8 sorlated risks. 

9 (15) Those who are injured as a result of this 

10 ronduct often have little or no recourse. ,Judgment 

11 evading foreign states and their state owned (:01'-

12 porations enjoy a safe haven vvithin their national 

13 borders, and this fact often presents an immrmount14 able obstaele to recovery for those who arc iI~jured 

15 by the behavior of those states. 

16 (1 G) The ahsen('e of a remedy for defanlts by 

17 such foreign states undermines nations that badly 

18 need to access capital from foreign lenders, vvith dis19 proportionate harm falling 011 resp0tlsible amI demo20 cratic nations. By undermining confidence in the 

21 secondary market for F;overeign deht, judgment evad22 lng foreign states signifieantly increase the risk that 

23 primary lending to less-advantaged nations will be 

24 ('urtailed, depriving aeserving sovereign borrowers of 

25 aecess to the international eapital markets. 
10


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(17) Aetion hy the United States Government 

2 to combat tIils grcryving problem must include meas3 u1'es that both proted against the irn~sponsihle eon4 duct of judgment evading foreign states and their 

S state u\vned corporations, and motivate such states 

6 and corporations to raise their standards of' behav7 lor. 

8 (1 R) An effective means of a chieving this impor9 tant objective is to deprive judgment evading foreign 

10 states and their state owned corporations of the 

11 privilege of issuing seenrities or horrmving 111 the 

12 United States, and requiring that warnings of their 

13 irresponsible behavior be given to persons in the 

14 U liited States who arc contemplating investillg ill, 

15 lending to, or doing business with such states and 

16 husinesses, until those states demonstrate that snell 

17 measures are no longer necessary. 

1 8 SEC. 4. DEFINITIONS. 

19 For purposes of this Act: 

20 (1) AGE='JCY OR INSTIWMENTAUTY OF A FOR21 EIGK STATE.-The term "agency or instrument.ality 

22 of a foreign state" has the meaning given that term 

23 111 seetioll 1603(b) of title 28, TTnited States Code. 

24 (2) FINAL JUD({ME='JT.-The term "final j1Hlg25 ment" means any judgment of a rnited States clis-
11


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10 

trict eourt, the Court of Intt~rnational Trade, or the 

2 court of any State, that is no longer eligible to be 

3 appealed to any (~ourt in the United States. 

4 (3) j110REIG.:-.r S'l'ATK-'l'he term "foreigtl state" 

5 has the meaning given that term in section 1 GO:3(a) 

6 of title 28, United States Code, except that it docs 

7 not include an agency or instrumentality of a foreign 

8 state. 

9 (4) IN'l'ERNA'1'lO.:-.rAL ORGANl2:;A'l'lON .-The term 

10 "international organization" means an entity des11 ignated by the Presi<1ent as heing entitle!l to en,joy 

12 the privileges, exemptions, and immunities provided 

13 by the International Organi7.atiolls Immunities Act 

14 (22 U.S.C. 288 et seq.). 

15 (5) ,JUDGMENT EVADI~G FOREIGN 8TATE.-

16 The term "judgment evading foreign state" means 

17 any foreign state that18 (A) has Ol1e or more judgments entered 

19 against it by any U liited States district court, 

20 the Court of International Trade, or the court 

21 of any State, the romhined amount of which 

22 judgments exceeds $100,000,000; 

n (B) fails to satisfY in full any such jmlg24 rnent for 1:1 perioa of more than two years after 

25 the judgment becomes a final judgment, regard-
12


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11 

leNN of whether Nueh judgment bee arne a final 

2 judgment before the date of the enactment of 

3 this Ad; amI 

4 (C) is not a foreign state eligible for5 (i) financing through the I nte1'-

6 national Development Association but not 

7 from the International Bank for RecoIl8 struction and Development; and 

9 (ii) debt relief under the Enhanced 

10 RIPe Initiative (as defined in section 

11 H; 2;) (e)(;1 ) of the International Finaneial 

12 Institutions Act) or under the ::\'rultilateral 

13 Debt Relief Initiative. 

14 (6) STATE OWNED COHPOHA'1'lOK Olc' A ,JUDG15 lVIENT EV~4.DING FOREIG~ STATE.-The term "state 

16 OIynea eorporation of a judgment evading foreign 

17 state" means any corporation or entity, other than 

1 8 a natural person19 (A) that is an agency or instrumelltalit,Y of 

20 a foreign state that is a judgment evading for21 eign Rtate; or 

22 (B) a majority of the shares or other ovvu23 ership interest of which is held, either directly 

24 or indireetly, by a judgnwnt evading foreign 

25 state or by an agency or instrumentality of a 
13


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12 

foreign state that is a judgment ewuling foreign 

2 state. 

3 (7) STATE.-The term "State" means eaeh of 

4 the several States, the District of Columbia, and an.Y 

5 commonwealth, territory, or possession of the rnited 

6 States. 

7 SEC. 5. STATEMENT OF POLICY. 

8 It shall be the policy of the United States9 (1) to advocate within the governing bodies of 

10 international organizations, international financial 

11 institutions sneh as the vVorld Bank and the InteI'-

12 national Monetary Fund, and other foreign policy 

13 settings for the full compensation and fair treatment 

14 of United States taxpayers ill whose favor judgments 

15 have been awarded by the United States courts; 

16 (2) to seek to proteet the e(~onomie interests of 

17 sueh ta)qmyers and other persons and of nations 

18 that bellefit from a reliable flow of foreign capital 

19 by20 (A) restricting the access to the rnited 

21 State:;; capital markets of judgment evading fo1'-

22 eign states and their state ovvlled corporations; 

23 (TI) requiring that such persons be warned 

24 of the !langel's of investing in, lending to, or 
14


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1:1 

doing- business with sueh states and state owned 

2 eorporations; and 

3 (C) mill on the World Bank, the Inter4 national lvlonetal',V Pund, and other interS national finanrial institutions to vote against 

6 providing fUlldillg or foreign eapital to judg7 ment evading foreign states; and 

8 (8) to further solidify the authority of the 

9 United States eourts by preventing judgment evad10 ing foreign states from willfully disregarding the 

11 judgment" of tho"e ("Ollrt". 

12 SEC. 6. BAR ON ACCESS TO UNITED STATES LENDERS AND 

1 3 INVESTORS. 

14 (a) MEASl·RES WITH RESPECT TO JUDGIVlBK'1' EVAD15 ING FOREIGN STATES.-The Securities and Exchange 

16 Commission shall17 (1) take all neressary measures to deny every 

18 judgment evading foreign state arress to rnited 

19 States capital markets, ineludiIlg the ability, directly 

20 or indirectly, to borrow money or sell seeurities in 

21 the United StateI';; and 

22 (2) require that all periodic filings made by the 

23 judgment evading foreigl1 state with the Seeurities 

24 and Exdwnge COlllllli""ion under the "eenritie" law" 

25 bear the following legend prominently on the cover 
15


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14 

page: "WA.R:.JING: THIS REPORT IS SUB2 MITTED BY A FOREIGN STATETR~T fu'tS 

3 BEE:.J DETER\lINED BY THE UKITED 

4 STATES DEPAR'1'lVIE~rl' 0j11 THE TREASURY 

5 TO TIE A ,n~DGME:.JT EVADING FOREIGK 

6 STATE BASED UPO~ ITS F-,ULURE TO SAT7 

8 

ISIT OrTST~~~DING 

COrRT ,TUDG~1E:.JTS.". 

UNITED STATES 

9 (b) lVII£A8URE8 WITH RESPECT TO STATE OWNED 

10 CORPORA.TIONS OF ,JrDGlVIENT EVrillIKG FOR.EIG~ 

11 STATES.-If any judgment evading foreign state remains 

12 in default on any final judgment for more than three 

13 years, irrespeet.ive of whether snell judgment beeame final 

14 before the date of the emwtment of this Act, the Securities 

15 and Exchange Commission shall16 (1) take all necessary measures to aeny any 

17 state owned corporation of a judgment evading for18 eign state aecess to the United States eapital ma1'-

19 kets, including the ability to issue debt, oq uity or 

20 other seeurities, or borrow money, unless the pro21 ceedE; of such borrmving of securities issuance are to 

22 be used, in the first instance, to satisfy in full all 

23 final judgment against its parent judgment evading 

24 foreign state; ana 
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15 

(2) reqmre that all periodie filings made by 

2 each state owned corporation of a judgment evading 

3 foreign state i'Vith the Se(mrities and Exdmnge Com4 mission under the securities laws bear the following 

5 legend prominently on the cover page: "\VARNTKG: 

6 THIS REPORT IS SCBMITTED BY A S'l'A'l'E 

7 OW~ED CORPORATION OF A FOREIGN 

8 STATE TI:U~T lIAS BEEN DETERMINED BY 

9 THE DEPART:\IE~T OF THE TREASURY TO 

10 BE A ·JUDGMEKT EV£illI~G FOR,EIGN STATE 

11 BASED UPON ITS FA1LURE TO SATISFY 

12 OUTST~L\fDI~G UNITED STATES COURT 

13 ,n~DGl\TENTS.". 

14 SEC. 7. REQUESTS FOR AID OR ASSISTANCE FROM JUDG15 MENT EVADING FOREIGN STATES. 

16 (a) BILATER.AL ASSISTA.'JCE.-'\llenever any pro17 posal is made to a department, agency. or other illstnl18 mentality of the rllitecl States Government to extend aid, 

19 a loan, or aLlY other fonl1 of assistance to a judgment 

20 evading foreign state, the head of the department, agency, 

21 or other im,trnmentalit:v may cOl1fiider the propofial only 

22 if it bears prominently the legend described in subsection 

23 

24 (h) YIULTILATERclli A8SI8TA"~CE.-\\11enever any 

25 proposal is made to an international organization to ex-
17


76980a-16.eps

16 

tend aid, 1:1 loan, or any other form of assistance to a jU(lg2 ment evading foreign state, the Secretary of State shall 

3 provide prompt noti('e of sueh proposal to the Congress. 

4 Such notice shall bear pl'omillently the lqzend described 

5 in subsection (c). 

6 (c) LEcm':':D D1<;SCRlBED.-'l'he legend of a proposal 

7 referred to in subsection (a) and the legend of a notice 

8 referred to in suhRection (b) iR the following: "REQUEST 

9 l<'OR GPu.:\.N'l'-lK-AID OR LnAl"\) BY ~\ JUDGlVUJN'l' 

10 EVADIKG FOR,EIGN STATK". 

11 SEC. 8. REPORTS; RECOMMENDATIONS OF ADDITIONAL 

12 MEASURES. 

13 (a) AN1\'1TAJJ REPOI\,TS TO CONCm.RSS.-Kot later 

14 than J auuary 31 of each year, the Secretary of the 'l'reas15 u1'y shall provide a report, in ,vriting, to the Congress 

16 identifying eaeh judgment evading foreign state, amI, for 

17 each such judgment evading foreign state18 (1) quantifying the impact 011 the rnited States 

19 economy, and cost to United States taxpayers, of the 

20 unsatisfied final judgments outstanding against the 

21 judgment evading foreign Rtate; and 

22 (2) describing all measures that the Secretary 

23 of the TreRsury and the Securities and ~xchallge 

24 Commission have taken in the preee!ling year to 

25 carry out this Act. 
18


76980a-17.eps

17 

(11) CONSIDERATION OF DOCmvm~T8 AKD OTHER IN2 FOK\L~TION.-The Secretary of the Treasury may COll3 sider doeurnents and other information reeeived from third 

4 parties and from judgment evadiug foreign statcs in preS paring each report under suhspction (a). 

6 (e) '1'J<;R1VllNA'TI0l\ nt' DJ<;SIGNA'1'lO.'.f.-At such time 

7 as the Secretary of the Treasury determines that any 

8 judgment evading foreign t;tate no longer qualifiet; aR a 

9 judgment evading foreign state, the Secretary shall so cer10 tify to the Congress no later than in the ne)d annual re11 port to Congress umler subsed,ion (a), at vvhieh time the 

12 requirements and prohibitions under this Act shall no 

13 longer apply to snch former judgment evadillg foreign 

14 state, or to any state oWllcd corporatioll of such judgmcllt 

15 avoiding foreign state. The Secretary may consider docu16 ments and other information reeeived from third parties 

17 and from the judgment evading foreign state in making 

18 this determination. 

19 (el) OTHJ<;R PUBLIC RJ<;PORTS '1'0 L'ICLUDI!: INFORMA20 TIO~ABOUT ,JUDGME~T EVADING FOR.EIGK STATES.-

21 The Secretary of Stat.e, the Secretary of the Treasury, and 

22 the Secretary of Commerce shall each reference the find23 ings of the Secretary of the Treasury from the Secretary's 

24 most reeent annual report to CongTess under snbseetlon 

25 (a) relating to the unsatisfied final judgments outstanding 
19


76980a-18.eps

18 

against the judgment evading foreign state in every report 

2 prepared for the public relating to the country risk or in3 vestment dimate of mwh judgment evaaing foreign state. 

4 (e) ~\.DDlTlO':\[:\L MEASUHES.-The Secretary of the 

:) Treasury shRll recommend to the CongTess in vvriting ad6 ditional measures to earry out the purposes of this Act. 

u 
20

Mr. MACK. Before recognizing myself and other members for 

statements, I have an amendment in the nature of a substitute 

that was shared with your offices yesterday, which includes updates and a few minor edits. 

The clerk will report the amendment. 

Mr. GATELY. Amendment in the nature of a substitute to H.R. 

1798, offered by Mr. Mack of Florida. 

Strike all after the enacting clause——

Mr. MACK. Without objection, the amendment in the nature of a 

substitute is considered read. 

[The amendment in the nature of a substitute follows:]

21


76980b-1.eps

AMENDMENT IN THE NATURE OF A SUBSTITUTE 

TO H.R. 1798 

OFFERED BY MR. MACK OF FLORIDA 

Strike all after the enacting clause and insert the 

follmving: 

1 SECTION 1. SHORT TITLE. 

2 This Aet may he (~ited as the ".Tudgment Evading 

3 l<'oreign States Accountability Act of 2012". 

4 SEC. 2. STATEMENT OF PURPOSE. 

5 The purpose of this Act is to preyent foreign states 

6 that do business, issue securities, or borrow money in the 

7 United States, and then fail to satisfy United States court 

8 judgments totaling $100,000,000 or more based on such 

9 activities, from inflicting further economic injuries in the 

10 United States, from undermining the integrity of 1~nited 

11 States courts, and from discouraging responsible lending 

12 to poor and developing nations by undermining the sec13 ondary and primary markets for soyereign debt. 

14 SEC. 3. FINDINGS. 

15 Congress finds the following: 

16 (1) Foreign states that do business, Issue secu17 rities, or borrow money in the United States, and 

18 then refuse to satis(y judgments of United States 
22


76980b-2.eps

2 

eourts enterell against them in (~onne(~tion with llis2 putes resulting from these or other commercial ac3 tivities, diredly or indiredly inflid hillions of dollars 

4 of damage in the United States, and ulldermine the 

5 credibility of the United States courts. 

6 (2) l<'oreign states that engage in such behavior 

7 can infect the management of coq)orations and 

8 other entities that they own or control ,,~th their 

9 profligate and irresponsible habits. 'Vhen negligent 

10 ethical standards permit government officials to re11 pudiate lawful judgments, the ll1,Jury to 1~nited 

12 States taA'Payers is multiplied. 

13 (3) The Republic of Argentina 1S a primary ex14 ample of a foreign state that has incurred large 

15 debts in the rnited States, defaulted on those debts, 

16 and then refused to honor hnvful judgments of 

17 United States and other courts ordering repayment. 

18 In 2001, Argentina defaulted on more than 

19 $81,000,000,000 in sovereign debt, the largest such 

20 default in history. In 2005, after refusing all efforts 

21 by creditors to negotiate the terms of an exchange 

22 offer, Argentina unilaterally offered lenders appro:x:i23 mately 27 cents on the dollar in its restructuring 

24 deal, far helow the international norm for sovereign 

25 debt restructurings. Argentina repudiated the debts 
23


76980b-3.eps

:1 

owed to the unpreeedented proportion of bOll(lholder~ 

2 who rejected that offer. 

3 (4) Argentina still owe~ 1~nited 8tate~ bond 

4 holders more than $3,500,000,000. Overall, the deS fault and restructuring by Argentina have cost 

6 United States bondholders, taxpayers, and share 

7 holders more than $10,000,000,000. 

8 (5) Argentina has the capacity to pay its exter9 nal creditors. Argentina now holds more than 

10 $45,000,000,000 in reserves. ~t\rgentina chose to pay 

11 off it~ $9,800,000,000 debt to the International 

12 Monetary Fund in full in 2005, years before it was 

13 due, and has similarly announced an intention to 

14 pay sovereign creditors of the Paris Club, of which 

15 the United States is owed $:360,000,000. 

16 (6) United State~ bondholder~ have won numer17 ous court rulings against Argentina relating to Ar18 gentina's default on debt owed to such bondholders 

19 and l\.rgeutina's decision to repeatecUy ignore these 

20 judgments threatens the United States legal system. 

21 Despite ha'~ng agreed to submit to the jurisdiction 

22 of the State of New York and to waive claims of sov23 ereign immunity, Argentina contested at least 151 

24 law~uit~ and ha~ refused to honor 116 jU(lgrnent~ 

25 against it, totaling more than $6,000,000,000. 
24


76980b-4.eps

4 

(7) Argentina has demonstrated a similar llis2 regard for arbitral awards granted to United States 

3 investors by the International Centre for Settlement 

4 of lnvestmellt Disputes (ICSID), a tribunal of the 

5 "World Bank. Although Argentina was allocated 

6 $3,300,000,000 for its 2010-2012 Country Strategy 

7 Partnership, and currently has $5,500,000,000 in 

8 loans and credits outstanding from the 'Vorld Dank, 

9 Argentina has consistently defied the decisions of 

10 this 'Vodd Bank tribunal. ~~rgentina is the respond11 ent in more IeSID (~ases than any other G-20 na12 tion, accounting for more than 66 percent of such 

13 cases. It is important to note that Argentina's argu14 mellts for nonpayment of ICSID awards have beell 

15 outright rejected by both the Department of State 

16 and the ICSID. Argentina's behavior undermines the 

17 viability of the ICSID process, thereby harming the 

18 foreign investments of United States businesses that 

19 rely UpOll this forum for a(~judication of disputes. 

20 (8) Argentina's debts are legitimate. Although 

21 Argentine government officials have asserted that 

22 the Argentine debt now outstanding was incurred by 

23 the repressive, nondemocratic regimes that ruled Ar24 gentina in the late 1970s and early 1980s, this is in25 accurate. All the bonds currently held by rnited 
25


76980b-5.eps

5 

State~ ereaitor~ were i~~ued by demo(~rati(~ally eled,-

2 eel Argentine governments, starting in 1993. 

3 (9) Argentina'~ aefault~ have rai~ea the (~()~ts of 

4 borrowing for both the public and private sectors. If 

5 the country took action to remediate its debts, its 

6 annual interest expense would certainly decline. 1\.r7 gentina's defaults have discouraged foreign direct in8 vestment. One study from 2007 states that Argen9 tina loses over $6,000,000,000 in foreign direct in10 vestment every year as a result of its default and 

11 debt repudiation and the re~ultant ri~k profile. 

12 (10) A.ll October 2010 evaluation report by the 

13 Financial Action Task Force (FATF), an intergov14 ermnental body that sets standards for safeguarding 

15 the international financial system from money-laun16 dering and terrori~t fiml.ll(~ing, gave Argentina the 

17 most negative evaluation of any 0-20 nation. FATF 

18 evaluated Argentina on 49 financial standards, and 

19 l\.rgentina failed to fully comply with 47 of these. As 

20 of October 2012, Argentina is still included in 

21 FATF's list of "High-risk and non-cooperative juris22 dictions" because of strategic deficiencies in its anti23 money laundering and anti-terrorist financing re24 g1ll1e. 
26


76980b-6.eps

6 

(11) YIany pen,ons in the United States are nn2 aware of Argentina's irresponsible behmrior and dis3 regard for the rule of law. Further, United States 

4 citi:,-;ens continue to invest in, lend to, and do busi5 ness vvith Argentina and are unfamiliar v.~th the as6 sociated risks. 

7 ( 12) Those who are injured as a result of this 

8 conduct often have little or no recourse. ,Judgment 

9 evading foreign states and their state owned corIO porations enjoy a safe haven within their national 

11 horders, and this fad often presents an insurmount12 able obstacle to recovery for those who are injured 

13 by the behav~or of those states. 

14 (13) The absence of a remedy for defaults by 

15 such foreign states undermines nations that badly 

16 need to ae(~ess eapital from foreign lenders, "\vith (lis17 proportionate harm falling on responsible and demo18 cratic nations. By undermining confidence in the 

19 secondary market for sovereign debt, judgment evad20 ing foreign states significantly increase the risk that 

21 primary lending to less-advantaged nations will be 

22 curtailed, depriving deserving sovereign borrowers of 

23 access to the international capital markets. 

24 (14) Adion hy the United States Government 

25 to combat this grmving problem must include meas-
27


76980b-7.eps

7 

ures that both proted against the irresponsible eon2 duct of judgment evading foreign states and their 

3 state mvned e0l1)Orations, and motivate sueh states 

4 and corporations to raise their standards of behav5 101'. 

6 (15) An effective means of achieving" this impor7 tant objective is to deprive judgment evading foreign 

8 states and their state owned corporations of the 

9 privilege of issuing securities or borrmving 1Il the 

10 United States, and requiring that warnings of their 

11 irresponsible behavior be given to persons in the 

12 United States who are contemplating investing in, 

13 lending to, or doing business ,,~th such states and 

14 businesses, until those states demonstrate that such 

15 measures are no longer necessary. 

16 SEC. 4. DEFINITIONS. 

17 For purposes of this Act: 

18 (1) AGE~CY OR INSTRUMENTALITY OF A FOR19 J<;lGl\ S'l'A'l'E.-'l'he term "agency or instrumentality 

20 of a foreign state" has the meaning given that term 

21 III section 1603(b) of title 28, United States Code. 

22 (2) FINAL JUDGME~T.-The term "final judg23 ment" means any judgment of a rnited States dis24 tri(~t eourt, the Court of International Trade, or the 
28


76980b-8.eps

eourt of any State, that IS no longer eligible to he 

2 appealed to any court in the United States. 

3 (8) FOREl(+~ STATE.-The term "foreign state" 

4 has the mealling given that term in section 1603(a) 

5 of title 28, United States Code, except that it does 

6 not include an agellCY or illstrumentality of a foreigll 

7 state. 

8 (4) TNTRRNATTO~AL C)RGANT7,ATTON.-The term 

9 "international organi:t;ation" means an entity des10 ignated by the President as being entitled to enjoy 

11 the privileges, exemptions, and immunities provided 

12 by the International Organizations Immunities Act 

13 (22 U.S.C. 288 et seq.). 

14 (5) JUDGlVLENT EVADl.:--.fG l"OREiGN STATE--

15 The term "judgment evading foreign state" means 

16 any foreign state that17 (A) has one or more judgments entered 

18 against it by any United States district court, 

19 the Court of lnternatiollal Trade, or the court 

20 of any State, the combined amount of which 

21 judgments exceeds $100,000,000; 

22 (B) fails to satisfY in full any such judg23 ment for a period of more than two years after 

24 the judgment heeomes a final judgment, regard25 less of whether such judgment became a final 
29


76980b-9.eps

9 

jU(lgment hefore the !late of the emwtment of 

2 this Act; and 

3 (C) i~ not a foreign ~tate eligihle for4 (i) financing through the InterS national Development Association but not 

6 from the International Bank for Recon7 struction and Development; and 

8 (ii) debt relief under the Enhanced 

9 RIPe Initiative ( as defined in section 

10 1625(e)(3) of the International Financial 

11 In~titutions Ad,) or under the Ylultilateral 

12 Debt Relief Initiative. 

13 (6) STNT'E U\VNRD CORPC)RATTOK OF 1\ .JTTDC}-

14 MEN'!' EVADING }'OREIG.:--.r STA'!'K-'1'he term "state 

15 owned cOl1)oration of a judgment evading foreign 

16 ~tate" mean~ any eorporation or entity, other than 

17 a natural person18 (A) that is an agency or instrumentality of 

19 a foreign state that is a judgment evading for20 eign state; or 

21 (D) a majority of the shares or other own22 ership interest of which is held, either directly 

23 or indirectly, by a judgment evading foreign 

24 ~tate or hy an agen(~y or instI111nentality of a 
30


76980b-10.eps

10 

foreign state that is a judgment eva !ling foreign 

2 state. 

3 (7) STATE.-The term "State" means e1:wh of 

4 the several States, the District of Columbia, and an'y 

5 commonwealth, territory, or possession of the rnited 

6 States. 

7 SEC. 5. STATEMENT OF POLICY. 

8 It shall be the policy of the United States9 (1) to advocate within the governing bodies of 

10 international organizations, international financial 

11 institutions sueh as the 'Vorld Bank and the Inter12 national Monetary Fund, and other foreign policy 

13 settings for the full compensation and fair treatment 

14 of United States taxpa.Yers ill whose favor judgments 

15 have been awarded by the United States courts; 

16 (2) to seek to proted the e(~onomie interests of 

17 such taA'J}ayers and other persons and of nations 

18 that benefit from a reliable flow of foreign capital 

19 b'y20 (A) restricting the access to the rnitecl 

21 States capital markets of judgment evading for22 eign states and their state owned corporations; 

23 (TIl requiring that such persons be warned 

24 of the !langel's of investing in, lending to, or 
31


76980b-11.eps

11 

doing- husiness with sueh states and state owned 

2 corporations; and 

3 (C) (~all on the World Bank, the Inter4 national Monetary j1'uml, and other interS national financial institutions to vote against 

6 providing funding or foreign capital to judg7 ment evading foreign states; and 

8 (3) to further solidify the authority of the 

9 United States courts by preventing judgment evacL10 ing foreign states from willfully disregarding the 

11 judgments of those eourts. 

12 SEC. 6. BAR ON ACCESS TO UNITED STATES LENDERS AND 

I 3 INVESTORS. 

14 (a) IVlEASCRJ<;S WITH RJ<;SPJ<;CT '1'0 JUDGIVlEl\T EVAD15 ING FOREIGN STATES.-The Securities and Exchange 

16 Commission shall17 ( 1) take all necessary measures to deny every 

18 judgment evading foreign state access to r nited 

19 States capital markets, including the ability, directly 

20 or indirectly, to borrow money or sell securities in 

21 the United States; and 

22 (2) require that all periodic filings made by the 

23 judgment evading foreigl1 state vvith the Securities 

24 and Exdwnge Commission under the seeurities laws 

25 bear the following legend prominently on the cover 
32


76980b-12.eps

12 

page: "WAR)JING: THIS REPORT IS SUB2 MITTED BY A FOREIGN STATE TIL~T HAS 

3 BEE)J DETEKVIINED BY THE UKITED 

4 STATES DEPAR'1'lVIE)JT 0}1' THE TREASURY 

5 TO BE A ,Jl~DGlVfE)JT EVADING FOREIGK 

6 STATE BASED UPO)J ITS F1ULURE TO SAT7 ISFY OrTSTANDING UNITED STATES 

8 COrRT ,JlTDGYfE)JTS.". 

9 (b) MEASURES WITH RESPECT TO STATE OWNED 

10 CORPOR~TIONS OF ,Jl~DGlVIENT Ev ADIKG FOREIG~ 

11 STATES.-If any judgment evading foreign state remains 

12 in default on any final judgment for more than three 

13 years, irrespective of whether such judgment became final 

14 before the date of the ellactment of this Act, the Securities 

15 and Exchange Commission shall16 (1) take all neeessary measures to deny any 

17 state owned corporation of a judgment evading for18 eign state access to the United States capital mar19 kets, illcludillg the ability to issue debt, eq uity or 

20 other securities. or borrow money, unless the pro21 ceeds of such bOTTo,ving of securities issuance are to 

22 be used, in the first instance, to satisfy in full all 

23 final judgment against its parent judgment evading 

24 foreign state; amI 
33


76980b-13.eps

1:1 

(2) reqUIre that all periodie filings made by 

2 each state owned corporation of a judgment evading 

3 foreign state with the Se(mrities and Exdmnge Com4 mission under the securities laws bear the following 

S legend prominently on the cover page: "vVARNIKG: 

6 THIS REPORT IS SCBl\U'I"l'ED BY A STATE 

7 OW~ED CORPORATION OF A FOREIGN 

8 STATE THAT HAS BEEN DETERMINED BY 

9 THE DEPART~IE~T OF THE TREASURY TO 

10 BE A ·JUDGMEKT EVADI~G FOREIGN STATE 

11 BASED UPON ITS FAIL URE TO SATISFY 

12 OUTSTA..\fDI~G UNITED STATES COURT 

13 ,n~DGMENTS.". 

14 SEC. 7. REQUESTS FOR AID OR ASSISTANCE FROM JUDG15 MENT EVADING FOREIGN STATES. 

16 (a) BILATERAL ~~C;8I8T~'L.'JCE.-\\11eneVer any pro17 posal is made to a department, agency, or other instIu18 mentality of the r nited States Government to eA1:end aid, 

19 a loan, or any other fOl1n of assistance to a judgment 

20 evading foreign state, the head of the department, agency, 

21 or other instrumentality may consider the proposal only 

22 if it bears prominently the legend described in subsection 

23 (c). 

24 (1)) YIULTILATERAL A88I8TAKCE.-VV11enever any 

25 proposal is made to an international organization to ex-
34


76980b-14.eps

14 

tend aid, a loan, or any other form of assistanee to a jU(lg2 ment evading foreign state, the Secretary of State shall 

3 provide prompt noti(~e of sueh proposal to the Congress. 

4 Such llotice shall bear promillelltly the legend described 

5 in subsection (c). 

6 (c) LEGE.:\D DESCRlBED.-The legelld of a proposal 

7 referred to in subsection (a) and the legend of a notice 

8 referred to in subsection (b) is the follov.~ng: "REQUEST 

9 j1'OR GRANT-IK-"AID OR LnAN BY A JUDGMENT 

10 EVADIKG FOR,EIGN STATE.". 

11 SEC. 8. REPORTS; RECOMMENDATIONS OF ADDITIONAL 

12 MEASURES. 

13 (a) ANNUM, REPOR,TS TO CONCmRSS.-Kot later 

14 than January 31 of each year, the Secretary of the Treas15 my shall provide a report, in \vriting, to the Congress 

16 identifying eaeh judgment evading foreign state, amI, for 

17 each such judgment evading foreign state18 (1) quantif;ving the impact on the r nited States 

19 economy, and cost to United States taxpayers, of the 

20 unsatisfied final judgments outstanding against the 

21 judgment evading foreign state; and 

22 (2) describing all measures that the Secret my 

23 of the Treasmy and the Securities and Exchange 

24 COInrnission have taken in the preee(ling year to 

25 carry out this Act. 
35


76980b-15.eps

If) 

(1)) CONSIDERATION OF DOC1Jl\m~TS AKD OTHER IN2 FOKVL~TION.-The Secretary of the Treasury may con3 sider doeuments and other information re(~eived from third 

4 parties and from judgment evadillg foreign states in preS paring each report under subsection (a). 

6 (c) TJ<;R1VllNA'l'lOK m' DJ<;SlGNA'l'lO.:--.f.-At such time 

7 as the Secretary of the Treasury determines that any 

8 judgment evading foreign state no longer qualifies as a 

9 judgment evading foreign state, the Secretary shall so cer10 tify to the Congress no later than in the neJ<.i annual re11 port to Congress umler subse(~tion (a), at whieh time the 

12 requirements and prohibitions under this Act shall no 

13 longer apply to such former judgment evading foreign 

14 state, or to any state oWlled corporatioll of such judgmellt 

15 avoiding foreign state. The Secretary may consider docu16 ments and other information reeeived from third parties 

17 and from the judgment evading foreign state in making 

18 this cletermina tion. 

19 (d) OTHER PUBLIC REPORTS To LNCLUDJ<; INFORNlA20 TIO~ ABOUT ,JUDGME~T EVADING FOREIGK STATES.-

21 The Secretary of State, the Secretary of the Treasury, and 

22 the Secretary of Commerce shall each reference the find23 ings of the Secretary of the Treasury from the Secretary's 

24 most reeent annual report to CongTess under subseetion 

25 (a) relating to the unsatisfied final judgments outstanding 
36


76980b-16.eps

16 

against the judgment evading foreign state in every report 

2 prepared for the public relating to the country risk or in3 vestment dimate of su(~h judgment eVH(ling foreign state. 

4 (e) .ADDlTlO.:--.rAL MEASURl£S.-'1'he Secretary of the 

5 Treasury shall recommend to the CongTess in vvriting ad6 ditional measures to carry out the purposes of this Act. 

[ZJ 
37

Mr. MACK. All members are given leave to insert remarks on this 

measure into the record should they choose to do so. 

I now recognize myself to speak on the bill and the amendment. 

The Judgment Evading Foreign States Accountability Act draws 

our attention to a serious problem that requires our immediate attention. The Republic of Argentina has incurred substantial debt in 

the United States and has subsequently defaulted on those debts. 

Going back more than a decade, in 2001, Argentina defaulted on 

more than $81 billion in sovereign debt. In 2005, Argentina refused 

to negotiate with creditors and unilaterally offered creditors 27 

cents on the dollar. 

Despite having agreed to submit to the jurisdictions of U.S. 

courts, specifically the State of New York, and waive claims of sovereign immunity, Argentina has contested at least 151 lawsuits 

and has refused to honor 116 court judgments against it, totaling 

more than $6 billion. 

Additionally, Argentina has demonstrated a similar disregard for 

arbitral awards granted to the United States investors by the 

International Centre for Settlement of Investment Disputes, a tribunal of the World Bank. Currently, Argentina is the respondent 

in more of these cases than any other G–20 nation, accounting for 

more than 66 percent of such cases. 

Argentina’s arguments for nonpayment have been outright rejected by both the World Bank and the U.S. State Department. Argentina’s behavior undermines the viability of the World Bank’s arbitration process, thereby harming the worldwide investments of 

U.S. businesses that rely upon this forum for adjudication purposes. 

The Obama administration has taken some action against Argentina, such as suspending Generalized System of Preferences benefits, as well as voting against new loans to Argentina through the 

World Bank and the Inter-American Development Bank. However, 

the Obama administration has not gone far enough to protect 

United States businesses and investors. 

Many people in the United States are unaware of Argentina’s irresponsible behavior and blatant disregard for the rule of law. U.S. 

citizens continue to invest in, lend to, and do business with Argentina and are unfamiliar with the associated risks. Those who are 

injured as a result of this conduct often have little or no recourse. 

H.R. 1798, the Judgment Evading Foreign States Accountability 

Act, takes bold steps to protect U.S. businesses and investors. This 

bill denies Argentina and other foreign states that have been in default of U.S. court judgments exceeding $100 million for more than 

2 years access to U.S. capital markets, as well as requires the U.S. 

Government to consider the default status of countries prior to 

granting them aid. 

I urge all of my colleagues to work with me to ensure the passage of the Judgment Evading Foreign States Accountability Act. 

I now recognize the ranking member for his remarks. 

Mr. ENGEL. Thank you very much, Mr. Chairman. 

Before I turn to today’s markup, I want to tell you what a pleasure it has been to work with you on this subcommittee. We have 

had an excellent working relationship and, I would dare say, an excellent friendship. 

38

Regardless of whether it was when I chaired the subcommittee 

and you were the ranking member or when you chaired and I have 

been the ranking member, we worked very well together. I have 

appreciated your friendship, your good humor, your cooperation, 

and that of your wife, our colleague, as well. And I wish you and 

your wife the best of luck in the days ahead. 

Mr. MACK. Thank you. Thank you very much. 

Mr. ENGEL. Turning to today’s markup, I think we must first 

note that Argentina is a very important country with which the 

United States has and will continue to have a multifaceted relationship. It is a member of the G–20 and a key nation in South 

America. It has vast resources and a large and educated population. I have enjoyed my visits to Argentina and continue to believe that it is a natural friend of the United States. 

However, today’s markup deals with holders of several billion 

dollars worth of Argentine debt who have remained unpaid since 

Argentina defaulted on roughly $100 billion of sovereign debt. 

While the vast majority of these bondholders accepted a restructuring of the debt, substantially reducing what they were owed, a 

small minority have held out, rejecting those deals. 

Mr. Chairman, I understand your concern about this matter, as 

it is very serious. However, I think that today’s markup is not the 

appropriate course of action at this sensitive time, and let me say 

why. 

First, we haven’t had hearings about Argentina on the debt 

issue. We are not first in line in terms of jurisdiction; that falls to 

the Committee on Financial Services. I don’t make light of this. As 

you have pointed out, this is a serious matter, but also a very complicated matter. And I don’t believe that rushing into a markup of 

legislation which may have unforeseen implications, especially 

ahead of Financial Services Committee consideration, is the step 

we should be taking now. 

I understand that even if we report this bill favorably today, the 

full committee will not take it up, and even if, hypothetically, the 

full committee did approve the bill, neither the House nor the Senate would have time to consider it. Therefore, I don’t think today’s 

markup will achieve the intended goal. 

And, finally, this matter is in the Federal court system right 

now. Late last month, the U.S. Court of Appeals for the Second Circuit upheld a lower court ruling that Argentina had to pay $1.33 

billion to the holdout investors. However, only yesterday, the U.S. 

Court of Appeals for the Second Circuit granted an emergency stay 

on its order, giving Argentina more time to respond to the ruling. 

Given the action in our courts, this is precisely, I think, the wrong 

time to be marking up H.R. 1798. It will be seen as interfering in 

the judicial process, something I think we should avoid at this moment. 

Therefore, I will respectfully vote no on H.R. 1798 today but will 

continue to monitor this issue closely in the days and weeks ahead. 

I certainly agree with you, Mr. Chairman, that this is an important 

issue and one that we need not take lightly and must not take 

lightly. I just don’t think that today is the right time to do it. 

So let me just conclude again the way I started, Mr. Chairman. 

It has been a pleasure serving with you on this subcommittee. You 

39

are not only my colleague but you are my friend. And I hope that 

we will continue to work together in the future on many, many different things. And I wish you only the best in the future. 

I yield back the balance of my time. 

Mr. MACK. Thank you very much. 

I would like to thank the ranking member for your comments, 

and I feel the same way. We have had a wonderful relationship. 

We have worked together very well. We have not always agreed, 

but we have always worked together to do what was best, as we 

saw it, for the hemisphere. And I value your friendship, and I appreciate your kind words today. So thank you very much. 

Are there any other members who wish to strike the last word 

and speak briefly on the measure? 

Mr. MCCAUL. Mr. Chairman, I would like to strike the last word. 

Mr. MACK. The gentleman is recognized. 

Mr. MCCAUL. First, I think this bill is an important step toward 

holding countries accountable for their financial obligations under 

U.S. law. 

I recently went down to Argentina, among other countries, and 

we met with several officials down there. And I was struck by what 

I see as a growing anti-American trend down there. I certainly 

hope Argentina will go back to being a friendly country and not 

being the antagonist that it looks like it is appearing to go down 

that road. 

Having said that, I just, on a personal point of personal privilege, 

Mr. Chairman, it has been not only a great honor serving on this 

committee with you, we came into Congress together at the same 

time, and I considered you to be one of my dearest friends up here 

in the Congress, along with your lovely wife. And we are going to 

miss you a lot. 

And, with that, I yield back. 

Mr. MACK. I thank the gentleman. 

And, again, thank you for your kind words. And our days aren’t 

over. We are going to continue to do a lot of great things together. 

And I appreciate those kind words. 

Do any other members wish to be recognized? 

Mr. SIRES. Yes. 

Mr. MACK. The gentleman is recognized. 

Mr. SIRES. Well, thank you for having this hearing today. And 

I also want to express my thanks to you for working together the 

last few years. It certainly has been my pleasure, and I certainly 

enjoyed our trip to Panama, although the timing wasn’t—all the 

things that happened, but it was certainly an enjoyable trip. 

And I thank you for all your support on an issue that is very important to me and my community. You have been a strong supporter, and I thank you for that. 

And I will be supporting this bill today. 

Mr. MACK. Thank you. 

And thank you for always being willing to work with us and with 

me. You are a friend, and I look forward to continue to see your 

work done here on this committee. So thank you. 

Anyone else? 

The gentleman is recognized. 

40

Mr. RIVERA. Thank you, Chairman. Thank you for having this 

important hearing and for always showing leadership on issues 

that sometimes are difficult to tackle, as I have noticed during my 

tenure on this committee. 

And I will be supporting the bill, as well. But as someone who 

has worked with you and with your family for many years—as you 

know, I started working with your father in Congress in 1988 and 

1989 and served with you in the Florida legislature. And it was an 

honor and privilege and a pleasure to always serve with you in the 

Florida House of Representatives and my time here in Congress 

with you, showing that leadership on so many issues that are important, particularly to promoting freedom, freedom around the 

world, to those that are not as fortunate, as many are here in the 

United States, to live in the greatest and freest country the world 

has ever known. 

So thank you for always being a standard bearer for freedom, 

whether it be in Cuba, Latin America, all over the world. You have 

been a staunch advocate, and you are to be commended for that. 

Thank you for your service. 

Mr. MACK. Thank you very much, David. Thank you. 

Hearing no further amendments, the question is on agreeing to 

the amendment in the nature of a substitute. 

All those in favor, say aye. 

All those opposed, say no. 

In the opinion of the Chair, the ayes have it, and the amendment 

in the nature of a substitute is agreed to. 

The question now occurs on adopting the bill as amended. 

All in favor, say aye. 

All those opposed, say no. 

In the opinion of the Chair, the ayes have it, and the amended 

bill is agreed to. 

Without objection, H.R. 1798, as amended, is reported favorably 

to the full Committee on Foreign Affairs. And staff are directed to 

make any technical and conforming changes. 

This concludes our business. And I would just like to say before 

we adjourn that it has been a privilege, an honor to serve with the 

members of this committee. And I think that we have done great 

work on this committee, whether it is when you were the chairman, and I think that we have done some great work, as well, over 

the last couple years. 

I see real opportunity for Latin America and the United States 

in how we work together and for the future of all of the people in 

all of our countries. And I will continue to watch and pay attention 

and be involved in issues that are related to Latin America and 

freedom. And I just want to thank my colleagues for everything 

that you have done for the people of the United States and people 

of Latin America. 

And, without objection, the subcommittee stands adjourned. 

[Whereupon, at 2:20 p.m., the subcommittee was adjourned.] 

(41)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

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76980n.eps

MARKUP NOTICE 

SUBCOMMITTEE ON THE WESTERN HEMISPHERE 

COMMITTEE ON FOREIGN AFFAIRS 

US HOUSE OF REPRESENTATIVES 

WASHINGTON, D.C. 20515-0128 

Connie Mack (R-FL), Chairman 

November 20, 2012 

You are respecttully requested to attend an OPEN meeting of the Committee on 

Foreign Atfairs, Subcommittee on the Western Hemisphere, to be held in Room 2172 of the 

Rayburn House Office Building (and available live, via the WEBCAST link on the 

Committee website at http://www.hcfa.house.gov): 

DATE: 

TIME: 

MARKUP OF: 

Thursday, November 29, 2012 

2:00 p.m. 

HR. 1798, To prevent foreign states that do business, issue securities, or 

borrow money in the United States, and then fail to satisfY United States 

court judgments totaling $100,000,000 or more based on such activities, 

from inflicting further economic injuries in the United States, from 

undermining the integrity of United States courts, and from discouraging 

responsible lending to poor and developing nations by undermining the 

secondary and primary markets for sovereign debt. 

By Direction ofthe Chairman 
43


76980m-1.eps

COMMITTEE ON FOREIGN AFFAIRS MINUTES OF SUBCOMMITTEE MARKUP 

MDIUTES OF SURCOMtVlITTEE ON _______ .the Western Hemisphere 

D.y._--,n~1",l/e.:J·,""d",l/zV __ D.alc. ___ =11~/",-'2",9I-,,1",-2 ___ Room, ___ ",2=-1:..:72,-__ 

Starting Time 2:06 P-"~_Ending Time 2:20 p.m. 

MARKUP 

Recesses ~1 <-to __ )( __ to __ ) <-to __ ) <-to __ ) <-10---1 <-to __ ) 

Presiding Ml.'mber(s) 

Rep. Connie Mack 

Clteck all of the following tilat apply: 

Open Session [{] 

EXecutive (closed) Session 0 Televised [{] 

Electronically Record"!.(taped) lZl 

Stenographic Record W 

BILLS FOR MARKUP: (include bill nUlI1ber(s) and title(s) qf legis/ation.) 

H.R. 1798, To preveHt joreign slates Ih«1 do business, issue secul'itiesj 01' bon'olV money ill the Ullitt!l/ States, am' then fail to satis/v UJllted 

Stale.'i t::ourf.iudgmeltt.v totaling $1 nO,nofl,nO(} OJ' more based Oil Sitch actMties,.rrolll illjlicting ji(rll1er eCOItomIC injnries ill the United 

Stllles,/rOJl1 Jlflilermill;llg tlie inlegrily of Ullited Stales courtsj ([ltd from afscourag;lIg responsible lemling to pOOl" ((11(1 Jet'l'/opillg nations hy 

lmdermbtlug the secOlufm~v alld primary maJ'kets for sOl'ereigll debt. 

COMMITTEE MEMBERS PRFSKNT: 

Reps. Mack, McCaul, Rivera, Engel, and Sires 

NON-COMMITTE~; MEMBERS PRESENT: 

STATE1VIENTS FOR THE RECORD: (List any statements submittedfor the record.) 

Rep. Mack 

ACTIONS TAKEN DURING THE MARKUP: (.4l1ach copie, 4legis/uliotl and amendmenls.) 

Tlu Clm!r cal!f!d Irp tTle hlllfor WmMI?Mti0l1 by the SI1/J('Ommlrtee. 

:;:wcflrfmelll ill '1fe IIfJfmrr of ~ subgitrr(e, pre-rWrrs1.1' pro~'idt!Jl to ,~fflllbers oftlte SnbCIJmm;t/u, Was lJjJued by ClIa/mum lifrN'k (MUck 067), which was adopted hy I'OJce 

H. ft. 17W1, us UJ/ll!1Il1rli, Wl!~ Ilgreed ((I by 1'I1ice I'(!fe (lnd JlVIY orden'llfuvoral1ly rep[)rleilio lite i'ulf Comwillei! p'1' ifllfmillf()f{S cUllsen/' 

RECORDED VOTES T AKKN (FOR MARKUP): (Attach final vole tally sheet listing each member.) 

TIME SCHEDULED TO RECONVENE ___ _ 

TIME ADJOURNED 2-20pm 
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Subcommittee 011 the Western Hemisphere 

M~ber Attendance 

'c;onnie Mack, R-FL, Chairma!1 

i'vlichacl T. McCaul, R-TX 

'J :;"11 Sclnnidt, R-OH 

'David Rivera, R-FL 

'] Christopher H. Smith, R-NJ 

::J )lron GaJlcgJy, R-CA 

'. FJ E .;ot L. lengel, D-NY, Ranking Member 

I<\.lbio Sires, D-NJ 

Cl Eni F. H. Faleomavaega, D-A8 

'J Gregory W. Meeks, D-NY 
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Opening Statement 

Chairman Connie Mack 

Western Hemisphere Subcommittee 

Marknp of H.R. 1798 

November 29, 2012 

H.R. 1798, To prevent foreign states that do business, issue securities, or borrow money in 

the United States, and then fail to satisfy United States court judgments totaling 

$100,000,000 or more based on such activities, from inflicting further economic injuries in 

the United States, from undermining the integrity of United States courts, and from 

discouraging responsible lending to poor and developing nations by undermining the 

secondary and primary markets for sovereign debt. 

The Judgment Evading Foreign States Accountability Act draws our attention to a serious 

problem that requires our immediate attention 

The Republic of Argentina has incurred substantial debt in the United States and has 

subsequently defaulted on those debts. 

Going back more than a decade, in 2001, Argentina defaulted on more than $81 billion in 

sovereign debt In 2005, Argentina refused to negotiate with creditors and unilaterally otfered 

creditors 27 cents on the dollar. 

Despite having agreed to submit to the jurisdiction of U.S. courts, specitically the State of New 

York, and wai ve claims of sovereign immunity, Argentina has contested at least 151 lawsuits and 

has refused to honor 116 court judgments against it, totaling more than $6 billion dollars. 

Additionally, Argentina has demonstrated a similar disregard for arbitral awards granted to 

United States investors by the International Centre for Settlement and Investor Disputes (ICSlD), 

a tribunal of the World Bank. 

Currently Argentina is the respondent in more ICSID cases than any other G-20 nation, 

accounting for more than 66% of such cases. 

Argentina's arguments for nonpayment have been outright rejected by both the World Bank and 

the U. S. State Department 

Argentina's behavior undermines the viability of the World Bank's arbitration process, thereby 

harming the worldwide investments of U.S. businesses that rely upon this forum for adjudication 

purposes. 

The Obama Administration has taken some action against Argentina, such as suspending 

Generalized System of Preferences (GSP) benetits as well as voting against new loans to 

Argentina through the World Bank and the Inter-American Development Bank. 
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76980c-2.eps

However, the Obama Administration has not gone far enough to protect United States businesses 

and investors. 

Many people in the United States are unaware of Argentina's irresponsible behavior and blatant 

disregard for the rule of law US citizens continue to invest in, lend to, and do business with 

Argentina and are unfamiliar with the associated risks. Those who are injured as a result of this 

conduct often ha ve little or no recourse. 

H.R. 1798, the Judgment Evading Foreign States Accountability Act, takes bold steps to protect 

U.S. businesses and investors. 

This bill denies Argentina and other foreign states that have been in default of US. court 

judgments exceeding $100 million dollars for more than two years access to U.S. capital 

markets, as well as requires the U.S. Government to consider the default status of countries prior 

to granting them aid. 

I urge all of my colleagues to work with me to ensure the passage of the Judgment Evading 

Foreign States Accountability Act.