I 

112TH CONGRESS 

1ST SESSION 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. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 6, 2011 

Mr. MACK (for himself, Mr. KING of New York, Ms. LORETTA SANCHEZ of 

California, Mr. CARNAHAN, and Mrs. MALONEY) introduced the following 

bill; which was referred to the Committee on Financial Services, and in 

addition to the Committee on Foreign Affairs, for a period to be subsequently determined by the Speaker, in each case for consideration of such 

provisions as fall within 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 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. 


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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Judgment Evading 

5 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, issue securities, or borrow money in the 

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

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

11 activities, from inflicting further economic injuries in the 

12 United States, from undermining the integrity of United 

13 States courts, and from discouraging responsible lending 

14 to poor 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, issue 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 tivities, directly or indirectly inflict billions of dollars 

24 of damage in the United States, and undermine the 

25 credibility of the United States courts. 


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1 (2) Foreign states that engage in such behavior 

2 can infect the management of corporations and 

3 other entities that they own or control with their 

4 profligate and irresponsible habits. When negligent 

5 ethical standards permit government officials to re6 pudiate lawful judgments, the injury to United 

7 States taxpayers is multiplied. 

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

10 debts in the United States, defaulted on those debts, 

11 and then refused to honor lawful judgments of 

12 United States and other courts ordering repayment. 

13 In 2001, Argentina defaulted on more than 

14 $81,000,000,000 in sovereign debt, the largest such 

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

16 by creditors to negotiate the terms of an exchange 

17 offer, Argentina unilaterally offered lenders approxi18 mately 27 cents on the dollar in its restructuring 

19 deal, far below the international norm for sovereign 

20 debt restructurings. Argentina repudiated the debts 

21 owed to the unprecedented proportion of bondholders 

22 who rejected that offer. 

23 (4) Argentina still owes United States bond 

24 holders more than $3,500,000,000. Overall, the de25 fault and restructuring by Argentina have cost 


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1 United States bondholders, taxpayers, and share 

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

3 (5) Argentina has the capacity to pay its exter4 nal creditors. Argentina now holds more than 

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 has similarly announced an intention to 

9 pay sovereign creditors of the Paris Club, of which 

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

11 (6) United States bondholders have won numer12 ous court rulings against Argentina relating to Ar13 gentina’s default on debt owed to such bondholders 

14 and Argentina’s decision to repeatedly ignore these 

15 judgments threatens the United States legal system. 

16 Despite having agreed to submit to the jurisdiction 

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

19 least 170 lawsuits and refusing to honor 100 judg20 ments against it, totaling more than 

21 $7,000,000,000. 

22 (7) Argentina has demonstrated a similar dis23 regard for claims brought by United States investors 

24 before the International Centre for Settlement of In25 vestment Disputes (ICSID), a tribunal of the World 


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1 Bank. Argentina is the respondent in more ICSID 

2 cases than any other nation, now accounting for 

3 more than a quarter of the tribunal’s caseload. It is 

4 important to note that Argentina’s arguments for 

5 nonpayment have been outright rejected by both the 

6 Department of State and the ICSID. Argentina 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. Argentina has behaved 

10 in a manner that undermines the viability of the 

11 ICSID process, thereby alarming the worldwide in12 vestments of United States businesses that rely upon 

13 this forum for adjudication of disputes. 

14 (8) Argentina’s debts are legitimate. Any asser15 tion that the Argentine debt now outstanding was 

16 incurred by the repressive, nondemocratic regimes 

17 that ruled Argentina in the late 1970s and early 

18 1980s is inaccurate. The bonds currently held by 

19 United States creditors were not incurred by non20 democratic regimes; rather, they were issued by 

21 democratically elected Argentine governments. 

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

23 junta—which caused tremendous suffering during a 

24 tyrannical 7-year reign—borrowed from foreign 

25 banks, 96 percent of that debt was refinanced in 


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1 1993 when Argentina’s ‘‘Brady Plan’’ restructuring 

2 was completed. That restructuring was underwritten 

3 by the United States Government. Prior to the 

4 Brady Plan restructuring, Argentina had undergone 

5 two ‘‘major restructurings’’ of its foreign debt—the 

6 first in 1985, and the second in 1987. 

7 (10) None of the debt now held by United 

8 States creditors dates from the days of the Argen9 tine military junta. Further, even if it were fair to 

10 characterize the debt issued in the 1993 Brady Plan 

11 restructuring as somehow derivative of junta-era 

12 debt—a notion that maligns the United States pol13 icymakers who approved and underwrote the Brady 

14 Plan on behalf of the American people—only five 

15 percent of the defaulted debt now held by United 

16 States creditors was issued during or before 1993. 

17 Ninety-five percent of the defaulted debt held by 

18 United States creditors was incurred after 1993 by 

19 freely elected Argentine governmental officials and 

20 has no relationship to the military junta. 

21 (11) Argentina’s defaults have raised the costs 

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 certainly decline. Ar25 gentina’s defaults have discouraged foreign direct inVerDate Mar 15 2010 00:23 May 11, 2011 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1798.IH H1798

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1 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. 

5 (12) An October 2010 evaluation report by the 

6 Financial Action Task Force (FATF), an intergov7 ernmental body that analyzes financial systems for 

8 criminal activity, gave Argentina the most negative 

9 evaluation of any G–20 nation. FATF evaluated Ar10 gentina on 49 financial standards, of which Argen11 tina failed to meet 47 out of the 49 standards. Ar12 gentina was given an original timeline of three 

13 months, then an additional ten months to dem14 onstrate compliance to the standards or face being 

15 blacklisted due to financial corruption and defi16 ciencies in combating financing of terrorism (CFT) 

17 and anti-money laundering (AML) systems. 

18 (13) Drawing further conclusions, FATF re19 ported several shortcomings in Argentina’s financial 

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

22 enforcement has prompted wide-spread money laun23 dering in Argentina’s financial sector creating an en24 vironment that puts Argentina at risk of becoming 


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1 a hub for terrorism and drug trafficking in the 

2 Western Hemisphere. 

3 (14) Many persons in the United States are un4 aware of Argentina’s irresponsible behavior and dis5 regard for the rule of law. Further, United States 

6 citizens continue to invest in, lend to, and do busi7 ness with Argentina and are unfamiliar with the as8 sociated risks. 

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

10 conduct often have little or no recourse. Judgment 

11 evading foreign states and their state owned cor12 porations enjoy a safe haven within their national 

13 borders, and this fact often presents an insurmount14 able obstacle to recovery for those who are injured 

15 by the behavior of those states. 

16 (16) The absence of a remedy for defaults by 

17 such foreign states undermines nations that badly 

18 need to access capital from foreign lenders, with dis19 proportionate harm falling on responsible and demo20 cratic nations. By undermining confidence in the 

21 secondary market for sovereign debt, judgment evad22 ing foreign states significantly increase the risk that 

23 primary lending to less-advantaged nations will be 

24 curtailed, depriving deserving sovereign borrowers of 

25 access to the international capital markets. 


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1 (17) Action by the United States Government 

2 to combat this growing problem must include meas3 ures that both protect against the irresponsible con4 duct of judgment evading foreign states and their 

5 state owned corporations, and motivate such states 

6 and corporations to raise their standards of behav7 ior. 

8 (18) An effective means of achieving this impor9 tant objective is to deprive judgment evading foreign 

10 states and their state owned corporations of the 

11 privilege of issuing securities or borrowing in the 

12 United States, and requiring that warnings of their 

13 irresponsible behavior be given to persons in the 

14 United States who are contemplating investing in, 

15 lending to, or doing business with such states and 

16 businesses, until those states demonstrate that such 

17 measures are no longer necessary. 

18 SEC. 4. DEFINITIONS. 

19 For purposes of this Act: 

20 (1) AGENCY OR INSTRUMENTALITY OF A FOR21 EIGN STATE.—The term ‘‘agency or instrumentality 

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

23 in section 1603(b) of title 28, United States Code. 

24 (2) FINAL JUDGMENT.—The term ‘‘final judg25 ment’’ means any judgment of a United States disVerDate Mar 15 2010 00:23 May 11, 2011 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1798.IH H1798

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1 trict court, the Court of International Trade, or the 

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

3 appealed to any court in the United States. 

4 (3) FOREIGN STATE.—The term ‘‘foreign state’’ 

5 has the meaning given that term in section 1603(a) 

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

7 not include an agency or instrumentality of a foreign 

8 state. 

9 (4) INTERNATIONAL ORGANIZATION.—The term 

10 ‘‘international organization’’ means an entity des11 ignated by the President as being entitled to enjoy 

12 the privileges, exemptions, and immunities provided 

13 by the International Organizations Immunities Act 

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

15 (5) JUDGMENT EVADING FOREIGN STATE.— 

16 The term ‘‘judgment evading foreign state’’ means 

17 any foreign state that— 

18 (A) has one or more judgments entered 

19 against it by any United States district court, 

20 the Court of International Trade, or the court 

21 of any State, the combined amount of which 

22 judgments exceeds $100,000,000; 

23 (B) fails to satisfy in full any such judg24 ment for a period of more than two years after 

25 the judgment becomes a final judgment, regardVerDate Mar 15 2010 00:23 May 11, 2011 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1798.IH H1798

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1 less of whether such judgment became a final 

2 judgment before the date of the enactment of 

3 this Act; and 

4 (C) is not a foreign state eligible for— 

5 (i) financing through the Inter6 national Development Association but not 

7 from the International Bank for Recon8 struction and Development; and 

9 (ii) debt relief under the Enhanced 

10 HIPC Initiative (as defined in section 

11 1625(e)(3) of the International Financial 

12 Institutions Act) or under the Multilateral 

13 Debt Relief Initiative. 

14 (6) STATE OWNED CORPORATION OF A JUDG15 MENT EVADING FOREIGN STATE.—The term ‘‘state 

16 owned corporation of a judgment evading foreign 

17 state’’ means any corporation or entity, other than 

18 a natural person— 

19 (A) that is an agency or instrumentality of 

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

22 (B) a majority of the shares or other own23 ership interest of which is held, either directly 

24 or indirectly, by a judgment evading foreign 

25 state or by an agency or instrumentality of a 


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1 foreign state that is a judgment evading foreign 

2 state. 

3 (7) STATE.—The term ‘‘State’’ means each of 

4 the several States, the District of Columbia, and any 

5 commonwealth, territory, or possession of the United 

6 States. 

7 SEC. 5. STATEMENT OF POLICY. 

8 It shall be the policy of the United States— 

9 (1) to advocate within the governing bodies of 

10 international organizations, international financial 

11 institutions such as the World Bank and the Inter12 national Monetary Fund, and other foreign policy 

13 settings for the full compensation and fair treatment 

14 of United States taxpayers in whose favor judgments 

15 have been awarded by the United States courts; 

16 (2) to seek to protect the economic interests of 

17 such taxpayers and other persons and of nations 

18 that benefit from a reliable flow of foreign capital 

19 by— 

20 (A) restricting the access to the United 

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

23 (B) requiring that such persons be warned 

24 of the dangers of investing in, lending to, or 


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1 doing business with such states and state owned 

2 corporations; and 

3 (C) call on the World Bank, the Inter4 national Monetary Fund, and other inter5 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 evad10 ing foreign states from willfully disregarding the 

11 judgments of those courts. 

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

13 INVESTORS. 

14 (a) MEASURES WITH RESPECT TO JUDGMENT EVAD15 ING FOREIGN STATES.—The Securities and Exchange 

16 Commission shall— 

17 (1) take all necessary measures to deny every 

18 judgment evading foreign state access to United 

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 foreign state with the Securities 

24 and Exchange Commission under the securities laws 

25 bear the following legend prominently on the cover 


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1 page: ‘‘WARNING: THIS REPORT IS SUB2 MITTED BY A FOREIGN STATE THAT HAS 

3 BEEN DETERMINED BY THE UNITED 

4 STATES DEPARTMENT OF THE TREASURY 

5 TO BE A JUDGMENT EVADING FOREIGN 

6 STATE BASED UPON ITS FAILURE TO SAT7 ISFY OUTSTANDING UNITED STATES 

8 COURT JUDGMENTS.’’. 

9 (b) MEASURES WITH RESPECT TO STATE OWNED

10 CORPORATIONS OF JUDGMENT EVADING FOREIGN

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 enactment of this Act, the Securities 

15 and Exchange Commission shall— 

16 (1) take all necessary measures to deny any 

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

20 other securities, or borrow money, unless the pro21 ceeds of such borrowing 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; and 


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1 (2) require that all periodic filings made by 

2 each state owned corporation of a judgment evading 

3 foreign state with the Securities and Exchange Com4 mission under the securities laws bear the following 

5 legend prominently on the cover page: ‘‘WARNING: 

6 THIS REPORT IS SUBMITTED BY A STATE 

7 OWNED CORPORATION OF A FOREIGN 

8 STATE THAT HAS BEEN DETERMINED BY 

9 THE DEPARTMENT OF THE TREASURY TO 

10 BE A JUDGMENT EVADING FOREIGN STATE 

11 BASED UPON ITS FAILURE TO SATISFY 

12 OUTSTANDING UNITED STATES COURT 

13 JUDGMENTS.’’. 

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

16 (a) BILATERAL ASSISTANCE.—Whenever any pro17 posal is made to a department, agency, or other instru18 mentality of the United States Government to extend aid, 

19 a loan, or any other form 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 (b) MULTILATERAL ASSISTANCE.—Whenever any 

25 proposal is made to an international organization to exVerDate Mar 15 2010 00:23 May 11, 2011 Jkt 099200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\H1798.IH H1798

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1 tend aid, a loan, or any other form of assistance to a judg2 ment evading foreign state, the Secretary of State shall 

3 provide prompt notice of such proposal to the Congress. 

4 Such notice shall bear prominently the legend described 

5 in subsection (c). 

6 (c) LEGEND DESCRIBED.—The legend of a proposal 

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

8 referred to in subsection (b) is the following: ‘‘REQUEST 

9 FOR GRANT–IN–AID OR LOAN BY A JUDGMENT 

10 EVADING FOREIGN STATE.’’. 

11 SEC. 8. REPORTS; RECOMMENDATIONS OF ADDITIONAL 

12 MEASURES. 

13 (a) ANNUAL REPORTS TO CONGRESS.—Not later 

14 than January 31 of each year, the Secretary of the Treas15 ury shall provide a report, in writing, to the Congress 

16 identifying each judgment evading foreign state, and, for 

17 each such judgment evading foreign state— 

18 (1) quantifying the impact on the United 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 Secretary 

23 of the Treasury and the Securities and Exchange 

24 Commission have taken in the preceding year to 

25 carry out this Act. 


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1 (b) CONSIDERATION OF DOCUMENTS AND OTHER IN2 FORMATION.—The Secretary of the Treasury may con3 sider documents and other information received from third 

4 parties and from judgment evading foreign states in pre5 paring each report under subsection (a). 

6 (c) TERMINATION OF DESIGNATION.—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 next annual re11 port to Congress under subsection (a), at which 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 owned corporation of such judgment 

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

17 and from the judgment evading foreign state in making 

18 this determination. 

19 (d) OTHER PUBLIC REPORTS TO INCLUDE INFORMA20 TION ABOUT JUDGMENT EVADING FOREIGN 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 recent annual report to Congress under subsection 

25 (a) relating to the unsatisfied final judgments outstanding 


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1 against the judgment evading foreign state in every report 

2 prepared for the public relating to the country risk or in3 vestment climate of such judgment evading foreign state. 

4 (e) ADDITIONAL MEASURES.—The Secretary of the 

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

Æ 


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