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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1798 Introduced in House (IH)]

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Judgment Evading Foreign States 
Accountability Act of 2011''.

SEC. 2. STATEMENT OF PURPOSE.

    The purpose of this Act is 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.

SEC. 3. FINDINGS.

    Congress finds the following:
            (1) Foreign states that do business, issue securities, or 
        borrow money in the United States, and then refuse to satisfy 
        judgments of United States courts entered against them in 
        connection with disputes resulting from these or other 
        commercial activities, directly or indirectly inflict billions 
        of dollars of damage in the United States, and undermine the 
        credibility of the United States courts.
            (2) Foreign states that engage in such behavior can infect 
        the management of corporations and other entities that they own 
        or control with their profligate and irresponsible habits. When 
        negligent ethical standards permit government officials to 
        repudiate lawful judgments, the injury to United States 
        taxpayers is multiplied.
            (3) The Republic of Argentina is a primary example of a 
        foreign state that has incurred large debts in the United 
        States, defaulted on those debts, and then refused to honor 
        lawful judgments of United States and other courts ordering 
        repayment. In 2001, Argentina defaulted on more than 
        $81,000,000,000 in sovereign debt, the largest such default in 
        history. In 2005, after refusing all efforts by creditors to 
        negotiate the terms of an exchange offer, Argentina 
        unilaterally offered lenders approximately 27 cents on the 
        dollar in its restructuring deal, far below the international 
        norm for sovereign debt restructurings. Argentina repudiated 
        the debts owed to the unprecedented proportion of bondholders 
        who rejected that offer.
            (4) Argentina still owes United States bond holders more 
        than $3,500,000,000. Overall, the default and restructuring by 
        Argentina have cost United States bondholders, taxpayers, and 
        share holders more than $10,000,000,000.
            (5) Argentina has the capacity to pay its external 
        creditors. Argentina now holds more than $54,000,000,000 in 
        reserves. Argentina chose to pay off its $9,800,000,000 debt to 
        the International Monetary Fund in full in 2005, years before 
        it was due, and has similarly announced an intention to pay 
        sovereign creditors of the Paris Club, of which the United 
        States is owed $360,000,000.
            (6) United States bondholders have won numerous court 
        rulings against Argentina relating to Argentina's default on 
        debt owed to such bondholders and Argentina's decision to 
        repeatedly ignore these judgments threatens the United States 
        legal system. Despite having agreed to submit to the 
        jurisdiction of the State of New York and to waive claims of 
        sovereign immunity, Argentina is now contesting at least 170 
        lawsuits and refusing to honor 100 judgments against it, 
        totaling more than $7,000,000,000.
            (7) Argentina has demonstrated a similar disregard for 
        claims brought by United States investors before the 
        International Centre for Settlement of Investment Disputes 
        (ICSID), a tribunal of the World Bank. Argentina is the 
        respondent in more ICSID cases than any other nation, now 
        accounting for more than a quarter of the tribunal's caseload. 
        It is important to note that Argentina's arguments for 
        nonpayment have been outright rejected by both the Department 
        of State and the ICSID. Argentina is currently receiving 
        $5,810,000,000 from the World Bank and has requested an 
        additional $1,630,000,000 in funding. Argentina has behaved in 
        a manner that undermines the viability of the ICSID process, 
        thereby alarming the worldwide investments of United States 
        businesses that rely upon this forum for adjudication of 
        disputes.
            (8) Argentina's debts are legitimate. Any assertion that 
        the Argentine debt now outstanding was incurred by the 
        repressive, nondemocratic regimes that ruled Argentina in the 
        late 1970s and early 1980s is inaccurate. The bonds currently 
        held by United States creditors were not incurred by 
        nondemocratic regimes; rather, they were issued by 
        democratically elected Argentine governments.
            (9) While it is true that the Argentine military junta--
        which caused tremendous suffering during a tyrannical 7-year 
        reign--borrowed from foreign banks, 96 percent of that debt was 
        refinanced in 1993 when Argentina's ``Brady Plan'' 
        restructuring was completed. That restructuring was 
        underwritten by the United States Government. Prior to the 
        Brady Plan restructuring, Argentina had undergone two ``major 
        restructurings'' of its foreign debt--the first in 1985, and 
        the second in 1987.
            (10) None of the debt now held by United States creditors 
        dates from the days of the Argentine military junta. Further, 
        even if it were fair to characterize the debt issued in the 
        1993 Brady Plan restructuring as somehow derivative of junta-
        era debt--a notion that maligns the United States policymakers 
        who approved and underwrote the Brady Plan on behalf of the 
        American people--only five percent of the defaulted debt now 
        held by United States creditors was issued during or before 
        1993. Ninety-five percent of the defaulted debt held by United 
        States creditors was incurred after 1993 by freely elected 
        Argentine governmental officials and has no relationship to the 
        military junta.
            (11) Argentina's defaults have raised the costs of 
        borrowing for both the public and private sectors. If the 
        country took action to remediate its debts, its annual interest 
        expense would certainly decline. Argentina's defaults have 
        discouraged foreign direct investment. One study from 2007 
        states that Argentina loses over $6,000,000,000 in foreign 
        direct investment every year as a result of its default and 
        debt repudiation and the resultant risk profile.
            (12) An October 2010 evaluation report by the Financial 
        Action Task Force (FATF), an intergovernmental body that 
        analyzes financial systems for criminal activity, gave 
        Argentina the most negative evaluation of any G-20 nation. FATF 
        evaluated Argentina on 49 financial standards, of which 
        Argentina failed to meet 47 out of the 49 standards. Argentina 
        was given an original timeline of three months, then an 
        additional ten months to demonstrate compliance to the 
        standards or face being blacklisted due to financial corruption 
        and deficiencies in combating financing of terrorism (CFT) and 
        anti-money laundering (AML) systems.
            (13) Drawing further conclusions, FATF reported several 
        shortcomings in Argentina's financial sector, most notably 
        corruption and the poor enforcement of Argentine financial 
        laws. The lack of enforcement has prompted wide-spread money 
        laundering in Argentina's financial sector creating an 
        environment that puts Argentina at risk of becoming a hub for 
        terrorism and drug trafficking in the Western Hemisphere.
            (14) Many persons in the United States are unaware of 
        Argentina's irresponsible behavior and disregard for the rule 
        of law. Further, United States citizens continue to invest in, 
        lend to, and do business with Argentina and are unfamiliar with 
        the associated risks.
            (15) Those who are injured as a result of this conduct 
        often have little or no recourse. Judgment evading foreign 
        states and their state owned corporations enjoy a safe haven 
        within their national borders, and this fact often presents an 
        insurmountable obstacle to recovery for those who are injured 
        by the behavior of those states.
            (16) The absence of a remedy for defaults by such foreign 
        states undermines nations that badly need to access capital 
        from foreign lenders, with disproportionate harm falling on 
        responsible and democratic nations. By undermining confidence 
        in the secondary market for sovereign debt, judgment evading 
        foreign states significantly increase the risk that primary 
        lending to less-advantaged nations will be curtailed, depriving 
        deserving sovereign borrowers of access to the international 
        capital markets.
            (17) Action by the United States Government to combat this 
        growing problem must include measures that both protect against 
        the irresponsible conduct of judgment evading foreign states 
        and their state owned corporations, and motivate such states 
        and corporations to raise their standards of behavior.
            (18) An effective means of achieving this important 
        objective is to deprive judgment evading foreign states and 
        their state owned corporations of the privilege of issuing 
        securities or borrowing in the United States, and requiring 
        that warnings of their irresponsible behavior be given to 
        persons in the United States who are contemplating investing 
        in, lending to, or doing business with such states and 
        businesses, until those states demonstrate that such measures 
        are no longer necessary.

SEC. 4. DEFINITIONS.

    For purposes of this Act:
            (1) Agency or instrumentality of a foreign state.--The term 
        ``agency or instrumentality of a foreign state'' has the 
        meaning given that term in section 1603(b) of title 28, United 
        States Code.
            (2) Final judgment.--The term ``final judgment'' means any 
        judgment of a United States district court, the Court of 
        International Trade, or the court of any State, that is no 
        longer eligible to be appealed to any court in the United 
        States.
            (3) Foreign state.--The term ``foreign state'' has the 
        meaning given that term in section 1603(a) of title 28, United 
        States Code, except that it does not include an agency or 
        instrumentality of a foreign state.
            (4) International organization.--The term ``international 
        organization'' means an entity designated by the President as 
        being entitled to enjoy the privileges, exemptions, and 
        immunities provided by the International Organizations 
        Immunities Act (22 U.S.C. 288 et seq.).
            (5) Judgment evading foreign state.--The term ``judgment 
        evading foreign state'' means any foreign state that--
                    (A) has one or more judgments entered against it by 
                any United States district court, the Court of 
                International Trade, or the court of any State, the 
                combined amount of which judgments exceeds 
                $100,000,000;
                    (B) fails to satisfy in full any such judgment for 
                a period of more than two years after the judgment 
                becomes a final judgment, regardless of whether such 
                judgment became a final judgment before the date of the 
                enactment of this Act; and
                    (C) is not a foreign state eligible for--
                            (i) financing through the International 
                        Development Association but not from the 
                        International Bank for Reconstruction and 
                        Development; and
                            (ii) debt relief under the Enhanced HIPC 
                        Initiative (as defined in section 1625(e)(3) of 
                        the International Financial Institutions Act) 
                        or under the Multilateral Debt Relief 
                        Initiative.
            (6) State owned corporation of a judgment evading foreign 
        state.--The term ``state owned corporation of a judgment 
        evading foreign state'' means any corporation or entity, other 
        than a natural person--
                    (A) that is an agency or instrumentality of a 
                foreign state that is a judgment evading foreign state; 
                or
                    (B) a majority of the shares or other ownership 
                interest of which is held, either directly or 
                indirectly, by a judgment evading foreign state or by 
                an agency or instrumentality of a foreign state that is 
                a judgment evading foreign state.
            (7) State.--The term ``State'' means each of the several 
        States, the District of Columbia, and any commonwealth, 
        territory, or possession of the United States.

SEC. 5. STATEMENT OF POLICY.

    It shall be the policy of the United States--
            (1) to advocate within the governing bodies of 
        international organizations, international financial 
        institutions such as the World Bank and the International 
        Monetary Fund, and other foreign policy settings for the full 
        compensation and fair treatment of United States taxpayers in 
        whose favor judgments have been awarded by the United States 
        courts;
            (2) to seek to protect the economic interests of such 
        taxpayers and other persons and of nations that benefit from a 
        reliable flow of foreign capital by--
                    (A) restricting the access to the United States 
                capital markets of judgment evading foreign states and 
                their state owned corporations;
                    (B) requiring that such persons be warned of the 
                dangers of investing in, lending to, or doing business 
                with such states and state owned corporations; and
                    (C) call on the World Bank, the International 
                Monetary Fund, and other international financial 
                institutions to vote against providing funding or 
                foreign capital to judgment evading foreign states; and
            (3) to further solidify the authority of the United States 
        courts by preventing judgment evading foreign states from 
        willfully disregarding the judgments of those courts.

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

    (a) Measures With Respect to Judgment Evading Foreign States.--The 
Securities and Exchange Commission shall--
            (1) take all necessary measures to deny every judgment 
        evading foreign state access to United States capital markets, 
        including the ability, directly or indirectly, to borrow money 
        or sell securities in the United States; and
            (2) require that all periodic filings made by the judgment 
        evading foreign state with the Securities and Exchange 
        Commission under the securities laws bear the following legend 
        prominently on the cover page: ``WARNING: THIS REPORT IS 
        SUBMITTED BY A FOREIGN STATE THAT HAS BEEN DETERMINED BY THE 
        UNITED STATES DEPARTMENT OF THE TREASURY TO BE A JUDGMENT 
        EVADING FOREIGN STATE BASED UPON ITS FAILURE TO SATISFY 
        OUTSTANDING UNITED STATES COURT JUDGMENTS.''.
    (b) Measures With Respect to State Owned Corporations of Judgment 
Evading Foreign States.--If any judgment evading foreign state remains 
in default on any final judgment for more than three years, 
irrespective of whether such judgment became final before the date of 
the enactment of this Act, the Securities and Exchange Commission 
shall--
            (1) take all necessary measures to deny any state owned 
        corporation of a judgment evading foreign state access to the 
        United States capital markets, including the ability to issue 
        debt, equity or other securities, or borrow money, unless the 
        proceeds of such borrowing of securities issuance are to be 
        used, in the first instance, to satisfy in full all final 
        judgment against its parent judgment evading foreign state; and
            (2) require that all periodic filings made by each state 
        owned corporation of a judgment evading foreign state with the 
        Securities and Exchange Commission under the securities laws 
        bear the following legend prominently on the cover page: 
        ``WARNING: THIS REPORT IS SUBMITTED BY A STATE OWNED 
        CORPORATION OF A FOREIGN STATE THAT HAS BEEN DETERMINED BY THE 
        DEPARTMENT OF THE TREASURY TO BE A JUDGMENT EVADING FOREIGN 
        STATE BASED UPON ITS FAILURE TO SATISFY OUTSTANDING UNITED 
        STATES COURT JUDGMENTS.''.

SEC. 7. REQUESTS FOR AID OR ASSISTANCE FROM JUDGMENT EVADING FOREIGN 
              STATES.

    (a) Bilateral Assistance.--Whenever any proposal is made to a 
department, agency, or other instrumentality of the United States 
Government to extend aid, a loan, or any other form of assistance to a 
judgment evading foreign state, the head of the department, agency, or 
other instrumentality may consider the proposal only if it bears 
prominently the legend described in subsection (c).
    (b) Multilateral Assistance.--Whenever any proposal is made to an 
international organization to extend aid, a loan, or any other form of 
assistance to a judgment evading foreign state, the Secretary of State 
shall provide prompt notice of such proposal to the Congress. Such 
notice shall bear prominently the legend described in subsection (c).
    (c) Legend Described.--The legend of a proposal referred to in 
subsection (a) and the legend of a notice referred to in subsection (b) 
is the following: ``REQUEST FOR GRANT-IN-AID OR LOAN BY A JUDGMENT 
EVADING FOREIGN STATE.''.

SEC. 8. REPORTS; RECOMMENDATIONS OF ADDITIONAL MEASURES.

    (a) Annual Reports to Congress.--Not later than January 31 of each 
year, the Secretary of the Treasury shall provide a report, in writing, 
to the Congress identifying each judgment evading foreign state, and, 
for each such judgment evading foreign state--
            (1) quantifying the impact on the United States economy, 
        and cost to United States taxpayers, of the unsatisfied final 
        judgments outstanding against the judgment evading foreign 
        state; and
            (2) describing all measures that the Secretary of the 
        Treasury and the Securities and Exchange Commission have taken 
        in the preceding year to carry out this Act.
    (b) Consideration of Documents and Other Information.--The 
Secretary of the Treasury may consider documents and other information 
received from third parties and from judgment evading foreign states in 
preparing each report under subsection (a).
    (c) Termination of Designation.--At such time as the Secretary of 
the Treasury determines that any judgment evading foreign state no 
longer qualifies as a judgment evading foreign state, the Secretary 
shall so certify to the Congress no later than in the next annual 
report to Congress under subsection (a), at which time the requirements 
and prohibitions under this Act shall no longer apply to such former 
judgment evading foreign state, or to any state owned corporation of 
such judgment avoiding foreign state. The Secretary may consider 
documents and other information received from third parties and from 
the judgment evading foreign state in making this determination.
    (d) Other Public Reports To Include Information About Judgment 
Evading Foreign States.--The Secretary of State, the Secretary of the 
Treasury, and the Secretary of Commerce shall each reference the 
findings of the Secretary of the Treasury from the Secretary's most 
recent annual report to Congress under subsection (a) relating to the 
unsatisfied final judgments outstanding against the judgment evading 
foreign state in every report prepared for the public relating to the 
country risk or investment climate of such judgment evading foreign 
state.
    (e) Additional Measures.--The Secretary of the Treasury shall 
recommend to the Congress in writing additional measures to carry out 
the purposes of this Act.
                                 <all>
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