I 

111TH CONGRESS 

2D SESSION H. R. 5564 

To prevent wealthy and middle-income 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 

JUNE 22, 2010 

Mr. MCMAHON (for himself, Mr. CARNAHAN, Mrs. MALONEY, Mr. TOWNS, 

Mr. HIGGINS, Ms. MARKEY of Colorado, Ms. KOSMAS, Mr. BURTON of 

Indiana, Mr. SHULER, Mr. GARRETT of New Jersey, Mr. WILSON of 

South Carolina, Mr. HALL of New York, Mr. OWENS, Ms. FALLIN, Mr. 

MAFFEI, Mr. MURPHY of New York, Ms. LORETTA SANCHEZ of California, Mr. JOHNSON of Georgia, Mr. BACA, Mr. TONKO, and Mr. 

POSEY) 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 wealthy and middle-income 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 


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of United States courts, and from discouraging responsible lending to poor and developing nations by undermining the secondary and primary markets for sovereign 

debt. 

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 2010’’. 

6 SEC. 2. STATEMENT OF PURPOSE. 

7 The purpose of this Act is to prevent certain wealthy 

8 and middle-income foreign states that do business, issue 

9 securities, or borrow money in the United States, and then 

10 fail to satisfy United States court judgments totaling 

11 $100,000,000 or more based on such activities, from in12 flicting further economic injuries in the United States, 

13 from undermining the integrity of United States courts, 

14 and from discouraging responsible lending to poor and de15 veloping nations by undermining the secondary and pri16 mary markets for sovereign debt. 

17 SEC. 3. FINDINGS. 

18 Congress finds the following: 

19 (1) Foreign states that do business, issue secu20 rities, or borrow money in the United States, and 

21 then refuse to satisfy judgments of United States 

22 courts entered against them in connection with disVerDate Mar 15 2010 02:37 Jun 23, 2010 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5564.IH H5564

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1 putes resulting from these or other commercial ac2 tivities, directly or indirectly inflict billions of dollars 

3 of damage in United States, and undermine the 

4 credibility of the United States courts. 

5 (2) Foreign states that engage in such behavior 

6 can infect the management of corporations and 

7 other entities that they own or control with their 

8 profligate and irresponsible habits. When the lax 

9 ethical standards that permit government officials to 

10 flout lawful judgments corrupt the behavior of the 

11 management of their state-owned corporations, the 

12 injury to United States taxpayers is multiplied. 

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

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

16 and then refused to honor lawful 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 approxi23 mately 27 cents on the dollar in its restructuring 

24 deal, far below the international norm for sovereign 

25 debt restructurings. Argentina repudiated the debts 


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1 owed to the unprecedented proportion of bondholders 

2 who rejected that offer. 

3 (4) Argentina still owes United States bond4 holders more than $3,500,000,000. Overall, the de5 fault and restructuring by Argentina have cost 

6 United States bondholders, taxpayers, and share7 holders more than $10,000,000,000. 

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

10 $45,000,000,000 in reserves. Argentina chose to pay 

11 off its $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 Official 

15 Creditors in full and partially in advance. 

16 (6) United States bondholders have won numer17 ous court rulings against Argentina relating to Ar18 gentina’s default on debt owed to such bondholders, 

19 and Argentina’s decision to repeatedly ignore these 

20 judgments undermines respect for the United States 

21 legal system. Despite having agreed to submit to the 

22 jurisdiction of the State of New York and to waive 

23 claims of sovereign immunity, Argentina is now con24 testing at least 163 lawsuits and refusing to honor 

25 88 judgments against it. 


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1 (7) Argentina has demonstrated a similar dis2 regard for claims brought by United States investors 

3 before the International Centre for Settlement of In4 vestment Disputes (ICSID). Argentina is the re5 spondent in more ICSID cases than any other na6 tion, now accounting for more than a quarter of the 

7 tribunal’s caseload. Argentina has behaved in a man8 ner that undermines the viability of the ICSID proc9 ess, thereby endangering the worldwide investments 

10 of United States businesses that rely upon this 

11 forum for adjudication of disputes. 

12 (8) Argentina’s debts are legitimate, though the 

13 country has attempted to argue that the borrowings 

14 it seeks to repudiate are somehow ‘‘odious’’. Any as15 sertion 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 5 per15 cent of the defaulted debt now held by United States 

16 creditors was issued during or before 1993. Fully 95 

17 percent of the defaulted debt held by United States 

18 creditors was incurred after 1993 by freely elected 

19 Argentine governmental officials and has no rela20 tionship to the military junta. 

21 (11) Argentina’s defaults have badly under22 mined its own economy. According to a team of Ar23 gentine economists led by Martin Krause, Argentina 

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1 vestment every year as a result of its default and 

2 debt repudiation and the resultant risk profile. 

3 (12) Argentina’s serial defaults have encour4 aged other nations to take the same course. On De5 cember 12, 2008, Ecuador selectively defaulted on 

6 $3,800,000,000 in obligations to investors—includ7 ing United States creditors—who had purchased its 

8 sovereign bonds, citing Argentina as its example. Ec9 uador earned record income from oil exports in 2008 

10 and has ample funds to honor its debts. Ecuadorian 

11 President Rafael Correa apparently plans to force its 

12 foreign bondholders (including United States bond13 holders) to accept restructuring terms that will re14 sult in substantial losses to foreign investors who 

15 lent Ecuador funds in good faith. 

16 (13) Unfortunately, many persons in the United 

17 States are unaware of this irresponsible behavior 

18 and disregard for the rule of law, and continue to 

19 invest in, lend to, and do business with Argentina 

20 and other foreign states and their state-owned cor21 porations, unaware of the associated risks. 

22 (14) Worse still, those who are injured as a re23 sult of this conduct often have little or no recourse. 

24 Judgment evading foreign states and their state25 owned corporations enjoy a safe haven within their 


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1 national borders, and this fact often presents an in2 surmountable obstacle to recovery for those who are 

3 injured by the behavior of those states. 

4 (15) The absence of a remedy for defaults by 

5 such foreign states undermines nations that badly 

6 need to access capital from foreign lenders, with dis7 proportionate harm falling on responsible and demo8 cratic poor nations. By undermining confidence in 

9 the secondary market for sovereign debt, judgment 

10 evading foreign states significantly increase the risk 

11 that primary lending to less-advantaged nations will 

12 be curtailed, depriving deserving sovereign borrowers 

13 of access to the international capital markets. 

14 (16) Action by the United States Government 

15 to combat this growing problem must include meas16 ures that both protect against the irresponsible con17 duct of judgment evading foreign states and their 

18 state-owned corporations, and motivate such states 

19 and corporations to raise their standards of behav20 ior. 

21 (17) An effective means of achieving this impor22 tant objective is to deprive judgment evading foreign 

23 states and their state-owned corporations of the 

24 privilege of issuing securities or borrowing in the 

25 United States, and requiring that warnings of their 


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1 irresponsible behavior be given to persons in the 

2 United States who are contemplating investing in, 

3 lending to, or doing business with such states and 

4 businesses, until those states demonstrate that such 

5 measures are no longer necessary. 

6 SEC. 4. DEFINITIONS. 

7 For purposes of this Act: 

8 (1) AGENCY OR INSTRUMENTALITY OF A FOR9 EIGN STATE.—The term ‘‘agency or instrumentality 

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

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

12 (2) FINAL JUDGMENT.—The term ‘‘final judg13 ment’’ means any judgment of a United States dis14 trict court, the Court of International Trade, or the 

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

16 appealed to any court in the United States. 

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

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

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

20 not include an agency or instrumentality of a foreign 

21 state. 

22 (4) INTERNATIONAL ORGANIZATION.—The term 

23 ‘‘international organization’’ means an entity des24 ignated by the President as being entitled to enjoy 

25 the privileges, exemptions, and immunities provided 


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1 by the International Organizations Immunities Act 

2 (22 U.S.C. 288 et seq.). 

3 (5) JUDGMENT EVADING FOREIGN STATE.— 

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

5 any foreign state that— 

6 (A) has one or more judgments entered 

7 against it by any United States district court, 

8 the Court of International Trade, or the court 

9 of any State, the combined amount of which 

10 judgments exceeds $100,000,000; 

11 (B) fails to satisfy in full any such judg12 ment for a period of more than 2 years after 

13 the judgment becomes a final judgment, regard14 less of whether such judgment became a final 

15 judgment before the date of the enactment of 

16 this Act; 

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

18 (i) financing through the Inter19 national Development Association but not 

20 from the International Bank for Recon21 struction and Development; and 

22 (ii) debt relief under the Enhanced 

23 HIPC Initiative (as defined in section 

24 1625(e)(3) of the International Financial 


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1 Institutions Act) or under the Multilateral 

2 Debt Relief Initiative. 

3 (6) STATE-OWNED CORPORATION OF A JUDG4 MENT EVADING FOREIGN STATE.—The term ‘‘state5 owned corporation of a judgment evading foreign 

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

7 a natural person— 

8 (A) that is an agency or instrumentality of 

9 a foreign state that is a judgment evading for10 eign state; or 

11 (B) a majority of the shares or other own12 ership interest of which is held, either directly 

13 or indirectly, by a judgment evading foreign 

14 state or by an agency or instrumentality of a 

15 foreign state that is a judgment evading foreign 

16 state. 

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

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

19 commonwealth, territory, or possession of the United 

20 States. 

21 SEC. 5. STATEMENT OF POLICY. 

22 It shall be the policy of the United States— 

23 (1) to advocate within the governing bodies of 

24 international organizations and in other foreign pol25 icy settings for the full compensation and fair treatVerDate Mar 15 2010 02:37 Jun 23, 2010 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H5564.IH H5564

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1 ment of United States taxpayers and other persons 

2 in whose favor judgments have been awarded by the 

3 United States courts; 

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

5 such taxpayers and other persons and of nations 

6 that benefit from a reliable flow of foreign capital 

7 by— 

8 (A) restricting the access to the United 

9 States capital markets of judgment evading for10 eign states and their state-owned corporations; 

11 (B) requiring that such persons be warned 

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

13 doing business with such states and state-owned 

14 corporations; and 

15 (C) subjecting to congressional scrutiny re16 quests for aid made by judgment evading for17 eign states to the United States Government; 

18 and 

19 (3) to seek to protect the authority of the 

20 United States courts by preventing judgment evad21 ing foreign states from willfully flouting the judg22 ments of those courts. 


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

2 INVESTORS. 

3 (a) MEASURES WITH RESPECT TO JUDGMENT EVAD4 ING FOREIGN STATES.—The Securities and Exchange 

5 Commission shall— 

6 (1) take all necessary measures to deny every 

7 judgment evading foreign state access to United 

8 States capital markets, including the ability, directly 

9 or indirectly, to borrow money or sell securities in 

10 the United States, unless the proceeds of such bor11 rowing or securities issuance are to be used, in the 

12 first instance, to satisfy in full all final judgments 

13 entered against such judgment evading foreign state 

14 that form the basis of the state’s designation as a 

15 judgment evading foreign state; and 

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

17 judgment evading foreign state with the Securities 

18 and Exchange Commission under the securities laws 

19 bear the following legend prominently on the cover 

20 page: ‘‘WARNING: THIS REPORT IS SUB21 MITTED BY A FOREIGN STATE THAT HAS 

22 BEEN DETERMINED BY THE UNITED 

23 STATES DEPARTMENT OF THE TREASURY 

24 TO BE A JUDGMENT EVADING FOREIGN 

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1 ISFY OUTSTANDING UNITED STATES 

2 COURT JUDGMENTS.’’. 

3 (b) MEASURES WITH RESPECT TO STATE-OWNED

4 CORPORATIONS OF JUDGMENT EVADING FOREIGN

5 STATES.—If any judgment evading foreign state remains 

6 in default on any final judgment for more than 3 years, 

7 irrespective of whether such judgment became final before 

8 the date of the enactment of this Act, the Securities and 

9 Exchange Commission shall— 

10 (1) take all necessary measures to deny any 

11 state-owned corporation of a judgment evading for12 eign state access to the United States capital mar13 kets, including the ability to issue debt, equity or 

14 other securities, or borrow money, unless the pro15 ceeds of such borrowing of securities issuance are to 

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

17 final judgment against its parent judgment evading 

18 foreign state; and 

19 (2) require that all periodic filings made by 

20 each state-owned corporation of a judgment evading 

21 foreign state with the Securities and Exchange Com22 mission under the securities laws bear the following 

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

24 THIS REPORT IS SUBMITTED BY A STATE– 

25 OWNED CORPORATION OF A FOREIGN 


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1 STATE THAT HAS BEEN DETERMINED BY 

2 THE DEPARTMENT OF THE TREASURY TO 

3 BE A JUDGMENT EVADING FOREIGN STATE 

4 BASED UPON ITS FAILURE TO SATISFY 

5 OUTSTANDING UNITED STATES COURT 

6 JUDGMENTS.’’. 

7 SEC. 7. REQUESTS FOR AID OR ASSISTANCE FROM JUDG8 MENT EVADING FOREIGN STATES. 

9 (a) BILATERAL ASSISTANCE.—Whenever any pro10 posal is made to a department, agency, or other instru11 mentality of the United States Government to extend aid, 

12 a loan, or any other form of assistance to a judgment 

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

14 or other instrumentality may consider the proposal only 

15 if it bears prominently the legend described in subsection 

16 (c). 

17 (b) MULTILATERAL ASSISTANCE.—Whenever any 

18 proposal is made to an international organization to ex19 tend aid, a loan, or any other form of assistance to a judg20 ment evading foreign state, the Secretary of State shall 

21 provide prompt notice of such proposal to the Congress. 

22 Such notice shall bear prominently the legend described 

23 in subsection (c). 

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

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


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

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

3 EVADING FOREIGN STATE.’’. 

4 SEC. 8. REPORTS; RECOMMENDATIONS OF ADDITIONAL 

5 MEASURES. 

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

7 than January 31 of each year, the Secretary of the Treas8 ury shall provide a report, in writing, to the Congress 

9 identifying each judgment evading foreign state, and, for 

10 each such judgment evading foreign state— 

11 (1) quantifying the impact on the United States 

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

13 unsatisfied final judgments outstanding against the 

14 judgment evading foreign state; and 

15 (2) describing all measures that the Secretary 

16 of the Treasury and the Securities and Exchange 

17 Commission have taken in the preceding year to 

18 carry out this Act. 

19 (b) CONSIDERATION OF DOCUMENTS AND OTHER IN20 FORMATION.—The Secretary of the Treasury may con21 sider documents and other information received from third 

22 parties and from judgment evading foreign states in pre23 paring each report under subsection (a). 

24 (c) TERMINATION OF DESIGNATION.—At such time 

25 as the Secretary of the Treasury determines that any 


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1 judgment evading foreign state no longer qualifies as a 

2 judgment evading foreign state, the Secretary shall so cer3 tify to the Congress no later than in the next annual re4 port to Congress under subsection (a), at which time the 

5 requirements and prohibitions under this Act shall no 

6 longer apply to such former judgment evading foreign 

7 state, or to any state-owned corporation of such judgment 

8 avoiding foreign state. The Secretary may consider docu9 ments and other information received from third parties 

10 and from the judgment evading foreign state in making 

11 this determination. 

12 (d) OTHER PUBLIC REPORTS TO INCLUDE INFORMA13 TION ABOUT JUDGMENT EVADING FOREIGN STATES.— 

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

15 the Secretary of Commerce shall each reference the find16 ings of the Secretary of the Treasury from the Secretary’s 

17 most recent annual report to Congress under subsection 

18 (a) relating to the unsatisfied final judgments outstanding 

19 against the judgment evading foreign state in every report 

20 prepared for the public relating to the country risk or in21 vestment climate of such judgment evading foreign state. 

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

23 Treasury shall recommend to the Congress in writing ad24 ditional measures to carry out the purposes of this Act. 

Æ 


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