In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 01-3054

INTERNATIONAL INSURANCE COMPANY, 

Plaintiff-Appellee,

v.

CAJA NACIONAL DE AHORRO Y SEGURO,

Defendant-Appellant.

____________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 00 C 6703—John W. Darrah, Judge.

____________

ARGUED JANUARY 25, 2002—DECIDED JUNE 7, 2002

____________

Before MANION, KANNE, and WILLIAMS, Circuit Judges.

MANION, Circuit Judge. After a default award was entered against defendant Caja Nacional de Ahorro y Seguro

(“Caja”) in arbitration proceedings, International Insurance

Company (“IIC”) filed a petition in federal district court

seeking to confirm the award. After Caja filed an answer

and affirmative defenses, IIC moved for an order requiring

Caja to post pre-judgment security. Caja responded that

it was immune from posting such security under the Foreign Sovereign Immunities Act (“FSIA”). The district court

held that the FSIA did not preclude it from requiring Caja
2 No. 01-3054

1 This amount included the indemnity obligations, accumulated

interest, arbitration costs and attorneys’ fees.

2 In doing so, Caja did not challenge the district court’s subject

matter jurisdiction, nor the court’s personal jurisdiction over it.

to post pre-judgment security, ordered it to do so, and

struck Caja’s answer and affirmative defenses. When Caja

did not post security or file a new answer, the district court

entered a default judgment against it. Caja appeals, and

we affirm.

I.

In 1979, plaintiff International Insurance Company, an

American insurance company, purchased reinsurance from

the defendant, Caja Nacional de Ahorro y Seguro, an insurance and reinsurance company headquartered in Argentina, pursuant to two reinsurance contracts. Caja subsequently failed to pay IIC over $2 million in indemnity

obligations, and on April 10, 2000, IIC initiated an arbitration proceeding as required by each contract’s arbitration

clause. Caja failed to respond to IIC’s arbitration demand or

to appear at the arbitration proceeding. As a result, on October 17, 2000, the arbitration panel entered a final default

award against Caja for approximately $4.7 million.1

 Each

contract contained an identical provision, Article XXI, which

provided that “judgment may be entered upon the award of

the Arbitrators in any court having jurisdiction.” Accordingly, on October 27, 2000, IIC filed a petition for confirmation of the arbitration award in federal district court. Caja

filed an answer and affirmative defenses in response to IIC’s

petition.2

 IIC then moved for an order requiring Caja to post

pre-judgment security based on the Illinois Insurance Code,

which requires unauthorized foreign companies, before
No. 01-3054 3

3 Additionally, IIC asked the court to strike Caja’s affirmative

defenses because they did not constitute grounds to vacate the

arbitration award. See infra note 5.

4 Both the United States and Argentina are signatories to the

New York Convention. The United States signed the New York

Convention in 1958, later codifying it into law in 1970 at 9 U.S.C.

§ 201, and Argentina signed it on March 14, 1989, id. note 1b.

filing any pleadings, to “deposit . . . cash or securities or . .

. a bond with good and sufficient sureties . . . sufficient to

secure the payment of any final judgment which may be

rendered . . . .” 215 ILCS 5/123(5). IIC argued that if Caja

failed to do so prior to filing its answer, the court should

strike its answer.3

 Caja responded that, as an instrumentality of a foreign government, it is not required to post prejudgment security pursuant to the Foreign Sovereign

Immunities Act, 28 U.S.C. § 1600 et seq.

The district court held that the FSIA did not preclude

it from requiring Caja to post pre-judgment security. The

court reasoned that under the FSIA a foreign state’s immunity is “subject to existing international agreements to

which the United States is a party at the time of enactment

of this Act.” 28 U.S.C. § 1609. The court concluded that

Argentina is a party to such an “existing” agreement—the

Convention on the Recognition and Enforcement of Foreign

Arbitral Awards (known as the “New York Convention”

and codified by 9 U.S.C. § 201 et seq.). As a result, the court

found the FSIA’s immunity provisions inapplicable. Specifically, the New York Convention authorizes the courts

of each participating country to require other signatory

countries to provide “suitable security” upon seeking to

set aside or suspend an award rendered within its jurisdiction. See 9 U.S.C. § 201, art. VI.4

 The district court fur--

ther concluded that Caja’s affirmative defenses constituted
4 No. 01-3054

5 The court also reviewed IIC’s motion to strike Caja’s affirmative defenses, and concluded that all but nine of them must be

stricken even if Caja filed security and a proper answer because

the asserted defenses did not provide a basis to vacate the

arbitration award. That conclusion is not before us on appeal, and

we express no opinion as to its validity.

6 IIC moved to dismiss the appeal for lack of appellate jurisdiction on the ground that the district court’s order requiring prejudgment security was an unappealable interlocutory order. Caja

claimed that we had jurisdiction over the appeal pursuant to the

collateral order doctrine because the district court had denied its

claim of sovereign immunity. See Rush-Presbyterian-St. Luke’s Med.

Ctr. v. Hellenic Republic, 877 F.2d 574, 576 n. 2 (7th Cir. 1989) (denial of claim of sovereign immunity is an immediately appealable

interlocutory order under the collateral order doctrine).

an application to set aside the arbitral award (a conclusion

that is not challenged on appeal) and therefore held that

the insurer was not immune from posting pre-judgment

security under Illinois law. The district court then ordered

Caja to post security in the amount of the default judgment and struck its answer and affirmative defenses.5 See International Ins. Co. v. Caja Nacional de Ahorro y Seguro,

No. 00C6703, 2001 WL 322005 (N.D.Ill. Apr. 2, 2001).

Caja did not post security or file a new answer, but

instead, on April 23, 2001, appealed the district court’s order

to this court. IIC moved to dismiss the appeal for lack of

appellate jurisdiction,6

 and on July 3, 2001, in an unpublished order, we granted IIC’s motion, citing Matter of

Carlson, 224 F.3d 716, 718 (7th Cir. 2000) (finding that order

requiring security, as opposed to denial of security, is

not ordinarily immediately appealable). On April 23, 2001,

while Caja’s appeal was still pending, IIC moved for a

default judgment on its petition to confirm the arbitration

award since Caja had not posted security and filed a new
No. 01-3054 5

7 Rule 62(d) provides that “[w]hen an appeal is taken the

appellant by giving a supersedeas bond may obtain a stay . . . .

The bond may be given at or after the time of filing the notice of

appeal or of procuring the order allowing the appeal, as the case

may be. The stay is effective when the supersedeas bond is

approved by the court.” We note that we have recently held that

a “judgment creditor who pays the judgment pending appeal

instead of posting a supersedeas bond . . . is entitled to the return

of its money if the decision is reversed, and so the payment does

not moot the appeal unless the appellant has relinquished his

right to seek repayment if he wins.” Dale M. ex rel. Alice M. v.

Board of Educ. of Bradley-Bourbonnais High Sch. Dist. No. 307, 237

F.3d 813, 815 (7th Cir. 2001).

answer. Caja objected, arguing that it did not wilfully disobey the court’s order to post security, but rather had filed

a meritorious timely appeal (and that posting security

would render the appeal moot). The district court construed

this objection as a request to stay the litigation pending

appeal, but since Caja failed to file the proper motion or the

necessary supersedeas bond under Fed. R. Civ. P. 62(d),7

 the

court denied its request. On July 6, 2001, the district court

granted IIC’s motion for default judgment and confirmed

the arbitration award in the amount of $4,702,428.12. Caja

appeals from that final judgment, and we affirm.

II.

A. Subject Matter Jurisdiction

Before addressing the merits of this appeal, we must

confirm that we have jurisdiction over this case. See Steel Co.

v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1988). The

Federal Arbitration Act (“FAA”), which governs the “enforcement, validity, and interpretation of arbitration clauses

in commercial contracts in both state and federal courts,”
6 No. 01-3054

Jain v. De Mere, 51 F.3d 686, 688 (7th Cir. 1995), and which

permits suits to confirm arbitration awards, see 9 U.S.C. § 9,

does not provide an independent basis for federal question

jurisdiction. See Moses H. Cone Mem’l Hosp. v. Mercury Const.

Corp., 460 U.S. 1, 25 n. 32 (1983).

The parties maintain, however, that independent federal

question jurisdiction exists. In its initial petition for confirmation of the arbitral award, IIC claimed that the district court had jurisdiction pursuant to the Inter-American Convention on International Commercial Arbitration

(known popularly as the “Panama Convention”), codified

at 9 U.S.C. § 301 et seq. The Panama Convention grants

United States district courts original jurisdiction over proceedings falling thereunder. See 9 U.S.C. § 302 (incorporating 9 U.S.C. § 203). On appeal, in its brief, Caja claims

that the district court had jurisdiction under the FSIA, 28

U.S.C. §§ 1602-1611, because it qualifies as a foreign state

under the statute. See 28 U.S.C. § 1603. IIC, curiously, found

Caja’s jurisdictional statement to be “complete and correct.”

In any event, this court is not bound by the parties’ representations regarding the source of our jurisdiction, and

we have an independent duty to ensure that it exists. See

ITOFCA, Inc. v. MegaTrans Logistics, Inc., 235 F.3d 360, 363

(7th Cir. 2000).

We conclude that the Panama Convention provides us

with independent federal question jurisdiction under 28

U.S.C. § 1331, which grants district courts original jurisdiction over civil actions “arising under the Constitution, laws,

or treaties of the United States.” As previously noted, the

Panama Convention was codified into federal law at 9
No. 01-3054 7

8 Both the United States and Argentina are signatories to the

Panama Convention. The United States signed the Panama Convention in 1975, later codifying it into law in 1990, and Argentina

signed it in 1975. See 9 U.S.C. § 301.

9 As noted, the Panama Convention, under which IIC initially

claimed jurisdiction, incorporates the New York Convention’s

jurisdictional provision. 9 U.S.C. § 302. In cases where countries

have signed both the New York Convention and the Panama

Convention, the Panama Convention will apply if “a majority

of the parties to the arbitration agreement are citizens of a

State or States that have ratified or acceded to the Inter-American [or Panama] Convention and are member States of the

Organization of American States.” 9 U.S.C. § 305(1). Otherwise,

the New York Convention is controlling. 9 U.S.C. § 305(2). Since

all of the parties to this arbitration are signatories to the Panama Convention, our jurisdiction is under that Convention. For

purposes of this appeal, the distinction between the Panama

and New York Conventions is not important because, as discussed in more detail below, the relevant provisions (concerning

the propriety of pre-judgment security) are substantively identical.

U.S.C. § 301 et seq.8 An action or proceeding “falling under

the [Panama] Convention shall be deemed to arise under the

laws and treaties of the United States [and] [t]he district

courts of the United States . . . shall have original jurisdiction over such an action or proceeding, regardless of the

amount in controversy.” See 9 U.S.C. § 203 (incorporated

by reference into the Panama Convention by 9 U.S.C.

§ 302).9

 The action brought by IIC against Caja falls within the ambit of the Convention because the suit involves

a dispute arising from a commercial arbitration agreement

between two businesses domiciled in countries that are

signatories to the Convention. See 9 U.S.C. § 202 (incorporated by reference into the Panama Convention by 9
8 No. 01-3054

10 Even if we did not have federal question jurisdiction under 28

U.S.C. § 1331, because it is undisputed that IIC is an American

corporation and that Caja is an Argentinean business entity, we

would have diversity jurisdiction over IIC’s suit to confirm its

arbitration award. See 28 U.S.C. § 1332(a)(2) (providing diversity

jurisdiction for suits between citizens of a State and citizens or

subjects of a foreign state); We Care Hair Dev., Inc. v. Engen, 180

F.3d 838, 840 n.1 (7th Cir. 1999).

11 Under the FSIA, a foreign state includes an agency or instrumentality of a foreign state. See 28 U.S.C. § 1603(a).

U.S.C. § 302). Therefore, we have federal question jurisdiction.10

While Caja does not challenge our subject matter jurisdiction, it does assert that it is an instrumentality of Argentina,11 thus making it immune from the jurisdiction of

American courts under the FSIA. See 28 U.S.C. § 1604

(granting foreign states immunity from the jurisdiction of

the courts of the United States). However, even if Caja is a

foreign instrumentality, we would still have subject matter

jurisdiction because the FSIA contains several exceptions

under which a foreign state or instrumentality may be

subject to such jurisdiction. See 27 U.S.C. §§ 1604-1607. See

also Argentine Republic v. Amerada Hess Shipping Corp., 488

U.S. 428, 434 (1989) (noting that the FSIA is the “sole basis for obtaining jurisdiction over a foreign state in our

courts.”). These exceptions “allow the court to obtain subject

matter jurisdiction over the case and provide the minimum

contacts with the United States required by due process

before a court can acquire personal jurisdiction.” Alberti v.

Empresa Nicaraguense de la Carne, 705 F.2d 250, 252 (7th Cir.

1983). See also 28 U.S.C. § 1330 (A) (conferring on federal

courts jurisdiction over suits against foreign states, as
No. 01-3054 9

defined in the FSIA, as to any claim for relief with respect to

which the foreign state is not entitled to immunity).

Section 1605(a)(6)(A) of the FSIA provides that a foreign

state or instrumentality is not immune from the jurisdiction of American courts in any proceeding to confirm an

arbitral award where that foreign state or instrumentality

agreed to submit to arbitration and the arbitration takes

place in the United States. Article XX of each of the parties’

reinsurance contracts provides that Caja would “submit

to the jurisdiction of any court of competent jurisdiction

within the United States and will comply with all requirements necessary to give such court jurisdiction . . . .” Article

XXI of each contract contained a provision that arbitration

would occur in Chicago, Illinois, unless some other location was mutually agreed upon by the parties. By agreeing

to a contract designating Chicago, Illinois as the site of

arbitration, even if it is a foreign instrumentality, Caja

waived its immunity in a proceeding to confirm the arbitral

award. See § 1605(a)(6)(A): Employers Ins. of Wausau v. Banco

de Seguros del Estado, 199 F.3d 937, 941 (7th Cir. 1999).

Accordingly, we conclude that we have federal question

jurisdiction over this case under 28 U.S.C. § 1331, and that,

if Caja is considered an instrumentality of a foreign state, we

have jurisdiction under 28 U.S.C. § 1330(A).

B. Imposition of Pre-Judgment Security

1. Foreign instrumentality.

This bring us to the question of whether Caja is entitled to

immunity from a pre-judgment security posting requirement under Section 1609 of the FSIA, which provides, in its

entirety, that

Subject to existing international agreements to which

the United States is a party at the time of enactment of
10 No. 01-3054

12 While this Section refers to “attachment arrest and execution,”

it has been interpreted to include pre-judgment security. See infra

n.13.

this Act the property in the United States of a foreign

state shall be immune from attachment arrest and execution except as provided in sections 1610 and 1611 of

this chapter.12

For purposes of this section, a “foreign state” includes a

foreign instrumentality. See 28 U.S.C. § 1603(a). A foreign

instrumentality is defined by the FSIA as an entity which

is a separate legal person, which is an organ of a foreign

state or a majority of whose shares or other ownership

interest is owned by a foreign state, and which is not a

citizen of the United States. See 28 U.S.C. § 1603(b). The

party claiming immunity under this section must establish

a prima facie case that it is a foreign instrumentality. See

Alberti, 705 F.2d at 255. If Caja established this prima facie

case, the burden going forward “would shift to the plaintiff

[i.e., IIC] to produce evidence establishing that the foreign

state is not entitled to immunity. The ultimate burden of

proving immunity would rest with the foreign state.” Id.

(citation omitted).

Caja attempted to establish that it is a foreign instrumentality by claiming in its answer that it is wholly-owned by

Argentina, submitting three documents in support of its

assertion. First, it submitted the affidavit of Jorge Moreira,

Caja’s attorney in the United States, who averred, based

on his personal knowledge, that Caja was wholly-owned

by the government of Argentina. Next, it submitted the

affidavit of Dr. Horacio R. Crespo, an Argentinean attorney for Caja, who stated under oath that Caja was a

wholly-owned agency of the government of Argentina. Mr.

Crespo’s affidavit did not contain a notarization, although
No. 01-3054 11

the U.S. Vice Consul in Argentina acknowledged that the

affidavit had been executed by Mr. Crespo. Finally, Caja

submitted a Spanish document and its English translation,

dated July 31, 1998, which purportedly indicated that the

administration of Caja had been transferred to the government of Argentina.

IIC responds that these affidavits are insufficient to

establish a prima facie case that Caja is a foreign instrumentality because these affidavits were not properly authenticated by the duly authorized officer or director of Caja. See,

e.g., Moore v. Nat’l Distillers and Chem. Corp., 143 F.R.D. 526,

532 n. 6 (S.D.N.Y. 1992) (plaintiff contested status of defendant as a foreign state because no officer or director had

filed an affidavit in support of that claim; court agreed that

defendant had not submitted “sufficient evidence”).

In its analysis, the district court merely assumed arguendo

that Caja was a foreign instrumentality, and never actually

decided the issue. Caja states in its reply brief that one other

court has already found it to be a foreign instrumentality,

citing Skandia America Reinsurance Corp. v. Caja Nacional de

Ahorro y Seguro, 1997 WL 278054 (S.D.N.Y. May 23, 1997).

Caja misreads the Skandia decision, however, because that

court specifically stated that it (like the district court in the

present case) was only assuming arguendo, for purposes of

judicial economy, that Caja was a foreign instrumentality.

Id. at *3.

The affidavits offered by Caja are not adequate to constitute a prima facie case that Caja is an instrumentality of

Argentina. Sufficient evidence of the validity for a foreign

instrumentality should be relatively simple to obtain. For

example, an authenticated corporate document demonstrating ownership at the time of suit, or an affidavit of a duly

authorized corporate or government officer, should be

readily available, especially when an entity’s sovereign
12 No. 01-3054

immunity is at stake. While we are not limiting what constitutes proof under all circumstances, the naked assertions

of Caja’s attorneys are clearly insufficient to establish that

Caja is wholly-owned by Argentina. See, e.g., Sesostris, S.A.E.

v. Transportes Navales, S.A., 727 F.Supp. 737, 743 (D.Mass.

1989) (evidence of Spanish attorney was insufficient to show

that entity was a foreign central bank under 28 U.S.C.

§ 1611(b)(1) where defendant presented no authenticated

document showing its ownership interest). Compare, e.g.,

O’Connell Machinery Co., Inc. v. M. V. “Americana”, 734 F.2d

115, 116 (2d Cir. 1984) (where defendant presented affidavit

of Italian government officer averring that a majority of the

defendant’s shares were owned by a company, which was,

in turn, under the direct control of the Italian Government,

and where the plaintiff did not dispute such ownership,

entity deemed to be foreign instrumentality).

Additionally, we note that an affidavit executed outside

the United States must include a statement that the affiant

has made his declarations “under penalty of perjury under

the laws of the United States of America.” 28 U.S.C. § 1746.

Mr. Crespo’s affidavit contained no such declaration. However, even if it had been properly executed, the affidavit

only refers to a document that was apparently executed

in 1998, and nothing therein indicates that, as of a relevant

time, such as the time of this lawsuit in 2000, at least 50%

of Caja was owned by the Argentinean government. See, e.g.,

Ocasek v. Flintkote Co., 796 F.Supp. 362, 365 (N.D.Ill. 1992)

(affidavit that, ten years before present action, majority of

entity’s shares were owned by Quebec was insufficient to

demonstrate entity was foreign state at time action was

filed). Therefore, we conclude that Caja has not presented

sufficient prima facie evidence to establish that it is a

foreign instrumentality under the FSIA such that it would

be entitled to immunity from posting pre-judgment security.
No. 01-3054 13

13 As noted earlier, see infra n.12, the language of the FSIA, both

in Section 1609 and Section 1610(d), refers to attachment arrest,

not to pre-judgment security, although it has been interpreted to

extend to both. See, e.g., Stephens v. Nat’l Distillers and Chemical

Corp., 69 F.3d 1226, 1229-30 (2d Cir. 1996) (concluding that New

York’s pre-judgment security requirement constituted an “attachment” for purposes of the FSIA). The parties do not raise the

issue, and we express no opinion on whether attachment arrest

and pre-judgment security are identical for purposes of the FSIA.

We merely find that, if Section 1610(d) gives foreign states

immunity from posting pre-judgment security, Caja has waived

it in this case.

2. Immunity.

Even if Caja were able to establish that it is a foreign

instrumentality and is therefore entitled to the protection of

the FSIA, we would still affirm the district court’s judgment

because we conclude that Argentina, and therefore Caja, has

waived its immunity under the FSIA. Section 1610(d) of the

FSIA provides that

[t]he property of a foreign state . . . used for a commercial activity in the United States, shall not be immune

from attachment prior to the entry of judgment in any

action brought in a court of the United States . . . if—(1)

the foreign state has explicitly waived its immunity

from attachment prior to judgment . . ., and (2) the

purpose of the attachment is to secure satisfaction of

a judgment that has been or may ultimately be entered

against the foreign state, and not to obtain jurisdiction.13

IIC argues that Argentina waived immunity on behalf of

itself and all of its instrumentalities by adopting both the

New York and Panama Conventions. Caja responds that

any such waiver must be explicit. We agree with Caja that
14 No. 01-3054

Section 1610(d)(1) provides that waivers thereunder must be

explicit. Therefore, we turn to the provisions of both the

New York Convention and the Panama Convention to determine whether Argentina and her instrumentalities have

explicitly waived their immunity under the FSIA.

The purpose of the New York Convention, and similarly

the Panama Convention, is to “encourage the recognition

and enforcement of commercial arbitration agreements

in international contracts and to unify the standards by

which agreements to arbitrate are observed and arbitral

awards are enforced in the signatory countries.” Scherk v.

Alberto-Culver Co., 417 U.S. 506, 520, n.15 (1974). Article VI

of the New York Convention states, “[i]f an application

for the setting aside or suspension of the award has been

made to a competent authority . . . the authority before

which the award is sought to be relied upon may, if it

considers it proper, . . . on the application of the party

claiming enforcement of the award, order the other party

to give suitable security.” 9 U.S.C. § 201, art. VI (emphasis

added). Similarly, Article 6 of the Panama Convention

states, “[i]f the competent authority . . . has been requested

to annul or suspend the arbitral decision, the authority . . .

at the request of the party requesting execution, may also

instruct the other party to provide appropriate guaranties.” 9

U.S.C. § 301, art. 6 (emphasis added). The emphasized

language of these Conventions allowing a court to impose

a security requirement is very explicit. Thus the courtordered pre-judgment deposit of security is clearly appropriate. Cf., Venus Lines Agency v. CVG Industria Venezolana

de Aluminio, C.A., 210 F.3d 1309, 1312 (11th Cir. 2000)

(simple reference in contract to “attachment” covers both

pre-judgment and post-judgment attachment, and therefore
No. 01-3054 15

14 The parties point us to only one other decision directly on

point, and the court in that case did not reach this issue, but

rather concluded that the New York Convention was an “existing

international agreement” under the FSIA. See Skandia, 1997 WL

278054 at *5. Nevertheless, in a footnote, and without further

explanation, the Skandia court, after requiring foreign instrumentalities to post pre-judgment security, stated that it “is unlikely

that I would find that respondent’s invocation of the New York

Convention constitutes such an explicit waiver as required by

§ 1610.” Id. at *5, n. 10.

15 The parties spent almost their entire briefs on an issue that we

do not address, save to recount it here. As stated above, the FSIA

gives foreign states and their instrumentalities immunity from

attachment arrest of their property in the United States. See 28

U.S.C. § 1609. However, the FSIA specifically states that it is

“subject to existing international agreements to which the United

(continued...)

constituted explicit waiver under Section 1610(d)).14 Because

Argentina signed the New York and Panama Conventions,

it has waived the immunity protections of the FSIA for their

instrumentalies.

In addition to the explicit waiver requirement of Section

1610(d)(1), Section 1610(d)(2) requires that the purpose

of attachment be to obtain security, not to obtain jurisdiction. As we have noted, personal jurisdiction over Caja was

never an issue before the district court. Additionally, IIC’s

motion for an order requiring Caja to post pre-judgment

security expressly stated that it was seeking to “secure

payment of any final judgment that may be rendered.”

Finally, in light of the stated purpose of the Illinois statute

in question that requires security sufficient to secure the

payment of final judgment, see 215 ILCS 5/123(5), it is clear

that the district court’s order complied with the requirement

of Section 1610(d)(2).15
16 No. 01-3054

15 (...continued)

States is a party at the time of enactment of this Act . . . .” Id. IIC

argued that the New York Convention, which was acceded to by

the United States in 1970, was just such an existing agreement.

This is the argument which persuaded the district court to rule in

IIC’s favor. See Skandia, 1997 WL 278054 at *4-5 (holding similarly). Caja responded that the New York Convention was not

an “agreement” at the time of enactment as to Argentina or her

instrumentalities because Argentina did not become a signatory

to the agreement until 1989. IIC replied that the plain language

of the FSIA only requires that the United States be a party to the

agreement at the time of its enactment. In light of our conclusion

that, if Caja is a foreign instrumentality, it waived its immunity

under Section 1610(d), we need not resolve this question. In any

case, nothing in the FSIA indicates that a foreign state may not

renounce its immunity by treaty as Argentina clearly chose to do

by adopting the Panama Convention in 1975 and the New York

Convention in 1989.

C. District Court’s Imposition of Security

Since we have concluded that Caja, even if it is an instrumentality of Argentina, is not immune from posting prejudgment security, we reach its last argument that the

district court had discretion in determining whether to

require pre-judgment security and that it failed to exercise

that discretion. Caja argues that the district court erred

by applying the mandatory Illinois law rather than the

discretionary Convention. Both the New York Convention

and the Panama Convention clearly indicate that district

courts have discretion to impose pre-judgment security

as they deem proper. See 9 U.S.C. § 201; 9 U.S.C. § 301.

However, under Illinois law it is less clear as to whether

courts have such discretion. The statute’s language provides that the court shall order the posting of security “in an

amount to be fixed by the court sufficient to secure the
No. 01-3054 17

16 As we have noted repeatedly, the Panama Convention contains

a similar provision.

payment of any final judgment . . . .” 215 ILCS 5/123(5).

While we have found no published Illinois cases interpreting this statute, its plain language arguably gives courts

discretion in fashioning a suitable security. However, Caja

argues that the district court did not believe it had discretion based on its statement, “Accordingly, pursuant to the

New York Convention, defendant is not immune from the

posting requirement of the Illinois Insurance Law.” We need

not decide whether the New York (or Panama) Convention

or Illinois law applies because we conclude that under

either law the order of pre-judgment security was appropriate.

First, we find nothing in the district court’s opinion that

would indicate that the court was unaware of its discretion

under either Convention. The district court specifically

noted that the New York Convention “allows this Court to

order a party denying enforcement of an award to ‘give

suitable security’ . . . .” (emphasis added).16 Thus, the district

court recognized that it had discretion to award security

in this case, and, in determining the appropriate amount,

decided to rely upon the standard articulated in the Illinois

statute. Second, even if the district court improperly believed that it had no discretion to deny an order of prejudgment security, remand is not necessary because we

believe that under the limited circumstances of this case,

pre-judgment security was appropriate. Caja repeatedly

failed to appear for any part of the arbitration proceeding.

We do not deem it to be an abuse of discretion for a court to

require such a party to post security in the full amount of

the possible judgment against it given this poor track record. Therefore, we conclude that the district court’s order of

pre-judgment security was appropriate.
18 No. 01-3054

III.

In conclusion, we note that, technically, Caja challenged

the district court’s July 5, 2001 order granting IIC a default

judgment, which we review for an abuse of discretion. See

Swaim v. Moltan Co., 73 F.3d 711, 716 (7th Cir. 1996). We

have focused on the propriety of the district court’s order

that Caja must file pre-judgment security. Of course, Caja’s

failure to do so formed the district court’s basis for granting

the default judgment. But Caja never squarely addressed

whether the default judgment itself was improper. For the

reasons summarized above, the district court did not err in

requiring Caja to post pre-judgment security. Because Caja

has presented no other basis for reversing the district court’s

order granting the plaintiff a default judgment, we therefore

affirm.

A true Copy:

Teste:

 _____________________________

Clerk of the United States Court of 

Appeals for the Seventh Circuit 

USCA-97-C-006—6-7-02