Opinion ID: 3040536
Heading Depth: 3
Heading Rank: 2

Heading: The Congo’s Waiver Of Immunity From Execution

Text: Subjects The 1984 Loan Agreement To 28 U.S.C. § 1610(a)’s Provisions. The 1984 Loan Agreement provides: To the extent that the Borrower may in any jurisdiction claim for itself or its assets immunity from suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed) the Borrower agrees 990 AF-CAP v. CHEVRONTEXACO not to claim and waives such immunity to the fullest extent permitted by the laws of that jurisdiction . . . [2] Af-Cap argues that the Congo’s agreement not to assert immunity from execution renders § 1610(a)’s provisions inapplicable to the 1984 Loan Agreement. We disagree. In fact, the opposite is true. Under § 1609, “the property in the United States of a foreign state shall be immune from attachment[,] arrest and execution except as provided in section[ ] 1610 . . .” 28 U.S.C. § 1609. In turn, § 1610(a), the exception at issue in this case, provides: “The property in the United States of a foreign state . . . used for a commercial activity in the United States, shall not be immune from attachment in aid of execution, or from execution, upon a judgment entered by a court of the United States or of a State . . . if: (1) the foreign state has waived its immunity from attachment in aid of execution, or from execution . . .” 28 U.S.C. § 1610(a) (emphasis added). Af-Cap’s contention that the Congo’s waiver renders 28 U.S.C. § 1610(a) inapplicable is self-defeating because, in the absence of a waiver, the property of the Congo would be immune from attachment under § 1609. We agree with the Fifth Circuit that the waiver merely triggers the exception to the immunity from execution that would otherwise be in effect. See Atwood Turnkey Drilling, Inc. v. Petroleo Brasileiro (Atwood), 875 F.2d 1174, 1176-77 (5th Cir. 1989). Rather than end our inquiry, the Congo’s waiver requires that we turn to the second requirement at issue in this case: whether the property was “used for a commercial activity in the United States.” CBC, 309 F.3d at 251 (citation omitted) (emphasis removed). [3] The parties dispute the meaning of “used for” in § 1610(a), and the precise meaning of the term is an issue of first impression in this Circuit. The Congo asks us to adopt the Fifth Circuit’s interpretation of the term. According to the Fifth Circuit: “To use property for a commercial activity, within the ordinary meaning of ‘use,’ would be to put the property in the service of the commercial activity, to carry out AF-CAP v. CHEVRONTEXACO 991 the activity by means of the property.” CBC, 309 F.3d at 254. “What matters under the statute is what the property is ‘used for,’ not how it was generated or produced,” id. at 251, and not whether the property merely has a “nexus or connection to a commercial activity in the United States.” Id. at 254. In contrast, Af-Cap asks us to expand the Fifth Circuit’s definition and determine whether property was used for a commercial activity in the United States by examining the entire underlying activity that generated the property in question. We agree with the Fifth Circuit that “[t]he phrase ‘used for’ in § 1610(a) is not a mere syntactical infelicity that permits courts to look beyond the ‘use’ of property, and instead try to find any kind of nexus or connection to a commercial activity in the United States.” Id. We are also mindful that we must construe the waiver provisions in the FSIA narrowly. See Corporacion Mexicana de Servicios Maritimos, S.A. De C.V. v. The M/T Respect, 89 F.3d 650, 655 (9th Cir. 1996) (analyzing the waiver exception in 28 U.S.C. § 1605(a)(1)). [4] “In interpreting the FSIA, we first look to the plain meaning of the language employed by Congress.” Phaneuf v. Republic of Indonesia, 106 F.3d 302, 307 (9th Cir. 1997) (citation omitted). When determining the plain meaning of language, we may consult dictionary definitions. See San Jose Christian Coll. v. City of Morgan Hill, 360 F.3d 1024, 1034 (9th Cir. 2004). The American Heritage College Dictionary, 1486 (3d ed. 2000) defines use as: “To put into service or apply for a purpose; employ.” This definition is very similar to the way we have defined “use” in applying a different statute. In Konop v. Hawaiian Airlines, Inc., 302 F.3d 868 (9th Cir. 2002), we stated: “The statute does not define the word ‘use,’ so we apply the ordinary definition, which is ‘to put into action or service, avail oneself of, employ.’ ” Id. at 880 (quoting Webster’s Ninth New Collegiate Dictionary, 1299 (1985)) (parallel citation omitted). The United States Supreme Court has similarly defined “use” as being “most sensibly read to mean active employment for commercial purposes, 992 AF-CAP v. CHEVRONTEXACO and not merely a passive, passing, or past connection to commerce . . . . [T]he word ‘use,’ in legislation as in conversation, ordinarily signifies ‘active employment.’ ” Jones v. United States, 529 U.S. 848, 855 (2000) (citations omitted). [5] The legislative history of § 1610(a) reiterates that “[t]he property in question must be used for a commercial activity in the United States.” H.R. Rep. No. 94-1487, at 28 (1976), as reprinted in 1976 U.S.C.C.A.N. 6604, 6627; see also Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 435 n.3 (1989) (noting that the legislative history of the FSIA, as presented in H.R. Rep. No. 94-1487, supported the Court’s conclusion). The structure of the FSIA also supports our definition of “used for.” See Ocean Advocates v. U.S. Army Corps of Eng’rs, 402 F.3d 846, 872 (9th Cir. 2005), as amended, (interpreting statutory text in the context of the overall statutory scheme). As the Fifth Circuit noted: Two subsections of the FSIA spell out the exceptions to immunity from execution. 28 U.S.C. § 1610(a) governs the immunity from execution of property belonging to foreign states. 28 U.S.C. § 1610(b) governs the immunity from execution of property belonging to an “agency or instrumentality” of a foreign state engaged in commercial activity in the United States. Subsection (a), regarding property belonging directly to a foreign state, permits execution only narrowly, when the property is “in the United States” and “used for a commercial purpose in the United States.” Subsection (b) is broader; it permits execution of “any property in the United States” belonging to the agency or instrumentality, regardless of how the agency or instrumentality uses the property . . . . CBC, 309 F.3d at 252-53 (emphasis in the original). We agree with the Fifth Circuit’s analysis: § 1610(a) is a narrower exception by operation of the phrase “used for,” a AF-CAP v. CHEVRONTEXACO 993 conclusion well supported in the case law. See, e.g., Ministry of Def. & Support for the Armed Forces of Iran v. Elahi (MOD), 126 S. Ct. 1193, 1194 (2006) (distinguishing § 1610(a) from § 1610(b) by highlighting the phrase “used for a commercial activity” in § 1610(a)); De Letelier v. Republic of Chile, 748 F.2d 790, 798-99 (2d Cir. 1984) (“The FSIA distinguishes between execution against property of an agency or instrumentality of a foreign state, which may be executed against regardless of whether the property was used for the activity on which the claim is based under § 1610(b)(2), and the property of the foreign state itself, which may be executed against only when the property was used for the commercial activity on which the claim is based under § 1610(a)(2). In making the distinction, Congress sharply restricted immunity from execution against agencies and instrumentalities, but was more cautious when lifting immunity from execution against property owned by the State itself.”); see also Working Group of the A.B.A., Reforming the Foreign Sovereign Immunities Act, 40 Colum. J. Transnat’l L. 489, 584 (2002) (“Several factors combine to make execution against foreign states extremely restrictive. First is the threshold requirement in section 1610(a) that the property against which attachment in aid of execution or execution is sought must be ‘used for a commercial activity in the United States.’ At the outset, this eliminates large classes of property that might be candidates for execution in satisfaction of a judgment against a foreign sovereign.”). In sum, the statutory structure and construction reflect a pivotal purpose of the FSIA: to “limit[ ] execution against property directly belonging to a foreign state . . .” CBC, 309 F.3d at 253. “As the Restatement explains, [f]or purposes of postjudgment attachment and execution, the Foreign Sovereign Immunities Act draws a sharp distinction between the property of states and the property of state instrumentalities. The property of states may be 994 AF-CAP v. CHEVRONTEXACO attached only if it is or was used in commercial activity; the property of state instrumentalities may be attached without any such limitation, so long as the instrumentality itself is engaged in commercial activity in the United States.” Id. (quoting Restatement (Third) of the Foreign Relations Law of the United States § 460 cmt. b (1987)) (alteration and internal quotation marks omitted). According the phrase “used for” its ordinary meaning helps preserve this distinction. Id. We also agree with the Fifth Circuit’s observation that the FSIA’s separate commercial activity exception to immunity informs our analysis. Section 1605(a)(2) provides: “A foreign state shall not be immune from the jurisdiction of courts of the United States [when] . . . the action is based upon . . . an act performed in the United States in connection with a commercial activity of the foreign state elsewhere . . .” 28 U.S.C. § 1605(a)(2). As the Fifth Circuit noted, “used for a commercial activity” in § 1610(a) and “in connection with a commercial activity” in § 1605(a)(2) are very different phrases. “Used for” is “more specific” and narrower than “in connection with,” which is akin to the alternative interpretation of “used for” proposed by the appellant in CBC — “integral to” or “related to.”1 CBC, 309 F.3d at 254-55. Accordingly, the Fifth Circuit reasoned, if it were to interpret “used for” to mean “in- 1 The Fifth Circuit’s conclusion that the phrases “in connection with” and “related to” are largely synonymous is supported by the legislative history of the FSIA, which uses the phrases interchangeably. See H.R. Rep. No. 94-1487, at 19, as reprinted in 1976 U.S.C.C.A.N. at 6617 (“The second situation, an ‘act performed in the United States in connection with a commercial activity of the foreign state elsewhere,’ looks to conduct of the foreign state in the United States which relates . . . to a regular course of commercial conduct elsewhere or to a particular commercial transaction concluded or carried out in part elsewhere.”) (emphases added); id. at 6618 (“[I]t has seemed advisable to provide expressly for the case where a claim arises out of a specific act in the United States which is commercial or private in nature and which relates to a commercial activity abroad.”) (emphasis added). AF-CAP v. CHEVRONTEXACO 995 tegral to” or “related to,” it would “interpret away the difference in phrasing between [§ 1610(a) and § 1605(a)(2)].” Id. at 255. The Fifth Circuit observed that if Congress had intended to equate “used for” with “integral to” or “related to,” Congress likely would have used the phrase “in connection with,” as it did in § 1605. Id. We agree. Af-Cap contends that we should not adopt the Fifth Circuit’s definition of “used for” because “[c]ourts have traditionally applied an interpretation consistent with [Af-Cap’s] view and contrary to the Fifth Circuit . . .” In support of this contention, Af-Cap relies on a number of cases, including Libra Bank Ltd. v. Banco Nacional de Costa Rica, S.A., 676 F.2d 47 (2d Cir. 1982); Ned Chartering & Trading, Inc. v. Republic of Pakistan, 130 F. Supp. 2d 64 (D.D.C. 2001); Itel Containers International Corp. v. Companhia de Navegacao Lloyd Brasileiro, No. 90 Civ. 8191, 1991 WL 12131 (S.D.N.Y. Jan. 25, 1991); Triton Container International v. M/S Itaite, No. 90 Civ. 7725, 1991 WL 255613 (S.D.N.Y. Jan. 24, 1991); National Union Fire Insurance Co. of Pittsburgh, PA v. People’s Republic of the Congo, No. 91 C 3172 confirmed, 1991 U.S. Dist. LEXIS 21581 (N.D. Ill. Dec. 26, 1991); Red Mountain Finance, Inc. v. Democratic Republic of Congo, No. CV-00-0164R (C.D. Cal. June 8, 2001), and LNC Investments, Inc. v. Democratic Republic of Congo, No. CV99-02529R (C.D. Cal. June 28, 1999). However, this litany of cases fails to enlighten our discussion because none of them analyze the pivotal phrase at issue in this case — “used for a commercial activity in the United States.” Only two of the cited cases appear to support AfCap’s argument. See Lloyd’s Underwriters v. AO Gazsnabtranzit, No. CIVA1:00-MI-0242-CAP, 2000 WL 1719493, at -2 (N.D. Ga. Nov. 2, 2000) (concluding, without elaboration, that license fees owed by United States companies to the Republic of Moldova were used by Moldova for a commercial activity in the United States); Alejandre v. Republic of Cuba, 42 F. Supp. 2d 1317, 1339-41 (S.D. Fla. 1999) (hold996 AF-CAP v. CHEVRONTEXACO ing, without analysis, that because payments by United States companies to a Cuban entity “are monetary property that this Court has determined exist in the United States for jurisdictional purposes, they by definition are used by [the Cuban entity] . . . for commercial activity in the United States”), vacated on other grounds sub nom. Alejandre v. Telefonica Larga Distancia de Puerto Rico, Inc., 183 F.3d 1277, 1283 n.15 (11th Cir. 1999) (“The district court held that the amounts owed [the Cuban entity] were both within the United States and used for a commercial activity therein. We express no opinion on the correctness of this holding.”) (citation omitted). Both decisions, from district courts in the Eleventh Circuit, pre-date Venus Lines Agency v. CVG Industria Venezolana de Aluminio, C.A., 210 F.3d 1309 (11th Cir. 2000) (per curiam). In that case, “Venus [Lines] claim[ed] that the Mexico cargo was used for the commercial activity of facilitating [CVG’s] sale of the [Alabama] cargo.” Id. at 1313. The Eleventh Circuit concluded: “If true, the Mexico cargo would indeed have been ‘used for a commercial activity in the United States.’ ” Id. (emphasis added). Because a question of fact existed, the Eleventh Circuit was not called upon to fully analyze the “used for” requirement. However, it does not appear that the Eleventh Circuit’s approach differs radically from that of the Fifth Circuit. [6] The Fifth Circuit emphasized that “what matters under the statute is how the foreign state uses the property, not how private parties may have used the property in the past . . .” CBC, 309 F.3d at 256 n.5 (emphasis in the original) (citation omitted), reasoning that, “[i]f we were to allow a private party’s commercial use of the property to count for § 1610(a), we would erase the commercial/noncommercial use distinction for almost all of a foreign state’s tangible property.” Id. We agree that to allow a private party’s commercial use of the property to waive a foreign sovereign’s immunity would not only frustrate “one of the principal goals of the FSIA” — to AF-CAP v. CHEVRONTEXACO 997 restrain, to the extent practicable, “judicial interference with the jus imperii, or sovereign acts, of a foreign state,” id. at 257 n.6 (citing H.R. Rep. No. 94-1487, at 7, as reprinted in 1976 U.S.C.C.A.N. at 6605) — but would also effectively eviscerate the protections of the FSIA by essentially placing the power to waive the foreign sovereign’s immunity in the hands of private parties. Other sections of the FSIA, as well as the legislative history, suggest that it is indeed the foreign sovereign’s use of the property that is determinative. Congress’s “Findings and declaration of purpose,” for example, clarify that “[foreign] states are not immune from the jurisdiction of foreign courts insofar as their commercial activities are concerned, and their commercial property may be levied upon for the satisfaction of judgments rendered against them in connection with their commercial activities.” 28 U.S.C. § 1602 (emphasis added). [7] In sum, we adopt in principle the test articulated by the Fifth Circuit in CBC to determine whether property was “used for a commercial activity in the United States,” as that term is used in the FSIA. Like the Fifth Circuit, we conclude that property is “used for a commercial activity in the United States” when the property in question is put into action, put into service, availed or employed for a commercial activity, not in connection with a commercial activity or in relation to a commercial activity. The FSIA does not contemplate a strained analysis of the words “used for” and “commercial activity,” and neither do we. See Corporacion Mexicana, 89 F.3d at 655 (instructing that the FSIA provisions should be narrowly construed). Rather, we anticipate that this determination will be made by considering the use of the property in question in a straightforward manner, with a proper appreciation of the fact that the further removed the property is from the referenced commercial transaction, the less likely it is that the property was used for that transaction. See id. 998 AF-CAP v. CHEVRONTEXACO We expressly decline, however, to incorporate the Fifth Circuit’s articulated “reservations about defining property use as commercial in nature solely by reference to past single and/ or exceptional commercial uses.” Af-Cap, 383 F.3d at 369. In our view, attempting to quantify the number of commercial uses associated with the property, or to embark upon characterizing property use as exceptional or unexceptional, would unnecessarily complicate the determination to be made under § 1610(a).