Opinion ID: 795095
Heading Depth: 2
Heading Rank: 3

Heading: The Writs of Garnishment

Text: 14 On September 17, 2004, we decided Af-Cap II. There, another of the Congo's judgment creditors sought to garnish the same royalty obligations FG Hemisphere seeks to garnish in this case. We found that the royalty obligations were not immune to execution and reversed the district court's decision to the contrary. One week after our Af-Cap II decision, FG Hemisphere filed an Emergency Application to Issue Writs of Garnishment, asking the district court to issue writs of garnishment directed to the royalty obligations. 15 On October 5, 2004, the district court granted this emergency application, finding only that a valid judgment exists against the Republique du Congo that is unchallenged, that the Republique du Congo irrevocably waived immunity with respect to the obligations of the Loan Agreement, and that the waiver extends to any assets, revenues and properties that belong to the Republique du Congo. That same day, writs of garnishment issued against the Garnishees as to any assets and other property of the Republique du Congo of any nature including any payments or obligations due to the Republique du Congo, whether denominated as taxes, fees, royalties, net profits, or otherwise. 16 FG Hemisphere filed a motion to clarify the October 5, 2004, order and to abandon portions of the previously-granted garnishment regarding certain tax obligations. Specifically, this motion asked the district court to modify the order to (1) include a determination that the royalty obligations at issue in FG Hemisphere's Emergency Application are not immune from execution under the FSIA because they constitute property of the Republique du Congo located in the United States, which has been used for commercial activity in the United States, and (2) order that the writs of garnishment issued in accordance with the Order do not relate to the bona fide obligation of the Garnishees to pay taxes to the Congo and are modified to exclude such tax obligations. 17 The district court granted this motion and, on October 22, 2004, modified and restated its earlier order: 18 The Court has reviewed the application and the defendants' response, and determines that a valid judgment exists against the Republique du Congo that is unchallenged, that the Republique du Congo irrevocably waived immunity with respect to the obligations of the Loan Agreement, and that the waiver extends to any assets, revenues and properties that belong to the Republique du Congo. The Garnishees owe to the Republique du Congo certain royalty obligations under a 1979 Convention for the production of oil. Based on the plaintiff's emergency application for the issuance of writs of garnishment and the Garnishees response thereto, the Court determines that said royalty obligations constitute property of the Republique du Congo located in the United States, which has been used for commercial activity in the United States, therefore, satisfying the requirements of the Foreign Sovereign Immunities Act and enabling the plaintiff to execute on said property. 19 In December 2004, FG Hemisphere filed an emergency application for writs of garnishment addressed to SNPC's working interest. The district court reasoned that the Garnishees advance operating expenses to SNPC via a transaction that functions like a revolving loan, and found SNPC's working interest share to be a species of a previous commercial-purpose determination. The court further held that the Congo had waived the defenses that might be asserted under the FSIA. The district court found that the Garnishees held assets for the Congo in the United States when this action commenced. Finally, the court determined that the obligations owed by the Garnishees to SNPC had a commercial purpose and were located in the United States. On December 23, 2004, the district court held that SNPC's working interest share was not immune from execution under the FSIA and that, therefore, FG Hemisphere was entitled to execute against this property. As with the October 5, 2004 order, writs of garnishment issued against SNPC's property on the same day as the December 2004 order. 20 The Congo Defendants appeal the district court's October and December 2004 orders granting FG Hemisphere's applications for writs of garnishment against them.