Court Opinion

ID: 2995701
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:21:50.619848+00
Date Added: 2024-06-11T15:02:32.826411
License: Public Domain

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 en-
tered 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 For-
eign Sovereign Immunities Act (“FSIA”). The district court
held that the FSIA did not preclude it from requiring Caja
2                                                    No. 01-3054

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 in-
surance and reinsurance company headquartered in Argen-
tina, pursuant to two reinsurance contracts. Caja subse-
quently failed to pay IIC over $2 million in indemnity
obligations, and on April 10, 2000, IIC initiated an arbitra-
tion 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 Oc-
tober 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.” Accord-
ingly, on October 27, 2000, IIC filed a petition for confirma-
tion 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

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.
No. 01-3054                                                      3

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 instrumental-
ity of a foreign government, it is not required to post pre-
judgment 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 im-
munity 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. Spe-
cifically, 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 juris-
diction. See 9 U.S.C. § 201, art. VI.4 The district court fur--
ther concluded that Caja’s affirmative defenses constituted

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.
4                                                      No. 01-3054

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 judg-
ment and struck its answer and affirmative defenses.5 See In-
ternational 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 unpub-
lished 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

5
   The court also reviewed IIC’s motion to strike Caja’s affirma-
tive 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 jurisdic-
tion on the ground that the district court’s order requiring pre-
judgment 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) (de-
nial of claim of sovereign immunity is an immediately appealable
interlocutory order under the collateral order doctrine).
No. 01-3054                                                        5

answer. Caja objected, arguing that it did not wilfully dis-
obey 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 “en-
forcement, validity, and interpretation of arbitration clauses
in commercial contracts in both state and federal courts,”

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).
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 confir-
mation of the arbitral award, IIC claimed that the dis-
trict court had jurisdiction pursuant to the Inter-Amer-
ican 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 pro-
ceedings falling thereunder. See 9 U.S.C. § 302 (incorporat-
ing 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’ repre-
sentations 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 jurisdic-
tion 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

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 jurisdic-
tion 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 with-
in 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 (incor-
porated by reference into the Panama Convention by 9

8
  Both the United States and Argentina are signatories to the
Panama Convention. The United States signed the Panama Con-
vention 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-Ameri-
can [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 Pana-
ma 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 dis-
cussed in more detail below, the relevant provisions (concerning
the propriety of pre-judgment security) are substantively iden-
tical.
8                                                    No. 01-3054

U.S.C. § 302). Therefore, we have federal question jurisdic-
tion.10
  While Caja does not challenge our subject matter jurisdic-
tion, it does assert that it is an instrumentality of Argen-
tina,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 ba-
sis 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

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 instru-
mentality of a foreign state. See 28 U.S.C. § 1603(a).
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 jurisdic-
tion 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 require-
ments necessary to give such court jurisdiction . . . .” Article
XXI of each contract contained a provision that arbitration
would occur in Chicago, Illinois, unless some other loca-
tion 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 require-
ment 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

     this Act the property in the United States of a foreign
     state shall be immune from attachment arrest and ex-
     ecution 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 instrumen-
tality 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 at-
torney 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

12
   While this Section refers to “attachment arrest and execution,”
it has been interpreted to include pre-judgment security. See infra
n.13.
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 govern-
ment of Argentina.
   IIC responds that these affidavits are insufficient to
establish a prima facie case that Caja is a foreign instrumen-
tality because these affidavits were not properly authenti-
cated 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 de-
fendant 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 consti-
tute 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 demonstrat-
ing 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 con-
stitutes 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. How-
ever, 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

     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 commer-
          cial 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

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 “attach-
ment” 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.
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 de-
termine 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 court-
ordered pre-judgment deposit of security is clearly appro-
priate. 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

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 jurisdic-
tion. 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

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 instrumen-
talities 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...)
16                                                      No. 01-3054

C. District Court’s Imposition of Security
  Since we have concluded that Caja, even if it is an in-
strumentality of Argentina, is not immune from posting pre-
judgment 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 pro-
vides that the court shall order the posting of security “in an
amount to be fixed by the court sufficient to secure the

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 simi-
larly). 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.
No. 01-3054                                                    17

payment of any final judgment . . . .” 215 ILCS 5/123(5).
While we have found no published Illinois cases interpret-
ing 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 discre-
tion 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 appropri-
ate.
   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 be-
lieved that it had no discretion to deny an order of pre-
judgment 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 rec-
ord. Therefore, we conclude that the district court’s order of
pre-judgment security was appropriate.

16
  As we have noted repeatedly, the Panama Convention contains
a similar provision.
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