« Federalism and the Treaty Power: A Response to Mike Ramsey
Mike Rappaport
| Main | Does the President Have Constitutional Power to Order Air Strikes in Iraq?
Michael Ramsey
»

06/18/2014

Argentine Bonds and Scalia's Legacy
Michael Ramsey

Bruce Murphy has a new biography of Justice Scalia out, arguing (in often snarky tones) that Scalia is, in the book's title phrase, "A Court of One."  As the book description puts it, the book shows how "he chose to be 'right' rather than influential."

The book focuses mainly on constitutional law, and whatever its merits in that discussion, its theme overlooks Scalia's deep influence on statutory interpretation.  Textualism in statutory interpretation is now a dominant force, and Scalia is primarily responsible for making it so.  If you doubt how Scalia has remade the field, consider Argentine bonds.

On Monday the Supreme Court rejected Argentina's attempts to use the Foreign Sovereign Immunities Act (FSIA) to shield itself from post-judgment orders.  First, it upheld (7-1) the district court's discovery orders requiring disclosure of Argentina's assets; and second, it denied (without comment) Argentina's petition challenging the district court's injunction prohibiting Argentina from paying certain bondholders without paying others.  (SCOTUSblog's analysis is here; analysis from Ingrid Wuerth at Lawfare is here).

As I've described previously, the case comes out of Argentina's 2001 default on its sovereign bonds. The plaintiffs in this case are private bondholders who sued and won in U.S. district court in New York (Argentina having waived sovereign immunity and consented to suit in New York).  After Argentina refused to pay, the plaintiffs sought various post-judgment remedies, leading to these appeals.

Previewing the case, I called it a test for textualism: the FSIA seems clearly not to grant Argentina any immunity in this situation, but substantial foreign policy and sovereign dignity concerns might point the other way.  (The U.S. government backed Argentina, and in a prior case involving a similar issue in a suit against Iran, the Seventh Circuit found immunity from the spirit of the statute).

Textualism won resoundingly.  Justice Scalia wrote for the 7-1 majority (Ginsburg dissenting, Sotomayor recused):

[A]ny sort of immunity defense made by a foreign sovereign in an American court must stand on the [FSIA's] text. Or it must fall.

The text of the Act confers on foreign states two kinds of immunity. First and most significant, “a foreign state shall be immune from the jurisdiction of the courts of the United States . . . except as provided in sections 1605 to 1607.” §1604. That provision is of no help to Argentina here: A foreign state may waive jurisdictional immunity,§1605(a)(1), and in this case Argentina did so, see 695 F. 3d, at 203. Consequently, the Act makes Argentina “liable in the same manner and to the same extent as a private individual under like circumstances.” §1606 … 

The Act’s second immunity-conferring provision states that “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.” §1609. …

That is the last of the Act’s immunity-granting sections. There is no third provision forbidding or limiting discovery in aid of execution of a foreign-sovereign judgment debtor’s assets. Argentina concedes that no part of the Act “expressly address[es] [postjudgment] discovery.” Brief for Petitioner 22. Quite right.  The Act … says not a word on the subject.

And that is the end of the analysis.  Scalia refuses even to consider policy arguments (or policy arguments dressed up as congressional purpose arguments):

Today’s decision leaves open what Argentina thinks is a gap in the statute. Could the 1976 Congress really have meant not to protect foreign states from postjudgment discovery "clearinghouses"? The riddle is not ours to solve (if it can be solved at all). It is of course possible that, had Congress anticipated the rather unusual circumstances of this case ... it would have added to the Act a sentence conferring categorical discovery-in-aid-of-execution immunity on a foreign state’s extraterritorial assets. Or, just as possible, it would have done no such thing. Either way, "[t]he question . . . is not what Congress ‘would have wanted’ but what Congress enacted in the FSIA." Republic of Argentina v. Weltover, Inc., 504 U. S. 607, 618 (1992) [Ed.: another Scalia FSIA opinion].

Nonetheless, Argentina and the United States urge us to consider the worrisome international-relations consequences of siding with the lower court. Discovery orders as sweeping as this one, the Government warns, will cause "a substantial invasion of [foreign states’] sovereignty," Brief for United States as Amicus Curiae 18, and will "[u]ndermin[e] international comity," id., at 19. Worse, such orders might provoke "reciprocal adverse treatment of the United States in foreign courts," id., at 20, and will "threaten harm to the United States’ foreign relations more generally," id., at 21. These apprehensions are better directed to that branch of government with authority to amend the Act ... 

Though the Court denied Argentina's related petition on the post-judgment injunction without comment, the reasoning of the discovery order case seems to apply equally there as well: nothing in the FSIA's text immunizes Argentina against that order either, even though the order is arguably an even greater imposition on Argentina's sovereign dignity (my prior analysis of this part of the case  is here).

Thirty years ago the Argentine bonds case might have come out the same way, but the opinion would not have been written the same way.  Much of the change can be attributed to Scalia's championship of textualism.  "Scalia: A Court of Seven" doesn't make for as a good a title, though.