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43. U.S. Statement of Interest in Copelco Capital v. Brazilian Consulate General, C 98-1357 VRW (D.C.N.D. Cal. 2005)


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PETER D. KEISLER

Assistant Attorney General, Civil Division

KEVIN V. RYAN

United States Attorney

JOSEPH H. HUNT

Director, Federal Programs Branch

VINCENT M. GARVEY

Deputy Director, Federal Programs Branch

RUPA BHATTACHARYYA (VA#38877)

Senior Trial Counsel, Federal Programs Branch

Civil Division, United States Department of Justice

P.O. Box 883, 20 Massachusetts Ave., N.W.

Washington, D.C. 20044

Tel: (202) 514-3146; Fax: (202) 318-7593

Email: rupa.bhattacharyya@usdoj.gov

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

COPELCO CAPITAL, INC., a Delaware corporation,

Plaintiff,

vs.

BRAZILIAN CONSULATE GENERAL, et al.,

Defendants.

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C 98-1357 VRW

STATEMENT OF INTEREST OF THE UNITED STATES

Date: May 26, 2006

Time: 2:00 p.m.

Courtroom: 6

Plaintiff herein, Copelco Capital, Inc., seeks an order from the Court allowing it to levy upon the assets of the judgment debtor, the Brazilian Consulate General, in its effort to enforce a judgment for $11,7645.34 in damages, plus prejudgment interest and reasonable attorneys’ fees, which it obtained against the Brazilian Consulate General by order of this Court dated May 14, 2003. The United States respectfully submits that plaintiff’s request to attach the assets of a foreign government’s consular mission must be rejected because granting such relief would result in a violation of the United States’ obligations under the Vienna Convention on Consular Relations, T.I.A.S. No. 6820, 21 U.S.T. 77, 1969 WL 97928 (April 24, 1963). Moreover, there is no authority allowing the Court to grant the relief requested because the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. §§ 1602-1611, which is the exclusive basis for federal jurisdiction over foreign sovereigns and their property, contains no relevant exception to its generally stated rule that the “property of a foreign state in the United States shall be immune from execution and attachment . . . .” 28 U.S.C. § 1609. The United States, which appears in this action pursuant 28 U.S.C. § 517,[1] accordingly, files this Statement in support of the position that Copelco’s motion seeking an order allowing it to levy against the Consulate’s assets should be denied.

BACKGROUND

On May 14, 2004, this Court entered judgment in favor of plaintiff, Copelco Capital, Inc. (“Copelco”), and against defendant, the Brazilian Consulate General (“Consulate”), in the amount of $11,765.34 in damages, plus reasonable attorneys’ fees. By order entered August 26, 2003, the Court awarded Copelco $26,984.77 in attorneys’ fees. Final judgment on Copelco’s breach of contract claim was entered June 18, 2004.

On January 10, 2005, Copelco filed a motion with the Court seeking an order allowing it to levy against the assets of the Consulate in satisfaction of its judgment. Although Copelco’s motion does not specifically identify the property upon which it seeks to levy, it appears that Copelco will seek to levy against a bank account held in the name of the Consulate.[2] The Consulate opposed that motion on March 9, 2005, arguing: (1) that the Vienna Convention on Consular Relations, to which both the United States and Brazil are parties, rendered consulate property immune from attachment in satisfaction of the judgment at issue here; (2) that the Consulate was a “foreign state” and not an “agency or instrumentality of a foreign state” and had not waived its immunity from attachment under the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1609, 1610; and (3) that remedies for enforcement of the judgment were available to Copelco in the courts of Brazil.[3] Copelco filed its reply brief on March 17, 2005.

DISCUSSION

I. THE ATTACHMENT OF CONSULAR PROPERTY TO SATISFY A CIVIL JUDGMENT VIOLATES THE OBLIGATIONS OF THE UNITED STATES UNDER INTERNATIONAL LAW.

The United States and Brazil are parties to the Vienna Convention on Consular Relations (“Vienna Convention” or “VCCR”), T.I.A.S. No. 6820, 21 U.S.T. 77, 1969 WL 97928 (April 24, 1963). That treaty obligates the United States to ensure that consular missions are accorded the facilities they require for the performance of their consular functions. Specifically, Article 28 of the Vienna Convention provides “The receiving State shall accord full facilities for the performance of the functions of the consular post.” As the preamble to the treaty states, the purpose of the privileges and immunities accorded consular missions is to “assure the efficient performance of the functions by consular posts on the behalf of their respective States.” As a practical matter, a consular mission cannot perform its consular functions if its bank accounts or other property are frozen or otherwise subject to interference. See, e.g., Connecticut Bank of Commerce v. Republic of Congo, 309 F.3d 240, 256 n.6 (5th Cir. 2002) (“the attachment of a bank account used to pay diplomatic salaries or maintain an embassy would immediately and directly affect the foreign state's sovereign diplomatic activities”). Such property, therefore, is protected by consular immunity.

In interpreting the obligations imposed by the Vienna Convention, the court’s role is “limited to giving effect to the intent of the Treaty parties.” Sumitomo Shoji America, Inc. v. Avagliano, 457 U.S. 176, 184-85 (1982). “Although not conclusive, the meaning attributed to treaty provisions by the Government agencies charged with their negotiation and enforcement is entitled to great weight.” Id. Moreover, where “the parties to a treaty both agree to the meaning of a treaty provision, and that interpretation follows from the clear treaty language, [the court] must, absent extraordinary strong contrary evidence, defer to that interpretation.” Id. at 185.

The Consulate argues, and the United States hereby agrees, that interference by the United States – including by courts of the United States – with bank accounts or other property of foreign nations used for consular activities interferes with the United States’ treaty obligations under the Vienna Convention. In Liberian Eastern Timber Corp. v. Govt. of Republic of Liberia (“LETCO”), 659 F. Supp. 606 (D.D.C. 1987), the United States District Court for the District of Columbia held that, pursuant to the Vienna Convention on Diplomatic Relations (which contains obligations relating to diplomatic missions identical to those relating to consular missions contained in the Vienna Convention on Consular Relations), the bank accounts of the Embassy of Liberia were immune from attachment to satisfy a civil judgment. The court found that because the bank accounts were “used for the functioning of the Liberian Embassy . . .,” they were immune from attachment pursuant to the “full facilities” clause of the Vienna Convention on Diplomatic Relations. In reaching this conclusion, the Court noted that the foreign mission “lacks the ‘full facilities’ the Government of the United States has agreed to accord, if, to satisfy a civil judgment, the Court permits a writ of attachment to seize official bank accounts used or intended to be used for purposes of the diplomatic mission.” Id. at 608. The Court further reasoned that failure to confer immunity upon the Liberian bank account would force the foreign nation “to take grossly inconvenient measures, such as issuing only checks drawn on a Liberian bank, or would have to run the risk that judgment creditors of Liberia would cause accounts the Embassy holds at banks located in the United States to be seized for an indefinite length of time, severely hampering the Embassy’s diplomatic functions.” Id.

Similarly, in Foxworth v. Permanent Mission of the Republic of Uganda to the United Nations, 796 F. Supp. 761 (S.D.N.Y. 1992), the United States District Court for the Southern District of New York rejected plaintiff’s effort to attach a bank account associated with Uganda’s Mission to the United Nations, finding that such attachment would be “contrary to the obligation of the United States to provide [Uganda] the immunities necessary for operation under the United Nations Charter and its obligation to accord ‘full facilities’ for the performance of the mission’s functions under the Vienna Conventions.” Id. at 763.

With respect to this matter, just as in LETCO and Foxworth, Copelco’s attempt to attach, execute, or levy property belonging to the Consulate squarely implicates the United States’ obligations under the Vienna Convention, and any order by the Court allowing such attachment, execution, levy would result in interference with those obligations, and moreover, in light of international reciprocity, also could undermine efforts to protect U.S. diplomatic and consular properties located abroad. In order to avoid such a result, this Court should find, in agreement with the courts in LETCO and Foxworth, that property of the Consulate is immune from attachment, execution, or levy in satisfaction of Copelco’s civil judgment.

II. THE FOREIGN SOVEREIGN IMMUNITIES ACT ALSO PRECLUDES LEVY OR EXECUTION UPON THE BRAZILIAN CONSULATE’S PROPERTY TO SATISFY A CIVIL JUDGMENT.

In addition to running afoul of the United States’ treaty obligations, any attempt to levy upon the Consulate’s property is prohibited by the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602, et seq. As a preliminary matter, the FSIA is the exclusive source of subject matter jurisdiction over all suits against foreign states or their instrumentalities. Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 443 (1989). The jurisdictional provisions of the FSIA waiving the ordinarily applicable immunity of foreign sovereigns, however, are explicitly made subject to treaty obligations that existed at the time of the FSIA’s enactment. See 28 U.S.C. § 1604 (“Subject to existing international agreements to which the United States is a party at the time of the enactment of this Act, a foreign state shall be immune from the jurisdiction of the courts of the United States . . . except as provided in sections 1605 and 1607 of this chapter”). Thus, the FSIA cannot be read to diminish or relieve the United States’ obligations under the Vienna Convention on Consular Relations, which entered into force in 1963, long before the FSIA’s 1976 enactment. See LETCO, 659 F. Supp. at 608 n.3 (“The United States was a party to the Vienna Convention at the time Congress enacted the FSIA, so the provisions of the Vienna Convention are controlling over the FSIA.”); see also Moore v. United Kingdom, 384 F.3d 1079, 1085 (9th Cir. 2004) (“acts of Congress should not be construed to conflict with international treaty obligations”) (citations omitted).

In any event, even under the provisions of the FSIA that apply in the absence of any applicable treaty, attachment of the Consulate’s property is forbidden. Section 1609 of the FSIA provides that “the property in the United States of a foreign state shall be immune from attachment, arrest or execution except as provided in sections 1610 and 1611 of this chapter.” 28 U.S.C. §1609. Section 1610(a) of the FSIA sets forth certain exceptions to Section 1609 immunity where the foreign state’s property is “used for a commercial activity in the United States.” 28 U.S.C. § 1610(a). Section 1610(b) provides certain further exceptions from the general immunity from attachment or execution for the property of “agencies or instrumentalities” of a foreign state where the judgment is entered against such agency or instrumentality. These exceptions are generally considered to be broader than the foreign state exceptions contained in Section 1610(a). Copelco, relying on the Court of Appeal’s decision in Gerritsen v. De la Madrid Hurtado, 819 F.2d 1511, 1517 (9th Cir. 1987), argues that the Consulate should be considered an “agency or instrumentality” of Brazil, and thus subject to the attachment provisions of Section 1610(b).

Under the prevailing case law, the Consulate, more properly, should be considered part of the foreign state itself, not an agency or instrumentality of it and, moreover, bank accounts used in furtherance of governmental activities of the consulate do not constitute property used for commercial activity in the United States. As a preliminary matter, Copelco’s reliance on the Court of Appeals’ decision Gerritsen is misplaced. As the district court in Gerritsen explained on remand, the Court of Appeal’s reference to the Mexican Consulate as a “separate legal person” was dicta and was not intended to support any proposition other than its basic holding that “claims against consulates are governed by the FSIA.” Gerritsen v. Escobar y Cordova, 688 F. Supp. 556, 559 (C.D. Cal. 1988). Moreover, as the Gerritsen district court noted, id., the Court of Appeals approvingly cited Gray v. Permanent Mission of the People’s Republic of the Congo to the United Nations, 443 F. Supp. 816, 820 (S.D.N.Y.), aff’d, 580 F.2d 1044 (2d Cir. 1978) (Table), which rejected the argument that the Congo’s permanent mission to the U.N. was an “agency or instrumentality” of a foreign state under the FSIA because “it is hard to imagine a purer embodiment of a foreign state than that state’s permanent mission to the United Nations.” Thus, the district court did not view the language of the Court of Appeals in Gerritsen upon which Copelco attempts to rely as dispositive of the issue. See, e.g., Gerritsen v. Escobar y Cordova, 721 F. Supp. 253, 257-58 (C.D. Cal. 1988) (in subsequent proceedings, weighing whether service of process was proper under both 28 U.S.C. § 1608(a), which governs service of process on foreign states, and alternatively, under 28 U.S.C. § 1608(b), which governs service of process on agencies and instrumentalities of foreign states).

As a general matter, when attempting to determine whether a particular entity is to be treated as a foreign state or as an agency or instrumentality of a foreign state for purposes of the various provisions of the FSIA which draw distinctions between the two, courts rely on a categorical approach which focuses on whether “the core functions of the foreign entity are predominantly governmental or commercial.” Transaero, Inc. v. La Fuerza Aerea Boliviana, 30 F.3d 148, 151-52 (D.C. Cir. 1994); accord Compangie Noga D’Importation et D’Exportation, S.A. v. Russian Federation, 361 F.3d 676, 687 (2d Cir. 2004) (surveying cases); Magness v. Russian Federation, 247 F.3d 609, 613 n.7 (5th Cir. 2001) (whether an entity is an “‘agency or instrumentality’ of a foreign state . . . depends upon the nature of its core functions – governmental vs. commercial – and whether the entity is treated as a separate legal entity under the laws of the foreign state”).

Under this “core functions” test, the conduct of foreign affairs is an “important and ‘indispensable’ governmental function.” Roeder v. Islamic Republic of Iran, 333 F.3d 228, 234-35 (D.C. Cir. 2003), cert. denied, ___ U.S. ___, 124 S. Ct. 2836 (2004) (quoting Kennedy v. Mendoza-Martinez, 372 U.S. 144, 160 (1963)). Foreign consulates in the United States perform important roles in the conduct of a foreign nation’s foreign affairs in this country, including protecting and providing services to citizens of the sending state and furthering cultural and economic relations. Just as the court found in Gray that it is “hard to imagine a purer embodiment of a foreign state than that state’s permanent mission to the United Nations,” so too a foreign state’s consular missions should properly be deemed part of the embodiment of the foreign state itself. Thus, contrary to Copelco’s argument, Section 1610(a), which applies to foreign states, and not Section 1610(b), which applies to agencies and instrumentalities of foreign states, is the applicable section when determining the availability of the Consulate’s assets for attachment.

Property of a foreign state is immune from attachment and execution pursuant to Section 1610(a) unless it is “used for commercial activity in the United States.” 28 U.S.C. § 1610(a). A bank account used to support consular activities in the United States should not be deemed to constitute property “used for a commercial activity in the United States” given the consulate’s core governmental functions. Thus, in LETCO, the Court agreed that no FSIA exception permitted execution on the Liberian Embassy’s bank account as the activity for which the funds were used “undoubtedly is of a public or governmental nature because only a government entity may use funds to perform the functions unique to an embassy.” 659 F. Supp. at 610. Thus, accounts not used to support “a regular course of commercial conduct,” see 28 U.S.C. § 1603(d), but rather to support diplomatic and/or consular activities, are not subject to attachment under 28 U.S.C. § 1610(a).

The LETCO Court recognized that some portion of the bank accounts might be construed as being used for activities such as purchasing goods or services from private entities which would be considered “commercial” for purposes of jurisdiction on the merits of the claim. Id. The Court held, however, that even if a portion of a bank account is used for such activities it would still be immune from attachment. Id. The Court reasoned that a contrary result would force a diplomatic mission to “undergo a severe hardship if a civil judgment creditor were permitted to freeze bank accounts used for purposes of a diplomatic mission for an indefinite period of time until exhaustive discovery had taken place to determine the precise portion of the bank account used for commercial activities.” Id.[4]; see also Af-Cap, Inc. v. Republic of Congo, 383 F.3d 361, 370 (5th Cir.) (“under the FSIA, foreign property retains its immunity protection where its commercial uses, considered holistically and in context, are bona fide exceptions to its otherwise noncommercial use.”), clarified on reh’g on other grounds, 389 F.3d 503 (5th Cir. 2004), cert. denied, ___ U.S. ___, 2005 WL 275256 (April 4, 2005); DeLetelier v. Republic of Chile, 748 F. 2d 790, 796 (2d Cir. 1984) (“Congress intended the ‘essential nature’ of given behavior to determine its status for purposes of the commercial activities exception, and gave the courts a ‘great deal of latitude’ to decide this issue. . . . The legislative history makes clear that courts should not deem activity "commercial" as a whole simply because certain aspects of it are commercial”) (citation omitted); but see Birch Shipping Corp. v. Embassy of the United Republic of Tanzania, 507 F. Supp. 311 (D.D.C. 1980) (finding bank account of foreign nation’s embassy could be executed upon to satisfy judgment pursuant to FSIA because foreign state waived immunity from attachment and some funds were used for commercial activity).[5]

Even if the property sought to be levied upon by Copelco is deemed to be used for a commercial activity, property of a foreign state remains immune from attachment and execution unless one of several further enumerated criteria are met. See 28 U.S.C. §1610(a)(1)-(6). None of these further circumstances that must be present in order to properly invoke one of the FSIA’s exceptions to the general rule against attachment or execution is applicable to this case. Copelco attempts to invoke only the first of these exceptions, that the Consulate has “waived its immunity from attachment in aid of execution or execution either explicitly or by implication . . . .” 28 U.S.C. § 1610(a)(1).[6] Copelco’s argument is based on the Court’s earlier merits determination that the Consulate waived its sovereign immunity from jurisdiction by agreeing to a contract, namely, the finance agreement, that specifically stated that it was governed by the laws of the United States. A waiver of immunity from jurisdiction, however, does not constitute a waiver of immunity from execution. See Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Defense Systems, Inc., 385 F.3d 1206, 1217 (9th Cir. 2004), petition for cert. filed, 73 U.S.L.W. 3498 (Feb. 11, 2005);[7] see also DeLetelier, 748 F.2d at 798-99 (noting that, in enacting FSIA, Congress did not intend “to reverse completely the historical and international antipathy to executing against a foreign state’s property even in cases where a judgment could be had on the merits”).

Because no provision of the FSIA allows departure from the general principle that “the property in the United States of a foreign state shall be immune from attachment, arrest or execution,” 28 U.S.C. § 1609, Copelco cannot succeed in its efforts to attach the assets of the Brazilian Consulate.

CONCLUSION

For the foregoing reasons, it is the position of the United States that Copelco’s motion seeking an order allowing it to levy against the Consulate’s assets should be denied.

Respectfully submitted,

PETER D. KEISLER

Assistant Attorney General, Civil Division

KEVIN V. RYAN

United States Attorney

JOSEPH H. HUNT

Director, Federal Programs Branch

VINCENT M. GARVEY

Deputy Director, Federal Programs Branch

___________________________________

RUPA BHATTACHARYYA (VA #38877)

Senior Trial Counsel

Federal Programs Branch, Civil Division

United States Department of Justice

P.O. Box 883, 20 Massachusetts Ave, N.W.

Washington, D.C. 20044

Tel: (202) 514-3146

Fax: (202) 616-8202

Dated: April 21, 2005 Email: rupa.bhattacharyya@usdoj.gov


CERTIFICATE OF SERVICE

I hereby certify that, on April 21, 2005, a copy of the foregoing STATEMENT OF INTEREST OF THE UNITED STATES was served upon counsel of record by facsimile and first-class U.S. mail, postage prepaid, addressed as follows:

Stephen M. Spinella, Esq.

Benjamin T. Morton, Esq.

SOLOMON, GRINDLE, SILVERMAN, & SPINELLA

12555 High Bluff Drive, Suite 260

San Diego, CA 92130

(858) 793-8500

fax: (858) 793-8263

Dennis M. Sullivan, Esq.

LAW OFFICES OF DENNIS M. SULLIVAN

601 California Street, 16th Floor

San Francisco, CA 94108

(415) 982-5454

fax: (415) 982-1732

Lindy H. Scoffield, Esq.

ANWYL SCOFFIELD STEPP & UNIVERSAL

2180 Harvard Street, Suite 200

Sacramento, CA 95815-3318

(916)565-1800

fax: (916) 565-2374

____________________________________

RUPA BHATTACHARYYA (VA #38877)

Senior Trial Counsel

Federal Programs Branch, Civil Division

United States Department of Justice

P.O. Box 883, 20 Massachusetts Ave, N.W.

Washington, D.C. 20044

Tel: (202) 514-3146

Fax: (202) 616-8202

Email: rupa.bhattacharyya@usdoj.gov



[1] That statute authorizes the Attorney General of the United States to send any officer of the Department of Justice to "attend to the interests of the United States in a suit pending in a court of the United States, or in the courts of a State, or to attend to any other interest of the United States." 28 U.S.C. § 517. The submission of a Statement of Interest does not constitute an intervention in this action but is the equivalent of an amicus curiae brief. See Flatow v. Islamic Republic of Iran, 305 F.3d 1249, 1252-53 & n.5 (D.C. Cir. 2002).

[2] Copelco apparently had sought and obtained a writ of execution on such a bank account on November 9, 2004, but then voluntarily agreed to release the funds when the Consulate complained that Copelco had failed to allow sufficient time to pass following entry of the judgment to allow for a voluntary payment before seeking to initiate compulsory execution proceedings. See 28 U.S.C. § 1610(c) (“No attachment or execution referred to in subsections (a) or (b) of this section shall be permitted until the court has ordered such attachment and execution after having determined that a reasonable period of time has elapsed following entry of judgment. . . .”). Copelco’s pending motion seeking leave of Court to levy on the Consulate’s assets explicitly seeks a determination that sufficient time has passed to make it apparent that the Consulate will not pay the judgment rendered against it unless it is compelled to do so.

[3] The United States here takes no position on the availability of such remedies in the courts of Brazil. The United States notes, however, that the Consulate has not challenged the Court’s finding of liability in this case.

[4] Indeed, such discovery may well be contrary to U.S. treaty obligations to avoid interference with the functioning of consulate missions. As noted by the LETCO Court, discovery is impracticable because, pursuant to Vienna Convention on Diplomatic Relations, the books and records of a mission are inviolable. See LETCO, 659 F. Supp. at 610 n.5; see VCCR, Art. 33 (analogous provision). This Court, therefore, cannot – without violating the United States’ obligations under the Convention – require the Consulate to produce records relating to its assets. Similarly, under Article 44 of the Vienna Convention, “[m]embers of a consular post are under no obligations to give evidence concerning matters connected with the exercise of their functions or to produce official correspondence and documents thereto.” VCCR, Art. 44(3). Although such personnel “may be called upon to attend as witnesses” in judicial proceedings, if they decline, they may neither be compelled nor penalized. Id., Art. 44(1).

[5] The United States was not a party to the Birch case nor did it submit its views on the proper construction of the FSIA or diplomatic or consular immunities.

[6] Copelco actually relies on the analogous provision relating to “agencies or instrumentalities” of a foreign state found in 28 U.S.C. § 1610(b)(1). As discussed above, however, the applicable provisions of the FSIA are those that apply to foreign states, and not those that apply to agencies or instrumentalities of foreign states.

[7] In Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran, it appears that the Court of Appeals assumed, because the judgment creditor conceded, that the Ministry of Defense was an “agency or instrumentality” of Iran. 385 F.3d at 1218 n.13. The Court recognized, however, that under 28 U.S.C. § 1603(a), the Ministry of Defense “also qualified as a ‘foreign state’ for purposes of the FSIA.” Id. The United States believes, under the “core function” test described above, that governmental entities like the Brazilian Consulate General here are properly deemed to be the “foreign state” for purposes of determining the applicable attachment provision of the FSIA.



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