(dissenting). It was error to deny the motion to *64vacate the default taken against the Central Bank of Iraq (CBI) on its guarantees of loans issued by plaintiff Hyundai Corporation, on the reasoning that CBI had failed to demonstrate a reasonable excuse for the failure to respond.
In litigation against a foreign state or its agents or instrumentalities, such as defendant Central Bank of Iraq, the Foreign Sovereign Immunities Act (FSIA) (28 USC § 1602 et seq.) controls whether the action is litigated in a state or a federal court. Inasmuch as the FSIA imposes stricter-than-usual limits on a plaintiff seeking a default judgment against a foreign state (see 28 USC § 1608 [e]), I would hold that even though the FSIA lacks a specific provision regarding the vacatur of defaults against a foreign sovereign, the policy behind section 1608 (e) and the FSIA generally requires that foreign sovereigns seeking to vacate defaults against them must satisfy only the requirements of federal law, rather than the strict procedural requirements óf our state law under CPLR 5015.
FACTS
On October 8, 1984, Hyundai Corporation agreed to lend defendant Electrical Projects Company (EPC), then known as the State Organization of Electricity of the Ministry of Industry and Minerals of the Republic of Iraq, over $100 million for the construction of the Al Mussaib Thermal Power Station (the Al-mus Agreement). The loan was made and EPC executed a series of promissory notes, which defendant CBI guaranteed.
Since August 1990, in the wake of UN-imposed sanctions on Iraq following its invasion of Kuwait, no payments have been made to Hyundai, nor has CBI made any payment under its guarantees. Ongoing discussions continued, however, as to the calculation of the amounts owed and the need to await the lifting of sanctions before payments could be made.
On December 2, 1997, plaintiffs brought the instant lawsuit against Iraq, EPC and CBI, seeking $66,254,966.95 plus prejudgment interest under the Almus Agreement, the promissory notes and the guarantees. The complaint was properly served under the Foreign Sovereign Immunities Act (28 USC § 1608). CBI received the complaint in April 1998.
Defendants obtained three extensions of their time to answer; that time finally expired on November 20, 1998 without service of an answer. On August 27, 1999, plaintiffs moved for a default judgment. CBI received notice of the motion on September 7, 1999 but did not respond. On December 13, 1999, a default *65judgment in the amount of $70,184,580 was entered against defendants.
CBI then made the underlying motion to vacate the default judgment and to dismiss the action pursuant to CPLR 3211 based on the statute of limitations. The motion court denied CBI’s motion, remarking that although the statute of limitations defense “may be meritorious,” CBI lacked a reasonable excuse for its failure to answer the complaint, as is required by CPLR 5015 to vacate a default judgment. I would reverse and direct the motion court to determine the merits of the motion to dismiss, irrespective of the existence of a reasonable excuse.
DISCUSSION
The federal Foreign Sovereign Immunities Act (28 USC § 1602 et seq.) is controlling when litigation is brought against a foreign state or its agents or instrumentalities, such as defendant Central Bank of Iraq. This is so regardless of whether the action is litigated in a state or a federal court. In particular, FSIA § 1608 (e) controls the entry of default judgments against an agency or instrumentality of a foreign state, providing that: “No judgment by default shall be entered by a court of the United States or of a State against a foreign state, a political subdivision thereof, or an agency or instrumentality of a foreign state, unless the claimant establishes his claim or right to relief by evidence satisfactory to the court.” The provision was modeled after rule 55 (e) of the Federal Rules of Civil Procedure, with the intention of “provid[ing] foreign sovereigns with the same protection from default judgments that the [United States] government enjoys” (see Commercial Bank of Kuwait v Rafidain Bank, 15 F3d 238, 242 [1994]; see also Compania Interamericana Export-Import, S.A. v Compania Dominicana de Aviacion, 88 F3d 948 [1996]). Therefore, when considering an application by a foreign sovereign to vacate a default taken against it, the standard which ought to be applied is that which would be applicable if the movant were the United States government.
When default judgments are entered against the United States government, applications to vacate the default are routinely granted wherever a meritorious defense is demonstrated, without regard to the reasons for the default.
“Mere failure on the part of the United States to answer a complaint is no ground for entry of judg*66ment against it. ‘When the government’s default is due to a failure to plead . . . the court typically either will refuse to enter a default or, if a default is entered it will be set aside.’ C. Wright & A. Miller, Federal Practice and Procedure § 2702 (2d Ed.1983). The rationale for Rule 55 (e) lies in the fact that it is ultimately the public which bears the cost of the default judgment entered against the Government. The public should not be made to shoulder the burden of a windfall judgment that befalls the Government’s adversary.” (Atkins v United States, 1990 WL 126196, *2, 1990 US Dist LEXIS 11310, *6-7 [US Dist Ct, D NJ, Wolin, J., Aug. 27, 1990] [citations omitted].)
Therefore, under the FSIA, as long as the foreign sovereign successfully demonstrates a meritorious defense, courts deny entry of a default judgment or set aside any default that was already entered (see e.g. Practical Concepts, Inc. v Republic of Bolivia, 811 F2d 1543 [1987]; Carl Marks & Co., Inc. v Union of Soviet Socialist Republics, 665 F Supp 323 [SD NY 1987], affd 841 F2d 26 [1988], cert denied 487 US 1219 [1988]; Walpex Trading Co. v Yacimientos Petroliferos Fiscales Bolivianos, 109 FRD 692 [SD NY 1986]; Jackson v People’s Republic of China, 794 F2d 1490 [11th Cir 1986], cert denied 480 US 917 [1987]).
Indeed, even though federal law holds that the question of whether the default was willful is one of the factors to consider in deciding whether to set it aside (see National Bank of Kuwait, S.A.K. v Rafidain Bank, 1994 WL 376037, *2, 1994 US Dist LEXIS 9817, *4-5 [US Dist Ct, SD NY, Patterson, J., July 19, 1994, No. 93 Civ 3324 (RPP)], citing Meehan v Snow, 652 F2d 274, 277 [2d Cir 1981] and Traguth v Zuck, 710 F2d 90, 94 [2d Cir 1983]), a finding of willfulness is virtually irrelevant where a meritorious defense is established, since “[a] default judgment is not appropriate if there exist meritorious defenses to the claims asserted” (see National Bank of Kuwait, S.A.K. v Rafidain Bank, 1994 WL 376037, *3, 1994 US Dist LEXIS 9817, *8, citing Wagstaff-EL v Carlton Press Co., 913 F2d 56, 57 [2d Cir 1990], cert denied 499 US 929 [1991] and Securities & Exch. Commn. v Hasho, 134 FRD 74, 77 [SD NY 1991]).
This liberal policy of vacating defaults against foreign states is explained by then-Circuit Judge Ginsburg in Practical Concepts, Inc. v Republic of Bolivia:
“[I]t is in the interest of United States’ foreign *67policy to encourage foreign states to appear before our courts in cases brought under the FSIA. When a defendant foreign state has appeared and asserts legal defenses, albeit after a default judgment has been entered, it is important that those defenses be considered carefully and, if possible, that the dispute be resolved on the basis of all relevant legal arguments.” (811 F2d at 1551-1552 [emphasis added].)
Essentially, federal policy requires that “when the government is a party to litigation, substance should trump procedure” (Stewart v United States Postal Serv., 649 F Supp 1531, 1535 [SD NY 1986]).
Despite these clear expressions of strong federal policy requiring courts to address the merits of legal claims against foreign governmental entities even after a default has been entered against them, this Court now holds that the merits of such a dispute need not be addressed where the foreign sovereign fails to satisfy our state procedural requirement that a litigant seeking to vacate a default demonstrate a “reasonable excuse” for the failure to respond (see CPLR 5015). The majority particularly relies upon the lack of any provision in the FSIA defining the standard for vacating a default granted under the Act.
It is true that while 28 USC § 1608 (e) explicitly preempts state law concerning the entry of a default judgment against a foreign sovereign, it says nothing about preempting state law regarding vacatur of a default judgment. Yet, “[flmplied conflict preemption may be found . . . when the state law . . . stan[ds] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress” (Matter of Delta Air Lines v New York State Div. of Human Rights, 91 NY2d 65, 71 [1997] [internal quotation marks omitted], quoting Guice v Charles Schwab & Co., 89 NY2d 31, 39 [1996], cert denied 520 US 1118 [1997], quoting Barnett Bank of Marion Cty., N.A. v Nelson, 517 US 25, 31 [1996]).
The federal courts have clearly enunciated a federal policy of ensuring that foreign states are provided with the same protections against default judgments as those applicable to the United States government, irrespective of a failure to timely oppose them. Given the policy concern so clearly articulated by Justice Ginsburg in Practical Concepts, encouraging the consideration of all relevant legal arguments in actions falling under the FSIA, even after a default judgment was entered, which policy has been carried out in a wide array of cases, it would make no *68sense to impose a uniform body of federal law to protect foreign sovereigns against the entry of default judgments, but leave it up to the states to undermine that policy by applying differing and potentially more restrictive standards to the vacatur of those same default judgments. We should recognize that enforcing our state procedural rule, which only permits vacating a default if a showing of a reasonable excuse has been made (CPLR 5015), is completely contrary to this federal policy regarding the treatment of defaults against foreign governments.
Moreover, if defaults against foreign sovereigns are to be treated identically to defaults taken against the United States government, we cannot permit different results to ensue depending upon whether the default is obtained in a state court or a federal court.
New York City serves as a mecca of international commerce in this global economy, with foreign sovereigns frequently acting as direct parties to that commerce. Indeed, our state court system has created commercial courts to knowledgeably handle specialized commercial litigation, including that which involves foreign sovereigns. Forcing foreign sovereigns to navigate a maze of state procedural rules, when their litigation is otherwise controlled by federal statute and related case law which establishes an overarching approach to dealing with such litigation, constitutes an ill-advised provincial approach to an issue that has national and international concerns. It also creates the possibility that foreign sovereigns involved in legal disputes will be disinclined to litigate in our state courts.
The majority blithely suggests that its ruling lends stability and predictability to New York’s law. However, this assertion is nothing but a tautology: any ruling of the majority would, by definition, lend stability to the law. Indeed, were the view of this dissent adopted as the majority ruling, it would create the same degree of stability for future litigants. Nor may the majority properly claim to be offering “stability” by providing a reading of the clear language of the statute. Both the majority’s reasoning and that expressed in this dissent offer an interpretation of the intent of the FSIA insofar as it expressly sets out rules for obtaining a default judgment against a foreign sovereign but says nothing about vacating such defaults. As to the majority’s implication that the ruling we suggest would constitute a capricious “interpretation du jour,” on the contrary, the holding we propose would create a consistent application of federal law to *69litigation under the FSIA, rather than promoting an unpredictable application of some state procedural rules in a context otherwise covered by federal law.
Our state procedural requirement should be put aside here, in favor of the protections afforded the United States government in federal court, which rejects procedural requirements regarding justifications for defaulting, in favor of ensuring that claims against the government are decided on the merits whenever a potentially meritorious defense is demonstrated.
Nor should CBI be held to a different standard simply because, having spent years trying to settle the claim, it failed to remove the case to federal court.
Accordingly, I would remit this matter to the motion court for a determination of merits of the statute of limitations defense.
Sullivan and Nardelli, JJ., concur with Marlow, J.; Saxe, J.P., and Catterson, J., dissent in a separate opinion by Saxe, J.P.
Order, Supreme Court, New York County, entered November 30, 2001, affirmed, without costs.