United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT August 23, 2006
Charles R. Fulbruge III
Clerk
No. 05-50290
AF-CAP INC,
Plaintiff - Appellant,
v.
THE REPUBLIC OF CONGO,
Defendant,
CMS NOMECO CONGO INC; THE NUEVO CONGO CO; NUEVO CONGO LTD,
Garnishees - Appellees.
05-50782
cons. w/ 05-51168
AF-CAP INC,
Plaintiff - Appellee,
v.
THE REPUBLIC OF CONGO,
Defendant -Appellant.
Appeal from the United States District Court
for the Western District of Texas
Before DEMOSS, BENAVIDES, and PRADO, Circuit Judges.
BENAVIDES, Circuit Judge:
This appeal concerns an ongoing battle by Af-Cap, Inc. to
receive payment from the Republic of Congo on an outstanding debt.
At issue are (1) the district court’s dissolution of garnishment
writs that would have allowed Af-Cap to garnish royalties owed to
the Congo; (2) a turnover order that requires the Congo to receive
monetary payment (as opposed to in kind payment) of the royalties
and requires its debtors to pay the royalties into the court
registry; and (3) a contempt order against the Congo for failing to
comply with the turnover order.
I. FACTUAL AND PROCEDURAL BACKGROUND
In 1984, Equator Bank Limited, Af-Cap’s predecessor-in-
interest, loaned the Congo funds for building a highway.1 The
following year, the Congo defaulted on the loan. More than ten
years later, Connecticut Bank of Commerce (“CBC”), an assignee of
Equator Bank, obtained a judgment against the Congo in England.
The Congo did not make the payments required by the judgment and,
as a consequence, CBC proceeded to enforce the judgment in the
United States. In 2000, a New York state court entered a money
judgment against the Congo in the amount of $13,628,340 plus
interest. Subsequently, the New York court entered an order
permitting attachment and execution against the assets of the Congo
1
In the loan agreement, the Congo agreed that any suit
arising out of the loan could be brought in England or New York.
2
in satisfaction of the judgment.
In 2001, CBC registered the New York judgment in a Texas state
court and simultaneously filed a garnishment action. CBC alleged
that CMS Nomeco Congo, Inc., The Nuevo Congo Company, and Nuevo
Congo Ltd. (the “CMS Companies”), among others, owed royalties and
taxes to the Congo and sought to garnish those obligations to
satisfy the judgment. The CMS Companies own working interests in
a convention (the “Convention”) that governs oil production in
Congolese waters. Under the Convention, the interest owners pay
the Congo royalties, which accrue when oil is taken from Congolese
territory. The Congo chooses the method of payment for these
royalties, either cash or “in kind” oil. Since 1999, the Congo has
opted to receive 100 percent of its payments “in kind.” The state
court, ex parte, issued writs of garnishment.
The Congo and the CMS Companies removed the action to the
United States District Court for the Western District of Texas. In
an order dated March 16, 2001, the district court held that the
Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602 (2000),
prohibited garnishment of the in kind royalties and tax
obligations. This Court vacated that decision, recognizing that
the property at issue could fall within an exception to FSIA if the
property was used by the Congo in conjunction with commercial
activity in the United States. Conn. Bank of Commerce v. Republic
of Congo, 309 F.3d 240 (5th Cir. 2002). The case was remanded for
3
further factual development with regard to whether the property was
used for “commercial activity.”2
On remand, the district court found that the Congo did not use
its royalties and tax obligations for commercial activity. In
doing so, the court dissolved the writs of garnishment against the
CMS Companies. On appeal, this Court vacated the district court’s
decision, holding that the obligations at issue had been used for
a “commercial activity” because the Congo used some of the
obligations to settle a lawsuit with the National Union Fire
Insurance Company (“NUFI”). Af-Cap Inc. v. Republic of Congo, 383
F.3d 361, amended on rehearing, 389 F.3d 503 (5th Cir. 2004)
(hereinafter “Af-Cap II”). It also found that the situs of the
obligations was the United States. Id. at 373. This Court again
remanded, this time instructing the district court to determine
which obligations had been used to pay the NUFI debt. Only those
obligations would fall within the “commercial activity” exception.
Id.
Following the remand, the district court denied a motion to
reinstate the original writs of garnishment3 and, instead, issued
2
By this time, Af-Cap had acquired the debt at issue. It is
the sixth owner of the debt.
3
This Court denied a petition for writ of mandamus on this
issue. See In re Af-Cap Inc., No. 04-51357, slip. op. at 2 (5th
Cir. Dec. 20, 2004) (“We have every confidence in the district
court’s ability to properly understand and apply our mandate
against the backdrop of the troublesome complexities presented in
the garnishment proceedings.”).
4
new writs. Shortly thereafter, however, the district court
dissolved the new writs. In doing so, the court found that the
nonmonetary obligations owed by the CMS Companies were not proper
subjects of garnishment under Texas law. In the same decision, the
district court held that Texas law allowed a “turnover order,” as
an alternative method of attachment. The court issued a turnover
order on February 22, 2005 that purports to (1) take “possession
and control of all future royalty obligations owed to the Congo,”
(2) “order[] the Congo to turn over such royalty payments into the
registry of the Court,” and (3) order the Congo “to execute in
three originals within three days the attached letter of
instruction . . . from the Congo to the parties who pay royalties
under the Convention to the Congo revoking prior instructions
regarding payment of royalty and instructing that the royalty be
paid in cash into the registry of the Court.” The royalties were
to be applied in favor of Af-Cap until the judgment was satisfied.
In response to the turnover order, the Congolese Ministry of
Foreign Affairs and Francophony sent a letter to the district court
stating that the Congo would not follow the order because it
violated the country’s sovereignty. The district court then issued
an order directing the clerk of court to execute a letter of
instruction, directing the CMS Companies to pay royalty obligations
to the court’s registry. On July 1, 2005, the district court found
the Congo in contempt for failing to comply with the turnover
order. Neither the Congo nor the CMS Companies has complied with
5
the orders and the Congo remains in contempt.
The parties timely appealed (1) the order dissolving the writs
of garnishment, (2) the turnover order, and (3) the contempt order.
We consolidated the three appeals for oral argument and likewise do
so now for disposition.
II. STANDARD OF REVIEW
For the contempt issue, the standard of review is abuse of
discretion. United States v. City of Jackson, 359 F.3d 727, 731
(5th Cir. 2004). The underlying findings of fact are reviewed for
clear error, and the underlying conclusions of law are reviewed de
novo. Id. For all of the remaining issues, the standard of review
is de novo because the issues raise questions of law. Randel v.
U.S. Dep't of the Navy, 157 F.3d 392, 395 (5th Cir. 1998). Given
that this is a diversity case, this Court must apply the law of
Texas. See Erie R. Co. v. Tompkins, 304 U.S. 64, 79–80 (1938). If
the law is unclear, this Court must predict how the Texas Supreme
Court would rule. See Herrmann Holdings Ltd. v. Lucent Techs.
Inc., 302 F.3d 552, 558 (5th Cir. 2002). When necessary, the
standard of review is discussed in greater detail below.
III. DISCUSSION
A. Garnishment Action
The first issue of this consolidated appeal is whether the
district court erred by dissolving the writs of garnishment on the
ground that Texas law does not allow the garnishment of nonmonetary
6
obligations.
Garnishment actions in Texas are “purely statutory” and courts
have no power to extend the benefits of garnishment beyond the
relief available under statute. Beggs v. Fite, 106 S.W.2d 1039,
1042 (Tex. 1937); see also 17 TEX. JUR. 3D Creditors’ Rights and
Remedies § 359 (1998). The Texas garnishment statute, however,
does not address the question posed here. See TEX. CIV. PRAC. & REM.
CODE ANN. ch. 63 (Vernon 1997). It makes no mention of nonmonetary
debts. Likewise, no Texas case has specifically considered whether
a nonmonetary obligation can be subject to garnishment.
1. Texas Does Not Allow Garnishment of Nonmonetary
Obligations
Our analysis of this issue is guided by the fact that
garnishment has been “long considered [a] harsh remed[y]” by Texas
courts. Varner v. Koons, 888 S.W.2d 511, 513 (Tex. App.—El Paso
1994, orig. proceeding); cf. Beggs, 106 S.W.2d at 1042 (describing
garnishees as “strangers” to an action who are subjected to
“inconvenience and hazard”). Indeed, Texas case law requires us to
“strictly construe” the Texas garnishment statute. See Varner, 888
S.W.2d at 513. Given this task of “strict construction,” we find
that expanding the garnishment statute to cover nonmonetary
obligations goes too far. This holding conforms with the principle
that courts do not have the equitable power to expand the purely
statutory garnishment remedy. Beggs, 106 S.W.2d at 1042.
7
Our conclusion is informed by Texas Rule of Civil Procedure
668, which provides that in the event it is determined that “the
garnishee is indebted to the defendant in any amount, or was so
indebted when the writ of garnishment was served, the court shall
render judgment for the plaintiff against the garnishee for the
amount so admitted or found to be due to the defendant from the
garnishee.” TEX. R. CIV. P. 668 (emphasis added). This rule does
not contemplate indebtedness as encompassing obligations other than
money. See Waples-Platter Grocer Co. v. Tex. & Pac. Ry., 68 S.W.
265, 266 (Tex. 1902) (holding that an unliquidated claim for breach
of contract cannot be garnished); Willis v. Heath, 12 S.W. 971, 972
(Tex. 1889) (holding that a negotiable promissory instrument cannot
be garnished). Indeed, Texas courts define the term “debt” as a
“specified sum of money owing to one person from another.” See
Seay v. Hall, 677 S.W.2d 19, 23 (Tex. 1984), superseded by statute
on other grounds as stated in Palmer v. Coble Wall Trust Co., 851
S.W.2d 178, 181 (Tex. 1992). Given that the CMS Companies have a
nonmonetary obligation to pay in kind oil to the Congo, it cannot
be garnished under Texas law.
Af-Cap has failed to point this Court to any authority that
proves Texas allows the garnishment of nonmonetary debts. Instead,
it mistakenly relies on authority related to “effects.” The Texas
garnishment statute contemplates garnishment of (1) debts, money
owed to a defendant, and (2) effects, tangible property owned by
8
the defendant in possession of the garnishee. See TEX. CIV. PRAC. &
REM. CODE ANN. § 63.003(a) (“After service of a writ of garnishment,
the garnishee may not deliver any effects or pay any debt to the
defendant.”). The only way the “effects” provision could be
applicable here is if a physical object in the possession of the
CMS Companies were the subject of this garnishment. That is simply
not the case. Indeed, this Court already determined in Af-Cap II
that the royalty obligation at issue does not have physical
characteristics. 383 F.3d at 371 (“[T]his property is intangible
in nature.”). Therefore, the issue before us concerns a debt, and
the “effects” authority relied upon by Af-Cap is inapposite.4
To conclude, this case turns on the fact that the obligation
at issue is nonmonetary. The CMS Companies, operating under the
Convention, do not owe money to the Congo; they owe oil. Af-Cap
does not ask this Court to allow it to garnish that oil, assuming
it could do so under the FSIA, and instead seeks to be the
beneficiary of the nonmonetary obligation. As explained above,
4
Af-Cap relies on McClung v. Watson, 165 S.W. 532, 535 (Tex.
Civ. App.—Amarillo 1914, no writ), where the court held that a
creditor could garnish certain livestock owned by the debtor but
in possession of the garnishee. It also relies on Jamison v.
Nat’l Loan Investors, L.P., 4 S.W.3d 465, (Tex. App.—Houston [1st
Dist.] 1999, pet. denied), where the court described garnishment
as “a statutory proceeding whereby the property, money, or
credits of a debtor in the possession of another are applied to
the payment of a debt.” Id. at 468 (emphasis added). Both of
these cases reference “effects,” that is physical property owned
by the defendant in possession of the garnishee, rather than
nonmonetary, intangible obligations.
9
Texas does not allow garnishment of this type of debt. Therefore,
the district court did not err in dissolving the writs of
garnishment.
2. Af-Cap’s Other Arguments Fail
Af-Cap also argues that the district court’s holding
contravenes the law of the case. “[U]nlike res judicata, the law
of the case doctrine applies only to issues that were actually
decided, rather than all questions in the case that might have been
decided, but were not.” Alpha/Omega Ins. Servs. v. Prudential Ins.
Co. of Am., 272 F.3d 276, 279 (5th Cir. 2001). An issue is
“actually decided” if the court explicitly decided it or
necessarily decided it by implication. Id. Af-Cap II only
addressed whether the obligations at issue were immune from
garnishment under FSIA. There is nothing in Af-Cap II that
interprets state garnishment law. Therefore, the district court
correctly questioned whether such an obligation could be
garnishable in Texas.
Af-Cap also argues that, as a plaintiff in a garnishment
action, it can “step[] into the shoes” of the Congo and elect to
receive the royalty payments in cash. See Rowley v. Lake Area
Nat'l Bank, 976 S.W.2d 715, 719 (Tex. App.—Houston [1st Dist.]
1998, pet. denied). This reasoning, however, ignores the
chronology of a garnishment proceeding. The writs at issue must
first capture a debt before a garnishor can step into the shoes of
10
the creditor. If this were not the rule, would-be garnishors could
manipulate assets so that a writ could attach. Here, the writs
failed to capture anything, given that the obligation is
nonmonetary. Therefore, Af-Cap has no authority to request payment
in cash.
B. The Turnover Order
The second issue in this consolidated appeal is whether the
district court erred in granting the turnover order that requires
the Congo to accept its royalty payments in cash and order its
debtors to make those payments to the court registry.
The parties dispute the standard of review for this issue,
with the Congo arguing for de novo review and Af-Cap arguing for
abuse of discretion. A combination of the two is required. While
the entry of a turnover order is reviewed for an abuse of
discretion, a district court necessarily abuses its discretion if
its conclusion is based on an erroneous determination of the law.
Maiz v. Virani, 311 F.3d 334, 338 (5th Cir. 2002). This Court
reviews questions of law de novo. Randel, 157 F.3d at 395. It
should be noted, however, that a trial court’s issuance of a
turnover order, even if predicated on an erroneous conclusion of
law, will not be reversed for abuse of discretion if the judgment
is sustainable for any reason. Maiz, 311 F.3d at 338.
In Texas, a court may order a judgment debtor “to turn over
nonexempt property that is in the debtor’s possession or is subject
11
to the debtor’s control.” TEX. CIV. PRAC. & REM. CODE ANN. § 31.002
(Vernon 1997). Such an order can be enforced “by contempt
proceedings or by other appropriate means in the event of refusal
or disobedience.” Id. The statute is “the procedural device by
which judgment creditors may reach assets of a debtor that are
otherwise difficult to attach or levy on by ordinary legal
process.” Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 224 (Tex.
1991).
1. The District Court Did Not Have In Personam Jurisdiction
Over the Congo
The dissolution of the writs of garnishment and creation of
the turnover order require this Court to find a new justification
for jurisdiction in this case. In Af-Cap II, this Court found
jurisdiction based on the fact that the obligations were held by
the CMS Companies who were located in the United States, and Texas
specifically. Af-Cap II, 383 F.3d at 371–73. With the turnover
order, the district court bypasses the CMS Companies and directly
orders the Congo to act. To find in personam jurisdiction, this
Court must look to the FSIA, which “provides the sole basis for
obtaining in personam jurisdiction over a foreign state.”
Hashemite Kingdom of Jordan v. Layale Enters., S.A. (In re B-727
Aircraft Serial No. 21010), 272 F.3d 264, 270 (5th Cir. 2001). In
Af-Cap II, this Court looked at the FSIA rules for property under
§ 1610(a); this Court now must look at rules for in personam
12
jurisdiction under § 1605(a). As explained below, the FSIA does
not allow in personam jurisdiction over the Congo.5
Section 1605(a) has two relevant provisions to the present
case. See 28 U.S.C. § 1605(a)(1) & (2). In § 1605(a)(1), personal
jurisdiction over a foreign state exists if the state “has waived
its immunity either explicitly or by implication.” Id. at §
1605(a)(1). In § 1605(a)(2), personal jurisdiction over a foreign
state exists in certain “commercial activity” situations. Id. at
§ 1605(a)(2). Beginning with § 1605(a)(2), the “commercial
activity” exception is foreclosed by reasoning used in Af-Cap II.
The Af-Cap II Court held that the situs requirement—required under
both § 1610 and § 1605—was only possible because the CMS Companies,
holding property of the Congo, were located in the United States.
Under an analysis of the turnover order, however, the CMS Companies
and the property they hold is not considered. The district court,
by dissolving the writs and replacing them with a turnover order,
lost the original foothold for jurisdiction. The “commercial
activity” exception does not apply to the Congo.
Turning to § 1605(a)(1), the loan agreement does not
explicitly waive immunity to suit in Texas. (Loan Agreement,
5
Af-Cap suggests that the turnover order should not be a
problem because “a virtually identical turnover order” was
entered into by the Northern District of Illinois in the NUFI
case. Unlike the present turnover order, however, the Congo
consented to the Illinois order. Therefore, the Congo waived any
potential personal jurisdiction argument in the NUFI case.
13
§ 19). The issue is therefore whether the Congo has implicitly
waived immunity to suit in Texas. This Court has identified three
circumstances in which a waiver is ordinarily implied: “(1) a
foreign state agrees to arbitration in another country; (2) the
foreign state agrees that a contract is governed by the laws of a
particular country; (3) the state files a responsive pleading
without raising the immunity defense.” Rodriguez v. Transnave
Inc., 8 F.3d 284, 287 (5th Cir. 1993) (internal citation omitted).
None of these circumstances is present in this case. First, there
is no arbitration agreement. Second, the loan agreement states
that it is to be governed by English law, not United States law.
Third, the pleadings with regard to the turnover order have
consistently raised an immunity defense. If this Court wanted to
go outside of the three ordinary circumstances, it must still
“narrowly construe” the implicit waiver clause of § 1605(a)(1).
Rodriguez, 8 F.3d at 287 (“[C]ourts rarely find that a nation has
waived its sovereign immunity without strong evidence that this is
what the foreign state intended.”).
In the case at hand, there is no evidence, and certainly no
strong evidence, that the Congo implicitly waived immunity to suit
in Texas. Af-Cap has failed to argue, much less show, how in
personam jurisdiction is appropriate in Texas. Because the
district court erroneously held that the Congo waived its immunity,
it abused its discretion. Therefore, the turnover order is
14
vacated.6
2. The Fugitive Disentitlement Doctrine Does Not Require
Dismissal of this Appeal
By motion dated May 27, 2005, Af-Cap argued that the Congo’s
noncompliance with the turnover order should result in the
dismissal of this appeal pursuant to the fugitive disentitlement
doctrine. We carried the motion with the merits of the appeal and
consider it now. As explained below, we will not extend the
fugitive disentitlement doctrine as contemplated by Af-Cap.
This Court has held that “[a]s a general matter, willful
flouting of the judicial system on the part of one seeking
appellate redress should not go wholly unrecognized.” United
States v. DeValle, 894 F.2d 133, 134 (5th Cir. 1990). The fugitive
disentitlement doctrine embodies that principle and limits a
party’s “access to the judicial system whose authority he evades.”
Bagwell v. Dretke, 376 F.3d 408, 410 (5th Cir. 2004). The
doctrine, however, is a “blunt” instrument that should not be
applied without serious forethought. Degen v. United States, 517
U.S. 820, 828 (1996).
In the present case, the policy concerns associated with the
doctrine are not served. The underlying foundation of the doctrine
is that it deters “disrespect for the legal process.” Ortega-
Rodriguez v. United States, 507 U.S. 234, 246 (1993). Sovereignty
6
We base our holding on the lack of personal jurisdiction
and do not address alternative arguments raised by the Congo.
15
assertions, however, are different than blatant disrespect for the
legal process. As explained above, the Congo correctly believed
that under the FSIA the district court lacked in personam
jurisdiction. The Congo asserts that its position was not designed
to be disrespectful. As evidence of that fact, it points to the
Congolese minister who promptly informed the court that the country
would not obey the turnover order because of sovereignty concerns.
In addition, Af-Cap has failed to cite a single case in which
the doctrine has been used against a foreign state.7 In contrast,
at least two cases exist in which foreign instrumentalities have
refused to comply with injunctions, yet nonetheless have had their
appeals heard. See Karaha Bodas Co. v. Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara, 335 F.3d 357, 366–76 (5th Cir. 2003);
Philippine Nat’l Bank v. U.S. Dist. Court for the Dist. of Hawaii
(In re Philippine Nat’l Bank), 397 F.3d 768, 772–75 (9th Cir.
2005). For these reasons, the fugitive disentitlement doctrine
does not require dismissal of this appeal.
3. The Law of the Case Does Not Prevent Consideration of
Whether the Turnover Order Is Barred by the FSIA
Af-Cap also argues that the law of the case should prevent
this Court from considering the Congo’s arguments under the FSIA.
Af-Cap II, however, only considered FSIA compliance with regard to
7
Af-Cap claims that the doctrine was used against a foreign
instrumentality in United States v. Crawford Enterprises, Inc.,
643 F.Supp. 370, 382 (S.D. Tex. 1986). A review of that case,
however, shows no use of the doctrine.
16
the garnishment of the royalty obligations. The Congo now asks for
consideration of the turnover order under the FSIA. As stated
above, the turnover order raises unique FSIA issues. Supra Part
III.B.1. For these reasons, the law of the case does not prohibit
this Court from considering the FSIA as it applies to the turnover
order.
C. The Contempt Order
The third issue in this consolidated appeal is whether the
district court erred in holding the Congo in contempt.
The district court entered the contempt order on July 1, 2005
after the Congo alerted the court that it would not comply with the
turnover order. The court ordered the Congo to pay $10,000 per day
into the registry of the district court until it complied with the
turnover order. It further stated that if the Congo continued to
ignore the turnover order for sixty days, the Congo would be
required to send written notice to its business associates in the
United States informing them of the amount of outstanding judgment
in the case and of the Congo’s contempt of court.8
8
The United States, as amicus curiae, argues that the
district court erred in imposing contempt sanctions against the
Congo. In foreign sovereignty cases, such as this one, the
government’s view is entitled to deference. Republic of Mexico
v. Hoffman, 324 U.S. 30, 35 (1945) (“‘In such cases [concerning a
foreign state’s immunity] the judicial department of this
government follows the action of the political branch, and will
not embarrass the latter by assuming an antagonistic
jurisdiction.’”) (quoting United States v. Lee, 106 U.S. 196,
209, (1882)); see also Magness v. Russian Fed’n, 247 F.3d 609,
619 (5th Cir. 2001) (interpreting a legal issue under the FSIA in
17
1. The FSIA Bars the Contempt Order
The FSIA creates the sole method for obtaining jurisdiction
over a sovereign state. Republic of Austria v. Altmann, 541 U.S.
677, 691 (2004). It also provides the sole, comprehensive scheme
for enforcing judgments against foreign sovereigns in civil
litigation. 28 U.S.C. § 1609. The legislative history surrounding
the FSIA specifically discusses contempt orders and states that
they “may be unenforceable if immunity exists.” H.R. Rep. No. 94-
1487, at 22 (1976), reprinted in 1976 U.S.C.C.A.N. 6604.
The contempt order, as written, does not fall within the
provisions of the FSIA. A review of the relevant sections, § 1610
and § 1611, shows that they do not present a situation in which the
order could stand. Those sections describe the available methods
of attachment and execution against property of foreign states.
Monetary sanctions are not included. Therefore, in issuing the
contempt order, the district court relied on an erroneous
conclusion of law. As such, the court abused its discretion, and
the contempt order is vacated.
2. The FSIA Allows Rights Without Remedies
Because we base our holding on the FSIA, we need not reach
other issues raised by the parties.9 We note, however, an error in
light of the government’s position expressed in an amicus brief).
9
The government argues that equitable principles and
international practice also require vacating the order.
18
the district court’s reasoning so that future courts will not
repeat it. In granting the contempt order, the district court
reasoned that Congress must have intended to authorize money
sanctions against foreign states when it authorized the issuance of
injunctive relief against them. That reasoning is flawed. Under
the FSIA, a court’s power to make an order does not always entail
a power of enforcement by sanctions. See De Letelier v. Republic
of Chile, 748 F.2d 790, 798–99 (2d Cir. 1984) (rejecting the
argument that Congress could not have intended in the FSIA to
“create a right without a remedy”).
IV. FG Hemisphere Associates v. The Republique de Congo
This Court recently issued an opinion in a related matter, FG
Hemisphere Associates v. Republique du Congo, _ F.3d _, 2006 WL
1883987 (5th Cir. July 10, 2006) (hereinafter “FG Hemisphere”).
Like the case at hand, FG Hemisphere concerned the appropriateness
of garnishment writs targeting debts owed by the CMS Companies to
the Congo. That case focused on the issue of when a district court
should determine the situs of the CMS Companies for purposes of the
FSIA.10 Id. at *11. It held that a court must determine the situs
10
The situs has great relevance in an FSIA determination
because a court can only attach a foreign state’s property if
that property is in the United States. 28 U.S.C. § 1610(a). In
Af-Cap II, this Court found that situs for the present case was
in the United States because the debtors (the CMS Companies) and
the debt were located in Texas. Af-Cap II, 383 F.3d at 371–73.
The CMS Companies argued in FG Hemisphere, and now argue here,
that the situs has changed because it (and its debts) are now
found in Europe. In July 2004, the Perenco Group, headquartered
19
when it decides whether an FSIA exception to immunity applies. Id.
After finding that the court had not done the appropriate situs
determination at the appropriate time, the FG Hemisphere Court
reversed the district court’s order granting writs of garnishment.
Id. at *18.
The FG Hemisphere opinion was issued after we heard oral
argument in this case. The parties filed supplemental briefing
specifically addressing how FG Hemisphere affects the consolidated
appeals now before us. Having reviewed their arguments, we decide
not to reach the issues raised by FG Hemisphere and instead rely on
the authority cited above, supra Part III. Applying FG Hemisphere
would neither change the fact that Texas law does not allow
garnishment of nonmonetary obligations11 nor alleviate the FSIA
errors committed by the district court with regard to the turnover
and contempt orders. We therefore do not provide alternative
holdings based on whether the district court made situs
determinations at the appropriate times.
V. CONCLUSION
To summarize, we hold that the garnishment of nonmonetary
obligations is not appropriate under Texas law. Likewise, a
in Europe, purchased the CMS Companies.
11
Under Af-Cap II, we have jurisdiction to consider the
garnishment writs. 383 F.3d at 373 (holding that the obligations
“are not protected by sovereign immunity”). Contrary to the CMS
Companies’ assertions, nothing requires us to disrupt that
holding.
20
turnover order is not an appropriate remedy in this action because
the district court did not have personal jurisdiction over the
Congo. Finally, the contempt order is not permissible under the
FSIA. For the reasons outlined above, we AFFIRM the district
court’s decision to dissolve the garnishment writs; VACATE the
turnover order; and VACATE the contempt order. We REMAND to the
district court for proceedings consistent with this opinion. The
motion filed by appellee to dismiss the appeal is denied.
21
Af-Cap, Inc. v. Republic of Congo
Court: Court of Appeals for the Fifth Circuit
Date filed: 2006-08-23
Citations: 462 F.3d 417
Copy CitationsCombined Opinion