D.C. Circuit finds foreign sovereign immunities act does not preclude contempt sanctions on foreign state for noncompliance with discovery orders.

Author:Crook, John R.
Position:State Jurisdiction and Immunities
 
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In March 2011, the U.S. Court of Appeals for the D.C. Circuit held that the Foreign Sovereign Immunities Act (FSIA) (1) does not preclude a district court from imposing contempt sanctions against the Democratic Republic of the Congo (DRC) for failure to comply with discovery orders. (2)

The case, FG Hemisphere Associates, LLC v. Democratic Republic of Congo, grows out of the DRC's seeming unwillingness or inability to protect its interests in litigation. As described in the Court's opinion, the plaintiff's predecessor in interest brought two arbitrations against the DRC in 2003, stemming from nonpayment of amounts due under a 1980 agreement to finance construction of an electric power transmission facility. The DRC did not participate in the arbitrations. Awards were entered against it in both cases. The claimant then sued to confirm the awards in U.S. district court, invoking the FSIA's exception allowing suits "to confirm an award made pursuant to ... an agreement to arbitrate." (3) The DRC again did not appear, and the district court entered two default judgments.

The claimant sued to enforce the default judgments and sought discovery to identify assets subject to enforcement. At some point, the DRC began to participate in the litigation and was represented by counsel. However, it failed to comply with part of the district court's discovery order requiring it to "provide information on any DRC assets valued over $10,000 and located outside the District of Columbia, both within the United States and in other countries where Hemisphere might seek to execute on its judgments." (4) The district court found the DRC in civil contempt, ordering it to complete discovery or show cause "why a fine payable to Hemisphere should not be imposed in the amount of $5,000 per week, doubling every four weeks until reaching a maximum of $80,000 per week...." (5) The court denied the DRC's motion to vacate the sanctions, and an appeal to the D.C. Circuit followed. On appeal, the U.S. government filed an amicus brief supporting the DRC's arguments that contempt sanctions are not available under the FSIA and, in any case, would constitute an abuse of discretion.

In a strongly worded opinion by Senior Circuit judge Silberman, the court of appeals found nothing in the FSIA's language or history limiting a district court's power to find contempt in the circumstances presented. (The court distinguished the power to impose sanctions from the power to enforce them...

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