Sovereign Immunity

• Author: International Law Group

The Republic of Congo (ROC) allegedly owes Walker International Holdings, Ltd. (WIH) a substantial sum of money. WIH had bought the debt from an Italian company, Sadelmi Cogepi SpA (Sadelmi), which had finished a construction project in the ROC. Thereafter, under the terms of the Sadelmi-ROC contract, WIH had to arbitrate the matter before the International Chamber of Commerce (ICC) in Paris, where the panel awarded it $26 million. Unable to collect, WIH filed this garnishment action and temporary restraining order (TRO) against Murphy Exploration & Production International (MEPI) which owed the ROC money.

The district court dismissed the action after the magistrate judge found that MEPI had not used the garnished funds for a "commercial activity" in the U.S. Disagreeing, WIH appealed. The U.S. Court of Appeals for the Fifth Circuit agrees with the district court and affirms.

In its analysis, the Court first turns to the question of whether the ROC had waived its sovereign immunity "either explicitly or by implication" according to the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. Section 1610(a)(1). An implied waiver of immunity under the FSIA for certain state property requires that the property (a) be in the U.S. and (b) be used for commercial activity.

Here, the ROC did in fact waive its sovereign immunity by signing contracts with MEPI that provided for arbitration proceedings where the ROC would not raise an immunity defense. The ROC agreed to abide by the ICC rules (in particular Rule 28(6)), which preclude the ROC from asserting a sovereign immunity defense. Thus, the ROC had expressly waived its sovereign immunity.

The Court then turns to the question of the property's presence in the U.S. WIH argued...