The Export-Import Bank of The Republic of China v. Democratic Republic of the…

Background

The Export-Import Bank of the Republic of China sued the Democratic Republic of the Congo (the “DRC”), formerly identified as the Republic of Zaire, for breach of a 1991 loan agreement. On January 23, 2017, the court entered a default judgment against the DRC for $57,325,223.40.

As part of efforts to enforce that judgment, the Bank served the DRC with requests for documents and written questions after judgment was entered. When the DRC did not respond, the court issued an August 29, 2018 order requiring the DRC to comply with its discovery obligations within 30 days. The court previously declined to impose contempt sanctions at that time because the DRC had not yet violated a clear and unambiguous court order.

The parties engaged intermittently in settlement discussions, but the discussions did not resolve the matter. The DRC did not pay any amount of the judgment and did not respond to the Bank’s discovery requests. The Bank renewed its request for sanctions under Rule 37 of the Federal Rules of Civil Procedure. The motion was unopposed.

Legal standard

Rule 37 allows a court to issue further orders when a party fails to obey an order requiring discovery. Those orders may include treating the failure as contempt of court. The court explained that monetary contempt sanctions may be imposed when the violated order is clear and unambiguous, the evidence of noncompliance is clear and convincing, and the party was not reasonably diligent in trying to comply. The court also has broad discretion to impose sanctions, subject to the requirement that its orders be just.

The court noted that, although the DRC is a foreign state and generally has sovereign immunity, the DRC waived that immunity in the 1991 loan agreement. That waiver covered proceedings to help collect the money judgment, including discovery concerning the DRC’s assets.

Court’s analysis

The court found that the DRC’s continuing failure to answer the discovery requests violated the clear and unambiguous August 2018 order. The court also found that the DRC was aware of its obligations and able to defend its interests because it had engaged intermittently in settlement discussions with the Bank and had participated in other litigation in the district.

The Bank proposed a sanction beginning at $1,000 per day, doubling every four weeks, and reaching a maximum of $80,000 per week. The court found that amount appropriate in light of the DRC’s failure to pay the judgment for almost four years and its failure to comply with discovery for more than two years despite intermittent engagement with the Bank.

Disposition

Judge Jesse M. Furman granted the Bank’s unopposed motion for monetary contempt sanctions. For each day the DRC remained in violation of the August 2018 order, it was ordered to pay the Clerk of Court $1,000 per day, with the amount doubling every four weeks to a maximum of $80,000 per week. The sanctions were not to begin accruing until three weeks after the October 29, 2020 order, giving the DRC time to correct its noncompliance without incurring monetary sanctions.

The court also ordered the Bank to file status letters every 60 days describing the sanctions accrued, communications with the DRC, and whether the sanctions should be revisited or changed. The Bank was ordered to promptly serve the DRC with the opinion and order and file proof of service by November 2, 2020. The Clerk was directed to terminate the sanctions motion from the docket.