Pharo Gaia Fund Ltd. v. Bolivarian Republic of Venezuela

Background

The plaintiffs sued Venezuela for breach of contract, alleging that it failed to make required payments on two series of bonds. On September 30, 2020, the court granted the plaintiffs’ motion for summary judgment and denied Venezuela’s motion for a stay. The court entered final judgment on October 16, 2020. The plaintiffs stated that Venezuela had not made any payments on that judgment.

The plaintiffs then moved for an order under 28 U.S.C. § 1610(c) finding that a reasonable period had passed since entry of judgment. Under that provision of the Foreign Sovereign Immunities Act, certain property of a foreign state’s agency or instrumentality in the United States generally cannot be attached until the court orders attachment and execution after finding that a reasonable time has passed and required notice has been given.

Arguments

Venezuela did not dispute that courts had found shorter periods reasonable in other cases. It argued, however, that attachment should not be permitted because of the specific circumstances in Venezuela. Venezuela said it could not reasonably be expected to pay from public funds because of a humanitarian crisis and because it lacked access to necessary governmental institutions and funds. It also argued that the order was premature because the plaintiffs did not have a license from the Treasury Department’s Office of Foreign Assets Control, or OFAC, to enforce a judgment against Venezuela’s assets. Finally, Venezuela argued that execution against its United States assets could damage the interim government and United States foreign-policy goals, and that the Biden administration should have an opportunity to address those issues.

Court’s Analysis

The court held that seven months had passed since entry of judgment. It noted that courts had found periods as short as three months, six weeks, two months, and, in cases involving Venezuela, two and five months, to be reasonable.

The court recognized that Venezuela was not attempting to evade the judgment. But it concluded that Venezuela’s inability to access funds showed that it had not taken steps to satisfy the judgment, and Venezuela had provided no timeline for doing so. The court found that this uncertainty supported allowing the plaintiffs to seek attachment.

The court also rejected the argument that the lack of an OFAC license prevented issuance of the order. It explained that a court may issue an order under § 1610(c) before OFAC grants a license to act against the defendant’s assets.

The court further found no need to give the United States an opportunity to submit a statement about foreign-policy interests. It distinguished a cited case involving the proposed judicial sale of important Venezuelan assets, explaining that nothing in this case suggested that merely issuing an order finding that a reasonable time had passed would have a foreign-policy impact.

Disposition

Judge Analisa Torres granted the plaintiffs’ motion for an order finding that a reasonable period had elapsed following entry of judgment under 28 U.S.C. § 1610(c). The Clerk of Court was directed to terminate the motion at ECF No. 69. The opinion did not state that the court itself ordered attachment of specific property.