Altana Credit Opportunities Fund SPC v. Bolivarian Republic of Venezuela

Background

The plaintiffs brought a breach-of-contract action involving fourteen series of bonds issued in 1997, 1998, and 2001. The opinion states that Altana Credit Opportunities Fund 1 SP and Altana Credit Opportunities Fund SPC were beneficial owners of the bonds, while Altana Funds Ltd. Cayman acted as their investment adviser and manager. Altana did not beneficially hold the bonds but brought the action with authorization from the registered bondholders.

The bond agreements required Venezuela to make interest and principal payments. The opinion states that Venezuela stopped making required interest payments beginning in October 2017 and failed to pay principal when several bonds matured or were accelerated. As of December 9, 2022, the plaintiffs asserted that Venezuela owed $378,038,956.36, before additional amounts that could accrue.

Venezuela was served through diplomatic channels under the Foreign Sovereign Immunities Act, which governs lawsuits against foreign states. Venezuela did not answer or otherwise defend the action. The Clerk of Court entered a certificate of default on September 21, 2021. The plaintiffs moved for default judgment on December 9, 2022.

Analysis

The court first addressed jurisdiction. The Foreign Sovereign Immunities Act generally protects foreign states from suit, but permits a foreign state to waive that protection expressly or by implication. The court found that Venezuela expressly waived sovereign immunity in the fiscal agency agreements. Those agreements also consented to suit in the U.S. District Court for the Southern District of New York and selected New York law for the agreements and bonds.

The court also found that service was proper. The opinion states that the first three service methods listed in the Foreign Sovereign Immunities Act were unavailable because Venezuela’s consulate had been closed, its consul general had been recalled, and no replacement process agent had been appointed. The Clerk therefore mailed the required papers to the U.S. Department of State, which delivered them to the Venezuelan embassy in Washington, D.C., through diplomatic channels.

Because Venezuela was a foreign state, the plaintiffs had to prove their claims with evidence satisfactory to the court rather than rely only on unsupported allegations. The court found that the plaintiffs had contractual standing, meaning they were authorized to sue under the bond arrangements. It further found that Venezuela’s failure to make the required principal and interest payments breached the bond contracts.

Damages and Relief

The plaintiffs sought unpaid principal and interest, additional interest accruing before judgment, prejudgment interest, post-judgment interest, attorney’s fees, and costs. The court stated that damages could include missed interest payments and unpaid principal, interest accruing between the filing of the complaint and entry of judgment, prejudgment statutory interest, and post-judgment interest. The court also stated that the bond terms allowed recovery of reasonable and documented out-of-pocket expenses, including reasonable counsel fees and court costs connected with investigating or enforcing the default.

Disposition

The court granted the plaintiffs’ motion for default judgment. It ordered the plaintiffs, by July 19, 2023, to submit an updated proposed default judgment showing the amounts due as of the submission date. The plaintiffs could also submit contemporaneous billing records and other documentation supporting fees and costs. The order did not state a final total judgment amount. Judge Analisa Torres directed the Clerk of Court to terminate the motion at ECF No. 65.