Syracuse Mountains Corporation v. Bolivarian Republic of Venezuela

Background

Syracuse Mountains Corporation sued the Bolivarian Republic of Venezuela for breach of contract based on eleven series of bonds issued in 1997, 1998, and 2001. Syracuse was a beneficial owner of the bonds and had authorization from the record holders to bring the action. The fiscal agency agreements stated that Venezuela waived sovereign immunity for claims arising from the bonds, consented to suit in the Southern District of New York, and agreed that New York law would govern the agreements and bonds.

Beginning in October 2017, Venezuela failed to make required interest payments. It also failed to pay principal when several bonds matured or installment payments became due, and another bond series was accelerated after default. Syracuse stated that Venezuela owed $359,778,666.88 as of May 3, 2022, excluding amounts that accrued later.

Venezuela was served through diplomatic channels under the Foreign Sovereign Immunities Act. It did not answer or otherwise defend the action. The clerk entered a certificate of default, and Syracuse moved for default judgment.

Court’s Analysis

The court first addressed jurisdiction. Under the Foreign Sovereign Immunities Act, foreign states generally are immune from suit but may waive that immunity. The court held that Venezuela expressly waived its immunity in the bond agreements, so the court had jurisdiction over Syracuse’s claims.

The court also held that service was proper. Service through the first three methods listed in the Act was unavailable because Venezuela had stated that its consulate was closed, its consul general had been recalled, and no replacement process agent had been appointed. The clerk therefore sent the required papers to the United States Department of State, which delivered them to Venezuela’s embassy in Washington, D.C., as allowed by the fourth method.

Because Venezuela defaulted, the court applied the special standard for default judgments against foreign states. Syracuse still had to establish its claim with evidence satisfactory to the court rather than relying only on unsupported allegations. The court found that Syracuse had contractual standing, that Venezuela had failed to make payments required by the bonds, and that this failure constituted breach of contract.

Damages and Disposition

The court concluded that Syracuse could recover missed interest payments and unpaid principal that accrued before the complaint was filed, as well as interest that accrued between filing and entry of judgment. The court also stated that Syracuse could recover statutory prejudgment interest, post-judgment interest, and reasonable documented counsel fees, court costs, and other out-of-pocket expenses allowed by the bond terms.

The court granted Syracuse’s motion for default judgment. It ordered Syracuse, by July 19, 2023, to submit an updated proposed default judgment showing the amounts due when submitted. Syracuse could also submit billing records and other documentation supporting fees and costs.