International Petroleum Transactions: Garnishment

摘要

In 1982, the Congo enters into a loan agreement with Banco de Brasil S.A. FG is a successor in interest to the creditor. Congo defaults on the loan and FG obtains a judgment against the Congo in th Southern District of New York. FG seeks to satisfy its money judgment via garnishment of royalty obligations which the Garnishees periodically deliver oil that is produced in Congolese territorial waters. The Garnishees rights to produce the oil arise under a 1979 agreement The 1979 agreement gives Congo the right to receive royalty in kind or in cash. Since 1999, me Congo has opted to receive royalties in kind. Under me terms of the joint operating agreement, me Congo takes a "lifting" of between 550,000 and 650,000 barrels of oil any time mat it becomes under-delivered by 275,000 barrels. In 2004, me Film Circuit decides Af-Cap Inc. v. Republic of Congo, 383 F.3d 361, clarified on rehearing, 389 F.3d 503 (5th Cir. 2004) that allowed another of the Congo's creditors to garnish the same royalty obligations mat are the target of FG's efforts. FG then files an emergency application for writs of garnishment against the Garnishees directed to the royalty obligations. The trial court grants FG's application. Held: reversed and remanded with instructions. Congo argues mat the district court lacks jurisdiction over it under the terms of the Foreign Sovereign Immunities Act (FSIA). Review of the district court's legal conclusions as to the applicability of the FSIA is de novo.