Provides for orders of attachment against a foreign state.
Ayes (60): Adams, Addabbo, Alesi, Aubertine, Bonacic, Breslin, DeFrancisco, Diaz, Dilan, Duane, Espada, Farley, Flanagan, Foley, Fuschillo, Golden, Griffo, Hannon, Hassell-Thomps, Huntley, Johnson C, Johnson O, Klein, Krueger, Kruger, Lanza, LaValle, Leibell, Libous, Little, Marcellino, Maziarz, McDonald, Montgomery, Nozzolio, Onorato, Oppenheimer, Padavan, Parker, Peralta, Perkins, Ranzenhofer, Robach, Saland, Sampson, Savino, Schneiderman, Serrano, Seward, Skelos, Smith, Squadron, Stachowski, Stavisky, Stewart-Cousins, Thompson, Valesky, Volker, Winner, Young
Excused (2): Larkin, Morahan
TITLE OF BILL: An act to amend the civil practice law and rules, in relation to orders of attachment in certain cases
PURPOSE: This bill will amend the New York Civil Practice Law and Rules ("CPLR") in order to provide judgment creditors who secure a money judgment against a foreign state, as defined in 28 United States Code Section 1603, and who demonstrate to the court that a reasonable basis exists for delaying the issuance of execution with respect to specific identifiable property of, or debt owed to, the judgment debtor, with a postjudgment order of attachment that has the same priority rights afforded to pre-judgment orders of attachment and executions. This amendment fills in a gap in existing priority rules which presently allow creditors of a foreign state who secure pre-judgment orders of attachment subsequent to judgment creditors who have already restrained property or debts to take priority over the earlier restraint in cases where the court determines that execution on the property or debt in question would be premature.
SUMMARY OF PROVISIONS:
Section 1 - Section 6205 of the Civil Practice Law and Rules is amended by adding a new provision allowing a court to order a post-judgment attachment upon the application of a judgment creditor of a foreign state. The amendment would give a post-judgment creditor who has reason to delay issuance of an execution the chance to obtain in a post-judgment attachment the same priority rights as existing attachments and executions.
Section 2 - Section 6211 of the CPLR is amended to permit such orders of attachment to be issued.
Section 3 - Effective Date.
Because many loan documents or debt instruments involving foreign sovereigns designate New York as the place of payment and the venue where the foreign sovereign waives sovereign immunity and consents to jurisdiction to be sued in the case of a default, the state and federal courts in New York are frequently the courts where actions under the Foreign Sovereign Immunities Act ("FSIA") are brought. Pursuant to section 1610(c) of the FSIA, a judgment creditor may not issue an execution against the foreign sovereign judgment debtor "until the court has ordered such ...execution after having determined that a reasonable period of time has elapsed following the entry of judgment ..." Even when the court has determined that "a reasonable period of time has elapsed following the entry of judgment," execution may only issue against property of a foreign sover eign "used for a commercial activity in the united States." (28 U.S.C. §1610(a)).
Years of experience have established that courts typically will not allow the issuance of executions against foreign sovereigns until they have made a determination that the property against which execution is sought meets the commercial activity test of the FSIA. However, it is exceedingly difficult to locate property of foreign sovereign judgment debtors in the United States because defaulting sovereigns habitually attempt to make themselves judgment-proof by removing their property from the United States. Even where diligent and costly efforts have succeeded in identifying property of the foreign sovereign, litigation with respect to whether it meets the standards for execution under the FSIA is also lengthy and costly. At most, courts are only willing to issue to judgment creditors restraining orders against the removal of such property by the sovereign or the garnishee holding the property while the underlying commercial activity in question is litigated through the court system. Because restraining notices or orders do not presently afford the diligent judgment creditor priority under the CPLR, the judgment creditor who has expended the time, effort and cost of locating assets in the United States of its foreign sovereign judgment debtor may lose priority to another creditor who learns through monitoring foreign sovereign debt litigation of the existence of such property, and secures a pre-judgment attachment against it before the judgment creditor can get an order authorizing it to execute against the property. The amendment proposed by this legislation would remedy this unfair situation and secure priority for the judgment creditor whose time, efforts and expenditures have located the property in question by authorizing the court to issue post-judgment attachments.
LEGISLATIVE HISTORY: This bill amends Assembly Bill Number 8647-C and Senate 3166-F which in May, 2008, was vetoed by Governor Paterson by Veto Message No. 6. In his veto message Governor Paterson expressed concern about the possible over breadth of the prior version of this bill but "recognize that there is a specific problem that may need to be addressed here - delays in the execution of judgments against foreign sovereigns - and so I encourage the sponsors and other proponents of this legislation to work...to determine whether there is a more narrowly-tailored way to address this specific problem, without creating other collateral consequences." This bill addresses these concerns by limiting the post-judgment order of attachment to actions in which a money judgment has been procured against a foreign state.
FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: Immediately.
STATE OF NEW YORK ________________________________________________________________________ 6360--A 2009-2010 Regular Sessions IN SENATE December 28, 2009 ___________Introduced by Sen. SCHNEIDERMAN -- read twice and ordered printed, and when printed to be committed to the Committee on Rules -- recommitted to the Committee on Codes in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the civil practice law and rules, in relation to orders of attachment in certain cases THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The civil practice law and rules is amended by adding a new section 6205 to read as follows: S 6205. ORDER OF ATTACHMENT IN CERTAIN CASES. AN ORDER OF ATTACHMENT MAY BE GRANTED IN AID OF EXECUTION TO A PARTY THAT HAS BEEN AWARDED A MONEY JUDGMENT AGAINST A FOREIGN STATE, AS DEFINED IN 28 UNITED STATES CODE SECTION 1603, IN ACCORDANCE WITH AND SUBJECT TO THE LIMITATIONS OF 28 UNITED STATES CODE SECTION 1610 AND OTHER APPLICABLE LAW. S 2. Subdivision (a) of section 6211 of the civil practice law and rules, as amended by chapter 860 of the laws of 1977, is amended to read as follows: (a) When granted; contents. An order of attachment may be granted without notice, before or after service of summons and at any time prior to judgment, OR AS PROVIDED IN SECTION SIXTY-TWO HUNDRED FIVE OF THIS ARTICLE. It shall specify the amount to be secured by the order of attachment including any interest, costs and sheriff's fees and expenses, be indorsed with the name and address of the plaintiff's attorney and shall be directed to the sheriff of any county or of the city of New York where any property in which the defendant has an inter- est is located or where a garnishee may be served. The order shall direct the sheriff to levy within his jurisdiction, at any time before final judgment, upon such property in which the defendant has an inter- est and upon such debts owing to the defendant as will satisfy the amount specified in the order of attachment. S 3. This act shall take effect immediately.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD15281-03-0