In Stati v. Republic of Kazakhstan, 19 Misc. 382 (PAE), 2024 WL 3442663 (S.D.N.Y. Jul. 17, 2024), the Southern District of New York held that documents and information held by third-party banks relating to a foreign sovereign’s assets are not protected from disclosure in post- judgment proceedings.
In 2013, Anatolie Stati and several related individuals and entities (collectively, the “Statis”) obtained an international arbitral award against the Republic of Kazakhstan (“Kazakhstan”), for $500 million for the improper seizure of the Statis’ oil and gas business. Since then, the Statis and Kazakhstan have, as the Southern District put it, “participated in a worldwide game of cat and mouse in which [the Statis] have attempted to collect on the award and Kazakhstan has sought to stymie their efforts.”
The Statis eventually domesticated their award in the United States and sought post-judgment discovery in the Southern District of New York. Specifically, the Statis sought discovery from various Citibank entities (“Citibank”) concerning the nature and extent of assets held at Citibank by Kazakhstan and dozens of other entities that the Statis claimed are agents, instrumentalities, or affiliates of Kazakhstan. Citibank and Kazakhstan objected to the Statis’ subpoenas seeking post-judgment discovery on several grounds, including that many of the assets of the targeted entities are likely to be immune from execution under the Foreign Sovereign Immunities Act (“FSIA”).
In rejecting that argument, the Southern District explained “the crucial distinction between discovery and execution”: while post-judgment execution is categorically limited by the text of the FSIA, post-judgment discovery is not. The Court underscored that “[a]lthough a foreign state’s property is generally immune from attachment and execution under the FSIA, the FSIA does not create a coextensive discovery privilege.” That is so, the Court explained, because discovery of those immune assets could lead to the discovery of executable, non-immune assets.
The Court further rejected Citibank and Kazakhstan’s argument that the Statis must limit their discovery demands to exempt assets. Such a requirement, the Court noted, would “create an untenable catch-22” that would require the Statis to prove that assets are exempt from FSIA immunity before obtaining the information necessary to make that determination.
Stati serves as a reminder about the limits of the protection of the FSIA and the breadth of post-judgment discovery that is available to a plaintiff. If you have questions about the FSIA or post-judgment discovery, please contact Michael C. Rakower, Sali A. Rakower or Daniel F. Gilpin.
0-3