US Government Debt Different - Finance Department - University of ...

232 United States Sovereign Debt: A Thought Experiment On Default And Restructuringtake too much comfort from the jurisdictions that adhere to absoluteimmunity from execution. Facing a U.S. default on obligationsowed to a foreign state and its citizens, the state’s courts might beinduced to embrace the trend toward restricted immunity. The U.Salso should consider strategic relocations of assets well in advance ofimplementing any default and restructuring plan. 168 It also shouldof separate juridical existence because the State exerted direct control over an entityin which the State became a majority shareholder through expropriation, andrecognized that “the separate legal status of [the entity] under these circumstanceswould insulate the [State] from liability for its expropriation . . . while permittingthe [State], through [the company], to profit from its commercial activities in theUnited States and to even assert a claim against KAL-SPICE to recover paymentfor assets of [the company] sold in this country.”); Walter Fuller Aircraft Sales Inc. v.Republic of the Philippines, 965 F.3d 1375, 1380 (5th Cir. 1992) (enumerating factorsto determine when the presumption of independent status should be overcometo allow for execution).Whether entities should be viewed as separate from, or a part of the State, has alsobeen illustrated in English law. See Trendtex Trading Corp. v. Cent. Bank of Nig., 64I.L.R. 111, 134 (Court of Appeal 1977) (holding that the Central Bank of Nigeria,separate legal entity with no clear expression of intent that it should have governmentalstatus, was not an emanation, arm, alter ego or department of the Stateof Nigeria after looking to the functions and control of the organization and theevidence as a whole); Baccus S.R.L. v. Servico Nacional Del Trigo, 23 I.L.R. 160,162-63 (Eng. Court of Appeal 1956) (whether a foreign department of State shouldlose its immunity because it conducts some of its activities by means of a separatelegal entity depends on the nature of the activities and the foreign State’s interest).168 In general, military and diplomatic-related assets, Federal Reserve Bank assets,and other non-commercial assets should be protected by sovereign immunity fromexecution under most national laws and international law. U.N. Convention, art.21 (listing property of a military character, for the performance of functions of thediplomatic mission of the State, central bank or other monetary authority of theState as property that should not be considered as property in use or intended foruse by the State other than government non-commercial purposes).The assets of diplomatic missions are generally immune from execution. See, e.g.,Vienna Convention on Diplomatic Relations, art. 22(3), April 18, 1961, 500U.N.T.S. 95 (“The premises of the mission, their furnishings and other propertythereon and the means of transport of the mission shall be immune from searchrequisition, attachment or execution.”); Act on the Civil Jurisdiction of Japan withrespect to a Foreign State, Act. No. 24 of 2009, art. 18(2)(i) (listing property thatis exempted from execution as “Property which is used or intended for use in theperformance of the functions of the diplomatic mission . . . .”); United States ForeignSovereign Immunities Act, 28 U.S.C. § 1610(a)(4)(B) (2012) (stating thatforeign State property shall not be immune, “Provided, That such property is notused for purposes of maintaining a diplomatic or consular mission or the residenceof the Chief of such mission.”). In the Philippine Embassy Bank Account case, theplaintiff sought to attach a mixed bank account of a diplomatic mission; however