BILL NUMBER:S6360A

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 iden-
tifiable property of, or debt owed to, the judgment debtor, with a post-
judgment 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 credi-
tors 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-judg-
ment 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.

JUSTIFICATION:

Because many loan documents or debt instruments involving foreign sover-
eigns 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 monitor-
ing 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 proper-
ty. 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.