Short title

This Act may be cited as the

Judgment Evading Foreign States Accountability Act of 2008

Statement of purpose

The purpose of this Act is to protect the economic interests of the United States and its citizens from the irresponsible conduct of certain foreign states, and agencies and instrumentalities of such states, that willfully refuse to satisfy United States court judgments.

Findings

Congress finds the following: (1)Foreign states and instrumentalities that do business or raise capital in the United States, and then refuse to satisfy judgments of United States courts entered against them in connection with disputes resulting from these activities, inflict billions of dollars of damage on United States taxpayers, and undermine the credibility of the United States courts. (2)The Republic of Argentina is a recent and egregious example of such behavior. Argentina has borrowed tens of billions of dollars in the United States capital markets through the issuance of bonds, notes, and other securities pursuant to which it agreed to be subject to the jurisdiction of the United States courts in actions relating to those bonds notes and securities, and both waived and pledged not to assert immunity in such actions. Argentina defaulted on its debt to foreign creditors in 2001, and scores of judgments, totaling more than $2,000,000,000, have been entered against it by the United States courts based on its default. Rather than satisfy these obligations, Argentina has expressed its intention never to pay any of the resulting judgments. (3)Since its default in 2001, Argentina’s economy has recovered dramatically. This recovery has enabled Argentina to accumulate foreign exchange reserves worth tens of billions of dollars, and to use those reserves to pay some creditors preferentially over United States citizens and holders of United States court judgments. (4)Other foreign states have expressed interest in following Argentina’s lead. For example, the Republic of Ecuador has recently threatened to default on and repudiate part of its sovereign debt, citing Argentina’s default approvingly as a precedent. (5)Foreign states that engage in such behavior can infect the management of businesses within their borders with their profligate and irresponsible habits. When the lax ethical standards that permit government officials to flout lawful judgments corrupt the corporate behavior as well, the injury to United States taxpayers is intensified. (6)United States taxpayers who are injured by such irresponsible conduct often have little or no recourse. The existing laws of the United States are highly protective of foreign states, and public and private corporations of judgment evading foreign states often enjoy a safe haven within their home country’s borders from those who are injured by their behavior. (7)Action by the United States Government to combat this growing problem must include measures that both protect United States taxpayers against the irresponsible conduct of judgment evading foreign states and their domestic corporations, and motivate such states and corporations to raise their standards of behavior. (8)An effective means of achieving this important objective without impinging on the President’s freedom to act in the foreign policy arena is to deprive judgment evading foreign states and their domestic corporations of the privilege of raising capital in the United States until those states demonstrate that such measures are no longer necessary by satisfying all outstanding judgments of the United States courts.

Definitions

For purposes of this Act: (1)

Judgment evading foreign state

The term judgment evading foreign state means any foreign state that— (A)has one or more judgments entered against the foreign state by any United States district court or the court of any State, the combined amount of which exceeds $1,000,000; and (B)fails to satisfy in full any such judgment for a period of more than 6 months after the judgment becomes a final judgment. (2)

Domestic corporation of a judgment evading foreign state

The term domestic corporation of a judgment evading foreign state means any corporation or entity, other than a natural person— (A)that is organized under the laws of a judgment evading foreign state; or (B)a majority of the shares or other ownership interest of which is held, either directly or indirectly, by a judgment evading foreign state, or by one or more corporations or entities that is organized under the laws of a judgment evading foreign state. (3)

Final judgment

The term final judgment means any judgment of a United States district court or the court of any State, that is no longer eligible to be appealed to any court in the United States. (4)

Foreign state

The term foreign state has the meaning given that term in 1603(a) of title 28, United States Code. (5)

International organization

The term international organization means an entity designated by the President as being entitled to enjoy the privileges, exemptions, and immunities provided by the International Organizations Immunities Act (22 U.S.C. 288 et seq.). (6)

State

The term State means each of the several States, the District of Columbia, and any commonwealth, territory, or possession of the United States.

Statement of policy

It shall be the policy of the United States— (1)to advocate within the governing bodies of international organizations and in other foreign policy settings for the full compensation and fair treatment of United States citizens and other persons in whose favor judgments have been awarded by the United States courts; (2)to seek to protect the economic interests of United States taxpayers by restricting the access to the United States capital markets of judgment evading foreign states, and subjecting to Congressional scrutiny requests for aid made by judgment evading foreign states to the United States Government; (3)to seek to protect the authority of the United States courts by preventing judgment evading foreign states from willfully flouting the judgments of those courts; and (4)to enforce a series of mandatory penalties, increasing over time, to prevent judgment evading foreign states from engaging in such misconduct.

Bar on access to United States capital markets

The Securities and Exchange Commission shall take all effective measures to deny every judgment evading foreign state access to United States capital markets, including the ability, directly or indirectly, to borrow or sell securities in the United States unless the proceeds of such borrowing or sale are to be used, in the first instance, to satisfy in full all final judgments that form the basis for that foreign state’s designation as a judgment evading foreign state. If any judgment evading foreign state remains in default on any such final judgment for more than 2 years, the Securities and Exchange Commission shall take all measures to deny any domestic corporation of a judgment evading foreign state access to the United States capital markets.

Requests for aid or assistance from judgment evading foreign states

(a)

Bilateral assistance

Whenever any proposal is made to a department, agency, or other instrumentality of the United States Government to extend aid, a loan, or any other form of assistance to a judgment evading foreign state, the head of the department, agency, or other instrumentality may consider the proposal only if it bears prominently the legend described in subsection (c). (b)

Multilateral assistance

Whenever any proposal is made to an international organization of which the United States is a member to extend aid, a loan, or any other form of assistance to a judgment evading foreign state, the Secretary of State shall provide notice of such proposal to the Congress in a prompt manner. Such notice shall bear prominently the legend described in subsection (c). (c)

Legend described

The legend of a proposal referred to in subsection (a) and the legend of a notice referred to in subsection (b) is the following: REQUEST FOR GRANT-IN-AID OR LOAN BY A JUDGMENT EVADING FOREIGN STATE.

Reports; recommendations of additional measures

(a)

Report

Not later than January 31 of each year, the Secretary of the Treasury shall provide a report, in writing, to the Congress identifying each judgment evading foreign state, and, for each such judgment evading foreign state— (1)setting forth the basis of the Secretary’s determination that it meets the definition of judgment evading foreign state; (2)quantifying the impact on the United States economy, and the cost to United States taxpayers, of the unsatisfied final judgments that form the basis for the foreign state’s designation as a judgment evading foreign state; and (3)describing all measures that the Department of the Treasury, the Department of Commerce, the Securities and Exchange Commission, the Commodity Futures Trading Commission, and representatives of the United States before international organizations have taken in the preceding year to carry out this Act. (b)

Termination of designation as judgment evading foreign state

At such time as the Secretary of the Treasury determines that a foreign state no longer qualifies as a judgment evading foreign state, the Secretary shall so certify to the Congress no later than in the next annual report to Congress under subsection (a), at which time the requirements and prohibitions under this Act shall no longer apply to such former judgment evading foreign state. (c)

Responsibilities of other departments

In every report prepared by the Secretary of State, the Secretary of the Treasury, or the Secretary of Commerce for the public relating to the economic risk or investment climate of a judgment evading foreign state, such Secretary shall reference the findings of the Secretary of the Treasury from the Secretary of the Treasury’s most recent annual report to Congress under subsection (a) relating to the unsatisfied final judgments outstanding against the judgment evading foreign state. (d)

Recommendations to congress

The Secretary of the Treasury shall provide to the Congress written recommendations on additional measures to carry out the purposes of this Act.