[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 912 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                 S. 912

To prevent foreign states that do business, issue securities, or borrow 
  money in the United States, and fail to satisfy United States court 
judgments totaling $100,000,000 or more based on such activities, from 
    inflicting further economic injuries in the United States, from 
      undermining the integrity of United States courts, and from 
  discouraging responsible lending to poor and developing nations by 
   undermining the secondary and primary markets for sovereign debt.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 9, 2011

  Mr. Wicker introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
To prevent foreign states that do business, issue securities, or borrow 
  money in the United States, and fail to satisfy United States court 
judgments totaling $100,000,000 or more based on such activities, from 
    inflicting further economic injuries in the United States, from 
      undermining the integrity of United States courts, and from 
  discouraging responsible lending to poor and developing nations by 
   undermining the secondary and primary markets for sovereign debt.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Judgment Evading Foreign States 
Accountability Act of 2011''.

SEC. 2. STATEMENT OF PURPOSE.

    The purpose of this Act is to prevent foreign states that do 
business, issue securities, or borrow money in the United States, and 
fail to satisfy United States court judgments totaling $100,000,000 or 
more based on such activities, from inflicting further economic 
injuries in the United States, from undermining the integrity of United 
States courts, and from discouraging responsible lending to poor and 
developing nations by undermining the secondary and primary markets for 
sovereign debt.

SEC. 3. FINDINGS.

    Congress finds the following:
            (1) Foreign states that do business, issue securities, or 
        borrow money in the United States, and refuse to satisfy 
        judgments of United States courts entered against them in 
        connection with disputes resulting from these or other 
        commercial activities--
                    (A) directly or indirectly inflict billions of 
                dollars of damage in the United States; and
                    (B) undermine the credibility of United States 
                courts.
            (2) Foreign states that engage in the behavior described in 
        paragraph (1) can infect the management of corporations and 
        other entities that they own or control with their profligate 
        and irresponsible habits. When negligent ethical standards 
        permit government officials to repudiate lawful judgments, the 
        injury to United States taxpayers is multiplied.
            (3) The Republic of Argentina is a primary example of a 
        foreign state that has incurred large debts in the United 
        States, defaulted on those debts, and refused to honor lawful 
        judgments of United States and other courts ordering repayment. 
        In 2001, Argentina defaulted on more than $81,000,000,000 in 
        sovereign debt, the largest such default in history. In 2005, 
        after refusing all efforts by creditors to negotiate the terms 
        of an exchange offer, Argentina unilaterally offered lenders 
        approximately 27 cents on the dollar in its restructuring deal, 
        far below the international norm for sovereign debt 
        restructurings. Argentina repudiated the debts owed to the 
        unprecedented proportion of bondholders who rejected that 
        offer.
            (4) Argentina owes United States bond holders more than 
        $3,500,000,000. The default and restructuring by Argentina have 
        cost United States bondholders, taxpayers, and share holders 
        more than $10,000,000,000.
            (5) Argentina has the capacity to pay its external 
        creditors. Argentina now holds more than $54,000,000,000 in 
        reserves. Argentina chose to pay off its $9,800,000,000 debt to 
        the International Monetary Fund in full in 2005, years before 
        it was due, and has similarly announced an intention to pay 
        sovereign creditors of the Paris Club, of which the United 
        States is owed $360,000,000.
            (6) United States bondholders have won numerous court 
        rulings against Argentina relating to Argentina's default on 
        debt owed to such bondholders. Argentina's decision to 
        repeatedly ignore these judgments threatens the United States 
        legal system. Despite having agreed to submit to the 
        jurisdiction of the State of New York and to waive claims of 
        sovereign immunity, Argentina is now contesting at least 170 
        lawsuits and refusing to honor 100 judgments against it, 
        totaling more than $7,000,000,000.
            (7) Argentina has demonstrated a similar disregard for 
        claims brought by United States investors before the 
        International Centre for Settlement of Investment Disputes 
        (ICSID), a tribunal of the World Bank. Argentina is the 
        respondent in more than a quarter of the ICSID cases, more 
        cases than any other nation. Argentina's arguments for 
        nonpayment have been rejected by the Department of State and 
        the ICSID. Argentina is currently receiving $5,810,000,000 from 
        the World Bank and has requested an additional $1,630,000,000 
        in funding. Argentina has behaved in a manner that undermines 
        the viability of the ICSID process, thereby alarming the 
        worldwide investments of United States businesses that rely 
        upon this forum for adjudication of disputes.
            (8) Argentina's debts are legitimate. Any assertion that 
        the outstanding Argentine debt was incurred by the repressive, 
        nondemocratic regimes that ruled Argentina in the late 1970s 
        and early 1980s is inaccurate. The bonds currently held by 
        United States creditors were issued by democratically elected 
        Argentine governments.
            (9) While the Argentine military junta, which caused 
        tremendous suffering during a tyrannical 7-year reign, borrowed 
        from foreign banks, 96 percent of that debt was refinanced in 
        1993 when Argentina's ``Brady Plan'' restructuring was 
        completed. Before the 1993 restructuring, which was 
        underwritten by the United States Government, Argentina had 
        undergone major restructurings of its foreign debt in 1985 and 
        1987.
            (10) None of the Argentine debt held by United States 
        creditors originated during the Argentine military junta. To 
        characterize the debt issued in the 1993 Brady Plan 
        restructuring as derivative of junta-era debt would malign the 
        United States policymakers who approved and underwrote the 
        Brady Plan on behalf of the American people. Ninety-five 
        percent of the defaulted Argentine debt held by United States 
        creditors was borrowed after 1993 by freely elected Argentine 
        governmental officials and has no relationship to the military 
        junta.
            (11) Argentina's defaults have raised the costs of 
        borrowing for the public and private sectors. If the country 
        took action to remediate its debts, its annual interest expense 
        would decline. Argentina's defaults have discouraged foreign 
        direct investment. A 2007 study estimates that Argentina loses 
        more than $6,000,000,000 in foreign direct investment every 
        year as a result of its default and debt repudiation and the 
        resultant risk profile.
            (12) An October 2010 evaluation report by the Financial 
        Action Task Force (FATF), an intergovernmental body that 
        analyzes financial systems for criminal activity, found that 
        Argentina is the only G-20 nation to receive a negative 
        evaluation and that Argentina failed to meet 47 out of the 49 
        financial standards. Argentina was given an original timeline 
        of 3 months, then an additional 10 months to demonstrate 
        compliance to the standards or face being blacklisted due to 
        financial corruption and deficiencies in combating financing of 
        terrorism and anti-money laundering systems.
            (13) FATF reported several shortcomings in Argentina's 
        financial sector, most notably corruption and the poor 
        enforcement of Argentine financial laws. The lack of 
        enforcement has prompted wide-spread money laundering in 
        Argentina's financial sector creating an environment that 
        places Argentina at risk of becoming a hub for terrorism and 
        drug trafficking in the Western Hemisphere.
            (14) United States citizens--
                    (A) are generally unaware of Argentina's 
                irresponsible behavior and disregard for the rule of 
                law;
                    (B) continue to invest in, lend to, and do business 
                with Argentina; and
                    (C) are unfamiliar with the associated risks.
            (15) Those who are injured as a result of this conduct 
        often have little or no recourse. Judgment evading foreign 
        states and their state-owned corporations enjoy a safe haven 
        within their national borders, which often presents an 
        insurmountable obstacle to recovery for those who are injured 
        by the behavior of those states.
            (16) The absence of a remedy for defaults by such foreign 
        states undermines nations that badly need to access capital 
        from foreign lenders, with disproportionate harm falling on 
        responsible and democratic nations. By undermining confidence 
        in the secondary market for sovereign debt, judgment evading 
        foreign states significantly increase the risk that primary 
        lending to less-advantaged nations will be curtailed, depriving 
        deserving sovereign borrowers of access to the international 
        capital markets.
            (17) Action by the United States Government to combat this 
        growing problem must include measures that--
                    (A) protect against the irresponsible conduct of 
                judgment evading foreign states and their state-owned 
                corporations; and
                    (B) motivate such states and corporations to raise 
                their standards of behavior.
            (18) An effective means of achieving the important 
        objectives described in paragraph (17), until those states 
        demonstrate that such measures are no longer necessary, would 
        be--
                    (A) to deprive judgment evading foreign states and 
                their state-owned corporations of the privilege of 
                issuing securities or borrowing in the United States; 
                and
                    (B) to require that warnings of their irresponsible 
                behavior be given to persons in the United States who 
                are contemplating investing in, lending to, or doing 
                business with such states and businesses.

SEC. 4. DEFINITIONS.

    In this Act:
            (1) Agency or instrumentality of a foreign state.--The term 
        ``agency or instrumentality of a foreign state'' has the 
        meaning given that term in section 1603(b) of title 28, United 
        States Code.
            (2) Final judgment.--The term ``final judgment'' means any 
        judgment of a United States district court, the Court of 
        International Trade, or the court of any State, that is no 
        longer eligible to be appealed to any court in the United 
        States.
            (3) Foreign state.--The term ``foreign state'' has the 
        meaning given that term in section 1603(a) of title 28, United 
        States Code, except that it does not include an agency or 
        instrumentality of a foreign state.
            (4) 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.).
            (5) Judgment evading foreign state.--The term ``judgment 
        evading foreign state'' means any foreign state that--
                    (A) has 1 or more judgments entered against it by 
                any United States district court, the Court of 
                International Trade, or the court of any State that 
                exceed, in the aggregate, $100,000,000;
                    (B) fails to satisfy in full any such judgment for 
                a period of more than 2 years after the judgment 
                becomes a final judgment, regardless of whether such 
                judgment became a final judgment before the date of the 
                enactment of this Act; and
                    (C) is not a foreign state eligible for--
                            (i) financing through the International 
                        Development Association, but not from the 
                        International Bank for Reconstruction and 
                        Development; or
                            (ii) debt relief under the Enhanced HIPC 
                        Initiative (as defined in section 1625(e)(3) of 
                        the International Financial Institutions Act) 
                        or the Multilateral Debt Relief Initiative.
            (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.
            (7) State-owned corporation of a judgment evading foreign 
        state.--The term ``state-owned corporation of a judgment 
        evading foreign state'' means any corporation or entity, other 
        than a natural person--
                    (A) that is an agency or instrumentality of a 
                foreign state that is 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 
                an agency or instrumentality of a foreign state that is 
                a judgment evading foreign state.

SEC. 5. STATEMENT OF POLICY.

    It is the policy of the United States--
            (1) to advocate within the governing bodies of 
        international organizations, international financial 
        institutions, such as the World Bank and the International 
        Monetary Fund, and other foreign policy settings for the full 
        compensation and fair treatment of United States taxpayers in 
        whose favor judgments have been awarded by the United States 
        courts;
            (2) to seek to protect the economic interests of such 
        taxpayers and other persons and of nations that benefit from a 
        reliable flow of foreign capital by--
                    (A) restricting the access to the United States 
                capital markets of judgment evading foreign states and 
                their state-owned corporations;
                    (B) requiring that such persons be warned of the 
                dangers of investing in, lending to, or doing business 
                with such states and state-owned corporations; and
                    (C) calling on the World Bank, the International 
                Monetary Fund, and other international financial 
                institutions to vote against providing funding or 
                foreign capital to judgment evading foreign states; and
            (3) to further solidify the authority of the United States 
        courts by preventing judgment evading foreign states from 
        willfully disregarding the judgments of those courts.

SEC. 6. BAR ON ACCESS TO UNITED STATES LENDERS AND INVESTORS.

    (a) Measures With Respect to Judgment Evading Foreign States.--The 
Securities and Exchange Commission shall--
            (1) take all necessary measures to deny every judgment 
        evading foreign state access to United States capital markets, 
        including the ability, directly or indirectly, to borrow money 
        or sell securities in the United States; and
            (2) require that all periodic filings made by the judgment 
        evading foreign state with the Securities and Exchange 
        Commission under the securities laws bear the following legend 
        prominently on the cover page: ``WARNING: THIS REPORT IS 
        SUBMITTED BY A FOREIGN STATE THAT HAS BEEN DETERMINED BY THE 
        UNITED STATES DEPARTMENT OF THE TREASURY TO BE A JUDGMENT 
        EVADING FOREIGN STATE BASED UPON ITS FAILURE TO SATISFY 
        OUTSTANDING UNITED STATES COURT JUDGMENTS.''.
    (b) Measures With Respect to State-Owned Corporations of Judgment 
Evading Foreign States.--If any judgment evading foreign state remains 
in default on any final judgment for more than 3 years, regardless of 
whether such judgment became final before the date of the enactment of 
this Act, the Securities and Exchange Commission shall--
            (1) take all necessary measures to deny any state-owned 
        corporation of a judgment evading foreign state access to the 
        United States capital markets, including the ability to issue 
        debt, equity or other securities, or borrow money, unless the 
        proceeds of such borrowing of securities issuance are to be 
        used, in the first instance, to satisfy in full all final 
        judgment against its parent judgment evading foreign state; and
            (2) require that all periodic filings made by each state-
        owned corporation of a judgment evading foreign state with the 
        Securities and Exchange Commission under the securities laws 
        bear the following legend prominently on the cover page: 
        ``WARNING: THIS REPORT IS SUBMITTED BY A STATE-OWNED 
        CORPORATION OF A FOREIGN STATE THAT HAS BEEN DETERMINED BY THE 
        DEPARTMENT OF THE TREASURY TO BE A JUDGMENT EVADING FOREIGN 
        STATE BASED UPON ITS FAILURE TO SATISFY OUTSTANDING UNITED 
        STATES COURT JUDGMENTS.''.

SEC. 7. REQUESTS FOR AID OR ASSISTANCE FROM JUDGMENT EVADING FOREIGN 
              STATES.

    (a) Bilateral Assistance.--If 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 not consider the proposal unless it prominently 
bears the legend set forth in subsection (c).
    (b) Multilateral Assistance.--If any proposal is made to an 
international organization to extend aid, a loan, or any other form of 
assistance to a judgment evading foreign state, the Secretary of State 
shall provide to Congress prompt notice of such proposal that 
prominently bears the legend set forth in subsection (c).
    (c) Legend.--The legend set forth in this subsection is the 
following: ``REQUEST FOR GRANT-IN-AID OR LOAN BY A JUDGMENT EVADING 
FOREIGN STATE.''.

SEC. 8. REPORTS; RECOMMENDATIONS OF ADDITIONAL MEASURES.

    (a) Annual Reports to Congress.--Not later than January 31 of each 
year, the Secretary of the Treasury shall submit a written report to 
Congress that--
            (1) identifies each judgment evading foreign state; and
            (2) for each such judgment evading foreign state--
                    (A) quantifies the impact on the United States 
                economy, and cost to United States taxpayers, of the 
                unsatisfied final judgments outstanding against the 
                judgment evading foreign state; and
                    (B) describes all measures that the Secretary of 
                the Treasury and the Securities and Exchange Commission 
                have taken in the preceding year to carry out this Act.
    (b) Consideration of Documents and Other Information.--The 
Secretary of the Treasury may consider documents and other information 
received from third parties and from judgment evading foreign states in 
preparing each report submitted under subsection (a).
    (c) Termination of Designation.--If the Secretary of the Treasury, 
after evaluating documents and other information received from third 
parties and from a judgment evading foreign state, determines that the 
judgment evading foreign state should no longer be classified as such, 
the Secretary, in the next annual report to Congress under subsection 
(a), shall certify that the requirements and prohibitions under this 
Act no longer apply to such foreign state or to any state-owned 
corporation of such foreign state.
    (d) Other Public Reports To Include Information About Judgment 
Evading Foreign States.--The Secretary of State, the Secretary of the 
Treasury, and the Secretary of Commerce shall each reference the 
findings of the Secretary of the Treasury from the Secretary's most 
recent annual report to Congress under subsection (a) relating to the 
unsatisfied final judgments outstanding against the judgment evading 
foreign state in every report prepared for the public relating to the 
country risk or investment climate of such judgment evading foreign 
state.
    (e) Additional Measures.--The Secretary of the Treasury shall 
submit written recommendations to Congress regarding additional 
measures to further the purposes of this Act.
                                 <all>