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Click here for the full text of this decision FACTS:In 1984, the Republic of Congo entered into a lending contract with Equator Bank Ltd. for a loan to fund highway constructions projects. The country defaulted a year later, and the Connecticut Bank of Commerce, who had been assigned the loan, secured a default judgment against the Congo in a London court. The bank then filed suit in New York to domesticate the foreign judgment, and that court entered a $13.6 million default judgment against the Congo. The New York court also authorized the bank to attach U.S. assets owned by the Congo to secure payment of the judgment. The bank registered its judgment in a Texas state court in Jan. 2001. The bank then filed a garnishment action against three companies that were successors-in-interest to a 1979 joint venture between a state-owned Congolese company (SNPC) and several oil companies for production of oil in the Congo. Under the terms of the agreement, the Congo permitted the joint venture to extract oil in exchange for the payment of royalties and a variety of taxes. A mining royalty can be paid in cash or in kind from the oil lifted from the wells. The Congo retains the choice of the form payment is to take, though it usually elects to have the royalties paid in kind. The agreement also obligates the companies to make periodic tax payments to the Congo based on the net income from covered activities. The remaining profits are split among the parties to the agreement in proportion to their working interests. The Congo removed the case to federal district court, then moved for dismissal, arguing that it was immune from the suit under the terms of the Foreign Sovereign Immunities Act. The bank argued the Congo had waived its immunity in this case. The district court dismissed the action. Among other things, the district court ruled that even when a foreign state purports to waive its immunity completely, the FSIA only permits execution on property that is “commercial.” The district court concluded that the royalty and tax payments to the Congo were non-commercial in nature, and thus the property was immune from attachment. The bank appealed, and on a first appeal, this court ruled that while the FSIA does apply only to commercial property, the district court erred by focusing on how the property was generated instead of fully considering what it is “used for.” In its remand, this court state that “If it turns out that the royalties and tax obligations are not used for any commercial activity in the United States, the district court should dissolve the writs of garnishment and dismiss the action.” On remand, the district court held that the Congo did not use its tax and royalty obligations for commercial activities. The bank, through its new successor, Af-Cap, appeals. Af-Cap raises two arguments: 1. the district court erred in disregarding the Congo’s express waiver of immunity contained in the lending contract; and 2. the district court erroneously concluded that the royalty and tax payments were not used for commercial activity. HOLDING:Reversed and remanded. The court rejects Af-Cap’s first argument, finding that the issue was already disposed of � in the Congo’s favor � during the first appeal. The court spends the remainder of the opinion discussing Af-Cap’s second argument. The court notes that resolution of this issue � whether the tax payments were used for commercial activity � requires an assessment of both law and fact. As such, the court agrees with the district court’s factual determination that the Congo has used these tax and royalty obligations for an explicitly commercial purpose: in 1989, an insurance company secured satisfaction on a $26 million loan by garnishing the same tax and royalty obligations at issue here. Since it finds no error in the district court’s factual finding, the court turns to the strictly legal questions: whether such past commercial use is sufficient to render these obligations” property used for commercial purposes” under the terms of FSIA. The court agrees with the district court’s reservations about defining property use as commercial in nature solely by reference to past single and/or exceptional commercial uses. A holistic approach should be used to determine the commercial (or non-commercial) status of a property’s use, the court says. Any analysis should examine the totality of the circumstances surrounding the property and should include an examination of the past uses of the property, as well as its present use, all with an eye toward determining whether the commercial use of the property, if any, is so exceptional that it is “an out of character” use for that particular property. This is basically the approach used by the district court, but the court nonetheless concludes that the facts and analysis produce a different result. Looking back at the $26 million debt that had to be repaid, the court notes that the amount was not insignificant and took a long time to repay. “Such a continuing, extended and monetarily significant use is neither exception nor de minimis,” the court finds. “Moreover, it is difficult to say that the execution on this obligation would be so unusual that it would shock and disrupt the public affairs of the Congo.” The court also notes that the Congo itself contemplated engaging in the same type of use again. Such contemplated use is “strongly suggestive” that the use of these funds was, in general, limited to sovereign use, and is hardly of the type the FSIA was designed to protect. The court thus concludes that the tax and royalty obligations at issue here are used for commercial purposes. The court then turns to confirm that the sought-after property has its situs in the United States, acknowledging that royalty and tax payments are intangible in nature. The court finds the “common sense” approach here yields a conclusion that the situs of these obligations is the United States, the situs of the companies. Applying ordinary situs rules does not, in this case, interfere with the goals of FSIA or imperil the sovereignty of the Congo. OPINION:Jolly, J.; Jolly and Prado, JJ.

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