FSIA: Attempted Garnishment of Foreign Sovereign Oil Revenues

Af-Cap, Inc. v. Chevron Overseas (Congo) Ltd.
2007 WL 177823 (CA9 Jan. 25, 2007)

In this case, Af-Cap, a creditor of the Republic of Congo, garnished property held by Chevron Overseas. The Congo had defaulted on a $6.5 million loan for construction of a highway made by Equator Bank, Af-Cap's predecessor. In 1985, the Congo defaulted on the loan. In 1986, the Connecticut Bank of Commerce ("CBC") secured a judgment in the United Kingdom that was later converted to a U.S. judgment in New York. CBC later registered the judgment in both Texas and California.

In this case, Af-Cap attempted to secure the judgment based on oil royalties that Chevron owed to the Congo. CA9 held that section 1610 of the Foreign Sovereign Immunities Act applies: "The property in the United States of a foreign state ... used for a commercial activity in the United States, shall not be immune from attachment in aid of execution, or from execution, upon a judgment entered by a court of the United States or of a State ... if: (1) the foreign state has waived its immunity from attachment in aid of execution, or from execution ..." 28 U.S.C. § 1610(a).

Here, the Court determined that the obligations to the Congo owed by Chevron are not for commercial activity in the United States. Accordingly, the district court affirmed the dissolving and vacating of the garnishments and liens Af-Cap had established.