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Case number 23-7064.

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TIG Insurance Company, a successor by merger to International Insurance Company and International Surplus Line Insurance Company of Ballant, versus Republic of Argentina, a successor to Carra Nacional de Arro y Seguro and Carra Nacional de Arro y Seguro.

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Mr. Bravin for the Ballant, Ms.

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Rama Murthy for Diapolis.

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Good morning.

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My name is Mark Bravin, and I am with the law firm of Mitchell, Silverberg, and Knupp representing the appellant, TIG Insurance Company.

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May it please the court?

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I would like to summarize what the case is about.

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Simply put, it's about the interpretation and application of the two FSIA jurisdictional

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exceptions, the waiver clause and the arbitration exception.

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And as an issue of first impression for this circuit, how do those two exceptions apply in the case of a sovereign successor to a sovereign entity that entered into a contract with clauses that are generally recognized as waiving immunity?

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I want to start with the status of CAJA when the contracts, the reinsurance contracts were made.

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Putting aside exceptions to the FSIA, CAJA would not have been entitled to sovereign immunity at that time, correct?

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That's correct, your honor.

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By accepting a contract governed by US law, the US forum, their immunity is waived.

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With regard to the alter ego theory, I take it that you could either get there through an agency argument or through a fraud injustice argument.

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I know you have an agency argument.

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Are you also making a fraud adjustment argument?

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Yes, Your Honor, we are.

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At the time that Argentina, through its resolutions,

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began the process of extinguishing the life of Caja, liquidating it.

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It expressly put out in resolutions that it was taking over the assets of liabilities.

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I thought that the alter ego, I could be wrong, but I thought the alter ego theory looks at what was the status of Caja at the time the reinsurance contracts were made, which would have preceded the resolutions in the 90s and 2000s.

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Yes, Your Honor.

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Are you saying there was any kind of fraud or injustice going on with regard to the relationship between CAJA and Argentina at the time that the reinsurance contracts were made?

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The fraud and injustice manifested itself when Argentina backed away from the obligations that CAJA entered into in those contracts, obligations to receive the premiums,

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invest them and have a reserve to apply to claims.

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And so those benefits were retained and there was no effort by CAJA to pay.

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I understand that argument.

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I think that you said at some point in the district court that CAJA was, quote, bested with decision-making autonomy and endowed with its own capital.

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So, I mean, that doesn't sound like an alter ego relationship.

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If that's all that there was, then I would agree with your honest assessment.

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But in fact, from the very outset, the government of Argentina created not just as a shareholding interest, but as an entity that was controlled by the government.

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What's your example of

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Like an example of when Argentina actually exercised the kind of control over CAJA that is not typical in a parent subsidiary relationship.

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So the clearest example is when the government decided that it would direct CAJA to enter the life insurance business and ensure all government officials at a certain level and above.

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and dictated the price at which that insurance would be offered, dictated the circumstances in which those policies would be applicable.

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That's the information you submitted with your motion for reconsideration, right?

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Yes.

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OK.

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And was there a reason you couldn't have presented that earlier?

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Sorry, no.

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Is there a reason you could not have presented that same material with your opposition to the motion to dismiss?

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No, we could have.

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this case proceeded in stages, in part because we believed and urged the district court to apply the successorship principles under the common law.

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And it was only after the court issued its opinion that we realized that the district court was missing these factors.

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And so we amplified the record, and the judge said, too late.

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I'm not going to consider that evidence.

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So can I ask you to move to the arbitration exception?

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So I understand your argument at a high level to be that when we look to whether the argument is made by Argentina, we should just look to successorship as one of several sort of potential doctrines under the common law that would bind a non-party

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To an agreement is that essentially the point that is one of our arguments, but it's not the only one we start with the principle that you look at the text and in this case the text uses a general term.

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borrowed from the common law, made by, it doesn't use words that would have narrowed the focus of the exception to arbitration agreements signed by a sovereign or entered into by a sovereign.

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And so using that analysis, the statute is broader than what the district court.

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My question would be, in this case, what is the law that governs the question of

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whether Argentina should be treated as a successor.

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Is it Illinois law?

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Is it something else?

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Is it federal common law?

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So under federal common law, all of the elements presented in our briefs and in the record below show that Argentina issued resolutions adopting the business

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The assets, the liabilities, the future contingent liabilities, and as the successor in interest, it stepped into Caja's shoes under the contracts.

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Yeah, I shouldn't hide the ball.

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I guess what I'm getting at is I don't think it's really been briefed what would be the source of law.

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And so I'm wondering if you think it would make sense if we agreed with you, the first level of your argument, to remand for sort of a choice of law analysis to occur.

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So Argentina, by adopting the contracts and the district court held that they adopted the contracts,

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they adopted the choice of law in those contracts, which is Illinois law.

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And that's the law that governs all of the substantive issues in the case and ought to govern these same questions that you're asking about.

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I mean, do we have enough facts here?

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I mean, if we agree with the legal principle, as Judge Garcia said, that successors in interest should be liable.

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Do we have enough information about whether Argentina is, in fact, successor in interest?

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I mean, there are questions about choice of law, possibly, as well as the underlying facts.

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Yes, Judge, you have enough in the record to show that under US law, which is applicable to the contracts,

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Argentina's resolutions need to be read as adopting.

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We have no briefing on Illinois law.

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You said Illinois law governs the question of successorship.

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We don't have any briefing on the content of Illinois law and how the facts here would apply under Illinois law.

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That's correct.

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And we don't rely on statutes for the successor and interest point here.

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We rely on the facts, and that's why we

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pointed to General Starr as a premier example, not the only one, but one that is exactly following the facts that we have.

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The Sixth Circuit did not rely on statutory law.

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It relied on common law.

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And that's what we are asking this court to do.

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And under the common law, principles of taking over the business, which the district court missed, a business that continued.

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with respect to incoming claims that had to be paid by taking over the assets and liabilities and promising that it was taking over the future contingent liabilities, Argentina became the successor under the common law principles that apply here.

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You mean federal common law principles?

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The Supreme Court has said that

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The common law from the states can be applied in a federal case.

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And there's obviously been debate about whether there is a federal common law.

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I don't think it's too much to ask that you identify the source of the common law you want us to apply.

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It could be federal common law.

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It could be Illinois common law.

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It could be Timbuktu common law, if that's your argument.

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But what common law is it that you're implying?

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So the common law of

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contracts, of assumption of contracts, of successorship to contracts, those are all principles that apply across the nation in cases where a foreign sovereign has taken over the responsibilities of a lower level entity.

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Is that federal common law?

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The cases don't identify.

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They simply articulate.

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I thought you had taken the position that it was Illinois law.

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Because I'll tell you, if you try to look, states approach these concepts differently.

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It's naive.

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And the point would just be that maybe it's Illinois, maybe it's Argentine law.

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But we don't have before us, and maybe it hasn't really been briefed, what the right answer is.

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I think I answered the question by saying we're not relying on statutes to establish successorship.

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We're relying on how the common law has assigned responsibility for an entity that takes over the contract that has these.

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Can I try another way?

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Yeah.

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I think your opposing side can win even if you are

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successor in interest if we buy the rest of their arguments.

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But I think in order for you to win, you have to show you are a successor in interest.

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And in order to show that, you need to identify for us the law that applies.

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And I think at this point, we could write an opinion saying you haven't met your burden because you haven't identified for us what law applies to show you are the successor in

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In that event, this court would be going against all of the cases that we cited in our brief, where the party that signed contracts with an arbitration clause, with recognized implicit waiver clauses, passed those waivers and responsibilities to their successor without- That's my colleagues want to ask more.

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I'm going to move on after this question.

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Imagine this sentence is in our opinion.

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TIG did not identify the source of common law that should apply.

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Correct statement?

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Partially.

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We identified the principles.

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We didn't tie them to a particular state.

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TIG did not identify who's common law.

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Who's common law.

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That would be correct.

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That would be correct.

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Okay.

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May I add just one other issue, which is in our briefs.

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All of this goes away if the court recognizes that Argentina is not entitled to raise these questions in this appeal because it waived them implicitly by litigating for two years on papers where we said there's- What was the response of the meeting that they filed that would have triggered the waiver?

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In this type of proceeding, it's not a pleading.

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It's a response to the petition.

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And the law in this circuit, going back to McKesson versus Iran, is that you look at the reality of what's going on.

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And in that case, this court said, what Iran filed without asserting sovereign immunity cannot be subject to the typical rules, because in that context, they weren't expected to assert sovereign immunity.

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But here, in our petition for enforcement, we laid it all out.

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We said, in case Argentina wants to raise jurisdictional immunity, here are all the reasons why, and it just ignored those.

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Just briefly on this, all the arguments you're making are about Argentina's litigation conduct in this litigation.

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Correct.

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But I think the question before us is whether the Northern District of Illinois had subject matter jurisdiction in 2018.

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And there's nothing to point to before that that would be an implicit waiver of this kind, right?

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Argentina never filed anything.

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That's correct.

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But for the 2018 judgment, the court had an arbitration award

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against Argentina and the court's mandate under US law was to consider whether under the New York Convention, which Argentina is a party to, whether this arbitration work should be enforced and should be confirmed, recognized, and enforced as a US judgment.

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And it made that determination.

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And that's why that court had jurisdiction

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Do you agree that in this circuit, subjective intent is required for an implied waiver?

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I agree that intent needs to be inferred by conduct, by promulgation of resolutions.

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You don't have to get into the mind.

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There is no mind.

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Obviously, there's no way to read a person's mind.

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When I read subjective intent as the district court used it, I take it to mean that there needs to be objective indications of subjective intent.

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You know, we do this all time with like mens rea with a criminal felt like where we have to read the criminal's mind.

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But if there's objective indications of a mental state, then that's that's enough.

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And here, I think the district court was saying there have to be objective indications of a subjective intent to waive.

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And I guess, do you agree with that standard?

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I do.

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And this court has recognized that the general star, excuse me, the general star make any inquiries into subjective intent?

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General Star followed a decision law, which includes in this circuit, such as worldwide minerals, that the issuance of, in this case, decrees saying we're taking it over, we're taking over the business, that is evidence of the intent.

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When a party, when Caja signed contracts that had typical examples of accepting foreign law, foreign forum, it didn't say in the contract or anywhere else, we intend to waive sovereign immunity.

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That's inferred from what it did and what it said.

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And that's what we're asking this court to do here, is to infer from what Argentina did in the resolutions to say it

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demonstrated sufficiently that it intended to take the contracts with all of their provisions, including the exceptions that have been recognized by this and every other court.

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Thank you.

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May it please the court, Rathna Ramamurthy from Cleary Gottlieb for the Republic of Argentina.

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The district court was correct to reject TIG's enforcement action because neither of the judgments that TIG seeks to enforce confers jurisdiction over the Republic under the Foreign Sovereign Immunities Act.

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TIG points to the FSIA's arbitration and implied waiver exceptions based on clauses and certain reinsurance contracts.

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But those contracts were entered by other parties acting on their own behalf, not acting on behalf of the Republic.

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And therefore, the clauses in those contracts do not jurisdictionally bind the Republic.

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Let me ask you, the arbitral panel here determined that Argentina was a successor in interest.

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How do we think about that decision by the arbitral panel?

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Are we bound by that?

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Do we report under what?

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What is the effect of that ruling by the arbitral panel for this panel?

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Yes, the arbitral panel in its default award made certain pronouncements.

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But here, I think the key is that there is a separation between the question of liability on the merits versus the jurisdictional questions that are before this court.

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And as a result of that, there are several cases across different circuits in which it's been found that a sovereign is responsible for contractual liabilities.

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Right.

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But do you agree that if Argentina is

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a successor in interest, then they would be bound by the Arbitral Clause.

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I know you obviously contest whether Argentina is a successor interest, but if we were to find that Argentina was a successor in interest, then wouldn't it be, you know, wouldn't we have subject matter jurisdiction?

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No, Your Honor.

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So even if Argentina were a successor in

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in some sense to the contractual liabilities, it would still be necessary to show that Argentina had intended to waive its immunity under the implicit waiver theory, or that it had made an agreement to arbitrate.

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So you think being a successor in interest is not sufficient for that?

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That's correct.

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It is not sufficient in this context.

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And for example, in Irish bank cases, we had a very similar factual paradigm where there was responsibility in some sense for liabilities, but that was a separate question from whether or not a sovereign

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jurisdictionally bound by contractual clauses that had jurisdictional implications, such as the choice of law clause or they are a successor.

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Why isn't that enough?

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I can understand why implied waiver would be different.

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Why isn't that enough to show the agreement was made by Argentina?

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And maybe one way to tee that up is, as I understand it, you concede that if Caja was Argentina's alter ego at the time of signing, then Argentina would have made the agreement, right?

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But alter ego is, if you look in a treatise, that's just one of five, six, seven ways that we bind non-signatories to agreements.

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And successorship is another one.

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And so it seems to me, I'm not sure why successorship or assumption would be on a different level than alter ego.

[00:21:00] Speaker 03:
Yes, Your Honor.

[00:21:00] Speaker 03:
So alter ego is a doctrine with a different status as a result of the fact that the alter ego doctrine within the FSIA context has been developed as analysis of the statute.

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So this court in Transamerica, for example, held that the band check alter ego analysis is the correct test for determining whether or not a foreign state can be considered jurisdictionally bound.

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Common law theories such as successorship or others have a separate function.

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And this is why, for example, in the Gator Assets case, the Second Circuit rejected and expressed great skepticism over the idea that those theories could be applicable.

[00:21:35] Speaker 04:
But alter ego.

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doesn't the doctrine of being an alter ego, piercing the veil, does not come from the FSIA.

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What those opinions say is that because you are treated like a party under an alter ego theory, then you've made the decision.

[00:21:50] Speaker 04:
And what I'm struggling with is why you wouldn't also say, if you are treated like a party because you are a successor to the contract, then you are treated as having made the agreement.

[00:22:01] Speaker 03:
So the alter ego.

[00:22:02] Speaker 04:
In other words, we just haven't had this case yet.

[00:22:05] Speaker 03:
Yes, I understand.

[00:22:05] Speaker 03:
So the author ego doctrine has been carefully calibrated for judicial opinion.

[00:22:10] Speaker 03:
So the trans America case, the gss group case have explained to the contours of when you have the limited finding and you have the exceptional circumstances.

[00:22:20] Speaker 03:
of an alter ego finding that would create a world where the foreign state could be bound by an entity that was not foreign state itself.

[00:22:27] Speaker 03:
Common law, as I think your discussion with plaintiffs council brought to light, brings in this possibility of just extreme variation and a much wider scope potentially than the FSIA was enacted.

[00:22:42] Speaker 03:
The FSIA was enacted to

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stem those types of issues, and to make sure that liability in this area and jurisdictional binding of a foreign state was really carefully calibrated.

[00:22:53] Speaker 03:
The alter ego doctrine has been developed in a way that is consistent with that, whereas bringing in all these other common law theories creates that addiction.

[00:22:59] Speaker 04:
So what is the source of law for the alter ego theory?

[00:23:03] Speaker 04:
Is that just federal common law?

[00:23:05] Speaker 03:
Yes, exactly.

[00:23:06] Speaker 03:
So that would be it was first developed in the Banachek case, and then it was applied in this context to jurisdiction in the Transamerica decision by this court.

[00:23:14] Speaker 03:
So it evolved and the Crystal Lake's case explicitly says this as a function of federal common law in interpreting the foreign sovereign immunity.

[00:23:23] Speaker 04:
And is there any case saying that successorship should not be developed in the same way if and when cases arise?

[00:23:33] Speaker 03:
So the closest to that would be the Gator Assets case out of the Second Circuit, which expressed great skepticism over the idea of importing in these other common law doctrines.

[00:23:42] Speaker 03:
So I think the difference is the alter ego doctrine has been developed within the context of the FSIA and what TIG is seeking to do here is to expand the limitations of the FSIA through reference to these other types of common law doctrines.

[00:23:56] Speaker 05:
Can I just get some help on terms and titles?

[00:24:02] Speaker 05:
Assuming that CAJA had the relationship with Argentina that you think it had when these insurance contracts were formed, was CAJA a sovereign instrumentality, a sovereign entity?

[00:24:15] Speaker 05:
What are we supposed to, what's the term?

[00:24:18] Speaker 05:
Instrumentality would be the correct.

[00:24:19] Speaker 05:
Sovereign instrumentality.

[00:24:20] Speaker 03:
Yes.

[00:24:21] Speaker 03:
Yes, exactly.

[00:24:22] Speaker 03:
And as a sovereign instrumentality, CAJA is presumed to be separate from the Republic.

[00:24:26] Speaker 03:
It acted on its own behalf.

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It was adequately capitalized.

[00:24:29] Speaker 03:
It's created pursuant to an enabling law.

[00:24:31] Speaker 03:
It had its own directors.

[00:24:32] Speaker 03:
And the Republic really had very limited involvement.

[00:24:35] Speaker 02:
So what if Caja's business had been transferred to another state instrumentality, rather than having its assets being assumed by Argentina, the state itself?

[00:24:45] Speaker 02:
Would that make a difference under 1605?

[00:24:48] Speaker 03:
Even in that context, you would still have to find that the receiving instrumentality intended to accede to the contractual clauses with jurisdictional implications.

[00:24:58] Speaker 03:
So under the implicit waiver exception, you'd still have to find subjective intent in the circuit of the second instrumentality to waive its own immunity.

[00:25:07] Speaker 03:
Or in context of the arbitration agreement, you would still have to find that the second instrumentality basically survived the alter ego test such that it could be considered to have made the agreement.

[00:25:19] Speaker 04:
So I have a question about that.

[00:25:23] Speaker 04:
You relied heavily on the fur tree.

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case, which I believe is the Ireland, assuming the contracts, the business of a private entity.

[00:25:32] Speaker 04:
And that case explicitly distinguishes the Egypt Air case in which the prior entity was a sovereign entity.

[00:25:40] Speaker 04:
And for implied waiver purposes, for example, that could be very important because then you know that that contract, as applied to the prior entity, affected a waiver of sovereign immunity.

[00:25:52] Speaker 04:
And what those cases are, the distinction they draw essentially is saying, if you assume the liabilities of a entity that had contracts with the effect of waiving sovereign immunity, then you implicitly, you don't just get to come and tell us, we didn't realize that.

[00:26:08] Speaker 04:
You might be able to have that argument if it's a private entity.

[00:26:12] Speaker 04:
Why isn't that reading of fir tree in the Egypt Air cases something that cuts against you?

[00:26:19] Speaker 03:
There's an additional distinction with the Egypt Air cases, which is there you had a subrogi relationship.

[00:26:24] Speaker 03:
So you explicitly had a factual paradigm where one entity stood in the shoes of the other as a subrogi.

[00:26:29] Speaker 03:
That's different than what we have here.

[00:26:31] Speaker 04:
If you're a successor, don't we generally say you stand in the shoes?

[00:26:35] Speaker 04:
We don't have the facts or know what law to apply to make that determination.

[00:26:40] Speaker 04:
But I'm pretty sure that in any case where you say you're a successor or you assume the liability of another party under a contract, that means you stand in their shoes in the exact same way.

[00:26:51] Speaker 03:
So I think there's a separation here between standing in shoes for terms of assuming responsibilities or liabilities versus standing in shoes for jurisdiction.

[00:27:00] Speaker 03:
And there's an additional hurdle as a result of that, which is you must show under the FSIA that there was an agent who had authority to waive the entity's immunity.

[00:27:09] Speaker 03:
So this circuit has not pronounced on whether actual or apparent authority is required.

[00:27:13] Speaker 03:
This is the Capitol Keys case.

[00:27:15] Speaker 03:
But here, you don't have either one.

[00:27:16] Speaker 03:
And so apparent authority, as explained in the Capitol Keys case, turns on representations made by the principal, so here by the republic.

[00:27:25] Speaker 03:
And there are no representations by the Republic that CAHA or David Peterson, who signed the other contract, was authorized to act on its behalf.

[00:27:33] Speaker 03:
So I think this paradigm shows exactly what the problem would be with that rule, which is that you would not be able to show that there was authority for such a waiver because instrumentalities presumptively act on their own behalf, which is exactly what was happening here with CAHA.

[00:27:51] Speaker 02:
Thank you very much.

[00:27:55] Speaker 02:
Raven, we'll give you two minutes.

[00:27:57] Speaker 01:
I intended, Your Honor, to reserve four minutes, but I'll stay up here only as long as you tell me it's OK.

[00:28:07] Speaker 01:
So I do have some points I'd like to rebut from what you've just heard.

[00:28:12] Speaker 01:
First, Argentina cites no authority, and we couldn't find any, that where a successor steps into the shoes of a predecessor sovereign entity,

[00:28:25] Speaker 01:
that it gets to choose which portions of contractual provisions it's going to be bound by and which ones it won't.

[00:28:34] Speaker 01:
Argentina didn't indicate in its pronouncements and its resolutions that it wasn't going to take on some parts of the contractual obligations.

[00:28:45] Speaker 01:
And it listed the 2001 Arbitration Award and judgment on a schedule of things that it was taking over.

[00:28:54] Speaker 01:
My colleague seemed to indicate, and perhaps she's right, that federal common law is the source for alter ego and band check and implicitly in General Star.

[00:29:08] Speaker 01:
There wasn't in General Star a statement that we are applying federal common law, but that's what they were doing.

[00:29:18] Speaker 01:
And I think that should be enough for this court.

[00:29:22] Speaker 01:
I also want to mention that,

[00:29:24] Speaker 01:
Argentina, by statute, got 70% of the income, the profits, from Caja.

[00:29:34] Speaker 01:
Its attorney general issued an opinion saying that the kind of entity that Caja was, an autarkic entity, that everything it does is for the benefit of the state.

[00:29:46] Speaker 01:
And the separation that US law recognizes between a sovereign entity and the sovereign

[00:29:54] Speaker 01:
doesn't exist here.

[00:29:55] Speaker 01:
They had federal employees, federal facilities.

[00:29:59] Speaker 01:
They were told to issue life insurance to federal officials.

[00:30:05] Speaker 01:
There's a whole list in our brief.

[00:30:06] Speaker 01:
And there's more than enough for this court to say, yeah, we're going to find that as an alternative.

[00:30:15] Speaker 01:
Caja and Argentina were alter egos from the outset, from 1979, not just

[00:30:21] Speaker 01:
at the time of the arbitrations.

[00:30:24] Speaker 01:
And then finally.

[00:30:25] Speaker 02:
Okay, thank you.