Affirming the trial court's decision ordering an Argentine reinsurer to post pre-judgment security, the U.S. Court of Appeals for the Seventh Circuit held that (1) the foreign reinsurer failed to present sufficient prima facie evidence to establish that it was an instrumentality of the Argentine government, and (2) even if it had, Argentina, and therefore the reinsurer, waived its immunity under the Foreign Sovereign Immunities Act (FSIA) when it signed two treaties governing international commercial arbitration and the recognition and enforcement of foreign arbitral awards.
The Argentine reinsurer, Caja Nacional de Ahorro y Seguro, owed over $2 million in claims payments under two reinsurance treaties to a U.S. cedent, International Insurance Co. (IIC). When IIC initiated an arbitration, Caja failed to respond, and the panel entered a default award of approximately $4.7 million. When IIC filed a petition to confirm that award in federal court, Caja appeared and opposed it on the basis that it was immune from American court jurisdiction because it was an instrumentality of a foreign state. Based on the Illinois insurance code, IIC moved for an order requiring Caja either to post pre-judgment security or to strike all of its responsive pleadings. The district court granted IIC's petition, struck Caja's pleadings, and confirmed the arbitration award.
After first confirming that it had subject matter jurisdiction over this appeal (both federal question and diversity jurisdiction), the Seventh Circuit turned its attention to Caja's argument that, as an instrumentality of a foreign government, it was immune from American court jurisdiction under the FSIA. Disagreeing, the court of appeals held that Caja had provided insufficient evidence to demonstrate that it was a foreign instrumentality, rejecting as inadequate two affidavits from the reinsurer's U.S. and Argentine attorneys and a 1998 Spanish document purportedly indicating that its administration had been transferred to the government of Argentina.
Even if Caja had succeeded in meeting its prima facie burden of proof, the Seventh Circuit concluded that Argentina waived its immunity under the FSIA when it signed two treaties governing international commercial arbitrations and the enforcement of foreign arbitral awards. Also, the trial court did not abuse its discretion by imposing the pre-judgment security requirement on Caja given its poor track record in repeatedly failing to appear for the arbitration proceeding.
International Insurance Co. v. Nacional de Ahorro y Seguro, No. 01-3045, 2002 U.S. App. LEXIS 10985 (7th Cir. June 7, 2002).