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LNC Investments LLC v. Republic Nicaragua

February 1, 2005

LNC INVESTMENTS LLC, F/K/A INVESTMENTS, INC.*FN1, APPELLANT
v.
THE REPUBLIC NICARAGUA



On Appeal from the United States District Court for the District of Delaware (D.C. No. 01-mc-00134). District Judge: Honorable Joseph J. Farnan, Jr.

Before: Sloviter, Ambro, and Aldisert, Circuit Judges.

The opinion of the court was delivered by: Sloviter, Circuit Judge.

PRECEDENTIAL

Submitted on Review of Jurisdiction February 1, 2005

This garnishment action arises from the District Court of Delaware. Although the named parties in the suit are the Republic of Nicaragua and LNC Investments, Inc. ("LNC"), the issue before us arises from LNC's attempt to garnish funds from Megatel, a company which owes $50 million to Nicaragua. The District Court quashed the writ of attachment LNC filed on Megatel because it concluded that Megatel would be exposed to double liability if the writ were enforced.*fn2 The District Court had jurisdiction pursuant to 28 U.S.C. § 1963.*fn3 We hold that this court lacks jurisdiction because the District Court's Order quashing the writ of attachment against Megatel was not a final disposition of the case under 28 U.S.C. § 1291.

I.

A. Megatel's $50 million Obligation to Nicaragua

By agreement dated August 31, 2001 ("Enitel Agreement"), the Republic of Nicaragua sold forty percent of the authorized and outstanding shares of Empresa Nicaraguense de Telecomunicaciones S.A. ("Enitel"), a state-owned and controlled telecommunications company in Nicaragua, to a consortium formed by Telia Swedtel AB, a Swedish telecommunications company, and EMCE, a Honduran holding company.

The Enitel Agreement provided that the consortium could organize a company for the purpose of purchasing the shares, and that "all rights, privileges and obligations granted to the [consortium] through this Agreement shall be transferred ipso jure" to that company. App. at 271. Pursuant to this clause, the consortium formed Megatel to purchase the shares under the Enitel Agreement. On December 18, 2001, Megatel paid $33,100,999 in cash to Nicaragua towards the price for the shares of Enitel as per the Enitel Agreement. In addition, Megatel agreed to pay the remaining $50 million of the agreed price in five annual installments of $10 million a year.

B. The Republic of Nicaragua's $86 million Debt to LNC

On December 11, 1980, Nicaragua entered into a loan agreement ("Loan Agreement") with a syndicate of banks to restructure its then existing debt. The Loan Agreement provided that Nicaragua would waive its sovereign immunity with respect to any of its obligations arising under the agreement. It further stated that any final judgment secured by lenders in New York federal court "shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law, and [Nicaragua] hereby irrevocably submits to the jurisdiction of the courts of each jurisdiction in which any Person shall seek to enforce such judgment." App. at 112-113.

In the 1980s, Nicaragua was unable to make payments required under the Loan Agreement and defaulted on the loans. In 1986 and 1987, LNC purchased a portion of the debts owed by Nicaragua under the Loan Agreement on the secondary market. LNC then brought suit in the United States District Court for the Southern District of New York for judgment on the loans. In LNC Inv., Inc. v. Republic of Nicaragua, No. 96 Civ. 6360 (JFK) slip op. at 2 (S.D.N.Y. Apr. 2, 1999), LNC was awarded a final judgment of $86,885,856.63 plus $230,000 in attorney's fees.

LNC asserts that it has been unable to retain counsel in Nicaragua to enforce its judgment in the courts of that country. Thus, it has attempted to satisfy its judgment by garnishing the assets of third parties who owe money to Nicaragua. On several occasions, other federal courts have denied such attempts for reasons other than the merits of LNC's judgment. See LNC Inv., Inc. v. Republic of Nicaragua, No. 99-2090, slip op. (S.D. Fla. Oct. 2, 2002) (rejecting LNC's attempt to enforce judgment by serving a writ of garnishment on Swedtel AB, because LNC failed to establish personal jurisdiction over Swedtel AB as a non-resident foreign corporation); LNC Inv., Inc. v. Republic of Nicaragua, No. 96 Civ. 6360 (JFK), 2000 WL 745550 (S.D.N.Y. June 8, 2000) (rejecting LNC's attempt to satisfy judgment by attaching income tax and value-added tax payments owed by American Airlines and Continental Airlines to Nicaragua on ground that the assets were immune from attachment under the Foreign Sovereign Immunities Act ("FSIA")); LNC Inv., Inc. v. Republic of Nicaragua, 115 F. ...


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