District Court Finds Chabad Compliant With Post-Judgment Enforcement Procedures; Rules That Cultural Exchange Property Is Not Subject To Seizure Under FSIA; And Denies Sanctions Without Prejudice

Agudas Chasidei Chabad of United States v. Russian Federation, et al., 05-cv-1548 (RCL) (D.D.C. July 2011), is a decision by Chief Judge Lambert addressing several noteworthy issues of international practice that we have posted on previously. The decision also shows a U.S. federal court going to extraordinary lengths to show deference and comity to a non-U.S. sovereign — who walked away from U.S. litigation after being actively involved for four years — without abrogating the rights of U.S. litigants protected under international and U.S. law.

The case involves Chabad's efforts to recover from Russia a collection of religious books and artifacts concerning the cultural heritage of Chasidism. The objects include a library and archives of tens of thousands of pages. The objects came into Russia's hands through the violation of international law, the Court had earlier ruled. The former Soviet Union had officially determined that it had no right to the property, but its orders requiring the return of the property to Chabad were nullified by the new Russian Federation.

Defendants in the suit are the Russian Federation, a "foreign state" under the FSIA, along with three Russian instrumentalities. Defendants had withdrew from the case after "nearly four years of active litigation" on the statement that, "The Russian Federation views any continued defense before this Court and, indeed, any participation in this litigation as fundamentally incompatible with its rights as a sovereign nation".

Earlier in the litigation the Court had granted a motion for entry of a default judgment, having earlier made the laborious and specific findings required by the FSIA in order to do so. See 441 F. Supp. 2d 6 (D.D.C. 2006). The current decision rules:

First, that Chabad had properly served defendants with notice of the default, a requirement of the FSIA before enforcement proceedings can commence and no mean task both given the intricacies of the statute and the recalcitrance of the defendants.

Second, the Court found that due notice had been given to defendants of the entry of the default judgment, which is a separate and specific requirement of FSIA enforcement procedures. See our posting on Rubin v. Islamic Republic of Iran, 637 F.3d 783, 800 (7th Cir. 2011) ("[E]ven when the foreign state fails to appear in the execution proceeding, the court must determine that the property sought to be attached is excepted from immunity under § 1610(a) or (b) before it can...