Martinez V Cuba

Attachment Under the Terrorism Risk Insurance Act: Martinez v Cuba in 2011

United States views on international law (based on the document “Digest of U.S. Practice in International Law”): B. The Assets at Issue Are Not “Blocked Assets” Subject to TRIA.

Plaintiff's contention—that all property interests governed by the CACR are subject to a prohibition on transfer absent a license from the Office of Foreign Assets Control (OFAC) and, thus, should be considered “seized or frozen” as defined in the TRIA—was addressed and disposed of in Weinstein v. Islamic Republic of Iran, 299 F. Supp. 2d 63, 75 (S.D.N.Y. 2004). To briefly reiterate, the TRIA provides that persons who obtain judgments under FSIA Section 1605(a)(7) may execute or attach “blocked assets” of a terrorist party—defined in part as any asset “seized or frozen by the United States” pursuant to (inter alia) Section 5(b) of the Trading with the Enemy Act (50 U.S.C. App. § 5(b))—the statute under which the CACR is promulgated. See TRIA § 201(d)(2)(A). Section 5(b) of the TWEA authorizes the President to do more than seize or freeze assets; it also grants authority to regulate any transfers, transactions, or dealings in the property interests of a foreign country. See 50 U.S.C. App. §5(b)(1)(B). Transactions subject to regulation under the CACR include those incident to the provision of travel and carrier services to Cuba. See 31 C.F.R. § 515.572. While the garnishees are prohibited from providing flight services to Cuba absent authorization from OFAC, the mere regulation of such services does not mean the assets plaintiff now seeks to garnish are “seized or frozen” under the TRIA. To the contrary, as OFAC has explained, the assets at issue—payments owed to a Cuban entity—came into being after their transfer was authorized, and they have not been subject to an across-the-board prohibition on transfer.

Congress has recognized the distinction between the attachment of assets that are “seized or frozen” (TRIA, § 201(d)(2)(A)) and the attachment of “property with respect to which financial transactions are prohibited or regulated” pursuant to the TWEA (FSIA Section 1610(f)(1)(A) waived by the President). See Weinstein, 299 F. Supp. 2d at 74, 75. This distinction is critical here because regulation of the garnishees' carrier services and related financial transactions to pay Cuban entities implements U.S. foreign policy to permit direct flights from the United States to Cuba for certain purposes. Under plaintiff's theory, once the transfers at issue were authorized by OFAC, they could simultaneously be halted through garnishment—foreclosing the Government's policy goals and rendering OFAC's action a nullity.

Plaintiff's assertion that her garnishment action would not jeopardize authorized flights is not her judgment to make and cannot be credited. Plaintiff ultimately seeks over $50 million to satisfy her judgment and, if her arguments are accepted, future debts owed by the garnishees would be subject to garnishment by plaintiff or other judgment creditors of Cuba—threatening the continuation of authorized flights and the destruction of the policy interests they serve.**** OFAC's determination that the authorized transfers here are not “seized or frozen” under TRIA serves significant governmental interests, is well supported by existing authority, and is entitled to deference.

More about Attachment Under the Terrorism Risk Insurance Act: Martinez v Cuba

The district court judge referred the garnishment action to a magistrate judge, who issued his report and recommendation granting summary judgment and dissolving the writs of garnishment on June 27, 2011. The magistrate judge concluded that there was no dispute that the CACR required a license to garnish the assets at issue. “Absent a license from OFAC or some other statutory basis for attachment of the Garnishees' assets that supplants the CACR license requirement, Plaintiff's writs of garnishment are null and void and must be dissolved.” The magistrate's report proceeded to find, in accordance with the U.S. arguments, that the repeated presidential waiver of § 1610(f)(1) rendered the FSIA unavailable as a basis for garnishment. And the magistrate agreed with the U.S. view that the payments at issue here did not meet the definition of a “blocked asset” under the TRIA. The district court judge later adopted this reasoning by the magistrate, granted the U.S. motion for summary judgment and to quash the writs of garnishment, holding that:

Developments

Plaintiff cannot satisfy the default judgment that she obtained against the Government of Cuba by garnishing payments owed by the listed air charter companies. Since Plaintiff does not have the required license from the United States Department of Treasury's Office of Foreign Assets Control, the writs of garnishment are null and void. Furthermore, in this case, neither the Foreign Sovereign Immunity Act nor the Terrorism Risk Insurance Act authorizes garnishment.

Details

Martinez appealed the district court's decision to the U.S. Court of Appeals for the Eleventh Circuit. But she subsequently voluntarily dismissed her appeal.

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See Also

• Privileges
• Immunities
• Foreign Sovereign Immunities
• Execution Of Judgments
• Post-Judgment Actions
• Attachments
• Terrorism
• Risk
• Insurance

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Notes and References

1. **** Editor's note: see in the content of this world legal encyclopedia 16.A.6.e(1) for a discussion of revisions to the Cuban Asset Control Regulations in 2011 that expanded opportunities for travel to Cuba.