US court rules in favour of A&B in Stanford Ponzi scheme case

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Antigua & Barbuda has, according to lexology.com, successfully appealed a US district court ruling that under certain exceptions to the Foreign Sovereign Immunities Act (the “FSIA”), Antigua was subject to suit relating to its alleged involvement in the Stanford Ponzi scheme.
Finding that the commercial activity exception to sovereign immunity was not satisfied and that the waiver exception applied only to claims for which jurisdiction was conceded by Antigua, the Fifth Circuit reversed the district court’s determination that it had jurisdiction over certain claims against Antigua, a foreign nation, and remanded for further proceedings.
The plaintiffs in two putative class actions filed the suit alleging Antigua was involved and complicit in the Ponzi scheme perpetrated by R Allen Stanford.
Stanford owned and operated numerous financial entities, including an offshore bank in Antigua, which he used in his scheme to defraud investors.
Plaintiffs alleged that Antigua actively and willingly participated in Stanford’s scheme and knowingly provided Stanford and his businesses a safe harbour from regulatory scrutiny. They asserted that Stanford and Antigua had a quid pro quo relationship in which Stanford paid incentives and bribes and made loans to Antigua and its public officials to ensure that he and his organisations were deemed compliant with relevant local regulations.
The two putative class actions were consolidated for appeal solely to address whether, under the FSIA, Antigua is subject to the jurisdiction of US courts.
The FSIA is the sole source of subject matter jurisdiction in litigation against a foreign state. Generally, foreign states are immune from the jurisdiction of US courts. However, the FSIA includes exceptions which, if applicable, permit a US court to exercise subject matter jurisdiction over a foreign state.
In this case, the plaintiffs argued that the commercial activity exception and the waiver exception of the FSIA authorised the exercise of jurisdiction over Antigua.
(More in today’s Daily Observer)

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