First Tuesday Update is our monthly take on current issues in commercial disputes, international arbitration, and judgment enforcement. In this update, we take a look back at 2023 and note some issues to watch in 2024 for each topic. Three highlights from last year were: first, the Crystallex litigation—including the Supreme Court's denial of Venezuela's certiorari petition (which happened yesterday); second, the Supreme Court's decision regarding RICO and judgment enforcement; and third, the post-judgment federal interest rate, which is back as a real consideration after being at near-zero levels for over a decade. We review these key developments in turn and look forward to continuing our updates on the first Tuesday of every month in 2024.

1. Crystallex

We have covered, and will continue to cover, the long-running dispute between Crystallex International Corporation v. Bolivarian Republic of Venezuela, No. 17-mc-151, D. Del. (Crystallex). Yesterday, on January 8, 2024, the United States Supreme Court denied Venezuela's writ of certiorari to overturn the latest veil-piercing order holding PdVSA liable for Venezuela's debts—arguing that relying on Maduro's conduct as a basis to pierce the veil was invalid since the US does not recognize that government. A Supreme Court review would have likely delayed the process of selling the stock of Citgo. With another hurdle eliminated, the sale closing date currently set for July 2024 remains on track—though there are still prospects for delay.

This case has been, and will continue to be, a precedent-setting one covering an array of judgment-enforcement issues, including, among other issues, the interrelationship between international arbitration awards and court judgments; Foreign Sovereign Immunities Act (FSIA) issues; piercing the corporate veil; registering judgments in different federal districts; enforcing federal judgments pursuant to the state procedures in which the federal court sits; the interrelationship (and tension) between secured creditors and judgment-creditors; priority; and last but certainly not least, sanctions and the Office of Foreign Assets Control (OFAC) policy.

We expect that our 2024 updates will continue to cover this case as the sale process moves closer to the finish line.

2. The United States Supreme Court decision in Yegiazaryan v. Smagin

The Supreme Court held that a party can assert a RICO claim to enforce foreign arbitral awards where the circumstances around the alleged injury arose in the United States. In Yegiazaryan v. Smagin, the Supreme Court held that the judgment-creditor, Smagin, could bring his RICO claim, having successfully plead a domestic injury under the RICO statute, where defendant had created a web of offshore entities to shelter his assets from the jurisdiction of the district court. The Court declined to adopt a specific set of factors or a bright-line rule to guide future courts in determining whether the circumstances in a given case constitute a "domestic injury." With respect to Smagin, the Court concluded that his allegations demonstrated a "domestic injury." Generally, Smagin's allegations were that (1) the injury was the inability to collect the judgment in California; (2) defendants, a California resident, developed a scheme that largely occurred in the US; and (3) the impact of this alleged wrongdoing was felt in the US.

Our prediction is that in 2024 more judgment creditors will pursue RICO claims, including taking advantage of state statutes that permit RICO claims pursuant to state law rather than necessarily meeting all of the federal statutory elements. This powerful tool is just starting to be used by judgment-creditors.

3. The federal post-judgment interest rate is back

The federal post-judgment interest rate, which is set by statute and is based on the weekly average 1-year constant maturity Treasury yield, has materially increased recently. The rate is fixed when the judgment is entered and does not vary for the duration of the outstanding judgment. As a result, many federal judgments have been accruing interest at a very low rate (sometimes close to zero interest) following the 2008-2009 financial crisis and in the post-COVID era of hyper-low interest rates. The Federal Reserve has recently increased rates and federal judgments are earning interest at much higher rates than over the last 15-years. However, as inflation has leveled out, so too have interest rates and some economic experts are predicting lower rates (but not near-zero rates) over the near-term. As of this writing, the post-judgment interest rate for judgments entered from January 1 through January 7, 2024 is: 4.81%.

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