Fulwood v. Federal Republic of Germany, et al

Filing

OPINION issued by Sandra L. Lynch, Chief Appellate Judge; Juan R. Torruella, Appellate Judge and Rogeriee Thompson, Appellate Judge. Published. [12-2143]

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Entry ID: 5776362

United States Court of Appeals
For the First Circuit
No. 12-2143
RONNIE FULWOOD,
Plaintiff, Appellant,
MORTIMER OFF SHORE LTD.,
Plaintiff,
v.
FEDERAL REPUBLIC OF GERMANY,
Defendant,
NORDDEUTSCHE LANDESBANK GIROZENTRALE; HSH NORDBANK AG;
WESTLB AG; HELABA LANDESBANK HESSEN-THUERINGEN;
LBBW LANDESBANK BADEN-WUERTTEMBERG,
Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Rya W. Zobel, U.S. District Judge]

Before
Lynch, Chief Judge,
Torruella and Thompson, Circuit Judges.

Robert A. Scher, with whom Rachel Kramer and Foley & Lardner
LLP were on brief, for appellant.
Jeffrey Harris, with whom, Max Riederer von Paar, Walter E.
Diercks, Rubin, Winston, Diercks, Harris & Cooke, LLP, Evan FrayWitzer, and Ciampa Fray-Witzer, LLP were on brief, for appellees.

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LYNCH, Chief Judge.

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Within the last decade, bondholders

who acquired old German Agra Bonds issued in 1928 to aid Germany's
agricultural recovery from World War I have sued both the Federal
Republic of Germany and enumerated German Banks in the federal
courts for payment on the bonds.

Two plaintiffs in 2010 brought

such suits in federal court in Massachusetts, seeking over $7
billion in accrued principal and interest on some 1,694 Agra Bonds.
Several post World War II international treaties to which
the United States is a signatory were meant to distinguish invalid
bonds and to settle valid debts, including the Agra Bonds, and
governed how such bonds were to be validated. Under a 1953 treaty,
the courts of the United States could be used for enforcement of
such bonds only under certain conditions, requiring prior use of
enumerated validation procedures. Appellant owns and is attempting
to collect payment on non-validated bonds.

The Massachusetts

district court dismissed the two suits, as pertinent to this
appeal,

for

failure

to

meet

those

conditions.

One

of

the

claimants, Ronnie Fulwood, appeals from the dismissal of his claims
against the defendant German Banks, but does not appeal as to the
dismissal of his claims against Germany.
We affirm.

Our holding is in accord with two other

circuits that have addressed similar issues.

See World Holdings,

LLC v. Fed. Republic of Germany, 701 F.3d 641 (11th Cir. 2012),
cert. denied, No. 12-1498, 2013 WL 3229961 (U.S. Oct. 7, 2013);

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Mortimer Off Shore Servs., Ltd. v. Fed. Republic of Germany, 615
F.3d 97 (2d Cir. 2010) ("Mortimer I").1
I.
Fulwood

seeks

to

recover

the

accrued

principal

and

interest on 83 pre-World War II bearer bonds entitled "German
Provincial & Communal Bank Consolidated Agricultural Loan US$1000
Secured Sinking Fund Gold Bonds Series A 6-1/2% Dated June 1928 -Due June 1, 1958" ("Agra Bonds").
14

provincial

banks

located

On June 1, 1928, a consortium of

within

the

state

of

Prussia,

a

political subdivision of Germany, issued the Agra Bonds in an
effort

to

finance

improvements

to

the

state's

agricultural

infrastructure. Mortimer I, 615 F.3d at 99. The bonds were listed
on the New York Stock Exchange and marketed in the United States.
Id.

Principal and interest was payable in Boston, Chicago, or New

York City.

Each of the 14 issuing banks was severally liable for

a stated percentage of each bond.

Each bank was owned in whole or

in part by the province in which it was located, with each province
guaranteeing the obligations of the banks located therein.

1

The

Fulwood also argues on appeal that the district court erred
in denying his motion to supplement the record with an Indenture
Fulwood claims shows any defense based upon the April 1953 Treaty
has been waived. This court reviews a district court's denial of
a motion to supplement for abuse of discretion. See United States
v. Union Bank for Sav. & Inv. (Jordan), 487 F.3d 8, 23 (1st Cir.
2007).
We find no abuse here.
The Indenture at issue was
publically available in the Stanford University Libraries and could
have been discovered earlier. Moreover, Fulwood waited more than
four months after the Indenture's actual discovery to file his
motion to supplement.
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bonds

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are

the

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obligations

"guarantors and successors."

of

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the

issuing

banks

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and

their

The Banks against which Fulwood has

filed suit are the alleged successors of some of the issuing banks.
Germany

is

alleged

to

have

assumed

the

obligations

of

the

provincial guarantors.
A.

Historical Background
In 1933, following the rise of the Nazi Party, the Third

Reich issued a moratorium on payment of bonds, including payment on
Agra Bonds.

That moratorium ended up remaining in effect until

after the end of World War II. After declaring the moratorium, the
Third Reich began a concerted effort to repurchase outstanding
bonds for eventual retirement. After the start of the second World
War, however, "it became 'impossible to present such bonds to the
American trustees or paying agents for cancellation.'" Mortimer I,
615 F.3d at 101 (quoting Abrey v. Reusch, 153 F. Supp. 337, 339
(S.D.N.Y. 1957)).

"As a result, German bank vaults held 'large

numbers' of reacquired, yet uncancelled foreign currency bonds, in
negotiable form, that 'no longer represented valid obligations.'"
Id. (quoting Abrey, 153 F. Supp. at 339).

Following the Third

Reich's surrender in 1945, Allied forces, including those of the
Soviet Union, occupied portions of Berlin until 1949.

During this

period, Soviet troops seized and returned to circulation many of
those invalid bonds.

These bonds "posed a significant problem,

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both domestically and internationally."

Id. at 101.

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That was so

given the
real possibility that the eventual holders of
the looted bonds would share the available
assets . . . of the German obligors equally
with the legitimate bondholders, a large
number of whom were nationals of the United
States. Moreover, the free and open trading in
the United States of all German Dollar Bonds
was impeded by the [resulting] uncertainties .
. . .
Id. (alterations in original) (quoting Abrey, 153 F. Supp. at 339).
In 1949, several years after the end of World War II, the
German Reich lands were divided into East and West Germany.

The

land that was once Prussia was split between the two nations.

In

1951, West Germany entered into negotiations with creditor nations
to address its outstanding debt.

The result of those negotiations

was the 1953 multilateral treaty between West Germany, the United
States, and twenty other creditor nations known as the London
Agreement on German External Debts, Feb. 27, 1953, 4 U.S.T. 445
("London Debt Agreement").

The London Debt Agreement created a

framework for resolving claims against the West German government
and constituted an offer of settlement to all holders of bonds
covered by the Agreement.

Id. at 453.

If a bondholder assented to

the offer of settlement, she would be guaranteed payment, albeit at
a lesser rate than the one to which she would have otherwise been
entitled.

See World Holdings, LLC, 701 F.3d at 646.

If a

bondholder did not assent to the settlement offer, her preexisting
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rights of enforcement were not waived.

See id.

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Non-assenters

were, however, barred from bringing a recovery action until after
all assenting bondholders had been paid in full.

See id.

As a condition on payment, bondholders assenting to the
London Debt Agreement's offer of settlement agreed to subject their
bonds

to

a

validation

process

"on

the

basis

of

the

German

Validation Law passed by its Parliament and about to be enacted."
London Debt Agreement, 4 U.S.T. at 527.

West Germany enacted the

German Validation Law on August 25, 1952 out of a concern over the
redemption of looted bonds. Mortimer I, 615 F.3d at 101–02. Under
the Validation Law, validation required that bonds be registered,
submitted with supporting evidence, and approved by a Board for the
Validation of German Bonds in the United States, in Germany, or the
country of offering following an administrative hearing.

See

Validation of Dollar Bonds of German Issue, U.S.-Fed. Rep. Ger.,
Feb. 27, 1953, 4 U.S.T. 797, 839-42 ("February 1953 Treaty").
Bondholders were given the opportunity to register their bonds
within five years of the applicable "opening date."2
2

Id. at 839.

In relevant part:
(1) The opening Date within the meaning of this Law
is, in respect of the types of bonds listed in the
Schedule of Foreign Currency Bonds, the first day
after the expiration of six months from the
effective date of the Law.
(2) The Federal Government may, by Ordinance,
establish in respect of bonds of a certain type
1. an earlier Opening Date, if appropriate
examination of registrations by the Foreign
Representative and the Examining Agency is
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Late registration was allowed only if failure to register within
the specified period was "without . . . fault."

Id. at 855.

West Germany and the United States entered into two
related bilateral treaties in 1953, which were negotiated at the
same time as the London Debt Agreement. The first, signed February
27, 1953, incorporated the validation procedures set out in the
German Validation Law.

February 1953 Treaty, 4 U.S.T. at 801-02.

Significantly, the February 1953 Treaty established the Board for
the Validation of German Bonds in the United States in New York
City to adjudicate validation claims in the United States, along
with twelve regional Arbitration Boards throughout the United
States to review the decisions of the Validation Board.

Id. at

803, 805, 824-25.
April 1, 1953 Treaty
The second treaty, signed April 1, 1953, is of even more
significance.

It

set

forth

the

limited

conditions

for

the

enforcement of outstanding German bonds in the U.S. courts.
Article II of the April 1953 Treaty provides:
No bond . . . referred to in the first
sentence of Article I above shall be
enforceable unless and until it shall be
already assured on such date, or
2. an Opening Date not more than six months
later, if the Foreign Representative or the
Examining Agency are not able to commence
appropriate examination of the registrations
before such date.
February 1953 Treaty, 4 U.S.T. at 838-839.
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validated either by the Board for Validation
of German Bonds in the United States
established by the Agreement on Validation
Procedures, or by the authorities competent
for that purpose in the Federal Republic.
Certain Matters Arising from the Validation of German
Dollar Bonds, U.S.-Fed. Rep. Ger., Apr. 1, 1953, 4 U.S.T.
885, 889 ("April 1953 Treaty").
It is undisputed that the bonds at issue are referred to
in Article I.

Article I of the April 1953 Treaty refers to "bonds

. . . listed in the . . . Schedule" of foreign currency bonds
appended to the German Validation Law.

Id.

Agra Bonds are listed

as item 19 in section C.IV of that Schedule. February 1953 Treaty,
4 U.S.T. at 877.

It is also clear the bonds at issue were never

validated (indeed, no attempt was ever made to do so) by the
Validation Board in the United States.

And it is clear that the

bonds have never been validated by authorities competent for that
purpose in the Federal Republic.
B.

Procedural Background
We describe the dismissal of Mortimer's complaint, which

has not been appealed, to provide context.

On March 28, 2012, the

district court dismissed Mortimer's claims against Germany, holding
that those claims were barred by either res judicata or collateral
estoppel from an earlier 2005 action Mortimer had filed in New York
seeking payment on 351 of the 1,611 Agra Bonds on which he was
seeking to recover in the present action.
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See Mortimer Off Shore

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Servs., Ltd. v. Fed. Republic of Germany, No. 10-11551-RWZ, 2012 WL
1067648 (D. Mass. Mar. 28, 2012) ("Mortimer II").3
In that same March 28, 2012 order, the district court
dismissed both Mortimer's and appellant Fulwood's claims against
the Banks, holding that Fulwood's claims failed because "the
Validation Law and [the April] 1953 Treaty apply to West German

3

The New York district court in the earlier action had
dismissed Mortimer's complaint for failure to state a claim,
holding that, under the April 1953 Treaty, Mortimer's failure to
validate its bonds in accordance with procedures set out in the
German Validation Law rendered those bonds unenforceable in U.S.
courts.
See Mortimer I, 615 F.3d at 104.
The Second Circuit
affirmed, holding that Mortimer could not seek to enforce the bonds
issued in territory that became West Germany without first
complying with the German Validation Law's requirements. Id. at
113-17.
As to the bonds issued in territory that became East
Germany, the Second Circuit affirmed on the alternative ground that
Mortimer had failed to make the threshold showing necessary to
invoke an exception to the Foreign Sovereign Immunities Act, 28
U.S.C. § 1602 et seq. ("FSIA"), and so the district court lacked
subject matter jurisdiction over Mortimer's claims based upon those
bonds. Mortimer I, 615 F.3d at 112-13. Under the FSIA, a foreign
state "shall be immune from the jurisdiction of the courts of the
United States," 28 U.S.C. § 1604, unless one of the FSIA's
exceptions, id. §§ 1605–07, applies.
Mortimer's claims in Massachusetts against Germany based upon
West German bonds were barred on res judicata grounds because (1)
the parties in the two actions are identical; (2) the two actions
"indisputably arose out of the same operative nucleus of facts";
and (3) the earlier judgment as to those bonds was "on the merits"
and hence final. Mortimer II, 2012 WL 1067648, at *6-9 (citing
Havercombe v. Dep't of Educ. of the Commonwealth of P.R., 250 F.3d
1, 3 (1st Cir. 2001)).
Because the Second Circuit "reached a
valid, binding, final judgment" on the issue of whether the
commercial activity exception to the FSIA, 28 U.S.C. § 1605(a)(2),
renders Germany subject to suit with respect to such bonds, a
theory Mortimer relied upon again here, Mortimer's claims based
upon East German bonds were barred by collateral estoppel. Id. at
*10 (citing Grella v. Salem Five Cent Sav. Bank, 42 F.3d 26, 30
(1st Cir. 1994)).
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debt, plaintiffs concede that the Defendant Banks hold only West
German debt, and plaintiffs admittedly have failed to comply with
the Validation Law."

Id. at *12.4

In so holding, the district

court relied upon the Second Circuit's decision in Mortimer I. See
id.

The district court dismissed Fulwood's claims against Germany

based upon the West German bonds on the same ground.

Id. at *11.

In an order dated August 21, 2012, the district court
dismissed Fulwood's claims against Germany based upon the indemnity
of the East German bonds for lack of subject matter jurisdiction,
holding that the FSIA precluded consideration of Fulwood's claims.
Mortimer Off Shore Servs., Ltd. v. Fed. Republic of Germany, No.
10-11551-RWZ, 2012 WL 3600840, at *2-3 (D. Mass. Aug. 21, 2012).
The district court rejected Fulwood's argument that his claims
against Germany were permitted under the FSIA's commercial activity
exception, holding that even if, as Fulwood alleged, Germany is
"identical" to the pre-World War II German Reich and is the legal
successor to its political subdivisions, including both Prussia and
East Germany, "mere accession to liability is not a commercial
action under the FSIA."
at

110

("Accession

to

Id. at *2; see also Mortimer I, 615 F.3d
liability

by

the

rules

of

customary

international law entails no action by the successor state with
respect to the commercial activity at issue -- the assumption of

4

Mortimer's claims against the Banks were barred
collateral estoppel. Mortimer II, 2012 WL 1067648, at *11.
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The state performs no action when it automatically

assumes liability.").
Fulwood now appeals the portion of the March 28, 2012
order dismissing his claims against the West German Banks.
II.
Fulwood's main argument is that the April 1953 Treaty's
verification requirements do not apply to his bonds but apply to
only those bondholders who assented to settlement under the London
Debt Agreement, which he did not.
"This case presents a pure issue of law.
a grant of a motion to dismiss is de novo."

Our review of

Providence Sch. Dep't

v. Ana C., 108 F.3d 1, 2 (1st Cir. 1997).
"The interpretation of a treaty, like the interpretation
of a statute, begins with its text."
491, 506 (2008).

Medellín v. Texas, 552 U.S.

"We also take into account the signatories'

intentions and expectations."

Yaman v. Yaman, ___ F.3d ___, No.

13-1240, 2013 WL 4827587, at *7 (1st Cir. Sept. 11, 2013).
Further,

"[i]t

is

well

settled

that

the

Executive

Branch's

interpretation of a treaty 'is entitled to great weight.'"

Abbott

v. Abbott, 130 S. Ct. 1983, 1993 (2010) (quoting Sumitomo Shoji
Am., Inc. v. Avagliano, 457 U.S. 176, 185 (1982)).
Fulwood's interpretation conflicts with the Treaty's
clear text and the Executive Branch's interpretation.
States

v.

Kin-Hong,

110

F.3d
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103,

106

(1st

See United
Cir.

1997)

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("[S]eparation

of

powers

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principles

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.

.

.

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preclude

us

from

rewriting the treaties which the President and the Senate have
approved.").

It is also inconsistent with the Treaty's apparent

purpose of preventing the enforcement of invalid bonds in U.S.
courts.

See Todok v. Union State Bank of Harvard, Neb., 281 U.S.

449, 454 (1930) (rejecting an interpretation that "seems to us to
be repugnant to the purpose of the treaty").
Under Article II of the April 1953 Treaty, "[n]o bond .
. . referred to in the first sentence of Article I . . . shall be
enforceable unless and until it shall be validated."
889.

4 U.S.T. at

Fulwood does not contest -- nor could he -- that Agra Bonds

are "referred to in the first sentence of Article I."

Fulwood is

thus left to argue from weakness that "[n]o bond" means something
other than no bond.
Fulwood attempts to construct an edifice, starting with
language from the Treaty's Preamble, which provides:
[F]urther measures are required to permit
debtors and creditors to proceed to the
orderly settlement of the obligations arising
from German dollar bonds with confidence in
the stability of the procedures regarding
validation and with assurance that claims
prejudicial to such settlement will not be
asserted on the basis of bonds which were
unlawfully acquired[.]
Id. at 888 (emphasis added).

The term "settlement" as used in the

Preamble, he argues, is a term of art, referring specifically to
the offer of settlement extended by the London Debt Agreement.
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From this, Fulwood says it is a necessary inference that the
purpose of the April 1953 Treaty is merely to promote the voluntary
settlement of claims under the London Debt Agreement.

And based

upon this understanding of the treaty's purpose from its Preamble,
Fulwood concludes that "bonds" as used Article II of the treaty
refers only to bonds held by those who assented to settlement under
the Agreement, as he did not.

But Article II does not use the term

"settlement" and its text is not ambiguous.

The argument fails in

its reliance on the Preamble rather than the text at issue.
But even were we to look to the Preamble to interpret
Article II, his argument still fails. To support his limited termof-art

interpretation

of

the

word

"settlement,"

used

in

the

Preamble but not in Article II, Fulwood cites both the technical
definitions of the terms "settled" and "settlement" as set forth in
the London Debt Agreement5 as well as the fact that the Debt
Agreement,

the

German

Validation

Law,

and

the

two

bilateral

treaties between West Germany and the United States that were
5

In relevant part:
(k)"settled," in relation to a debt, means that
terms of payment and other conditions have been
established for such debt in accordance with the
provisions of the present Agreement and the Annexes
thereto, by agreement between the creditor and
debtor, or, in proceedings between the creditor and
debtor, by final judgment or order of a court or by
final decision of an arbitral body;
(l) "settlement," in relation to a debt, means the
establishment of terms of payment and other
conditions in accordance with paragraph (k).
London Debt Agreement, 4 U.S.T. at 448.
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negotiated and enacted contemporaneously.6

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We agree with the

Eleventh Circuit's observation in World Holdings, LLC v. Federal
Republic of Germany that the term "settlement" as used in the
Preamble also has familiar, non-technical readings, referring
either to "[a]n agreement ending a dispute or lawsuit" or a
"[p]ayment, satisfaction, or final adjustment."

701 F.3d at 652

(alteration in the original) (quoting Black's Law Dictionary 1496,
1497 (9th ed. 2009)).

Given these common usages, it would be

irrational to conclude the drafters of the April 1953 Treaty
intended to limit the scope of Article II by giving a limited
technical meaning to a term in the preamble.
Nor could one deduce from the Preamble's three references
to "settlement" that the April 1953 Treaty's sole purpose was to
facilitate the "settlement" of the assenters to the London Debt
Agreement, and it had no purpose as to non-assenters.
Preamble's first paragraph rules that out.

Indeed, the

It identifies as the

overarching basis for the treaty the "agree[ment]" between the
United States and West Germany that:
[I]t is in their common interest to provide
for the determination of the validity of
German dollar bonds in view of the possibility
that a large number of such bonds may have
been unlawfully acquired during hostilities in
Germany or soon thereafter . . . .
6

As Fulwood observes, the February 1953 Treaty also uses
language of "settlement." See 4 U.S.T. at 801-02 (referring to
"the settlement of claims").
Like the April 1953 Treaty, the
February 1953 Treaty does not expressly define the term.
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4 U.S.T. at 887 (emphasis added).

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The April 1953 Treaty was

motivated at least in part by a concern over the instability that
would result from the redemption of looted bonds.

See also

February 1953 Treaty, 4 U.S.T. at 798-99 (observing that "bonds may
have fallen unlawfully into the hands of persons who will seek to
negotiate them, or to make claim under them against the debtors,
trustees or paying agents, or otherwise to profit from their
unlawful acquisition"). This concern applies both to assenters and
non-assenters.

The April 1953 Treaty has the broader purpose of

preventing the enforcement of wrongfully acquired bonds.
That the April 1953 Treaty was not limited as Fulwood
argues is reinforced by a 1953 message from President Eisenhower to
the Senate.

See Jama v. Immigration & Customs Enforcement, 543

U.S. 335, 348 (2005) (noting judiciary's "customary policy of
deference to the President in matters of foreign affairs").

That

Message, which accompanied both of the 1953 bilateral treaties when
they were sent to the Senate for ratification, begins with the
observation that a large number of German bonds "found their way
into unauthorized hands after the occupation of Berlin."

Message

from the President of the United States, Enclosure 7(d), annexed to
Hearings Before the Committee on Foreign Relations, 83rd Congress,
1st Sess. 230 (1953).

The Message goes on to explain that, on

December 9, 1941, trading of German securities was suspended on
U.S. exchanges at the request of the Securities and Exchange
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the suspension was kept in place after World War II

and would remain "until measures have been taken which will ensure
that the looted bonds do not find a market in the United States."
Id.
this

The Message continues, "If no action were taken to deal with
situation,

the

Soviet

Government

could

introduce

these

unlawfully held bonds into our security markets upon the resumption
of trading."

Id.

Significantly, the Message describes the February 1953
Treaty as "outlin[ing] the procedure for validation," the purpose
of which "will be to separate bonds legitimately held from those
which disappeared after the occupation."

Id. at 231.

The Message

then remarks that "a further measure" -- the April 1953 Treaty -"was required to prevent the holders of looted bonds from using the
processes of American courts to enforce payment upon them."
The Message states:

Id.

"[The April 1953 Treaty] provides that the

holders of dollar bonds that have not been duly validated cannot
resort to courts in the United States for the purpose of enforcing
their rights under such bonds."
the

April

1953

Treaty

as

Id.; see also id. (characterizing

"the

agreement

denying

holders

of

non-validated bonds the right to resort to courts in the United
States").

The Treaty's verification requirements apply to London

Debt Agreement assenters and non-assenters alike.

After all, if

holders of looted bonds could enforce payment simply by waiting
until assenting bondholders had been paid in full, the Treaty's
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verification "requirement" would be utterly without bite.

See

World Holdings, LLC, 701 F.3d at 646 ("If a bondholder refused to
accept the settlement offer, he maintained his preexisting rights
of enforcement.")

We will not interpret Article II of the April

1953 Treaty in a way that "makes nonsense of it."

Hanover Shoe,

Inc. v. United Shoe Mach. Corp., 392 U.S. 481, 498 n.12 (1968)
(quoting United States v. Aluminum Co. of Am., 148 F.2d 416, 432
(2d Cir. 1945)).
In a last-ditch effort, Fulwood argues if the April 1953
Treaty's validation requirement were to apply to assenters and nonassenters alike, that requirement would be inconsistent with the
voluntary

nature

of

the

London

Debt

Agreement's

offer

of

settlement. The argument would not undercut our reading of Article
II in any event; regardless, it fails in its own terms.
Fulwood reasons that if the April 1953 Treaty makes
validation in accordance with the German Validation Law a condition
of enforcement even for non-assenters, the Treaty would require,
barring a valid excuse, registration for validation within the
applicable five-year period from 1953 through 1958.

However,

because the London Debt Agreement prohibited non-assenters from
bringing an enforcement action prior to the resolution of all
claims by assenters -- a point he says went well beyond the
expiration of any applicable five-year period -- Fulwood contends
that the only way for a bondholder to comply with the validation
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Case: 12-2143

Document: 00116604711

requirement

would

be

for

Page: 19

her

to

Date Filed: 10/30/2013

assent

to

the

Entry ID: 5776362

London

Debt

Agreement's offer of settlement.
This argument, even within its own terms, is without
merit, resting on a conflation of the different concepts of
enforcement and validation.

The London Debt Agreement gives

priority to assenters as to enforcement, barring non-assenters from
pursuing enforcement actions until all assenters have been paid in
full.

On the other hand, the Agreement gives no priority to

assenters as to validation, stating only:

"Payment on bonds . . .

which require validation under the German validation procedure
shall not be made until such bonds . . . shall have been validated
pursuant thereto."
German

Validation

London Debt Agreement, 4 U.S.T. at 527.
Law

in

turn

draws

no

distinction

The

between

assenters and non-assenters, thus providing assenters and nonassenters

the

same

opportunity

to

register

bonds

for

validation within five years of the applicable opening date.

See

February 1953 Treaty, 4 U.S.T. at 839.

their

Likewise, the Validation

Law provides both assenters and non-assenters the opportunity to
register their bonds for validation even after the expiration of
the applicable five-year period if "the failure to register [those
bonds]

timely

negligence."7

was

not

due

Id. at 856.

to

[the

bondholder's]

own

gross

The February 1953 Treaty incorporated

7

All U.S. Validation Boards established by the February 1953
Treaty appear to have been dissolved by 1960. However, it remains
open to a bondholder to seek validation from "authorities competent
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Document: 00116604711

Page: 20

the German Validation Law in full.

Date Filed: 10/30/2013

Entry ID: 5776362

See 4 U.S.T. at 801-02.

As

such, the April 1953 Treaty's conditioning the enforcement of bonds
in

U.S.

courts

on

their

validation

in

accordance

with

the

Validation Law created no incentive whatsoever for bondholders to
assent to the London Debt Agreement's offer of settlement.8
III.
Under

the

April

1953

Treaty,

these

Agra

Bonds

are

enforceable in U.S. courts only if they have been validated.
Fulwood's bonds have not been validated and are unenforceable in
U.S. courts.

The district court's dismissal of Fulwood's claims

against the Banks is affirmed.

for that purpose" in Germany.

Costs are awarded to the Banks.

April 1953 Treaty, 4 U.S.T. at 889.

8

At oral argument, Fulwood made the additional argument that
the April 1953 Treaty's verification requirements apply only as to
the enforcement of listed bonds against Germany. Fulwood failed to
raise this argument in his opening brief before this court, and it
is waived. United States v. Pakala, 568 F.3d 47, 57 (1st Cir.
2009) ("We have consistently held that arguments not raised in the
initial appellate legal brief are considered waived." (quoting
United States v. Capozzi, 486 F.3d 711, 719 n.2 (1st Cir. 2007))
(internal quotation marks omitted)). Waiver aside, the argument
has no merit, lacking any textual basis whatsoever. See, e.g.,
April 1953 Treaty, 4 U.S.T. at 888 ("[T]he United States and
[Germany] agree that further measures are required to permit
debtors and creditors to proceed to the orderly settlement of . .
. obligations . . . ." (emphasis added)).
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