Full opinion text
MEMORANDUM AND ORDER BRIEANT, Chief Judge: —Yes well there was just one more thing here I, that I think you might ... —That? My God, haven’t seen one in years. —No this isn’t what I ... what is it. —Russian Imperial Bond. —You mean it isn’t worth any, worth very ... —Mister Bast, anything is worth whatever some damn fool will pay for it, only reason somebody can make a market in Russian Imperials is because some damn, somebody like your associate will buy them. Happen to know how he, how this associate of yours got into all this? —By, well, buying and selling at first I think and then he had some stock in a company and was going to bring some kind of legal suit for, for his class, I mean he ... —A class action? William Gaddis, JR 201 (1975) In these two related cases, defendant Union of Soviet Socialist Republics (“USSR” or “Soviet Union”) moves to vacate default judgments entered against it by this Court on March 31, ■ 1986, and to dismiss plaintiffs Complaints. The Russian Imperial Bonds The named plaintiffs are class representatives of holders of debt instruments (collectively “the instruments” or “the bonds”) issued by the Imperial Russian Government in 1916. Apart from the fact that different instruments are involved in each, these cases are essentially identical. On December 1, 1916, the Imperial Russian Government issued $25 million in five-year external gold dollar bearer bonds at 5V2% interest (“the bearer bonds”). The interest was payable semiannually, each June 1 and December 1 starting June 1, 1917, until the bonds themselves came due on December 1, 1921. These bearer bonds are the subject of No. 82 Civ. 1245. The second issue, in the amount of $50 million, was assembled by a consortium of United States banks consisting of J.P. Morgan & Co., the National City Bank of New York, Guaranty Trust Company of New York, Lee, Higginson & Co., and Kidder, Peabody & Co., and offered to the public in the form of three-year credit participation certificates at %lk% interest (“the credit participation certificates” or “the certificates”). The contract establishing the credit was executed on June 18, 1916, and the certificates were issued on July 10, 1916. The certificates were due on June 18, 1919, with interest payable semiannually, beginning January 10, 1917, each January 10 and July 10. They are the subject of No. 82 Civ. 1246. The Fall of the Russian Empire The Imperial Russian Government did not long survive these debt issues. The first or so-called February Revolution began in Russia on February 24 (Old Style)/March 8 (New Style), 1917, at a time when that nation was locked in combat on the Eastern front of World War I. The success of the February Revolution was assured by March 12 when the police and military, who at first had fired on the crowds, joined forces with them. On March 14 the ministers of a Provisional Government were named: the following day Czar Nicholas II, last of the Romanovs, abdicated, and the Imperial Russian Government ceased to exist. On March 17, 1917, the United States was the first nation to recognize the new Provisional Government. B. Lincoln, Passage Through Armageddon 357 (1986). The fragile Provisional Government, led at first by Prince Georgi Lvov and later by Lvov’s Minister of Justice, a lawyer named Alexander Kerensky, was unable to withstand the pressures of the continuing world war from without, and of revolutionary opposition, particularly that of the Bolsheviks, led by V.I. Ulyanov, known as Lenin, from within. Significant evidence suggests that the two types of opposition were related, in that the Germans financed the Bolsheviks, knowing that Lenin would promptly sue for peace and eliminate the need for Germany to maintain its Eastern Front. Lenin received safe conduct in April 1917 through the combat lines of the Central Powers, sent in a sealed boxcar, as if his ideas were contagious. See, e.g., H. Shukman, Lenin and the Russian Revolution 168-70 (1966). Within six months the Bolsheviks had seized power in the October Revolution, October 24-26 (O.S.)/November 6-8 (N.S.). The fall of the Provisional or Kerensky Government was announced on November 7, and the last pockets of resistance at the Kremlin were wiped out on November 14. See generally B. Dmytryshyn, A History of Russia (1977); B. Lincoln, supra; B. Pares, A History of Russia (rev. ed. 1972). Peace with the Central Powers came with the signing of the Treaty of Brest-Litovsk on March 3, 1918. The Bolsheviks had promised to carry out the Provisional Government’s plan to hold free elections for a Constituent Assembly, and did so on November 25/De-cember 8,1917. The Bolsheviks apparently did not interfere significantly with the election, and finished a respectable but distant second to the Socialist Revolutionary Party. Consequently, on January 19/Feb-ruary 1, 1918, after a stormy one-day session, Lenin dissolved the Constituent Assembly and took the power of Government in Russia to himself. On January 21/Feb-ruary 3, the Bolshevik Government issued a decree regarding the annulment of state loans, which proclaimed among other things that “All foreign loans are annulled unconditionally and without exception.” Findings of Fact and Conclusions of Law in Support of Judgment by Default Pursuant to 28 U.S.C. § 1608(e) If 5. Notwithstanding this decree, interest was paid on the remaining three installments of the certificates, on July 10, 1918, January 10, 1919, and July 10, 1920. Interest was also paid on the bearer bond coupons due on June 1, 1918, December 1, 1918 and June 1, 1918. Thus, what is at issue in this litigation is the Soviet Union’s obligation to pay the principal on both instruments and the interest represented by the last five bearer bond coupons. On July 10, 1918, the Bolshevik regime promulgated the first Soviet Constitution, under which the nation became the Russian Soviet Federated Socialist Republics (R.S.F. S.R.). After a period of intense social, cultural, and economic ferment, the R.S.F. S.R. was succeeded by the present Union of Soviet Socialist Republics upon the promulgation of the second Soviet Constitution on January 31, 1924. Thus, the decree that gives rise to this case, in which Russia “annulled” all foreign debt obligations including payment on the bearer bonds and the credit participation certificates, was issued by the Bolshevik Government, which was the immediate successor of the Kerensky Government and immediate predecessor of the R.S.F. S.R. The Litvinov Assignment and United States Recognition of the Soviet Union When the decree was issued, the United States did not recognize the Bolshevik Government: it continued to recognize the Kerensky Government in exile until November 16, 1933, when it recognized the Government of the USSR. Simultaneously, an exchange of letters between President Franklin D. Roosevelt and the People’s Commissar for Foreign Affairs of the Soviet Union, Mr. Maxim Litvinov, established what has come to be known as the Litvinov Assignment. See United States v. Pink, 315 U.S. 203, 212-13, 62 S.Ct. 552, 556-57, 86 L.Ed. 796 (1942) (reproducing texts of letters); United States v. Belmont, 301 U.S. 324, 57 S.Ct. 758, 81 L.Ed. 1134 (1937) (holding the Litvinov Assignment lawful under President’s power to recognize foreign governments). Under the Litvinov Assignment, “preparatory to a final settlement of the claims and counter claims between [the respective governments] and their nationals,” Pink, 315 U.S. at 212, 62 S.Ct. at 556, the Soviet Union assigned its claims, including those “due it, as the successor of prior Governments of Russia,” id., to the United States on condition that it be notified of any recovery by the United States on such claims. The United States collected $9 million in pre-inflation money as a result of the Litvinov Assignment. First National City Bank v. Gillilland, 257 F.2d 223, 225 (D.C.Cir.), cert. denied, 358 U.S. 837, 79 S.Ct. 61, 3 L.Ed.2d 73 (1958). In 1955, Congress enacted the Foreign Claims Settlement Act, ch. 645, 69 Stat. 562 (codified as amended at 22 U.S.C. §§ 1621-1641q (1986)). Under this Act, the proceeds of claims collected pursuant to the Litvinov Assignment were deposited into a Soviet Claims Fund. 2,2 U.S.C. § 1641a(a) (1982). Section 1641d empowered the Foreign Claims Settlement Commission to adjudicate the validity of, and disburse awards for, two kinds of claims. Section 1641d(a)(l) dealt with claims against Russian nationals by United States nationals who had secured prerecognition liens on Russian property located within American jurisdiction that later passed to the United States under the Litvinov Assignment. More importantly, § 1641d(a)(2) empowered the Commission to determine the validity and ¿mounts of “claims, arising prior to November 16, 1933, of nationals of the United States against the Soviet Government.” Under § 1641Í, an award by the Commission for less than the full amount of the claim does not extinguish any rights of the claimant against the Soviet Government. There is authority for the view that the instruments sued on here were among the “claims” referred to in the Litvinov Assignment. Memorandum of Andrew T. McGuire, General Counsel, Foreign Claims Settlement Commission, May 17, 1956 [“McGuire Memo”], at 5 n. 21 (citing Sack, Diplomatic Claims Against the Soviets (1918-1938), N.Y.U. School of Law Contemporary Law Pamphlets, Ser. 1, No. 7, at 55 n. 27 (1938)). In any case it is clear that the Soviet Claims Fund was to be applied, pursuant to § 1641d(a)(2), among other things to the instruments to the extent owned by American citizens. Explicit historical references to the bonds exist. For example, in 1955 the Foreign. Claims Settlement Commissioner noted that “The remainder of the fund would go to the payment of awards on some $75 million of repudiated Imperial Russian Government bonds, under a category involving about $350 million, more or less, for the nationalization or confiscation claims____” Hearings on H.R. 6382 Before the House Comm, on Foreign Affairs, 84th Cong., 1st Sess. 37 (1955), quoted in McGuire Memo at 9. See also Hearings Before the Senate Comm, on Foreign Relations, 84th Cong., 1st Sess. 30 (1955) (colloquy concerning distribution of claims on Imperial bonds), quoted in McGuire Memo at 10. Pursuant to the Act, 22 U.S.C. § 1641o (a), the Commission distributed the Fund in or about 1959. Bondholders who had filed claims that were certified by the Commission received awards from the Fund. Findings of Fact If 10. Plaintiffs allege that this distribution represents 4% of the value of the bonds. Meanwhile, as indicated in our opening paragraph, a thriving market had developed for the bonds. A Protective Committee for the certificates was formed on June 17, 1919, and functioned through 1938. Foreign Claims Settlement Commission Panel Opinion 45, in Foreign Claims Settlement Commission, Tenth Semiannual Report to Congress, at 183. As late as 1950 the bearer bonds were listed in Moody’s Manual of Investments. The bonds were traded on the New York Curb Exchange, later on the American Stock Exchange from 1921 through 1956, and thereafter over the counter. Plaintiffs do not cite, and this Court has not discovered, any prior litigation of the validity or enforceability of any Soviet obligation to pay on these instruments. This Court has, however, discovered one case that specifically mentions the credit participation certificates, and another that probably involves the bonds. Miller v. National City Bank, 147 F.2d 798 (2d Cir.1945), was an action'by holders of the credit participation certificates against National City Bank of New York and Guaranty Trust Company, two members of the syndicate that floated the credit, for alleged misappropriation of the balance of the credit that remained on deposit when the Bolsheviks repudiated the obligations. The merits of this claim were never reached: our Court of Appeals ruled only on the question whether plaintiffs could meet the jurisdictional amount for diversity cases by claiming the whole unexpended $5 million rather than their individual shares. Ultimately, the case was dismissed on the ground that the New York Supreme Court’s determination that the statute of limitations had run was res judicata. 166 F.2d 723 (2d Cir.1948). Commonwealth Commercial State Bank v. Lucas, 41 F.2d 111 (D.C.Cir.1930), was a tax case in which “[o]n July 10, 1916, appellant ... purchased Imperial Russian 6V2 per cent, bonds, at par value of $40,000. On May 31, 1917, it purchased Imperial Russian Government hlk per cent, bonds at par value of $11,000.” The percentages of interest, dates of purchase, and the fact that the par values are given in dollars make it probable that the bonds were those at issue here. In 1921, the bonds were selling at 10% of their par value. The Bank accordingly tried, on its 1921 tax return, to deduct the $51,000 the bonds cost as a bad debt. The Board of Tax Appeals disallowed the deduction, but the Court of Appeals for the District of Columbia permitted a deduction of 90%, that is, the amount the value of the bonds had declined from par. Lucas is thus tangentially relevant to the present case, indicating as it does a judicial recognition as early as 1930 (while the Soviet Government was still unrecognized) that Russian debt securities were in effect'uncollectible. History of This Litigation Plaintiffs initiated these cases by filing a Complaint for each on March 2, 1982. These cases are governed by the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. §§ 1330,1602-1611 (1986), which, by specifying exceptions to sovereign immunity, now provides the sole basis for federal court subject matter jurisdiction over suits against a foreign sovereign. 28 U.S.C. § 1604; Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 489, 103 S.Ct. 1962, 1969, 76 L.Ed.2d 81 (1983). The FSIA sets out elaborate procedures to ensure that the defendant sovereign receives notice of the suit against it. 28 U.S.C. § 1608. These were fully complied with by plaintiffs. As mentioned above, the Complaints in these cases were filed in this Court on March 2, 1982. In addition, the FSIA requires a plaintiff to file a “notice of suit,” a document apprising the foreign sovereign of the pendency of the suit against it, in a form prescribed by the Secretary of State. 28 U.S.C. § 1608(a); 22 C.F.R. § 93.2(a) and Annex (1987). Notices of suit were filed in these cases on March 12, 1982. Section 1608 also specifies that service of a Summons and Complaint on a foreign state should be made in accordance with bilateral special service arrangements or applicable international conventions. If these are lacking, § 1608(a)(3) provides that service shall be made by sending a copy of the summons and complaint and a notice of suit, together with a translation of each into the official language of the foreign state, by any form of mail requiring a signed receipt, to be addressed and dispatched by the clerk of the court to the head to the ministry of foreign affairs of the foreign state concerned____ Certificates of Mailing executed by the Clerk of this Court, establishing compliance with the § (a)(3) requirements, were filed on March 15, 1982. This is evidently the mailing the Soviet Ministry of Foreign Affairs returned to the United States Embassy in Moscow under cover of Diplomatic Note No. 33/ossha, dated May 14,1982. The Ministry refers to “the documents of the District Court of the Southern District of New York, received by mail,” which it is returning “without execution.” The Ministry stated the Soviet position that “in accordance with the principle of the sovereign equality of countries ... the Soviet state ... enjoy[s] immunity from jurisdiction of foreign courts [and] can not be brought to am American court as defendant without its evidently expressed consent for it.” The Ministry reported that the Soviet Union would not consent to suit, and added that it regarded the suit as a violation of the Litvinov Assignment, under which “the question about consideration of mutual financial claims in legal form has been closed once and for all.” The Ministry also announced its expectation that the Executive Branch of the United States Government would intervene to assure Soviet immunity. It did not. In the meantime, plaintiffs had moved to effect service under §. 1608(a)(4), which provides that if service cannot be made within 30 days under paragraph (3), [it can be made] by sending two copies of the summons and complaint and a notice of suit, together with a translation of each into the official language of the foreign state, by any form of mail requiring a signed receipt, to be addressed and dispatched by the clerk of the court to the Secretary of State in Washington, District of Columbia, to the attention of Director of Special Consular Services — and the Secretary shall transmit one copy of the papers through diplomatic channels to the foreign state and shall send to the clerk of the court a certified copy of the diplomatic note indicating when the papers were transmitted. Certificates of Mailing establishing the Clerk of this Court’s compliance with § (a)(4) were filed on April 21, 1982. These documents were received by. the State Department Office of Consular Services on June 15, 1982. Unfortunately, as an August 9, 1982 letter from Elizabeth Swift, Chief of the Europe and Canada Division of the Office of Citizens Consular Services to plaintiffs’ attorney explained, “[d]ue to a misunderstanding ... service ... under the procedures contemplated was not effected by the United States Embassy at Moscow.” Counsel informed this Court of the situation by letter dated August 19, 1982, and that same day sent the Clerk of the Court a second set of papers for transmittal to the State Department. . The Certificates of Mailing for these documents were filed on August 20, 1982. The documents were transmitted by the United States Embassy in Moscow to the Soviet Ministry of Foreign Affairs, under cover of Diplomatic Note No. 1710, dated October 20, 1982, a certified copy of which was docketed in this Court on February 17, 1983 after being filed some time during November 1982. Section 1608(c)(1) specifies that “[s]ervice shall be deemed to have been made ... in the case of service under subsection (a)(4), as of the date of transmittal indicated in the certified copy of the diplomatic note.” Thus, service in these cases was complete on October 20, 1982. The Ministry of Foreign Affairs responded to the transmittal by Diplomatic Note No. 93/ossha, dated November 2, 1982, returning the documents and reiterating the position it had expressed in Diplomatic Note No. 33/ossha, and insisting that “US authorities take immediate and effective measures to provide legal immunity of the USSR and to dismiss the present matter in the court,” this notwithstanding that Diplomatic Note No. 1710 had explained that the Executive Branch was not in a position to comment on the suit and that claims of sovereign immunity in particular are to be adjudicated in the United States courts under United States law. Astonished that a sophisticated major trading nation which enjoys full diplomatic relations with the United States would default the elaborate notice and service provisions of the FSIA, this Court before embarking upon the declaration of a class action and the conduct of an inquest for these ancient dishonored securities, determined to assure that defendant, and the United States also, would have more than the constructive notice which flows from statutory compliance. This Court, on its own initiative, insisted that plaintiffs take further affirmative steps to notify the Soviet Union and to inform appropriate United States officials of the status of the litigation. On March 18, 1983, plaintiffs submitted a proposed order to this Court directing an entry of default against defendant. At that time this Court declined by an Endorsement Order to sign the proposed order pending further notice to interested parties, and directed that plaintiffs serve copies of the Endorsement Order, the proposed default order with affirmation and exhibits, and the Complaint on the United States Attorney for the Southern District of New York by March 24,1983, and to the Soviet Ambassador at the Soviet Embassy in Washington, D.C. On March 24, 1983, plaintiffs filed affidavits of service on the parties mentioned. These were measures not required by the FSIA; they were imposed by this Court on its own motion to ensure every reasonable effort to give the defendant notice of the actions against it, so that it could appear to assert any defense including that of sovereign immunity, before an entry of default, and also that the United States Department of Justice be given every reasonable opportunity, if so advised, to intervene on behalf of the United States in a matter of obvious importance to its international relations. Defendants did not appear in response to this additional notice. By letter dated April 3, 1983, Soviet Consul V. Sinitsyn returned the documents, as well as documents relating to Frolova v. Union of Soviet Socialist Republics, 558 F.Supp. 358 (N.D.Ill.1983), aff'd, 761 F.2d 370 (7th Cir.1985) (per curiam), advising that “[according to the existing agreement of 1935 and legal practice these documents must be presented to the Soviet authorities via the Embassy of the United States in Moscow.” This was done under cover of United States Diplomatic Note No. 1454, dated August 7, 1984. The concluding paragraph of that Diplomatic Note stated: United States law does not require transmittal by counsel for private parties, the Department of State, or the Embassy of the United States of interim documents, such as plaintiffs’ requests for preliminary entry of default, to a foreign state defendant that has failed to respond to a complaint within the period specified by United States law. Nevertheless, Judge Brieant requested plaintiffs’ attorney to do so with respect to the endorsement orders of March 18, 1983 and related documentation. See also Letter from H. Edward Odom, Chief of European Services Division of the Office of Citizens Consular Services, to Edward M. Sills, Esq., August 31, 1984 (“[TJhere is no provision in the [State] Department’s regulations requiring it to transmit [interim] papers ... and ordinarily the Department does not do so. In view of their importance to these cases, Judge Brieant’s specific request, and other factors, the Department has made an exception to this principle____”). No response was received from the United States Attorney for the Southern District of New York, or anybody else. Faced with what appeared by then to be a deliberate default, this Court ordered the entry of a default against the Soviet Union on May 3, 1983. Copies of the proposed order had been served on the United States Attorney for the Southern District of New York and the Ambassador of the USSR through the Soviet Foreign Mission in New York City on April 22, 1983. Affidavit of Service of Lawrence Milberg, Esq., April 22, 1983. This Court notes that it was not until May 23, 1983, about three weeks thereafter, that the Supreme Court decided Verlinden, supra, in which it held for the first time that “[u]nder the [FSIA], subject-matter jurisdiction turns on the existence of an exception to foreign sovereign immunity____ Accordingly, even if the foreign state does not enter an appearance to assert an immunity defense, a district court still must determine that immunity is unavailable under the Act.” See also Frolova v. Union of Soviet Socialist Republics, 761 F.2d 370, 373 (7th Cir.1985); Meadows v. Dominican Republic, 628 F.Supp. 599, 603 (N.D.Cal.1986), aff'd, 817 F.2d 517 (9th Cir.1987); Von Dardel v. Union of Soviet Socialist Republics, 623 F.Supp. 246, 251 (D.D.C.1985). The plaintiffs moved for class certification on June 29, 1983, which motion was granted on December 28,1983. The Notice of Motion for class certification, along with its supporting documents, was also served on the United States Attorney and on the Soviet Ambassador, this time through the Soviet Embassy in Washington, on June 29, 1983. The process of determining the claims of the class members was not completed until September 20, 1985, when this Court entered an Order Determining Claims. The Court held an inquest on January 3, 1986, and adopted plaintiffs’ proposed Findings of Fact and Conclusions of Law on February 3, 1986. On March 31, 1986, this Court finally entered a final judgment on default against the defendant USSR. The Clerk of this Court, by letter dated May 1, 1986, sent a copy and translation of the default judgment to the Soviet Ministry of Foreign Affairs in Moscow, as required by 28 U.S.C. § 1608(e). This transaction is evidenced by Certificates of Mailing dated May 2, 1986. These documents were also rejected and returned. On July 11, 1986, the Clerk of the Court sent the documents to the Office of Citizens Consular Services for transmittal to the Soviets. The documents were sent to the United States Embassy and therewith transmitted under cover of Diplomatic Note No. 1772, dated August 27, 1986, which among other things noted that property of a defaulting defendant in the United States is subject to attachment by the plaintiff, and urged the Soviet Union to appear through United States counsel, if so advised, to seek relief from the default judgment. See Letter of Deborah A. McCarthy, Consular Affairs Officer, Europe and Canada Division, Office of Citizens Consular Services, to Edward Aponte, Chief Deputy Clerk, United States District Court for the Southern District of New York, September 8, 1986, and attachments. The Soviet Union’s response, dated October 11,1986, was not sent to this Court by the State Department until February 4,1987. The Soviet Union again rejected service, reiterated its claim of absolute immunity, and stated that any attempt to enforce the default judgment, by attachment or otherwise, “would have most serious consequences for relations between our countries undermining the possibility of normal development of bilateral relations in different spheres.” In spite of the harsh rhetoric of its October 11, 1986 note, the Soviet Union thereafter retained counsel in the United States, and on March 30, 1987 filed a Notice of Motion to vacate the default judgment and dismiss the Complaint, with supporting documents. On May 27, 1987, the United States for the first time submitted a Statement of Interest, as well as Declarations from Thomas W. Simons, Jr., Deputy Assistant Secretary of State for European and Canadian Affairs, and the Honorable Abraham D. Sofaer, a former Judge of this Court,. now Legal Adviser to the Department of State. The Declarations both detailed how representatives of the United States had, after the entry of the default judgment, endeavored to explain to the Soviet Union that the United States adhered to the restrictive theory of sovereign immunity, that under the FSIA determinations of immunity are made by the United States courts rather than by the Executive Branch, that the Soviet Union would consequently be well advised to appear in these cases, and that it could do so in order to contest the issue of its absolute sovereign immunity, without thereby waiving that immunity and submitting itself to the jurisdiction of the United States courts. The Statement of Interest argues in detail that the default judgment, should be held void for want of jurisdiction and the Complaints dismissed. All of the United States’ submissions insist on the importance of this litigation to bilateral relations between the United States and the Soviet Union. However, as the procedural history just detailed makes clear, this Court went well out of its way to give notice of the progress of these lawsuits not only to the Soviet Union but also to the Executive Branch of our own Government, apprising both the State Department and the United States Attorney for the Southern District of New York of all developments, although it was not obliged to do so under the FSIA. This Court took these actions because of its own concern at the time to spare itself, the plaintiffs, the United States, and the Soviet Union the embarrassment and waste of effort that the entry of a default judgment, and the proceedings to determine its validity that would eventually but necessarily follow, might occasion. This Court is convinced that the USSR at all times knew that it was necessary to answer and appear in order to assert the waivable affirmative defense of sovereign immunity or plead the effect of the Litvinov Accord. But for the fact that the USSR seems to present singularly compelling grounds for the relief requested, on the merits, we would leave the defendant to its laches, its neglect, and its studied and intentional default. Plaintiffs filed their papers in opposition to the motion on May 29, 1987, oral argument was had on July 15, 1987, and decision reserved. Rule 60(b)(1) and (b)(6) Considerations The Soviet Union seeks relief from the default judgment under Rule 60(b) of the Federal Rules of Civil Procedure. In general, in deciding whether to grant a motion to vacate under Rule 60(b)(1) or (b)(6), courts consider whether the default was willful, whether defendant offers a meritorious defense, and how severely the nonmoving party would be prejudiced if the default judgment is vacated. Davis v. Musler, 713 F.2d 907, 915 (2d Cir.1983). Our Court of Appeals has noted that “prejudice” here does not mean mere delay: “Rather, it must be shown that delay will ‘result in the loss of evidence, create increased difficulties of discovery, or provide greater opportunity for fraud and collusion.’ ” Davis, 713 F.2d at 916 (quoting 10 C. Wright, A. Miller & M. Kane, Federal Practice & Procedure: Civil § 2699 at 536-37 (1983)). Here, no such effects can result from vacating the default judgment. Plaintiffs have already collected all the evidence they are going to, and the only issues raised by defendant’s belated appearance are issues of law. Moreover, under the circumstances of this case, the Soviet Union’s willful default is tempered by its genuine but unfounded belief that it enjoys such sovereign immunity that it can merely crumple and discard our legal process, and that this inherent quality of sovereignty cannot be impaired unilaterally by the United States’ adoption of the FSIA. See Jackson v. People’s Republic of China, 794 F.2d 1490, 1496-97 (11th Cir.1986), cert. denied, — U.S.—, 107 S.Ct. 1371, 94 L.Ed.2d 687 (1987). We also believe that the Soviet Union has tendered meritorious defenses. To do so, a moving party “need not conclusively establish the validity of the defense(s) asserted,” Davis, 713 F.2d at 916; “[i]t is sufficient to state defenses which, if established on trial, would defeat plaintiff’s action,” Horn v. Intelectron Corp., 294 F.Supp. 1153, 1155-56 (S.D.N.Y.1968) (Lasker, J.). Cf. United States v. Moradi, 673 F.2d 725, 727 (4th Cir.1982) (“[A]ll that is necessary to establish the existence of a ‘meritorious defense’ is a presentation or proffer of evidence, which, if believed, would permit either the Court or the jury to find for the defaulting party.”). Here, the Soviet Union has raised at least three defenses, any one of which would be complete: the statute of limitations; the effect of the Litvinov Assignment; and the inapplicability of the FSIA to pre-1952 claims. For these reasons, it would be appropriate to relieve the defendant from its default. The FSIA and Rule 60(b)(4) The Soviet Union also moves to vacate under Rule 60(b)(4). In FSIA cases, the differences between these motions offer the potential for confusion. Rule 60(b)(1) and (b)(6) motions require a court to examine the merits of a case — to find that there are meritorious defenses or other equitable reasons for vacating a default judgment. Rule 60(b)(4) motions, however, are jurisdictional: a successful (b)(4) motion establishes only that the default judgment was void for want of jurisdiction, and is not a judgment on the merits. See generally Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 776, 90 L.Ed. 939 (1946) (“[I]t is well settled that the failure to state a proper cause of action calls for a judgment on the merits and not for a dismissal for want of jurisdiction.”) In an FSIA case, the potential confusion results because a Rule 60(b)(4) dismissal can look like a dismissal for failure to state a claim upon which relief can be granted, and appear thereby to violate the rule of Bell v. Hood. The reason is that, as many courts have observed, the FSIA begins with a presumption of immunity that is only overturned if the plaintiff can demonstrate that the defendant sovereign’s activity sued on falls under one of the exceptions to immunity enumerated at 28 U.S.C. §§ 1605 and 1607. Thus, as our Court of Appeals has observed, “In many cases a resolution of the substantive immunity law issues will be required in order to reach a decision on subject matter jurisdiction____ [A] court may have to interpret the substantive principles embodied in §§ 1605-1607 before deciding whether to take jurisdiction.” Corporacion Venezolana de Fomento v. Vintero Sales Corp., 629 F.2d 786, 790-91 n. 4 (2d Cir.1980), cert. denied sub nom. Corporacion Venezolana de Fomento v. Merban Corp., 449 U.S. 1080, 101 S.Ct. 863, 66 L.Ed.2d 804 (1981). In the present case, this Court holds that plaintiffs have indeed stated a claim under the FSIA, inasmuch as the Imperial Russian Government’s offering of the bonds is a commercial activity in the sense of § 1605. The Court then goes on to hold, however, that because the FSIA does not apply retroactively to pre-1952 claims, sovereign immunity deprives this Court of jurisdiction over what we first determined to be a claim under the FSIA. The dismissal is, therefore, one for want of jurisdiction, not one on the merits, even though the Court must consider the merits before determining whether it has jurisdiction, in seeming violation of Bell v. Hood, supra. The FSIA and the History of Sovereign Immunity Section 1604 of the FSIA provides: Subject to existing international agreements to which the United States is a party at the time of enactment of this Act a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607 of this chapter. As noted supra, in virtue of § 1604 the Act is the sole basis for federal court subject matter and personal jurisdiction over a foreign sovereign. “If one of the specified exceptions to sovereign immunity applies, a federal district court may exercise subject-matter jurisdiction under § 1330(a); but if the claim does not fall within one of the exceptions, federal courts lack subject-matter jurisdiction.” Verlinden, 461 U.S. at 489, 103 S.Ct. at 1969 (footnote omitted) (observing in footnote that when federal court lacks subject matter jurisdiction over foreign sovereign it also lacks personal jurisdiction). See also id. at 493, 103 S.Ct. at 1971; Frolova v. Union of Soviet Socialist Republics, 761 F.2d 370, 372 (7th Cir.1985) (“[T]he comprehensive scheme established by the FSIA is the exclusive means by which foreign countries may be sued in American courts.”); Jackson v. People’s Republic of China, 596 F.Supp. 386, 387 (N.D.Ala.) (citing cases), aff'd, 794 F.2d 1490 (11th Cir.1986), cert. denied, — U.S. —, 107 S.Ct. 1371, 94 L.Ed.2d 687 (1987). The evolution of foreign sovereign immunity in the United States courts presents an interesting story. For most of its history, as a matter of comity, the United States granted foreign sovereigns absolute immunity from suit in its courts. The classic expression of the doctrine of absolute immunity in our courts was offered, in language resonant of Thomas Hobbes, by Chief Justice Marshall in The Schooner Exchange v. M’Faddon, 11 U.S. (7 Cranch) 116, 137, 3 L.Ed. 287 (1812): This full and absolute territorial jurisdiction being alike the attribute of every sovereign, and being incapable of conferring extra-territorial power, would not seem to contemplate foreign sovereigns nor their sovereign rights as its objects. One sovereign being in no respect amenable to another; and being bound by obligations of the highest character not to degrade the dignity of his nation, by placing himself or its sovereign rights within the jurisdiction of another, can be supposed to enter a foreign territory only under an express license, or in the confidence that the immunities belonging to his sovereign station, though not expressly stipulated, are reserved by implication, and will be extended'to him. This perfect equality and absolute independence of sovereigns, and this common interest impelling them to mutual intercourse, and an interchange of good offices with each other, have given rise to a class of cases in which every sovereign is understood to wave [sic] the exercise of a part of that complete exclusive territorial jurisdiction, which has been stated to be the attribute of every nation. This passage from The Schooner Exchange was quoted in Berizzi Brothers Co. v. S.S. Pesaro, 271 U.S. 562, 572, 46 S.Ct. 611, 612, 70 L.Ed. 1088 (1926), as the Court’s justification for extending immunity in an in rem action against a merchant ship owned and controlled by the Italian government. The Court reached this decision even though the State Department, in the court below, had said “It is the view of the Department that government-owned merchant vessels ... employed in commerce should not be regarded as entitled to ... immunit[y].” The Pesaro, 277 F. 473, 479-80 n. 3, quoted in Republic of Mexico v. Hoffman, 324 U.S. 30, 38, 65 S.Ct. 530, 534, 89 L.Ed. 729 (1945) (Frankfurter, J., concurring). Thus, it would appear that as of 1926 the Supreme Court relied on general principles of international law in immunity determinations: in The Pesaro it refused to recognize what we now call the “commercial activity” exception to sovereign immunity, even though the State Department urged that position upon it. There was a difference of opinion in the Executive Branch on this issue as early as 1918, when in an exchange of letters the Attorney General claimed that foreign merchant vessels were entitled to immunity and the Secretary of State denied that view. Restatement (Second) of Foreign Relations Law of the United States § 69, at 211 (1965). By the 1940s the Supreme Court had adopted a policy of deference to the Executive Branch on a case by case basis: “It is therefore not for the courts to deny an immunity which our government has seen fit to allow, or to allow an immunity on new grounds which the government has not seen fit to recognize.” Republic of Mexico v. Hoffman, 324 U.S. 30, 35, 65 S.Ct. 530, 533, 89 L.Ed. 729 (1945). See Verlinden, 461 U.S. at 486, 103 S.Ct. at 1967, citing Ex Parte Republic of Peru, 318 U.S. 578, 63 S.Ct. 793, 87 L.Ed. 1014 (1943) (stating principle of judicial deference to State Department determination of foreign sovereign’s entitlement to immunity, in case in which State Department had certified such entitlement), and Hoffman, 324 U.S. at 33-36, 65 S.Ct. at 531-33 (reaffirming principle of judicial deference but exercising in rem jurisdiction in absence of State Department certification of immunity or evidence that United States would customarily recognize immunity); Restatement (Second) of Foreign Relations Law of the United States § 69 at 212-13 (1965). Indeed, in Hoffman Justice Frankfurter’s concurrence suggests that the Court effectively overruled The Pesaro. Hoffman, 324 U.S. at 38-42, 65 S.Ct. at 534-36; see Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682, 700 & 700-701 n. 14, 96 S.Ct. 1854, 1864 & 1864 n. 14, 48 L,Ed.2d 301 (1976). In any case, after The Pesaro, “the executive department filed suggestions of immunity in conformity with that decision in cases involving merchant vessels owned and operated by foreign states.” Restatement (Second) of Foreign Relations Law of the United States § 69 at 212-13 (1965). More generally, “[u]ntil 1952, the State Department ordinarily requested immunity in all actions against friendly foreign sovereigns.” Verlinden, 461' U.S. at 486, 103 S.Ct. at 1968. In 1952, a sea change occurred when the State Department announced, in the so-called Tate Letter, its adoption of the “restrictive” theory of sovereign immunity. Letter of Jack B. Tate, Acting Legal Adviser, Department of State, to Acting Attorney General Philip B. Perlman, May 19, 1952, reprinted in 26 Dep’t of State Bull, 984-85 (1952) and Alfred Dunhill of London Inc. v. Republic of Cuba, 425 U.S. 682, 711-15, 96 S.Ct. 1854, 1869-71, 48 L.Ed.2d 301 (1976). Under the restrictive theory, immunity is extended only to a foreign sovereign’s “public acts,” (jure imperii), not its “private,” including commercial, acts (jure gestionis). Legal Adviser Tate noted that “a shift in executive policy cannot control the courts,” but believed that “the courts are less likely to allow a plea of sovereign immunity where the executive has declined to do so,” noting that “at least some Justices of the Supreme Court” thought that Executive Branch determinations of immunity should be dispositive. Dunhill, 425 U.S. at 714, 96 S.Ct. at 1871. Congress enacted the FSIA in 1976, at the urging of the Department of State, because some thought the policy embodied in the Tate Letter had proved awkward to implement and required codification. See Verlinden, 461 U.S. at 487-88, 103 S.Ct. at 1968. As has been noted supra, the FSIA is now the exclusive basis for federal court jurisdiction over suits against a foreign sovereign, and a court lacks both subject matter and personal jurisdiction over the sovereign unless one of the exceptions set out in 28 U.S.C. §§ 1605-1607 applies. 28 U.S.C. § 1604. Plaintiffs submit that at least two of the FSIA exceptions apply to this case: first, issuance of the bonds in the United States was a commercial activity, and so not entitled to immunity in virtue of § 1605(a)(2) (no immunity in cases “in which the action is based upon a commercial activity carried on in the United States by the foreign state”); second, the annulment of foreign loans was an expropriation illegal under international law, that is, a taking of the bondholders’ property right to receive payments on their bonds, and so subject to the illegal takings exception under § 1605(a)(3) (no immunity in cases “in which rights in property taken in violation of international law are in issue and that property ... is present in the United States in connection with a commercial activity carried on in the United States by. the foreign state”). This Court will not address plaintiffs’ contention that the bond issue is subject to the § (a)(3) exception, because we are persuaded by plaintiffs’ contention that the flotation of the bonds was a commercial activity within the meaning of the FSIA. Plaintiffs cite unequivocal language in the legislative history to support that contention. The House Report characterized commercial acts generally as “those which private persons normally perform,” or “of the same character as ... might be made by a private person.” H.R. No. 94-1487 at 14, reprinted in U.S. Code Cong. & Ad. News 6604, 6613, 6615 (1976). Issuance of debt instruments is certainly an activity in which private parties engage. Indeed, the House Report specifically singles out such activity: “Moreover, both a sale of bonds to the public and a direct loan from a U.S. commercial bank to a foreign government are activities which are of a commercial nature and should be treated like other similar commercial transactions.” Id. at 10, U.S.Code Cong. & Ad.News 1976, 6609. “This definition includes ... an indebtedness incurred by a foreign state which negotiates or executes a loan agreement in the United States, or which receives financing from a private or public lending institution located in the United States.” Id. at 17, U.S.Code Cong. & Ad.News 1976, 6615. Thus, it seems clear, and the Soviet Union does not dispute, that a foreign bond issue subsequent to the effective date of the FSIA would fall within the commercial activity exception. See Slade v. United States of Mexico, 617 F.Supp. 351, 355 & n. 12 (D.D.C.1985), aff'd mem., 790 F.2d 163 (1986), cert. denied, — U.S.—, 107 S.Ct. 878, 93 L.Ed.2d 832 (1987); see also Schmidt v. Polish People’s Republic, 579 F.Supp. 23, 26 (S.D.N.Y.), aff'd, 742 F.2d 67 (2d Cir.1984). The dispositive issue before this Court, therefore, is the same as that in Slade and Jackson: whether the FSIA applies retroactively so as to confer jurisdiction over a foreign sovereign for its commercial activities engaged in long before the effective date of the FSIA and before the 1952 Tate Letter. If so, this Court had jurisdiction to enter a default judgment, which should now be vacated granting leave to the Soviet Union to answer or move with respect to the Complaint. If not, the Complaint must be dismissed for want of subject matter jurisdiction. Retroactivity and the FSIA In general, “[t]he presumption is very strong that a statute was not meant to act retrospectively, and it ought never to receive such a construction if it is susceptible of any other.” United States Fidelity & Guaranty Co. v. United States ex rel. Struthers Wells Co., 209 U.S. 306, 314, 28 S.Ct. 537, 539, 52 L.Ed. 804 (1908). Indeed, drawing on Struthers Wells among other sources, Justice Rehnquist recently wrote that “[t]he principle that statutes operate only prospectively, while judicial decisions operate retrospectively, is familiar to every law student.” United States v. Security Industrial Bank, 459 U.S. 70, 79, 103 S.Ct. 407, 413, 74 L.Ed.2d 235 (1982). Plaintiffs argue that this general principle is subject to an exception that applies to the FSIA: a statute may be applied retroactively if' it is “remedial,” that is, if its retroactive application would not interfere with “substantive” or “vested” rights. See, e.g., Union Pacific Railroad Co. v. Laramie Stock Co., 231 U.S. 190, 199, 34 S.Ct. 101, 102, 58 L.Ed. 179 (1913); United States v. Kairys, 782 F.2d 1374, 1381 (7th Cir.) (“In order for a statute to be considered remedial it must be one that neither enlarges nor impairs substantive rights, but relates to the means and procedures for enforcement of those rights.”), cert. denied, — U.S. —, 106 S.Ct. 2258, 90 L.Ed.2d 703 (1986). Plaintiffs argue that the FSIA plainly states that it is applicable to all actions against a foreign state, without limitation as to time; that retrospective application would not deprive the Soviet Union of any antecedent rights, because absolute sovereign immunity before the Tate Letter had been a matter of comity rather than of right; that the FSIA is remedial, in that it creates no new rights but only provides a structure for enforcing independently or antecedently existing rights; and that a number of courts have in fact applied the FSIA in cases involving transactions that occurred before its effective date. We take up each of these arguments in turn. Construction of the FSIA Our Court of Appeals has observed that the “[determination of retroactivity [is] a matter of statutory construction.” Litton Systems v. American Telephone & Telegraph Co., 746 F.2d 168, 174 (2d Cir. 1984). This Court is unable so to read the FSIA’s plain language and legislative history so as to give it retroactive effect. Congress provided a ninety-day grace period between the passage of the FSIA and its effective date, to put foreign sovereigns on notice of the codification of United States policy. Jackson, 596 F.Supp. at 388. “Such a postponement of a statute’s effective date is evidence of the legislature’s desire that it be given prospective application only.” Buccino v. Continental Assurance Co., 578 F.Supp. 1518, 1527 (S.D.N.Y.1983); see Ocean & Atmospheric Science v. Smyth Van Line, Inc., 446 F.Supp. 1158, 1159 (S.D.N.Y.1978). Moreover, the jurisdictional section, 28 U.S.C. § 1330(a), provides that the district courts “shall have” jurisdiction over the cases specified in §§ 1605 and 1607 (emphasis supplied). The use of “shall have” indicates prospective application. Martropico Compania Naviera S.A. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Pertamina), 428 F.Supp. 1035, 1037 (S.D.N.Y.1977). Thus, the plain language and legislative history of the statute provide thrusts against, rather than for, a congressional intent that the FSIA be applied retroactively. This conclusion accords with that reached by our Court of Appeals in Schmidt v. Polish People’s Republic, 742 F.2d 67 (2d Cir.1984). Schmidt involved notes on which Poland defaulted in 1939 because of the outbreak of World War II. The plaintiffs argued that the statute of limitations had not run because under New York law it is tolled when the defendant is absent from- the jurisdiction, and Poland was not present in the jurisdiction — that is, amenable to process — until January 19, 1977, when the FSIA became effective. As Judge Winter observed, this “inventive argument,” 742 F.2d at 70, “construes the FSIA as reviving all claims, however dormant, existing against foreign governments at any time before its passage.” Id. at 71. That proved sufficient reason for the Court of Appeals to reject the argument: We believe this infuses the Act with consequences wholly uncontemplated by Congress. While the. Act indisputably enhances a party’s capacity to gain personal jurisdiction over a foreign state ... nothing in its language or legislative history indicates that such wholesale reactivation of ancient claims was intended____ Moreover, since the “Tate Letter” ... foreign sovereign immunity had not extended to the commercial activity of a foreign state ... and Congress had no reason whatsoever to believe that it that it was reviving otherwise dormant claims based on such activity. Id. Was Absolute Immunity an Antecedent Right Eliminated by the FSIA? Plaintiffs’ second and third contentions go hand in hand. If the FSIA is merely remedial, it can be applied retroactively. To say that a statute is remedial is simply to say that it does not prejudice antecedent rights. Thus, if absolute sovereign immunity is not a matter of right, the FSIA is merely remedial and can be applied retroactively to sovereigns’ commercial activities, because sovereigns had no antecedent right no, to be sued for the consequences of such activities. Plaintiffs rest their contention that absolute immunity is not an antecedent right on Chief Justice Burger’s remark in Verlihden that “[a]s The Schooner Exchange made clear ... sovereign immunity is a matter of grace and comity on the part of the United States, and not a restriction imposed by the Constitution.” 461 U.S. at 486, 103 S.Ct. at 1967. Chief Justice Burger went on to observe that “[ajccordingly, this Court consistently has deferred to the decisions of the political branches — in particular, those of the Executive Branch — on whether to take jurisdiction over actions against foreign sovereigns and their instrumentalities.” Id. Plaintiffs rely on this passage to support the view that absolute immunity was a matter of executive grace, such that the Executive Branch could acknowledge or withhold immunity on a case-by-case basis, in the tradition of the “Bernstein letter” approach to the analogous “Act of State” doctrine. See Bernstein v. N.V. Nederlandsche-Amerikaansehe Stoomvart-Maatschappij, 210 F.2d 375 (2d Cir.1954) (Court of Appeals refused, for the first time, to apply Act of State doctrine, relying on a letter and press release from State Department Legal Adviser relieving American courts of such restraints on their jurisdiction in considering validity of Nazi official actions). This Court’s analysis of the history of foreign sovereign immunity shows that plaintiffs’ picture is over-simplified. It was not always true that the Supreme Court deferred to executive branch determinations of immunity: as late as 1926, in The Pesaro, the Court found immunity, relying on the general and abstract principles laid down in The Schooner Exchange, in spite of the State Department’s arguments to the contrary. It is fair to say that as late as 1926 the Supreme Court regarded sovereign immunity as a right grounded in the natural law of international relations. Only in the 1940s, in cases such as Ex Parte Peru and Mexico v. Hoffman, which the Chief Justice cites in Verlinden, did the Supreme Court adopt a policy of deference to the executive. It is ironic, moreover, that, as the drafters of the Restatement point out, the State Department began requesting immunity for foreign sovereigns as a matter of course only after and in response to The Pesaro. Restatement (Second) of Foreign Relations Law of the United States § 69, at 212-13. In light of The Pesaro, we may venture with some confidence to say that as late as 1926, almost a decade after the Soviet debt repudiation at issue in this case, the federal courts would not have taken jurisdiction over any instrumentality of a foreign sovereign — let alone the sovereign itself — no matter what the Executive Branch recommended. Moreover, one should consider Chief Justice Burger’s distinction between comity and constitutionality in the context of Verlinden; the question presented in that case was whether the FSIA permitted foreign plaintiffs to sue foreign sovereigns in courts in the United States, and if so whether this represented an unconstitutional expansion of the federal courts’ Article III jurisdiction. The contrast between “matters of grace and comity” and “restrictions imposed by the Constitution” is not, in this context, one between matters of international etiquette and constitutional right, but between matters of right grounded in comity and matters of right grounded in the Constitution. Chief Justice Burger is reminding us that although the federal courts would not have entertained an action against a foreign sovereign during the era of absolute immunity, they could have done so without violating the Constitution. They did not entertain such actions, as The Schooner Exchange made clear, because to do so would have violated general principles of international law which are enforceable only by appeal to grace and comity. That this is so makes the rights granted thereby to sovereign nations, no less genuine. The United States could at any time, and did in 1952, cease to grant absolute sovereign immunity without violating the Constitution, but only at the cost of ceasing to recognize a principle that it previously considered to express a right under international law, and which other sovereigns still hold valid. This Court recognizes that other sovereigns still adhere to the doctrine of absolute sovereign immunity. Adherence to that theory, however principled, cannot be used as a basis for a United States Court to excuse a foreign sovereign from the obligation to appear after notice and assert its defenses, including that of immunity, ¡under pain of suffering a default and the customary consequences thereof, including admission of the allegations of the Complaint. Some foreign sovereigns may be unfamiliar with the United States’ adoption of the restrictive theory of sovereign immunity and its codification in the FSIA, and their failure to appear may be understood in this light, and to that extent mitigated. The Department of State shows here that it has undertaken the task of educating such sovereigns about the United States’ legal system. The Soviet Union, however, is far from an unsophisticated litigant in the United States courts. It has frequently appeared in other cases to assert its immunity. See Von Dardel v. Union of Soviet Socialist Republics, 623 F.Supp. 246, 252 (D.D.C.1985) (collecting cases). Thus, this Court has no hesitation in holding that a foreign sovereign’s pre-1926 settled expectation that it was absolutely immune from suit in the United States courts rises to the level of an antecedent right. For until 1926 at least, the Supreme Court recognized absolute sovereign immunity on the basis of the abstract principles of international law stated in The Schooner Exchange. At some point after 1926, the courts deferred to the customary recommendation of immunity tendered by the State Department: this shift changed the basis, but not the fact, of the settled expectation of immunity. Only after 1952 was it reasonable for a foreign sovereign to anticipate being sued in the United States courts on commercial transactions. In short, this Court is persuaded by the reasoning of decisions such as Jackson and Slade that retroactive application of the FSIA to pre-1952 transactions and events would affect foreign sovereigns’ antecedent rights adversely. This Court endorses the holding of the district court in Jackson: At the time of the issuance of the bonds in 1911 up until the date of their maturity in 1951, China relied on the well-founded expectation that the then extant, almost universal doctrine of absolute sovereign immunity governed all interactions between her and the United States and the citizens of the two respective countries. Concomitantly, China had no expectation of being haled into a court in the United States to answer for any default of the bond issue. Similarly, the predecessors in interest of the plaintiff bondholders class had no expectation of any right to bring an action in a court of the United States upon a default of the bond issue. 596 F.Supp. at 389. The district court’s similar observations in Slade are equally apposite: [T]o apply the FSIA to the underlying transactions would clearly prejudice the antecedent rights of Mexico. Between 1922 and 1951, the government of Mexico could safely assume that the then existing doctrine of absolute immunity governed any commercial transaction between it and the United States or its citizens. Mexico could therefore not reasonably anticipate being haled into court in the United States for defaulting on public debt instruments. Nor, for that matter, could holders of bonds and interest coupons reasonably expect to bring an action against Mexico in a United States court in the event of such a default, The Court finds that because Mexico may have reasonably relied on these factors in structuring its conduct prior to 1952, it would be inequitable to divest Mexico of the absolute immunity it enjoyed in 1922 by applying the FSIA to this case. 617 F.Supp. at 358 (footnotes omitted). This Court has undertaken its own study of cases between 1927 and 1952 involving the various Russian Governments and the Litvinov Assignment, in order to ascertain whether prior to 1952 foreign sovereigns indeed had the expectation of not being sued for their commercial activities in United States courts. Our inquiry lends support to the view that before 1952 the United States courts would have treated the Russian Governments as entitled to absolute sovereign immunity, except insofar as those Governments could have been considered to have waived their immunity or consented to setoffs by appearing as plaintiffs or the assignors of plaintiffs in the United States courts. The Russian Governments in United States Courts, 1927-1952 Three lines of cases involving the various Russian Governments show that the Soviet Union had a justified expectation of absolute sovereign immunity from suit in the United States courts arising from its repudiation of foreign debts. First, a number of cases brought by the Imperial and Provisional Governments involved the status of the Russian Governments as successors in interest to one another before and after the recognition of the Soviet Union. Second, the validity of the Litvinov Assignment was several times the subject of litigation. Third, after the Litvinov Assignment was upheld by th