RICHARD J. LEON, United States District Judge.
Petitioner Belize Social Development Limited ("petitioner" or "BSDL") brings this action against respondent the Government of Belize ("respondent" or "GOB"), seeking the confirmation and enforcement of a foreign arbitral award pursuant to § 207 of the Federal Arbitration Act ("FAA"), 9 U.S.C. § 207, and Article III of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention" or "N.Y. Conv.").
On September 19, 2005, respondent GOB and Belize Telecommunications Limited ("BTL")
The Accommodation Agreements also contained a clause which provided that any dispute would be referred to and resolved by arbitration under the London Court of International Arbitration ("LCIA") Rules. Pet'r's Mem. at 4. Over the next few years, the parties amended the original agreement three times and on May 29, 2007, under the third agreement, Belize Telemedia Limited ("Telemedia") "assumed all of BTL's rights and obligations under the Accommodation Agreement." Id. at 3.
On February 8, 2008, Dean Barrow was appointed the new Prime Minister of Belize and his administration refused to acknowledge Telemedia's rights as set forth in the Accommodation Agreements or to comply with its obligations under the agreements. Id. at 5. Telemedia, on the other hand, complied with its obligations under the Accommodation Agreements by purchasing GOB properties for 19,200,000 Belize dollars. Id.
Telemedia submitted a request for arbitration to the LCIA on May 9, 2008, claiming multiple breaches of the Accommodation Agreements. Pet'r's Mem. at 6. The LCIA appointed a Tribunal comprised of three distinguished arbitrators to govern the arbitration proceedings. Id. at 7. GOB refused to participate in the arbitration proceedings, id. at 8; Resp't's Prelim. Resp. at 6, and on March 18, 2009, following
Two days after the Tribunal issued its Final Award, on March 20, 2009, BSDL was created in the British Virgin Islands. Resp't's Prelim. Resp. at 7. That same day, Telemedia assigned to BSDL the monetary portion of the Tribunal's Final Award, id. at 7-8, thereby allowing BSDL "to enforce and receive the monetary portion of the Final Award," Pet'r's Mem. at 9.
In Belize, GOB filed a lawsuit against Telemedia on April 6, 2009, Pet'r's Mem. in Opp'n to Resp't's Mot. to Stay or Dismiss and in Supp. of Pet. To Confirm Arb. Award ("Pet'r's Suppl. Mem.") at 3 [Dkt. # 45], seeking a declaratory judgment that the Tribunal's arbitration award is "unenforceable and the Accommodation Agreements are invalid as contrary to Belize law and public policy," Resp't's Prelim Resp. at 8.
GOB also enacted legislation in 2009 to assume control over telecommunications in Belize and obtained 94% of Telemedia's shares as part of that legislation. Resp't's Prelim. Resp. at 9; Resp't's Suppl. Br. at 12. In 2010, the Belize Supreme Court of Judicature (Amendment) Act ("SCJA") made it a criminal offense punishable by fine, imprisonment of at least five years, or both "to disobey or fail to comply with an injunction" issued by the Belize Supreme Court. Pet'r's Suppl. Mem. at 5. GOB also made it a crime for BSDL and its counsel to respond to the pleadings that GOB had already filed in this case. Id. In August 2012, "the Belize Court of Appeal struck down several sections of the SCJA as unconstitutional," including the sections
BSDL filed its petition in this Court on November 17, 2009. On October 18, 2010, this court stayed the proceeding pending resolution of the case in Belize. Id. at 7. BSDL appealed the stay order and, alternatively, sought a writ of mandamus. Id.
The United States Court of Appeals for the District of Columbia Circuit granted the writ of mandamus and held that this court's indefinite "stay order as issued exceeded the proper exercise of authority of the district court." Belize Soc. Dev. Ltd. v. Gov't of Belize, 668 F.3d 724, 727 (D.C.Cir.2012), cert denied, 133 S.Ct. 274 (2012). In addition, the D.C. Circuit held that this case is governed by the New York Convention, and litigation in Belize is irrelevant to enforcement of the arbitration award in this proceeding. See id. at 730 ("[T]he pending action in Belize has no preclusive effect on the district court's disposition of the petition to enforce pursuant to the FAA and the New York Convention...."). The case was remanded, and I was instructed to "conduct further proceedings not inconsistent with [the] opinion." Id. at 734 (internal quotation marks omitted).
At oral argument, BSDL took the position that "in the world of foreign arbitration awards that are brought to the United States for confirmation under 9 USC section 207, this is what you would call run of the mill," and that "the D.C. Circuit has given ... a very clear template as to what is to be done, because section 207 says that when an award is brought for confirmation, the District Court shall confirm unless one of the grounds for either stay or non-enforcement under the [New York] convention is established." Tr. at 20. This is in line with my reading of our Circuit Court's opinion in this case:
Belize Soc. Dev. Ltd., 668 F.3d at 733 (quoting Mitsubishi Motors Corp. v. Soler-Chrysler-Plymouth, Inc., 473 U.S. 614, 631, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985), and 9 U.S.C. § 207).
GOB nevertheless argues that, even after the Circuit Court's ruling, there are at least five distinct grounds on which I could dismiss the petition, including lack of subject matter jurisdiction, lack of standing,
In short, I am not persuaded by any of GOB's asserted bases for dismissing or denying BSDL's petition, and I will therefore grant the petition, confirm the arbitration award, and enter judgment in BSDL's favor.
This Court has subject matter jurisdiction over "any nonjury civil action against a foreign state ... as to any claim for relief in personam with respect to which the foreign state is not entitled to immunity either under [the Foreign Sovereign Immunities Act ("FSIA") ] or under any applicable international agreement." 28 U.S.C. § 1330(a). GOB takes the position that it is entitled to sovereign immunity under the FSIA because it has never waived immunity and none of the FSIA exceptions apply. See Resp't's Mem. at 37-41. GOB is mistaken.
Under the FSIA, a foreign sovereign enjoys no immunity from a suit "to confirm an award made pursuant to [] an agreement to arbitrate, if ... the agreement or award is or may be governed by a treaty or other international agreement in force for the United States calling for the recognition and enforcement of arbitral awards." 28 U.S.C. § 1605(a)(6)(B). The LCIA's award in this case is clearly governed by the New York Convention because both England (where the arbitration took place) and the United States are parties to the Convention. Belize Soc. Dev. Ltd., 668 F.3d at 731 n. 3. Belize's status under the convention is irrelevant. Id, Moreover, it is well settled that an action to confirm an arbitration award under the New York Convention falls squarely within the ambit of the § 1605(a)(6)(B) immunity exception. Creighton Ltd. v. Gov't of the State of Qatar, 181 F.3d 118, 123-24 (D.C.Cir.1999); see also Cont'l Transfert Technique Ltd. v. Fed. Gov't of Nigeria, 697 F.Supp.2d 46, 55-56 (D.D.C.2010) (applying 28 U.S.C. § 1605(a)(6) in case involving dispute between a foreign sovereign, Nigeria, and one of its own nationals, a Nigerian corporation). Thus, this Court has subject matter jurisdiction.
GOB challenges the application of § 1605(a)(6), claiming that the LCIA's
GOB also argues for dismissal based on the relative inconvenience of litigating in this forum. See Resp't's Mem. at 26-28; Resp't's Suppl. Br. at 5-13. Under the doctrine of forum non conveniens, I "must decide (1) whether an adequate alternative forum for the dispute is available and, if so, (2) whether a balancing of private and public interest factors strongly favors dismissal." Agudas Chasidei Chabad of U.S. v. Russian Fed'n, 528 F.3d 934, 950 (D.C.Cir.2008) (citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255 n. 22, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981)). The balancing of private and public interests occurs only if an adequate alternative forum exists. Id.
Unfortunately for GOB, there is no adequate alternative forum for this case because "only a court of the United States (or of one of them) may attach the commercial property of a foreign nation located in the United States." TMR Energy Ltd. v. State Prop. Fund of Ukraine, 411 F.3d 296, 303 (D.C.Cir.2005). Even if GOB has no attachable property in the United States at this time, Resp't's Suppl. Br. at 8, "it may own property here in the future, and [BSDL's] having a judgment in hand will expedite the process of attachment," TMR Energy, 411 F.3d at 303. This is the controlling law in our Circuit, and I will therefore apply it faithfully.
Convenience aside, GOB also urges me to dismiss BSDL's petition on
According to GOB, BSDL lacks standing to enforce the arbitration award because Telemedia did not validly assign BSDL the right to the monetary portion of the award. GOB challenges the assignment both under the terms of the Accommodation Agreement, see Resp't's Mem. at 33-34; Resp't's Prelim. Resp. at 16-17; Resp't's Suppl. Br. at 20-21, and under Belizean law, see Resp't's Suppl. Br. at 2122 (citing Belizean case law and regulations).
First, Section 19 of the Accommodation Agreement, on which GOB bases its entire Accommodation Agreement argument, was "deleted in its entirety" and replaced by a new provision on January 1, 2008, more than a year before the March 20, 2009 Telemedia-BSDL assignment even took place. See Decl. of Louis B. Kimmelman ("Kimmelman Decl."), Ex. E
Second, GOB's reliance on the law of Belize is misplaced. By its own terms, the assignment "is governed by English law and shall be construed in accordance with English law." See Decl. of Stephen J. Ruzika ("Ruzika Deck"), Ex. C ¶ 3.6 (Deed of Assignment) [Dkt. # 1-19].
I am also satisfied that there are no necessary parties missing from this case. Under Federal Rule of Civil Procedure 19, a case may be dismissed only if an absent party is "required" in the litigation, the absent party cannot be joined, and equitable factors weigh in favor of dismissal. Cherokee Nation of Okla. v. Babbitt, 117 F.3d 1489, 149596 (D.C.Cir.1997) (citing Fed.R.Civ.P. 19(a), (b)); see also Fed. R.Civ.P. 12(b)(7) (allowing motion to dismiss for "failure to join a party under Rule 19"). A party is "required" if:
Fed.R.Civ.P. 19(a)(1).
GOB contends that Telemedia and its former majority shareholder, Dunkeld International Investments Ltd. ("Dunkeld"), are indispensable parties because
There is no evidence in the record that Dunkeld has ever asserted the right to enforce the LCIA arbitration award. To the contrary, Dunkeld's December 4, 2009 Notice of Arbitration — which GOB cites as the sole piece of evidence that Dunkeld has claimed an interest in the award — explicitly states that "[o]n 20 March 2009 Telemedia assigned the benefit of the LCIA Award ... insofar as it orders the payment of certain damages and costs by [GOB] to Telemedia, to [BSDL]." Decl. of Gian C. Ghandi ("Ghandi Decl."), Ex. 8 ¶ 7.13 (Notice of Arbitration) [Dkt. # 15-10]. And as already discussed, Telemedia in fact did assign to BSDL its right to the monetary portion of the arbitral award, as well as the right to enforce that award. See supra Part I.D; see also Ruzika Deck, Ex. C ¶ 1.3 ("[T]he Assignee shall have the sole right to enforce any and all rights which accrue in respect of the [damages and costs awarded by the LCIA] against [GOB]."). Dunkeld obviously agrees that there is a valid assignment.
As a matter of both English and U.S. law, not to mention common sense, an absent party that has assigned its legal rights is not "required" in litigation brought by the assignee to enforce those rights. See Smith Op. ¶ 11 ("BSDL can claim the [award] in its own name...."); Primax Recoveries, Inc. v. Lee, 260 F.Supp.2d 43, 51 (D.D.C.2003) ("In light of [an assignee-] plaintiff's claim that it is the sole possessor of the rights being asserted against defendant, it is difficult to see how the Court will be unable to accord relief in the absence of [an assignor] or how defendant will incur multiple or inconsistent obligations by reasons of the claimed interest.").
GOB claims that BSDL's petition should be denied because it does not comply with Article IV of the New York Convention, which requires the petitioner, "at the time of the application, [to] supply: (a) The duly authenticated original award or a duly certified copy thereof; [and] (b) The original agreement [to arbitrate] or a duly certified copy thereof." Resp't's Suppl. Br. at 27 (quoting Article IV(1)). BSDL concedes that it did not provide original or duly certified copies of original documents, but says that "signed copies ... that were certified to be `true and correct' copies `under penalty of perjury'" are enough. Pet'r's Suppl. Mem. at 17-18 (citing Dkt. # # 1-3, 1-4).
I agree with another judge who characterized an argument like GOB's as "grasping at straws, attempting to persuade the Court to refuse to confirm the award on the basis of a mere technicality." Arbitration Between Overseas Cosmos, Inc. v. NR Vessel Corp., No. 97 CIV. 5898(DC), 1997 WL 757041, at *5 (S.D.N.Y. Dec. 8, 1997).
Next, GOB argues that the arbitration award is unenforceable because "the alleged arbitration agreement [between GOB and BTL] is invalid under the laws of Belize." See Resp't's Suppl. Br. at 28 (citing N.Y. Conv. Art. V(1)(a)). In truth, however, GOB does not challenge the legality of the arbitration agreement as a stand-alone provision; rather, GOB fires attacks on at least a dozen other provisions of the Accommodation Agreements. See id. at 28-38; Resp't's Prelim. Resp. at 26-36.
Unfortunately for GOB, it is well-settled law that "an arbitration provision is severable from the remainder of the contract." Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006) (holding that arbitrator should decide whether contract containing arbitration clause was void ab initio because terms other than the arbitration clause violated state law and rendered the contract "criminal on its face"). Absent a direct challenge to the arbitration clause itself, the clause remains "enforceable apart from the remainder of the contract," and GOB's challenge to the validity of the contracts "should ... be considered by an arbitrator, not a court." Id.; see also id. at 449 ("[A] challenge to the validity of the contract as a whole, and not specifically to the arbitration clause, must go to the arbitrator." (emphases added)); Nanosolutions, LLC v. Prajza, 793 F.Supp.2d 46, 54-55 (D.D.C.2011) ("[T]he FAA prohibits a district court from considering... challenges [to] the contract as a whole.").
Section 15.2 of the Accommodation Agreement reflects the parties' clear intent to arbitrate "[a]ny dispute arising out of or in connection with this Agreement including any question regarding its existence, validity or termination." GOB offers no basis under Belizean law, or any other law, for this Court to find that particular clause invalid.
The New York Convention allows for enforcement of an arbitral award to be refused if "[t]he award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration," Art. V(1)(c), or if "[t]he subject matter of the difference is not capable of settlement by arbitration under the law of th[e] country" being asked to recognize and enforce the award, Art. V(2)(a). GOB contends that these articles apply because the LCIA Award and its enforcement violate the internationally-recognized common law revenue rule, see Resp't's Mem. at 19-24; Resp't's Prelim. Resp. at 12-16, 36-38; Resp't's Suppl. Br. at 38-40, as well as the United States' political question and act of state doctrines and principles of comity,
The LCIA considered the revenue rule and decided that it did not apply because this is a contract case, not an action to enforce a foreign nation's tax laws. See Final Award ¶ 180.
As for the act of state doctrine, the FAA states that "[e]nforcement of arbitral agreements, confirmation of arbitral awards, and execution upon judgments based on orders confirming such awards shall not be refused on the basis of the Act of State doctrine." 9 U.S.C. § 15 (emphasis added).
The political question doctrine, meanwhile, "is primarily a function of the separation of powers" and should not be understood to mean that "every case or controversy which touches foreign relations lies beyond judicial cognizance." Baker v. Carr, 369 U.S. 186, 210-11, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962). The subject matter of the controversy in this case — the existence and enforceability of a contract between a state and a private party — raises no separation of powers concerns, or any other political questions for that matter, that would make it non-arbitrable under U.S. law. In fact, courts in our Circuit regularly resolve contract disputes brought by private parties against foreign countries. See McKesson, Corp. v. Islamic Republic of Iran, 672 F.3d 1066 (D.C.Cir.2012); Gulf Res. Am., Inc. v. Republic of Congo, 370 F.3d 65 (D.C.Cir. 2004); El-Hadad v. United Arab Emirates, 216 F.3d 29 (D.C.Cir.2000); Wye Oak Tech., Inc. v. Republic of Iraq, 941 F.Supp.2d 53 (D.D.C.2013). Given the frequency with which these cases arise — and the fact that GOB fails to cite even one such case decided on political question grounds — it simply cannot be that the political question doctrine bars U.S. courts
Furthermore, GOB cannot challenge enforcement by first, raising arguments that "depart from the law and enter the realm of political theory," and then, invoking the political question doctrine. Republic of Philippines v. Westinghouse Elec. Corp., 774 F.Supp. 1438, 1465 (D.N.J.1991).
In its initial motion to stay or dismiss and its preliminary response to BSDL's petition, GOB argued that I should decline to enforce the LCIA Award under Article V(1)(e) of the New York Convention because "enforcement of the Award has been suspended by a competent authority (Belize Supreme Court)." Resp't's Mem. at 15; Resp't's Prelim. Resp. at 20-26. Our Circuit Court addressed Article V(1)(e), saying:
Belize Soc. Dev. Ltd., 668 F.3d at 731 (emphases added). GOB has not sought or obtained any relief in the English courts, so Article V(1)(e) does not apply.
Finally, GOB urges the Court to refuse recognition and enforcement of the LCIA Award on the basis that doing otherwise would be "contrary to the public policy" of the United States. Resp't's Prelim. Resp. at 39-42; Resp't's Suppl. Br. at 41-43 (quoting N.Y. Conv. Art. V(2)(b)). As our Circuit Court has noted, courts around
GOB cites the Foreign Corrupt Practices Act as the "best evidence[ ]" that the United States has "a strong public policy against corruption abroad." Resp't's Suppl. Br. 41. I agree with the general notion that the United States has a strong policy against foreign corruption. But it also has a countervailing policy that I mentioned earlier — an `"emphatic federal policy in favor of arbitral dispute resolution"' that `"applies with special force in the field of international commerce.'" Belize Soc. Dev. Ltd., 668 F.3d at 733 (quoting Mitsubishi Motors Corp., 473 U.S. at 631, 105 S.Ct. 3346). This is not the first time a court has been confronted with conflicting policies, one weighing in favor of enforcing an arbitral award and one weighing against it, and consistently, U.S. courts have enforced arbitral awards in the face of public policy interests at least as weighty as the policy against corruption abroad. See Agility Pub. Warehousing Co. K.S.C., Prof I Contract Admins., Inc. v. Supreme Foodservice GmbH, 495 Fed.Appx. 149, 151 (2d Cir. 2012) ("[T]he [public policy] defense is frequently invoked but rarely successful, particularly in view of the strong United States policy favoring arbitration.").
It is "the norm" for courts enforcing arbitral awards to convert foreign currency amounts into dollars, Cont'l Transfert Technique Ltd. v. Fed. Gov't of Nigeria, 932 F.Supp.2d 153, 158 (D.D.C. 2013), and I will follow that norm. In addition, I will exercise my discretion to award prejudgment interest because I find that doing so is "`consistent with the underlying arbitration award,'" which "grants pre-award interest but is `silent' on whether a party should recover postaward interest — i.e., prejudgment interest." Id. at *8 (quoting Ministry of Def. & Support for the Armed Forces of the Islamic Republic of Iran, 665 F.3d at 1103). The prejudgment interest will be calculated using the average daily prime rate between the date of the Final Award and the date of this opinion. Id. at 9.
For all the foregoing reasons, petitioner's Petition to Confirm Arbitration Award and to Enter Judgment [Dkt. # 1] is GRANTED and respondent's Motion to Stay Action or, in the Alternative, Dismiss Petition [Dkt. # 15] is DENIED. An appropriate order shall accompany this Memorandum Opinion.
GOB also grossly mischaracterizes the record when it says that "In [a December 2009] letter, as a basis of its threatened claims against the GOB, Dunkeld asserts that the GOB `has not complied with [the subject] LCIA award." Resp't's Suppl. Br. at 23. The quoted statement about GOB's non-compliance with the award is not in the letter from Dunkeld's counsel, see Ghandi Decl., Ex. 8 at 3-4, but rather is found ten pages into Notice of Arbitration, which was attached to the letter, see id. ¶ 7.14. Moreover, it is found in the "factual background to the dispute" section of the Notice, see id. ¶ 7, and is not at all presented as "a basis of [Dunkeld's] threatened claims."
Given the particular facts before the court, I read China Minmetals as consistent with Buckeye, which distinguished between "[t]he issue of the contract's validity," which is not for the court to resolve, and "the issue [of] whether any agreement between the alleged obligor and obligee was ever concluded," which the courts might be allowed to consider. Buckeye, 546 U.S. at 444, 126 S.Ct. 1204 n.l. In this case, GOB alleges that "[t]he illegality of provisions in the Accommodation Agreement is wide and major," Young Decl. at ¶ 7 [Dkt. # 39-1], but unlike the respondent in China Minmetals, GOB does not challenge the very existence of an agreement to arbitrate between two parties who had the authority and capacity to contract on behalf of their principals, see Buckeye, 546 U.S. at 444 n. 1.