Embassy Law Web Log   
Washington, DC, USA      

State Wins Stay of Enforcement After Arbitration

The November 3, 2015 decision in Getma International v. Republic of Guinea by the United States District Court for the District of Columbia illustrates usefully the conditions for a stay of excution of a disputed arbitral award. The District Court determined that the main conditions for the enforcement of the foreign award existed but it accepted the limitations established by the Federal Arbitration Act, namely an application of discretion.

Relying on the factors established by the United States Court of Appeals for the Second Circuit in Europcar Italia, S.p.A. v. Maiellano Tours Inc., 156 F.3d 310, 316-17 (2d Cir. 1998), the court carefully examined six EuropCar factors. It concluded that the dispute surrounding the award counseled against confirmation and enforcement. However, it noted that staying these proceedings indefinitely could be seen as an abuse of discretion. See Belize Soc. Dev. Ltd. v. Gov't of Belize, 668 F.3d 724, 732-33 (D.C. Cir. 2012) and limited the stay for a period through April 30, 2016. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

FSIA Attachment After Judgment Against State

Arguments in two cases rolled into one decision in Owens v. Republic of Sudan, decided by the United States District Court for the District of Columbia on October 28, 2015. The disputed issue is whether plain­tiffs with default judgments in hand against Iran and Sudan may initiate the attach­ment into American property of these nations.

The plaintiffs gave proper notice; the court observed that suffi­cient time lapsed between notice under 28 USC §1608(e) and the appli­cation to initiate attach­ment. Sudan objected because the nation belatedly had moved to challenge the default judgment.

Sudan raised several concerns, based on the statute in 28 USC §1610(c), the legislative history of the Foreign Sovereign Immunities Act and its presentation by then-Legal Adviser Monroe Leigh, and comity. Ultimately, the court rejected these objections in a reasoned opionion after also taking issue with diverging views by the United States Court of Appeals for the Seventh Circuit in Rubin v. Iran, among others. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

Supreme Court Oral Argument Audio Files

The audio files from the oral argument before the Supreme Court of the United States in the Foreign Sovereign Immunities Matter involving a railroad accident in Austria became available today on the court's website. The matter is OBB Personenverkehr AG v. Sachs.

Embassy Duty to Preserve EMails

When litigation in U.S. courts looms, parties need to preserve and protect evidence, including emails. Does an embassy need to follow this procedural rule despite the sanctity of its documents under the Vienna Convention of 1961? Or will it be subject to sanctions by an American court if it follows its own organizational procedures in destroying emails under standard procedures imposed by its foreign office?

An opportunity to explore this conflict presented itself in the matter Ashraf-Hassan v. Embassy of France but the September 17, 2015 decision by the United States District Court for the District of Columbia avoided addressing the potential conflict and an exploration of an embassy's right to self-organization which many jurisdictions consider a generally accepted principle of international law.

Both parties had requested sanctions against each other, for failing to preserve evidence. The court found that sanctions were not appropriate in this matter because the case would not be heard by a jury. In a bench trial, there is no risk of misleading a jury. In any case, the court held, clear notice of imminent litigation was not given before the emails at the defendant embassy were destroyed under the data protection laws of France in its ordinary course of administration.

Interestingly, both parties requested in their motions in limine only that the court draw adverse inferences for lost correspondence. The court declined. With respect to the plaintiff's request, it noted that the plaintiff has the burden of proof which it can attempt to meet with evidence other than the lost writings. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

Central Bank not Alter Ego of State

In a very instructional decision, the United States District Court for the Second Circuit, located in New York City, ruled on August 31, 2015 that a nation's central bank is not that nation's alter ego for purposes of the Foreign Sovereign Immunities Act. The plaintiff, a bond creditor of Argentina, sought to attach assets of Argentina's central bank. The district court believed that exceptions to immunity applied but the higher court reversed in the matter EM Ltd. v. Banco Central de la Republica Argentina:

Relevant to this appeal, the District Court concluded that BCRA had waived its sovereign immunity under two statutory exceptions. First, the District Court held that the FAA's express waiver of sovereign immunity also waived BCRA’s immunity—under 28 U.S.C. § 1605(a)(1) 3 —because BCRA is Argentina’s “alter ego.” Second, the District Court held that BCRA’s use of its account with the Federal Reserve Bank of New York (“FRBNY”) constituted “commercial activity” in the United States, which waived BCRA’s sovereign immunity under 28 U.S.C. § 1605(a)(2).

Because neither of these statutory exceptions applies to this case, the District Court erred in denying BCRA’s motion to dismiss for lack of subject matter jurisdiction. Accordingly, we REVERSE the District Court’s order of September 26, 2013, and we REMAND the cause with instructions to dismiss the TAC with prejudice.
Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

Bouquet of Defenses against Arbitral Award

Numerous defenses against the recognition of a foreign arbitral award did not help the government of Belize in the matter BCB Holdings Inc. v. Government of Belize before the United States District Court for the District of Columbia. However, the decision is quite educational. In the case seeking promised tax benefits, Belize had argued:

Namely, the Settlement Deed containing the arbitration clause is invalid; enforcement would violate the revenue rule; the Award is against U.S. public policy; the New York Convention does not apply to the dispute between the parties; the Court lacks subject-matter jurisdiction because Belize is entitled to foreign sovereign immunity; the Court lacks personal jurisdiction; the petition is time barred; the doctrines of res judicata, collateral estoppel, or international comity preclude enforcement of the Award; and there is a more convenient alternative forum … In addition, the GOB urges the Court to dismiss the complaint to recognize the U.K. Judgment because it was improperly joined with this confirmation action, the Court lacks subject matter and personal jurisdiction, res judicata and international comity must be applied, the foreign judgment is against public policy, and it conflicts with the final CCJ judgment. Id. 5,6.
In its 24-page opinion of June 24, 2015, the court discussed the defenses which the foreign government launched after failing to participate in the arbitration, enacting laws purporting to subject those enforcing such awards to criminal penalties and seeking anti-arbitration injunctions.

The court granted the petition to confirm the foreign award, convert the monetary relief in the arbitration award into U.S. dollars, and award prejudgment interest. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

High Representative Immunity Defined

In 1945, Congress enacted the International Organizations Immunities Act, Pub.L. 291, 59 Stat. 669 (1945), 22 U.S.C. §§ 288-288f, and on June 4, 2015, the United States District Court for the District Court applied it in a suit against an international organization based abroad in which the United States participates. In Zuza v. High Representative, the court held that the organization and its officials were immune from suit. Therefore, the court must dismiss the complaint for lack of subject-matter jurisdiction.

The dispute involves a government official in Bosnia-Herzegovina dismissed from his post as Chief of Cabinet of the Speaker of the Assembly of Republika Srpska. He was dismissed from his position within the mandate of the Office of the High Representative in Bosnia and Herzegovina which had been established by the Dayton Peace Agreement of 1995, with policies established in the Bonn Conclusions of 1997. The United States is one of the 53 parties to the Agreement.

The court analyzed the definition of an international organization under the statute as applied to the Office and it officials and concluded that it does confer immunity from suit in the United States. Judge Rudolph Contreras' 16-page opinion is a valuable and recommended contribution to the body of law defining international organizations under the Act and its application to such organizations based outside of the United States. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

World Bank Immunity and Employment

An instructive opinion in the matter Smith v. World Bank Group illustrates the lack of subject-matter jurisdiction of United States courts over employ­ment matters involving the World Bank. An employee obtained a default against the international organization which benefits from the International Organi­zations Immu­nities Act, 22 U.S.C. §288a, which provides that:

International organizations, their property and their assets, wherever located, and by whom­soever held, shall enjoy the same immunity from suit and every form of judi­cial process as is enjoyed by foreign govern­ments, except to the extent that such organi­zations may expressly waive their immu­nity for the purpose of any procee­dings or by the terms of any contract.
The United States District Court for the District of Columbia noted on April 21, 2015 that the organi­zation had not waived its immunity. Therefore, the court lacks subject-matter juris­diction and may not enter the default judgment that the plaintiff employee sought on her discri­mination claim. Her claims fall within the range of internal employment-related lawsuits which the courts have determined to fall outside of existing narrow waivers of immunity. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

Deposition of Foreign State and Immunity

An important concern for foreign sovereigns as well as diplomatic and consular officials is whether a United States court will enforce a notice of deposition against them. In the context of the recognition and enforcement of a foreign arbitral award and the judgment of a London court, the United States District Court for the District of Columbia approached the issue on January 27, 2015.

In the matter Continental Transfert Technique Ltd. v. Government of Nigeria, the foreign state had moved to strike a notice of deposition pursuant to Rules 30(b)(6) and 69(a)(2) of the Federal Rules of Civil Procedure, in which the plaintiff sought to discover information regarding the defendant state's assets that could be used to satisfy the judgment. The defendant argued both that its sovereign immunity barred the discovery effort, as well as that the notice was overbroad:

First, it contends that sovereign immunity protects foreign sovereigns from the burden of discovery, insofar as Continental’s Rule 30(b)(6) notice of deposition would subject Nigeria to "arrest" and "execution." … Second, Nigeria maintains that Continental's notice is overbroad, as it "does not identify any specific property or assets targeted for execution." Nigeria raises a third argument in its reply memorandum, arguing that as a foreign sovereign it is not the proper subject of Continental's deposition notice for two further reasons: (1) the language of Rule 30(b)(6) of the Federal Rules of Civil Procedure does not include foreign sovereigns within the class of entities to whom such a deposition notice may be addressed; and (2) any deponent whom Nigeria might identify as possessing knowledge of the subject matters sought to be discovered would be either a "high government official" or a diplomat of Nigeria, and these potential deponents therefore would enjoy foreign official immunity or diplomatic immunity. Id. at 3-4.
While the court noted that foreign sovereign immunity is not a bar to discovery in this context, it importantly raised as unresolved the issue of what kind of discovery is permissible and how the information may be obtained.

The court agreed with the defendant state that these issues are serious and deserve further exploration. For these reasons, it ordered the parties to file supplemental memoranda which may lead to a guiding decision at a future time. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.