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Thai-Lao Lignite (Thail.) Co., Ltd. v. Government of the LAO People's Democratic Republic

United States District Court, S.D. New York

February 6, 2014

THAI-LAO LIGNITE (THAILAND) CO., LTD. & HONGSA LIGNITE (LAO PDR) CO., LTD., Petitioners,
v.
GOVERNMENT OF THE LAO PEOPLE'S DEMOCRATIC REPUBLIC, Respondent

For Thai-Lao Lignite (Thailand) Co. Ltd., Hongsa Lignite (LAO PDR) Co. Ltd., Petitioners: James Evan Berger, LEAD ATTORNEY, Wendy Wei-Wenne Huang Waszmer, King & Spalding LLP (NYC), New York, NY; Charlene Chia-Ling Sun, King & Spalding LLP, New York, NY.

For United Air Lines, Inc., Kalitta Air, LLC, Federal Express Corporation, Garnishees: James Andrew Moss, LEAD ATTORNEY, Balber, Pickard, Battistoni, Maldonado, & Van Der Tuin, New York, NY.

For Government of the LAO People's Democratic Republic, Respondent: Anthony J. Hatab, LEAD ATTORNEY, Dressel & Hatab, New York, NY; David J. Branson, LEAD ATTORNEY, King Branson LLC, Bethesda, MD; Anthony Frazier King, King Branson LLC, Washington, DC; George A Bermann, Columbia University School of Law, New York, NY; Joel Maximino Melendez, Robert Kelsey Kry, Molo Lamken LLP (NYC), New York, NY; Steven Francis Molo, MoloLamken, LLP, New York, NY.

For Bank of the Lao People's Democratic Republic, ADR Provider: Joseph Emanuel Neuhaus, LEAD ATTORNEY, Sullivan and Cromwell, LLP(NYC), New York, NY.

For David J Branson, Miscellaneous: Courtney Alyssa Solomon, Gregory P. Joseph, Paul J. Bschorr, Rachel Mead Cherington, Samuel Neil Fraidin, Joseph Hage Aaronson, LLC, New York, NY.

OPINION

Page 215

OPINION & ORDER

Kimba M. Wood, United States District Judge.

On August 5, 2011, this Court entered a judgment against the Government of the Lao People's Democratic Republic (" Respondent" ) enforcing a $57 million arbitral award in favor of Thai-Lao Lignite (Thailand) Co., Ltd. (" TLL" ) and Hongsa Lignite (Lao PDR), Co. Ltd. (" HLL" ) (collectively,

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" Petitioners" ). [Dkt. No. 50]. On December 27, 2012, the Malaysian High Court vacated the arbitral award underlying the Court's judgment. (Kry Decl. Ex. A & B [Dkt. No. 205]). In light of that ruling, Respondent moves to vacate the Court's judgment enforcing the arbitral award pursuant to Federal Rule of Civil Procedure 60(b)(5) and Article (V)(1)(e) of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, T.I.A.S. No. 6997 (the " New York Convention" ), as implemented by the Federal Arbitration Act, 9 U.S.C. § § 201 et seq . Petitioners urge the Court to require Respondent to post security as a condition of moving under Rule 60(b) or as a condition for the entry of any order vacating the judgment. For the reasons that follow, Respondent's motion is GRANTED and Petitioners' request is DENIED.

I. Relevant Background[1]

1. The Project Development Agreement and Arbitration

This case concerns a dispute between TLL, HLL, and Respondent arising out of a Project Development Agreement (" PDA" ) that TLL and Respondent entered into on July 22, 1994. In Article 14.1(i) of the PDA, TLL and Respondent agreed to submit any dispute arising out of the PDA to arbitration in Kuala Lumpur, Malaysia. The PDA further provided that:

Any award or determination of the arbitral panel shall be final, nonappealable, binding, and conclusive upon the parties, and judgment may be entered in any court of competent jurisdiction. The parties waive to the extent permitted by law any rights to appeal or any review of such award by any court or tribunal of competent jurisdiction.

( Id. art. 14.1(vi)). Respondent affirmatively waived sovereign immunity " from jurisdiction, attachment (both before and after judgment), and execution to which it might otherwise be entitled in any action or proceeding relating in any way to this Agreement." ( Id., art. 14.2.).

On October 5, 2006, Respondent sent Petitioners a Notice of Termination of the PDA; on July 26, 2007, Petitioners initiated arbitration. Petitioners contended that Respondent violated the PDA by improperly seeking to terminate it without cause, and without following the procedures for termination outlined in the agreement. Respondent argued that neither TLL nor HLL had standing to bring this claim. The arbitral panel concluded that both TLL and HLL had standing to bring the claim under the PDA because TLL was a signatory to the PDA, and HLL was an " intended beneficiary" of the PDA.

The panel further concluded that Respondent had breached the PDA by improperly terminating it, and thus that Petitioners were entitled, under the PDA, to damages, including " TLL's total investment cost plus a premium and consideration of the Lenders and Investors." ( Id. art. 15.1). The panel determined that " total investment cost" meant " the total amount of money that [TLL and HLL] together, on behalf of TLL, reasonably and unavoidably actually expended out-of-pocket in the normal course of preparation

Page 217

for performance or in performance up until the date of breach." (Award ¶ 114 [Dkt. No. 9-1]). The panel concluded that " premium" meant an " an allowance for a reasonable return on [TLL and HLL's] total investment costs to be set by the arbitration panel in its judgment." ( Id. ¶ 127). Examining the evidence in the record, the panel awarded Petitioners $57,210,000 in damages, which included the total investment cost, a premium, interest, and attorneys' fees. Subsequently, Petitioners initiated proceedings seeking to enforce the arbitral award against Respondent.

2. Enforcement Proceedings in New York

In New York, Petitioners initially filed their petition to confirm the award in the Supreme Court of the State of New York, New York County, Commercial Division, on June 8, 2010. On July 9, 2010, Respondent removed the case to this Court. On October 1, 2010, Respondent filed a motion to dismiss and asked the Court to stay its consideration of the petition pursuant to Article VI of the New York Convention, pending the outcome of a proceeding to set aside the arbitral award that Respondent had filed in Malaysia. On October 13, 2010, Respondent withdrew the portion of its motion that sought a stay. On August 3, 2011, this Court denied Respondent's motion to dismiss and granted Petitioners' petition to confirm the arbitral award. The Second Circuit Court of Appeals affirmed, and the U.S. Supreme Court denied certiorari.

3. Malaysian Litigation

On October 19, 2010, Respondent initiated proceedings to set aside the arbitral award in the High Court of Malaya at Kuala Lumpar. Under Malaysian law, a challenge to an arbitral award must be made within ninety days of receipt of the award. (Reply Decl. of Grace Xavier, Ex. B, at 29). The High Court dismissed the action because it was filed nine months after the award was issued. The High Court declined to exercise its discretion to waive the timeliness requirement, finding that the delay was " inordinate . . . as the [Respondent] had adequate legal representation." (Malaysian High Court Judgment of April 15, 2011, at 8 [Dkt. No. 83-3]).

The Malaysian Court of Appeal reversed, holding that Respondent " should not be prejudiced by the fact that it was not conversant with local law requirements and did not receive adequate advice from its legal advisors to enable the application to set aside the award to be made within time in Malaysia." (Malaysian Court of Appeal Judgment of July 26, 2011, at 13 [Dkt. No 83-5]). The ...


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