United States District Court, S.D. New York
For Mobil Cerro Negro, Ltd., Venezuela Holdings, B.V., Mobil Cerro Negro Holding, Ltd., Mobil Venezolana De Petroleos Holdings, Inc., Mobil Venezolana De Petroleos, Inc., Petitioners: Evan Glassman, LEAD ATTORNEY, Steptoe & Johnson, LLP (NYC), New York, NY; Jared Robert Butcher, LEAD ATTORNEY, PRO HAC VICE, Faegre Baker Daniels LLP, Minneapolis, MN; Jeffrey Michael Theodore, Michael Jeremy Baratz, Steven K. Davidson, LEAD ATTORNEYS, PRO HAC VICE, Steptoe & Johnson, LLP (DC), Washington, DC.
For Bolivarian Republic of Venezuela, Respondent: Joseph D. Pizzurro, Juan Otoniel Perla, LEAD ATTORNEYS, Curtis, Mallet-Prevost, Colt & Mosle, LLP(NYC), New York, NY.
OPINION & ORDER
PAUL A. ENGELMAYER, UNITED STATES DISTRICT JUDGE.
At issue in this case is the process by which an arbitral award issued by the International Centre for Settlement of Investment Disputes (" ICSID" ) is to be recognized and converted into a federal court judgment. ICSID is a unique arbitral tribunal. Created pursuant to an international treaty, the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (" the ICSID Convention" ), ICSID addresses disputes involving international investments in which one party is a foreign sovereign. The United States has been a treaty member since 1966, when the ICSID Convention entered into force and Congress passed enabling legislation.
Conversion of an arbitral award into a judgment allows a creditor to begin to enforce the award, for instance, by attaching or executing on assets. And the enabling statute for the ICSID Convention, 22 U.S.C. § 1650a, contemplates that federal courts will recognize ICSID awards and enforce them. However, § 1650a does not specify the process by which a creditor is to convert its ICSID award into a federal court judgment. Must the creditor bring a plenary action, subject to the ordinary requirements of service of process, personal jurisdiction over the award debtor, and venue? Or. may a more streamlined process be used?
The ICSID award creditors in this case take the position, supported by case law and practice in this District, that to fill this gap in § 1650a, a district court may look to the forum state's law. New York law permits recognition of a foreign judgment on an ex parte basis, so long as the judgment debtor is notified within 30 days. (The creditor must then wait another 30 days before attaching or executing on assets.) The award creditors here--ExxonMobil entities (" Mobil" )--proceeded on that basis: A day after ICSID issued a $1.6 billion award in their favor against the Bolivian Republic of Venezuela (" Venezuela" ), Mobil brought an ex parte petition in this District to recognize that award. The Court's miscellaneous part (Part One) granted that petition, and a final judgment (" the Part One judgment" ) was entered. Mobil notified Venezuela of the judgment soon thereafter.
Venezuela, the award debtor, now moves to vacate the Part One judgment. It makes two arguments. First is that the enabling statute, § 1650a, does not permit ex parte recognition proceedings--it is instead necessary to bring a plenary lawsuit. Second is that recognition of an ICSID award against a foreign sovereign is governed by the Foreign Sovereign Immunities Act (" FSIA" ), 28 U.S.C. § § 1330, 1602 et seq., which requires that any action against a foreign sovereign be brought with service of process upon, and personal jurisdiction over, the sovereign, and in a designated venue. Venezuela therefore argues that the Part One judgment is void for want of subject matter and personal jurisdiction and because this District is an improper venue.
For the reasons that follow, the Court denies Venezuela's motion to vacate the Part One judgment. However, because Venezuela (after this action was filed) applied to ICSID to revise the amount of the arbitral award and because ICSID has stayed enforcement of that award pending resolution of Venezuela's application, the Court stays enforcement of the Part One judgment for the time being.
A. The Parties
The arbitration award creditors are a series of ExxonMobil entities that, in the 1990s, began investing in the oil industry in Venezuela. See Dkt. 3 (" Award" ), Ex.
1 ¶ ¶ 45-52. The Court refers to these entities collectively as " Mobil."
The arbitration award debtor is Venezuela, a leading petroleum-producing country. Award ¶ 35. In 2007, Venezuela expropriated Mobil's interests in certain oil projects in Venezuela. Id. at ¶ 112.
B. The Arbitral Award
In 2007, Mobil commenced an arbitration against Venezuela, challenging the expropriation. Mobil did so pursuant to a bilateral investment treaty under which Venezuela waived its sovereign immunity with respect to Mobil's claims. Mobil Br. 1.
The arbitration was conducted under the auspices of ICSID, a part of the World Bank. Mobil and Venezuela actively participated in the arbitration and were represented by counsel. See Award, p. 2.
On October 9, 2014, the ICSID panel issued a 134-page decision (" the Award" ) that awarded Mobil $1,600,042,482, plus 3.25% interest, compounded annually from June 27, 2007 until payment. Id. ¶ 404. To date, Venezuela has not paid on the Award. Mobil Br. 2.
C. Procedural History
The next day--October 10, 2014--Mobil filed an ex parte petition in this District seeking recognition of the Award and entry of judgment. Dkt. 1. The Hon. J. Paul Oetken, sitting in Part One, held an ex parte hearing, see Dkt. 21, granted the petition, and entered a final judgment in the amount of $1,600,042,482, plus 3.25% interest, compounded annually from June 27, 2007 until payment, see Dkt. 6. The same day, Mobil sent a letter to Venezuela's counsel, notifying them of the judgment and demanding payment. Dkt. 26, Ex. 1.
On October 14, 2014, Venezuela moved to vacate the judgment. It filed an accompanying memorandum of law and declaration. See Dkt. 12-14. On October 23, 2014, this matter was assigned to this judge. See Dkt. 23. On November 10, 2014, Mobil filed an opposing brief and a declaration. See Dkt. 25-26. On November 24, 2014, Venezuela submitted a reply brief and a declaration. See Dkt. 28-29. On December 12, 2014, the Court held argument.
Separately, on October 23, 2014, while Venezuela's motion to vacate was pending, Venezuela filed an application with the ICSID panel to revise the Award. See Dkt. 28 (" Pizzurro Reply Decl." ), Ex. A. There, Venezuela did not contest that Mobil is owed $1,600,042,482, plus interest. Instead, it argued that Mobil's Award in that amount partly duplicates a recovery Mobil previously received from another source--Venezuela's state-owned oil company. See Award ¶ ¶ 375-77. On October 24, 2014, the ICSID Secretary-General registered Venezuela's application for revision and stayed enforcement of the Award. Pizzurro Reply Decl., Ex. A.
II. Legal Standards
Venezuela moves, under Federal Rule of Civil Procedure 60(b), to vacate the Part One judgment.
Rule 60(b) permits a court to " relieve a party . . . from a final judgment" for a variety of reasons, including, relevant here, that " the judgment is void" or for " any other reason that justifies relief." 
See Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir. 1986). " A judgment is void under Rule 60(b)(4) . . . 'only if the court that rendered it lacked jurisdiction of the subject matter, or of the parties, or if it acted in a manner inconsistent with due process of law.'" Grace v. Bank Leumi Trust Co. of N.Y., 443 F.3d 180, 193 (2d Cir. 2006) (quoting Texlon Corp. v. Mfrs. Hanover Commercial Corp., 596 F.2d 1092, 1099 (2d Cir. 1979)); see also " R" Best Produce, Inc. v. DiSapio, 540 F.3d 115, 123 (2d Cir. 2008) (holding that Rule 60(b)(4) was properly invoked to challenge lack of personal jurisdiction) (citing 11 Charles A. Wright, Arthur R. Miller, & Mary Kay Kane, Fed. Prac. & Pro. § 2862, at 326-27 & n.10 (2d ed. 1995 & Supp. 2008)); see generally United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 271, 130 S.Ct. 1367, 176 L.Ed.2d 158 (2010).
" A motion under Rule 60(b) must be made within a reasonable time." Fed.R.Civ.P. 60(c). Venezuela's motion--made four days after the Part One judgment--was timely. See Cent. Vermont Pub. Serv. Corp. v. Herbert, 341 F.3d 186, 189 (2d Cir. 2003).
III. Overview of Venezuela's Challenges to the Part One Judgment
Venezuela does not argue that there is any substantive defect in the Part One judgment. Instead, in moving to vacate, Venezuela makes two procedural arguments against that judgment. The first is that 22 U.S.C. § 1650a, the enabling statute, does not authorize borrowing New York State's streamlined ex parte recognition procedure, as occurred here. Dkt. 14 (" Venezuela Br." ), 7-16. The second is that even if the enabling statute initially authorized that procedure, the FSIA, enacted 10 years later, supersedes it where recognition actions are brought against foreign sovereigns, and imposes service-of-process, personal jurisdiction, and venue requirements not met here. Id. at 6-7, 16-17. Venezuela argues that under either § 1650a or the FSIA, a plenary lawsuit is required to recognize an ICSID award against a foreign sovereign. Id. at 2, 14, 17.
The Court addresses these arguments in turn.
IV. Venezuela's Argument Based on § 1650a
A. Background on the ICSID Convention and the Enabling Statute
The ICSID Convention is an international treaty drafted in 1965 which entered into force in 1966. See 17 U.S.T. 1270, T.I.A.S. No. 6090. The treaty's purpose was to stimulate economic development by private parties. See ICSID Convention pmbl. To further that goal, the Convention supplies a neutral forum, an international arbitral institution known as ICSID, to resolve disputes between a private party of one country and the government of another. See id. art. 1.
ICSID has jurisdiction over a dispute where two requirements are met. First, there must be an investment-related legal
dispute between a state party to the Convention and a national of another state that is also a party to the treaty. Second, the parties to the dispute must consent to ICSID's jurisdiction.
Where ICSID has jurisdiction, its determinations are final. ICSID awards are binding and subject to review only within ICSID itself. See ICSID Convention art. 53 (ICSID awards " shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention" ). National courts thus lack the power to set aside or modify ICSID awards. They may review such awards solely to confirm their authenticity. See Dolzer & Schreuer, Principles of Int'l Inv. Law 224; Christoph G. Schreuer, The ICSID Convention: A Commentary 1126 (2d ed., 2009).
In this respect, ICSID awards are more secure from attack than awards from other arbitral institutions. Other arbitral awards, whether governed by a statute or an international treaty, are subject to substantive review, albeit limited.
ICSID awards, however, can and are expected to be recognized and enforced in national courts. Article 54(1) of the ICSID Convention, addressing recognition, provides: " Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State. A Contracting State with a federal constitution may enforce such an award in or through its federal courts and may provide that such courts shall treat the award as if it were a final judgment of the courts of a constituent state."
Article 55 of the ICSID Convention, addressing execution on assets, provides:
" Nothing in Article 54 shall be construed as derogating from the law in force in any Contracting State relating to immunity of that State or of any foreign State from execution." Considered together, Articles 54 and 55 provide that, for contracting states, recognition of ICSID awards is compulsory, whereas the later execution of assets to satisfy such an award is subject to contracting states' domestic laws, which may vary. See Schreuer, The ICSID Convention 1143.
The United States has been a contracting state since 1966. See 17 U.S.T. 1270, T.I.A.S. No. 6090. The enabling statute passed by Congress and signed by President Lyndon B. Johnson provides in full:
(a) Treaty rights; enforcement; full faith and credit; nonapplication of Federal Arbitration Act
An award of an arbitral tribunal rendered pursuant to chapter IV of the convention shall create a right arising under a treaty of the United States. The pecuniary obligations imposed by such an award shall be enforced and shall be given the same full faith and credit as if the award were a final judgment of a court of general jurisdiction of one of the several States. The Federal Arbitration Act (9 U.S.C. § 1 et seq .) shall not apply to enforcement of awards rendered pursuant to the convention.
(b) Jurisdiction; amount in controversy
The district courts of the United States (including the courts enumerated in section 460 of title 28) shall have exclusive jurisdiction over actions and proceedings under subsection (a) of this section, regardless of the amount in controversy.
22 U.S.C. § 1650a.
The brief text of the enabling statute thus does not specify the procedural mechanism by which an arbitral award is to be converted into a federal judgment.
B. Prior Ex Parte ICSID Recognition Actions in This District
On five occasions before this case, courts in this District have been presented with an application ex parte to recognize an ICSID award. In four, the foreign sovereign was the award debtor. Each time,
the district court recognized the ICSID award ( i.e., converted it to a federal court judgment) without requiring that a plenary lawsuit be brought.
1. LETCO: In re Liberian Eastern Timber Corporation (LETCO) v. Republic of Liberia, No. M-68, (S.D.N.Y. Sept. 10, 1986), the award creditor (LETCO) obtained an ICSID award against the Republic of Liberia. It then petitioned ex parte for entry of judgment and for the issuance of writs of execution permitting LETCO to begin enforcing that judgment. The Part One judge (Keenan, J.) granted LETCO's petition in both respects. Id. at *1-2.
Notified of the Part One judgment, Liberia then moved to vacate it, and " to enjoin the issuance of executions to seize its property or assets in order to satisfy the judgment." Liberian E. Timber Corp. (LETCO) v. Republic of Liberia, 650 F.Supp. 73, 75 (S.D.N.Y. Dec. 12, 1986). The district court (Weinfeld, J.) denied the motion to vacate. Id. at 76-77. It reasoned that (1) Article 54 of the ICSID Convention obliges the United States, as a contracting party, " to recognize and enforce the pecuniary obligation of the award" ; (2) Liberia, as a Convention signatory, waived its sovereign immunity with respect to recognition " of any arbitration award entered pursuant to the Convention" ; and (3) " Liberia clearly contemplated the involvement of the courts of any of the Contracting States, including the United States as a signatory to the Convention, ...