Preble-Rish Haiti, S.A. v. BB Energy USA ( 2022 )

Case: 22-20021 Document: 00516394972 Page: 1 Date Filed: 07/14/2022
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
July 14, 2022
No. 22-20021 Lyle W. Cayce
Clerk
Preble-Rish Haiti, S.A.,
Plaintiff—Appellee,
versus
Republic of Haiti,
Defendants,
BB Energy USA, L.L.C.,
Garnishee—Appellant.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:21-CV-1953
Before Higginbotham, Dennis, and Graves, Circuit Judges.
James E. Graves, Jr., Circuit Judge:
The Foreign Sovereign Immunities Act provides a foreign state’s
property with immunity from prejudgment attachment unless an exception
applies. The relevant exception in this case requires a foreign state to
explicitly waive its immunity from prejudgment attachment. 28 U.S.C.
§ 1610(d). Although this court has yet to interpret the § 1610(d) exception,
today we hold that an explicit waiver must be, well, explicit. Anything short
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of a foreign state’s clearly expressed waiver of immunity from prejudgment
attachment will not suffice under § 1610(d). Here, however, the district court
entered a writ of attachment based on the erroneous conclusion that Haiti
and its agency waived their immunity from prejudgment attachment based
on a contract that said nothing about prejudgment attachment. We therefore
REVERSE the district court and VACATE the writ.
BACKGROUND
Plaintiff-Appellee Preble-Rish Haiti, S.A. filed this case pursuant to
Rule B of the Supplemental Rules for Admiralty or Maritime Claims in the
Federal Rules of Civil Procedure. It sought to attach assets to secure a partial
final arbitration award against the Republic of Haiti and the Bureau de
Monétisation de Programmes d’Aide au Developpement (BMPAD).
Garnishee BB Energy USA, L.L.C. admits to holding credits belonging to
BMPAD located in the Southern District of Texas.
A. Underlying Facts
In May 2020, Preble-Rish, a Haitian company, entered into three
contracts with BMPAD, a Haitian government agency, to deliver fuel. The
contracts specified that BMPAD would provide a letter of credit as payment.
BMPAD did not provide that letter, so the contracts were amended to permit
BMPAD to instead make full prepayment pursuant to an invoice Preble-Rish
submitted before each delivery. The contracts stated Preble-Rish would
make six deliveries of fuel in response to orders from BMPAD.
Relevant here, the contracts had an arbitration clause stating:
In the event of a dispute between the [BMPAD] and [Preble
Rish] under this Contract, the dispute shall be submitted by
either party to arbitration in New York. . . . The decision of the
arbitrators shall be final, conclusive and binding on all Parties.
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Judgment upon such award may be entered in any court of
competent jurisdiction.
Pursuant to the contracts, BMPAD and Preble-Rish executed their
duties without issue on four deliveries of fuel. Problems arose on the fifth
delivery. To resolve these issues, on November 20, 2020, Preble-Rish sent
BMPAD a notice demanding arbitration in New York. BMPAD did not
appear in the arbitration and refused to participate. On December 22, 2020,
Haiti and BMPAD filed a petition in New York state court to obtain an order
to stay the pending arbitration with Preble-Rish. Preble-Rish opposed the
petition and filed a cross-motion to compel arbitration.
While Haiti and BMPAD’s action was pending in New York state
court, on August 6, 2021, the arbitration panel issued a partial final award of
security. The award required BMPAD to post approximately $23 million in
security.
On September 27, 2021, the New York state court denied BMPAD’s
petition to stay the arbitration and granted Preble-Rish’s motion to compel
arbitration. The order states: “It is beyond dispute that the parties freely and
unequivocally agreed to arbitrate all of their disputes in New York.” That
order was affirmed by the New York Appellate Division on April 12, 2022.
The Appellate Division stated BMPAD failed to show the arbitration clause
was invalid under Haitian law.
B. Procedural History
On June 15, 2021, Preble-Rish filed this Rule B attachment action in
the Southern District of Texas to secure any final award from the pending
arbitration and the partial final award of security. In its first complaint,
Preble-Rish asserted claims for breach of contract and unjust enrichment.
After complying with Rule B, Preble-Rish sought a writ of attachment for
property belonging to BMPAD located in the district but in the possession of
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BB Energy. Preble-Rish alleged that BMPAD prepays BB Energy for fuel and
that the prepaid funds are property of BMPAD present in the district.
The district court issued the writ of attachment and Preble-Rish
served BB Energy with the writ on July 1, 2021. BB Energy promptly moved
to dismiss and argued the district court lacked jurisdiction over the complaint
based on BMPAD’s sovereign immunity.1 BB Energy also moved to vacate
the attachment because the contracts at issue were not maritime in nature
and therefore precluded admiralty jurisdiction as needed for Rule B
attachment. The district court stayed the writ to determine the subject
matter jurisdiction issue.
On August 10, 2021, the district court denied BB Energy’s motion to
dismiss because it concluded BMPAD had waived sovereign immunity by
agreeing to arbitrate disputes under the contracts. The district court also
concluded BMPAD explicitly waived its sovereign immunity from
prejudgment attachment by agreeing to provide letters of credit or
prepayment as stated in the contracts and because the property that sought
to be attached was “used for commercial activity in the United States.”
Having concluded that BMPAD waived its sovereign immunity generally and
from prejudgment attachment, the district court determined it had subject
matter jurisdiction over the case and reinstated the writ of attachment.
BB Energy did not appeal this order.
On September 3, 2021, the district court granted BB Energy’s motion
to vacate the writ of attachment. The district court concluded the contracts
1
To date, neither Haiti nor BMPAD has appeared in this case. BB Energy
nonetheless has standing to assert the sovereign immunity defense because the property it
holds qualifies as “property of a foreign state.” See Walker Int’l Holdings Ltd. v. Republic of
Congo, 395 F.3d 229, 233 (5th Cir. 2004).
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were not maritime in nature and did not satisfy the requirements for
admiralty jurisdiction for Rule B attachments.
Preble-Rish filed an amended complaint2 and added claims for
maritime fraud and conversion. BB Energy moved to dismiss and again,
raised BMPAD’s sovereign immunity by arguing the new maritime tort
claims fell outside the scope of the arbitration clause and BMPAD did not
waive its immunity from prejudgment attachment. The district court
deferred ruling on the motion to dismiss and directed the parties to discovery.
BB Energy appealed and this court remanded the case with instructions for
the district court to limit discovery to the sovereign immunity jurisdictional
issue. See Preble-Rish Haiti, S.A. v. BB Energy USA, LLC, No. 21-20534, 2021
WL 5143757, at *3 (5th Cir. Nov. 4, 2021) (unpublished). On remand, the
parties agreed no further discovery was needed to resolve the issue.
On January 4, 2022, the district court denied BB Energy’s motion to
dismiss based on sovereign immunity. The district court relied on its August
10, 2021 decision to conclude that the arbitration clause waived BMPAD’s
immunity from suit. It therefore only determined whether the arbitration
clause covered maritime tort claims in the amended complaint. The court
broadly construed the arbitration clause’s waiver for disputes “under this
contract” to encompass the maritime tort claims in addition to the breach of
contract claims. The district court also applied issue preclusion as to whether
Haitian law prohibited arbitration against governmental entities and cited the
New York state court’s order denying BMPAD’s motion to stay arbitration.
Although BB Energy raised BMPAD’s sovereign immunity from
2
Preble-Rish first filed a notice of appeal and a motion for reconsideration, or in
the alternative, a motion for leave to file an amended complaint. After the district court
granted Preble-Rish leave, Preble-Rish withdrew its notice of appeal and filed its amended
complaint.
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prejudgment attachment again, the district court stated it had already
decided that issue and cited its August 10, 2021 order.
BB Energy appeals the January 4, 2022 order pursuant to the collateral
order doctrine.3
DISCUSSION
This case turns on the interpretation of 28 U.S.C. § 1610(d) which
provides a limited exception to the general rule that a foreign state and its
property is entitled to sovereign immunity. That exception applies only when
“the foreign state explicitly waived its immunity from attachment prior to
judgment.” § 1610(d). Here, there was no explicit waiver. So we conclude
BMPAD did not waive its immunity from prejudgment attachment and the
district court erred in concluding otherwise.
Without this waiver, the district court did not have jurisdiction to
enter the writ of attachment against BB Energy.4 We accordingly reverse the
district court and vacate the writ.
The denial of sovereign immunity is reviewed de novo. See Frank v.
Commonwealth of Antigua and Barbuda, 842 F.3d 362, 367 (5th Cir. 2016). A
foreign state’s sovereign immunity deprives the federal courts of jurisdiction.
The Foreign Sovereign Immunities Act (FSIA) therefore “provides the sole
source of subject matter jurisdiction in suits against a foreign state.” Id.3
Contrary to Preble-Rish’s argument that this court lacks appellate jurisdiction,
the collateral order doctrine permits review of the denial of sovereign immunity from writs
of garnishment or attachment. See Stena Rederi AB v. Comision de Contratos del Comite
Ejecutivo Gen. del Sindicato Revolucionario de Trabajadores Petroleros de la Republica
Mexicana, S.C., 923 F.2d 380, 386 (5th Cir. 1991).
4
Because we resolve this appeal on the prejudgment attachment issue, we assume
without deciding that BMPAD implicitly waived its sovereign immunity from suit generally
pursuant to 28 U.S.C. § 1605(a)(1).
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(quoting Dale v. Colagiovanni, 443 F.3d 425, 427–28 (5th Cir. 2006)); 28
U.S.C. § 1604. Pursuant to the FSIA, the general rule is that foreign states
are immune from suit in American courts. 28 U.S.C. § 1604; see also Arriba
Ltd. v. Petroleos Mexicanos, 962 F.2d 528, 532–33 (5th Cir. 1992). Along with
immunity from suit generally, the FSIA provides a foreign state’s property
with immunity from attachment or execution unless an exception applies. 28
U.S.C. § 1609.
The relevant exception here is § 1610(d), which states:
The property of a foreign state . . . used for a commercial
activity in the United States, shall not be immune from
attachment prior to the entry of judgment in any action . . . if—
(1) the foreign state has explicitly waived its immunity
from attachment prior to judgment . . . and
(2) the purpose of the attachment is to secure
satisfaction of a judgment that has been or may
ultimately be entered against the foreign state, and not
to obtain jurisdiction.
This exception has three conditions: (1) the property must be used for
a commercial purpose in the United States; (2) there must be an explicit
waiver; and (3) the purpose of attachment must be to secure satisfaction of a
judgment. See Pine Top Receivables of Ill., LLC v. Banco de Seguros del Estado,
771 F.3d 980, 983 (7th Cir. 2014). BB Energy only challenges the first two
elements; it argues there is no explicit waiver from prejudgment attachment
and the credits it holds for BMPAD are not “used for commercial activity in
the United States.”
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This court has not yet interpreted the § 1610(d) exception or its
requirements. We are confident, however, that the explicit waiver
requirement has not been met here.5
To interpret § 1610(d), “we begin ‘where all such inquiries must
begin: with the language of the statute itself.’” Republic of Sudan v. Harrison,
139 S. Ct. 1048, 1056 (2019) (alterations and citations omitted).
Section 1610(d) revokes sovereign immunity for a foreign state’s property “if
the foreign state has explicitly waived its immunity from attachment prior to
judgment.” The key word here is “explicitly.” This naturally and ordinarily
means in a definite and unambiguous manner. To be unequivocal, express,
clear, or plain. Dictionaries contrast “explicitly” with “not merely by
implication or implicitly.” E.g., Explicitly, Oxford Eng. Dictionary
(3d ed. June 2016).
We, like other courts, think an explicit waiver must be explicit “in the
common sense meaning of that term.” S & S Machinery Co. v.
Masinexportimport, 706 F.2d 411, 416 (2d Cir. 1983). While an explicit waiver
need not include the words “prejudgment attachment” or the like, an
asserted waiver “must demonstrate unambiguously the foreign state’s
intention to waive its immunity from prejudgment attachment.” Id. This
requires “unmistakable and plain language.” Id.The importance of the explicit waiver requirement is also highlighted
when we compare § 1610(d) to the language used in other exceptions in the
FSIA. For instance, there are several other exceptions that permit a waiver
to be explicit or implicit. Compare §§ 1605(a)(1), 1610(a)(1) (allowing wavier
to be explicit or by implication), with § 1610(d). See also S & S Machinery, 706
F.2d at 416 (“The requirement that the waiver of immunity from
5
As for the other two requirements, we find no error in the district court’s analysis.
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prejudgment attachment be explicitly made is underscored both by the plain
language of § 1610(d) and by the contrast between § 1610(d) and § 1610(a).”
(emphasis in original)).
With this understanding, we can only conclude that BMPAD did not
explicitly waive its immunity from prejudgment attachment. The only basis
for a waiver of any immunity is the arbitration clause in the contract between
BMPAD and Preble-Rish. The arbitration clause is relevant to whether
BMPAD waived its sovereign immunity from suit generally, but a waiver of
immunity from suit has “no bearing upon the question of immunity from
prejudgment attachment.” S & S Machinery, 706 F.2d at 417.
Even when we look at the arbitration clause and the contract as a
whole, we find nothing to support an explicit waiver of immunity from
prejudgment attachment. The clause does not contemplate prejudgment
attachment or any other liabilities. Nor does it mention security or letters of
credit in the context of disputes between the parties. Although Preble-Rish
and BMPAD agreed any arbitration awards would “be final, conclusive and
binding,” that language does not contemplate any specific remedy or allow
the arbitration panel to ignore the immunity from prejudgment attachment
as provided by the FSIA.
And in prior cases where this court has concluded the § 1610(d)
exception applied, the parties’ agreement has explicitly said sovereign
immunity is waived “including any immunity from the jurisdiction of any
court or from any execution or attachment in aid of execution prior to judgment or
otherwise.” Atwood Turnkey Drilling, Inc. v. Petroleo Brasileiro, S.A., 875 F.2d
1174, 1177 (5th Cir. 1989) (emphasis added); see also Mangattu v. M/V Ibn
Hayyan, 35 F.3d 205, 210 (5th Cir. 1994) (rejecting argument that agreement
to laws of another country is sufficient to find an explicit waiver); id. (“If the
subsequent law of another country in fact waives immunity, it would be an
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implicit waiver . . . .” (emphasis added)). Such explicit language is absent
here.
Preble-Rish urges us to find waiver because, in the contracts, BMPAD
agreed to provide letters of credit or full prepayment, i.e., agreed to provide
security in Preble-Rish’s favor. To support this theory, Preble-Rish points to
Banco de Seguros del Estado v. Mutual Marine Office, Inc., 344 F.3d 255 (2d
Cir. 2003). In that case, the Second Circuit determined a sovereign entity
agreed to “apply for and secure delivery to [the other party] a clean
irrevocable Letter of Credit issued by a bank” and therefore demonstrated
that the “parties embraced the usefulness of letters of credit as a means of
securing their respective rights and obligations and as a means of facilitating
the transaction generally.” Mut. Marine Off., 344 F.3d at 261 (citations
omitted). The parties in that case had also agreed to arbitration and explicitly
stated the “arbitrators are relieved of all judicial formalities and may abstain
from following the strict rules of law.” Id. (internal quotation marks and
citations omitted). Although the district court accepted this theory, we are
unpersuaded.
The Second Circuit in Mutual Marine noted the arbitration clause at
issue did not explicitly authorize the arbitrator to order a letter of credit as
security against a possible final award. See id. So rather than relying on
§ 1610(d)’s demand that a waiver be explicit, the court looked to other
provisions in the agreement to infer a waiver of immunity from prejudgment
attachment. If the court needs to infer a waiver, then the waiver is not
explicit. See Pine Top, 771 F.3d at 985 (concluding a waiver that must be
discerned from contract clauses “that do not speak to orders of preanswer
security in judicial proceedings” is not explicit). And although BMPAD
agreed to provide letters of credit, the contracts in this case lack the same
generous arbitration clause that allows arbitrators to “abstain from following
the strict rules of law.” Id. Without such authorization, the contract here
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simply provides for letters of credit during the underlying transaction—not
in any disputes that are ultimately submitted to arbitration. Mutual Marine is
thus distinguishable and unpersuasive on the issue before us.
CONCLUSION
To satisfy § 1610(d), an explicit waiver of immunity from
prejudgment attachment must be express, clear, and unambiguous. Anything
short of that is insufficient. Because there is no such explicit waiver in the
contract or elsewhere, the district court erred in concluding BMPAD waived
its sovereign immunity from prejudgment attachment. We accordingly
REVERSE the district court and VACATE the writ of attachment.
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