Belize Bank Limited v. Government of Belize , 191 F. Supp. 3d 26 ( 2016 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
__________________________________
)
The Belize Bank Limited, )
)
Petitioner, )
)
v. ) Civil Action No. 14-cv-659 (APM)
)
Government of Belize, )
)
Respondent. )
__________________________________)
MEMORANDUM OPINION
I. INTRODUCTION
This case is one in a recent series of cases filed in this District Court in which Respondent
Government of Belize finds itself seeking to prevent the confirmation of an international
arbitration award entered against it. In two cases that preceded this one—Belize Social
Development Ltd. v. Government of Belize, No. 09-cv-2170 (RJL), and BCB Holdings Ltd. v.
Government of Belize, No. 14-cv-1123 (CKK)—the district courts confirmed the arbitration
awards at issue and, in both cases, the Court of Appeals affirmed the district courts’ rulings.1
In Belize Social Development and BCB Holdings, the Government of Belize raised many of the
same arguments that it has raised in this case. This court, therefore, does not write on a clean slate.
Indeed, as will be seen, the Court of Appeals’ decisions in Belize Social Development and
BCB Holdings foreclose several of Respondent’s arguments made in these proceedings.
1
The Court of Appeals also affirmed another arbitration award confirmation against Belize in Newco Ltd. v. Gov’t of
Belize, No. 15-7077, 2016 WL 3040824, at *1 (D.C. Cir. May 13, 2016).
Petitioner The Belize Bank Limited (“Bank”) brings this action against Respondent
Government of Belize (“Belize”) to enforce a 2013 arbitration award issued by the London Court
of International Arbitration in London, England. The Bank was awarded BZ$36,895,509.462 plus
interest and now seeks to confirm the award under the Federal Arbitration Act, 9 U.S.C. § 201, et
seq., which codifies the Convention on the Recognition and Enforcement of Foreign Arbitral
Awards.
For the reasons below, the Bank’s Petition to Confirm the Foreign Arbitration Award will
be granted and Belize’s Motion to Dismiss the Petition will be denied.
II. BACKGROUND
A. Factual Background
From 2001 to 2004, the Bank entered into various loan agreements with Universal Health
Services Company Limited, a health services provider in Belize. Pet. to Confirm Foreign
Arbitration Award, ECF No. 1 [hereinafter Pet.], ¶ 14. In December 2004, Said Musa, Belize’s
then-Prime Minister and Minister of Finance, signed a “Guarantee and Postponement of Claim
Agreement” (“Guarantee”) on the behalf of Belize, which purported to guarantee payment to the
Bank of all debts and liabilities owed to the Bank by Universal Health Services. Resp’t’s Prelim.
Resp. to Pet., ECF No. 13 [hereinafter Resp.], at 3.
In early 2007, it became apparent to the Bank that Universal Health Services would be
unable to service its debt to the Bank. Pet. ¶ 15. When Belize declined to satisfy the debt under
the Guarantee, Belize entered into a Settlement Deed with the Bank in March 2007 to discharge
its liability under the Guarantee. Id. ¶ 16. Integrated into the Settlement Deed was a Loan Note
that obligated Belize to pay the Bank a total of BZ$33,545,820, with interest accruing daily and
2
“BZ$” signifies Belizean dollars.
2
compounded monthly on demand or in any event no later than September 23, 2007. Id. ¶ 17.
Belize, however, failed to pay the Bank the first monthly interest payment, which was due on April
23, 2007. Id. ¶ 20. On May 9, 2007, the Bank notified Belize that it was in default on the Loan
Note and invoked a provision accelerating the full amount of the principal together with all accrued
interest. Id. Belize did not respond to the demand or make any payment. Id.
The Bank then invoked a dispute resolution clause contained in the Settlement Deed,
requiring the parties to arbitrate any disputes in London, England, under the Rules of the London
Court of International Arbitration (“LCIA”). Id. ¶¶ 18, 22. The Bank commenced arbitration
proceedings under the LCIA Rules in May 2007, seeking, among other things, a declaration that
the Settlement Deed and Loan Note were valid and payment of the sums due under the Loan Note.
Id. ¶ 22. Belize did not, however, participate in the arbitration. Id. ¶ 23. In July 2007, the arbitral
tribunal rendered a Partial Award on Jurisdiction, holding that it had jurisdiction over the dispute.
Id. ¶ 25. Following the Partial Award, in January 2008, the Bank and Belize entered into a
settlement agreement (“2008 Settlement Agreement”) that terminated the arbitration proceedings
before entry of a Final Award. Id. ¶ 26.
In February 2008, following elections, the government of Belize changed. Id. ¶ 27. The
new government sought to invalidate the 2008 Settlement Agreement through litigation in the
Belizean courts. Id. ¶¶ 27-28. The Bank, however, succeeded in obtaining an order from the
Belizean Supreme Court—a trial level court—that stayed the local litigation in favor of arbitration
proceedings. Id. ¶ 32. Deeming the litigation to be a violation of the 2008 Settlement Agreement,
the Bank re-initiated arbitration under the LCIA Rules on July 9, 2008. Id. ¶ 33. In the 2008
Arbitration, the Bank sought a declaration that the 2008 Settlement Agreement was valid and
payment of the amounts owed under that Agreement. Id. Alternatively, the Bank asserted that, if
3
the 2008 Settlement Agreement was not valid, the Bank was entitled to collect damages based on
Belize’s breach of the Loan Note attached to the Settlement Deed. Id.
Again, Belize did not initially participate in the 2008 Arbitration. Id. ¶ 34. The LCIA
appointed the same arbitral tribunal that presided in the prior proceedings. Id. The panel issued
the First Partial Award on August 4, 2009, holding that the panel “had jurisdiction over the Bank’s
claims arising out of the 2008 Settlement Agreement. . . . [but] that part of the 2008 Settlement
Agreement was void.” Id. ¶ 36. The tribunal reserved for later consideration all other issues,
including the Bank’s alternative claims under the Settlement Deed and Loan Note. Id.
Following a two-year stay to allow for the conclusion of new litigation filed in the Belizean
courts, the second phase of the 2008 Arbitration began in late 2011. Id. ¶ 41. Belize elected to
participate in that phase of the proceedings. Id. Belize soon thereafter made various challenges
to the composition of the arbitral panel, which the LCIA denied. Id. ¶¶ 42-45. Belize then
withdrew from the 2008 Arbitration. Id. ¶ 46.
On January 15, 2013, the arbitral tribunal entered a Final Arbitration Award in favor of the
Bank. Id. ¶ 47. The panel found that the Loan Note was valid and enforceable and that Belize had
breached it. Id. It ordered Belize to pay the Bank the sum of BZ$36,895,509.46, plus interest at
17%, compounded on a monthly basis from September 8, 2012, until the date of payment. Id.
Belize refused the Bank’s demand for payment in the full amount of the Final Award. Id. ¶ 48.
B. Procedural History
On April 18, 2014, the Bank filed in this court a Petition to Confirm Foreign Arbitration
Award and to Enter Judgment. See generally Pet. Belize moved to dismiss the Petition, see
generally Mem. of P. & A. in Supp. of Resp’t’s Mot. to Dismiss, ECF No. 12-1 [hereinafter Mot.
4
to Dismiss], and filed a Preliminary Response to the Petition, see generally Resp. The Petition
and the Motion to Dismiss are now ripe for consideration.
III. DISCUSSION
A. Belize’s Motion to Dismiss
Belize advances a host of arguments for dismissal of the Bank’s confirmation petition.
They are as follows: (1) the court lacks subject matter jurisdiction because Belize has foreign
sovereign immunity under the Foreign Sovereign Immunities Act (“FSIA”); (2) dismissal is
appropriate under the doctrine of forum non conveniens; (3) the court lacks personal jurisdiction
over Belize; and (4) dismissal is warranted on grounds of international comity. The court considers
each of these arguments in turn.
1. Subject Matter Jurisdiction
Our Court of Appeals recently has explained that:
Where jurisdiction is sought over a foreign sovereign for the enforcement of an
arbitral award, we have held two conditions must be satisfied: “First, there must
be a basis upon which a court in the United States may enforce a foreign arbitral
award; and second, [the foreign sovereign] must not enjoy sovereign immunity
from such an enforcement action.”
Diag Human, S.E. v. Czech Republic–Ministry of Health, No. 14-7142, 2016 WL 3064507, at *2
(D.C. Cir. May 31, 2016) (quoting Creighton Ltd. v. Gov’t of the State of Qatar, 181 F.3d 118,
121 (D.C. Cir. 1999)). As the Court of Appeals did in Diag Human, this court will review those
conditions in reverse order.
a. Sovereign immunity
“The Foreign Sovereign Immunities Act ‘provides the sole basis for obtaining jurisdiction
over a foreign state in the courts of this country.’” Id. at *3 (quoting Argentine Republic v.
Amerada Hess Shipping Co., 488 U.S. 428, 443 (1988)). The Act bars federal and state courts
5
from exercising subject matter jurisdiction when a foreign state is entitled to immunity, but confers
jurisdiction upon federal district courts to hear suits when a foreign state is not. Id.In this case, the Bank argues that Belize is not entitled to sovereign immunity on two
grounds. First, the Bank asserts that Belize explicitly waived immunity in Clause 9.5 of the
Settlement Deed, see 28 U.S.C. § 1605(a)(1). Mem. of P. & A. in Supp. of Pet. to Confirm
Arbitration Award, ECF No. 1-1 [hereinafter Pet. Mem.], at 10. Second, the Bank contends that
the arbitration exception applies, 28 U.S.C. § 1605(a)(6). Id. at 11. Belize counters that neither
exception is applicable, for one main reason: the former Prime Minister lacked actual authority to
execute the agreements at the center of the parties’ dispute, “including the Settlement Deed that
contained the arbitration clause.” Mot. to Dismiss at 11.
The parties spend significant time debating the importance and purported binding effect of
foreign court decisions that address the former Prime Minister’s authority to enter into the
underlying agreements. See Mot. to Dismiss at 13-14; Belize’s Suppl. Br., ECF No. 30; Bank’s
Supp. Br., ECF No. 31. But those foreign decisions are of no consequence—and thus have no
binding effect—in light of the Court of Appeals’ decision in Belize Social Development Ltd. v.
Gov’t of Belize, 794 F.3d 99, 102-03 (D.C. Cir. 2015).3
Like here, Belize argued in Belize Social Development that the FSIA’s arbitration exception
did not apply because the former Prime Minister lacked the actual authority to enter into the
underlying agreement that led to the parties’ dispute and arbitration. Id. at 102. The Court of
Appeals, however, rejected that argument on the ground that the arbitration clause was severable
3
In any event, it is doubtful that these foreign court decisions would have any preclusive effect on the question whether
this court should confirm the arbitration award. See Belize Social Dev. Ltd. v. Gov’t of Belize, 668 F.3d 724, 730
(D.C. Cir. 2012) (vacating district court’s stay “[b]ecause the pending action in Belize has no preclusive effect on the
district court’s disposition of the petition to enforce pursuant to the [Federal Arbitration Act] and the New York
Convention”); see also BCB Holdings, Ltd. v. Gov’t of Belize, 110 F. Supp. 3d 233, 246 (D.D.C. 2015).
6
from the underlying agreement and that Belize had offered no evidence that the former Prime
Minister lacked the authority to enter the agreement to arbitrate. Id. As the Court of Appeals put
it: “Belize must show that the Prime Minister lacked authority to enter into the arbitration
agreement. This Belize has failed to do.” Id. So it is here. As in Belize Social Development, in
this matter Belize has “present[ed] nothing beyond its bare allegation in support of its argument
that the Prime Minister lacked authority to enter the agreement to arbitrate.” Id. at 103 (emphasis
added). Belize takes issue with the Court of Appeals’ holding in Belize Social Development, see
Resp. of Gov’t of Belize, ECF No. 36, but this court of course is not free to ignore it. Accordingly,
binding precedent compels the conclusion that the FSIA’s arbitration exception applies in this
case; therefore, Belize does not enjoy sovereign immunity from this enforcement action.
b. Basis for federal court enforcement
There also exists a basis for this court to enforce the arbitral award—namely, the Federal
Arbitration Act, 9 U.S.C. § 201, et seq., which, among other things, codifies the United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the
New York Convention. Our Court of Appeals has held on more than one occasion that the New
York Convention, as codified by the Federal Arbitration Act, id. § 202, grants federal courts
jurisdiction to confirm international arbitral awards that arise from a “commercial” transaction,
such as the one at issue in this case. See Diag Human, 2016 WL 3064507, at *5 (“We have already
established that the New York Convention, as codified by the United States, grants federal courts
jurisdiction over arbitration disputes that fall within its ambit.”); Belize Social Dev., 794 F.3d at
104 (“We thus conclude that the Accommodation Agreement is commercial and is governed by
the New York Convention.”); Creighton Ltd., 181 F.3d at 123 (“[T]he New York Convention ‘is
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exactly the sort of treaty Congress intended to include in the arbitration exception.’”) (quoting
Cargill Int’l S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1018 (2d Cir. 1993)).
Belize offers two arguments for why the New York Convention does not provide a basis
to enforce the arbitral award. First, it contends that the Convention does not apply “because Belize
has not ratified it.” Mot. to Dismiss at 19. But that argument is squarely foreclosed by an earlier
Court of Appeals opinion in the Belize Social Development case. See Belize Social Dev. Ltd., 668
F.3d at 730 n.3. In that decision, the Court of Appeals stated: “The fact that Belize is not a party
to the New York Convention is irrelevant. If the place of the award is ‘in the territory of a party
to the Convention, all other Convention states are required to recognize and enforce the award,
regardless of the citizenship or domicile of the parties to the arbitration.’” Id. (quoting Creighton,
181 F.3d at 121). There, as here, the award was rendered in London. See id. Because both
England and the United States are parties to the New York Convention, the United States courts
must recognize and enforce the award against Belize. See id.Second, Belize contends that the New York Convention does not apply, because it is not a
“person” as that term is used in Article I(1) of the Convention. Mot. to Dismiss at 20. Article I(1)
provides that “this Convention shall apply to the recognition and enforcement of arbitral awards
made in the territory of a State other than the State where the recognition and enforcement of such
awards are sought, and arising out of differences between persons, whether physical or legal.”
Convention on the Recognition and Enforcement of Foreign Arbitral Awards, art. I(1), June 7,
1959, 21 U.S.T. 2517, 330 U.N.T.S. 38 (emphasis added). According to Belize, Article I(1) should
be interpreted as excluding arbitration awards arising out of disputes involving foreign states.
Belize, however, cites no case to support such a reading.4 This court declines to adopt such a
4
Belize does cite Price v. Social People’s Libyan Arab Jamahiriya, 294 F.3d 82, 97 (D.C. Cir. 2002), for the
proposition that the term “person” excludes foreign states, see Mot. to Dismiss at 20, but Price held that foreign states
8
narrow construction of the New York Convention, especially when the Court of Appeals
consistently has held that the Convention, as codified, provides a basis for federal courts to enforce
arbitral awards between private entities and foreign states. See supra.
Accordingly, the court concludes that it has subject matter jurisdiction with respect to the
Bank’s petition for confirmation.
2. Forum Non Conveniens
Next, Belize argues that the Bank’s petition should be dismissed on forum non conveniens
grounds, because “Belize is an adequate alternative forum, and the private and public factors also
favor the Belizean forum.” Mot. to Dismiss at 23. That argument, however, is foreclosed by the
decisions in Belize Social Development and BCB Holdings. See Belize Social Dev., 794 F.3d at
105 (affirming the district court’s refusal to dismiss action based on forum non conveniens
grounds); BCB Holdings Ltd. v. Gov’t of Belize, 2016 WL 3042521, at *2 (D.C. Cir. May 13, 2016)
(holding that Belize’s forum non conveniens argument is “squarely foreclosed by our precedent”)
(citing TMR Energy Ltd. v. State Property Fund of Ukraine, 411 F.3d 296 (D.C. Cir. 2005)).
3. Personal Jurisdiction and International Comity
Belize Social Development likewise forecloses Belize’s arguments that (1) the court lacks
personal jurisdiction over it and (2) dismissal is warranted on international comity grounds, Mot.
to Dismiss at 26-32. See Belize Social Dev., 794 F.3d at 105 (affirming the district court’s refusal
to dismiss action based on lack of personal jurisdiction and on international comity grounds);
see also GSS Group Ltd. v. Nat’l Port Auth., 680 F.3d 805, 809 (D.C. Cir. 2012) (stating that
“foreign sovereigns and their extensively-controlled instrumentalities are not ‘persons’ under the
Fifth Amendment’s Due process Clause—and thus have no right to assert a personal jurisdiction
were not “persons” for purposes of the U.S. Constitution’s Due Process Clause. That decision has little relevance to
what the term “person” means under the New York Convention.
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defense.”) (citations omitted); cf. BCB Holdings, 2016 WL 30242521, at *2 (affirming district
court’s refusal to reject enforcement of the arbitral award on international comity grounds).
B. Belize’s Defenses under the New York Convention5
The court turns next to the grounds upon which Belize contends that the court should reject
confirmation of the award under the New York Convention. A court “may refuse to enforce the
award only on the grounds explicitly set forth in Article V of the Convention.” TermoRio S.A.
E.S.P. v. Electranta S.P., 487 F.3d 928, 933 (D.C. Cir. 2007) (citation omitted); see also 9 U.S.C.
§ 207; Yusuf Ahmed Alghanim & Sons, W.I.L. v. Toys “R” Us, Inc., 126 F.3d 15, 20 (2d Cir. 1997)
(“There is now considerable case law holding that, in an action to confirm an award rendered in,
or under the law of, a foreign jurisdiction, the grounds for relief enumerated in Article V of the
Convention are the only grounds available for setting aside an arbitral award.”). Because “the
New York Convention provides only several narrow circumstances when a court may deny
confirmation of an arbitral award, confirmation proceedings are generally summary in nature.”
Int'l Trading and Indus. Inv. Co. v. DynCorp Aerospace Technology, 763 F. Supp. 2d 12, 20
(D.D.C. 2011). “[T]he burden of establishing the requisite factual predicate to deny confirmation
of an arbitral award rests with the party resisting confirmation,” id. (internal quotation marks
omitted) (quoting Imperial Ethiopian Gov't v. Baruch–Foster Corp., 535 F.2d 334, 336 (5th Cir.
1976)), and “the showing required to avoid summary confirmation is high.” Id. (internal quotation
marks omitted) (quoting Ottley v. Schwartzberg, 819 F.2d 373, 376 (2d Cir. 1987)).
Belize advances five grounds for rejecting the award: (1) the composition of the arbitral
panel was not in accordance with the parties’ agreement; (2) recognition of the award would be
5
Given that arbitral award enforcement proceedings are to “take the form of summary procedure,” TermoRio S.A.
E.S.P. v. Electranta S.P., 487 F.3d 928, 940 (D.C. Cir. 2007) (citation omitted), and given that the Court of Appeals’
decisions in Belize Social Development and BCB Holdings have largely foreclosed Belize’s jurisdictional arguments,
the court declines Belize’s request to allow an interlocutory appeal before proceeding to the merits.
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contrary to the public policy of the United States; (3) the arbitration did not meet the minimum
requirements of due process; (4) the underlying agreements are invalid under the laws of Belize;
and (5) Belize is not a party to the New York Convention. Only the first of these arguments
requires any extended discussion.
1. Article V(1)(d) – Improperly Constituted Arbitrator Panel
Article V(1)(d) of the New York Convention allows a court to refuse recognition and
enforcement of the award where “[t]he composition of the arbitral authority or the arbitral
procedure was not in accordance with the agreement of the parties.” art. V(1)(d). Generally
speaking, Belize contends that this court should not confirm the Final Award because the arbitral
panel was not selected in accordance with the parties’ agreement and the LCIA Rules. To
understand that contention first requires a recitation of the relevant facts.
a. Belize’s challenges to the arbitral panel
In Clause 9 of the Settlement Agreement, Belize and the Bank agreed to arbitrate any
disputes in London, England, under the LCIA Rules and incorporated those Rules by reference
into the Agreement. Pet., Kimmelman Decl., Ex. C, ECF No. 1-5, ¶¶ 9.2, 9.4. The parties also
agreed that the arbitral tribunal would consist of three arbitrators, “one appointed by each Party
and the third appointed jointly by the two Parties’ arbitrators.” Id. ¶ 9.2. When the Bank first
commenced arbitration proceedings in 2007, Belize declined to participate, including refusing to
exercise its right to appoint an arbitrator. Pet., Kimmelman Decl., Ex. E, ECF No. 1-7, at 1-2. As
permitted by its Rules, the LCIA appointed an arbitrator in Belize’s stead, Zachary Douglas. Id.
at 2. The Bank selected Hilary Heilbron. Id. Douglas and Heibron jointly nominated Toby Landau
as chair of the tribunal. Id. at 3. Belize eventually joined the arbitration, but raised no objection
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to Douglas’ appointment. Id. at 2. The 2007 arbitration panel was discharged after Belize and the
Bank reached a settlement, i.e., the 2008 Settlement Agreement. Id.
The same trio again constituted the arbitral tribunal when the Bank re-initiated arbitration
proceedings in 2008. Id. The Bank again nominated Heilbron, and Belize once more initially
elected not to participate, including declining to appoint an arbitrator. Pet., Kimmelman Decl.,
Ex. B, ECF No. 1-4, at 11-12. As before, the LCIA appointed Douglas in Belize’s stead, and
Landau was nominated to be tribunal’s chair. Id. at 12; see also Kimmelman Decl., Ex. E, at 2.
The panel, as constituted, issued a First Partial Award on August 11, 2009. Kimmelman Decl.,
Ex. E, at 3.
Following a two-year long stay, the 2008 Arbitration moved to its second phase in
December 2011. Id. This time, Belize elected to participate. Id. Soon thereafter, Toby Landau,
the arbitral panel’s chair, resigned in February 2012 because of a potential conflict of interest. Id.
Belize then asked for the entire panel to be reconstituted pursuant to the procedure set forth in the
arbitration agreement. Id. at 4. The LCIA rejected the request, concluding that the remaining
arbitrators—Heilbron and Douglas—would nominate a new chair. Id. LCIA appointed
Yves Fortier, based on his selection by Heilbron and Douglas. Id. at 9.
In March 2012, Belize challenged the continued service of Douglas on the panel. Id. at 5.
Belize asserted that Douglas was conflicted because he was a member of Matrix Chambers, a
British barristers’ chambers. Another member of Matrix Chambers had represented interests
adverse to Belize in prior litigation and had represented one Lord Michael Ashcroft, whose
interests included the Bank. Id. Belize demanded that Douglas make certain disclosures—it
submitted a list of 30 questions for Douglas to answer—about Matrix Chambers’ practices and
representations. Id. at 5-8. Douglas responded that he was of aware of no circumstances that
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would call into question his impartiality or independence. Id. at 8. He further answered that he
never inquired into the practices of any other Matrix Chambers members and was under no
obligation to do so, as no “member of a barristers’ chambers is obliged to provide details of his or
her practice to another member of chambers” and “it would be a breach of a barrister’s obligation
of confidentiality to do so and would amount to professional misconduct.” Id. Thereafter, Belize
formally asked the LCIA again to reconstitute the panel and for Douglas’ removal. Id.
In April 2012, LCIA created a “Division” consisting of three members to decide Belize’s
challenges to the arbitral panel. Id. at 10. The Division rejected Belize’s challenges. Id. at 18.
As to Douglas’ supposed conflict because of his membership in Matrix Chambers, the Division
ruled that Douglas was not required to answer the Bank’s requested disclosures about Matrix
Chambers because, unlike United States’ law firms, barristers within a British chambers operate
as independent practitioners. Id. at 14-15. The Division also ruled that Douglas’ membership in
Matrix Chambers did not create an appearance of bias. Id. at 16-18. Finally, the Division
concluded that the LCIA Rules did not require a wholesale reconstitution of the panel when Landau
resigned, and that it was proper simply for the remaining arbitrators to select a new chair, which
they did. Id. at 18-20.
b. Belize’s assertions under Article V(1)(d)
Invoking Article V(1)(d) of the New York Convention, Belize argues that the Final Award
should not be enforced, because (1) the arbitral tribunal was not constituted in accordance with the
parties’ agreement because Belize was not permitted to nominate its own “wing” arbitrator, (2) the
LCIA incorrectly concluded that Douglas was not required to make disclosures about Matrix
Chambers, (3) the LCIA improperly refused to disqualify Douglas based on the appearance of a
13
conflict of interest created by his membership in Matrix Chambers, and (4) the LCIA erroneously
rejected Belize’s demand to reconstitute the panel. Resp. at 28-32.
As discussed, given the strong public policy in favor of international arbitration, a party
challenging an award under the New York Convention bears a heavy burden. See Encyclopaedia
Universalis S.A. v. Encyclopedia Britannica, Inc., 403 F.3d 85, 90 (2d Cir. 2005). A district court’s
review is “very limited . . . in order to avoid undermining the twin goals of arbitration, namely,
settling disputes efficiently and avoiding long and expensive litigation.” Id. (internal quotation
marks and citation omitted). Moreover, where, as here, a party’s challenge involves an application
of the arbitral institution’s own rules, courts typically have deferred to the arbitral panel’s
interpretation of them. See, e.g., York Research Corp. v. Landgarten, 927 F.2d 119, 123 (2d Cir.
1991) (“Given the parties’ designation of the AAA as the supervisory authority regarding the
resolution of disputes under the agreement, the AAA's view of the meaning of its rules is of
considerable significance.”); Ecopetrol S.A. v. Offshore Exploration and Production LLC,
46 F. Supp. 3d 327, 344 (S.D.N.Y. 2014) (“[W]hen parties have adopted rules conferring on an
arbitral panel authority to interpret the rules governing arbitration, courts should defer to the
panel’s interpretation of the rules governing arbitration.” (citation omitted)).
Applying the foregoing standards, this court is not persuaded by any of Belize’s challenges
under Article V(1)(d). First, Belize forfeited its right to appoint a “wing” arbitrator by not initially
participating in the 2007 Arbitration and 2008 Arbitration. Under LCIA Arbitration Rule Art. 2.3,
see Kimmelman Second Decl., Ex. M, ECF No. 22-9, if, as here, “the Arbitration Agreement calls
for party nomination of arbitrators, failure to send a Response [to the request for arbitration] or to
nominate an arbitrator within time or at all shall constitute an irrevocable waiver of that party’s
opportunity to nominate an arbitrator.” (emphasis added). With Belize having waived its right to
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appoint an arbitrator, LCIA was authorized to appoint one in its stead under Articles 5.4, 5.5, and
7.2, which it did by appointing Douglas. Id.Nor does the court perceive any error in the Division’s rejection of Belize’s demands that
Douglas make various disclosures about Matrix Chambers and that he be removed because of a
perception of bias created by his affiliation with Matrix Chambers. The Division’s rejection of
both demands turned on its conclusion that, unlike law firms in the United States, barristers in an
English chambers are independent practitioners. Therefore, for conflicts purposes, Article 5.3 of
the LCIA Rules did not require Douglas to disclose the potentially conflicting matters of other
chambers members; nor did the matters of other chambers members require his disqualification
from serving on the panel. Kimmelman Decl., Ex. E, at 14-17. The Division also reasonably
explained why the main case relied on by Belize—Hrvatsak Elektroprivreda, d.d. v. Republic of
Slovenia, ICSID Case no. ARB/05/24 (May 6, 2008)—was distinguishable and did not compel a
contrary result. Id. It is not for this court, given its limited scope of review, to second-guess the
Division’s interpretation of LCIA’s conflict rules and its application of Hrvatsak.
Finally, the court finds no error in the LCIA’s and the Division’s rejection of Belize’s
demand to reconstitute the arbitral panel anew after Landau’s resignation. Under Article 11.1 of
the LCIA Rules, “if an appointed arbitrator is to be replaced for any reason, the LCIA Court shall
have a complete discretion to decide whether or not to follow the original nominating process.”
see Kimmelman Decl., Ex. M, ECF No. 22-9, at 6. When Landau resigned, instead of permitting,
as the Bank asked, the parties to re-nominate their respective “wing” arbitrators to select a new
chair, the LCIA allowed the remaining arbitrators—Douglas and Heilron—to select a new chair.
The decision was well within LCIA’s “complete discretion” under Article 11.1, as nothing in that
15
Article, or any other, required LCIA to re-do the nominating process in its entirety after the chair’s
resignation.6
2. Article V(2)(b) – Contrary to U.S. Public Policy
Having concluded that Belize has not met its heavy burden of showing that the arbitral
panel was constituted in violation of the parties’ agreement, the remaining Article V defenses are
disposed of easily. Belize next argues that the Final Award should not be enforced because, under
Article V(2)(b), enforcing an award rendered by arbiters who were not impartial would be contrary
to United States public policy. See Resp. at 32-39; New York Convention art. V(2)(b) (stating that
recognition and enforcement may be refused where the award would be “contrary to the public
policy of [the] country.”).
Courts may rely on Article V(2)(b)’s public policy exception “in clear-cut cases” where
“enforcement would violate the forum state’s most basic notions of morality and justice.”
Termorio, 487 F.3d at 938 (citations omitted). Even if the norm of an unconflicted arbitral panel
is rooted in this country’s “basic notions of morality and justice”—a showing that Belize has not
convincingly made—it has not shown how that norm was violated here. As discussed, the LCIA’s
and the Division’s decisions rejecting Belize’s challenges to the arbitral panel were well reasoned
and consistent with the LCIA’s Rules. The court finds nothing about the selection process of the
arbitrators in this case that would offend United States public policy.
3. Article V(1)(b) – Failed to Meet Due Process
The court likewise rejects Belize’s contention that the Petition should be denied pursuant
to Article V(1)(b) of the Convention. That Article allows a court to refuse recognition and
6
In light of the foregoing conclusions, the court rejects Belize’s request for limited discovery concerning arbitrator
Douglas’ alleged impartiality, Resp. at 41. See In re Andros Compania Maritima, S.A. & Marc Rich & Co., A.G., 579
F.2d 691, 702 (2d Cir. 1978) (affirming district court’s rejection of discovery into arbitrator’s alleged conflict where
“clear evidence of impropriety has not been presented”).
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enforcement of an award if “[t]he party against whom the award is invoked was not given proper
notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable
to present his case.” art. V(1)(b). That provision “essentially sanctions the application of the
forum state’s standards of due process.” Parsons & Whittemore Overseas Co. v. Societe Generale
De L'Industrie Du Papier (Rakta), 508 F.2d 969, 975 (2d Cir. 1974). Under United States law,
“[t]he fundamental requirement of due process is the opportunity to be heard ‘at a meaningful time
and in a meaningful manner.’” Mathews v. Eldridge, 424 U.S. 319, 333 (1976) (citation omitted).
Thus, as the Second Circuit has put it, under Article V(1)(b), if the losing party “was denied the
opportunity to be heard in a meaningful time or in a meaningful manner, enforcement of the Award
should be refused pursuant to Article V(1)(b).” Iran Aircraft Indus. v. Avco Corp., 980 F.2d 141,
146 (2d Cir. 1992).
Belize argues that “the arbitration proceeding did not meet minimum requirements of due
process because the arbitration panel did not provide the required element of impartiality” under
Article V(1)(b) of the New York Convention. Resp. at 39. But Belize has not shown how the
panel’s alleged impartiality deprived it of an opportunity to be heard. Indeed, Belize walked out
of the 2008 Arbitration after receiving an unfavorable ruling from the Division. Any lost
opportunity to be heard therefore was self-inflicted.7
4. Article V(1)(a) – Invalid under Belizean Law
Belize further argues that “[t]he Petition should also be denied because the Guarantee, the
Settlement Deed, and the Loan Note were not valid under the laws of Belize,” thereby requiring
non-enforcement under Article V(1)(a). Resp. at 40. Article V(1)(a) of the Convention allows a
7
To the extent that Article V(1)(b)’s also guarantees “a fundamentally fair hearing” under United States law, which
mandates a court to review whether the respondent was afforded an “impartial decision by the arbitrator,” then Belize
has failed to demonstrate impartiality. Slaney v. The Int’l Amateur Athletic Fed'n, 244 F.3d 580, 592 (7th Cir. 2001)
(citations omitted); see also, supra section III(E)(1).
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court to refuse recognition and enforcement if “said agreement is not valid under the law to which
the parties have subjected it or, failing any indication thereon, under the law of the country where
the award was made.” art. V(1)(a) (emphasis added). Belize relies on China Minmetals Materials
Import and Export Co., Ltd. v. Chi Mei Corp., 334 F.3d 274, 289 (3d Cir. 2003), for the proposition
that “a party that opposes enforcement of a foreign arbitration award under the Convention on the
grounds that the alleged agreement containing the arbitration clause on which the arbitral panel
rested its jurisdiction was void ab initio is entitled to present evidence of such invalidity to the
district court.” The district court then “must make an independent determination of the agreement's
validity and therefore of the arbitrability of the dispute, at least in the absence of a waiver
precluding the defense.” Id. Belize, therefore, argues that because the underlying agreements
were unlawful under Belize law, the arbitration clause itself was invalid. Resp. at 40-41. The
Bank, for its part, reads China Minmetals more narrowly, construing the case to stand for the
unremarkable proposition that a party may challenge the existence or validity of the agreement to
arbitrate directly, as opposed to indirectly by challenging the agreement as a whole. Pet’r’s Mem.
of P. & A. in Opp’n, ECF No. 21, at 40-41.
However one reads China Minmentals, our Court of Appeals’ decision in Belize Social
Development forecloses the type of indirect challenge to the agreement to arbitrate that Belize
attempts here. Again, in Belize Social Development the court held that an arbitration clause is
segregable from the agreement as a whole. Belize Social Dev. Ltd., 794 F.3d at 102. Accordingly,
if there is a challenge under Article V(1)(a) to anything, it must be to the agreement to arbitrate
itself, not the agreement as a whole. Here, Belize has not offered any evidence that the arbitration
agreement itself is invalid under the law of Belize. Therefore, Article V(1)(a) does not provide a
ground to deny the Petition.
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C. Arguments Concerning the Award
1. Award in U.S. Dollars
The Bank asks the court to order payment on the Final Award in U.S. dollars. Pet. ¶ 58.
The court will do so. “Conversion of foreign currency into dollars at judgment ‘is the norm, rather
than the exception.’” BCB Holdings, Ltd., 110 F. Supp. 3d at 250 (quoting Cont’l Transfert
Technique Ltd. v. Fed. Gov’t of Nigeria, 932 F. Supp. 2d 153, 158 (D.D.C. 2013), aff'd, 603 F.
Appx. 1 (D.C. Cir. 2015)). Accordingly, the Final Award shall be converted to U.S. dollars as of
January 15, 2013, the date of the Award, and the judgment will be entered in U.S. dollars.
2. Prejudgment Interest
As other courts have in similar confirmation proceedings, this court will award
prejudgment interest, as requested by the Bank, Pet. at 14. See BCB Holdings Ltd., 110 F. Supp.
3d at 251; Belize Social Dev., Ltd. v. Gov’t of Belize, 5 F. Supp. 3d 25, 43-44 (D.D.C. 2013). The
Final Award includes prejudgment interest from September 7, 2012, at a rate of 17% per annum,
compounded monthly, until the date of payment. Pet. at 14. The court will award the Bank
prejudgment interest consistent with the Final Award.
IV. CONCLUSION
For the foregoing reasons, the Bank’s Petition to Confirm Foreign Arbitration Award and
to Enter Judgment is granted, and Belize’s Motion to Dismiss is denied. A separate Order
accompanies this Memorandum Opinion.
Dated: June 8, 2016 Amit P. Mehta
United States District Judge
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