Duke Energy International Peru Investments No. 1 Ltd. v. Republic of Peru

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
DUKE ENERGY INTERNATIONAL
PERU INVESTMENTS NO. 1 LTD.,
Petitioner,
v. Civil Action No. 11-1602 (JEB)
REPUBLIC OF PERU,
Respondent.
MEMORANDUM OPINION
Petitioner Duke Energy International Peru Investments No. 1 Ltd. (DEI) filed this action
to confirm an Award issued by an international arbitrator pursuant to 22 U.S.C. § 1650a and
Article 54 of the Convention on the Settlement of Investment Disputes Between States and
Nationals of Other States (ICSID Convention). Respondent Republic of Peru moved to dismiss
the action or, in the alternative, to remand the dispute to the arbitrator for further clarification.
The Court denied the Motion in a Memorandum Opinion issued on September 14, 2012. See
Duke Energy Intern. Peru Investments No. 1 Ltd. v. Republic of Peru, -- F. Supp. 2d --, 2012 WL
4045191 (D.D.C. Sept. 14, 2012) (DEI I). Peru now seeks what amounts to a second bite at the
apple and meets the same fate. The Court will thus confirm the Award of $2,740,218 in favor of
DEI.
I. Procedural Background
The factual background to this matter is set forth in DEI I, see id. at *1, and will not be
reiterated here. In previously moving to dismiss, Peru argued first that DEI’s Petition should be
dismissed for failure to state a claim “‘because the Petition acknowledges that Peru has paid the
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full amount of the award according to the intention of the ICSID Tribunal.’” Id. at *3 (quoting
Motion to Dismiss, ECF No. 10, at 6). It also argued “that the case should be remanded to the
ICSID Tribunal for clarification because the underlying award is ambiguous inasmuch as the
appropriate interest rate cannot be determined.” Id. (citing Motion to Dismiss at 7). The Court
disagreed on both points. See id. at *3, *5.
After denying Peru’s Motion, the Court held a status conference, in which it invited the
parties to propose how next to proceed. DEI argued that the Court should simply confirm the
award, having rejected Peru’s objections. See Hrg. Tr. (Oct. 2, 2012) at 7. Peru, conversely,
desired an opportunity for fuller briefing on Peruvian law. Id. at 4. The Court, while noting that
DEI might well be right, permitted Peru a “limited opportunity” to present any other arguments
against confirmation. Id. at 10.
Peru has thus filed a pleading styled “Motion to Deny Confirmation,” see ECF Nos. 19-
20, and DEI has cross-moved to enter an order confirming the award. See ECF No. 21.
II. Analysis
In its new Motion, Peru contends that the amended Article 38 of its Tax Code does not
apply to the Award. Although the Court, in permitting additional briefing, did not foreclose any
arguments Peru wished to make, it did not expect such briefing to act as a motion for
reconsideration. Denying the clear applicability of Article 38 was a focus of Peru’s earlier
Motion to Dismiss, which the Court rejected. This new Motion should not be a vehicle for
reargument of the same point.
Even if Peru’s arguments were new, they would not succeed. This time around, Peru first
maintains that Peruvian tax law distinguishes between “Assessment Resolutions” and “Orders to
Pay” such that the assessment SUNAT levied on DEI was not a “document . . . demanding the
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payment of a tax debt” for purposes of amended Article 38. See Mot. to Deny at 5. In the
alternative, it contends that Article 38 does not apply at all because DEI itself was not a taxpayer;
instead, DEI’s subsidiary Egenor was. Id. at 8. Because the Award is clear on its face as to
whether and how amended Article 38 applies, the Court again rejects these arguments.
As was the case when this Court considered Peru’s Motion to Dismiss, the question
presented is a narrow one: whether the ICSID Award is sufficiently clear for this Court to
determine the applicable interest rate. If so, this Court is required by statute to give the Award
full faith and credit and confirm it accordingly. See 22 U.S.C. § 1650a. The legal standards
governing judicial review of arbitration awards are not complicated. As the Court previously
noted, such review “is limited by design.” DEI I, 2012 WL 4045191, at *3. Remand is the only
relief available, and it is “an exceptional remedy . . . ‘to avoid if possible, given the interest in
prompt and final arbitration.’” Id. (quoting Ethyl Corp. v. United Steelworkers of America,
AFL-CIO, 768 F.2d 180, 188 (7th Cir. 1985)). Remand is only warranted where the award is
“‘so ambiguous that a court is unable to discern how to enforce it.’” Id. (quoting Telenor Mobile
Comms. AS v. Storm LLC, 351 F. App’x 467, 469 (2d Cir. 2009)); see, e.g., Hyle v. Doctor’s
Assocs., Inc., 198 F.3d 368, 371 (2d Cir. 1999) (remand appropriate where arbitral award
ambiguous as to which respondent was liable). Although styled as a Motion to Deny
Confirmation, then, Peru’s Motion is really just a second motion for remand. Once again, Peru
would only be entitled to such remand if this Court were at a loss to determine the arbitrator’s
meaning.
Peru’s first argument about Peruvian tax law is thus another red herring. The issue before
the Court is the clarity or ambiguity of the Award. Because the plain language of the Award is
and remains clear, Peru’s assertions regarding the meaning of Peruvian tax law are irrelevant:
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they are beyond the clear, plain meaning of the Award, and the Court simply need not reach
them. See, e.g., Travelers Indemn. Co. v. Bailey 557 U.S. 137, 150 (2009) (“where the plain
terms of a court order unambiguously apply . . . they are entitled to their effect”); Connecticut
Nat’l Bank v. Germain, 503 U.S. 249, 254 (1992) (“when the words of a statute are unambiguous
. . . this first canon is also the last: ‘judicial inquiry is complete’”) (internal citations omitted); In
re Fitzgerald Marine & Repair, Inc., 619 F.3d 851, 859 (8th Cir. 2010) (“Where the written
instrument is so worded that it can be given a certain definite legal meaning or interpretation,
then it is not ambiguous, and this Court will construe [it accordingly].”).
The Award states that “[DEI] has indeed sustained a loss as a result of SUNAT’s
assessment against Egenor.” See Amended Pet., Declaration of Andrew H. Marks, Exh. B
(Award), ¶ 457 (emphasis added). It goes on to hold that DEI is to be awarded interest at “the
actual interest rate(s) stipulated for that period by SUNAT for refunds to taxpayers.” Id., ¶ 488.
Amended Article 38 provides for two different interest rates used in refunds to taxpayers. See
Amended Pet., Declaration of Rocío V. Liu Arévalo, Exh. A (Translation of Law 29191). The
TIM or interest-on-arrears rate must be paid for overpayments “made as a consequence of any
document issued by the Tax Administration requiring the payment of a tax debt.” Id. Other
excessive payments are awarded interest at a rate “no lower than the average deposit rate for the
market for any other excessive payment.” Id.
Both learned dictionaries and common usage define an “assessment” in the tax context as
something that sets the amount to be paid – that is, a document that requires the payment of a tax
debt. See, e.g., The Oxford English Dictionary (defining “assessment” as “the determination or
adjustment of the amount of taxation, charge, fine, etc., to be paid by a person or community”)
Under the only reasonable reading of the Award, the TIM rate applies, and DEI should receive
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interest at the rate intended for overpayments “made as a consequence of any document . . .
requiring the payment of a tax debt.” As the Court noted in its earlier Opinion, the rule of
interpretation that the plain meaning should govern – where that meaning is unambiguous –
holds true for contracts, judgments, and statutes. And for the Award here, too. See DEI I, 2012
WL 4045191, at *4. Because the plain meaning here is readily intelligible, no further judicial
inquiry is needed.
Finally, Peru’s argument that DEI is not entitled to the higher interest rate provided in
Article 38(a) because it is not a Peruvian taxpayer was previously foreclosed, both by this Court
and by the ICSID Tribunal. As DEI correctly notes, the Tribunal plainly stated that DEI must be
awarded interest “calculated using . . . the interest rate(s) SUNAT credits to taxpayers on tax
refunds.” Award, ¶ 488. Because the Tribunal has made clear that DEI is to receive interest at
the taxpayer rate, the fact that DEI’s subsidiary Egenor was the actual payor of the tax
overpayments is irrelevant. Absent any showing from Peru that the Tribunal’s clear statement
that DEI was to receive the taxpayer interest rate is ambiguous, the Tribunal’s ruling is binding
and conclusively resolves this issue. Because Peru has again failed to show that the Award is so
ambiguous that this Court cannot determine the proper interest rate to be applied, it will deny
Peru’s Motion and confirm the Award.
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III. Conclusion
For the foregoing reasons, the Court will issue a contemporaneous ORDER this day
denying Peru’s Motion to Deny Confirmation, granting DEI’s Motion to Enter Order
Confirming, and awarding DEI $2,740,218, which is the amount Peru agrees is being contested
here. See Rep. at 7.
/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date: November 19, 2012
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