Concesionaria Dominicana De Autopistas Y Carreteras, S.A. v. Dominican State

SUMMARY MEMORANDUM OPINION; NOT INTENDED FOR PUBLICATION
IN THE OFFICIAL REPORTERS
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
CONCESIONARIA DOMINICANA DE
AUTOPISTAS Y CARRETERAS, S.A.,
Petitioner,
Civil Action No. 12-cv-1335 (RLW)
v.
THE DOMINICAN STATE,
Respondent.
MEMORANDUM OPINION 1
Petitioner Concesionaria Dominicana de Autopistas y Carreteras, S.A. (“CODACSA”)
brings this action to confirm an arbitral award against Respondent the Dominican State (the
“Dominican Republic”), pursuant to the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards (the “New York Convention”), June 10, 1958, 21 U.S.T. 2517, T.I.A.S.
No. 6997, which was codified by Congress at Chapter 2 of the Federal Arbitration Act, 9 U.S.C.
§§ 201-08. The matter is now before the Court on CODASCA’s Motion for Default Judgment.
(Dkt. No. 7). For the reasons set forth herein, CODASCA’s Motion will be GRANTED, and the
1
This unpublished memorandum opinion is intended solely to inform the parties and any
reviewing court of the basis for the instant ruling, or, alternatively, to assist in any potential
future analysis of the res judicata, law of the case, or preclusive effect of the ruling. The Court
has designated this opinion as “not intended for publication,” but this Court cannot prevent or
prohibit the publication of this opinion in the various and sundry electronic and legal databases
(as it is a public document), and this Court cannot prevent or prohibit the citation of this opinion
by counsel. Cf. FED. R. APP. P. 32.1. Nonetheless, as stated in the operational handbook adopted
by our Court of Appeals, “counsel are reminded that the Court’s decision to issue an unpublished
disposition means that the Court sees no precedential value in that disposition.” D.C. Circuit
Handbook of Practice and Internal Procedures 43 (2011).
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SUMMARY MEMORANDUM OPINION; NOT INTENDED FOR PUBLICATION
IN THE OFFICIAL REPORTERS
Court will CONFIRM the underlying arbitral award issued in favor of CODASCA and against
the Dominican Republic.
BACKGROUND
On November 26, 2001, CODACSA entered into a concession contract with the
Dominican Republic related to the funding and development of several stretches of highway
extensions in the Dominican Republic. (Dkt. No. 1 (“Petition”) at ¶ 6). 2 Roughly speaking, the
contract granted CODACSA the right to collect tolls at three separate toll stations over the life of
the concession (approximately thirty years), in exchange for various financing and construction
obligations on the part of CODACSA. (Id.). Shortly after the contract was approved and
enacted by the Dominican government, however, CODACSA asserts that the Dominican
Republic breached and repudiated the contract by failing to deliver a contractually-required bank
guarantee, among other ways. (Id. at ¶ 8). In turn, CODACSA initiated arbitration proceedings
before the Arbitration Court of the International Chamber of Commerce (“ICC”), as called for by
the terms of the concession contract. (Id.). 3
2
Because the Dominican Republic has not appeared in this action whatsoever, the facts set
forth herein are drawn from CODASCA’s Verified Petition to Confirm.
3
More specifically, the applicable contract between CODACSA and the Dominican
Republic expressly provided as follows:
23. Settlement of Disputes.
Any disputes or disagreements of any nature pertaining to or deriving from this
contract, other than those that may be resolved by agreement shall be settled by
arbitration in Arbitration Court of the International Chamber of Commerce in Paris,
which shall administer the arbitration and designate the arbitrators in accordance with its
Regulations and Bylaws.
The parties also expressly agree to comply with the arbitration award handed down.
(Petition at ¶ 7; Dkt. No. 1-2 at ¶ 23).
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IN THE OFFICIAL REPORTERS
Following the appointment and confirmation of three arbitrators, the ICC held evidentiary
hearings in the matter on September 6-10, 2010, and October 25-26, 2010, in Washington D.C.
(Id. at ¶ 12). The arbitrators ultimately issued their written award on January 11, 2012, finding
that the Dominican Republic breached the contract in several respects and awarding CODACSA
damages in the amount of $33,683,759.67, along with administrative expenses, attorneys’ fees,
and pre- and post-award interest. (Id. at ¶ 14; Dkt. No. 1-4 at Sect. XIII). Several months later,
on May 25, 2012, the ICC arbitrators issued an “Addendum to the Final Arbitration Award,”
setting forth revised damages calculations for the award in favor of CODACSA. (Petition at ¶
16; Dkt. No. 1-7 at Annex A, ¶ 914). More specifically, CODACSA was awarded damages as
follows: (1) $37,438,424.56 for losses arising from the termination of the contract; (2) pre-award
interest at the rate of LIBOR plus 2% per annum, amounting to a total of $3,016,480.42; 4 (3)
$200,000.00 for administrative expenses of the ICC, including the fees and expenses of the
arbitrators; and (4) $1,892,672.86 in attorneys’ fees. (Id.). In sum, the total amount due at the
time of the final award was $42,547,577.84. (Id.). The final award also provided for post-award
interest at the rate of LIBOR plus 2% per annum, if the award was not paid within sixty days
from the date of notification. 5 (Id.).
4
The arbitrators’ award provided for pre-award interest at the rate of 2% above the LIBOR
six-month average as of the date of the award—May 31, 2012. CODACSA correctly identifies
that rate as 2.7364%. See BBA LIBOR, Historical Libor Rates, May 2012, available at
http://www.bbalibor.com/rates/historical (last visited Dec. 20, 2012). Applied to the overall
principal amount of $37,438,424.56, the applicable daily interest rate is $2,845.74. (Petition at p.
7 n.2). In turn, CODACSA tabulates the total amount of pre-award interest—covering the period
from June 30, 2009 through May 31, 2012—to be $3,016,480.42.
5
CODACSA correctly identifies that applicable interest rate as of July 31, 2012, to be
2.7496%. See BBA LIBOR, Historical Libor Rates, July 2012, available at
http://www.bbalibor.com/rates/historical (last visited Dec. 20, 2012). Applying that rate to the
overall principal of $42,547,577.84, CODACSA calculates the applicable daily rate of interest to
be $3,249.69. (Petition at p. 7 n.3).
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IN THE OFFICIAL REPORTERS
On June 13 and 26, 2012, CODACSA requested that the Dominican Republic provide
assurances that it would honor and pay the final award within the applicable sixty-day period.
(Petition at ¶ 17). CODACSA also advised that, absent receipt of such assurances by July 10,
2012, CODACSA would initiate judicial proceedings to confirm the final award as a judgment.
(Id.). While the Dominican Republic subsequently acknowledged the receipt of CODACSA’s
requests for assurances, it did not substantively respond to those requests. (Id.).
On August 13, 2012, CODACSA filed its Verified Petition to Confirm (“Petition”)
initiating these proceedings. As required by Article IV of the New York Convention,
CODACSA attached to its Petition a certified copy of the final arbitral award, along with a
certified copy of the parties’ arbitration agreement (set forth at Paragraph 23 of the concession
contract). On September 10, 2012, CODASCA served a copy of its Petition on the Dominican
Republic through a courier, DHL World Wide Express. (Dkt. No. 5). The Dominican Republic
received and accepted service of the Petition two days later, on September 12, 2012. (Dkt. No.
6). To date, however, the Dominican Republic has not responded to CODACSA’s Petition, nor
has it otherwise appeared in this action whatsoever. As a result, CODASCA filed this Motion
for Default Judgment on November 19, 2012. (Dkt. No. 7). The Court initially issued a Minute
Order advising that CODACSA’s Motion was premature, insofar as no entry of default had been
entered against the Dominican Republic. (See Minute Order dated Nov. 30, 2012). CODACSA
then promptly moved for entry of default against the Dominican Republic, which the Clerk of
Court entered on December 3, 2012. (Dkt. No. 13). 6 This Motion is now ripe for decision.
6
The Court also notes that, although not required to do so given the Dominican Republic’s
default status, CODACSA served a copy of its Return of Service Affidavit and its Motion for
Default Judgment on the Dominican Republic on November 30, 2012. (See Dkt. No. 11). Yet,
the Dominican Republic still has not appeared in this action whatsoever.
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SUMMARY MEMORANDUM OPINION; NOT INTENDED FOR PUBLICATION
IN THE OFFICIAL REPORTERS
ANALYSIS
A. The Court Has Jurisdiction To Confirm The Arbitral Award
To begin with, given the Dominican Republic’s status as a foreign state, the Court must
first consider the impact of the Foreign Sovereign Immunities Act (“FSIA”) upon its power to
hear this case. Creighton Ltd. v. Gov’t of the State of Qatar, 181 F.3d 118, 121-24 (D.C. Cir.
1999). The FSIA renders a foreign state “presumptively immune from the jurisdiction of United
States courts.” Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993) (citing Verlinden B.V. v.
Central Bank of Nigeria, 461 U.S. 480, 488-89 (1983)). Therefore, “unless a specified exception
applies, a federal court lacks subject-matter jurisdiction over a claim against a foreign state.” Id.;
see also Peterson v. Royal Kingdom of Saudi Arabia, 416 F.3d 83, 86 (D.C. Cir. 2005). As
relevant here, the FSIA specifically prescribes a jurisdictional exception for purposes of
confirming certain arbitration awards:
A foreign state shall not be immune from the jurisdiction of courts of the United
States . . . in any case . . . in which the action is brought . . . to confirm an award
made pursuant to . . . an agreement to arbitrate, if . . . the agreement or award is or
may be governed by a treaty or other international agreement in force for the
United States calling for the recognition and enforcement of arbitral awards.
28 U.S.C. § 1605(a)(6)(B). This Circuit has explained that the “New York Convention is exactly
the sort of treaty Congress intended to include in the arbitration exception.” Creighton Ltd., 181
F.3d at 123-24 (quoting Cargill Int’l S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1018 (2d. Cir.
1993)) (internal quotations omitted).
Given that CODACSA properly invokes the New York Convention as the basis for its
Petition, the FSIA’s arbitration exception vests the Court with subject matter jurisdiction over
this action. An arbitral award “falls under the Convention” where it arises “out of a legal
relationship, whether contractual or not, which is considered as commercial, including a
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SUMMARY MEMORANDUM OPINION; NOT INTENDED FOR PUBLICATION
IN THE OFFICIAL REPORTERS
transaction, contract, or agreement . . . .” 9 U.S.C. § 202; see also Global Distressed Alpha Fund
I LP v. Red Sea Flour Mills Co. Ltd., 725 F. Supp. 2d 198, 203 (D.D.C. 2010). The arbitral
award CODACSA seeks to confirm plainly falls under the Convention, inasmuch as it derives
from CODACSA’s commercial legal relationship with the Dominican Republic, as memorialized
in the underlying concession contract. Accordingly, the FSIA’s arbitration exception provides
the Court with subject matter jurisdiction over this case.
Relatedly, the Court also concludes that it has personal jurisdiction over the Dominican
Republic. The FSIA “specifies that personal jurisdiction over a foreign state shall exist as to
every claim for relief over which the district courts have [subject-matter] jurisdiction . . . where
service has been made under [28 U.S.C. § 1608].” GSS Group Ltd. v. Nat’l Port Auth., 680 F.3d
805, 811 (D.C. Cir. 2012) (citing 28 U.S.C. § 1330(b)). More simply put, “under the FSIA,
subject matter jurisdiction plus service of process equals personal jurisdiction.” Id.; Practical
Concepts, Inc. v. Republic of Bolivia, 811 F.2d 1543, 1548 n.11 (D.C. Cir. 1987). Therefore,
because the Court has subject matter jurisdiction under § 1605(a)(6)(B), and because CODACSA
properly effectuated service of process on the Dominican Republic pursuant to 28 U.S.C. §
1608(a)(3), (See Dkt. Nos. 3, 4, 5, and 6), the Court also has personal jurisdiction over the
Dominican Republic.
B. CODACSA Is Entitled To Confirmation of Its Arbitral Award
The New York Convention—which Congress ratified and adopted through Chapter 2 of
the Federal Arbitration Act—authorizes the recipient of a foreign arbitral award to seek an order
in federal court “confirming the award as against any party to the arbitration.” 9 U.S.C. § 207.
Upon receipt of such a petition, “[t]he court shall confirm the award unless it finds one of the
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SUMMARY MEMORANDUM OPINION; NOT INTENDED FOR PUBLICATION
IN THE OFFICIAL REPORTERS
grounds for refusal or deferral of recognition or enforcement of the award specified in said
Convention.” Id. To be sure, “the FAA affords the district court little discretion in refusing or
deferring enforcement of foreign arbitral awards: the Convention is ‘clear’ that a court ‘may
refuse to enforce the award only on the grounds explicitly set forth in Article V of the
Convention.’” Belize Soc. Dev., Ltd. v. Gov’t of Belize, 668 F.3d 724, 727 (D.C. Cir. 2012)
(quoting TermoRio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928, 935 (D.C. Cir. 2007)); see also
Encyclopaedia Universalis S.A. v. Encyclopaedia Britannica, Inc., 403 F.3d 85, 90 (2d. Cir.
2005) (“Given the strong public policy in favor of international arbitration, review of arbitral
awards under the New York Convention is very limited in order to avoid undermining the twin
goals of arbitration, namely, settling disputes efficiently and avoiding long and expensive
litigation.”).
The Dominican Republic obviously does not argue that any of the exceptions under the
New York Convention preclude confirmation of CODACSA’s arbitration award—nor could it,
given its default status in this case. Nonetheless, based upon an independent review of
CODACSA’s submissions, 7 the Court concludes that none of the grounds for refusing to confirm
7
The FSIA only allows the entry of a default judgment against a foreign state “where the
“the claimant establishes his claim or right to relief by evidence satisfactory to the court.” 28
U.S.C. § 1608(e). This standard is the same as that “applicable to default judgments against the
U.S. Government under [Federal Rule of Civil Procedure] 55(e),” Hill v. Republic of Iraq, 328
F.3d 680, 683 (D.C. Cir. 2003), and the Court “may accept as true the plaintiff[’s]
uncontroverted evidence, including proof by affidavit.” Bell Helicopter Textron Inc. v. Islamic
Repub. of Iran, 764 F. Supp. 2d 122, 126 (D.D.C. 2011). Here, CODACSA presented the Court
with certified copies of the original concession contract (Dkt. No. 1-2), along with the ICC’s
final arbitration award (Dkt. No. 1-4) and the subsequent addendum to that award (Dkt. No. 1-
7)—all of which were introduced by way of CODACSA’s verified petition, executed by Mr.
Pedro Claros Alegría. Although the verification itself does not confirm Mr. Alegría’s
relationship to this action, upon a review of the ICC documents lodged along with CODACSA’s
Petition, Mr. Alegría appears to have been counsel of record for CODACSA in the arbitration
proceedings before the ICC and therefore can properly authenticate the above-listed documents.
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SUMMARY MEMORANDUM OPINION; NOT INTENDED FOR PUBLICATION
IN THE OFFICIAL REPORTERS
CODACSA’s arbitral award exists here. See G.E. Transp. S.p.A. v. Republic of Albania, 693 F.
Supp. 2d (D.D.C. 2010) (summarizing the Convention’s grounds for refusing confirmation as:
“incapacity of the parties; invalidity of the underlying agreement; an award beyond the scope of
the arbitration agreement; improper composition of the arbitral panel; and an award that has not
yet become binding, or has been set aside or suspended by a competent authority of the country
in which, or under the law of which, that award was made”). Therefore, given the Court’s
circumscribed role in reviewing CODACSA’s Petition, the Court finds that CODACSA is
entitled to confirmation of its arbitral award and a corresponding judgment against the
Dominican Republic.
CONCLUSION
For the foregoing reasons, CODASCA’s Petition to Confirm the Award and for Default
Judgment is GRANTED. An Order accompanies this Memorandum Opinion.
Digitally signed by Judge Robert L.
Wilkins
Date: December 20, 2012 DN: cn=Judge Robert L. Wilkins,
o=U.S. District Court, ou=Chambers
of Honorable Robert L. Wilkins,
email=RW@dc.uscourt.gov, c=US
Date: 2012.12.20 09:43:43 -05'00'
ROBERT L. WILKINS
United States District Judge
(See Dkt. Nos. 1-4, 1-7). Accordingly, the Court concludes that CODACSA presented
“satisfactory” evidence to justify the default judgment it seeks herein.
8