Micula v. Gov't of Rom.

101 F.4th 47

Ioan MICULA, et al., Appellees v. GOVERNMENT OF ROMANIA, Appellant

No. 23-7008

United States Court of Appeals, District of Columbia Circuit

Argued February 28, 2024

Decided May 14, 2024

Appeal from the United States District Court for the District of Columbia (No. 1:17-cv-02332) David R. Fine argued the cause for appellant. On the briefs were Ioana Salajanu and Matthew J. Weldon.

Stephen P. Anway and Dimitar P. Georgiev-Remmel were on the brief for amicus curiae the European Commission in support of appellant.

Francis A. Vasquez, Jr. argued the cause for appellees. With him on the brief were Hansel T. Pham, Jacqueline L. Chung, Drew Marrocco, Catharine Luo, Anthony B. Ullman, John J. Hay, and Luke A. Sobota.

Paul M. Levine, James J. East, Jr., and Carlos Ramos-Mrosovsky were on the brief for amicus curiae International Scholars in support of appellees.

Before: Pillard and Pan, Circuit Judges, and Rogers, Senior Circuit Judge.

Rogers, Senior Circuit Judge:

The Government of Romania seeks relief from three judgments stemming from the confirmation of an international arbitral award on the ground that the district court lacked subject matter jurisdiction under the arbitration exception to the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1605(a)(6). It contends that the bilateral agreement to arbitrate underlying the award is invalid under European Union ("EU") law as shown by two decisions of the EU's highest court in 2022. The district court denied Romania's motion for relief pursuant to Federal Rule of Civil Procedure 60(b) on the grounds that EU law was inapplicable, because the dispute preceded Romania's accession to the EU in 2007 and neither EU decision on which Romania relies retroactively rendered the arbitration agreement void when it joined the EU. For the following reasons, the court affirms the denial of the motion.

I.

The underlying foreign arbitral award stemmed from adoption by the Government of Romania of tax incentives to encourage investment in certain economically "disfavored" regions of the country. According to Micula et al. v. Government of Romania, ICSID Case No. ARB/05/20, Award ¶ 145 (Dec. 11, 2013) ("Arbitral Award"), the Micula brothers and associated entities (hereinafter, "Miculas") built food production facilities in Romania relying on these incentives, which Romania stated would remain in place until at least 2009. See id. ¶¶ 133, 145, 152, 156, 166-72, 677, 686, 689. After Romania repealed most of the tax incentives in February 2005 in preparation to join the EU, see id. ¶¶ 132, 234-39, 244, the Miculas filed for arbitration in July 2005 under the rules of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, March 18, 1965, 17 U.S.T. 1270, 575 U.N.T.S. 159 ("ICSID"). As Swedish nationals, the Miculas invoked arbitral jurisdiction pursuant to a 2002 bilateral investment treaty between Romania and EU member Sweden ("Sweden-Romania BIT"). Arbitral Award ¶¶ 1, 226, 247. Article 7 of the treaty provides for ICSID international arbitration of investment disputes.

In December 2013, an ICSID tribunal awarded the Miculas 376,433,229 Romanian Lei in damages, plus interest, for breach of the Sweden-Romania BIT. Arbitral Award ¶ 1329. Applying the Sweden-Romania BIT, id. ¶¶ 288, 318, the tribunal ruled that EU law did not govern the dispute because although Romania joined the EU in 2007 during the pendency of the arbitral proceedings, it was not part of the EU and "not properly subject to EU law" during the events underlying the dispute. Id. ¶¶ 319, 340. Romania petitioned unsuccessfully in 2014 to annul the award as inconsistent with EU law.

In March 2015, while the annulment petition was pending, the European Commission determined that Romania's satisfaction of the award as an EU member would constitute anticompetitive "state aid" under EU law, and forbid Romania from paying the award. The Miculas sought review in the General Court of the Court of Justice of the European Union ("General Court"), a constituent court of the Court of Justice of the European Union ("CJEU"), the EU's highest court. In June 2019, the General Court invalidated the Commission decision, ruling that because the award compensated the Miculas for Romania's pre-EU conduct, the Commission lacked the "competence" to review whether paying it would constitute state aid. Eur. Food S.A. v. Eur. Comm'n, Nos. T-624/15, T-694/15, T-704/15 (18 June 2019) ("2019 General Court") ¶¶ 66-67, 74-75, 79-80, 90-95. Romania appealed in August 2019 to the CJEU.

Meanwhile, in November 2017, the Miculas petitioned the United States District Court for the District of Columbia to enforce the award pursuant to 22 U.S.C. § 1650a.¹ The district court confirmed the award in September 2019 and entered judgment for $356,439,727, net of payments made and with interest. Micula v. Government of Romania, 404 F. Supp. 3d 265, 270, 285 (D.D.C. 2019) ("2019 Confirmation"). The district court exercised jurisdiction pursuant to the FSIA's exception to sovereign immunity for proceedings to "confirm an award made pursuant to [ ] an agreement to arbitrate," 28 U.S.C. § 1605(a)(6). Romania challenged subject matter jurisdiction, arguing that the arbitration clause in the Sweden-Romania BIT was void as of Romania's 2007 accession because EU law prohibits intra-EU agreements to arbitrate EU law disputes between a member state and the citizens of another member state. The district court ruled EU law was inapplicable because the parties' dispute predated Romania's EU membership and the award did not "relate to the interpretation or application of EU law." 2019 Confirmation, 404 F. Supp. 3d at 279-80.

This court affirmed. Micula v. Government of Romania, 805 F. App'x 1 (D.C. Cir. 2020) ("Micula I"). On appeal, Romania conceded jurisdiction, see Br. of Resp't-Appellant, Micula v. Government of Romania, No. 19-7127 at 1, while the European Commission continued to argue that EU law voided Romania's agreement to arbitrate, see Br. of Amicus Curiae European Commission, Micula v. Government of Romania, No. 19-7127 at 7-11. The court held that, "[a]s Romania now agrees, the district court properly invoked the [FSIA] exception for actions to enforce arbitration awards." Micula I, 805 F. App'x at 1. Regarding the Commission's jurisdictional arguments, the court observed that, "as the district court carefully explained, Romania did not join the EU until after the underlying events here, so the arbitration agreement applied" regardless of Romania's subsequent accession to the EU. Id. Later proceedings led to judgments for discovery sanctions and accrued sanctions that this court affirmed. See Micula v. Government of Romania, No. 20-7116, 2022 WL 2281645 (D.C. Cir. Jun. 24, 2022); Micula v. Government of Romania, No. 21-7139, 2023 WL 2127741 (D.C. Cir. Feb. 21, 2023).

In March 2022, Romania sought relief from the 2019 Confirmation, and ensuing sanctions, pursuant to Clauses (4), (5), and (6) of Federal Rule of Civil Procedure 60(b), arguing that two decisions of the EU's highest court in 2022 held, "[i]n unequivocal terms," that "the agreement to arbitrate in the [Sweden-Romania] BIT was void the moment that Romania entered the EU." Romania's Mem. of Supp. of Mot. for Relief from Judg. (Mar. 29, 2022) at 5. As relevant, in January 2022, the CJEU overturned the 2019 General Court decision and held that the European Commission was "competent" to evaluate whether Romania's post-accession payment of the award would constitute prohibited "state aid." Eur. Comm'n v. Eur. Food S.A., ECLI:EU:C:2022:50 (25 Jan. 2022) ("January 2022 CJEU"). In September 2022, the CJEU held that because the Commission has determined satisfying the award would be state aid, EU courts cannot enforce it. Romanian Air Traffic Serv. Admin. v. Eur. Food S.A., ECLI:EU:C:2022:749 (21 Sep. 2022) ("September 2022 CJEU"). The district court denied the Rule 60(b) motion, concluding that the CJEU Decisions did not hold Romania's accession retroactively voided its pre-EU consent to arbitrate and "the jurisdictional fact . . . that there was a valid agreement to arbitrate before Romania acceded to the EU — remains undisturbed." Micula v. Romania, Mem. Op. at 12-15 (D.D.C. Dec. 22, 2022) ("2022 Mem. Op."), 2022 WL 18356669, at *7; Order (Dec. 22, 2022). Romania appeals.

II.

Romania contends, as it did in the district court, that the district court erred in denying relief under Rule 60(b)(4), (b)(5), and (b)(6), and on appeal invokes the principle of international comity. Its brief does not distinguish between the three district court judgments and appears to reason that if the court sets aside the 2019 Confirmation, then the sanctions in 2020 and 2021 to enforce earlier confirmation should also be set aside. Inasmuch as the Miculas also do not draw a distinction between the judgments, the court will address only whether the district court erred in denying relief from the 2019 Confirmation. Rule 60(b) proceedings are "subject to only limited and deferential appellate review." Gonzalez v. Crosby, 545 U.S. 524, 535, 125 S.Ct. 2641, 162 L.Ed.2d 480 (2005) (citation omitted). Romania fails to meet its burden to show error by the district court.

A.

Rule 60(b)(4) provides for relief when a judgment is "void." FED. R. CIV. P. 60(b)(4). A judgment is "not void . . . simply because it is or may have been erroneous." United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 270, 130 S.Ct. 1367, 176 L.Ed.2d 158 (2010). Where a jurisdictional defect is alleged, relief is usually reserved "only for the exceptional case in which the court that rendered judgment lacked even an arguable basis for jurisdiction." Id. at 271, 130 S.Ct. 1367 (internal quotations omitted). Appellate review of a district court's "arguable basis" ruling is de novo. Lee Mem'l Hosp. v. Becerra, 10 F.4th 859, 863 (D.C. Cir. 2021).

Romania maintains that the district court erred in applying the ...