An ex parte proceeding in a U.S. court to “recognize,” “enforce,” or “confirm” an arbitration award against a foreign sovereign is improper. The U.S. Court of Appeals for the Second Circuit issued a lengthy and instructive decision to that effect in Mobil Cerro Negro, Ltd. v. Bolivarian Republic of Venez., 863 F.3d 96 (2d. Cir. 2017). Its lesson is that in the United States, the only way to enforce (or recognize or confirm) an arbitral award issued against a sovereign entity by the International Centre for Settlement of Investment Disputes (“ICSID”) (and probably otherwise as well) is in compliance with the Foreign Sovereign Immunities Act (“FSIA”).
(The distinctions between confirmation, recognition, and enforcement of arbitration awards were the subject of the Second Circuit’s decision in CBF Indústria de Gusa S/A v. AMCI Holdings, Inc., 850 F.3d 58, 72 (2d Cir. 2017), which this blog discussed in A Primer for Enforcement in the U.S. of Foreign-Issued Arbitration Awards (Courtesy of the Second Circuit).)
Thus, for example, a party seeking to enforce an arbitral award against a foreign sovereign must commence a proceeding in federal court in compliance with FSIA’s service of process and venue requirements. Consequently, in most cases, a proceeding to enforce an ICSID award against a foreign sovereign will have to be filed in the U.S. District Court for the District of Columbia. (28 U.S.C. §1391(f)(4) provides that a civil action may be brought “in the United States District Court for the District of Columbia if the action is brought against a foreign state.”)
The plaintiff in Mobil Cerro Negro ignored the FSIA procedures. After obtaining an ICSID award against the Bolivarian Republic of Venezuela (“Venezuela”) for $1.6 billion, that plaintiff filed an ex parte petition in the U.S. District Court for the Southern District of New York to recognize the award and enter judgment upon it. A judge granted the petition, without notice to Venezuela, and entered judgment in the full amount. The procedure adopted by that plaintiff and the District Court was based on the laws of the State of New York regarding summary procedures for recognizing and enforcing “foreign judgments.” (N.Y. C.P.L.R. §5401, et seq.)
The Second Circuit vacated that judgment because the requirements of the FSIA had not been met. Those requirements “serve Congress’s stated goals of promoting comity with other sovereigns and ensuring the United States’ consistency of approach with respect to federal courts’ interactions with...
