Belize Soc. Dev. Ltd. v. Gov't of Belize

• Decision Date: 11 December 2013
• Docket Number: Civil Case No. 09–2170 (RJL)
• Citation: 5 F.Supp.3d 25
• Parties: Belize Social Development Limited, Petitioner, v. The Government of Belize, Respondent.
• Court: U.S. District Court — District of Columbia

5 F.Supp.3d 25

Belize Social Development Limited, Petitioner,

v.The Government of Belize, Respondent.

Civil Case No. 09–2170 (RJL)

United States District Court, District of Columbia.

December 11, 2013

Joseph S. Hall, Kenneth Chris Todd, Kellogg, Huber, Hansen, Todd, Evans & Figel, PLLC, Washington, DC, Dana C. MacGrath, Louis B. Kimmelman, Sidley Austin, LLP, New York, NY, for Petitioner.

Creighton R. Magid, Dorsey & Whitney LLP, Washington, DC, Juan C. Basombrio, Dorsey & Whitney LLP, Costa Mesa, CA, for Respondent.

MEMORANDUM OPINION [# # 1, 15, 47]

RICHARD J. LEON, United States District Judge

Petitioner Belize Social Development Limited (“petitioner” or “BSDL”) brings this action against respondent the Government of Belize (“respondent” or “GOB”), seeking the confirmation and enforcement of a foreign arbitral award pursuant to § 207 of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 207, and Article III of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention” or “N.Y. Conv.”).¹ Before the Court are petitioner's Petition to Confirm Arbitration Award and to Enter Judgment [Dkt. # 1] and respondent's Motion to Stay Action or, in the Alternative, Dismiss Petition [Dkt. # 15]. Upon consideration of the pleadings, relevant law, and the entire record, the petition to confirm and enter judgment is GRANTED, and the motion to stay or dismiss is DENIED.

FACTUAL BACKGROUND

A. Accommodation Agreements

On September 19, 2005, respondent GOB and Belize Telecommunications Limited (“BTL”) ² entered into the first of four “Government Telecommunications Accommodation Agreement[s] ... to improve telecommunications for the people of Belize and better accommodate the GOB's telecommunications needs.” Pet'r's Mem. of Points and Authorities in Supp. of Pet. to Confirm Arb. Award & Enter J. (“Pet'r's Mem.”) at 2 [Dkt. # 1–1]; Resp't's Mem. in Supp. of Mot. to Stay Action or, in the Alt., Dismiss Pet. (“Resp't's Mem.”) at 5–6 [Dkt. # 15]. As part of the agreements (hereinafter, “original agreements”), BTL would acquire certain properties owned by GOB for 19,200,000 Belize dollars. Pet'r's Mem. at 2. In exchange, GOB would give BTL preferential tax treatment, exempt BTL from import duties on goods and equipment, guarantee BTL a minimum rate of return on investments, pay any shortfall that may occur between the minimum rate of return and the actual rate of return, and allow BTL to control the use of “Voice Over Internet Protocol.” Id.; see also Pet. to Confirm Arb. Award & Enter J., Ex. A (“Final Award” or “LCIA Award”) at 20–23 [Dkt. # 1–3] (explaining class license holders and their customers were not permitted to use voice over internet protocol services unless permitted by the individual license holder (BTL)).

The Accommodation Agreements also contained a clause which provided that any dispute would be referred to and resolved by arbitration under the London Court of International Arbitration (“LCIA”) Rules. Pet'r's Mem. at 4. Over the next few years, the parties amended the original agreement three times and on May 29, 2007, under the third agreement, Belize Telemedia Limited (“Telemedia”) “assumed all of BTL's rights and obligations under the Accommodation Agreement.” Id. at 3.

On February 8, 2008, Dean Barrow was appointed the new Prime Minister of Belize and his administration refused to acknowledge Telemedia's rights as set forth in the Accommodation Agreements or to comply with its obligations under the agreements. Id. at 5. Telemedia, on the other hand, complied with its obligations under the Accommodation Agreements by purchasing GOB properties for 19,200,000 Belize dollars. Id.

B. Arbitration Proceedings in the LCIA

Telemedia submitted a request for arbitration to the LCIA on May 9, 2008, claiming multiple breaches of the Accommodation Agreements. Pet'r's Mem. at 6. The LCIA appointed a Tribunal comprised of three distinguished arbitrators to govern the arbitration proceedings. Id. at 7. GOB refused to participate in the arbitration proceedings, id. at 8; Resp't's Prelim. Resp. at 6, and on March 18, 2009, followinga three day evidentiary hearing, “the Tribunal unanimously ruled in favor of Telemedia and issued its Final Award,” which granted Telemedia both declaratory and monetary relief, Pet'r's Mem. at 8; Resp't's Mem. at 8. The Tribunal found that: (i) the Accommodation Agreements are legal and binding under Belize law, (ii) “GOB ... violated numerous provisions of the Accommodation Agreement[s],” and (iii) “Telemedia was entitled to relief.” Pet'r's Mem. at 9.

Two days after the Tribunal issued its Final Award, on March 20, 2009, BSDL was created in the British Virgin Islands. Resp't's Prelim. Resp. at 7. That same day, Telemedia assigned to BSDL the monetary portion of the Tribunal's Final Award, id. at 7–8, thereby allowing BSDL “to enforce and receive the monetary portion of the Final Award,” Pet'r's Mem. at 9.

C. Belize Litigation and GOB Legislation

In Belize, GOB filed a lawsuit against Telemedia on April 6, 2009, Pet'r's Mem. in Opp'n to Resp't's Mot. to Stay or Dismiss and in Supp. of Pet. To Confirm Arb. Award (“Pet'r's Suppl. Mem.”) at 3 [Dkt. # 45], seeking a declaratory judgment that the Tribunal's arbitration award is “unenforceable and the Accommodation Agreements are invalid as contrary to Belize law and public policy,” Resp't's Prelim Resp. at 8.³ On July 20, 2009, the Belize Supreme Court issued a preliminary injunction barring Telemedia and BSDL from enforcing the arbitration award until after the court issued its ruling in the pending action. Id. at 9. The parties dispute whether that injunction remains valid after the April 2009 lawsuit was discontinued and a February 2012 lawsuit instituted in its place. See Resp't's Suppl. Br. at 3 [Dkt. # 39] (claiming that “the injunction remains in place”); Pet'r's Suppl. Mem. at 4 (claiming that “the Belize Supreme Court ordered ... the discharge of the injunction”).⁴

GOB also enacted legislation in 2009 to assume control over telecommunications in Belize and obtained 94% of Telemedia's shares as part of that legislation. Resp't's Prelim. Resp. at 9; Resp't's Suppl. Br. at 12. In 2010, the Belize Supreme Court of Judicature (Amendment) Act (“SCJA”) made it a criminal offense punishable by fine, imprisonment of at least five years, or both “to disobey or fail to comply with an injunction” issued by the Belize Supreme Court. Pet'r's Suppl. Mem. at 5. GOB also made it a crime for BSDL and its counsel to respond to the pleadings that GOB had already filed in this case. Id. In August 2012, “the Belize Court of Appeal struck down several sections of the SCJA as unconstitutional,” including the sections giving SCJA extraterritorial effect ⁵ and the sections imposing criminal penalties. Id. at 6.

D. United States Litigation

BSDL filed its petition in this Court on November 17, 2009. On October 18, 2010, this court stayed the proceeding pending resolution of the case in Belize. Id. at 7. BSDL appealed the stay order and, alternatively, sought a writ of mandamus. Id.

The United States Court of Appeals for the District of Columbia Circuit granted the writ of mandamus and held that this court's indefinite “stay order as issued exceeded the proper exercise of authority of the district court.” Belize Soc. Dev. Ltd. v. Gov't of Belize, 668 F.3d 724, 727 (D.C.Cir.2012), cert denied,133 S.Ct. 274 (2012). In addition, the D.C. Circuit held that this case is governed by the New York Convention, and litigation in Belize is irrelevant to enforcement of the arbitration award in this proceeding. See id. at 730 (“[T]he pending action in Belize has no preclusive effect on the district court's disposition of the petition to enforce pursuant to the FAA and the New York Convention....”). The case was remanded, and I was instructed to “conduct further proceedings not inconsistent with [the] opinion.” Id. at 734 (internal quotation marks omitted).

LEGAL ANALYSIS

At oral argument, BSDL took the position that “in the world of foreign arbitration awards that are brought to the United States for confirmation under 9 USC section 207, this is what you would call run of the mill,” and that “the D.C. Circuit has given ... a very clear template as to what is to be done, because section 207 says that when an award is brought for confirmation, the District Court shall confirm unless one of the grounds for either stay or non-enforcement under the [New York] convention is established.” Tr. at 20. This is in line with my reading of our Circuit Court's opinion in this case:

[T]he FAA, by codifying the New York Convention, provides a carefully structured scheme for the enforcement of foreign arbitral awards and represents an “emphatic federal policy in favor of arbitral dispute resolution,” which “applies with special force in the field of international commerce.” The plain terms of the FAA instruct a district court reviewing a foreign arbitral award to “confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement ... specified in the [New York] Convention.”

Belize Soc. Dev. Ltd., 668 F.3d at 733 (quoting Mitsubishi Motors Corp. v. SolerChrysler–Plymouth, Inc., 473 U.S. 614, 631, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985), and 9 U.S.C. § 207).⁶

GOB nevertheless argues that, even after the Circuit Court's ruling, there are at least five distinct grounds on which I could dismiss the petition, including lack of subject matter jurisdiction, lack of standing, and forum non conveniens. See Resp't's Suppl. Br. at 126; Resp't's Mem. at 1545; Oral Arg. Tr. at 4–19. I am confident that if this case raised such significant jurisdictional and justiciability concerns, our Circuit Court would have flagged them, rather than emphasizing that “the district court's task [is] to review and grant BSDL's petition to confirm the Final Award absent a finding that an enumerated exception to enforcement specified in the New...