864 F.3d 172 (2nd Cir. 2017), 14-597, Thai-Lao Lignite (Thail.) Co. v. Goverment of the Lao People's Democratic Republic

Docket Nº:14-597, 14-1052, 14-1497
Citation:864 F.3d 172
Opinion Judge:Susan L. Carney, Circuit Judge.
Party Name:THAI-LAO LIGNITE (THAILAND) CO., LTD., HONGSA LIGNITE (LAO PDR) CO., LTD., Petitioners-Appellants--Cross-Appellees, v. GOVERNMENT OF THE LAO PEOPLE'S DEMOCRATIC REPUBLIC, Respondent-Appellee--Cross-Appellant
Attorney:JAMES E. BERGER (Charlene C. Sun, J. Emmett Murphy, Nilufar Hossain, Kerianne Tobitsche, on the brief), King & Spalding LLP, New York, NY, for Petitioners-Appellants--Cross-Appellees. ROBERT K. KRY (Steven F. Molo, Joel M. Melendez, MoloLamken LLP, New York, NY; David J. Branson, Anthony F. King,...
Judge Panel:Before: KATZMANN, Chief Judge, POOLER, and CARNEY, Circuit Judges.
Case Date:July 20, 2017
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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864 F.3d 172 (2nd Cir. 2017)

THAI-LAO LIGNITE (THAILAND) CO., LTD., HONGSA LIGNITE (LAO PDR) CO., LTD., Petitioners-Appellants--Cross-Appellees,

v.

GOVERNMENT OF THE LAO PEOPLE'S DEMOCRATIC REPUBLIC, Respondent-Appellee--Cross-Appellant

Nos. 14-597, 14-1052, 14-1497

United States Court of Appeals, Second Circuit

July 20, 2017

Argued: April 1, 2015.

Page 173

Appeal from orders of the United States District Court for the Southern District of New York (Wood, J.), vacating its August 3, 2011 judgment enforcing an arbitral award (the " Award" ) against the Government of the Lao People's Democratic Republic (" Laos" ), and denying the requests of Petitioners-Appellants Thai-Lao Lignite (Thailand) Co., Ltd. (" TLL" ), and Hongsa Lignite (Lao PDR) Co., Ltd. (" HLL" ), that Laos post security pending conclusion of the motion to vacate and any subsequent appeals, and that the court enforce an English judgment also entered on the same Award. The District Court entered its judgment enforcing the Award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, implemented by 9 U.S.C. § § 201-08 (the " New York Convention" or " Convention" ). It vacated its enforcement judgment upon Laos's motion under Federal Rule of Civil Procedure 60(b)(5), made over one year later, after a court in the Malaysian arbitral seat set aside the Award. The District Court did so on the understanding that in the circumstances of this case the Convention required it to give effect to the later Malaysian decision annulling the Award. Petitioners argue that, in so construing its obligations, the District Court exceeded the permissible bounds of its discretion. Had the court examined and accorded appropriate weight to standard Rule 60(b) considerations--including whether the motion was brought within a reasonable time, whether the moving party acted equitably, and whether vacatur strikes an appropriate balance between serving the ends of justice and preserving the finality of judgments--the District Court would have been bound, they argue, to deny Laos's vacatur motion. The untimeliness of Laos's appeal of the Award and Laos's allegedly inequitable conduct in Malaysia and before the District Court compel that result, they contend.

We agree with Petitioners that Rule 60(b)(5) applies to a district court's consideration of a motion to vacate a judgment under the circumstances of the instant case. In adjudicating a Rule 60(b)(5) motion to vacate a judgment enforcing an arbitral award that has, since the initial confirmation, been annulled in the primary jurisdiction, district courts should analyze the full range of Rule 60(b) considerations, including timeliness and the equities. In conducting this analysis, district courts ought to assign significant weight to the concerns of international comity recently articulated in Corporación Mexicana De Mantenimiento Integral, S. De R.L. De C.V. v. Pemex-Exploración Y Producción, 832 F.3d 92 (2d Cir. 2016), cert. dismissed, 137 S.Ct. 1622, 197 L.Ed.2d 746 (2017). In the instant case, however, consideration of these factors would not have materially changed the outcome, especially in light of the District Court's explanations of its rulings granting vacatur and denying sanctions. We therefore AFFIRM the District Court's decision to vacate its earlier judgment enforcing the Award.

We further decide that the District Court committed no abuse of discretion by denying Petitioners' requests that Laos be required to post security during the pendency of its motion and any subsequent appeals and that the court enforce the English judgment. Accordingly, we AFFIRM these two orders as well.

JAMES E. BERGER (Charlene C. Sun, J. Emmett Murphy, Nilufar Hossain, Kerianne Tobitsche, on the brief), King & Spalding LLP, New York, NY, for Petitioners-Appellants--Cross-Appellees.

ROBERT K. KRY (Steven F. Molo, Joel M. Melendez, MoloLamken LLP, New York, NY; David J. Branson, Anthony F. King, Tiana A. Bey, King Branson LLC, Bethesda, MD; Anthony J. Hatab, Dressel & Hatab, P.C., New York, NY, on the brief), for Respondent-Appellee--Cross-Appellant.

Before: KATZMANN, Chief Judge, POOLER, and CARNEY, Circuit Judges.

OPINION

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Susan L. Carney, Circuit Judge.

This case requires us to address how a district court should adjudicate a motion to vacate a judgment that it has entered enforcing a foreign arbitral award, when that award has later been set aside by courts in

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the arbitral seat. In particular, we consider the interplay between Federal Rule of Civil Procedure 60(b)(5), which permits district courts to " relieve a party . . . from a final judgment" when the judgment " is based on an earlier judgment that has been reversed or vacated," on the one hand, and the standards for declining to enforce an arbitral award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, on the other.

Briefly, the question arises in the following context. In 2007, Petitioners Thai-Lao Lignite (Thailand) Co., Ltd. (" TLL" ) and its subsidiary, Hongsa Lignite (Lao PDR) Co., Ltd. (" HLL" ) (collectively, " Petitioners" ) submitted to arbitration in Malaysia a commercial dispute arising from the terminations by the Government of the Lao People's Democratic Republic (" Laos" ) of contracts granting TLL rights to mine lignite (a soft coal) in the Hongsa region of Laos and to build a major lignite-burning power plant there--an extensive project undertaken during the early 1990s. In late 2009, a duly convened arbitral panel found Laos in breach and awarded Petitioners approximately $57 million as compensation for their losses (the " Award" ). After the period for challenging the Award in Malaysia expired, Petitioners began enforcement actions against Laos in the United States, the United Kingdom, and France under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, implemented by 9 U.S.C. § § 201-08 (the " New York Convention" or " Convention" ). Their enforcement efforts succeeded in the United States and the United Kingdom, resulting first in an August 2011 judgment in the United States District Court for the Southern District of New York (the " August 2011 judgment" ) and, later, a November 2012 judgment in the High Court of Justice of England and Wales (the " English judgment" ).

In October 2010, almost one year after the Award was issued and nine months after a challenge was due, Laos moved in Malaysia for an extension of time within which to file its request to set aside the Award. The Malaysian courts eventually granted Laos's motion and then, in 2012, set aside the Award. Returning to the United States with the Malaysian judgment in hand, Laos moved under Federal Rule of Civil Procedure 60(b)(5) to vacate the District Court's August 2011 judgment enforcing the Award.

Rule 60(b) provides that, " [o]n motion and just terms, the court may relieve a party . . . from a final judgment" for certain specified reasons, one of which is set forth in Rule 60(b)(5): that " the judgment . . . is based on an earlier judgment that has been reversed or vacated." Fed.R.Civ.P. 60(b). Petitioners urged the District Court to deny Laos's motion to vacate, citing (among other conduct) Laos's delay in Malaysia in challenging the Award and its dilatory tactics in discovery matters arising in the U.S. litigation--conduct that Petitioners argued was so egregious that it should bar Laos from obtaining the equitable relief of vacatur.

The District Court rejected Petitioners' arguments, concluding that the New York Convention left it with exceedingly limited discretion: in essence, it was bound to give effect to the Malaysian annulment unless doing so would offend basic standards of justice in the United States. Finding that neither Laos's conduct nor anything in the Malaysian courts' reasoning so tainted the Malaysian order such that vacatur would offend fundamental standards of justice, the District Court granted Laos's Rule 60(b)(5) motion. In related rulings, the District Court also denied Petitioners' later application to enforce the English judgment,

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on grounds that the English judgment conflicted with the presumptively dominant Malaysian judgment, and it rejected Petitioners' request for security from Laos to protect their interest in the Award during the pendency of its Rule 60(b) motion and any subsequent appeals.

Petitioners now appeal these orders. Because our determination of this appeal rests in part on our decision in Corporación Mexicana de Mantenimiento Integral, S. de R.L. de C.V. v. Pemex-Exploración y Producción (" Pemex " ), we have held our ruling in this matter pending our decision and resolution of the petition for certiorari in that case. 832 F.3d 92 (2016), cert...

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