Blue Ridge Invs., L.L.C. v. Republic of Argentina
| Decision Date | 19 August 2013 |
| Docket Number | Docket No. 12–4139–cv. |
| Citation | 735 F.3d 72 |
| Parties | BLUE RIDGE INVESTMENTS, L.L.C., Petitioner–Appellee, v. REPUBLIC OF ARGENTINA, Respondent–Appellant. |
| Court | U.S. Court of Appeals — Second Circuit |
OPINION TEXT STARTS HERE
Edward Scarvalone (Gabriel Bottini, argued pro hac vice), Doar Rieck Kaley & Mack, New York, NY, for Republic of Argentina.
John N. Thomas (Clifton S. Elgarten, Birgit Kurtz, on the brief), Crowell & MoringLLP, New York, NY, for Blue Ridge Investments, L.L.C.
Before: CABRANES and B.D. PARKER, Circuit Judges.1
This appeal arises from an order of the United States District Court for the Southern District of New York (Paul G. Gardephe, Judge ) that denied a motion to dismiss filed by respondent-appellant the Republic of Argentina (“Argentina”). In that motion, Argentina sought dismissal, on, inter alia, foreign sovereign immunity grounds, of a petition to confirm an arbitration award filed by petitioner-appellee Blue Ridge Investments, L.L.C. (“Blue Ridge”). Because the denial of Argentina's motion to dismiss is an interlocutory order, we must first decide whether, and to what extent, we have jurisdiction to consider the issues raised in this appeal.
Argentina asserts that: (1) we have jurisdiction under the “collateral order doctrine” to consider whether the District Court erred in concluding that Argentina had waived its foreign sovereign immunity; and (2) we should exercise “pendent appellate jurisdiction” to consider whether the District Court erred in concluding that Blue Ridge, as an assignee, could state a claim to confirm the underlying award of the International Centre for the Settlement of Investment Disputes (“ICSID”). We conclude that we do have jurisdiction to consider the District Court's foreign sovereign immunity decision pursuant to the collateral order doctrine, but we decline to exercise pendent appellate jurisdiction over the District Court's decision that Blue Ridge could state a claim to confirm the ICSID award because that issue is not “inextricably intertwined” with the foreign sovereign immunity decision. See Swint v. Chambers Cnty. Comm'n, 514 U.S. 35, 50–51, 115 S.Ct. 1203, 131 L.Ed.2d 60 (1995).
Because our appellate jurisdiction is limited to reviewing the District Court's foreign sovereign immunity decision, we reach the merits of that issue only and hold that the District Court correctly found that Argentina waived its immunity from suit under two exceptions to the Foreign Sovereign Immunities Act: (1) the so-called implied waiver exception, described 28 U.S.C. § 1605(a)(1),2 and (2) the so-called arbitral award exception, described in 28 U.S.C. § 1605(a)(6).3
Accordingly, we affirm the September 30, 2012 order of the District Court insofar as it concluded that Argentina waived its foreign sovereign immunity, and we remand the cause to the District Court for further proceedings consistent with this opinion.
The following facts are drawn from the written May 12, 2005 Arbitration Award of the ICSID and, unless otherwise noted, are undisputed by the parties.
In 1989, Argentina undertook several economic reforms, including the privatization of several state-owned industries. One of those industries was the “gas transportation” industry. A consequence of this privatization was that Gas del Estado, a state-owned entity, was divided into two gas transportation companies and eight gas distribution companies; one of the new gas transportation companies was Transportadora de Gas del Norte (“TGN”). In 1992, investment in TGN (as well as in the other newly-created companies) was opened to investors. As relevant to this case, CMS Gas Transmission Company (“CMS”) purchased shares of TGN from the Argentine government in 1995, acquiring a 25% ownership interest in TGN.4
Pursuant to the legislation and regulations enacted during this period of “privatization” in Argentina, licensees of public utilities, like TGN, were able to adjust gas tariffs “every six months in accordance with the United States Producer Price Index.” Joint App'x 82. But in late 1999, following Argentina's economic crisis of the late 1990s,5 the Argentine government called a meeting “with representatives of the gas companies in order to discuss a temporary suspension of the [United States Producer Price Index] adjustment on gas tariffs.” Id. at 83. Although the gas companies agreed to a temporary suspension of the adjustment of gas tariffs for a period of six months, the agreement reached with the Argentine government provided that “the costs of the deferral [of the adjustment date] would be recouped” within a year.6Id. The Argentine government did not indemnify the losses, however, and instead froze the United States Producer Price Index adjustment of gas tariffs indefinitely. Argentina ultimately terminated the rights of licensees of public utilities to adjust tariffs at all.
On July 26, 2001, CMS initiated arbitration before an ICSID tribunal to recover the income lost by the decrease in gas tariff revenue following Argentina's suspension of the adjustment of gas tariffs. In particular, CMS asserted that Argentina had breached its obligations to CMS as a U.S. investor in Argentina, including the obligation to accord it “fair and equitable treatment.” See Treaty Concerning the Reciprocal Encouragement and Protection of Investment, U.S.-Arg., Nov. 14, 1991, S. Treaty Doc. No. 103–2 (1993) (hereinafter, “Treaty”). The Treaty holds Argentina to certain standards of conduct toward U.S. investors and provides for the resolution of certain disputes between U.S. investors and Argentina through arbitration administered by the ICSID.
On May 12, 2005, the ICSID tribunal entered an award in favor of CMS, requiring Argentina to pay compensation in the amount of $133.2 million plus interest (the “Award”). In particular, the ICSID tribunal found that Argentina “breached its obligations to accord [CMS] the fair and equitable treatment guaranteed in Article II(2)(a) of the [Bilateral Investment] Treaty and to observe the obligations entered into with regard to the investment guaranteed in Article II(2)(c) of the Treaty.” Joint App'x 206. On September 8, 2005, Argentina sought to have the Award annulled, but the ICSID Annulment Committee rejected Argentina's application and instead confirmed the Award.
In March 2008, CMS filed a “Petition to Enforce Foreign Arbitral Award” in the United States District Court for the Southern District of New York, and sought to attach certain Argentine assets. The proceedings took place before Judge Loretta A. Preska. During the course of that proceeding, Judge Preska determined that CMS had not identified the assets it sought to attach with the specificity required by the FSIA. As a result of that ruling, CMS filed a notice of voluntary dismissal without prejudice pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i).7
In June 2008, Blue Ridge notified Argentina that it had purchased CMS's interest in the Award and, on March 13, 2009, it filed a petition to confirm the Award in the Southern District of New York. The case was assigned to then-District Judge Gerard E. Lynch. In mid-August 2009, Blue Ridge informed Judge Lynch's chambers that it did not intend to move forward with the confirmation proceeding at that time, and wished to withdraw its petition without prejudice. On August 31, 2009, Judge Lynch, noting that the parties stated they had “reached a settlement in principle,” issued a so-called “thirty-day order,” which stated “that this action is dismissed without costs and without prejudice to restoring the action to the Court's calendar, provided the application to restore the action is made within thirty days.”
On January 8, 2010, Blue Ridge filed the present petition to confirm the Award pursuant to Article 54 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, Mar. 18, 1965, 17 U.S.T. 1270, 575 U.N.T.S. 159 (the “ICSID Convention”). Argentina then moved to dismiss the petition on several grounds, arguing that: (1) it was immune from suit pursuant to the FSIA; (2) Blue Ridge, as an assignee, could not state a claim under the ICSID Convention to confirm the Award; (3) the petition was barred by res judicata because Blue Ridge's prior confirmation petition had been dismissed with prejudice pursuant to the “thirty-day order” issued by Judge Lynch; and (4) the petition was time-barred under New York's applicable one-year statute of limitations. Judge Gardephe, now presiding, denied Argentina's motion to dismiss and rejected each of its arguments. See Blue Ridge Invs., LLC v. Republic of Argentina, 902 F.Supp.2d 367, 375 (S.D.N.Y.2012).
With regard to Argentina's foreign sovereign immunity defense, Judge Gardephe held that Argentina had waived its immunity from suit pursuant to two exceptions to the FSIA: (1) the implied waiver exception, see28 U.S.C. § 1605(a)(1), and (2) the arbitral award exception, see id. § 1605(a)(6). Blue Ridge Invs., 902 F.Supp.2d at 375. Specifically, he found that Argentina had waived its foreign sovereign immunity under the implied waiver exception because it had signed the ICSID Convention, “which provides for the automatic recognition and enforcement of awards in Contracting States.” Id. He also found that Argentina had waived its foreign sovereign immunity under the arbitral award exception because “Argentina's agreement to submit its dispute with CMS to [an] arbitration governed by the ICSID Convention constituted a waiver of immunity under Section 1605(a)(6)(B) with respect to [the] recognition and enforcement of the Award.” Id.
With regard to Argentina's other arguments, Judge Gardephe held that: (1) Blue Ridge, as an assignee, could state a claim to confirm the Award because nothing in the language of the ICSID Convention...
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