Blue Ridge Invs., LLC v. Republic of Argentina

• Decision Date: 30 September 2012
• Docket Number: No. 10 Civ. 153 (PGG).,10 Civ. 153 (PGG).
• Citation: 902 F.Supp.2d 367
• Parties: BLUE RIDGE INVESTMENTS, LLC, Petitioner, v. The REPUBLIC OF ARGENTINA, Respondent.
• Court: U.S. District Court — Southern District of New York

902 F.Supp.2d 367

BLUE RIDGE INVESTMENTS, LLC, Petitioner,

v.The REPUBLIC OF ARGENTINA, Respondent.

No. 10 Civ. 153 (PGG).

United States District Court, S.D. New York.

Sept. 30, 2012.

Aryeh S. Portnoy, John Nelson Thomas, Birgit Kurtz, Crowell & Moring LLP, New York, NY, Theodore R. Posner, Weil Gotshal & Manges LLP, Washington, DC, for Petitioner.

Edward Scarvalone, Doar, Rieck, Kaley & Mack, New York, NY, for Respondent.

MEMORANDUM OPINION & ORDER

PAUL G. GARDEPHE, District Judge.

On January 8, 2010, Petitioner Blue Ridge Investments, L.L.C. (“Blue Ridge”) filed the instant petition to confirm an arbitral award rendered pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the “ICSID Convention” or the “Convention”). On June 22, 2011, Respondent Republic of Argentina (“Argentina”) moved, pursuant to Federal Rules of Civil Procedure 12(b)(1), (2), and (6), to dismiss the petition for lack of subject matter and personal jurisdiction under the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. §§ 1604–1607 (2006), and for failure to state a claim upon which relief can be granted. For the reasons stated below, Respondent's motion to dismiss will be DENIED.

BACKGROUND

On July 26, 2001, CMS Gas Transmission Company (“CMS”) filed an arbitration claim against Argentina ¹ with the InternationalCentre for the Settlement of Investment Disputes (the “ICSID”).² (Pet. ¶ 6) The dispute was arbitrated before an ICSID tribunal, and on May 12, 2005, the ICSID tribunal issued a final award in CMS's favor in the amount of $133.2 million (the “Award”). ( Id. ¶ 7) “The tribunal found that Argentina [had] breached its obligations to CMS, as a U.S.-protected investor in Argentina, under the bilateral investment treaty between the U.S. and Argentina and the ICSID Convention.” ( Id.)

On September 8, 2005, Argentina filed an application with the Secretary–General of ICSID seeking annulment of the Award. ( Id. ¶ 8) On September 25, 2005, the ICSID Annulment Committee “confirmed Argentina's obligation to pay CMS $133.2 million plus interest in compensation, holding that ‘payment by Argentina of the sum awarded is ... obligatory.’ ” ( Id.) Argentina has not paid any portion of the award. ( Id. ¶¶ 12–13)

Blue Ridge, a Delaware corporation, is the purchaser and assignee of the Award. ( Id. ¶ 4) On June 5, 2008, Blue Ridge notified Argentina that it was the successor-in-interest to CMS because of the purchase and assignment. ( Id. ¶ 1)

DISCUSSION

Defendant moves to dismiss under Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction, under Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction, and under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted.³ A claim is “properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000).

“In the context of a Rule 12(b)(1) challenge to jurisdiction under the FSIA, ... the district court ‘must look at the substance of the allegations' to determine whether one of the exceptions to the FSIA's general exclusion of jurisdiction over foreign sovereigns applies.” Robinson v. Gov't of Malaysia, 269 F.3d 133, 140 (2d Cir.2001) (quoting Cargill Int'l S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1019 (2d Cir.1993)). The Second Circuit has described the parties' evidentiary burdens as follows: “The defendant must first ‘present[ ] a prima facie case that it is a foreign sovereign.’ ” Id. at 141 n. 7 (quoting Cargill Int'l, 991 F.2d at 1016). The plaintiff then “has the burden of going forward with evidence showing that, under exceptions set forth in the FSIA, immunity should not be granted, although the ultimate burden of persuasion remains with the alleged foreign sovereign.” Id. at 141 (quoting Cargill Int'l, 991 F.2d at 1016).

In other words, in assessing whether a plaintiff has sufficiently alleged or profferedevidence to support jurisdiction under the FSIA, a district court must review the allegations in the complaint, the undisputed facts, if any, placed before it by the parties, and—if the plaintiff comes forward with sufficient evidence to carry its burden of production on this issue—resolve disputed issues of fact, with the defendant foreign sovereign shouldering the burden of persuasion.

Id.⁴

A Rule 12(b)(6) motion challenges the legal sufficiency of pleaded claims. “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). To meet this standard, a complaint's factual allegations must permit the Court, “draw[ing] on its judicial experience and common sense,” “to infer more than the mere possibility of misconduct.” Id. at 679, 129 S.Ct. 1937. “In considering a motion to dismiss ... the court is to accept as true all facts alleged in the complaint,” Kassner v. 2nd Ave. Delicatessen Inc., 496 F.3d 229, 237 (2d Cir.2007) (citing Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 87 (2d Cir.2002)), and must “draw all reasonable inferences in favor of the plaintiff.” Id. (citing Fernandez v. Chertoff, 471 F.3d 45, 51 (2d Cir.2006)). For purposes of a motion to dismiss, the “complaint is deemed to include any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference,” and the court may consider any document “which is integral to the complaint.” Int'l Audiotext Network, Inc. v. Am. Tel. and Telegraph Co., 62 F.3d 69, 72 (2d Cir.1995).

I. THE COURT HAS SUBJECT MATTER JURISDICTION

The Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1602, et seq., is “the sole basis for obtaining jurisdiction over a foreign state” in United States courts. Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 443, 109 S.Ct. 683, 102 L.Ed.2d 818 (1989). The FSIA provides that a “foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607 of this chapter.” 28 U.S.C. § 1604. Accordingly, pursuant to the FSIA, “a foreign state is presumptively immune from the jurisdiction of United States courts....” Saudi Arabia v. Nelson, 507 U.S. 349, 355, 113 S.Ct. 1471, 123 L.Ed.2d 47 (1993). However, “[t]hat presumption can be overcome if a plaintiff shows that one of the exceptions to immunity under 28 U.S.C. §§ 1605–1607 applies.” Funnekotter v. Republic of Zimbabwe, No. 09 Civ. 8168(CM), 2011 WL 666227, at *2 (S.D.N.Y. Feb. 10, 2011).

Blue Ridge argues that two exceptions to sovereign immunity apply here: (1) the exception for explicit or implicit waivers of immunity under 28 U.S.C. § 1605(a)(1); and (2) the exception for confirmation of arbitral awards under 28 U.S.C. § 1605(a)(6). (Petr. Opp. Br. 6) Argentina argues that it has not waived sovereign immunity, stating that (1) “[c]onsenting to arbitrate before an ICSID tribunal hardly constitutes proof of a foreign state's intent to waive immunity to suit in United States courts” under Section 1605(a)(1); and (2) there was no waiver under Section 1605(a)(6) because “Argentina did not make an agreement to arbitrate ‘with’ ... [or] ‘for the benefit of’ Petitioner.” (Resp. Br. 11; Resp. Reply Br. 2)

A. Implied Waiver Exception

Under Section 1605(a)(1),

[a] foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case ... in which the foreign state has waived its immunity either explicitly or by implication....

28 U.S.C. § 1605(a)(1).

The Second Circuit has cautioned that “the implied waiver provision of Section 1605(a)(1) must be construed narrowly,” Shapiro v. Republic of Bolivia, 930 F.2d 1013, 1017 (2d Cir.1991), and “courts have been reluctant to find an implied waiver where the circumstances were not ... unambiguous.” Id. Implied waiver is commonly found in cases involving the enforcement of arbitration awards, however, so long as the award is rendered pursuant to a convention to which the foreign state is a signatory, and the convention provides for recognition and enforcement of the award in contracting states. See, e.g., Seetransport Wiking Trader Schiffarhtsgesellschaft MBH & Co. v. Navimpex Centrala Navala, 989 F.2d 572, 578–79 (2d Cir.1993); Liberian E. Timber Corp. v. Gov't of the Republic of Liberia ( “LETCO” ), 650 F.Supp. 73, 76 (S.D.N.Y.1986); M.B.L. Int'l Contractors, Inc. v. Republic of Trinidad & Tobago, 725 F.Supp. 52, 55–56 (D.D.C.1989).

In Seetransport, the Second Circuit found an implied waiver where a foreign state was a signatory to the Convention on the Recognition and Enforcement of Arbitral Awards, holding that “when a country becomes a signatory to the Convention, by the very provisions of the Convention, the signatory State must have contemplated enforcement actions in other signatory States.” Seetransport, 989 F.2d at 578. Similarly, in LETCO, Judge Weinfeld found that “Liberia, as a signatory to the [ICSID] Convention, waived its sovereign immunity in the United States with respect to the enforcement of any arbitration award entered pursuant to the Convention.”LETCO, 650 F.Supp. at 76. Judge Weinfeld reasoned that “Liberia clearly contemplated the involvement of the courts of any of the Contracting States, including the United States as a signatory to the Convention, in enforcing the pecuniary obligations of the award.” Id.

Here, Argentina and the United States are both Contracting States to the ICSID Convention.⁵ Pursuant to Article 54 of the Convention, “[e]ach Contracting State shall recognize an award rendered pursuant to th[e] Convention as binding and enforce the pecuniary...