Chevron Corp. v. Republic of Ecuador, 13–7103.

• Decision Date: 04 August 2015
• Docket Number: No. 13–7103.,13–7103.
• Citation: 795 F.3d 200
• Parties: CHEVRON CORPORATION and Texaco Petroleum Company, Appellees v. The Republic of ECUADOR, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

795 F.3d 200

CHEVRON CORPORATION and Texaco Petroleum Company, Appellees

v.The Republic of ECUADOR, Appellant.

No. 13–7103.

United States Court of Appeals, District of Columbia Circuit.

Argued Jan. 12, 2015.

Decided Aug. 4, 2015.

Rehearing En Banc Denied Sept. 28, 2015.

Mark N. Bravin argued the cause for appellant. With him on the briefs were Eric M. Goldstein and Eric T. Werlinger.

Jeffrey S. Bucholtz argued the cause for appellees. With him on the brief were Brian Callanan, James P. Sullivan, Brian A. White, and Caline Mouawad.

Before: GARLAND, Chief Judge, and SRINIVASAN and WILKINS, Circuit Judges.

Opinion

Opinion for the Court filed by Circuit Judge WILKINS.

WILKINS, Circuit Judge:

For the last twenty years, the Republic of Ecuador and energy industry giant Chevron Corporation have been locked in a struggle involving a series of lawsuits related to an investment and development agreement. The dispute began in the Ecuadorian court system, where it languished unresolved for over a decade. It then proceeded to an international arbitration tribunal, whose verdict in Chevron's favor was appealed and sustained at all levels of the Dutch judiciary. The dispute made it to our shores in an action for confirmation of the arbitral award before the District Court for the District of Columbia. The District Court confirmed the arbitral award, prompting yet another appeal. We now affirm.

I.

In 1973, Chevron¹ and Ecuador signed an agreement allowing Chevron to develop Ecuadorian oil fields in exchange for providing below-market oil to the Ecuadorian government for domestic use. The deal was set to expire in 1992, and the parties were unable to agree to an extension. As the expiration date approached, Chevron filed several breach of contract suits against Ecuador. In 1995, Chevron and Ecuador signed a settlement agreement conclusively terminating all rights and obligations between the parties. The agreement provided for the continuation of the pending lawsuits.

In 1993, the United States and Ecuador signed a Bilateral Investment Treaty (“BIT”)—formally known as the Treaty Between the Government of the United States of America and the Government of the Republic of Ecuador for the Encouragement and Reciprocal Protection of Investment—which took effect in 1997. Under this treaty, Ecuador made a standing offer to American investors to arbitrate disputes involving investments that existed on or after the treaty's effective date. J.A. 297, 300. For purposes of the BIT, the definition of “investment” included “a claim to money or a claim to performance having economic value, and associated with an investment.” J.A. 294.

In 2006, Chevron commenced an international arbitration action before a three-member tribunal based out of The Hague, claiming that Ecuador had violated the BIT by failing to resolve its lawsuits in a timely fashion. Ecuador objected to the tribunal's jurisdiction, arguing that it had never agreed to arbitrate with Chevron. The basis of this objection was Ecuador's contention that Chevron's investments in Ecuador had terminated no later than 1995, two years prior to the entry into force of the BIT. The tribunal rejected the jurisdictional challenge, finding that Chevron's lawsuits were “investments” within the meaning of the BIT, and, after determining that Ecuador had delayed disposition of the lawsuits, ultimately decided against Ecuador on the majority of the breach of contract claims, awarding Chevron approximately $96 million. Ecuador challenged the award in the Dutch court system; the challenge was rejected by the District Court of The Hague, The Hague Court of Appeal, and the Dutch Supreme Court.

On July 27, 2012, Chevron petitioned the District Court to confirm the arbitral award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), which has been incorporated into the Federal Arbitration Act. See 9 U.S.C. §§ 201 –208. Ecuador raised three arguments in opposition: (1) that the District Court lacked subject-matter jurisdiction under the Foreign Sovereign Immunities Act (“FSIA”); (2) that confirmation should be denied under the New York Convention; and (3) that a stay should be granted until the Dutch Supreme Court could resolve the then-pending appeal of the award.

The District Court determined that it had subject-matter jurisdiction under 28 U.S.C. § 1605(a)(6), which provides that sovereign immunity does not prevent a suit to confirm an award made pursuant to an arbitration agreement governed by an international treaty, because the award was made pursuant to the BIT and governed by the New York Convention. J.A. 1427–28. The District Court rejected Ecuador's argument that the FSIA required the District Court to undertake a de novo analysis of whether the dispute was arbitrable under the BIT. J.A. 1428–29. The District Court reviewed the question of arbitrability, however, as part of its consideration of whether the confirmation should be denied under the New York Convention, J.A. 1430–45, and found that the parties had “clearly and unmistakably agreed” that the tribunal would resolve such questions. J.A. 1436. Having made this finding, the District Court engaged in a deferential review of the tribunal's arbitrability decision and determined that it was clearly supported by the text of the BIT. J.A. 1439. The District Court rejected Ecuador's argument that confirming the order was against public policy and denied the requested stay. J.A. 1439–46. Ecuador filed a timely appeal. We affirm.

II.

As a general matter, the FSIA grants foreign states immunity from the jurisdiction of the courts of the United States. 28 U.S.C. § 1604. In enacting the FSIA, however, Congress enumerated several exceptions to this jurisdictional restriction. These exceptions “provide[ ] the sole basis for obtaining jurisdiction over a foreign state in federal court.” Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 439, 109 S.Ct. 683, 102 L.Ed.2d 818 (1989) ; see also Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 488–89, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983). At issue in this case is the arbitration exception, which provides for federal court jurisdiction “in any case ... in which the action is brought, either to enforce an [arbitration] agreement made by the foreign state with or for the benefit of a private party ... or to confirm an award made pursuant to such an agreement to arbitrate, if ... the agreement or award is or may be governed by a treaty ... in force for the United States calling for the recognition and enforcement of arbitral awards.” 28 U.S.C. § 1605(a)(6).

The District Court concluded that the jurisdictional requirements of the FSIA were met because “the Award's own language indicates it was rendered pursuant to the BIT” and “the Award is clearly governed by the New York Convention.” Chevron Corp. v. Republic of Ecuador, 949 F.Supp.2d 57, 62 (D.D.C.2013). Ecuador argues that the District Court failed to determine in the first instance that an arbitration agreement existed, instead deferring to the judgment of the arbitrator. Had the District Court undertaken the correct analysis, the argument goes, it would have determined that Ecuador had never agreed to arbitrate its dispute with Chevron, thus denying the District Court jurisdiction to enforce the arbitral award. Chevron primarily argues that the statute permits jurisdiction so long as the plaintiff presents a non-frivolous claim that the foreign sovereign has consented to arbitration.

A.

There are two types of jurisdictional authorizations: (1) “jurisdiction [that] depends on particular factual propositions” and (2) “jurisdiction [that] depends on the plaintiff's asserting a particular type of claim.” Agudas Chasidei Chabad of U.S. v. Russian Fed'n, 528 F.3d 934, 940 (D.C.Cir.2008). Ecuador argues that the § 1605(a)(6) exception requires the District Court to make three findings: “(1) a foreign state has agreed to arbitrate; (2) there is an award based on that agreement; and (3) the award is governed by a treaty signed by the United States calling for the recognition and enforcement of arbitral awards.” Appellant's Br. at 23. Chevron argues that the exception allows jurisdiction any time a plaintiff asserts a non-frivolous claim involving an arbitration award. Appellee's Br. at 30–31.

For the most part, Ecuador has the better argument, and has identified the relevant jurisdictional facts. In most instances, the existence of an arbitration agreement is a “purely factual predicate[ ] independent of the plaintiff's claim.” Chabad, 528 F.3d at 940. Likewise, the existence of an award is a factual question that the District Court must resolve in order to maintain jurisdiction. If there is no arbitration agreement or no award to enforce, the District Court lacks jurisdiction over the foreign state and the action must be dismissed.²

As the plaintiff, Chevron bears the initial burden of supporting its claim that the FSIA exception applies. See id. “[T]his is only a burden of production; the burden of persuasion rests with the foreign sovereign claiming immunity, which must establish the absence of the factual basis by a preponderance of the evidence.” Id. Chevron has met its burden of production by producing the BIT, Chevron's notice of arbitration against Ecuador, and the tribunal's arbitration decision. Ecuador does not dispute the existence of the BIT, Chevron's notice, or the tribunal's arbitration decision, but instead challenges the District Court's conclusion that the BIT (or the combination of the BIT and Chevron's notice of arbitration) is an arbitration agreement between Ecuador and Chevron.

B.

Ecuador argues that the FSIA required the District Court to make a de novo determination of whether Ecuador's offer to arbitrate in the BIT encompassed Chevron's breach of contract claims. According to Ecuador, if Chevron's claims are not covered by the BIT, then Ecuador never agreed to arbitrate with Chevron,...