CONTI. TRANSFERT TECHNIQUE v. FED. GOV. OF NIGERIA, Civil Action No. 08-2026(PLF).

• Decision Date: 23 March 2010
• Docket Number: Civil Action No. 08-2026(PLF).
• Parties: CONTINTENTAL TRANSFERT TECHNIQUE LIMITED, Plaintiff, v. FEDERAL GOVERNMENT OF NIGERIA, et al., Defendants.
• Court: U.S. District Court — District of Columbia

697 F. Supp.2d 46

CONTINTENTAL TRANSFERT TECHNIQUE LIMITED, Plaintiff, v. FEDERAL GOVERNMENT OF NIGERIA, et al., Defendants.

Civil Action No. 08-2026(PLF).

United States District Court, District of Columbia.

March 23, 2010.

Joel A. Hankin, Melissa E. Byroade, Paul F. Doyle, Kelley, Drye & Warren, New York, NY, Shaun Michael Gehan, Kelley, Drye & Warren, LLP, Washington, DC, for Plaintiff.

David Ludwig, Dunlap, Grubb & Weaver, P.C., Leesburg, VA, Thomas Mansfield Dunlap, Dunlap, Grubb & Weaver, P.L.L.C., Washington, DC, Kenechukwu C. Okoli, Law Offices of K.C. Okoli, P.C., New York, NY, for Defendants.

OPINION

PAUL L. FRIEDMAN, District Judge.

This is an action to enforce an arbitral award issued in the United Kingdom under Nigerian law. The Clerk of this Court entered a default in this case on February 13, 2009. Plaintiff Continental Transfert Technique Limited ("Continental") then moved for the entry of default judgment against the defendants, the Federal Government of Nigeria, the Attorney General of Nigeria, and the Minister of the Interior of Nigeria (collectively, "Nigeria"). After the filing and service of that motion, Nigeria moved to dismiss Continental's complaint. While the motions to dismiss and for default judgment were pending, Continental filed an amended complaint, which Nigeria then moved to dismiss.

There are four motions currently pending before the Court: (1) Continental's motion for default judgment, (2) Nigeria's motion to vacate the Clerk's entry of default, (3) Nigeria's motion to dismiss Continental's original complaint, and (4) Nigeria's motion to dismiss Continental's amended complaint. Based on the parties' arguments, the relevant legal authorities, and the entire record in this case, the Court will grant Nigeria's motion to vacate the entry of default and deny the motion for default judgment. It will also deny both motions to dismiss.¹

I. BACKGROUND

In 1999 Continental, a Nigerian corporation, entered into a contract with the Nigerian government to produce "computer-compatible identification cards." Am. Compl. ¶¶ 10-11. The contract contained the following arbitration clause:

In the event of any dispute, claim or difference which may arise out of or in relation to this contract and touching on the performance or breach thereof, . . . the matter shall be referred to arbitration in accordance with the provisions of the Arbitration and Conciliation Act, Cap. 19, Vol. 1, Laws of the Federation of Nigeria 1990. . . . Both parties shall appoint an arbitrator who shall preside over the matter. The Law governing the proceedings shall be Nigerian Law and the award of the arbitrators shall be final and binding on all the parties hereto.

Am. Compl., Ex. B (Contract) at 8-9.

Claiming that Nigeria had failed to perform its obligations under the contract, Continental initiated arbitration pursuant to the contract's arbitration clause in 2007. Am. Compl. ¶ 17. Nigeria disputed Continental's claims and raised counterclaims of its own. Id. ¶ 18. The two parties then each selected one arbitrator to serve on the panel that would decide their claims; those two arbitrators in turn selected a third panel member. Id. ¶ 20. At a series of hearings held at the International Dispute Resolution Centre ("ICSID") in London, counsel for each party presented witnesses and documentary evidence to the arbitral panel in June 2008. Id. ¶¶ 20-22. On August 14, 2008, the arbitrators issued their decision ("the arbitral award"), finding in Continental's favor as to some claims and in Nigeria's as to others. Id. ¶ 24. Once damages owed to Nigeria were set against those owed to Continental, the arbitrators determined that Nigeria was liable to Continental in the amount of approximately 29.7 million Nigerian naira, or around 252 million dollars in United States currency. Id. ¶ 24. Nigeria was also ordered to pay Continental's costs as well as 95 percent of the fees arising from the arbitration itself. Id. ¶¶ 25-26.

On November 25, 2008, Continental filed the original complaint in this action, seeking enforcement of the arbitral award under the Federal Arbitration Act, 9 U.S.C. §§ 201 et seq., and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, opened for signature June 10, 1958, 21 U.S.T. 2517, reprinted in 9 U.S.C. § 201 (historical and statutory notes) ("the New York Convention"). Pursuant to 28 U.S.C. § 1608(a)(3), the Clerk of this Court, at plaintiff's request, effected service on Nigeria by sending the appropriate documents to the head of Nigeria's Ministry of Foreign Affairs. The defendants accepted service on December 11, 2008. Return of Service/Affidavit, Docket No. 7; Mot. to Stay at 3.

While those events occurred during the progress of the litigation before this Court, Continental filed a related action in the United Kingdom. On December 9, 2008, roughly two weeks after filing the instant action before this Court, Continental filed a claim form in the United Kingdom's High Court of Justice ("the English court"), seeking to enforce the arbitration award there. Am. Compl. ¶ 30. In an order issued on December 19, 2008, the High Court gave Continental "leave to enforce the arbitration award . . . in the same manner as a Judgment or Order" and ordered that "judgment be entered against the Defendants in the terms of the said Award." Am. Compl., Ex. D at 1. The English court also instructed Nigeria that under English law, "you have the right to make an application to the Court within 2 months and 22 days after service of the Order to set aside this Order." Id. at 2. Continental would gain the right to enforce the award only after those 2 months and 22 days had passed, or, if Nigeria moved to vacate the award, after that motion had been adjudicated. Id.

The English court's December 19, 2008 order was served on Nigeria on March 13, 2009. Am. Compl. ¶ 33. In the meantime, on February 9, 2009, the time within which Nigeria was required to answer or otherwise respond to Continental's complaint before this Court expired. On February 12, 2009, Continental requested entry of default against Nigeria, and the Clerk of the Court duly entered the default on February 13, 2009. On February 18, 2009, Continental filed a motion for default judgment, which was mailed to Nigeria by the Clerk of the Court on February 20.

On March 25, 2009—after Nigeria had received both the motion for default judgment and the preliminary order from the United Kingdom's High Court—Nigeria appeared in the litigation before this Court, moving for a temporary stay of the proceedings so that the defendants could respond to Continental's motion and move to vacate the Clerk's entry of default. See Mot. to Stay at 5. The Court granted the motion for a stay on April 24, 2009, ordering Nigeria to submit its motion to vacate the default by May 11, 2009.

On April 20, 2009, Nigeria initiated proceedings to set aside the arbitration award before Nigeria's Federal High Court, Lagos Division ("the Nigerian court"). MTD1, Okoli Decl. ¶ 19. Nigeria's filing in the Nigerian court requested the following relief: (1) "an Order enlarging the time within which to apply to set aside the Award," MTD1, Okoli Decl., Ex. A at 2, ¶ 1—requested because the period during which Nigeria could have timely applied under Nigerian law to set aside the award had already elapsed, id. at 6, ¶ 18; (2) "a declaration" that the arbitration in question was a "domestic commercial arbitration subject to Nigerian municipal law, and not an international commercial arbitration to which the 1958 New York Convention applies," id. at 2, ¶ 3; (3) "a declaration that the arbitral tribunal misconducted sic itself in rendering the Final Award, particularly when the tribunal awarded damages for loss of profits to the defendants contrary to the agreement of the parties," id. at 2, ¶ 4; (4) "an Order setting aside the Award," id. at 2, ¶ 5; and (5) an injunction "restraining the defendant... from seeking or continuing to seek recognition and enforcement of the aforesaid Award, in the United States or in any part of the world." Id. at 2, ¶ 6.

On April 23, 2009, without hearing argument or receiving briefs from Continental, the Nigerian court issued an ex parte order in which it (1) granted Nigeria an extension of time in which to apply to vacate the arbitration award, and (2) barred Continental "from seeking or continuing to seek to sic the recognition and enforcement of the Final Award . . . pending the hearing and determination" of Nigeria's motion for an "interlocutory injunction" on April 27, 2009. MTD1, Okoli Decl., Ex. B at 2, ¶¶ 1, 4. The April 27th hearing on Nigeria's motion for an injunction subsequently was delayed until May 20, 2009. Status Report ¶ 4. Meanwhile, Nigeria moved in this Court on May 11, 2009, to set aside the clerk's entry of default and to dismiss Continental's complaint. See MTD1 at 1. While that motion was pending in this Court, Continental moved on May 20 before the Nigerian court to vacate the order issued ex parte by that court on April 23. The court denied that motion on June 16, 2009. MTD2, Okoli Decl., Ex. F. at 24. Progress in the Nigerian litigation since that date appears to have stalled; the judge assigned to the case retired "on or about September 5, 2009," and "a new judge has not yet been assigned." Status Report ¶ 7.

On June 23, 2009, after Nigeria had filed its motion to vacate and to dismiss in this Court, Continental applied to the English court for an order stating that the "Interim Order from the Court dated 19 December 2008 is now absolute, and Continental is now entitled to apply for enforcement of this judgment." MTD2, Okoli Decl., Ex. A ¶ 3(i). Continental claimed to seek an "absolute" order because it believed Nigerian courts would require it "to show that the interim Order had become absolute by producing additional documentary evidence." Id. ¶ 15. Specifically, Continental believed that Nigerian courts...