Int'l Trading v. Dyncorp Aerospace Tech.

• Decision Date: 21 January 2011
• Docket Number: Civil Action No. 09–791 (RBW).
• Court: U.S. District Court — District of Columbia
• Parties: INTERNATIONAL TRADING AND INDUSTRIAL INVESTMENT COMPANY (f/k/a/ International Trading and Investment Company), Petitioner,v.DYNCORP AEROSPACE TECHNOLOGY et al., Respondents.

763 F.Supp.2d 12

INTERNATIONAL TRADING AND INDUSTRIAL INVESTMENT COMPANY (f/k/a/ International Trading and Investment Company), Petitioner,

v.DYNCORP AEROSPACE TECHNOLOGY et al., Respondents.

Civil Action No. 09–791 (RBW).

United States District Court, District of Columbia.

Jan. 21, 2011.

Christopher Ryan Hart, John Joseph Buckley, Jr., Williams & Connolly LLP, Washington, DC, for Petitioner.Charles B. Wayne, DLA Piper LLP (U.S.), Washington, DC, James P. Duffy, IV, DLA Piper LLP (U.S.), New York, NY, for Respondents.

MEMORANDUM OPINION

REGGIE B. WALTON, District Judge.

Currently before the Court is an amended petition filed by petitioner International Trading and Industrial Investment Company, formerly known as International Trading and Investment Company (“International Trading”), to confirm an arbitral award (the “Award”) rendered in its favor and against respondents DynCorp Aerospace Technology and its affiliated companies under the Federal Arbitration Act, 9 U.S.C. § 207 (2000) (the “FAA”),¹ and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38, available at 1970 WL 104417 (the “New York Convention” or the “Convention”), which was ratified by Congress and codified at 9 U.S.C. §§ 201– 08 (2000). Amended Petition for Confirmation of Foreign Arbitral Award (the “Am. Pet.”) at 1. On December 1, 2010, the Court held a hearing on the merits of International Trading's petition, at which time the Court issued an oral ruling granting the petition and informed the parties that it would issue a short order thereafter. Upon further reflection, however, the Court believes that the issues presented in this case compel a more thorough written analysis and explanation regarding the Court's rulings, and this memorandum opinion reflects the Court's efforts in that regard.²

I. Background

The following facts in this case are undisputed unless otherwise noted. “DynCorp ... is an American company that ... provides logistical support and security services to the [United States] Armed Forces in Qatar.” Resp'ts' Opp'n at 3. On July 17, 1998, DynCorp entered into an agreement (the “Agreement” or “1998 Agreement”) with International Trading, “under which [International Trading] was appointed as [a] service agent for the purpose of establishing, operating[,] and maintaining a licensed branch office [for DynCorp] in the State of Qatar.” Am. Pet. ¶ 24. International Trading's specific “duties under the Agreement included assisting DynCorp in obtaining all licenses and permits required to establish a branch office; advising it regarding importing and exporting equipment, spares[,] and stores; and advising and assisting it in dealings with government ministries, departments, and agencies,” id. ¶ 26, so that ultimately DynCorp could “obtain [ ] ... contracts to provide security services in Qatar,” id. ¶ 27. The Agreement was written in both Arabic and English, Resp'ts' Opp'n at 4; Pet'r's Reply at 11, with the Arabic version controlling in the event of a conflict between the two versions, although consideration must be given to the English Terms as well, see Resp'ts' Opp'n, Ex. A (the 1998 Agreement) at 19.

The duration of the contract was governed by Section 9. 1, which stated the following:

[T]his Agreement shall be for a period of [s]ixty months from the date of signature and shall continue thereafter unless and until terminated by either party giving to the other not less than 90 ... days prior notice expiring on or any time after the first anniversary of the date hereof.

Id., Ex. A (the 1998 Agreement) at 12. On September 24, 2001, DynCorp sent a letter to International Trading evincing its intent to terminate the agreement on December 23, 2001. Am. Pet. ¶ 30. International Trading disputed DynCorp's ability to terminate the agreement because it believed that “the Agreement could not be terminated until after the expiration of the base period of sixty months,” which would not have been until July 20, 2003. Id. DynCorp's position was that “the maximum term of the Agreement was sixty months, and that either party could terminate [the Agreement] upon ninety days notice one year after the ... Agreement was signed.” Resp'ts' Opp'n at 5. Unable to resolve this dispute on their own, International Trading initiated arbitration proceedings before the International Chamber of Commerce (the “ICC”) under Section 13.1 of the Agreement.³ Am. Pet. ¶ 31.

Pursuant to the ICC Rules, the ICC selected Paris, France as the site for the arbitration, id. ¶ 34, to which neither party objected, see id. ¶ 35. The parties also agreed that Qatari law governed the resolution of any substantive questions in the case, and that the ICC Rules would apply to any procedural issues that arose during the proceedings. Id. On May 29, 2006, the arbitrator issued a written decision in which he concluded that DynCorp breached the Agreement because Section 9.1 required the Agreement to remain in effect “for a period of ‘sixty months from the date of signature and shall continue thereafter, unless and until terminated,’ i.e., the initial term of the Agreement is 60 months and the Agreement will continue after the initial term until terminated by either party,” Pet'r's Mem., Ex. A (May 29, 2006 Arbitral Award (“the Award”)) at 23 (emphasis omitted in part), and DynCorp had announced its intention to terminate the agreement prior to that date, Am. Pet. ¶ 41. The arbitrator rejected DynCorp's position to the contrary, noting that

[i]f the intention of any of the parties was to allow the other to terminate the Agreement as of the date of its first anniversary only, the Agreement would have been drafted and signed initially for a period of one year, renewable yearly. But, upon signature of such Agreement, the intention of both parties was clear: it was initially drafted for a period of sixty months, and after sixty months, it was automatically renewable unless and until terminated by either party (by a prior notice).

Pet'r's Mem., Ex. A (Award) at 24. As a result of the breach, the arbitrator concluded that International Trading was entitled to $1,107,764.95 for damages, Am. Pet. ¶ 45, $40,000 for costs, and interest of 5% per annum, id. ¶ 46.

On July 23, 2006, DynCorp pursued a stay of the Award before the Qatari Court of First Instance, arguing that “the [a]rbitration suffered from procedural defects,” but was denied relief, Resp'ts' Opp'n at 8. DynCorp then appealed to the Qatari Court of Appeal, which concluded that the dispute “was resolved on correct, suitable, and accepted ... law,” id., Ex. D (Decision of Qatari Court of Appeal) at 12–13, but while the court upheld the arbitrator's award of damages and costs, it vacated the award of 5% interest, Resp'ts' Opp'n at 9. Soon thereafter, DynCorp appealed to the Qatari Court of Cassation, which is the court of last resort in the State of Qatar. Id. After consideration of the matter, the Court of Cassation concluded “that the arbitrator failed to follow Qatari law by improperly interpreting the 1998 Agreement in light of the parties' intentions.” Id. at 10. The Court of Cassation found that the arbitrator's interpretation of the Agreement “goes against the apparent meaning of the contract conditions,” and that the arbitrator's reading of the Agreement was a “misinterpretation of facts,” as well as “error [regarding] the implementation of the law.” Id. According to DynCorp, International Trading did not object to jurisdiction before any of the Qatari tribunals and voluntarily participated in the proceedings. See id. at 8–10.

On April 30, 2009, International Trading filed its petition in this Court, which it later amended on May 22, 2009, requesting that the Court confirm the Award pursuant to 9 U.S.C. § 207, as well as Article IV of the New York Convention. Am. Pet. at 1. In response, DynCorp moved on July 31, 2009, to have the Court deny confirmation of the Award, arguing that the Court of Cassation “was a valid authority to set aside the Award,” and that in any event, recognition of the Award should be denied “under Chapter 2 of the FAA.” ⁴ Resp'ts' Opp'n at 1. Because DynCorp also initiated proceedings before the courts of France to set aside the Award on the same day it filed its cross-motion in this Court, DynCorp also requested a stay of the proceedings under Article V(1)(e) of the New York Convention, id., which states that where “an application for the setting aside ... of [an] award has been made to a competent authority referred to in Article V(1)(e), the authority before which the award is sought be relied upon may ... adjourn the decision.” The Court denied the motion for a stay without prejudice on July 28, 2010, “in light of the parties' agreement that the motion should be held in abeyance pending resolution of” the matter before the French courts. Order, Int'l Trading and Indust. Invest. Co. v. DynCorp Aerospace Tech., Civil Action No. 09–791(RBW) at 1. On November 4, 2010, the Paris Court of Appeal rejected DynCorp's action to set aside the Award, Pet'r's Supp. Mem. at 1, and subsequently, at the December 1, 2010 hearing, this Court entertained the parties' arguments as to whether the Award should be confirmed.

II. Standard of Review

Pursuant to 9 U.S.C. § 207, the Court is required to “confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the [New York] Convention.” Those specified grounds can be found under Article V of the Convention. Specifically, Article V(1) authorizes the Court to deny confirmation of the arbitral award under the following circumstances:

(a) The parties to the agreement ... were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

(...