Micula v. Gov't of Rom.

• Decision Date: 18 May 2015
• Docket Number: Civil No. 1:14–cv–00600 APM
• Citation: 104 F.Supp.3d 42
• Parties: Viorel Micula, Petitioner, v. The Government of Romania, Respondent.
• Court: U.S. District Court — District of Columbia

104 F.Supp.3d 42

Viorel Micula, Petitioner,

v.The Government of Romania, Respondent.

Civil No. 1:14–cv–00600 APM

United States District Court, District of Columbia.

Signed May 18, 2015

Danforth Newcomb, Shearman & Sterling LLP, New York, NY, for Petitioner

MEMORANDUM OPINION

Amit P. Mehta, United States District Judge

I. INTRODUCTION

Petitioner Viorel Micula has asked this court to confirm an arbitration award entered in his favor against the Government of Romania under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. Confirming, or recognizing, that arbitration award would render it an enforceable judgment of this court. Micula contends that the court should confirm the award ex parte—that is, without serving the Government of Romania—under 22 U.S.C. § 1650a, which provides: “The pecuniary obligations imposed by such an award shall be enforced and shall be given the same full faith and credit as if the award were a final judgment of a court of general jurisdiction of one of the several States.” The question before the court is whether a statute that empowers federal courts to “enforce” an international arbitration award as if it were a final state court judgment permits a federal court, as a precursor to enforcement, to recognizeor confirmsuch an arbitration award on an ex partebasis.

The court concludes that section 1650adoes not permit use of such an ex parteprocedure and therefore denies Micula's petition. If Micula wishes to have his arbitration award recognized and enforced in a United States federal court, he must file a plenary action, with proper service on the Government of Romania under the Foreign Sovereign Immunities Act of 1976.

II. BACKGROUND

A. The Convention on the Settlement of Investment Disputes between States and Nationals of Other States

The Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“Convention” or “ICSID Convention”) established the International Centre for Settlement of Investment Disputes (“ICSID”). Convention on the Settlement of Investment Disputes between States and Nationals of Other States art. 1, opened for signatureMar. 28, 1965, 17 U.S.T. 1270[hereinafter ICSID Convention]. The Convention entered into effect on October 14, 1966, after it had been ratified by 20 countries, including the United States.¹Id.art. 68; ICSID, Contracting States and Measures Taken by Them for the Purpose of the Convention,at 1–6, ICSID Doc. ICSID/8–A (Sept.2014).

The Convention's purpose was to promote economic development and private international investment by providing a legal framework and procedural mechanism that could be used to resolve (primarily economic) disputes between private investors and governments. Id.at Preamble; SEN. EXEC. REP. NO. 2, at 1 (1966). “ICSID has jurisdiction over a dispute where two requirements are met. First, there must be an investment-related legal dispute between a state party to the Convention and a national of another state that is also a party to the treaty. Second, the parties to the dispute must consent to ICSID's jurisdiction.”

Mobile Cerro Negro, Ltd. v. Bolivarian Republic of Venezuela,87 F.Supp.3d 573, 577–578, No. 14 Civ. 8163, 2015 WL 631409, at *3 (S.D.N.Y. Feb. 13, 2015). Where ICSID has jurisdiction, its decisions are final and are subject to review only within ICSID itself. Id.87 F.Supp.3d at 578–579, at *4.

The Convention, however, did not confer upon ICSID the power to enforce its awards. It left that function to its contracting states. Article 54(1) of the Convention provides:

Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State. A Contracting State with a federal constitution may enforce such an award in or through its federal courts and may provide that such courts shall treat the award as if it were a final judgment of the courts of a constituent state.

ICSID Convention art. 54(1).

The ICSID Convention was not self-executing. See Medellin v. Texas,552 U.S. 491, 506, 128 S.Ct. 1346, 170 L.Ed.2d 190 (2008)(explaining when a treaty obligation requires legislation to become domestic law). It thus required its Contracting States to “take such legislative or other measures as may be necessary for making the provisions of this Convention effective in its territories.” ICSID Convention art 69. Congress gave the ICSID Convention domestic effect in the United States by passing the Convention on the Settlement of Investment Disputes Act of 1966 (“Investment Disputes Act”). SeeConvention on the Settlement of Investment Disputes Act of 1966, Pub. Law 89–532, 80 Stat. 334 (1966) (codified at 22 U.S.C. §§ 1650and 1650a). Section 3 of the Investment Disputes Act, codified at 22 U.S.C. § 1650a, addresses the enforcement of ICSID arbitration awards in the United States. It provides in full:

(a) Treaty rights; enforcement; full faith and credit; nonapplication of Federal Arbitration Act

An award of an arbitral tribunal rendered pursuant to chapter IV of the convention shall create a right arising under a treaty of the United States. The pecuniary obligations imposed by such an award shall be enforced and shall be given the same full faith and credit as if the award were a final judgment of a court of general jurisdiction of one of the several States. The Federal Arbitration Act (9 U.S.C. § 1 et seq.) shall not apply to enforcement of awards rendered pursuant to the convention.

(b) Jurisdiction; amount in controversy

The district courts of the United States (including the courts enumerated in section 460 of Title 28) shall have exclusive jurisdiction over actions and proceedings under subsection (a) of this section, regardless of the amount in controversy.

22 U.S.C. § 1650a.

B. Micula v. RomaniaProceedings Before the ICSID Tribunal

Petitioner Viorel Micula, along with four co-petitioners²(collectively, “Claimants”), submitted an arbitration request to ICSID on August 2, 2005. Micula v. Romania,ICSID Case No. ARB/05/20, Award, ¶ 10 (Dec. 11, 2013), ECF No. 1–4. The ICSID tribunal proceedings began on November 10, 2006. Id.at ¶ 16. Claimants asserted that they had made investments in certain regions of Romania in reliance on economic incentives instituted by the Romanian government. See, e.g.,id. at ¶ 131; see alsoStatement of P. & A. in Supp. of Pet. to Confirm ICSID Arbitration Award and Enter J., ECF No. 1–1 at 3 [hereinafter Pet'r's P. & A.]. When Romania later revoked those incentives, Claimants alleged that they experienced significant financial losses. See, e.g.,Miculaat ¶¶ 131, 262.Further, Claimants argued that Romania's actions violated its bilateral investment treaty with Sweden. See, e.g.,id.¶ 131; see alsoPet'r's P. & A. at 3–4. In December 2013, the ICSID tribunal ruled for the Claimants, awarding them monetary damages of 376,433,229 Romanian Leu (RON)–the equivalent of 116,317,868 U.S. Dollars–plus interest at the rate of the three-month Romanian Interbank Offer Rate, plus 5%, compounded on a quarterly basis with respect to certain amounts and periods (“the Award”). Miculaat ¶ 1329; Pet'r's P. & A. at 4; Updated Statement of P. & A. in Supp. of Pet. to Confirm ICSID Arbitration Award and Enter J., ECF No. 7–1 at 6 [hereinafter Updated Pet'r's P. & A.].

C. Procedural History in this Court

Five months later, on April 11, 2014, Micula filed a petition with this court under 22 U.S.C. § 1650aseeking confirmation of the Award on an ex partebasis (“Petition”).³Pet. to Confirm ICSID Arbitration Award and Enter J., ECF No. 1 at 1–4. Micula argued that, because section 1650ais purportedly silent as to the proper procedure for confirming an ICSID award, the court should “look to the most analogous state law in crafting the procedural mechanism to confirm such judgments”–here, the District of Columbia Uniform Enforcement of Foreign Judgments Act, D.C.Code § 15–352. Pet'r's P. & A. at 8. Under that statute, the Superior Court for the District of Columbia is permitted to confirm foreign judgments on an ex partebasis. See id.(citing Nader v. Serody,43 A.3d 327, 333 (D.C.2012)). Micula also cited a series of cases from the Southern District of New York in which the courts borrowed New York state procedural rules and confirmed ICSID awards ex parte. See id.(citing cases).

Shortly before Petitioner filed in this court, Romania moved before ICSID to annul the Award. Updated Pet'r's P. & A. at 5. ICSID's Secretary–General granted Romania an initial stay of enforcement. Id. After ICSID constituted an ad hocCommittee to consider the annulment request, Romania sought an extension of the stay pending the decision on annulment. Id. The ad hocCommittee granted the stay request on August 7, 2014, but made it contingent upon on Romania's filing of a written assurance that it would make unconditional, full payment of the Award if the request for annulment was denied. Id. When Romania did not file the written assurance, the ad hocCommittee revoked the stay as of September 7, 2014. Id.As a result, Petitioner Micula filed an updated petition, which again requested confirmation of the award on an ex partebasis, as well as entry of judgment of the award after its conversion into U.S. dollars. Id. at 9–10.

On February 9, 2015, this court, newly assigned to this matter, entered a minute order seeking an update from Micula as to his “efforts to serve the government of Romania.” Min. Order, Micula v. Gov't of Romania,No. 14–600 (D.D.C. Feb 9, 2015). In his response to the court's order, Micula argued that “[a]wards issued by [ICSID] should be confirmed ex partepursuant to the ICSID Convention and applicable U.S. law.” Status Report, ECF No. 9 at 1. Relying again on decisions from the Southern District of New York, Micula asserted that, “[i]n keeping with the policy goals of the ICSID Convention and its enabling statute, ...