OI European Grp. B.V. v. Bolivarian Republic of Venez.
| Decision Date | 21 May 2019 |
| Docket Number | Civil Action No. 16-1533 (ABJ) |
| Court | U.S. District Court — District of Columbia |
| Parties | OI EUROPEAN GROUP B.V., Plaintiff, v. BOLIVARIAN REPUBLIC OF VENEZUELA, Defendant. |
Plaintiff Owens-Illinois European Group ("OIEG") brought this action pursuant to 22 U.S.C. § 1650a and Article 54 of the International Centre for Settlement of Investment Disputes ("ICSID") Convention against the Bolivarian Republic of Venezuela seeking to confirm and enforce an arbitration award of more than $400 million. Compl. [Dkt. # 1]. In October of 2010, OIEG's factories were expropriated by the Venezuelan government, then headed by Hugo Chávez, and on September 7, 2011, OIEG commenced arbitration against Venezuela pursuant to the Netherlands-Venezuela Bilateral Investment Treaty. Id. ¶¶ 6, 12; Final Award [Dkt. # 1-10] ¶¶ 1, 110. On March 10, 2015, the tribunal found in favor of plaintiff, and it awarded OIEG $372,461,982 for the expropriation and $5,750,000 in costs and expenses. See Final Award [Dkt. # 1-14] ¶¶ 880-81, 976.
A motion to dismiss has already been heard and denied, see Mar. 8, 2019 Hr'g Tr. [Dkt. # 54] ("3/8 Hr'g Tr."), and plaintiff has filed a motion for summary judgment seeking confirmation of the Award. Pl.'s Mot. for Summ. J. [Dkt. # 60] ("Pl.'s Mot."). Because 22 U.S.C. § 1650a requires this Court to confirm an arbitral award obtained under ICSID, and the sole issue raised in defendant's opposition pertains to the applicable post-judgment interest rate, the Court will enter judgment for plaintiff.
The International Convention on the Settlement of Investment Disputes between States and Nationals of Other States is a multilateral treaty designed to provide a legal framework for resolving disputes between private investors and governments. Preamble, Mar. 18, 1965, 17 U.S.T. 1270 ("ICSID Convention"). The ICSID Convention established the International Centre for Settlement of Investment Disputes, which has the authority to convene arbitration tribunals to adjudicate disputes between international investors and host governments in contracting states. Id. art. 1. "Any Contracting State or any national of a Contracting State" may request that ICSID convene an arbitration tribunal. See id. art. 36. The tribunal, which consists of either a single arbitrator or "any uneven number of arbitrators," id. art. 37, considers the dispute and issues a written award, which "deal[s] with every question submitted to the [t]ribunal, and . . . state[s] the reasons upon which it is based." Id. art. 48.
The parties have multiple avenues for contesting the tribunal's award: A party may request "revision" if there is a newly-discovered material fact previously unknown to the parties and arbitrator, see id. art. 51, or an "annulment" if a party challenges the tribunal's substantive decision. Id. art. 52. When a party seeks annulment, ICSID convenes an ad hoc committee of three members to review the award determination. Id. At a party's request, enforcement of an award is "stayed provisionally until the [c]ommittee" renders its decision. Id. But, "except to the extent that enforcement" has been stayed, the tribunal's award remains "binding on the parties and shall not be subject to any appeal or to any other remedy" other than those set forth in the ICSID Convention. Id. art. 53.
ICSID is not empowered to enforce awards. Prevailing parties must register their awards with a court of a member state. The courts of member states are required to "recognize an award . . . as binding and [to] enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that [s]tate," or, for a member state with "a federal constitution," to "treat the award as if it were a final judgment of the courts of a constituent state." Id. art. 54; see 22 U.S.C. § 1650a(a).
The United States has been a member of the ICSID Convention since 1966, and Congress has enacted legislation implementing the Convention:
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.
22 U.S.C. § 1650a(a).
Plaintiff is a corporation organized and existing under the laws of the Netherlands. Pl.'s Statement of Undisputed Material Facts [Dkt. # 63] ("Pl.'s SOF") ¶ 1. Plaintiff is part of a group of companies that operates glass container factories around the world, including in Venezuela. See Final Award [Dkt. # 1-10] ¶¶ 86-87. Plaintiff operated its Venezuelan glass factories through two of its subsidiaries, - Fábrica de Vidrios los Andes, ("Favianca") and Owens-Illinois de Venezuela, C.A. ("OIdv") - through which plaintiff held 72.983% equity interest in the Venezuelan factories. Id. ¶ 87; id. [Dkt. # 1-14] ¶ 881. A group of minority shareholders held the remaining 27.017% equity interest. See id. Defendant is the Bolivarian Republic of Venezuela. Pl.'s SOF ¶ 2.
In October of 2010, the Venezuelan government expropriated plaintiff's Venezuelan glass factories, Final Award ¶¶ 110-14, and OIEG commenced arbitration against Venezuela on September 7, 2011. Id. ¶ 1. An arbitral tribunal was assembled by March 30, 2012, id. ¶ 21, and on September 16-21, 2013, the tribunal held a hearing in Paris, France to receive testimony and hear argument. Id. ¶¶ 66-67. On March 10, 2015, the tribunal issued a final arbitration award ("Award") in OIEG's favor. Pl.'s SOF ¶ 3; see Final Award. That Award consisted of:
See also Pl.'s SOF ¶ 5.
Shortly thereafter, Venezuela sought annulment of the award in accordance with the ICSID convention. Pl.'s SOF ¶ 4; ICSID Convention art. 52. On July 17, 2015, the Annulment Committee entered a provisional stay of enforcement of the Award, but on April 4, 2016, that stay was terminated based upon the risk of Venezuela's non-compliance. Decision on Stay of Enforcement of the Award, Ex. B to Neudhardt Decl. [Dkt. # 27-8] ¶¶ 123-28, 130. Subsequently, OIEG filed suit in this Court to enforce its arbitration award, and after a year of multiple service attempts, plaintiff effectuated service on June 28, 2017. See Return of Service [Dkt. # 16].
On September 27, 2017, defendant moved to dismiss the complaint arguing that OIEG was not the real party in interest and Federal Rule of Civil Procedure 17 mandated dismissal, that OIEG had waived its right to claim that the decision is an enforceable final award, that OIEGwas impermissibly seeking double recovery,1 and that the award was unenforceable because one of the arbitrators on the tribunal was biased. See Def.'s Mot. to Dismiss or Stay the Proceeding [Dkt. # 23]. In the alternative, defendant moved to stay the proceedings pending the annulment proceedings. See id. On December 21, 2017, the Court granted defendant's motion to stay. Min. Order (Dec. 21, 2017).
Almost a year later, on December 10, 2018, plaintiff notified the Court that the annulment committee had rejected defendant's application for annulment on December 6, 2018. See Pl.'s Status Report [Dkt. # 52]; Annulment Comm. Decision [Dkt. # 52-1] ("Annulment Decision"). And, the committee awarded plaintiff an additional $3,864,811.05 for costs and expenses related to the annulment proceeding, plus interest from December 6, 2018 until payment at the same rate provided for in the Award. Annulment Decision ¶ 398.
The Court therefore lifted the stay on December 18, 2018, see Min. Order, and it denied defendant's motion to dismiss in open court on March 8, 2019. See 3/8 Hr'g Tr. With respect to the real party in interest issue, the Court found that Federal Rule of Civil Procedure 25, not Rule 17, applied, and Rule 25 did not mandate dismissal of the case. Id. at 10:11-15:2. It also held that OIEG had not waived its right to enforce the award, that OIEG was not impermissibly seeking double recovery, and that the arbitrator bias argument was not available to defendantduring an enforcement proceeding for an award issued pursuant to the ICSID Convention. Id. at 15:3-25:16.
Thereafter, the Court entered a schedule for briefing summary judgment. See Min. Order (Mar. 15, 2019). But before any briefs were filed, the parties entered into a stipulation for final judgment. Stipulated Order for Final J. [Dkt. # 56] ("Stipulation"). The next day, new counsel for defendant, representing Venezuela under the authority of the President of the Venezuelan National Assembly, Juan Guaidó, entered an appearance, Appearance of Counsel [Dkt. # 57], and moved to strike the stipulation on the grounds that it was the Guaidó government, and not the Maduro government, that had been formally recognized by the United States. Guaidó Gov't Emergency Mot. to Strike [Dkt. # 58]. Considering Venezuela's political climate and possible change of administration, OIEG informed the Court that it would not oppose the motion, Resp. to Emergency Mot. [Dkt. # 59], and it filed its motion for summary judgment. See Pl.'s Mot. In light of plaintiff's consent...
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