Preble-Rish Haiti, S.A. v. Republic of Haiti
| Decision Date | 14 July 2022 |
| Docket Number | 22-20021 |
| Citation | 40 F.4th 368 |
| Parties | PREBLE-RISH HAITI, S.A., Plaintiff—Appellee, v. REPUBLIC OF HAITI, Defendants, BB Energy USA, L.L.C., Garnishee—Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Keith Bernard Letourneau, Zachary Cain, Blank Rome, L.L.P., Houston, TX, Lauren B. Wilgus, Blank Rome, L.L.P., New York, NY, for Plaintiff-Appellee.
Andrew D. Silverman, Orrick, Herrington & Sutcliffe, L.L.P., New York, NY, James Anglin Flynn, Emily Villano, Orrick, Herrington & Sutcliffe, L.L.P., Washington, DC, Claudia Wilson Frost, Christina Elise Ponig, Orrick, Herrington & Sutcliffe, L.L.P., Houston, TX, for Garnishee-Appellant.
Before Higginbotham, Dennis, and Graves, Circuit Judges.
The Foreign Sovereign Immunities Act provides a foreign state's property with immunity from prejudgment attachment unless an exception applies. The relevant exception in this case requires a foreign state to explicitly waive its immunity from prejudgment attachment. 28 U.S.C. § 1610(d). Although this court has yet to interpret the § 1610(d) exception, today we hold that an explicit waiver must be, well, explicit. Anything short of a foreign state's clearly expressed waiver of immunity from prejudgment attachment will not suffice under § 1610(d). Here, however, the district court entered a writ of attachment based on the erroneous conclusion that Haiti and its agency waived their immunity from prejudgment attachment based on a contract that said nothing about prejudgment attachment. We therefore REVERSE the district court and VACATE the writ.
Plaintiff-Appellee Preble-Rish Haiti, S.A. filed this case pursuant to Rule B of the Supplemental Rules for Admiralty or Maritime Claims in the Federal Rules of Civil Procedure. It sought to attach assets to secure a partial final arbitration award against the Republic of Haiti and the Bureau de Monétisation de Programmes d'Aide au Developpement (BMPAD). Garnishee BB Energy USA, L.L.C. admits to holding credits belonging to BMPAD located in the Southern District of Texas.
In May 2020, Preble-Rish, a Haitian company, entered into three contracts with BMPAD, a Haitian government agency, to deliver fuel. The contracts specified that BMPAD would provide a letter of credit as payment. BMPAD did not provide that letter, so the contracts were amended to permit BMPAD to instead make full prepayment pursuant to an invoice Preble-Rish submitted before each delivery. The contracts stated Preble-Rish would make six deliveries of fuel in response to orders from BMPAD.
Relevant here, the contracts had an arbitration clause stating:
In the event of a dispute between the [BMPAD] and [Preble Rish] under this Contract, the dispute shall be submitted by either party to arbitration in New York.... The decision of the arbitrators shall be final, conclusive and binding on all Parties. Judgment upon such award may be entered in any court of competent jurisdiction.
Pursuant to the contracts, BMPAD and Preble-Rish executed their duties without issue on four deliveries of fuel. Problems arose on the fifth delivery. To resolve these issues, on November 20, 2020, Preble-Rish sent BMPAD a notice demanding arbitration in New York. BMPAD did not appear in the arbitration and refused to participate. On December 22, 2020, Haiti and BMPAD filed a petition in New York state court to obtain an order to stay the pending arbitration with Preble-Rish. Preble-Rish opposed the petition and filed a cross-motion to compel arbitration.
While Haiti and BMPAD's action was pending in New York state court, on August 6, 2021, the arbitration panel issued a partial final award of security. The award required BMPAD to post approximately $23 million in security.
On September 27, 2021, the New York state court denied BMPAD's petition to stay the arbitration and granted Preble-Rish's motion to compel arbitration. The order states: "It is beyond dispute that the parties freely and unequivocally agreed to arbitrate all of their disputes in New York." That order was affirmed by the New York Appellate Division on April 12, 2022. The Appellate Division stated BMPAD failed to show the arbitration clause was invalid under Haitian law.
On June 15, 2021, Preble-Rish filed this Rule B attachment action in the Southern District of Texas to secure any final award from the pending arbitration and the partial final award of security. In its first complaint, Preble-Rish asserted claims for breach of contract and unjust enrichment. After complying with Rule B, Preble-Rish sought a writ of attachment for property belonging to BMPAD located in the district but in the possession of BB Energy. Preble-Rish alleged that BMPAD prepays BB Energy for fuel and that the prepaid funds are property of BMPAD present in the district.
The district court issued the writ of attachment and Preble-Rish served BB Energy with the writ on July 1, 2021. BB Energy promptly moved to dismiss and argued the district court lacked jurisdiction over the complaint based on BMPAD's sovereign immunity.1 BB Energy also moved to vacate the attachment because the contracts at issue were not maritime in nature and therefore precluded admiralty jurisdiction as needed for Rule B attachment. The district court stayed the writ to determine the subject matter jurisdiction issue.
On August 10, 2021, the district court denied BB Energy's motion to dismiss because it concluded BMPAD had waived sovereign immunity by agreeing to arbitrate disputes under the contracts. The district court also concluded BMPAD explicitly waived its sovereign immunity from prejudgment attachment by agreeing to provide letters of credit or prepayment as stated in the contracts and because the property that sought to be attached was "used for commercial activity in the United States." Having concluded that BMPAD waived its sovereign immunity generally and from prejudgment attachment, the district court determined it had subject matter jurisdiction over the case and reinstated the writ of attachment. BB Energy did not appeal this order.
On September 3, 2021, the district court granted BB Energy's motion to vacate the writ of attachment. The district court concluded the contracts were not maritime in nature and did not satisfy the requirements for admiralty jurisdiction for Rule B attachments.
Preble-Rish filed an amended complaint2 and added claims for maritime fraud and conversion. BB Energy moved to dismiss and again, raised BMPAD's sovereign immunity by arguing the new maritime tort claims fell outside the scope of the arbitration clause and BMPAD did not waive its immunity from prejudgment attachment.
The district court deferred ruling on the motion to dismiss and directed the parties to discovery. BB Energy appealed and this court remanded the case with instructions for the district court to limit discovery to the sovereign immunity jurisdictional issue. See Preble-Rish Haiti, S.A. v. BB Energy USA, LLC , No. 21-20534, 2021 WL 5143757, at *3 (5th Cir. Nov. 4, 2021) (unpublished). On remand, the parties agreed no further discovery was needed to resolve the issue.
On January 4, 2022, the district court denied BB Energy's motion to dismiss based on sovereign immunity. The district court relied on its August 10, 2021 decision to conclude that the arbitration clause waived BMPAD's immunity from suit. It therefore only determined whether the arbitration clause covered maritime tort claims in the amended complaint. The court broadly construed the arbitration clause's waiver for disputes "under this contract" to encompass the maritime tort claims in addition to the breach of contract claims. The district court also applied issue preclusion as to whether Haitian law prohibited arbitration against governmental entities and cited the New York state court's order denying BMPAD's motion to stay arbitration. Although BB Energy raised BMPAD's sovereign immunity from prejudgment attachment again, the district court stated it had already decided that issue and cited its August 10, 2021 order.
BB Energy appeals the January 4, 2022 order pursuant to the collateral order doctrine.3
This case turns on the interpretation of 28 U.S.C. § 1610(d) which provides a limited exception to the general rule that a foreign state and its property is entitled to sovereign immunity. That exception applies only when "the foreign state explicitly waived its immunity from attachment prior to judgment." § 1610(d). Here, there was no explicit waiver. So we conclude BMPAD did not waive its immunity from prejudgment attachment and the district court erred in concluding otherwise.
Without this waiver, the district court did not have jurisdiction to enter the writ of attachment against BB Energy.4 We accordingly reverse the district court and vacate the writ.
The denial of sovereign immunity is reviewed de novo. See Frank v. Commonwealth of Antigua and Barbuda , 842 F.3d 362, 367 (5th Cir. 2016). A foreign state's sovereign immunity deprives the federal courts of jurisdiction. The Foreign Sovereign Immunities Act (FSIA) therefore "provides the sole source of subject matter jurisdiction in suits against a foreign state." Id. (quoting Dale v. Colagiovanni , 443 F.3d 425, 427–28 (5th Cir. 2006) ); 28 U.S.C. § 1604. Pursuant to the FSIA, the general rule is that foreign states are immune from suit in American courts. 28 U.S.C. § 1604 ; see also Arriba Ltd. v. Petroleos Mexicanos , 962 F.2d 528, 532–33 (5th Cir. 1992). Along with immunity from suit generally, the FSIA provides a foreign state's property with immunity from attachment or execution unless an exception applies. 28U.S.C. § 1609.
The relevant exception here is § 1610(d), which states:
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