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OMNI BRIDGEWAY LIMITED, Petitioner, v. THE MINISTRY OF INFRASTRUCTURE THE NATIONAL AGENCY OF NATURAL ALBPETROL SH.A. Respondents. |
No. ____________ |
Petitioner Omni Bridgeway Limited, in its capacity as appointed agent and investment manager for Omni Bridgeway (Fund 2) Pty. Ltd. and Omni Bridgeway (Fund 3) Pty. Ltd., as assignee for GBC Oil Company Ltd., by and through its attorneys MoloLamken LLP, respectfully submits this petition to confirm, recognize, and enforce a foreign arbitral award
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against respondents The Ministry of Infrastructure and Energy of the Republic of Albania, The National Agency of Natural Resources of the Republic of Albania, and Albpetrol Sh.A.
1. This is an arbitral enforcement proceeding under Chapter 2 of the Federal Arbitration Act, 9 U.S.C. §§ 201 et seq., and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517 (the “New York Convention”). Petitioner Omni Bridgeway Limited, in its capacity as appointed agent and investment manager for Omni Bridgeway (Fund 2) Pty. Ltd. and Omni Bridgeway (Fund 3) Pty. Ltd. (“Omni Bridgeway”), seeks to confirm an arbitral award rendered in favor of GBC Oil Company Ltd. (“GBC”) against the Ministry of Infrastructure and Energy of the Republic of Albania (the “MIE”), the National Agency of Natural Resources of the Republic of Albania (“AKBN”), and Albpetrol Sh.A. (“Albpetrol”). The award was rendered by a tribunal of the International Court of Arbitration of the International Chamber of Commerce in an arbitration under the 2017 ICC Arbitration Rules captioned GBC Oil Co. Ltd. v. Ministry of Infrastructure & Energy, ICC Case No. 22676/GR.
2. The arbitral tribunal issued its Final Award on July 6, 2020. A duly certified copy of the Award is attached as Exhibit A to the accompanying Declaration of Geoffrey D. Holub (the “Award”). The Award ordered the MIE and AKBN to pay USD $12,577,852.10 in damages and ordered all three respondents to pay USD $292,760 plus EUR 14,451.68 in costs. On October 19, 2020, the tribunal issued an Addendum clarifying that the respondents are jointly and severally liable for the amounts indicated. A duly certified copy of the Addendum is attached as Exhibit B to the Holub Declaration (the “Addendum”). As of July 5, 2023, the total amount due with interest is USD $14,735,693.46.
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3. The arbitration arose out of three License Agreements between the Ministry of Economy, Trade and Energy (the “METE”) (the MIE’s legal predecessor), as represented by the National Agency of Natural Resources, and Albpetrol. Certified copies of the three License Agreements, along with certified translations, are attached as Exhibits C, D, and E to the Holub Declaration (the “License Agreements”). Section 25.3 of each License Agreement contains an arbitration agreement by which the parties agreed to submit disputes to arbitration before the International Chamber of Commerce in Zurich, Switzerland.
4. As contemplated by the License Agreements, Albpetrol entered into three Petroleum Agreements with Stream Oil & Gas Limited (“Stream”) (the company now known as GBC Oil Company Ltd.) by which GBC succeeded to Albpetrol’s rights under the arbitration clause in the License Agreements. Certified copies of the three Petroleum Agreements are attached as Exhibits F, G, and H to the Holub Declaration (the “Petroleum Agreements”).
5. Following the tribunal’s Final Award, GBC assigned all of its rights under the Award to Omni Bridgeway pursuant to an Assignment Agreement dated May 8, 2023, a copy of which is attached as Exhibit A to the accompanying Declaration of Christopher J. Young.
6. Respondents have refused to pay any of the amounts due under the Award. Omni Bridgeway therefore brings this action to enforce the Award pursuant to the New York Convention and the Federal Arbitration Act.
7. Petitioner Omni Bridgeway Limited (“Omni Bridgeway”) is a corporation organized under the laws of Australia with its registered address at Level 18, 68 Pitt Street, Sydney, New South Wales, Australia. Omni Bridgeway Limited brings this action in its capacity as appointed agent and investment manager for Omni Bridgeway (Fund 2) Pty. Ltd. and Omni
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Bridgeway (Fund 3) Pty. Ltd., and all references to Omni Bridgeway Limited or Omni Bridgeway in this petition and its supporting documents refer to Omni Bridgeway acting in that capacity. Omni Bridgeway brings this action as assignee of the original award creditor, GBC Oil Company Ltd.
8. GBC Oil Company Ltd. (“GBC”) is a corporation organized under the laws of the Cayman Islands, with its registered address at P.O. Box 448, George Town, Grand Cayman, KY1 1106, Cayman Islands. At the time of the License Agreements, GBC was known as Stream Oil & Gas Ltd. Subsequently, it changed its name to TransAtlantic Albania Ltd. and then to GBC Oil Company Ltd. Award ¶ 1.
9. Respondent The Ministry of Infrastructure and Energy of the Republic of Albania (the “MIE”) is a foreign government ministry and integral component of the Republic of Albania. The MIE is a primary organ of the Albanian government responsible for the regulation of Albania’s oil and gas industry. Award ¶ 40. The MIE was established by Article 6 of Albania’s Constitution and is “one of the pillars of the governmental system of the Republic of Albania.” Id. ¶¶ 475, 478. The MIE is a foreign state within the meaning of the Foreign Sovereign Immunities Act, 28 U.S.C. § 1603(a).
10. The MIE is the legal successor to the Ministry of Energy and Industry of the Republic of Albania (the “MEI”) pursuant to Decision No. 504 of the Council of Ministers dated September 13, 2017. Award ¶ 37. The MEI, in turn, is the legal successor to the Ministry of Economy, Trade and Energy (the “METE”) — the entity named in the License Agreements — pursuant to Decision No. 833 of the Council of Ministers dated September 18, 2013. Id. ¶ 36. Respondents acknowledged during the arbitration that the MIE is the legal successor to the MEI and the METE. Id. ¶¶ 20, 36.
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11. Respondent The National Agency of Natural Resources of the Republic of Albania (“AKBN”) is an arm of the state and integral component of the Republic of Albania. AKBN is a primary organ of the Albanian government that oversees oil and gas activities in Albania. Award ¶ 40. It was created in 1993 as an institution under the control of the Ministry of Industry, Natural Resources and Energy. Id. ¶ 277. Among other things, its duties include drafting and implementing government policies in the mining, oil, and hydropower sectors, preparing documentation for licenses and authorizations in those sectors, and supervising mining, oil, and hydropower activities. Id. ¶¶ 277, 470. AKBN is a foreign state within the meaning of the Foreign Sovereign Immunities Act, 28 U.S.C. § 1603(a).
12. Respondent Albpetrol Sh.A. (“Albpetrol”) is a state-owned entity. Albpetrol is wholly owned by the Albanian government. Award ¶ 40. Albpetrol is an agency or instrumentality of a foreign state within the meaning of the Foreign Sovereign Immunities Act, 28 U.S.C. § 1603(b).
13. This Court has subject matter jurisdiction over this petition to confirm a foreign arbitral award against foreign sovereign entities pursuant to 28 U.S.C. § 1330(a), 28 U.S.C. § 1331, and 9 U.S.C. § 203.
14. Respondents MIE and AKBN are not entitled to sovereign immunity in this proceeding because they expressly waived their immunity in the License Agreements. Specifically, Section 25.3(d) of each License Agreement states:
The Ministry and AKBN irrevocably waive any right of immunity or any right to object to this arbitration agreement, any arbitration award, any judgment regarding the enforcement of an arbitration award o[r] the execution of any arbitration award against or in respect of any of its property whatsoever it now has or may acquire in the future in any jurisdiction.
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License Agreements § 25.3(d) (emphasis added). Accordingly, this case falls within the Foreign Sovereign Immunities Act’s exception for express waivers, 28 U.S.C. § 1605(a)(1). See Gulf Res. Am., Inc. v. Republic of Congo, 370 F.3d 65, 71-74 (D.C. Cir. 2004).
15. Respondents MIE, AKBN, and Albpetrol also are not entitled to sovereign immunity in this proceeding because this is an action to confirm an arbitral award governed by the New York Convention, a treaty providing for the recognition and enforcement of arbitral awards to which the United States is a party. Accordingly, this matter falls within the Foreign Sovereign Immunities Act’s exception for arbitral enforcement, 28 U.S.C. § 1605(a)(6). See Process & Indus. Devs. Ltd. v. Federal Republic of Nigeria, 27 F.4th 771, 776 (D.C. Cir. 2022).
16. This Court has personal jurisdiction over each respondent pursuant to 28 U.S.C. § 1330(b) because each respondent is a foreign sovereign entity; each respondent is not entitled to immunity for the reasons set forth above; and each respondent will be duly served as required by the Foreign Sovereign Immunities Act, 28 U.S.C. § 1608.
17. In addition, this Court has personal jurisdiction over each respondent because each respondent consented to personal jurisdiction in the License Agreements. Specifically, Section 25.3(f) states:
Each Party hereto agrees that any arbitral award rendered against it pursuant to this Section 25.3 may be enforced against its assets wherever they may be found and that a judgment upon the arbitral award may be entered in any court having jurisdiction thereof.
License Agreements § 25.3(f).
18. Venue is proper in this district under 28 U.S.C. § 1391(f)(4) and 9 U.S.C. § 204.
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19. This dispute arises out of three License Agreements and three corresponding Petroleum Agreements for the development of three oilfields in Albania: the Cakran-Mollaj Oilfield, the Gorisht-Kocul Oilfield, and the Ballsh-Hekal Oilfield.
20. The three License Agreements are all dated July 4, 2007, and they are identical in relevant respects. The License Agreements state that they are entered into by “The Ministry of Economy, Trade and Energy as represented by The National Agency of Natural Resources,” on the one hand, and Albpetrol Sh.A., on the other. License Agreements at cover and preamble. They are each signed “[w]ith authorization” by the President of AKBN and by the General Director of Albpetrol. Id. at signature pages.
21. The License Agreements’ recitals observe that “the Albanian Government wishes that oil and gas Reservoirs underlying the Contract Area be exploited with high efficiency and in a rational manner, in conformity with the generally accepted practices of the international petroleum industry.” License Agreements at Recital H. They therefore authorize Albpetrol “to transfer or to delegate all or part of its rights, title and interests hereunder to a foreign or local juridical person . . . with which Albpetrol wishes to cooperate.” Id. at Recital D. Each License Agreement “will enter into full force and effect upon the approval . . . of a Petroleum Agreement which will [be] entered by Albpetrol and its partner.” Id. at Recital G.
22. Consistent with that structure, Albpetrol entered into three Petroleum Agreements with Stream Oil & Gas Limited (now known as GBC Oil Company Ltd.) dated August 8, 2007. Annex E to each Petroleum Agreement is an “Instrument of Transfer” stating that Albpetrol “hereby transfers all its rights, privileges and obligations under the License Agreement . . . to Stream.” Petroleum Agreements annex E § 1.
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23. The License Agreements and Petroleum Agreements contain comprehensive provisions regarding the parties’ obligations to develop the three oilfields and the distribution of profits from them. See, e.g., License Agreements arts. 9 & 10; Petroleum Agreements arts. 5-9.
24. Section 3.1 of the License Agreements contains a provision titled “Application of Law and Stability of Terms.” That provision states that, if Albanian law changes in a way that impairs the licensee’s economic rights under the contract, the MIE and AKBN will either modify the contract or “immediately undertake other necessary actions to eliminate the negative economic effect”:
(b) Subject to Section 3.1(c) below, to the extent that any provision of Albanian Law conflicts or is inconsistent with a provision of this License Agreement, the provision of the Albanian Law shall prevail.
(c) Notwithstanding Section 3.1(b) above, if, as a result thereof, any right or benefit granted (or which is intended to be granted) to LICENSEE under this License Agreement is infringed in some way, a greater obligation or responsibility shall be imposed onto LICENSEE or, in whatever other way the economic benefits accruing to LICENSEE from this License Agreement are negatively influenced by Section 3.1(b), and such an event is not provided for herein, the Parties will immediately amend this License Agreement, or AKBN and the Ministry will immediately undertake other necessary actions to eliminate the negative economic effect on the LICENSEE.
License Agreements § 3.1(b)-(c).
25. Section 25.3 of the License Agreements is titled “Arbitration between AKBN, Albpetrol, and Foreign Partner(s).” It provides:
(a) All disputes arising in connection with this License Agreement between AKBN, Albpetrol and foreign partner(s) shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce (“ICC”). Said arbitration shall be carried out by, in the case of mere technical matters, one (1) arbitrator and, in the case of all other disputes, three (3) arbitrators, appointed by the ICC Court of Arbitration in accordance with said Rules and their interpretation by said Court. In that regard, the Parties hereto waive the right each to nominate an arbitrator and as of now accept the appointment made by the ICC Court as it deems best. . . .
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(b) The arbitration proceeding shall take place in Zurich, Switzerland and shall be conducted in the English language. . . .
License Agreements § 25.3(a)-(b).
26. The License Agreements provide that “the laws of Switzerland” govern “[a]ll questions with respect to the interpretation or enforcement of, or the rights and obligations of the Parties under, this License Agreement” in any arbitration brought under the foregoing provision. License Agreements § 26.1(b)(ii).
27. At the time the License Agreements became effective in August 2007, the only tax the Albanian government imposed on oilfield operators like GBC was a petroleum profits tax. Award ¶ 322.
28. Within a year, however, the Albanian government began imposing new taxes. On July 28, 2008, the Albanian government imposed a royalty tax on 10% of the sale value of available petroleum production. Award ¶ 322. On July 21, 2011, the government imposed a new per liter carbon tax. Id. ¶ 323. In 2014, the government eliminated several tax exemptions, including an excise tax exemption, an income tax exemption for subcontractors, a carbon tax and circulation tax exemption for petroleum products purchased for the operations, and a value added tax exemption. Id. ¶ 323. In 2014, the government increased the circulation tax. Id. ¶ 324.
29. Under the plain terms of the License Agreements, the MIE and AKBN were required to amend the agreements or take other immediate steps to neutralize the negative economic impact of the government’s tax changes. But the MIE and AKBN never did that. “It is undisputed that the large majority of the effects of tax changes on Claimant were not neutralized.” Award ¶ 832.
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30. The MIE acknowledged its obligation to neutralize the negative economic effects of the new taxes. In 2015, the parties entered into a Settlement Agreement by which GBC would receive various offsets and deferrals to compensate it for the additional taxes. Award ¶¶ 713, 715. Other government agencies, however, refused to approve the Settlement Agreement, and it was never implemented. Id. ¶¶ 716-717, 837.
31. Ultimately, respondents seized the Gorisht Oilfield on January 26, 2017, and seized the Cakran Oilfield on February 1, 2017. Award ¶ 326. Respondents also refused to transfer the Ballsh Oilfield to GBC as contemplated by the applicable Petroleum Agreement. Id. ¶ 327.
32. On March 17, 2017, GBC filed a request for arbitration with the ICC’s International Court of Arbitration pursuant to the arbitration clause in Section 25.3(a) of the License Agreements. Award ¶ 52.
33. GBC sought damages for the MIE’s and AKBN’s failure to neutralize the economic effect of the additional taxes, as well as their wrongful confiscation of the Gorisht and Cakran Oilfields and failure to turn over the Ballsh Oilfield. Award § 4.1.
34. The arbitration was ultimately heard by a panel of three esteemed arbitrators, Professor Christophe Seraglini of Freshfields Bruckhaus Deringer LLP, Loretta Malintoppi of 39 Essex Chambers, and Dr. Sabrine Konrad of Morgan, Lewis & Bockius LLP. Award ¶ 44.
35. The MIE, AKBN, and Albpetrol all appeared in the arbitration and were represented by experienced arbitration counsel from Clifford Chance’s London and Munich offices. Award ¶ 41.
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36. The parties participated in nearly two years of pre-hearing proceedings, which included the exchange of numerous pleadings, legal briefs, witness statements, exhibits, and expert reports. Award ¶¶ 52-216. The arbitration hearing took place over four days in Paris, France, from January 21 to January 24, 2019. Id. ¶ 217. The parties then submitted post-hearing briefs and other filings. Id. ¶¶ 218-268.
37. On July 6, 2020, the tribunal issued its Final Award, which spans 1,436 paragraphs over 300 pages — a veritable tome even by the standards of international arbitration.
38. The tribunal first addressed jurisdictional challenges that respondents raised to its authority to arbitrate the dispute.
39. First, respondents contended that the tribunal lacked jurisdiction because the License Agreements containing the arbitration clause may have been illegally procured. Respondents had no actual evidence of bribery or any similar misconduct, but they claimed there were “red flags” suggesting something was afoot, including that GBC allegedly did not have the necessary level of financial or technical expertise and that the contracts were not awarded through a competitive bidding process. Award ¶¶ 330-374.
40. The tribunal carefully considered all of respondents’ “red flags” and concluded that they lacked evidentiary support. Award ¶¶ 427-455. Respondents failed to prove that GBC lacked the necessary financial or technical resources. Id. ¶¶ 427-434. Respondents also failed to prove that GBC had any negotiation exclusivity, but even if it did, no law precluded exclusivity. Id. ¶¶ 427-437. The tribunal concluded that respondents’ allegations were “unsubstantiated and unsupported by evidence” and thus “do not signal corruption in the case at hand.” Id. ¶ 453.
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41. The tribunal further noted that, under governing Swiss law, an “arbitration agreement cannot be contested on the grounds that the main contract is not valid.” Award ¶ 460. That severability principle was fatal to respondents’ arguments because there was no evidence that the arbitration clause itself had been illegally procured. Id. ¶¶ 462-463.
42. Second, respondents argued that the arbitration clause in the License Agreements was invalid under Swiss law because there was a mismatch between the parties who signed the agreements and the parties identified in the arbitration clause. Award ¶¶ 491-523. As noted above, the License Agreements state that they were entered into by “The Ministry of Economy, Trade and Energy as represented by The National Agency of Natural Resources,” and they are signed “[w]ith authorization” by the President of AKBN. License Agreements at cover, preamble, and signature page. The arbitration clause, however, states that “[a]ll disputes arising in connection with this License Agreement between AKBN, Albpetrol and foreign partner(s) shall be finally settled” by ICC arbitration. Id. § 25.3(a). According to respondents, because AKBN signed the License Agreements as representative of the METE, but the arbitration clause refers only to “AKBN,” there was a mismatch that deprived the tribunal of jurisdiction to arbitrate claims against anyone, whether the MIE or AKBN. Award ¶¶ 494-495.
43. The tribunal rejected that argument. Award ¶¶ 576-612. The tribunal observed that there was no dispute over the “consent of the MIE to the License Agreements.” Id. ¶ 583. “The MIE is a party to the License Agreements because AKBN represented the METE in the signature of the License Agreements and . . . the MIE is the legal successor of the MEI, which is itself the legal successor of the METE, under the License Agreements.” Id. The only dispute was over whether “AKBN’s representation of the MIE in the conclusion of the License Agreements led to AKBN’s representation of the MIE in the arbitration clause.” Id.
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44. The tribunal held that it did. The MIE’s consent to the License Agreements as a whole, the tribunal reasoned, included consent to the arbitration clause contained in those agreements. Award ¶ 586. And “the reference to AKBN in the arbitration agreement must be understood as a reference to the MIE for all contractual obligations for which AKBN was representing the MIE, except for what is clearly intended to refer to undertakings that are specific to AKBN.” Id. ¶ 587. The tribunal found further support for that conclusion from the fact that the License Agreement’s sovereign immunity waiver stated that “the MIE itself, and not only AKBN, ‘irrevocably waive[d] any right of immunity or any right to object to [the] arbitration agreement.’” Id. ¶ 588 (quoting License Agreements § 25.3(d)). The tribunal thus concluded that it had jurisdiction over MIE. Id. ¶ 590.
45. The tribunal similarly found that it had jurisdiction over AKBN. Although the License Agreements state that AKBN was signing as representative for the METE, after analyzing the agreements, the tribunal found that “AKBN has several rights and obligations pursuant to the License Agreements that are separate from the MIE’s.” Award ¶ 594. For example, Section 3.1(c) expressly imposed obligations on both the MIE and AKBN to eliminate the negative economic effects of new legislation. Id. ¶ 595. Sections 3.2 and 3.5(c) imposed obligations on both the MIE and AKBN to ensure that other contractors’ petroleum operations did not interfere with GBC’s operations and to ensure that GBC was granted all necessary authorizations. Id. Section 9.3(a) imposed obligations on both the MIE and AKBN with respect to equipment and immovable property. Id. ¶ 596. Most importantly, Section 25.3(d) states that both the MIE and AKBN waive any immunity and any right to object to the arbitration agreement. Id. ¶ 598. The tribunal thus concluded that “AKBN consented to be bound by the
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License Agreements and the arbitration clause therein in its own right and not merely as a representative of the MIE.” Id. ¶ 600.
46. Turning to the merits, the tribunal held that the MIE and AKBN breached the License Agreements by not taking steps to neutralize the impact of the additional taxes the Albanian government imposed. Award ¶¶ 813-851. “Pursuant to Article 3.1(c) of the License Agreements, Claimant had the right to have the full negative economic effect of taxes eliminated.” Id. ¶ 842. “It is undisputed that the large majority of the effects of tax changes on Claimant were not neutralized.” Id. ¶ 832. “Claimant ha[d] the right to be compensated by AKBN and the MIE for the negative economic effect of the tax changes that it suffered,” but “Respondents did not comply with their obligation to compensate Claimant.” Id. ¶¶ 847, 849.
47. By contrast, the tribunal rejected GBC’s claim that respondents confiscated its Cakran and Gorisht Oilfields. Award ¶¶ 1210-1264. The tribunal also rejected GBC’s claim for failure to turn over the Ballsh Oilfield, holding that any such claim would be against Albpetrol under the Petroleum Agreement, as to which the tribunal lacked jurisdiction. Id. ¶¶ 1360-1369.
48. Turning to damages, the tribunal awarded USD $12,577,852.10 in favor of GBC against the MIE and AKBN, corresponding to the amount of royalty tax that GBC paid to the Albanian government that the MIE and AKBN failed to neutralize. Award ¶¶ 1378-1395. The tribunal did not award interest on that amount. Id. ¶ 1395.
49. The tribunal also awarded costs to GBC against all three respondents in the amount of USD $292,760 and EUR 14,451.68, plus 5% interest. Award ¶¶ 1430-1431.
50. On October 19, 2020, the tribunal issued an Addendum to its Final Award. The Addendum amended the decretal provisions of the Award to clarify that the MIE and AKBN
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were “jointly and severally” liable for the damages and that all three respondents were “jointly and severally” liable for the costs. Addendum ¶ 31.
51. GBC subsequently entered into an Assignment Agreement with Omni Bridgeway, dated May 8, 2023, attached as Exhibit A to the Young Declaration. Pursuant to that agreement, GBC assigned all of its rights under the Award to Omni Bridgeway, subject to approval by the Grand Court of the Cayman Islands. Young Decl. Ex. A §§ 1.1, 2.1. On June 23, 2023, the Grand Court of the Cayman Islands issued an order approving the Assignment Agreement, attached as Exhibit B to the Young Declaration. Young Decl. Ex. B § 2(a).
52. The New York Convention is an international treaty signed by over 150 countries that is designed to facilitate and expedite the recognition and enforcement of foreign arbitral awards. See Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517. To that end, the Convention requires that “[e]ach Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles.” Id. art. III, 21 U.S.T. at 2519. The United States is a party to the New York Convention and is bound by its terms. See New York Arbitration Convention: Contracting States, http://www.newyorkconvention.org/countries. Switzerland, the legal seat of the arbitration, and Albania, the site of the oilfields, are both parties too. Id.
53. The New York Convention’s goal is “to encourage the recognition and enforcement of commercial arbitration agreements.” Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 n.15 (1974). That objective is consistent with the “emphatic federal policy in favor of arbitral dispute resolution” — a policy that “applies with special force in the field of international
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commerce.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985). In light of that strong pro-arbitration policy, confirmation proceedings are a “summary procedure.” TermoRio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928, 940 (D.C. Cir. 2007). “[T]he showing required to avoid summary confirmation is high” and “rests with the party resisting confirmation.” Int’l Trading & Indus. Inv. Co. v. DynCorp Aerospace Tech., 763 F. Supp. 2d 12, 20 (D.D.C. 2011).
54. The United States implemented the New York Convention through Chapter 2 of the Federal Arbitration Act. That statute provides that “[t]he Convention . . . shall be enforced in United States courts in accordance with this chapter.” 9 U.S.C. § 201. Section 207 specifies:
Within three years after an arbitral award falling under the Convention is made, any party to the arbitration may apply to any court having jurisdiction under this chapter for an order confirming the award as against any other party to the arbitration. The court shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention.
9 U.S.C. § 207 (emphasis added). Confirmation is thus mandatory unless one of the Convention’s narrow grounds for non-enforcement applies: “[W]hen an action for enforcement is brought in a foreign state, the state may refuse to enforce the award only on the grounds explicitly set forth in Article V of the Convention.” TermoRio, 487 F.3d at 935.
55. The Federal Arbitration Act “seeks to streamline the procedures for confirming arbitral awards.” Process & Indus. Devs. Ltd. v. Federal Republic of Nigeria, 962 F.3d 576, 585 (D.C. Cir. 2020). Consistent with that goal, the Act directs that petitions to confirm awards “shall be made and heard in the manner provided by law for the making and hearing of motions,” rather than the pleading procedures applicable to traditional civil actions. 9 U.S.C. §§ 6, 208. Where, as here, no immunity is at issue because the sovereign expressly waived its immunity,
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courts may address confirmation “in a single round of briefing on the petition to confirm.” Process & Indus. Devs., 962 F.3d at 585.
56. The Award in this case falls within the scope of the Convention. Under the Federal Arbitration Act, “[a]n arbitration agreement or arbitral award arising out of a legal relationship, whether contractual or not, which is considered as commercial, including a transaction, contract, or agreement described in section 2 of this title, falls under the Convention” unless it arises out of a “relationship which is entirely between citizens of the United States.” 9 U.S.C. § 202. Those requirements are met. The Award arises out of commercial License Agreements for the development and production of petroleum in Albanian oilfields, and no party is a citizen of the United States.
57. Article IV of the Convention requires a party seeking recognition and enforcement of an award to submit “[t]he duly authenticated original award or a duly certified copy thereof” as well as “[t]he original [arbitration] agreement . . . or a duly certified copy thereof.” 21 U.S.T. at 2519-20. Petitioners have submitted those materials. Holub Decl. Exs. A, C-E.
58. Article V to the Convention provides grounds for denying recognition and enforcement. “[T]he Convention is ‘clear’ that a court ‘may refuse to enforce the award only on the grounds explicitly set forth in Article V.’” Belize Soc. Dev. Ltd. v. Gov’t of Belize, 668 F.3d 724, 727 (D.C. Cir. 2012). None of those grounds applies here.
59. Article V.1(a) permits non-enforcement where one of the parties to the arbitration agreement was “under some incapacity” or where the agreement was “not valid under the law to which the parties have subjected it” — in this case, Swiss law. 21 U.S.T. at 2520; License Agreements § 26.1(b)(ii). That provision does not apply here.
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60. Respondents claimed in the arbitration that the License Agreements were invalid because there were “red flags” of illegality. But as the tribunal observed, those allegations were “unsubstantiated and unsupported by evidence.” Award ¶ 453. The tribunal also held that, under governing Swiss law, a party cannot challenge the validity of an arbitration clause merely by claiming illegality in the broader contract as a whole. Id. ¶¶ 462-463. United States law is no different: A party cannot challenge an arbitral award by disputing the validity of the broader contract in which the arbitration clause appears. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445 (2006) (“[A]s a matter of substantive federal arbitration law, an arbitration provision is severable from the remainder of the contract.”); Belize Soc. Dev. Ltd. v. Gov’t of Belize, 794 F.3d 99, 102-03 (D.C. Cir. 2015) (similar). Respondents have never claimed that there were any red flags relating specifically to the arbitration clause.
61. Respondents also sought to avoid the License Agreements’ arbitration clause on the basis of the purported mismatch between the party that executed the License Agreements (AKBN on behalf of the METE) and the party referenced in the arbitration clause (AKBN). The tribunal properly rejected that argument too. As the tribunal explained, the METE consented to the arbitration clause because AKBN signed the License Agreements on its behalf. Award ¶¶ 583-590. Government entities, like corporations, “may act only through their agents.” Braswell v. United States, 487 U.S. 99, 110 (1988). Courts have thus repeatedly deemed foreign sovereigns bound by arbitration agreements signed by their representatives. See, e.g., Belize Soc. Dev., 794 F.3d at 102-03 (deeming foreign sovereign bound by arbitration clause signed by foreign official); see also CapitalKeys, LLC v. Democratic Republic of Congo, No. 21-7070, 2022 WL 2902083, at *3 (D.C. Cir. July 22, 2022) (noting that some courts have found even apparent authority sufficient).
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62. The License Agreements state on their face that they were signed by AKBN “[w]ith authorization” from the METE. License Agreements at signature page. The tribunal found that AKBN signed the agreements on behalf of the METE. Award ¶ 586. AKBN’s authority to represent the METE is consistent with its general responsibilities under Albanian law. Id. ¶ 277. And the MIE never claimed in the arbitration that AKBN lacked authority to sign the License Agreements on its behalf — to the contrary, it argued that AKBN signed the agreements only on its behalf. Id. ¶ 471. The MIE thus forfeited any argument that AKBN lacked authority to represent it in signing the agreements. See Howard Univ. v. Metro. Campus Police Officer’s Union, 512 F.3d 716, 720 (D.C. Cir. 2008) (“[A] party that does not object to the arbitrator’s jurisdiction during the arbitration may not later do so in court.”).
63. The tribunal also properly concluded that AKBN signed the License Agreements on its own behalf too. Award ¶¶ 591-601. The License Agreements impose numerous obligations on AKBN. Id. ¶¶ 595-596. Section 25.3(d) states that both “[t]he Ministry and AKBN irrevocably waive . . . any right to object to this arbitration agreement, any arbitration award, [or] any judgment regarding the enforcement of an arbitration award.” License Agreements § 25.3(d) (emphasis added). That provision makes no sense unless AKBN was signing the contract on its own behalf too.
64. At a minimum, the METE and AKBN are bound by the arbitration clause under estoppel principles. See, e.g., Deloitte Noraudit A/S v. Deloitte Haskins & Sells, U.S., 9 F.3d 1060, 1064 (2d Cir. 1993) (non-signatory bound by arbitration clause where it “knowingly accepted the benefits” under a contract). The License Agreements granted respondents extensive benefits, including a profits tax in the form of a share of the petroleum. License Agreements §§ 10.3, 14. Although the parties disputed whether GBC delivered all the petroleum it was
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supposed to, there is no dispute that it delivered substantial amounts. Award ¶¶ 1228-1252. Having accepted those direct benefits under the contracts for many years, respondents cannot now turn around and disavow the contracts’ arbitration clause.
65. While the License Agreements were entered into by the Ministry of Economy, Trade and Energy (the “METE”) rather than the Ministry of Infrastructure and Energy (the “MIE”), the tribunal properly determined that the MIE is the legal successor of the METE. Award ¶¶ 34-40. Respondents conceded in the arbitration that the MIE was the successor of the METE. Id. ¶¶ 20, 36. The tribunal thus appropriately entered the Award against the MIE as successor to the METE. See Productos Mercantiles e Industriales, S.A. v. Faberge USA, Inc., 23 F.3d 41, 46-47 (2d Cir. 1994) (holding that award could be confirmed against successor to arbitration agreement); cf. GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 140 S. Ct. 1637, 1648 (2020) (holding that New York Convention does not preempt non-signatory enforcement).
66. For similar reasons, the tribunal properly entered the Award in favor of GBC even though the License Agreements were executed by Albpetrol. Albpetrol transferred all its rights under the License Agreements, including its arbitration rights, to Stream Oil & Gas Ltd. in the Petroleum Agreements. Petroleum Agreements annex E § 1. The License Agreements’ arbitration clause also specifically covers Albpetrol’s “foreign partner(s)” like GBC. License Agreements § 25.3(a). Finally, GBC is the same entity as Stream Oil & Gas Ltd. with a new name. Award ¶ 1.
67. Notably, the License Agreements specifically provide that any disputes shall be settled under the ICC Arbitration Rules. License Agreements § 25.3(a). Those rules state that “any question of jurisdiction . . . shall be decided directly by the arbitral tribunal.” Rules of
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Arbitration of the International Chamber of Commerce art. 6(3) (2017) (attached as Exhibit A to the accompanying Declaration of Robert K. Kry). By incorporating those ICC rules, the parties delegated jurisdictional issues to the tribunal. See LLC SPC Stileks v. Republic of Moldova, 985 F.3d 871, 878-79 (D.C. Cir. 2021) (incorporating rules “assign[s] arbitrability determinations to the tribunal”); Chevron Corp. v. Ecuador, 795 F.3d 200, 207-08 (D.C. Cir. 2015) (same). Thus, while the Court must still determine that the MIE (as successor to the METE) and AKBN agreed to arbitrate, once it does so, any further jurisdictional disputes are for the tribunal.
68. For all those reasons, respondent’s jurisdictional objections provide no basis for refusing to confirm the Award under Article V.1(a).
69. Article V.1(b) of the Convention permits non-enforcement where the party “was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case.” 21 U.S.T. at 2520. That provision does not apply either. Respondents participated in nearly two years of extensive pre-hearing proceedings, including the exchange of pleadings, legal briefs, witness statements, exhibits, and expert reports. Award ¶¶ 52-216. They participated in a four-day merits hearing. Id. ¶ 217. And they submitted post-hearing briefs and other submissions. Id. ¶¶ 218-268. Respondents have never claimed they lacked notice of the arbitration or an opportunity to respond.
70. Article V.1(c) of the Convention permits non-enforcement where the Award “deals with a difference not contemplated by or not falling within the terms of the submission to arbitration” or “contains decisions on matters beyond the scope of the submission to arbitration.” 21 U.S.T. at 2520. That provision does not apply either. The arbitration clause in the License Agreements covers “[a]ll disputes arising in connection with this License Agreement” among the parties. License Agreements § 25.3(a). Consistent with that broad language, GBC’s statement of
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claim expressly alleged that the MIE and AKBN breached their obligation under the License Agreements to neutralize the economic impact of the additional taxes. Award ¶¶ 697-698 & nn.661-664. The Award thus falls squarely within the scope of the submission.
71. Article V.1(d) permits non-enforcement where “[t]he composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties.” 21 U.S.T. at 2520. Nothing like that occurred here. The ICC appointed all three arbitrators as authorized by the License Agreements. Award ¶¶ 58, 133; License Agreements § 25.3(a). And it conducted the arbitration under the ICC Arbitration Rules as provided by the License Agreements. Award at cover; License Agreements § 25.3(a).
72. Article V.1(e) permits non-enforcement where “[t]he award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.” 21 U.S.T. at 2520. No such circumstances exist here. The Award by its terms is final, and Swiss law provides only 30 days to challenge the Award in the Swiss courts. See Swiss Private International Law Act of Dec. 18, 1987, art. 190(4) (as in force from Jan. 1, 2021) (attached as Exhibit B to the Kry Declaration). Respondents never brought such a challenge.
73. Article V.2(a) requires non-enforcement where “[t]he subject matter of the difference is not capable of settlement by arbitration under the law of th[e] country” where enforcement is sought. 21 U.S.T. at 2520. This dispute clearly would have been arbitrable under United States law. See 9 U.S.C. § 2.
74. Finally, Article V.2(b) requires non-enforcement where “recognition or enforcement of the award would be contrary to . . . public policy.” 21 U.S.T. at 2520. That exception is “construed narrowly” and “applie[s] only where enforcement would violate the
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United States’ most basic notions of morality and justice.” Belize Bank Ltd. v. Gov’t of Belize, 852 F.3d 1107, 1111 (D.C. Cir. 2017) (alteration omitted). No such circumstance is present here. The arbitral tribunal carefully considered respondents’ allegations about red flags of illegality and found them “unsubstantiated and unsupported by evidence.” Award ¶ 453. There is no U.S. public policy against confirming an award where the tribunal fully considered allegations of illegality and found them lacking. See Tatneft v. Ukraine, 21 F.4th 829, 838 (D.C. Cir. 2021) (rejecting public policy defense where “[t]he parties have already litigated and arbitrated their claims” and “[i]f Ukraine wanted to raise claims about the illegality of the share purchases . . . it had the opportunity to raise those claims before the arbitral panel”); BCB Holdings Ltd. v. Gov’t of Belize, 650 F. App’x 17, 19 (D.C. Cir. 2016) (rejecting public policy argument because “[t]he arbitral tribunal did not find any corruption”); Belize Soc. Dev. Ltd. v. Gov’t of Belize, 5 F. Supp. 3d 25, 43 (D.D.C. 2013) (similar), aff’d, 794 F.3d 99 (D.C. Cir. 2015).
75. Following the tribunal’s Final Award, GBC agreed to assign its rights under the Award to Omni Bridgeway pursuant to an Assignment Agreement dated May 8, 2023. Young Decl. Ex. A § 2.1. The Grand Court of the Cayman Islands approved the assignment on June 23, 2023. Young Decl. Ex. B § 2(a).
76. It is well-settled that an assignee of an arbitral award has standing to seek recognition and enforcement of the award under the New York Convention. See, e.g., Balkan Energy Ltd. v. Republic of Ghana, 302 F. Supp. 3d 144, 157 (D.D.C. 2018) (“Balkan Ghana legally assigned its rights in the Award to Balkan UK and therefore Balkan UK has standing to bring this enforcement action under the New York Convention.”); Glob. Distressed Alpha Fund I LP v. Red Sea Flour Mills Co., 725 F. Supp. 2d 198, 201-03 (D.D.C. 2010) (confirming award in
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favor of assignee); cf. Blasket Renewable Invs., LLC v. Kingdom of Spain, No. CV 21-3249, 2023 WL 2682013, at *3 (D.D.C. Mar. 29, 2023) (appeal pending) (granting motion to substitute assignee). Omni Bridgeway therefore has standing as assignee to seek confirmation.
77. Moreover, the assignee of an arbitral award is entitled to invoke the Foreign Sovereign Immunities Act’s exceptions to immunity to the same extent as the original award creditor. See Gretton Ltd. v. Republic of Uzbekistan, No. 18-CV-1755, 2019 WL 3430669, at *4-5 (D.D.C. July 30, 2019) (noting that “courts in this district — with the blessing of the D.C. Circuit — have time and again found jurisdiction over arbitration assignees’ confirmation suits”); Balkan Energy, 302 F. Supp. 3d at 154 (“Nothing in Section 1605(a)(6) requires a court to resolve whether an arbitration award was validly assigned as a necessary precondition to recognizing subject-matter jurisdiction under the arbitration exception.”). Omni Bridgeway may therefore invoke the same immunity exceptions as GBC.
78. The Court should grant post-award, pre-judgment interest through the date of any judgment confirming the Award. The tribunal did not award interest on the damages portion of the Award. Award ¶ 1395. Nonetheless, this Court can and should award interest to ensure full compensation for the MIE’s and AKBN’s breaches.
79. As the D.C. Circuit has explained, “payment of appropriate interest [is] ‘a dictate of natural justice’ necessary ‘to repair all the damages that accrue naturally’ from the breach of an obligation.” LLC SPC Stileks v. Republic of Moldova, 985 F.3d 871, 881 (D.C. Cir. 2021). “[C]onfirmation petitions under the New York Convention are ‘deemed to arise’ under the laws of the United States, and ‘[p]rejudgment interest is an element of complete compensation’ in U.S. law.” Id. (citation omitted). Prejudgment interest is thus appropriate even when “the arbitral
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award was silent on prejudgment interest.” Id.; see also Cont’l Transfert Technique Ltd. v. Fed. Gov’t of Nigeria, 932 F. Supp. 2d 153, 163-64 (D.D.C. 2013) (prejudgment interest “should normally be awarded when damages have been liquidated by an international arbitral award”), aff’d, 603 F. App’x 1 (D.C. Cir. 2015); Compagnie des Bauxites de Guinee v. Hammermills, Inc., No. 90-0169, 1992 WL 122712, at *8 (D.D.C. May 29, 1992) (“Courts have consistently allowed prejudgment interest in actions brought to confirm arbitral awards.”); Waterside Ocean Navigation Co. v. Int’l Navigation Ltd., 737 F.2d 150, 153-54 (2d Cir. 1984) (similar).
80. This Court has discretion over what interest rate to use. See Forman v. Korean Air Lines Co., 84 F.3d 446, 450 (D.C. Cir. 1996). Nonetheless, the D.C. Circuit has “repeatedly concluded that the use of the prime rate in the award of prejudgment interest reflects an appropriate exercise of the district court’s discretion.” Cont’l Transfert Technique Ltd. v. Fed. Gov’t of Nigeria, 603 F. App’x 1, 5 (D.C. Cir. 2015); see also Cont’l Transfert, 932 F. Supp. 2d at 165 (noting “preference . . . for the use of the prime rate rather than the statutory postjudgment interest rate”); Belize Soc. Dev., 5 F. Supp. 3d at 43 (applying prime rate). The Court should therefore apply the U.S. prime rate to the damages portion of the Award.
81. With respect to the costs portion of the Award, the tribunal expressly awarded 5% interest. Award ¶¶ 1430-1431. For that portion, therefore, the Court should apply the interest rate specified by the tribunal.
82. In both cases, the Court should award interest on a compound rather than simple basis. See Cont’l Transfert, 932 F. Supp. 2d at 166 n.7 (compounding is “standard practice”).
83. Post-judgment interest will accrue on the judgment confirming the Award at the rate prescribed by 28 U.S.C. § 1961.
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84. Finally, the tribunal awarded a small portion of the costs award in Euros rather than U.S. Dollars. Award ¶ 1431. The Court should convert that portion to U.S. Dollars at the exchange rate prevailing on the date of judgment. See Cont’l Transfert, 932 F. Supp. 2d at 158 (conversion of foreign currency award into U.S. dollars at judgment “is the norm, rather than the exception”), aff’d, 603 F. App’x 1 (D.C. Cir. 2015); cf. Stileks, 985 F.3d at 881 (“Traditionally, U.S. courts render judgments in U.S. dollars.”). Conversion to U.S. dollars is particularly appropriate here because the portion of the Award denominated in Euros is very small and it would be inconvenient for the judgment to be denominated in two different currencies.
85. Claim calculations showing interest and foreign exchange conversion as of July 5, 2023 are attached as Exhibit C to the Kry Declaration. Support for the interest rates and exchange rate are attached as Exhibits D and E. In the event the Court grants this petition to confirm, petitioner can submit an updated claim calculation and proposed form of judgment.
WHEREFORE, petitioner respectfully requests an order:
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and Albpetrol Sh.A., jointly and severally, in the amount of USD $357,089.14, such amounts combined totaling USD $14,735,693.46;
Dated: July 5, 2023 |
Respectfully submitted, |
Signature
Robert K. Kry
D.C. Bar # 490545
MOLO LAMKEN LLP
The Watergate, Suite 500
600 New Hampshire Avenue, N.W.
Washington, D.C. 20037
Tel.: (202) 556-2011
Fax: (202) 556-2001
[email protected]
Attorney for Petitioner