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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
|
DORALEH CONTAINER TERMINAL SA,
v. REPUBLIC OF DJIBOUTI,
|
Civil Action No. 20-cv-2571 (ВАН) Judge Beryl A. Howell |
MEMORANDUM OPINION AND ORDER
On February 17, 2023, judgment (“February 2023 Judgment”) was entered in favor of petitioner, Doraleh Container Terminal S.A. (“Doraleh Container"), confirming two foreign arbitral awards in the total amount of approximately $541 million against respondent, the Republic of Djibouti (“Djibouti”). Mem. Op., ECF No. 44; Order, ECF No. 47.1 Djibouti appealed that ruling to the D.C. Circuit on February 24, 2023. Notice of Appeal to D.C. Cir. Ct., ECF No. 48.
With that appeal pending, Djibouti now moves to stay execution of the February 2023 Judgment without requiring the posting of a supersedeas bond. Resp.’s Mot. Stay ("Resp.’s Mot."), ECF No. 50. Petitioner both opposes that motion and simultaneously seeks a declaration that a "reasonable period of time has elapsed following the entry of judgment,” 28 U.S.C. § 1610(c), permitting enforcement of the February 2023 Judgment to begin, id. § 1610(a). See Petitioner’s Motion for Relief (“Pet.’s Mot.”), ECF No. 53.
1 This case was originally resolved by Judge Thomas F. Hogan and reassigned, on April 11, 2023, to the undersigned on the former's retirement. ↩
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Djibouti has not demonstrated that the petitioner's interest in ultimate recovery would be adequately protected absent a bond, and thus is not entitled to an exception from the usual requirement that a supersedeas bond be posted to secure a stay. See Fed. Prescription Serv. Inc. v. Am. Pharm. Ass’n, 636 F.2d 755, 760–61 (D.C. Cir. 1980). Thus, Djibouti's motion will be denied, although this respondent remains free to obtain a stay of enforcement actions by posting a bond or other security approved by the Court, pursuant to Federal Rule of Civil Procedure 62(b).
Petitioner's cross-motion for a declaration, pursuant to 28 U.S.C. § 1610, that would allow pursuit of enforcement actions to execute the February 2023 Judgment will likewise be denied without prejudice, given the relatively short period of just two months that has elapsed since the entry of judgment and the likelihood that Djibouti will now post a bond to obtain a stay of the judgment.
The parties primarily dispute whether Djibouti should be granted an unbonded stay of the February 2023 Judgment while pursuing an appeal before the D.C. Circuit. See Resp.’s Mot. at 3–13; Petitioner's Opp'n Resp.’s Mot. Stay (“Pet.'s Opp'n”) at 9–21, ECF No. 53-1. Djibouti, as a judgment debtor, is entitled to a stay of execution upon the posting of a bond, pursuant to Federal Rule of Civil Procedure 62(b). See Fed. Prescription Serv., 636 F.2d at 758–59 (explaining that where the bond provided is an “amount to satisfy the judgment in full, together with costs, interest, and damages for delay,” it is “[b]eyond question” that an appellant is entitled to a stay “as a matter of right”). Here, however, Djibouti seeks an extraordinary departure from that norm by seeking an enforcement stay while avoiding the requisite posting of a bond. As
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petitioner correctly asserts, unbonded stays are granted only rarely, and the circumstances of this case do not warrant deviation from the usual bond requirement. Djibouti's motion will therefore be denied.
Federal Rule of Civil Procedure 62(b) contemplates that a judgment debtor provide a court-approved bond (or other security) before being entitled to a stay of enforcement pending appeal, for "[t]he purpose of the supersedeas bond is to secure the appellee from loss resulting from the stay of execution." Fed. Prescription Serv., 636 F.2d at 760. “Because the stay operates for the appellant's benefit and deprives the appellee of the immediate benefits of his judgment, a full supersedeas bond should be the requirement in normal circumstances," and is normally justified by “some reasonable likelihood of the judgment debtor's inability or unwillingness to satisfy the judgment." Id. As such, only “[i]n usual circumstances" should a district court exercise any discretion to “order partially secured or unsecured stays." Id. Upon finding that such “unusual circumstances” exist, a district court may order an unbonded or partially bonded stay only where the requesting party establishes that this would “not unduly endanger the judgment creditor's interest in ultimate recovery.” Id. at 760–61 (footnote omitted); see also Klayman v. Jud. Watch, Inc., No. 06-cv-670 (CKK), 2019 WL 4260380, at *1 (D.D.C. Sept. 9, 2019) (“The moving party has the burden to ‘objectively demonstrate the reasons for such a departure' [from the usual bond requirement]” (quoting Grand Union Co. v. Food Employers Lab. Relations Ass’n, 637 F. Supp. 356, 357 (D.D.C. 1986)).2
2 The parties dispute whether, as an alternative to the Federal Prescription test, Djibouti might obtain an unbonded stay under the traditional factors for granting injunctive relief, i.e., “whether the stay applicant has made a strong showing that he is likely to succeed on the merits,” “whether the applicant will be irreparably injured absent a stay,” “whether issuance of the stay will substantially injure the other parties interested in the proceeding," and "where the public interest lies,” see Hilton v. Braunskill, 481 U.S. 770, 776 (1987). Resp.’s Mot. at 9–13; Pet.’s Opp'n at 18–21; Resp.’s Reply Supp. Mot. Stay ("Resp.’s Reply"), ECF 55, at 8. No such alternative test is referenced in Federal Prescription, which sets out the governing standard in this Circuit for an unbonded stay. See Klayman, 2019 WL 4260380, at *1 n.1 (concluding that the Hilton factors are inapplicable to the narrow question of "whether a bond should be required" for a stay); cf. Stati v. Republic of Kazakhstan, No. 14-cv-1638 (ABJ), 2018 ↩
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Djibouti argues that foreign sovereigns are generally exempt from this regime, as they enjoy a “presumption” of solvency and compliance entitling them to unbonded stays. Resp.’s Mot. at 5–6. Such a “presumption” appears to be wishful thinking, as this argument has been repeatedly rejected in this Circuit. See, e.g., Pao Tatneft v. Ukraine, No. 17-cv-582 (CKK), 2021 WL 2209460, at *2–3 (D.D.C. June 1, 2021) (collecting cases and concluding that “upon review of cases from this Circuit . . . with regard to foreign sovereigns, there is no hardline exception to the default rule requiring a bond to obtain a stay of execution"). “[T]he standard set forth in the Fed. Prescription case” thus applies to foreign sovereigns, just the same as to any party seeking an unbonded stay. Id. Consequently, this Court must “look to the circumstances of this case to determine if there are ‘unusual circumstances' that warrant waiving the requirement of a supersedeas bond.” Id.
"The Court of Appeals has emphasized three considerations when reviewing a district court's exercise of discretion in granting a stay without bond: (1) the damage award amount, (2) the net worth of the moving party in relation to the damage award, and (3) the residency status of the moving party." Klayman, 2019 WL 4260380, at *1 (citing Fed. Prescription Serv., 636 F.2d at 761). Where the damage award amount is small, especially in comparison to the net worth of the party seeking the unbonded stay, and that party resides in the district of the court ordering the money judgment and has not evinced any intent to leave, an unbonded stay is unlikely to “unduly endanger" the judgment creditor's interest in recovery, and a court may exercise discretion to
WL 11409986, at *2 n.3 (D.D.C. Nov. 13, 2018) (noting the uncertainty, but proceeding to assume that both standards were "relevant"). This issue need not be resolved here, however, because, as addressed infra, Djibouti falls short of its burden under the Federal Prescription test of demonstrating that petitioner's interest in recovery would be adequately protected in the event of an unbonded stay, which also means the third Hilton factor militates against grant of an unbonded stay.
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issue one. Fed. Prescription Serv., 636 F. 2d at 761; see also Klayman, 2019 WL 4260380, at *1–2 (collecting cases).
None of these factors is present in this case. As a foreign sovereign, Djibouti is plainly not a resident of this district. At over half a billion dollars, the judgment award is significant, even for a foreign sovereign. Finally, while as a nation state Djibouti's net worth likely vastly exceeds the award, see Resp.’s Mot. at 6 (noting its GDP to be “around $5.0 billion this year alone"), this status entitles the country to sovereign immunity, which is likely to be invoked to shelter assets from execution. That execution immunity in effect limits the relevant ratio of judgment to net worth. See, e.g., Walters v. Indus. & Com. Bank of China, Ltd., 651 F.3d 280, 289 (2d Cir. 2011) (noting that “the execution immunity afforded sovereign property is broader than the jurisdictional immunity afforded the sovereign itself,” which often leaves judgment creditors a "right without a remedy” against foreign states). Further, as petitioner points out, an unbonded stay will provide Djibouti a window of time to “shift whatever non-immune assets it has beyond [petitioner]'s reach while the appeal is pending." Pet.'s Opp'n at 11. While making much of the general fact of its solvency, Djibouti offers no assurances that the country will “waive[] its immunity from attachment in aid of execution or from execution,” 28 U.S.C. § 1610(a)(1), so that any particular assets or amount of money will actually be subject to execution when the time comes. See Resp.’s Mot. at 6–8. Djibouti therefore has not met its burden of establishing that an unbonded stay will not “unduly endanger” petitioner's interest in its “ultimate recovery,” requiring the denial of its motion. Fed. Prescription Serv., 636 F.2d at 760–61.
Finally, Djibouti also requests, in a footnote, that “[a]t a minimum, and for the same reasons [as for the requested unbonded stay], the Court . . . stay post-judgment discovery
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pending appeal.” Resp.’s Mot. at 11 n.5. Post-judgment discovery “[i]n aid of the judgment or execution" is authorized by Federal Rule of Civil Procedure 69(a)(2), for the purpose of "allow[ing] the judgment creditor to identify assets from which the judgment may be satisfied." LLC SPC Stileks v. Republic of Moldova, No. 14-cv-1921 (CRC), 2023 WL 2610501, at *6 (D.D.C. March 23, 2023) (quoting Wall v. DO & CO NY Catering, Inc., No. 18-cv-3725 (AKT), 2021 WL 4133756, at *1 (E.D.N.Y. Sept. 9, 2021)). Accordingly, “[t]he rules governing discovery in postjudgment execution proceedings are quite permissive,” as “the judgment creditor should be permitted to conduct a broad inquiry to uncover any hidden or concealed assets of the judgment debtor.” Id. (quoting Republic of Argentina v. NML Cap., Ltd., 573 U.S. 134, 138 (2014); Wall, 2021 WL 4133756, at *1). Given the generally expansive permissiveness of this regime, and especially in light of the fact that Djibouti has fallen short of demonstrating its entitlement to an unbonded stay, this bald request, appearing as an almost after-thought, for a stay of post-judgment discovery “for the same reasons,” Resp.’s Mot. at 11 n.5, is denied.
Petitioner moves for an order, pursuant 28 U.S.C. § 1610(c), that “a reasonable period of time has elapsed following the entry of judgment,” such that petitioner may begin enforcement of the February 2023 Judgment by means of attachment, execution, or other means in accordance with 28 U.S.C. § 1610(a). Pet.’s Mot.; see 28 U.S.C. § 1610(a), (c).
Despite the denial of its motion for an unbonded stay, Djibouti remains free to secure a stay in this matter by posting a bond, pursuant to Federal Rule of Civil Procedure 62(b). To allow for the foreseeable possibility that Djibouti will now do so, petitioner's request will be denied as premature. While petitioner correctly notes that § 1610(c) declarations have occasionally been found appropriate after as little as six weeks after the entry of judgment, see
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Ned Chartering and Trading, Inc. v. Republic of Pakistan, 130 F. Supp. 2d 64, 67 (D.D.C. 2001), more frequently courts wait until several months have elapsed, see, e.g., Saint Gobain Performance Plastics Europe v. Bolivarian Republic of Venezuela, No. 20-cv-129 (RC), 2021 WL 6644369, at *2 (D.D.C. July 13, 2021) (four months); Koch Minerals Sarl v. Bolivarian Republic of Venezuela, No. 17-cv-2559 (ZMF), 2022 WL 521747, at *3 (D.D.C. Feb. 22, 2022) (six months); Stati, 2018 WL 11409986, at *1 (eight months); Spanski Enters., Inc. v. Telewizja Polska, S.A., No. 12-cv-957 (TSC), 2019 WL 13159872, at *1 (D.D.C. Aug. 22, 2019) (17 months). Given that only two months have passed since the entry of February 2023 Judgment, and given Djibouti's demonstrated desire to obtain a stay pending appeal, setting in motion enforcement proceedings under 28 U.S.C. § 1610 remains premature at this time. If Djibouti does not elect to obtain a stay, under Federal Rule of Civil Procedure 62(b), by posting a Court-approved bond (or other security) within the next two months, petitioner may renew its motion.
For the foregoing reasons, it is hereby—
ORDERED that respondent's Motion to Stay the Judgment, ECF No. 50, without posting a bond, is DENIED WITHOUT PREJUDICE; it is further
ORDERED that respondent may nonetheless obtain a stay pending appeal of the judgment confirming the arbitration awards in this case, ECF No. 47, provided that respondent posts a bond, in accordance with Federal Rule of Civil Procedure 62(b); and it is further
ORDERED that petitioner's Motion for Relief Pursuant to 28 U.S.C. § 1610(c), ECF No. 53, is DENIED WITHOUT PREJUDICE to its refiling 60 days or more from the date of this order, provided no stay is in effect at that time.
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SO ORDERED.
Date: April 24, 2023
Signature
BERYL A. HOWELL
U.S. District Court Judge