Case of the Day: Commissions Import Export S.A. v. Republic of the Congo

The case of the day is Commissions Import Export SA v. Republic of the Congo (D.D.C. 2013). The case deals with local statutes of limitations applicable to recognition and enforcement of foreign arbitral awards, a topic we saw in the discussion of Yugraneft Corp. v. Rexx Management Corp., [2010] 1 S.C.R. 649 (Can.), the case of the day from January 20, 2011.

The Republic of the Congo was party to a 1992 contract with Commisimpex that it failed to honor. The contract contained an arbitration agreement and a waiver of sovereign immunity. Commisimpex commenced an arbitration before the ICC in Paris against the Republic and one of its ministries. In 2000, the tribunal awarded more than $31 million in damages to Commisimpex.

In 2009, Commisimpex sought recognition and enforcement of the award in the English High Court. The court entered a judgment in Commisimpex’s favor.

In 2012, Commisimpex sought recognition and enforcement of the English judgment—not the arbitral award—under District of Columbia law. 1 It moved for summary judgment.

For purposes of the decision, the judge assumed that the English judgment would be entitled to recognition and enforcement under District of Columbia law but for the statute of limitations in the FAA. 2 Section 207 of the FAA provides:

Within three years after an arbitral award falling under the [New York] 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.

Under US law (unlike the Canadian law at issue in Yugraneft), the statute of limitations is procedural not substantive, so there was no dispute that if Commisimpex had sought confirmation of the arbitral award directly, § 207 would have barred the claim even though the New York Convention does not include a statute of limitations as one of the bases on which a court may refuse recognition and enforcement of an award.

The judge held that allowing an action to recognize a foreign judgment that would be untimely if brought as an action to recognize the underlying arbitral award would obstruct Congress’s purposes and objectives in the FAA and thus that the Commisimpex’s action under DC law was preempted by federal law. Of course, the overriding purpose of the FAA is to facilitate the enforcement of agreements to arbitrate and the recognition and enforcement of arbitral awards, but the judge also found that Congress had intended to ensure procedural uniformity throughout the nation and to protect a defendant’s interest in finality by imposing a time limit on confirmation. Thus he concluded that Commisimpex’s action was preempted.

This is a highly interesting ruling that raises a lot of questions. Here are some that come to mind:

  • What if the United States had a federal statute governing recognition and enforcement of foreign judgments? Then there would be no issue of federal law preempting state law. Instead, there would be a simple issue of statutory construction, or maybe a not-so-simple issue. Depending on your methodological leanings, the question might be: did Congress intend to limit the time for recognition and enforcement of a foreign judgment based on an arbitral award in these circumstances? It seems to me that this new decision should prompt the drafters of proposed federal legislation to deal expressly with the question.
  • What if Commisimpex had first obtained recognition and enforcement of the award in one US state and then sought recognition, outside of the FAA’s limitations period, in another state? It seems to me that the Full Faith and Credit Clause would have to trump the concerns about the policy of the FAA. But should the rule be different in the domestic context than it is in the foreign context? If I’m right about the outcome in a domestic case, isn’t that reason to think the judge got this one wrong in the international case?
  • We know that refusal to recognize or enforce foreign judgments can be a source of diplomatic friction. Shouldn’t comity concerns have at least been a factor in the judge’s decision?

These questions suggest that I have doubts about the holding. I’m not saying it’s wrong—I’m saying it’s complicated. I hope (and guess) that the judgment will be appealed, so that we can get the Court of Appeals’s view.

Notes:

  1. Commisimpex first sought recognition in New York, but the case was transferred to Washington on venue grounds.
  2. While the statute is not, on its face, a statute of limitations, courts have read it as one.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2012), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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