Case of the Day: Commissions Import Export SA v. Republic of the Congo
Posted on July 14, 2014
The case of the day is Commissions Import Export S.A. v. Republic of the Congo (D.C. Cir. 2014). This is the appeal of the decision I reported in January 2013. The holding in the District Court was that where a party to a foreign arbitration has obtained a judgment confirming the award from a foreign court and then seeks recognition and enforcement of the foreign judgment rather than of the award in a US court, the statute of limitations in § 207 of the FAA preempts any longer statute of limitations available under state law governing the recognition and enforcement of foreign judgments. In today’s decision, the DC Circuit reversed.
As I noted in the previous post, the main issue in the case arises because confirmation of an arbitral award is governed by federal law while recognition and enforcement of a foreign judgment is governed by state law. Thus the issue is one of preemption, which raises delicate federalism questions. The case was governed by Hines v. Davidowitz, 312 U.S. 54 (1941), under which federal law preempts state law when, in the particular circumstances, state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” As the Supreme Court noted in Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363 (2000), this is a question of judgment “to be informed by examining the federal statute as a whole and identifying its purpose and intended effects.”
Section 207 of the FAA provides:
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 began by asking what Congress intended when it enacted § 207. The Congo argued that the purpose of § 207 was to promote finality and uniformity, and that those purposes would be frustrated. But the court rejected this argument. Because the FAA does not even mention foreign judgments, the court found that a textual analysis of the statute supported the view that Congress had not intended § 207 to apply to proceedings to enforce a foreign judgment, period. And the court noted that § 9 of the FAA, a similarly-worded statute governing confirmation of domestic arbitral awards, did not preempt longer statutes of limitations available under state law. It would be anomalous to read § 207 differently than the courts had read § 9.
Fundamentally, the point is that the purpose of the statute is to facilitate confirmation of arbitral awards. Thus construing the statute to set a floor, not a ceiling, was consistent with the Congressional purpose:
The amendment of the Federal Arbitration Act to include Chapter 2 reflects a congressional judgment that the emphatic federal policy in favor of arbitral dispute resolution applies with special force in the field of international commerce. That policy is not undermined—and frequently will be advanced—through recourse to parallel enforcement
mechanisms that exist independently of the FAA.
(Citations and internal quotation marks omitted).
The prospects for Supreme Court review of the decision are unclear. The Second Circuit agrees with the DC Circuit’s position, and the decision doesn’t indicate that any other circuit court disagrees.