The case of the day is Mobil Cerro Negro, Ltd. v. Bolivarian Republic of Venezuela (S.D.N.Y. 2015). In 2007, Venezuela expropriated Mobil’s interest in various oil projects in the country. Mobil commenced an ICSID arbitration under a bilateral investment treaty. In 2014, the tribunal awarded Mobil approximately $1.6 billion, which remains unpaid. A day after issuance of the award, Mobil, by way of an ex parte and summary proceeding, obtained recognition of the award in New York. Venezuela moved to vacate the judgment. It later asked the tribunal to modify the award on the grounds that the award gave Mobil a double recovery in light of a recovery Mobil had obtained from the Venezuelan state-owned oil company. ICSID’s Secretary-General stayed the award pending the outcome of the motion to modify it.

Venezuela’s procedural argument was that it was improper to recognize the award by way of a summary ex parte proceeding; according to Venezuela, a plenary proceeding was necessary. The court rejected this contention. ICSID awards are not governed by the New York Convention, but rather by statute, 22 U.S.C. § 1650a. The statute provides:

An award of an arbitral tribunal rendered pursuant to chapter IV of the convention shall create a right arising under a treaty of the United States. The pecuniary obligations imposed by such an award shall be enforced and shall be given the same full faith and credit as if the award were a final judgment of a court of general jurisdiction of one of the several States. The Federal Arbitration Act (9 U.S.C. 1 et seq.) shall not apply to enforcement of awards rendered pursuant to the convention.

Unlike the FAA, the statute does not provide for any grounds on which a court can refuse recognition of an ICSID award. And in fact, assuming the document presented to the court as the award is authentic, there are no such grounds. Also unlike the FAA, the statute does not set out a procedural scheme for recognition and enforcement of awards. It simply provides that “The pecuniary obligations imposed” by the award “shall be enforce and shall be given the same full faith and credit” as if the award were a state court judgment.

The judge noted that several ICSID award creditors had previously registered their awards in the Southern District of New York in ex parte proceedings, but that only one other judge had really considered the propriety of the procedure. That case, Siag v. Egypt, held that it was proper to look to Article 54 of the CPLR, which sets out the procedure for registering a sister-state judgment in New York and which requires only registration, not a plenary action. The judge in today’s case agreed with Siag, pointing to the general principle of borrowing from state procedure when there is a gap in federal law and, less persuasively to me, to the Rules of Decision Act and FRCP 69. Venezuela pointed to various concerns that were not too persuasive. There is a need for uniformity, it claimed. Well, ICSID awards are enforceable in more than 100 countries, in each case under that country’s procedure, so there is no harm in using state law procedures in US cases. Federal law must preemept state law given that ICSID awards are an exclusively federal concern. But there is no conflict between federal and state law here, and to the extent we want to consider the question, New York’s procedures aid the federal interest in speedy recognition. Using the New York procedure offends comity, Venezuela claimed. But comity is not at stake since the recognition of the award is purely ministerial—the court has no power to do anything other than recognize it.

Perhaps the best argument Venezuela put forward is that the court should have looked to the procedure federal courts use when asked to register a state-court judgment as a federal judgment, which rather than to the procedures New York courts use when asked to register sister-state judgments. In the other procedure, there is room, for example, to consider whether the underlying judgment was constitutionally infirm. The judge rejected this point, and suggested, I think, that there is no room to challenge recognition of an ICSID award even on constitutional grounds. But is that really right? See Edward Baldwin et al., Limits to Enforcement of ICSID Awards, 23 J. Int’l Arb. 1, 11 n.39 (2006).

Venezuela also claimed that the FSIA, enacted after the ICSID enabling statute, supersedes it, and that under the FSIA the court lacks jurisdiction and ex parte procedures are not permitted. The court easily rejected the jurisdictional point, since under 28 U.S.C. § 1605(a)(6)(B), there is no sovereign immunity in actions to confirm arbitral awards if the award is governed by a treaty calling for the recognition and enforcement of arbitral awards. The court also pointed to 28 U.S.C. § 1605(a)(1), which creates an exception to sovereign immunity in cases of waiver. Venezuela waived its immunity, the judge said, by adopting the ICSID Convention. More generally, under 28 U.S.C. § 1604, the definition of sovereign immunity in § 1605 is “subject to existing international agreements to which the United States is a party at the time of enactment of this Act.” I wonder whether this provision of § 1604 was meant to ensure that Congress did not violate a treaty by impermissibly narrowing foreign sovereign immunity. Here, though, the court deploys § 1604 precisely to make the point that the foreign sovereign is not immune under FSIA.

Venezuela points to the FSIA in another way. Because Mobil was proceeding pro se, it did not even attempt to serve process, let alone to serve process using one of the methods the FSIA prescribes. Nor did Mobil try to satisfy the FSIA’s venue requirements, which probably would have led to the case being filed in the District of Columbia if applied. Do these FSIA requirements apply? The court said no. The text of the FSIA did not provide a clear answer, but the court reasoned that if it accepted Venezuela’s argument, the result would be in tension with the ICSID Convention. That convention was intentionally drafted to ensure that unlike with ordinary arbitral awards governed by the New York Convention, there would be no substantive review at all of ICSID awards. The method for enforcement of an ICSID award must be at least as simple and expeditious as the procedure for confirmation under the New York Convention:

Ironically, if Venezuela were literally held to its advocacy here, requiring the creditor to file a “plenary action” (initiated by a complaint and resolvable only upon full motions practice) would give Venezuela more process than it was due under the New York Convention, under which at least a streamlined petition-based confirmation process is used. And if Venezuela were taken instead simply to advocate the use under the ICSID Convention of the procedures used under the New York Convention, that
notion, too, would plainly be at odds with the intent of the ICSID Convention.

The last interesting point is that Venezuela still has its immunity from execution under the FSIA. The reason for emphasizing this point is to show that Mobil’s position does not deprive Venezuela of the special protections it has under the FSIA—it simply pushes the litigation towards actual substantive issues, namely the issues involving execution and attachment, and away from the purely ministerial issue of recognition of the ICSID award.