Case of the Day: Orange Middle East & Africa v. Equatorial Guinea
Posted on May 23, 2016
The case of the day is Orange Middle East & Africa v. Republic of Equatorial Guinea (D.D.C. 2016). Orange and the Republic of Equatorial Guinea were the shareholders of a telecommunications company providing service in Equatorial Guinea. The government was the majority shareholder. After some disputes arose, the parties entered into a settlement agreement, which required the government to purchase Orange’s shares if it granted a telecommunications license to a third party. The agreement provided for arbitration of disputes in Paris under the ICC rules.
In 2011, the government granted a third party a license, but it failed to purchase Orange’s shares. Orange demanded arbitration. The arbitrators awarded Orange more than € 131 million. The government sought to set aside the award, but the Court of Appeals in Paris authorized enforcement of the award.
Orange sought to confirm the award in Washington. The government moved to dismiss for insufficient service of process.
The FSIA governed service of process, of course. Orange sought to serve process under 28 U.S.C. § 1608(a)(1), which provides for “delivery of a copy of the summons and complaint in accordance with any special arrangement for service between the plaintiff and the foreign state.” It claimed that the settlement agreement contained a “special arrangement.” The relevant portion of the agreement provided for service of “notices, agreements, waiver declarations, and other communications made under this Agreement” by mail. Orange delivered the papers to the government by mail and asserted that it had complied with the agreement. But as the judge noted, the District of Columbia cases distinguishes between “all-inclusive” notice clauses (“all notices … shall”) and notice clauses limited to notices provided under the agreement (“all notices required or permitted under this agreement … shall”). The former is a special arrangement for service; the latter is not. Thus the court granted the motion and dismissed without prejudice.
I suspect Orange understood from the outset this was a possible or even likely outcome. But because the FSIA has a hierarchy of methods of service, Orange probably figured that if it proceeded to another method of service first, it might well face a motion to dismiss asserting that it had failed to make use of the special arrangement set out in the agreement! Parties could avoid this by being explicit in their contracts about whether a method of service of notices is intended to serve as a special arrangement under § 1608(a)(1).