I reported on the decision denying a jurisdictional motion to dismiss in Chiejina v. Nigeria, an award enforcement case I’m handling, back in August 2022. The dispute involved breaches of a contract for construction of gully erosion control structures in Nigeria’s Imo state. The parties have now filed their briefs in the DC Circuit (Nigeria’s brief; the award creditors’ brief; the reply brief; the appendix). There are a few points of interest I thought you’d like to read about.
First is the question of non-signatories who seek to enforce awards. The contract in this case was between Nigeria and a small Nigerian engineering firm, PICCOL Nigeria. The firm’s owner, Mr. Chiejina, did not sign in his personal capacity, but he was injured by Nigeria’s breach of the contract. He and Nigeria both demanded arbitration, Nigeria did not raise an arbitrability challenge during the arbitration, and the arbitrator awarded damages to both PICCOL and Mr. Chiejina. But in response to a petition to confirm, Nigeria argued that the arbitration exception to foreign sovereign immunity did not apply because Mr. Chiejina was not a signatory and Nigeria had not agreed to arbitrate disputes with him.
When a foreign state makes a non-signatory argument, it matters just who is the non-signatory. If the foreign state is the non-signatory, then there may indeed be a jurisdictional problem. Suppose, for example, that a state-owned enterprise signs a contract with an agreement to arbitrate, and the counterparty demands arbitration against the state-owned enterprise and the foreign state. Even if the arbitrator makes an award against the foreign state, the foreign state still has a jurisdictional argument in a US court, because the foreign state itself never agreed to arbitrate. But when a foreign state has agreed to arbitrate, and an arbitrator issues an award under that agreement in favor of a non-signatory, then even if the arbitrator got it wrong, the foreign state has a merits defense under Article V of the New York Convention, not a jurisdictional defense. The cases support this distinction, but I think you can also see it in the wording of the FSIA. The statute, 28 U.S.C. § 1605(a)(6), requires an agreement between the foreign state and a private party—not the award creditor, or the signatory to the underlying contract.
Second, as a backstop to the arbitration exception, PICCOL and Mr. Chiejina have argued that the waiver exception to foreign sovereign immunity applies. The Second Circuit, in the Seetransport case, has held that any state that has joined the New York Convention has implicitly waived its sovereign immunity in any award enforcement case brought in another contracting state’s courts. The DC Circuit has indicated its agreement with this view on a few occasions, though never in a precedential decision. Because the arbitration exception almost always applies in cases that Seetransport governs, there is probably no need for the DC Circuit to reach the issue. But just in case, we argued it below and argued it on an appeal as an alternate basis for affirming. In another case, the US government, as amicus curiae, has suggested that the court should avoid deciding the question if possible, without suggesting that Seetransport is wrong. This is of course a sensitive question, but I haven’t really seen a good argument against Seetransport on the merits. So it’s in the case, but I don’t expect the court to reach it.
Third, Nigeria raised a very unusual service question. PICCOL and Mr. Chiejina served process by having the clerk address and dispatch the documents to the Nigerian minister of foreign affairs, per 28 U.S.C. § 1608(a)(3). But Nigeria argued that the underlying contract’s notice provision, which applied to notices authorized by the contract, was a “special arrangement for service” under 28 U.S.C. § 1608(a)(1), and that PICCOL and Mr. Chiejina were required to attempt service under it. Why is this such an unusual argument? Because it’s almost always the private plaintiff who tries to argue that a contractual notice clause is a “special arrangement for service” in order to avoid the more cumbersome and formal methods of the FSIA, and it’s almost always the foreign state who insists on the more formal methods of service. What the cases say is that an all-encompassing notice provision (one governing “all notices,” for example, without specifying whether or not they are notices under the contract) is a special arrangement of service, but a limited notice provision (notices under the contract, or whatever), is not. And because it’s always the foreign state arguing for the more formal methods of service, courts read § 1608(a)(1) narrowly, to serve the interests of the foreign states, including, incidentally, Nigeria, which has resisted the kind of argument it makes here in another case.
Nigeria argued that its preference on the issue of service is entitled to substantial deference. That’s not what the FSIA is about. The FSIA fixes the methods of service and the order in which they must be attempted, whatever the foreign state’s preference and whatever the private plaintiff’s preference. Anyway, it’s hard to take Nigeria’s claim about its preference seriously, given some real-world evidence from another case. In the P&ID case, a case seeking confirmation of a multi-billion dollar award, which has been heavily litigated here, in Nigeria, and in London (a trial seeking to set aside the award on grounds of fraud has just concluded), the underlying contract contained precisely the kind of all-encompassing notice clause that the courts have held applies to service of a petition for confirmation. Nigeria’s lawyers were attuned to issues of service. Indeed, they argued correctly that service on the Nigerian ministry of justice was improper, because the statute required service on the minister of justice. But they apparently never even considered asserting that P&ID should have served process using the method in the contract. Nigeria’s true preference, like the true preference of probably every foreign state, is to be served via mail to its foreign minister or even via letters rogatory.
Updated to include links to the reply brief and the deferred appendix.