District of Columbia Warns Sovereigns Against Dragging Out Confirmation Proceedings

In Deutsche Telekom AG v. Republic of India, No. CV 21-1070 (RJL), 2024 WL 1299344 (D.D.C. Mar. 27, 2024), Judge Leon of the District Court for the District of Columbia sent a strong message to sovereign states looking to delay the confirmation of arbitration awards.

Judge Leon confirmed Deutsche Telekom's award, denying India's motion to dismiss on forum non conveniens and because India is immune from suit under the Foreign Sovereign Immunities Act. The forum non conveniens argument was "dispatched with alacrity"--as the D.C. Circuit has “squarely held ‘that forum non conveniens is not available in proceedings to confirm a foreign arbitral award because only U.S. courts can attach foreign commercial assets found within the United States.’ ” Id. at *2.

The court gave more time to the sovereign immunity argument, but nevertheless rejected it, finding that the FSIA's "arbitration exception" applies. Id. The Court explained that "the arbitration exception requires establishing three 'jurisdictional facts': 'the existence of an arbitration agreement, an arbitration award[,] and a treaty governing the award.'” Id. at *3. India attempted to rebut Deutsche Telekom's clear establishment of these three requirements by arguing that "its offer to arbitrate in ... the BIT did not encompass [Deutsche Telekom's]'s claims—first because '[it]had not made any ‘investment’ in India and was not an ‘investor’ as defined in the BIT,' and second because [its] activities through a subsidiary were not protected by the BIT." Id. The court explained, however, that such arguments "about whether a sovereign's offer to arbitrate covers 'this particular dispute' concern 'the arbitrability of a dispute[, which] is not a jurisdictional question under the FSIA., [but] are 'properly considered as part of [merits] review under the New York Convention.'” Id. Finding that India is not immune from suit, the court moved on to consider --and reject--India's argument as part of its analysis under the New York Convention.

Lastly, the court strongly rejected India's argument that confirmation proceedings in U.S. courts have evolved to comprise two separate stages when sovereigns are involved: one where arguments regarding immunity are heard; and one where defenses under the New York convention are considered. The court explained that not only need confirmation proceedings need to be summary in nature, but proceeding as requested by India would give sovereigns another bite at the apple after it raised the same arbitrability arguments--to no avail--before "the arbitral panel, the Swiss Federal Supreme Court, and the [District of Columbia] court." "Enough is enough!" the Court concluded.

SDNY Allows Execution Against Libya

On September 18, 2023, Judge Koeltl granted Olin Holdings's motion seeking entry of an Order pursuant to 28 U.S.C. § 1610(c), permitting the petitioner to seek an attachment or execution.

The Foreign Sovereign Immunities Act requires a waiting period before execution of a judgment against a sovereign commerces. Courts must determine “that a reasonable period of time has elapsed following the entry of judgment” before ordering attachment or execution of a foreign state’s property within the United States. The Olin Holdings court collected cases applying Section 1610(c), noting that although what constitutes a "reasonable period of time" is case-dependent, other courts have found one has elapsed after eleven or seven months. In this case, fifteen months have elapsed, so the Court has found a reasonable period of time has elapsed and allowed Olin to begin enforcement of its judgment against Libya.

The Court rejected Libya's argument that enforcement should not be allowed until proceedings in France challenging the award have terminated.

This case is Olin Holdings Inc. v. State of Libya, No. 1:21-cv-04150-JGK (S.D.N.Y). Olin Holdings is represented by James Berger, Charlene Sun, Erin Collins, and Thomas Childs of DLA Piper. The State of Libya is represented by Kevin Meehan and Joseph Pizzurro of Curtis, Mallet-Prevost, Colt & Mosle, LLP

The opinion can be downloaded below.

Olin v. Libya.pdf

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SDNY Orders Citibank to Instruct Gabon Subsidiary to Freeze Assets

On September 15, 2023, the Southern District of New York issued an order requiring Citibank, N.A. and Citigroup, Inc. to "unequivocally instruct the managers of Citibank Gabon, S.A. to comply with [a] present order of the Libreville Commercial Court in Gabon, and to preserve the status quo by maintaining the present freeze of the [the Cameroon Oil Transportation Company S.A. ("COTCO") funds until resolution of the COTCO shareholders' disputes, except for amounts necessary for the ordinary course of payment of COTCO's employees, taxes, and its existing subcontractors and suppliers essential to COTCO's operation of the pipeline."

This order was the result of a petition for injunctive relief in aid of arbitration filed by Savannah Midstream Investment Limited ("SMIL") pursuant to Rules 64 and 65 of the Federal Rules of Civil Procedure and Rule 7502(c) of the New York Civil Practice Law and Rules.

SMIL is a significant shareholder of COTCO, who holds over $150,000,000 in assets in Citibank's Gabon "branch." COTCO was established in the late 1990s as a result of a collaboration between the Republic of Cameroon and the Republic of Chad to develop the production capacity of certain oil fields in Southern Chad. After SMIL's ownership changed, Chad purportedly tried to nationalize SMIL's assets in COTCO and tried to oust SMIL from COTCO. According to SMIL, Chad continues to take illegal steps amid a military coup in Gabon to cause a Gabonese court to vacate a protective injunction freezing COTCO’s funds held in accounts at the Gabon branch of Citibank. SMIL initiated arbitration with the ICC International Court of Arbitration, who ordered interim relief against Chad.

Citibank opposed SMIL's request, arguing that the Court cannot direct them to freeze accounts held at Citi Gabon, which it is not a branch, but an entity independent of Citibank, that SMIL failed to name necessary parties such as COTCO and Chad and that, as a matter of comity, the Court should not intervene in the Gabon proceeding. Citibank filed a notice of appeal with the Second Circuit.

The case is Savannah Midstream Investment Limited v. Citibank, N.A. et al., No. 1:23-07771 (S.D.N.Y.). SMIL is represented by Debra Dubritz O'Gorman, Kevin S. Reed, Dennis Hranitzky, and Yehuda Goor of Quinn Emanuel Urquhart & Sullivan, LLP. Citibank and Citigroup are represented by Sharon L. Schneier, Gaurav K. Talwar, and Theodore R. Snyder of Davis Wright Tremaine LLP.

The order can be downloaded below.

Savannah Midstream.pdf

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