Late Confirming Your Award? No Problem!

The Middle District of North Carolina confirmed a Dutch arbitration award, rejecting the respondents' argument that the petition to confirm was untimely because it came more than three years after the award was issued. Although the Fourth Circuit never reached this questions before, the Court explained that the language in the Federal Arbitration Award (FAA) governing foreign arbitral awards is similar to that governing domestic awards, and the Fourth Circuit held that the three-year confirmation window governing domestic awards is permissive rather than mandatory. Sverdrup Corp. v. WHC Constructors, Inc., 989 F.2d 148, 156 (4th Cir. 1993).

The award arises from a dispute related to a Dutch court's 2017 order demanding the transfer of De Nederlandsche Bank N.V.'s shares in Conservatrix to Trier Holding B.V., a Dutch corporation, with Mr. Lindberg, through NIH and NIH Capital, being the ultimate shareholder of Trier. Under European regulation and the Dutch Financial Supervision Act, insurance companies are required to maintain a solvency capital ratio of at least 100%. In March 2019, respondents agreed to maintain Conservatrix's minimum solvency capital ratio at 135%. However, in August 2019, a financial report showed Conservatrix's solvency capital ratio had fallen below the minimum threshold.

In response, Conservatrix initiated summary arbitral proceedings against the respondents before the Netherlands Arbitration Institute, seeking provisional relief to replenish the solvency capital ratio. The arbitral tribunal issued a detailed ruling and arbitral award on January 31, 2020, ordering respondent Trier to replenish the shortfall in Conservatrix's solvency capital ratio to 135%, with core equity contributions, and ordering other respondents to procure Trier's compliance. If they did not comply within 60 days, the tribunal ordered payment of €150 million to Conservatrix. A Dutch court promptly granted leave to enforce the arbitration award in February 2020. Despite subsequent appeals by Trier, including an appeal to the Supreme Court of the Netherlands, the attempts to nullify the award were denied. As of the latest update in March 2022, there has been no action in the main proceeding, indicating a standstill in the legal proceedings. Petitioner filed a petition to confirm the award in the Middle District of North Carolina in October 2023.

Section 207 of the FAA outlines the procedure for confirming foreign arbitration awards, stating that within three years of the award being made, any party to the arbitration may apply to a court for an order confirming the award against any other party. Respondents argue that because the petitioners filed their petition more than three years after the arbitrator entered the award, the petition should be dismissed. However, the Fourth Circuit has interpreted similar language in Section 9 of the FAA differently, finding that the one-year limitation period for domestic arbitrations is permissive rather than mandatory, allowing for confirmation of awards beyond the one-year period to encourage dispute resolution outside of federal court.

Although the Fourth Circuit has not specifically interpreted the three-year language in Section 207, the language in both Section 9 and Section 207 is nearly identical, stating that "any party to the arbitration may apply" to confirm the award within a specified time. At least one other court in the circuit has concluded that the time limitation in Section 207 is also permissive, citing the Fourth Circuit's reasoning in a similar case. Therefore, despite the Petitioners filing their petition more than three years after the arbitrator entered the award, the permissive nature of the three-year period outlined in Section 207 means that it does not serve as a bar to confirming the award beyond the three-year timeframe. Consequently, the Court denied Respondents' motion to dismiss based on a time bar. This holding is similar to that in First Kuwaiti Gen. Trading & Contracting W.L.L. v. Kellogg Brown & Root Int'l, Inc., No. 1:23-MC-1, 2023 WL 6221771, at *4 (E.D. Va. Sept. 22, 2023).

The case is Van Andel et al. v. Lindberg et al., No. 1:23-CV-879, 2024 WL 1860385 (M.D.N.C. Apr. 29, 2024).

Hulley Opposes Russia's Appeal

Appellees Hulley Enterprises Ltd., Yukos Universal Ltd., and Veteran Petroleum Ltd. filed their brief in opposition to Russia's appeal last week. Appellees, represented by Susman Godfrey LLP, focused their response on the fact that Russia's arbitrability argument has been rejected repeatedly in the course of the sovereign's various attempts at annulling or vacating the award. Appellees implored the Court: "This case cries out for the doctrine of issue preclusion to be applied."

Appellees argued that since the case was stayed for six years to wait for the annulment proceedings before Dutch courts to come to an end, allowing Russia to re-litigate these issues would "defeat the central purpose of the New York Convention—facilitating the expeditious resolution of disputes."

Even if the Court were to give Russia another bite at the apple, Appellees argue, the District Court correctly denied the Russian Federation’s motion to dismiss under the Foreign Sovereign Immunities Act (“FSIA”). Appellees explained that Russia's agreement to provisionally apply the ECT was sufficient for the District Court to find that an agreement to arbitrate existed. Appellees further argued that since the sovereign is not challenging the existence of the agreement, but its validity, Russia's challenges are questions of arbitrability, which are not jurisdictional questions under the FSIA.

Russia's opening brief, in April, is an appeal of the District Court's decision denying its request to dismiss the action to enforce an arbitral award against it, claiming that it has never waived its immunity against jurisdiction. Russia now argues that the Court erred in refusing to dismiss the action because (1) it has not delegated the arbitrability review to the tribunal; and (2) even if it did, the District Court still had the obligation to independently decide "whether Respondent made a 'standing offer' to arbitrate under the [Energy Charter Treaty ("ECT")] and whether Petitioners were eligible offerees who could 'accept[]' any purported offer."

The case is Hulley Enterprises Ltd. v. Russian Federation, No. 23-7174 (D.C. Cir.). Russia's reply brief is due on May 22, 2024.

Default Proceedings Underway in Award Confirmation Case Against Ghana

Petitioner GPGC Ltd., represented by Robert Kry of Molo Lamken LLP informed the Court that service of the Clerk's Entry of Default on the Republic of Ghana was completed in a proceeding to confirm a $134 million award against the sovereign.

The arbitration arose out of a 2015 Emergency Purchase Agreement between Ghana and GPGC, a commodity supplier and supply chain manager with operations around the world (the “EPA”). Under the EPA, GPGC agreed to relocate, install, and operate two gas turbine power plants to meet the energy needs of the Republic of Ghana during an energy crisis affecting the country. That agreement required GPGC to dismantle the two power plants, transport them to Ghana, install them, and operate and maintain them, all at its own expense. In return, GPGC would earn revenues from the energy sales for a guaranteed term of four years. But according to the petition to confirm, in December 2016, Ghana held a general election, and the newly installed government believed that its predecessor had purchased too much power and that there would be an excess of supply. In February 2018, Ghana purported to terminate the EPA. The arbitration ensued before the Permanent Court of Arbitration, where GPGC claimed that the termination of the EPA was unlawful.

In January 2021, the tribunal issued its final award, ordering Ghana to pay GPGC $134,348,661 for its wrongful termination of the EPA. Ghana has made a few partial payments toward the Award, but has failed to pay the full amount due.

GPGC filed the petition to confirm the Award before the U.S. District Court for the District of Columbia in January 2024. The petition was served on Ghana that same month. Due to Ghana's failure to appear in this case, GPGC filed and affidavit in support of default on April 23, 2024. The Clerk entered default the next day. With the clerk's entry of default having been served on the sovereign, GPGC will soon move for default judgment and confirmation of the award.

Ghana is not a stranger to U.S. courts and it has appeared in the past to oppose the confirmation of arbitration awards, see, e.g.,  Balkan Energy Ltd. v. Republic of Ghana, 302 F. Supp. 3d 144 (D.D.C. 2018), or other lawsuits brought against it in U.S. courts, e.g., TJGEM LLC v. Republic of Ghana, 26 F. Supp. 3d 1 (D.D.C. 2013), aff'd, No. 14-7036, 2015 WL 3653187 (D.C. Cir. June 9, 2015).

The case is GPGC Limited v. Government of the Republic of Ghana, No. 1:24-cv-00169-JEB (D.D.C.).