Construction Co. Opposes Guatemala's Motion to Dismiss

On May 10, Sigma Constructores, S.A. ("Sigma"), a well-established construction and engineering company incorporated in Guatemala, opposed Guatemala's motion to dismiss its petition to confirm three awards totaling over $32 million. Sigma addressed six different arguments--or categories of arguments--advanced by the sovereign in its attempt to dismiss the petition to confirm the awards.

First, Sigma argued that the sovereign's arguments such as "(i) that Sigma’s claims in the Arbitrations were time-barred; (ii) that Guatemalan law prevents Respondent from paying the amounts due in U.S. dollars, or (iii) that payment of the Awards would otherwise violate Guatemalan law" are impermissible attempts by Guatemala for a second bite at the apple, as they have been considered--and rejected--by the competent arbitral tribunals, as well as Guatemalan courts, that confirmed the three awards. Petitioner explained that these arguments are not jurisdictional and thus improperly raised in a Rule 12(b)(6) motion. Petitioner further argued that these arguments should be precluded under a long line of precedent that bars award debtors from re-litigating substantive issues during a confirmation proceeding.

Second, Sigma used Guatemala's counsel own words during a status conference to reject an argument that the awards were made against Guatemalan Ministry of Communications, and not the state itself. Petitioner not only pointed out that the Ministry was not a party to the contracts underlying the arbitrations, nor to the arbitration itself, but also quoted Guatemala's counsel who conceded during a status conference that the Ministry "does not have a separate legal personality" under Guatemalan law.

Third, Sigma rebuffed Guatemala's attempt to apply the Panama Convention instead of the New York Convention to its request to confirm the awards because the awards are purely domestic. Nevertheless, the petitioner pointed out that it has satisfied the pleading requirements for recognition under the Panama Convention as well.

Fourth, Sigma asked the Court to reject the "comity" arguments set forth by the sovereign as premature and factual.

Fifth, petitioner explained that Guatemala's forum non conveniens arguments should be rejected because the D.C. Circuit held that the doctrine is inapplicable in arbitration award confirmation proceedings.

Lastly, petitioner asked the Court to deny the sovereign's request for a stay of the confirmation proceedings, as all the ancillary litigation launched by Respondent to collaterally attack the judgments confirming two of the awards have been finally decided in Sigma’s favor. Moreover, the remaining award has been confirmed and Respondent’s efforts to stay its enforcement have been consistently rejected by Guatemalan courts.

The case is Sigma Constructores, S.A. v. Republic of Guatemala, C.A. No. 1:22-cv-01674-TSC (D.D.C.). Jonathan Cross and Daniela Paez of Herbert Smith Freehills N.Y. LLP represent petitioner. Guatemala was represented by Greenberg Traurig in moving to dismiss, but the firm withdrew its appearance earlier this month after presidential elections in Guatemala resulted in a change of regime and, as Greenberg Traurig explained, "effectively, a new client." According to the motion to withdraw, Guatemala is actively looking for a new firm to take Greenberg Traurig's place. Guatemala's reply is due on May 30, 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.).

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.