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.

Sovereign Litigation Cases to Watch in 2023

Enforcement Actions against Russia

Over the past year, three petitions to confirm arbitration awards were filed in the District of Columbia against Russia. These cases will be particularly interesting to watch in light of the current geopolitical landscape. Historically, it has been extraordinarily difficult to enforce judgments against Russia, but global sanctions against the sovereign might provide new ways to approach enforcement. It famously took Franz Sedelmeyer 12 years and over 30 domestic execution cases to collect his award against Russia--a saga which made him the only individual ever to collect a monetary award from Putin’s Russia.

Yukos Capital Limited v. The Russian Federation (No. 1:22-cv-00798) seeks to enforce a July 2021 arbitral award issued against Russia by the Permanent Court of Arbitration in proceedings conducted pursuant to the Energy Charter Treaty. After the clerk entered default judgment against the sovereign, Russia moved to dismiss the case for failure to effect service, and just recently requested a hearing on the motion to dismiss. Yukos is represented by Matthew McGill and Matthew Rozen of Gibson, Dunn & Crutcher LLP. The Russian Federation is represented by Bruce Samuel Marks, Maria Grechishkina, and Thomas Sullivan of Marks & Sokolov, LLC.

In Stabil LLC v. The Russian Federation (No. 1:22-cv-00983), a group of petitioners represented by James H. Boykin, III and John M. Townsend of Hughes Hubbard & Reed LLP, filed a lawsuit to confirm a 2019 arbitration award against Russia "awarding them compensation for the Russian Federation’s seizure of their assets after its 2014 invasion of Crimea." Service is still pending in this case, although it was filed over a year ago.

Just recently, the Joint Stock Company State Savings Bank of Ukraine (known as JSC Oschadbank) filed suit against Russia to confirm a 2018 arbitration award arising from "the Russian Federation’s wrongful invasion and occupation of Crimea, which resulted in the closure of [JSC Oschadbank]’s Crimean operation and the unlawful seizure of its business, assets and valuables." The lawsuit was assigned to the newly sworn in Judge Reyes, who has a plethora of experience in the judgment enforcement and sovereign litigation areas. JSC Oschadbank is represented by Dennis Hranitzky and Debra O'Gorman of Quinn Emanuel Urquhart & Sullivan LLP and the case number is 1:23-cv-00764-ACR.

Enforcement Actions against India & Air India

Last year, the Republic of India found itself a defendant in no less than three cases before the District of Columbia, brought by petitioners and arbitration award winners CC/Devas (Mauritius) Ltd. (No. 1:21-cv-00106-RCL), Cairn Energy and Cairn UK Holdings Ltd. (No. 1:21-cv-00396-RJL), and Deutsche Telekom AG (No. 1:21-cv-01070-RJL). These cases came along with companion enforcement cases in the Southern District of New York against India's then-state owned entity, Air India (Case Nos. 1:21-cv-09155-PGG, 1:21-cv-05601-PGG, and 1:21-cv-04375-PGG).

Cairn settled with the Republic of India in December 2021, and the two other cases were stayed pending resolution of India's challenges to the awards. According to the regular status updates provided by the parties, India's challenges to the Deutsche award are still pending. Although the CC/Devas Petitioners reported to the Court a final ruling of the Supreme Court of the Netherlands, India has opposed a lift of the stay in that case, noting that further proceedings are scheduled to take place before the District Court of The Hague and the Court of Appeal in The Hague.

The parallel enforcement cases against Air India as India's alter ego, are also stayed. However, during the stay, Air India was sold to Tata Group. These cases would have provided great insight into the timing of alter ego enforcement cases and whether an arbitration award against a sovereign would have to be confirmed in a separate proceeding before commencing an enforcement action against the sovereign's alter ego.

The Republic of India is represented by David Riesenberg, Carolyn Beth Lamm, Nicolle E. Kownacki, and Weiqian Luo of White & Case LLP. Air India was represented by Dorit Ungar Black of Holwell Shuster & Goldberg LLP.

The petitioners are represented by Dennis Hranitzky, Debra O'Gorman, and Mark McNeill of Quinn Emanuel Urquhart & Sullivan LLP (Cairn), James H. Boykin, III of Hughes Hubbard & Reed LLP (Deutsche), and Matthew D. McGill, Ankita Ritwik, David Casazza, and Lee Ross Crain of Gibson, Dunn & Crutcher LLP and Bradley A. Klein of Skadden Arps Slate Meagher & Flom LLP (CC/Devas).

Kazakstan Sues Investors

In March 2023, Kazakstan filed a lawsuit in the District of Columbia (No. 1:23-cv-00565) against the Moldovan Stati brothers and their companies, who have been pursuing the enforcement of an arbitral award against Kazakstan for almost ten years, seeking relief from the Court from the judgment entered in relation to such award, accusing the defendants of fraud on the court. Although the award was confirmed in 2019, Kazakhstan claims to have "now obtained [evidence of the fraud that] is clear, convincing, and indisputable," stemming from allegedly false audit reports and financial statements which were used to obtain the confirmed arbitration award.

Matthew H. Kirtland and Esha Kamboj from Norton Rose Fulbright US LLP represent the Republic of Kazakstan. Information regarding counsel for the Stati brothers and entities is not yet available.