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United States: Court of Appeals for the District of Columbia Circuit Decision in the Matter of the Arbitration between Maritime International Nominees Establishment V. Guinea and United States (Foreign Sovereign Immunities Act; Icsid Arbitration; Waiver of Immunity)*
Published online by Cambridge University Press: 20 March 2017
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- Type
- Judicial and Similar Proceedings
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- Copyright
- Copyright © American Society of International Law 1982
Footnotes
*
[Reproduced from the Slip Opinion provided to International Legal Materials by the U.S. Court of Appeals for the District of Columbia Circuit. [The Decision of the U.S., District Court for the District of Columbia, dated January 12, 1981, appears at 20 I.L.M. 666 (1981). The Brief for the United States, submitted as intervenor to the U.S. Court of Appeals on October 22, 1981, appears at 20 I.L.M. 1436 (1981).]
References
1 The signatories to the contract were Guinea and the Inter Maritime Bank, which acted “in the name and on behalf of” MINE. Joint Appendix (“J.A.”) 207.
2 “SOTRAMAR” is an acronym for the “Societe Mixte de Transports Maritimes,” Appellant's Brief (“Br.”) 4, or the “Societe Guineenne de Transports Maritimes,” Appellee's Br, 5.
3 At the outset of the hearing1, the court stated, “The issue that concerns the Court the most and the one that seems to me that you ought to focus your arguments on is, basically, the jurisdictional question.” Transcript of January 8, 1981, Hearing, at 3.
4 On March 11, 1981, upon motion of both parties, the District Court corrected this with respect to the amount of the award. J.A. 297.
5 MINE sought to make a fuller reply to the contentions advanced in Guinea's motions by filing on January 23, 1981, a motion for leave to complete the record. J.A. 326. The District Court granted the motion on February 10, 1981. R. 34.
6 The same day, Guinea filed with the District Court a motion for a stay pending appeal. R. 30.
7 On September 18, 1981, this court entered an order granting the United States leave to intervene pursuant to 28 U.S.C. § 2403 (1976), and allowing the United States to file a suggestion of interest. In addition to the regular cycle of briefing in this case, therefore, we have received a Brief for the United States as Intervenor and Suggestion of Interest, and briefs from MINE and Guinea in reply to the United States’3 brief.
8 Although Guinea directs some of its arguments both to the order to compel and the order to confirm, see, e.g., Appellant's Br. 25, it is clear that the only order on review before us is the order to confirm. An order to compel arbitration issued in an independent proceeding under the FAA is a final and appealable judgment. See Chatham Shipping Co. v. Fertex Steamship Corp., 352 F.2d 291 (2d Cir. 1965) ; 9 Moore's Federal Practice 1110.20 [4.-1] (2d ed. 1982). Cf. Goodall- Sanford, Inc. v. United Textile Workers, 353 U.S. 550 (1957) (order directing arbitration under section 301 (a) of the Taft-Hartley Act, 29 U.S.C. § 185(a) (1976), is appealable as a final judgment). Guinea cannot now, by way of appealing the confirmation order, obtain review of the earlier order to compel.
9 MINE has not argued that the District Court's finding that it had jurisdiction under the FSIA in the earlier section 4 proceeding to compel bars Guinea from questioning the District Court's exercise of jurisdiction in the section 9 proceeding to confirm now under review. Because the section 9 proceeding adjudicated a different claim from that in the earlier proceeding, any preclusive effect would derive from the doctrine of collateral estoppel. See Commissioner v. Sunnen, 333 U.S. 591, 597-98 (1948) ; Nasem v. Brown, 595 F.2d 801, 805 n.8 (D.C. Cir. 1979). That doctrine requires that even issues less basic than jurisdiction be fully litigated before they are preclusively established. See McCord v. Bailey, 636 F.2d 606, 609 (D.C. Cir. 1980), cert, denied, 451 U.S. 983 (1981); IB Moore's Federal Practice 10.443 [3] (2d ed. 1982). Guinea did not appear in the first proceeding, so the issue was not fully litigated and may be raised at this time.
10 MINE also argues that the SOTRAMAR contract constituted an explicit waiver of immunity within the meaning of section 1605(a)(1). Appellee's Br. 19-20. MINE can point to no particular provision in the contract arguably concerning immunity; rather, MINE rests its argument on the fact that the SOTRAMAR venture was a “mixed-economy” company under the laws of Guinea. Participation in such a company amounted to an explicit waiver, in MINE'S view, because Guinean law provides that the state in a mixed economy company is a shareholder and that the state's rights and obligations are derived from its standing as a shareholder rather than as a state. Id..
Although a state can explicitly waive its immunity in a contract with a private party, H.R. Rep. No. 94-1487, supra, at 18, MINE's argument falls far short of demonstrating such a waiver. This becomes clear upon reading the House Report's comments about withdrawals of waivers:
[I]f the foreign state agrees to a waiver of sovereign immunity in a contract, that waiver may subsequently be withdrawn only in a manner consistent with the expression of the waiver in the contract. Some court decisions have allowed subsequent and unilateral rescissions of waivers by foreign states. But the better view, and the one followed in this section, is that a foreign state which has induced a private person into a contract by promising not to invoke its immunity cannot, when a dispute arises, go back on its promise and seek to revoke the waiver unilaterally.
Id. These statements suggest that Congress contemplated waivers of a much more specific and explicit nature than the one MINE constructs from the operation of this Guinean law.
11 Included in the record are several exhibits filed by MINE in connection with its motion to confirm. One of them, a copy of the “Demand for Arbitration” that MINE presented to the AAA, contains the following statement:
Disputes between M.I.N.E. and Guinea arose out of and relating to the Agreement In 1975, M.I.N.E. sought to obtain from Guinea a proper and correct joint submission of their dispute to ICSID. Guinea, however, failed and refused to sign 3uch a submission or to proceed with arbitration. The refusal by Guinea to execute a revised joint submission or otherwise cooperate with M.I.N.E.'s efforts made unavailable the method originally agreed upon by the parties for choosing arbitrators.
J.A. 103. A reference in another exhibit echoes the allegation that the failure to sign a submission to ICSID frustrated the method “originally agreed upon by the parties.” J.A. 93 (affidavit of MINE’3 then-attorney). The clear import of these statements is that the parties contemplated an ICSID arbitration.
MINE tries to reconcile these earlier representations with the theory that the parties contemplated a non-ICSID arbitration by offering the following scenario: MINE “approached ICSID to determine how and when the President might select the three arbitrators” ICSID personnel informed MINE that “such a procedure is unknown to the organization” MINE “reluctantly concluded that the informal procedure … could not be accomplished“ and only then did the parties sign the ICSID consent form. Appellee's Br. 55-56. These allegations were never presented to the District Court, and we will not now consider the argument that MINE bases on them.
12 Of course, to say that the parties agreed to a future ICSID arbitration says nothing about whether the parties It is the former issue that is relevant to the waiver question, and our discussion of waiver should not be read as implying anything about the latter.
13 Of course, an agreement to apply Guinean law is literally an agreement to apply the law of a “particular” country. Courts have generally assumed, however, that Congress did not endorse the literal wording of the House Report, for when paraphrasing the report they say waiver is to be found when a foreign state agrees to apply the law of “another” country. See Ohntrup v. Firearms Center Inc., 516 F. Supp. 1281, 1284 (E.D. Pa. 1981) (mem.) ; Castro v. Saudi Arabia, 510 F. Supp. 309, 312 (W.D. Tex. 1980). Because MINE has not questioned this reading of congressional intent, we see no reason to do so at this time.
14 At the enforcement 3tage, the ICSID treaty, see Convention art. 54, and a supporting United States statute, 22 U.S.C. § 1650a (1976), provide that ICSID arbitrations are to be enforced as judgments of sister states. We need not decide whether Guinea’3 signing of the ICSID treaty would thus waive its immunity from proceedings enforcing ICSID awards, for this is a proceeding to confirm an AAA arbitration. We also do not express opinions (1) whether any waiver of immunity for ICSID enforcement proceedings would also waive immunity for suits to compel ICSID arbitrations, or (2) whether Congress's declaration that the Federal Arbitration Act “3hall not apply to enforcement of awards rendered” by ICSID, id., prohibits proceedings to compel ICSID arbitrations. Resolution of neither point is implicit in our holding today, for we decide that this ICSID agreement did not contemplate the involvement of domestic courts before the enforcement stage only because MINE cannot contend otherwise in this litigation.
15 Because the ICSID arbitration was to take place in the United States unless otherwise specified, see pp. 12-13 supra, we need not speculate about whether the courts of some other country might find themselves empowered to compel an ICSID arbitration.’ Thus, although other courts have found it necessary to hold that only an agreement to arbitrate in this country will waive a sovereign's immunity in United States courts, see Ohntrup v. Firearms Center Inc., 516 F. Supp. 1281, 1285 (E.D. Pa. 1981) (mem.) ; Verlinden B.V. v. Central Bank of Nigeria, 488 F. Supp. 1284, 1301-02 (S.D.N.Y. 1980), aff'd on other grounds, 647 F.2d 320 (2d Cir. 1981), cert, granted, 102 S. Ct. 993 (1982), we do not settle that question here.
16 The second clause has no relevance to this case. The “act” on which this action is “based“—the alleged breach of the SOTRAMAR contract—is not claimed to have been “performed in the United States.”
17 MINE adds to these findings the argument that Guinea's alleged breach resulted in “contact with the United States” for purposes of the first clause: “Each ton of bauxite which should have been carried by SOTRAMAR to destinations in the United States was instead carried to those same destinations by Afro-Bulk.” Appellee's Br. 26. The District Court made no such finding, and MINE supports its contention in part with evidence outside the record. Id.; see Fed. R. App. P. 10. As will be clear from our discussion of the contacts listed by the District Court, the record properly before us cannot sustain the assertion, implicit in MINE'S argument, that under the SOTRAMAR contract arrangements had been made to transport bauxite to destinations in the United States.
18 Of course, a finding1 of FSIA personal jurisdiction, which would rest in part on a finding of non-immunity, must comport with the demands of due process, and Congress intended that the Act satisfy those demands, H.R. Rep. No. 94-1487, supra, at 13. But the immunity determination involves considerations distinct from the issue of personal jurisdiction, and the FSIA's interlocking provisions are most profitably analyzed when these distinctions are kept in mind. See generally Texas Trading & Milling1 Corp. v. Federal Republic of Nigeria, 647 F.2d 300 (2d Cir. 1981), cert, denied, 102 S. Ct. 1012 (1982) ; Kane, Suing Foreign Sovereigns: A Procedural Compass, 34 Stan. L. Rev. 385, 402-04 (1982).
19 According to MINE's memorandum in reply to Guinea’3 motion to dismiss, Mr. Anada was a MINE official. J.A 239 n.5.
20 We are bound in a more basic sense, of course, by constitutional precepts of personal jurisdiction, but we go no further than the statute itself to decide this particular question. And we note once more that while personal jurisdiction principles shed light on the immunity determination, the two inquiries are not entirely the same. See supra note 18.
21 Because we find the link between Guinea on one hand and MINE's report activities in the United States on the other to be too weak to attribute MINE's actions here to Guinea, we necessarily find that the path from Guinea to MINE and then from MINE to Global stretches too far to link Guinea with Global indirectly. We distinguish this point from our discussion earlier, supra pp. 26-28, showing the lack of evidence directly linking Global with Guinea.
22 The letter begins with the following statement:
Following the meeting of Sunday, September 9, 1973, in Washington, MINE, Inc. believes it useful to lay before you for your consideration the following views of the problems now facing SOTRAMAR.
J.A. 288. No further reference is made to the Washington meeting until near the letter's conclusion:
In view of the facts set forth above and the references of Your Excellency on September 9, 1973 to the need to change the entire basic SOTRAMAE Convention … . J.A, 291.
23 The legislative history does not contradict the clear import of the words Congress chose. Commenting on section 1330(b), which concerns personal jurisdiction under the Act, the House Report stated that the immunity provisions “prescribe the necessary contacts [the “minimum contacts” requirement of International Shoe Co. v. Washington, 326 U.S. 310 (1945)] which must exist before our courts can exercise personal jurisdiction.” H.R. Rep. No. 94-1487, supra, at 13. To read “substantial contact” as demanding more than “minimum contacts” is fully compatible with this statement.
Congress also noted that section 1330(b) is “in effect, a Federal long-arm statute over foreign states … . It is patterned after the long-arm statute Congress enacted for the District of Columbia.” H.R. Rep. No. 94-1487, supra, at 13. The phrase “patterned after” is not a clear mandate to interpret the immunity exceptions in light of the District of Columbia long-arm statute, and “[t]here are significant differences in language and effect between the District's statute and the Act, which Congress, the author of both, could not have overlooked,” Verlinden, 488 F. Supp. at 1295. Accord Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300, 311 (2d Cir. 1981), cert, denied, 102 S. Ct. 1012 (1982) ; Harris v. VAO Intourist, 481 F. Supp. 1056, 1063-65 (E.D.N.Y. 1979) (mem.). While these differences might not always undermine the usefulness of referring to the District of Columbia statute, see VAO Intourist, 481 F. Supp. at 1064- 65, the “substantial contact” requirement has not even a remote relative in that statute. See D.C. Code § 13-423 (a) (1) (1981) (allows personal jurisdiction as to a claim arising from the person's “transacting any business in .the District of Columbia“).
24 Although case law construing the phrase “substantial contact” is not extensive, our conclusion finds support by way of contrast with cases that find jurisdiction. See Gemini Shipping, Inc. v. Foreign Trade Org. for Chems. & Foodstuffs, U.S. and paid under a contract through a letter of credit confirmed by a New York bank) ; Ohntrup v. Firearms Center Inc., 516 F. Supp. 1281, 1285-86 (E.D. Pa. 1981) (mem.) (sales agreement was between defendant and U.S. corporation; defendant agreed that U.S. corporation would be its representative in U.S.; and agreement called for substantial sales in U.S. within first year of contract) ; Behring Int’l, Inc. v. Imperial Iranian Air Force, 475 F. Supp. 383, 390 (D.N.J. 1979) (contract was negotiated and executed in New York, where defendant maintained office and picked up contractedfor cargo).
25 See supra note 16.
26 Section 18 reads as follows: A state has jurisdiction to prescribe a rule of law attaching: legal consequences to conduct that occurs outside its territory and causes an effect within its territory, if either
(a) the conduct and its effect are generally recognized as constituent elements of a crime or tort under the law of states that have reasonably developed legal systems, or
(b) (i) the conduct and its effect are constituent elements of activity to which the rule applies; (ii) the effect within the territory is substantial; (iii) it occurs as a direct and foreseeable result of the conduct outside the territory; and (iv) the rule is not inconsistent with the principles of justice generally recognized by states that have reasonably developed legal systems.
27 Although section 18 addresses legislative action, both section 18 and the third clause relate to when an action having an effect within the United States can trigger the exercise of authority by the United States. See Restatement (Second) of Foreign Relations Law of the United States, supra, § 18 comment b (§ 18 concerns “the question whether the conduct of [an] alien outside the territory had an effect within the territory of a type which justifies the state in prohibiting or regulating this conduct“).
28 Explaining the application of the foreseeability requirement in the commercial context, the comment to section 18 states:
[T]he rule stated in this Clause does not require intent in the subjective sense, and will usually deal with conduct which was intended to produce the effect within the territory in the sense that those responsible for the conterritory would result from the conduct outside.
Restatement (Second) of Foreign Relations Law of the United States, supra, § 18 comment f.
29 Article II of the contract stated in part:
The COMPANY'S policy shall be to offer at all times and anywhere freight services at competitive international rates. However, for political reasons, [Guinea] reserves the right to exclude certain countries from the traffic of the COMPANY'S ships. J.A. 209.
* [The Introductory Note was prepared for International Legal Materials by Peter D. Ehrenhaft of Hughes Hubbard & Reed and a member of the I.L.M. Editorial Advisory Committee.
[The materials reproduced appear in the order in which they are discussed in the Introductory Note. The I.L.M. page numbers appear in the margin. The press briefing by the U.S. Secretary of Commerce concerning the settlement precedes the document terminating the countervailing duty and antidumping investigations, at I.L.M. page 1422.]