Arbitration. Enforcement of Award. Venue. District court transfers ICSID award enforcement proceedings to proper venue.
Plaintiff Continental Casualty Company brought suit against Defendant the Argentine Republic ("Argentina") in the Eastern District of Virginia seeking recognition or confirmation of a $2.8 million arbitral award issued pursuant to the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (the “ICSID Convention”). Argentina sought dismissal for lack of subject matter and personal jurisdiction and improper venue.
The court noted that the issue of subject matter jurisdiction in an action against a foreign state is governed by the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602, et seq. Pursuant to the FSIA, each action in a district court against a foreign state must satisfy one of the statutory exceptions to foreign sovereign immunity. In this case, the court concluded that subject matter jurisdiction existed because Argentina had waived any foreign sovereign immunity objections to enforcement of an ICSID award under the ICSID Convention.
In addition, the FSIA provides that personal jurisdiction is proper against a foreign sovereign if subject matter jurisdiction and proper service of process are present. Because Argentina did not challenge service of process, and because there existed subject matter jurisdiction under the FSIA, it followed that there was also personal jurisdiction over Argentina under the FSIA.
Argentina then argued that venue was improper in the Eastern District of Virginia, while Plaintiff argued that because it sought merely recognition or confirmation, but not enforcement, the action could be brought in any federal court. The court found Plaintiff's argument unpersuasive because there was no basis for distinguishing between recognition or confirmation on the one hand, and enforcement on the other. The implementing statute for the ICSID Convention recognized no such distinction and provided only for the enforcement of ICSID awards. Thus, the court held that the proper method of enforcement of an ICSID arbitral award was the same as the enforcement of a state court judgment, which is a suit on the judgment as a debt.
Accordingly, as the proceedings were in effect a civil action brought against a foreign state, the court was required to consider the venue requirements set out in 28 U.S.C. § 1391(f). Pursuant to § 1391(f), venue in an action against a foreign state is proper (1) in any judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of the property that is the subject of the action is situated; (2) in any judicial district in which the vessel or cargo of a foreign state is situated; (3) in any judicial district in which the agency or instrumentality is licensed to do business or is doing business, if the action is brought against an agency or instrumentality of a foreign state; or (4) in the United States District Court for the District of Columbia if the action is brought against a foreign state or political subdivision thereof.
Considering these requirements, the court found that Argentina had correctly challenged venue. The court noted that all relevant events, properties, and business entities were abroad, and that the District of Columbia, where venue is proper for actions brought against a foreign state or political subdivision thereof, was thus the sole proper venue for this case. However, because there was no evidence that the case was brought in the Eastern District of Virginia in bad faith or to harass Argentina, the court transferred the case to avoid the unnecessary costs and delay that would result from dismissal and refiling in the District of Columbia.