Arbitration. Enforcement of Award. Foreign Sovereign Immunities Act. District court confirms ICSID award, holding that Argentina had waived sovereign immunity by consenting to ICSID arbitration, that an assignee could seek enforcement of the award, and that New York's twenty year statute of limitations for enforcement of money judgments applied, instead of the one year statute of limitation for enforcement of arbitral awards.
Petitioner Blue Ridge Investments, LLC ("Blue Ridge") filed an action in the United States District Court for the Southern District of New York to enforce an arbitral award rendered pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the "ICSID Convention") against Respondent Republic of Argentina ("Argentina"). Argentina moved to dismiss the petition for lack of subject matter and personal jurisdiction under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1602, et seq., and for failure to state a claim. The court denied Argentina's motion to dismiss.
First, Argentina argued that the court lacked subject matter and personal jurisdiction. Under the FSIA, foreign states are immune from the jurisdiction of U.S. courts unless one of the statutory exceptions applies. Blue Ridge alleged that two exceptions applied in this case: (1) explicit or implicit waiver under 28 U.S.C. § 1605(a)(1); and (2) confirmation of arbitral awards under 28 U.S.C § 1605(a)(6). Argentina responded that neither exception applied on the basis that: (1) consenting to arbitration before an ICSID tribunal did not constitute proof of intent to waive immunity to suit in U.S. courts; and (2) there was no waiver under § 1605(a)(6) because Argentina did not make an arbitration agreement "with" or "for the benefit" of Blue Ridge.
The court held that both exceptions applied and subject matter jurisdiction existed because Argentina had waived any foreign sovereign immunity objections to enforcement of an ICSID award under the ICSID Convention. Specifically, the court found an implied waiver of immunity based on Argentina's status as a contracting state to the ICSID Convention. The court also found that the confirmation of an arbitral award exception applied because Argentina and the United States were both signatories to the ICSID Convention and the instant action was to confirm an ICSID award.
In addition, the court determined that because it had found subject matter jurisdiction under the FSIA, and because service of process was not challenged, the court had personal jurisdiction over Argentina.
Next, Argentina argued that the petition should be dismissed because: (1) Blue Ridge, as an assignee, lacked authority to seek recognition and enforcement of the award; (2) the petition was barred by res judicata; and (3) the petition was barred by New York's one year statute of limitations for the enforcement of arbitral awards. The court disagreed with all of these arguments.
With respect to the authority argument, the court concluded that nothing in the ICSID Convention, in legislation implementing the ICSID Convention, or New York law prevented an assignee from seeking enforcement of an ICSID award. As to the res judicata argument, the court noted that prior enforcement proceedings of the award had been voluntarily dismissed during settlement discussions.
Lastly, on the statute of limitations argument, the court determined that neither the ICSID Convention, nor the legislation implementing the ICSID Convention, contained a statute of limitations, and that, in such cases, courts will "absorb" or "borrow" the local rule unless the state limitation undermines the goals of the federal statute. Finding that ICSID awards are to be treated as final judgments of a state court, rather than as arbitral awards, the court determined that New York's twenty year statute of limitations for enforcement of money judgments applied, instead of the one year statute of limitation for enforcement of arbitral awards.