Blue Ridge Invs., L.L.C. v. Republic of Arg., 2013 U.S. App. LEXIS 17160 (2d Cir. 2013) [click for opinion]
In 1999, Argentina reached an agreement with the nation's gas companies: the companies would temporarily refrain from increasing gas tariffs if Argentina would indemnify them for the lost income. But Argentina never reimbursed them and even permanently revoked the companies' right to adjust the tariffs.
CMS, which had a 25% ownership interest in one of the private gas transportation companies, commenced arbitration before the International Centre for the Settlement of Investment Disputes ("ICSID"). The tribunal awarded CMS $133.2 million plus interest. CMS petitioned the Southern District of New York to enforce the award. Blue Ridge bought CMS's interest in the arbitral award and took over the lawsuit. Argentina claimed sovereign immunity under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1602, et seq.
The FSIA provides immunity for sovereign nations being sued in United States courts. But immunity can be waived. Argentina impliedly waived its immunity, the Second Circuit held, by becoming a party to the ICSID Convention, which requires each contracting state to recognize as binding and enforceable ICSID arbitration awards. The court reasoned that by joining the ICSID Convention Argentina must have contemplated enforcement actions in other ICSID contracting states.
The Second Circuit also held that Argentina waived its sovereign immunity by submitting to arbitration. In doing so, the Second Circuit joined every other court that has addressed the question whether awards issued pursuant to the ICSID Convention fall within the arbitral-award exception to the FSIA: Cont’l Cas. Co. v. Argentine Republic, 893 F. Supp. 2d 747, 751 (E.D. Va. 2012); Funnekotter v. Republic of Zimbabwe, 2011 U.S. Dist. LEXIS 14915 (S.D.N.Y. Feb. 10, 2011); Siag v. Arab Republic of Egypt, 2009 U.S. Dist. LEXIS 54066 (S.D.N.Y. June 19, 2009).