Bcb Holdings Limited v. Government of Belize
110 F. Supp. 3d 233
D.D.C.2015Background
- BCB Holdings (formerly Carlisle) and Belize Bank (petitioners) invoked an LCIA arbitration clause in a 2005 Settlement Deed after Belize refused certain tax treatment; Belize did not participate and the LCIA awarded petitioners BZ$40,843,272.34 plus interest and costs in 2009.
- Petitioners sought enforcement in Belize (Supreme Court enforced; Court of Appeals reversed; Caribbean Court of Justice (CCJ) refused enforcement on public-policy grounds); petitioners later obtained a UK judgment (2013) recognizing the LCIA Award.
- Belize enacted a 2010 criminal statute penalizing violation of Belize Supreme Court injunctions (large fines and mandatory prison terms), which chilled out-of-Belize enforcement efforts; those provisions were later struck down by Belize appellate courts and the CCJ.
- Petitioners filed in D.D.C. in July 2014 to confirm the LCIA Award under 9 U.S.C. § 207 (New York Convention/Federal Arbitration Act) and to convert damages to USD; Belize moved to dismiss asserting multiple defenses (sovereign immunity, lack of NY Convention applicability, statute of limitations, public policy, res judicata/comity from CCJ, forum non conveniens, personal jurisdiction).
- The Court held that the New York Convention governs, the FSIA arbitration exception supplies jurisdiction, equitable tolling saved the petition from the three-year FAA limitations period, and Article V defenses (invalid agreement, revenue rule, US public policy) failed; judgment to confirm Award in USD with prejudgment interest was entered; alternative complaint to recognize the UK judgment dismissed as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of New York Convention / commercial character | Settlement Deed arises from commercial stock transaction and arbitration falls within Convention/FAA | Belize argued dispute not commercial and Belize not party to Convention so Convention doesn't apply | Convention applies: award made in England (a Convention state); commercial test met |
| Subject-matter jurisdiction under FSIA | FSIA §1605(a)(6) arbitration exception applies; award "is or may be" governed by treaty | Agreement void ab initio because PM lacked authority; FSIA exception therefore inapplicable | FSIA exception satisfied; courts should not relitigate arbitrability at jurisdiction stage (merits addressed under Article V) |
| Personal jurisdiction / service | Proper service under FSIA suffices; foreign sovereigns lack Due Process personal-jurisdiction defense | Belize urged sovereign protections against PJ | Personal jurisdiction exists where FSIA subject-matter jurisdiction and service under §1608 obtained |
| Statute of limitations (9 U.S.C. §207) | Petition timely due to equitable tolling while 2010 criminal statute chilled enforcement efforts | Petition time-barred; criminal statute didn't bar petitioners who lacked specific injunction | Equitable tolling applies: petitioners diligently pursued rights and extraordinary circumstances (criminal statute) prevented timely filing |
| Preclusive effect of CCJ refusal to enforce | CCJ is not the country "under the law of which" the award was made; LCIA arbitration in England gives primary-jurisdiction to England | CCJ's final judgment refusing enforcement should preclude enforcement in U.S. (res judicata/comity) | CCJ decision not preclusive here because England (procedural law/arbitration seat) is primary jurisdiction; secondary jurisdictions may still enforce |
| Forum non conveniens | U.S. forum required to reach Belize commercial assets; alternative forum inadequate | Belize argued alternative fora exist and Sinochem allows early dismissal | Dismissal denied: TMR Energy controls; no alternative forum can attach U.S.-located commercial property of foreign state |
| Article V defenses (validity of agreement; revenue rule; public policy) | Arbitration clause valid/separable; dispute is contractual not enforcement of Belize tax law; U.S. public-policy against corruption asserted insufficient | Belize claimed contract invalid (PM lacked authority), Award contravenes revenue rule, Award violates U.S. public policy against corruption | Article V challenges fail: arbitration clause separable and not challenged as independent; subject matter arbitrable (not mere tax enforcement); public-policy defense is narrow and not met |
| Conversion and interest | Petitioners sought USD judgment and prejudgment interest consistent with Award | — | Court converted damages to USD (as of Award date) and awarded prejudgment interest at tribunal rate (3.38% compounding) |
Key Cases Cited
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614 (recognizing strong federal policy favoring arbitration)
- Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213 (federal policy strongly favors enforcing arbitration agreements)
- Creighton Ltd. v. Gov’t of the State of Qatar, 181 F.3d 118 (D.C. Cir.) (New York Convention is an arbitration-recognition treaty covered by FSIA exception)
- Belize Soc. Dev. Ltd. v. Gov’t of Belize, 668 F.3d 724 (D.C. Cir.) (arbitration-seat/Convention analysis in similar Belize facts)
- TermioRio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928 (D.C. Cir.) (scope of Convention and Article V review)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (separability of arbitration clause from contract)
- Pasquantino v. United States, 544 U.S. 349 (revenue rule and foreign tax enforcement context)
- Karaha Bodas Co., LLC v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 335 F.3d 357 (5th Cir.) (primary vs. secondary jurisdiction under Article V(1)(e))
- Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp., 549 U.S. 422 (federal courts may dismiss on forum non conveniens before resolving jurisdictional issues)