288 F. Supp. 3d 166
D.C. Cir.2018Background
- Brett Berkowitz bought coastal lots in Costa Rica (Lots B1, B3, B5, B6, B8) after alleged assurances from a government minister that development would be permitted; some lots later became subject to expropriation tied to creation/definition of a marine park.
- Costa Rica enacted measures (1991 Decree, 1995 Park Law, 2005 resolution) creating uncertainty about park boundaries and initiated local expropriation proceedings; some compensation judgments were entered at various times.
- Berkowitz and others submitted investor-state claims to an ICSID/UNCITRAL tribunal under CAFTA alleging expropriation (Art.10.7) and minimum-standard/denial-of-justice claims (Art.10.5).
- The Tribunal issued an Interim Award on jurisdiction (Oct. 25, 2016): found lack of jurisdiction for some lots, jurisdiction for others (limited to Article 10.5 claims tied to certain judgments), and requested further briefing on other lots.
- The petitioners filed to vacate the Interim Award in D.D.C. under FAA §10 while arbitration remained ongoing; during the suit petitioners later withdrew claims, and the Tribunal issued a Corrected Interim Award and terminated the arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Costa Rica was in default for failing to timely respond to the vacatur petition | Berkowitz: served Costa Rica Jan 23/25, 2017 (via law firm, embassy, or CAFTA Annex G) so 14-day response elapsed; default entry should stand | Costa Rica: FSIA governs service; proper service occurred Mar 28, 2017, so FSIA 60-day period not expired and no default | Court: FSIA controls; service before Mar 28 was ineffective (Sidley not authorized, Annex G not a broad "special arrangement"); vacated clerk’s default; Costa Rica timely answered |
| Whether the Interim Award was final and thus reviewable under FAA §10 | Berkowitz: Interim Award decided jurisdictional issues for several lots and is reviewable now | Costa Rica: Interim Award was interlocutory; courts should not review non-final arbitration rulings | Court: Interim Award was non-final; tribunal expressly called it "interim", remained seised, and contemplated further proceedings; vacatur denied |
| Whether Annex G of CAFTA constituted a "special arrangement" for FSIA service | Berkowitz: Annex G designates Ministry of Foreign Trade for notices, so it qualifies as a special arrangement under 28 U.S.C. §1608(a)(1) | Costa Rica: Annex G is limited to treaty dispute notices and not an all-encompassing service provision for U.S. court process | Court: Annex G is limited to treaty arbitration communications and is not an "all-encompassing" special arrangement for service of judicial documents; petitioners’ Annex G service ineffective |
| Whether the Tribunal exceeded its authority such that vacatur under FAA §10 is warranted | Berkowitz: Tribunal exceeded authority by issuing rulings that should be vacated | Costa Rica: Court lacks jurisdiction to review interlocutory award and Tribunal acted within scope | Court: Declined to reach substantive FAA §10 excess-of-authority claim because award was not final; petition denied and case dismissed |
Key Cases Cited
- Broad v. Mannesmann Anlagenbau AG, 196 F.3d 1075 (9th Cir. 1999) (Hague Service Convention and designation of central authority for service)
- Keegel v. Key West & Caribbean Trading Co., Inc., 627 F.2d 372 (D.C. Cir. 1980) (no obligation to respond arises until after service effected)
- Transaero, Inc. v. La Fuerza Aerea Boliviana, 30 F.3d 148 (D.C. Cir. 1994) (Section 1608(a) sets exclusive procedures for service on a foreign state)
- Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428 (1989) (FSIA provides sole basis for jurisdiction over a foreign state in federal court)
- Am. Postal Workers Union v. U.S. Postal Serv., 422 F. Supp. 2d 240 (D.D.C. 2006) (courts should not interfere with ongoing arbitrations; awards must be final to be vacated)
- LaPrade v. Kidder Peabody & Co., Inc., 146 F.3d 899 (D.C. Cir. 1998) (FAA discourages interlocutory review of arbitrations)
- Michaels v. Mariforum Shipping, S.A., 624 F.2d 411 (2d Cir. 1980) (district courts lack power to review interlocutory arbitration rulings)
- McKinney Restoration Co. v. Ill. Dist. Council No. 1, 392 F.3d 867 (7th Cir. 2004) (award not final when substantive tasks remain for arbitrator)