Enron Nigeria Power Holding, Ltd. v. Federal Republic of Nigeria
2016 U.S. App. LEXIS 23276
| D.C. Cir. | 2016Background
- In 1999 Nigeria (as guarantor) and Lagos State entered a PPA with Enron Nigeria Power Holding, Ltd. (ENPH) for a three‑phase power project; Enron itself was not a party to the PPA and the agreement contained an integration clause and ICC arbitration clause.
- Nine days after signing, NEPAN suspended implementation; parties renegotiated Phases I and III but Phase II remained stalled and conditions for Phase II lapsed by Dec. 31, 2000.
- Enron collapsed in 2001; ENPH repeatedly asserted it could still perform Phase II, but Nigeria maintained Phase II was suspended. ENPH ultimately initiated ICC arbitration (2006) over Nigeria’s repudiation of Phase II.
- The ICC found Nigeria/NEPAN breached (anticipatory breach deemed of no legal effect) and rejected theories that Enron was a party, that ENPH had fraudulently induced Nigeria, and that Enron’s accounting fraud was connected to Phase II. The ICC awarded ENPH loss‑of‑chance damages (~$11.22M plus interest and costs).
- ENPH sought confirmation of the ICC award in D.D.C.; the district court confirmed the award, finding Nigeria waived sovereign immunity and failed to show enforcement would violate U.S. public policy. Nigeria appealed arguing Article V(2)(b) of the New York Convention forbids enforcement because of fraud/Enron’s misconduct.
Issues
| Issue | ENPH (Plaintiff) Argument | Nigeria (Defendant) Argument | Held |
|---|---|---|---|
| Whether enforcement should be refused under New York Convention Art. V(2)(b) on U.S. public‑policy grounds | ENPH: No well‑defined public‑policy bar applies; ICC already resolved factual matters; courts must defer to arbitrator | Nigeria: Enforcement would reward fraud; Enron’s fraud taints the PPA and award; public policy prohibits profiting from one’s own fraud | Court: Narrow public‑policy exception not met; substantial deference to ICC factual findings defeats policy defense; affirm enforcement |
| Whether Nigeria contractually waived ability to challenge award in U.S. courts | ENPH: PPA waiver (challenge only in London) bars later U.S. public‑policy challenge | Nigeria: Public‑policy defenses under Art. V(2)(b) cannot be waived because courts must protect their integrity | Court: Waiver argument fails; parties cannot contract away Article V(2)(b) public‑policy review |
| Whether forfeiture/ procedural default bars Nigeria’s public‑policy claim on appeal | ENPH: Nigeria failed to press some arguments below so they are forfeited | Nigeria: Court must raise and decide public‑policy issues regardless of forfeiture | Court: Forfeiture does not eliminate the court’s duty to resolve public‑policy question |
| Whether Enron’s fraud or alter‑ego status imputes liability to ENPH or voids award | ENPH: Enron was not a party; ICC found no connection between Enron’s fraud and Phase II; no basis to pierce corporate veil | Nigeria: ENPH was an Enron special‑purpose vehicle; Enron’s fraud taints the contract and award; alter‑ego should apply | Court: ICC’s findings that Enron was not a party and fraud was unrelated are entitled to deference; no equities shown to pierce veil; claim fails |
Key Cases Cited
- Comm’ns Import Export S.A. v. Republic of the Congo, 757 F.3d 321 (D.C. Cir. 2014) (explains New York Convention implementation and enforcement under FAA)
- TermoRio S.A. v. Electranta S.P., 487 F.3d 928 (D.C. Cir. 2007) (narrow construction of public‑policy exception to enforcement)
- United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29 (1987) (courts give weight to arbitrator’s factual findings at enforcement stage)
- Mitsubishi Motors Corp. v. Soler Chrysler‑Plymouth, Inc., 473 U.S. 614 (1985) (strong federal policy favoring arbitration, especially in international commerce)
- W.R. Grace & Co. v. Local Union 759, 461 U.S. 757 (1983) (courts ultimately decide public policy even when contract delegates interpretation to arbitrators)
- Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064 (2013) (parties may delegate contract interpretation to arbitrators; courts defer to arbitrator’s construction)
- Stolt‑Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010) (arbitral error alone insufficient to overturn award)
- Ackermann v. Levine, 788 F.2d 830 (2d Cir. 1986) (public‑policy standard for refusing enforcement)
- Riggs v. Palmer, 115 N.Y. 506 (N.Y. 1889) (classic statement of equity that no one may profit by own fraud)