Salini Costruttori S.P.A. v. Kingdom of Morocco
233 F. Supp. 3d 190
D.D.C.2017Background
- Salini, an Italian contractor, entered a 2004 construction contract with Morocco (Ministry of Equipment and Transportation) that included an arbitration clause selecting ICC arbitration in Paris as an option.
- Disputes arose about termination, unpaid work, and reimbursement of taxes and duties; Salini filed an ICC arbitration in Paris in 2009 and obtained a 2011 award awarding contract damages, reimbursement of taxes/duties, and interest.
- Salini sought recognition and enforcement of the award in Moroccan courts; the Administrative Court of Rabat enforced most of the award but refused the tax-reimbursement portion as contrary to Moroccan law; the Administrative Court of Appeal affirmed; an appeal to Morocco’s Court of Cassation remained pending.
- Morocco paid the portions the Moroccan court ordered enforced (about 167,695,954.30 MAD / roughly €15.3M); Salini filed in U.S. District Court (D.D.C.) under the FAA/New York Convention to confirm and enforce the remainder before the three-year period expired.
- Morocco moved to dismiss under Rules 12(b)(1) and 12(b)(6), arguing the tax-related portion had been set aside by a competent authority of the arbitral seat country (Article V(1)(e)), and asked the U.S. court to defer until Morocco’s Court of Cassation ruled.
- The court found it had jurisdiction under the FSIA/FAA, concluded Morocco was a secondary (not primary) jurisdiction because the arbitration was governed procedurally by ICC Rules in Paris, and therefore U.S. confirmation was not barred by Article V(1)(e); the petition to confirm was granted and Morocco’s motion to dismiss denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether U.S. court must refuse confirmation because award (tax portion) was set aside by a competent authority under Article V(1)(e) of the New York Convention | Salini: France/ICC was the primary jurisdiction; Moroccan courts acted only as secondary enforcement courts, so Article V(1)(e) does not bar U.S. confirmation | Morocco: Moroccan courts effectively set aside the tax reimbursement portion and Morocco was the primary jurisdiction because Moroccan law governed the contract and arbitration | Court: Morocco was a secondary jurisdiction; ICC Rules governed arbitration procedures in Paris, so no valid set-aside by a primary authority — confirmation allowed |
| Whether Morocco’s invocation of the revenue rule bars U.S. enforcement of tax-related award relief | Salini: Award enforces contractual reimbursement, not foreign tax claims; revenue rule inapplicable | Morocco: Repayment of taxes implicates the revenue rule, which prohibits enforcing foreign tax judgments in U.S. courts | Court: Revenue rule inapplicable because dispute is contract enforcement, not collection of foreign tax claims |
| Whether principles of comity or res judicata require denying confirmation because Moroccan courts refused enforcement of part of the award | Salini: Moroccan courts acted as secondary enforcement courts without Article V authority; New York Convention allows enforcement in multiple jurisdictions | Morocco: Moroccan judgments should be afforded comity and preclusive effect | Court: Comity/res judicata do not bar confirmation because Moroccan courts lacked authority to set aside the award as a primary jurisdiction |
| Procedural defenses (service, default entry) to jurisdiction/confirmation | Salini: Service ultimately perfected; default entry was improper and to be vacated | Morocco: Raised service and default arguments earlier | Court: Subject-matter jurisdiction exists under FSIA/FAA; default was improperly entered and must be vacated; service conceded at argument |
Key Cases Cited
- BCB Holdings, Ltd. v. Gov’t of Belize, 110 F. Supp. 3d 233 (D.D.C.) (distinguishes contract enforcement from foreign tax-collection bar and discusses New York Convention enforcement)
- Creighton Ltd. v. Gov’t of the State of Qatar, 181 F.3d 118 (D.C. Cir.) (treats New York Convention as treaty-based basis for U.S. jurisdiction)
- Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 335 F.3d 357 (5th Cir.) (explains primary v. secondary jurisdiction under Article V)
- TermoRio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928 (D.C. Cir.) (rejects routine second-guessing of primary-jurisdiction courts by secondary States)
- Belize Soc. Dev. Ltd. v. Gov’t of Belize, 668 F.3d 724 (D.C. Cir.) (addresses meaning of “under the law of which” in Article V(1)(e))
- Int’l Trading & Indus. Inv. Co. v. DynCorp Aerospace Tech., 763 F. Supp. 2d 12 (D.D.C.) (describes the summary nature of confirmation proceedings under the New York Convention)