199 F. Supp. 3d 179
D.D.C.2016Background
- Petitioners (Anatolie & Gabriel Stati; Ascom; Terra Raf) owned Kazakh oil/gas investments and alleged Kazakhstan expropriated assets and terminated subsoil-use contracts after investigations and tax assessments.
- Petitioners initiated SCC arbitration under the Energy Charter Treaty (ECT); Tribunal (Dec. 19, 2013) found Kazakhstan breached fair-and-equitable-treatment and awarded ~$497.7 million plus costs.
- Petitioners filed to confirm the award in D.D.C. under the New York Convention / FAA; Kazakhstan opposed and contested jurisdiction and alleged fraud in procuring the award.
- Kazakhstan filed a petition in the Svea Court of Appeal (Stockholm) to set aside the award; that set-aside proceeding is pending and scheduled for hearing.
- The district court found it has subject-matter jurisdiction under the FAA (New York Convention) and under FSIA via implied waiver and the arbitration exception, but exercised discretion to stay confirmation pending resolution of the Swedish set-aside proceeding.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FAA supplies jurisdiction to confirm the award | ECT is an agreement in writing; arbitration in Sweden; dispute commercial and transnational → FAA/New York Convention applies | Kazakhstan: no consent to arbitrate because petitioners failed to wait 3‑month amicable settlement period under ECT | Court: ECT grants Kazakhstan "unconditional consent" subject only to narrow exceptions; 3‑month rule is procedural (tribunal decides). FAA jurisdiction exists |
| Whether FSIA bars U.S. jurisdiction (sovereign immunity) | Implied waiver: Kazakhstan agreed to arbitrate in Sweden (waiving immunity) and filed pleadings here without asserting immunity; arbitration exception also applies | Kazakhstan: contests implied waiver and argues sovereign immunity should prevent U.S. enforcement | Court: Kazakhstan impliedly waived immunity (agreement to arbitrate in another signatory + failure to raise immunity in first pleadings); arbitration exception (§1605(a)(6)) also satisfied |
| Whether the court should proceed to confirm or stay given pending Swedish set‑aside | Seek prompt U.S. confirmation; if stay, request Kazakhstan post security for award amount | Oppose immediate confirmation; Sweden set‑aside could render award unenforceable — do not oppose a stay; procedural objections to security request | Court: exercised discretion under New York Convention Article VI to stay confirmation pending Svea Court of Appeal decision; declined to require security now but may revisit if appeals prolong stay |
| Whether allegations of fraud require district‑court mini‑trial now | Petitioners: fraud allegations were rejected by tribunal and should not require remand; proceed to confirmation | Kazakhstan: requested leave to add fraud grounds and noted ongoing Swedish set‑aside on fraud | Court: declined to conduct mini‑trial on fraud here and deferred to Swedish set‑aside process; stay ordered instead |
Key Cases Cited
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (federal courts have limited jurisdiction)
- BG Group PLC v. Republic of Argentina, 134 S. Ct. 1198 (treaty procedural prerequisites are for arbitrators to decide; not jurisdictional)
- Chevron Corp. v. Ecuador, 795 F.3d 200 (FSIA arbitration/jurisdiction analysis; prima facie showing standard)
- Belize Social Dev. Ltd. v. Gov’t of Belize, 794 F.3d 99 (commercial scope under New York Convention and FSIA principles)
- Creighton Ltd. v. Gov’t of Qatar, 181 F.3d 118 (agreement to arbitrate in a Convention signatory effects implied waiver of immunity)
- Foremost-McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d 438 (circumstances giving rise to implied waiver under FSIA)
- Europcar Italia v. Maiellano Tours, 156 F.3d 310 (factors for staying enforcement when set‑aside proceedings pending abroad)