864 F.3d 172
2d Cir.2017Background
- Petitioners (TLL and HLL) obtained a $57.21M UNCITRAL award against Laos in Kuala Lumpur (Nov. 2009) for wrongful termination of project contracts.
- Laos did not file a timely Malaysian set-aside application (90-day rule) but later obtained an extension and successfully annulled the Award in Malaysian courts (High Court, later Court of Appeal).
- Petitioners enforced the Award in the S.D.N.Y. (Aug. 2011) and in England (Nov. 2012); the U.S. district court judgment was affirmed by the Second Circuit before Malaysia annulled the Award.
- After the Malaysian annulment, Laos moved in S.D.N.Y. under Fed. R. Civ. P. 60(b)(5) to vacate the U.S. judgment confirming the Award; the District Court granted vacatur and denied Petitioners’ requests for security and to enforce the English judgment.
- The Second Circuit affirmed: Rule 60(b)(5) applies to judgments confirming foreign arbitral awards; courts should weigh the full range of Rule 60(b) factors while giving significant weight to comity and the primary jurisdiction’s annulment unless enforcing the annulled award is required to vindicate fundamental U.S. public policy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 60(b)(5) applies to vacatur of a U.S. judgment confirming a foreign arbitral award subsequently annulled at the seat | Rule 60(b)(5) should not be displaced; finality warrants placing burden on Laos to justify vacatur | Rule 60(b)(5) is consistent with Convention and governs vacatur of U.S. confirmation judgments | Rule 60(b)(5) applies; courts must consider full Rule 60(b) factors and give significant weight to primary-jurisdiction annulments (comity), subject to narrow public-policy exception |
| Standard for deference to primary-jurisdiction annulment under the New York Convention | The District Court should not presumptively defer to the foreign annulment; finality and enforcement favor Petitioners | Convention and comity counsel significant deference to the seat’s annulment; refusal only when enforcement would offend fundamental U.S. notions of justice | Adopted Pemex/TermoRio comity approach: presumptive weight to annulment; refuse recognition only to vindicate fundamental U.S. public policy |
| Whether Laos’s delay/misconduct bars Rule 60(b)(5) relief | Petitioners: Laos’s delay, discovery misconduct, and tactical behavior make vacatur inequitable | Laos: timely sought relief once Malaysian courts annulled the Award; conduct not sanctionable | District Court did not abuse discretion; alleged misconduct did not rise to inequitable-conduct level that would bar vacatur |
| Whether District Court should have required Laos to post security during Rule 60(b) proceedings | Petitioners: court may and should require security to protect their interests | Laos: FSIA and discretion preclude or counsel against ordering security | Affirmed: denial of security was within district court discretion; appellate court declines to reach FSIA issue |
| Whether English judgment enforcing the Award should be recognized in NY despite Malaysian annulment | Petitioners: English judgment is valid and default by Laos precludes sua sponte denial | Laos: English judgment conflicts with the Malaysian annulment (primary jurisdiction) | Affirmed: district court permissibly declined to recognize the English judgment and credited the Malaysian judgment under NY law (CPLR 5304(b)(5)) |
Key Cases Cited
- Corporación Mexicana de Mantenimiento Integral, S. de R.L. de C.V. v. Pemex-Exploración y Producción, 832 F.3d 92 (2d Cir.) (presumption of comity to annulments at the arbitral seat; public-policy exception)
- Termo-Rio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928 (D.C. Cir. 2007) (courts should defer to seat annulment unless enforcement would offend fundamental U.S. public policy)
- Baker Marine (Nig.) Ltd. v. Chevron (Nig.) Ltd., 191 F.3d 194 (2d Cir. 1999) (public policy may justify refusing to defer to foreign court annulment)
- Motorola Credit Corp. v. Uzan, 561 F.3d 123 (2d Cir. 2009) (equitable misconduct can bar Rule 60(b) relief)
- Nemaizer v. Baker, 793 F.2d 58 (2d Cir. 1986) (Rule 60(b) balances finality and justice)
- House v. Secretary of Health & Human Servs., 688 F.2d 7 (2d Cir. 1982) (Rule 60 procedural framework)