Valores Mundiales, S.L. v. Bolivarian Republic of VenezuelaValores Mundiales, S.L. v. Bolivarian Republic of Venezuela
Miguel Lopez-Forastier argued the cause for appellees. With him on the briefs were Jose E. Arvelo, Amanda Tuninetti, and Jose F. Giron.
Juan O. Perla argued the cause for appellant. With him on the brief were Joseph D. Pizzurro, Sylvi Sareva, and Rebecca Meyer.
Opinion for the Court filed by Senior Circuit Judge EDWARDS.
EDWARDS, Senior Circuit Judge: The International Centre for Settlement of Investment Disputes (“ICSID“) was established in 1966 by a multilateral convention designed to promote international investment. ICSID aims to fulfill the goal of its generating convention by providing reliable dispute resolution processes for member states and nationals of other member states. However, ICSID is not authorized to enforce arbitration awards issued pursuant to its procedures. Rather, the parties to any such proceeding must rely on the courts of member states to enforce awards issued by an Arbitral Tribunal convened in accordance with the ICSID Convention. See ICSID Convention, art. 54, 17 U.S.T. 1270. Thus, as a signatory to the ICSID Convention, the United States has agreed that an ICSID award will “be given the same full faith and credit as if the award were a final judgment of a court of general jurisdiction of one of the several States.”
This case concerns a claim against Venezuela, a debtor subject to an ICSID arbitration award. In 2013, two Spanish companies, Valores Mundiales, S.L. and Consorcio Andino, S.L. (together, “Valores“) commenced an arbitration under the ICSID Convention claiming that Venezuela forcibly occupied and decreed the expropriation of the assets of the two companies. An ICSID Arbitral Tribunal ruled in favor of Valores, ordering Venezuela to pay more than $430 million in compensation, plus attorneys’ fees and costs. Venezuela then sought to annul the Arbitral Tribunal‘s award. Valores, in turn, filed an action to enforce the award in the United States District Court for the District of Columbia. The District Court stayed the enforcement action pending disposition of the ICSID annulment proceeding.
After the parties’ briefs had been submitted in the annulment proceeding, the National Assembly of Venezuela ceased to recognize Nicolas Maduro as President and named Juan Guaido as Interim President. Representatives for the Interim Government requested the ICSID Annulment Committee to allow it to replace the lawyers representing Venezuela in the annulment proceeding. After careful review of the matter, the ICSID Annulment Committee concluded that the lawyers who had been representing Venezuela should continue through the conclusion of the annulment proceeding. The ICSID Annulment Committee ultimately rejected Venezuela‘s request to annul the Arbitral Tribunal‘s
When the proceeding before the District Court resumed, Venezuela opposed enforcement of the judgments issued by the Arbitral Tribunal and the Annulment Committee. Venezuela claimed that it had been deprived of due process because the ICSID Annulment Committee had declined to recognize counsel designated by the Guaido regime. Venezuela also argued that, because the United States had formally recognized the Guaido regime, the District Court should not enforce the ICSID awards. Finally, Venezuela argued that Valores had forfeited any claim to fees awarded by the Annulment Committee.
The District Court found that no due process violations occurred in the ICSID proceedings. Valores Mundiales, S.L. v. Bolivarian Republic of Venezuela, 2023 WL 3453633, at *5-6 (D.D.C. May 15, 2023). The court concluded that, under
We find no merit in Venezuela‘s challenges to the District Court‘s decision. As we explain below, the District Court committed no error in construing the prescriptions of the ICSID Convention and applying the full faith and credit requirement of
I. BACKGROUND
A. ICSID Convention and Section 1650a
The ICSID Convention, opened for signature Mar. 18, 1965, 17 U.S.T. 1270, 575 U.N.T.S. 159, is a multilateral treaty aimed at promoting private international investment. See Mobil Cerro Negro, Ltd. v. Bolivarian Republic of Venezuela, 863 F.3d 96, 100 (2d Cir. 2017) (citing ANTONIO R. PARRA, THE HISTORY OF ICSID 11-12, 24-26 (2012)). The goals of the ICSID Convention are accomplished through ICSID, which is charged with maintaining a legal framework and a reliable process for the resolution of disputes between private investors and governments. See id. at 100-101; see also Mar. Int‘l Nominees Establishment v. Republic of Guinea, 693 F.2d 1094, 1096 (D.C. Cir. 1982) (“[ICSID‘s] purpose is to provide an international conciliation and arbitration forum.“).
ICSID is based in Washington, D.C. See ICSID Convention art. 2. The ICSID Convention authorizes ICSID to convene arbitration, mediation, and fact-finding panels to address disputes between international investors and Contracting States. See id. arts. 1(2), 7, 25(1), 28. States that have signed the ICSID Convention and ratified it under their domestic law qualify as “Contracting States.” See id. arts. 67, 68(1); see also INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES, GUIDE TO MEMBERSHIP IN THE ICSID CONVENTION 5
Any Contracting State or national of a Contracting State may request that ICSID institute arbitration proceedings to resolve an investment dispute. ICSID Convention art. 36(1). A request for arbitration is registered by ICSID unless the dispute is manifestly outside ICSID‘s jurisdiction. See id. art. 36(3). If the parties cannot timely agree on an Arbitral Tribunal, see id. art. 37, 38, the ICSID Chairman will appoint an Arbitral Tribunal, see id. art. 38. The ICSID Convention contains measures to ensure the neutrality of ICSID Arbitral Tribunals, mandating that arbitrators appointed by the ICSID Chairman “shall not be nationals of the Contracting State party to the dispute or of the Contracting State whose national is a party to the dispute.” Id. During the proceedings, parties may present written and oral argument to the arbitration panel; they may also be represented by counsel. INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES, ICSID ARBITRATION RULES Rules 2(2), 30, 32 (2022), https://icsid.worldbank.org/sites/default/files/Arbitration_Rules.pdf. After consideration of the parties’ presentations and the governing law, the Tribunal issues a written decision and award. See ICSID Convention arts. 42(1), 48(2). The Tribunal‘s disposition of a case must address every question submitted by the parties and must state the reasons upon which the arbitration decision and award are based. Id. art. 48(3).
The only route for setting aside an ICSID Arbitral Tribunal‘s award is through the ICSID Convention‘s annulment process. See id. arts. 52, 53(1); CHRISTOPH H. SCHREUER, COMMENTARY ON THE ICSID CONVENTION 1225 (3d ed. 2022) (“SCHREUER, COMMENTARY“). Either party to a dispute may request annulment of an award. ICSID Convention art. 52(1). Mirroring the initial arbitration process, upon receipt of an annulment application, an ad hoc committee of three arbitrators is appointed to preside over the annulment proceedings. Id. art. 52(3). And, again much like the arbitration process, the ICSID Convention requires that extensive steps be taken to ensure the neutrality of the Annulment Committee. Id. No member of the initial Arbitral Tribunal may be part of the Annulment Committee. Id. Additionally, no member of the Annulment Committee may share a nationality with any member of the initial Arbitral Tribunal or the private investor party to the dispute, nor may an Annulment Committee member share the nationality of the Contracting State party to the dispute. Id. The same rules of procedure that apply to Arbitral Tribunals apply to Annulment Committees. Id. art. 52(4). Among the grounds the ICSID Convention recognizes as bases for annulment is “a serious departure from a fundamental rule of procedure.” Id. art. 52(1)(d).
The ICSID Convention does not give ICSID the power to enforce awards. See id. art. 54; see also SCHREUER, COMMENTARY 1475. Instead, a party seeking enforcement must turn to the courts of a Contracting State. See ICSID Convention art. 54. A Contracting State‘s court must “recognize an award rendered pursuant to [the] Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State.” Id. art. 54(1). “[Contracting] states’ courts are thus not permitted to examine an ICSID award‘s merits, its compliance with international law, or the ICSID tribunal‘s jurisdiction to render the award; under the Convention‘s terms, they may do no more than examine the judgment‘s authenticity and enforce the obligations imposed by the award.” Mobil, 863 F.3d at 102 (citing
The United States is a Contracting State. INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES, List of Contracting States and Other Signatories of the Convention 5 (October 25, 2022), https://icsid.worldbank.org/sites/default/files/ICSID%203/ICSID-3--ENG.pdf. Venezuela was a Contracting State but denounced its membership in 2012. See id. However, the terms of the bilateral investment treaty between Spain and Venezuela render Venezuela subject to ICSID‘s jurisdiction for the purpose of the arbitration proceedings at issue here. See Joint Appendix (“J.A.“) 46, 90-92.
Congress gave effect to the United States‘s obligations under the ICSID Convention with the enactment of
B. The Underlying Arbitration
As noted above, the facts of this case are straightforward and largely undisputed. Valores Mundiales, S.L., and Consorcio Andino, S.L., are Spanish shareholders of Venezuelan companies who were subject to an expropriation decree issued by the Venezuelan government. J.A. 46. On May 10, 2013, the pair commenced ICSID arbitration proceedings against Venezuela for losses relating to the decree. J.A. 47. ICSID convened an Arbitral Tribunal in accordance with ICSID Convention procedures. As part of the proceedings, the parties submitted multiple rounds of briefing and the Tribunal conducted a five-day hearing, which featured expert and fact witnesses. J.A. 49-51, 53-55. The parties also submitted post-hearing briefs. J.A. 56. At the close of the arbitration proceedings, the Tribunal issued a thorough decision that addressed the issues raised by the parties. See J.A. 31-199. The Arbitral Tribunal awarded Valores $430.4 million as compensation for damages and lost profits and close to another $6 million in costs. J.A. 196.
After the Arbitral Tribunal issued its decision and award, Venezuela applied to annul the award. J.A. 613, 732. An Annulment Committee was constituted and annulment proceedings began. See J.A. 613-14. While the annulment proceedings were pending, Venezuela reportedly experienced widespread civil unrest and the Venezuelan government underwent a regime change. See Valores, 2023 WL 3453633, at *3. The National Assembly ceased to recognize Nicolas Maduro as President and named Juan Guaido as Interim President. Id. The United States recognized Guaido as Venezuela‘s leader. Id. However, Maduro maintained control over key institutions and several other countries continued to recognize him as Venezuela‘s legitimate leader. Id.
Meanwhile, on January 8, 2019, Valores filed a suit in the District Court, seeking enforcement of the Tribunal‘s award. As relief, Valores requested enforcement of the ICSID award and the pecuniary obligations contained therein, reimbursement of its legal fees, and “such other and further relief as the Court may deem just and proper.” J.A. 18.
On March 27, 2019, during the ICSID annulment proceedings, the Special Attorney General for the Guaido government sought to intervene and replace the Maduro government‘s representative as Venezuela‘s counsel in the proceeding. J.A. 619-20. Although the parties had concluded the written phase of the annulment proceeding and a hearing date had been set, the Annulment Committee suspended the matter and requested that all parties submit briefing on the issue of Venezuela‘s representation. J.A. 506. Representatives for both the Guaido and Maduro regimes and Valores complied with the Annulment Committee‘s request (although the Guaido regime‘s representative did not submit a reply brief). J.A. 507. On August 29, 2019, the Annulment Committee issued a written opinion finding that under both international and Venezuelan law, the Guaido government‘s representative had failed to carry his burden to prove his legitimacy to represent Venezuela in the ICSID action. J.A. 517. The Annulment Committee then held a two-day hearing on the merits of Venezuela‘s annulment application. J.A. 736. On December 21, 2021, the Annulment Committee issued a decision affirming the Arbitral Tribunal‘s decision and award. J.A. 712. The Annulment Committee also granted Valores an additional $2.3 million in attorneys’ fees and costs. Id.
During the prolonged annulment process, the federal litigation also progressed, albeit in fits and starts. On October 23, 2019, the Clerk of the District Court entered a default judgment against Venezuela. J.A. 4. On March 2, 2020, Venezuela‘s counsel entered appearances, answered the Complaint, and sought to have the default judgment set aside. Id. Valores moved for judgment on the pleadings or, in the alternative, summary judgment; Venezuela cross-moved for summary judgment. J.A. 5.
On November 17, 2020, after the parties had fully briefed their summary judgment motions, the District Court stayed the case, pending completion of the annulment proceeding. J.A. 6. Following the Annulment Committee‘s decision, the District Court lifted the stay on January 24, 2022. J.A. 6-7. After a hearing before a Magistrate Judge, the District Court granted summary judgment for Valores. Valores Mundiales v. Bolivarian Republic of Venezuela, 2023 WL 3453633 (D.D.C. May 15, 2023).
First, the District Court held that a federal court‘s review of an ICSID award was limited and that Valores‘s ICSID award against Venezuela was owed full faith and credit. Id. at *5-7. The District Court noted that the Arbitral Tribunal and the Annulment Committee had followed all relevant ICSID procedures, that the Guaido government was given an opportunity to present its claim to the Annulment Committee, and that the committee issued a “lengthy and reasoned” decision rejecting its arguments. Id. at *6. The District Court then rejected Venezuela‘s claim that enforcement of an ICSID award amounted to an impermissible recognition of the Maduro regime as Venezuela‘s legitimate representative. Id. at *7.
Venezuela timely appealed.
II. ANALYSIS
A. Standard of Review
We review de novo the District Court‘s grant of summary judgment and denial of a cross-motion for summary judgment. Consumer Fed‘n of Am. & Pub. Citizen v. U.S. Dep‘t of Health & Hum. Servs., 83 F.3d 1497, 1501 (D.C. Cir. 1996). We will affirm “only if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.” Republican Nat. Comm. v. Taylor, 299 F.3d 887, 890 (D.C. Cir. 2002); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The District Court also enforced the additional fees and costs granted to Valores by the Annulment Committee. We review for abuse of discretion the District Court‘s determination that Valores did not waive or forfeit its claim for the additional fees and costs. Seed Co. Ltd. v. Westerman, Hattori, Daniels & Adrian, LLP, 961 F.3d 1190, 1195 (D.C. Cir. 2020).
B. Full Faith and Credit Review
We first consider whether the ICSID award is owed full faith and credit. As the District Court held, both the Convention and its implementing legislation strictly limit a federal court‘s authority to review an ICSID award. See ICSID Convention art. 54(1);
Congress adopted implementing legislation consistent with the Convention‘s intent.
Because
Preventing relitigation of issues already decided is the keystone of the full faith and credit obligation. “[U]ncertainty, confusion, and delay . . . necessarily accompany relitigation of the same issue.” Underwriters Nat. Assur. Co. v. N. Carolina Life & Acc. & Health Ins. Guar. Ass‘n, 455 U.S. 691, 704 (1982); see also id. at 704 n.9. As a result, a court may not deny a judgment full faith and credit because “it disagrees with the reasoning underlying the judgment or deems it to be wrong on the merits.” V.L. v. E.L., 577 U.S. 404, 407 (2016) (per curiam). Rather, the full faith and credit obligation owed final judgments “precludes any inquiry into the merits of the cause of action, the logic or consistency of the decision, or the validity of the legal principles on which the judgment is based.” Id. (quoting Milliken v. Meyer, 311 U.S. 457, 462 (1940)).
Full faith and credit‘s bar against relitigation is unyielding. The Supreme Court has recognized want of jurisdiction as an exceptional instance in which a judgment may be denied full faith and credit. Underwriters, 455 U.S. at 705; see also Baker, 522 U.S. at 233 (recognizing lack of jurisdiction as a basis to deny full faith and credit but noting that the Supreme Court‘s “decisions support no roving ‘public policy exception’ to the full faith and credit due judgments“) (emphasis omitted). However, even this exception
On the record before this court, it is clear that Valores‘s ICSID awards against Venezuela are owed full faith and credit. No party contests the jurisdiction of ICSID or the authenticity of the awards rendered by the Arbitral Tribunal and the Annulment Committee. See Mobil, 863 F.3d at 102. Following the Supreme Court‘s elaboration of the full faith and credit standard, we look to whether ICSID would treat the award as binding. See Kremer, 456 U.S. at 463. As the District Court found, it would. See Valores, 2023 WL 3453633, at *5. Neither the parties nor the record suggests otherwise. Based on a straightforward application of
Venezuela claims we should deny full faith and credit to Valores‘s ICSID awards against it because the Guaido government‘s representatives were denied an opportunity to be heard. On Venezuela‘s view, an analogous state court judgment would not be owed full faith and credit for lack of procedural due process. Venezuela‘s position cannot withstand scrutiny under the full faith and credit standard.
Because jurisdiction is satisfied and the award‘s authenticity is not up for debate, Venezuela seeks to prevent enforcement by rehashing an issue that the Annulment Committee considered and resolved. However, Venezuela‘s attempt cannot succeed because
Upon receipt of a letter from the Guaido regime seeking to intervene, the Annulment Committee immediately suspended its proceedings, requested briefing from all parties, and issued an extensive opinion outlining its reasoning for declining the Guaido regime‘s request. J.A. 506. The Guaido regime was afforded a full airing and discussion of its position. The Annulment Committee concluded that the Guaido regime‘s representative had not carried the burden necessary to displace Venezuela‘s existing counsel which had been duly appointed and had been prosecuting its annulment case since its inception. J.A. 504-18; see also J.A. 516-17 ¶¶ 49, 51 (“Mr. Hernandez‘s presentation is not enough to justify a change of procedural representation in this case. . . . Therefore, the procedure must continue with the representation of the Republic already constituted in the file.“). Venezuela does not deny that the Annulment Committee followed all relevant rules governing ICSID actions. Nor could it. As the District Court observed, throughout the annulment process, “the ad hoc committee acted in accordance with ICSID‘s procedural rules, allowed Venezuela to be heard, and issued opinions grounding its decisions in [Venezuelan] and international law.” Valores, 2023 WL 3453633, at *6.
Venezuela has had its opportunity to be heard. The issue of its representation was considered and decided by the Annulment Committee in full accordance with ICSID rules. We will not allow Venezuela to re-open the issue in federal court. On the record before us, it is clear that the judgments of the ICSID Arbitral Tribunal and the Annulment Committee are entitled to full faith and credit.
C. Recognition
Venezuela next attempts to skirt the well-established limits of full faith and credit review by suggesting that enforcement of the ICSID awards against Venezuela would contravene the President‘s Recognition authority under Article II of the Constitution. Venezuela argues that “the ICSID Convention cannot be interpreted as obligating a U.S. court to issue a decision that undermines the Executive‘s exclusive power to recognize foreign governments.” Reply Brief for Appellant 14-15. Thus, according to Venezuela, “[t]he recognition doctrine precludes courts from recognizing any entity or individual purporting to act on behalf of the sovereign state other than the government recognized by the Executive Branch.” Id. at 19.
This argument is clearly a non sequitur. Neither the ICSID Convention nor its implementing legislation undermines the authority of the President of the United States. And the District Court‘s decision in no way “recognizes” anyone purporting to act on behalf of a sovereign state.
As the District Court correctly observed, enforcement of the ICSID awards is not equivalent to recognition of the Maduro regime. In noting that the question regarding the legitimacy of the Maduro regime was not before the court, the District Court stated that,
[I]f lawyers for the Maduro government had attempted to enter notices of appearances on behalf of Venezuela in this proceeding over the objection of the government
that the U.S. Executive recognized, the Court would likely [have] reject[ed] those notices. But that has not happened. In enforcing the award, the Court is not recognizing any regime as the current official government of Venezuela.
Valores, 2023 WL 3453633, at *7.
The District Court understood that “[r]ecognition is a ‘formal acknowledgment . . . that a particular regime is the effective government of a state.‘” Zivotofsky v. Kerry, 576 U.S. 1, 11 (2015) (quoting Restatement (Third) of Foreign Relations Law of the United States § 203 cmt. a). Recognition “is a political rather than a judicial question,” Guaranty Tr. Co. of New York v. United States, 304 U.S. 126, 137 (1938), and is “often effected by an express written or oral declaration,” Zivotofsky, 576 U.S. at 11 (internal quotation omitted). Neither the District Court nor this court has “recognized” any government regime in Venezuela.
Precluded by
Nor does our enforcement of the ICSID awards imply a denial of the President‘s recognition of the Guaido government. Our enforcement cannot seriously be seen as an attempt by this court to “aggrandiz[e] its power at the expense of another branch.” Zivotofsky, 576 U.S. at 31-32 (alteration in original) (quoting Freytag v. Commissioner, 501 U.S. 868, 878 (1991)). Nothing in our enforcement of the ICSID awards forces the Executive to contradict his statements recognizing the Guaido regime. See Zivotofsky, 576 U.S. at 30. Nor is there anything to indicate that
An ICSID Arbitral Tribunal and Annulment Committee are not bound by United States law. Rather, they must follow the framework set out in the ICSID Convention and the procedures adopted by ICSID pursuant to its authority under the ICSID Convention. The United States agreed to these rules when it became a Contracting State under the ICSID Convention. And, as noted above,
Venezuela looks to United States v. Pink, 315 U.S. 203 (1942), for support. In Pink, the Supreme Court considered a New York
The Court in Pink held that “[e]nforcement of New York‘s policy . . . would collide with and subtract from the Federal policy.” Id. at 231. Such a collision was unconstitutional because, with respect to recognition, the President‘s authority “is not limited to a determination of the government to be recognized. It includes the power to determine the policy which is to govern the question of recognition.” Id. at 229. As a result, the Supremacy Clause requires that “state law must yield when it is inconsistent with or impairs the policy or provisions of a treaty or of an international compact or agreement.” Id. at 230-31.
The decision in Pink has no bearing on the issues before this court. Enforcement of the ICSID awards does not implicate a conflict between state and federal law. In this case, federal policy - in the form of the ICSID treaty and its implementing legislation – requires this court to enforce the awards without review of the merits, pursuant to Article 54(1) of the ICSID Convention and
In our constitutional scheme, the judiciary must follow the political branches’ lead on matters of foreign affairs. See Chicago & S. Air Lines v. Waterman S. S. Corp., 333 U.S. 103, 111 (1948). (“[Foreign policy] decisions are wholly confided by our Constitution to the political departments of the government, Executive and Legislative. . . . They are decisions of a kind for which the Judiciary has neither aptitude, facilities nor responsibility and have long been held to belong in the domain of political power not subject to judicial intrusion or inquiry.“). Here, a refusal to enforce the ICSID awards against Venezuela would require this court to ignore the treaty obligations undertaken by the Executive and approved by the Senate and the implementing legislation passed by Congress. Enforcement, not its opposite, is what the separation of powers requires.
D. Fees and Costs
Finally, we find that the District Court did not abuse its discretion in enforcing the additional fees and costs awarded by the Annulment Committee. The District Court noted that, in claiming that Valores had forfeited their right to the fees and costs, Venezuela misconstrued the submissions in the parties’ January 21, 2022 Joint Status Report. See Valores, 2023 WL 3453633, at *7. We agree. The record makes clear that Valores‘s statement that “[t]he final decision of the ICSID Committee does not impact the Parties’ positions before this Court” concerned the merits of the summary judgment briefing, not the relief requested. See J.A. 624. Furthermore, in failing to raise this issue before the Magistrate Judge, Venezuela “waive[d] its own waiver argument.” Se. Alabama Med. Ctr. v. Sebelius, 572 F.3d 912, 920 n.7 (D.C. Cir. 2009).
In any event, the District Court squarely considered Venezuela‘s argument advocating exclusion of Valores‘s supplementary fees and costs and found it wanting. Finding no “error of law” in the District Court‘s decision, we hold that the District Court did not abuse its discretion in enforcing the Annulment Committee‘s award
III. CONCLUSION
For the reasons set forth above, we affirm the judgment of the District Court.