Nine months after the application denial, Tethyan referred the dispute to ICSID. See id. ¶ 11. That body was formed by the ICSID Convention, a multilateral agreement signed by 164 nations—including Australia, Pakistan, and the United States—that provides a framework for arbitrating investment disputes between contracting states and nationals of other contracting states and for recognition of any resulting awards. See ICSID Convention, pmbl., Pet. Ex. 2, ECF No. 1-2. Tethyan made the referral under a bilateral investment treaty between Australia and Pakistan (Treaty).1 The Treaty provides that when a signatory nation and an investor of the other nation cannot resolve a dispute among themselves, "either party to the dispute may ... refer the dispute to [ICSID]." Treaty, art. 13(2)(b). ICSID convened a Tribunal in 2012 to arbitrate. See Pet. ¶ 12.
The Tribunal took its time. Over four years, it conducted 32 days of hearings. See id. ¶ 13. Finally, in November 2017, the Tribunal issued a Decision on Jurisdiction and Liability. See Rozen Decl., Ex. B at 635–1020, ECF No. 1-1 (J&L).2 The Tribunal first decided, over Pakistan's objections, that it had jurisdiction to hear Tethyan's claims. See id. ¶ 688. Next, it held that Tethyan had a legitimate expectation that Balochistan would approve the mining application and that Tethyan had relied on that expectation. See id. ¶ 958. Balochistan rejected the application on pretextual grounds so that Balochistan could start its own mining project using Tethyan's hard work. See id. ¶ 1264. Pakistan thus, through one of its provincial governments, had expropriated the value of Tethyan's investment, thereby violating multiple provisions of the Treaty. See id. ¶ 1449. Tethyan was entitled to "all damages and losses resulting from" Pakistan's breaches. Id.
In July 2019, the Tribunal issued its damages determination. See Rozen Decl., Ex. A at 5–633, ECF No. 1-1 (Award). The Tribunal directed Pakistan to pay $4.087 billion in compensation, pre-award interest dating from the start of arbitration proceedings, $2.53 million in arbitration costs, $59.4 million in Tethyan's legal costs, and post-award interest compounded annually. See id. ¶ 1858. All told, the Award totals about $6 billion. See Mot. to Stay at 10, ECF No. 34 (Mot.).
These provisions mandate an "exceptionally limited" role for the Court in enforcing an ICSID award. TECO Guatemala Holdings, LLC v. Repub. of Guatemala, 414 F. Supp. 3d 94, 101 (D.D.C. 2019). That said, courts do more than rubber stamp. The Court must ensure that it has subject-matter and personal jurisdiction; that the award is authentic; and that its enforcement order tracks the award. See id.; see also Mobil Cerro Negro, Ltd. v. Bolivarian Repub. of Venezuela, 863 F.3d 96, 112 (2d Cir. 2017) (holding that 22 U.S.C. § 1650a does not provide an independent grant of subject matter jurisdiction over actions to enforce ICSID awards). And to give "full faith and credit" to an ICSID award as if it were a final judgment in a state, the Court consults the "established procedures for enforcing state court judgments in federal court." TECO, 414 F. Supp. 3d at 101 (cleaned up). The Court's role thus entails "more than summary enforcement" of an award. Id. at 102.
The Court first considers Pakistan's request for a stay. Admittedly, courts usually must establish jurisdiction before moving onto any merits issue. See Foster v. Chatman, 578 U.S. 488, 496 (2016). Yet when a court contemplates on non-jurisdictional "threshold grounds" a delayed hearing of a case's merits, it may consider those grounds first. Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 431 (2007) (cleaned up). As many judges in this district have held, "[t]he stay of a petition to enforce an arbitration award is one such threshold issue." Masdar Solar & Wind Cooperatief U.A. v. Kingdom of Spain, 397 F. Supp. 3d 34, 38 (D.D.C. 2019); see also RREEF Infra. (G.P.) Ltd v. Kingdom of Spain, No. 19-cv-3783 (CJN), 2021 WL 1226714, at *2 (D.D.C. Mar. 31, 2021).
Pakistan also responds that at least one judge in this district has granted a stay during ICSID annulment proceedings even when the defendant failed to abide by the Centre's conditions for a prolonged stay. See Union Fenosa Gas, S.A. v. Arab Repub. of Egypt, No. 18-cv-2395 (JEB), 2020 WL 2996085, at *5 (D.D.C. Jun. 4, 2020). But that underlying arbitral award "garnered a dissent, a relatively rare outcome" in ICSID decisions. Id. at *4. The court credited that dissent as rendering the likelihood of annulment more than "wishful thinking." Id. Here, in contrast, Pakistan involves only wishful thinking that the Committee will annul the Award, and no member of the original tribunal dissented. More, Union Fenosa is expressly limited to its facts. The court there based its decision on "several unique circumstances," including the dissent, id., and refused to "suggest that a stay is always or even often warranted whenever a losing party petitions to annul" an award, id. at *5. Given those statements, this Court also bases its decision on the unique facts of this case.
* * *
The Circuit affirmed denial of a motion to stay enforcement of an arbitral award pending an application to vacate the award. See id. at 880. The award there arose under a different arbitral framework—the New York Convention. So the court reviewed several New York Convention-specific factors from a leading case, Europcar Italia, S.p.A. v. Maiellano Tours, Inc., 156 F.3d 310, 317–18 (2d Cir. 1998). The D.C. Circuit determined that district courts must, when considering a stay under the New York Convention, consider "(1) the general objectives of arbitration—the expeditious resolution of disputes and the avoidance of protracted and expensive litigation"; and "(2) the status of the foreign proceedings and the estimated time for those proceedings" to resolve. Stileks, 985 F.3d at 879–80.
In arguing that neither exception applies, Pakistan makes the same argument. According to Pakistan, it never agreed, under the Treaty's terms, to arbitrate this case at ICSID. Article 13(2)(b) of the Treaty allows "either party" to refer a dispute to the ICSID for arbitration. But when an investor of either nation makes that referral, Article 13(3)(a) says that the other nation "shall consent in writing to the submission of the dispute to the [ICSID] within thirty days" of receiving the investor's request to refer. Treaty, art. 13(3)(a). Pakistan asserts that it never provided such written consent. See Mot. at 29. Thus, it never agreed to arbitrate at ICSID.
In disputes over the existence of an arbitration agreement, the D.C. Circuit applies a burden-shifting framework. See Chevron, 795 F.3d at 204. The plaintiff has a prima facie burden of production to show an arbitration agreement. See id. at 204. A plaintiff carries that burden by producing "copies of the [underlying treaty], the notice of arbitration, and the tribunal's decision." Stileks, 985 F.3d at 877 (citing Chevron, 795 F.3d at 204). That production creates "a presumption" that the treaty and notice of arbitration "constituted an agreement to arbitrate." Chevron, 795 F.3d at 205. The foreign sovereign then has a "burden of persuasion" to rebut that presumption "by a preponderance of the evidence." Id. at 204.
Tethyan makes a prima facie case by presenting the Award, the Treaty, and its notice of arbitration. See Treaty; Award; Davis Decl., Ex. A, ECF No 36-1 (Request for Arbitration). That production entitles Tethyan to a presumption of a valid arbitration agreement. Chevron, 795 F.3d at 205. To rebut that presumption, Pakistan must show "by a preponderance of the evidence" that those combined documents do not constitute a valid arbitration agreement. Id. at 205. But has Pakistan done so?
Recall that the Tribunal determined that it had jurisdiction over the dispute, see J&L ¶ 648. That determination included a conclusion that Pakistan had given written consent to the Tribunal's arbitration. See id. ¶ 646. In essence, the Tribunal made an arbitrability conclusion that the parties had agreed to arbitrate. See Henry Schein, Inc. v. Archer and White Sales, Inc., 139 S. Ct. 524, 529 (2019) (defining as a gateway question of arbitrability "whether the parties have agreed to arbitrate" (cleaned up)). Tethyan argues that this Court must accept the Tribunal's arbitrability decision as binding for purposes of this action. See Opp'n at 28–30. Pakistan disagrees, saying the Court should make its own independent determination on the existence of an agreement. See Reply at 18–20.
The Court takes its cue from Chevron, which held that FSIA did not require a de novo review of arbitrability. 795 F.3d at 204–05. There, the D.C. Circuit found that the petitioner had made a prima facie case of an agreement. See id. at 205. The Circuit then affirmed the district court's conclusion—though not made in a FSIA jurisdictional analysis—that the prima facie documents constituted an agreement between the parties. See id. The Circuit thus found jurisdiction under the FSIA. See id. at 206.
The district court's reasoning in Chevron—affirmed by the Circuit—confirms this Court's jurisdiction under the FSIA. Ecuador argued that "it never consented to arbitrate the underlying dispute." Chevron Corp. v. Repub. of Ecuador, 949 F. Supp. 2d 57, 63 (D.D.C. 2013). Like Pakistan here, Ecuador sought an "independent, de novo determination" by the district court on arbitrability. Id. Judge Boasberg rejected that argument as "counter to the clear teaching in this circuit on the purpose and role of the FSIA" as a jurisdictional statute speaking only "to the power of the court rather than to the rights and obligations of the parties." Id. (cleaned up). Inquiring into the arbitrability of the underlying dispute would examine the contractual rights of the parties to arbitration "and would thus be beyond the reach of the FSIA's cabined jurisdictional inquiry." Id.
The Circuit's affirmance of that conclusion, see Chevron, 795 F.3d at 205, n.3, means that under FSIA—rather than under the New York Convention—arbitrability does not affect the Court's jurisdiction. Indeed, the Circuit has recently said so. See Stileks, 985 F.3d at 878 ("[T]he arbitrability of a dispute is not a jurisdictional question under the FSIA.").
Pakistan responds that the D.C. Circuit misread Judge Boasberg's opinion and that this Court still should analyze de novo the Treaty's language. See Reply at 20. That request runs headlong into Stileks. There, Moldova argued that the underlying treaty "did not give the arbitral tribunal jurisdiction of the dispute" and thus Moldova had not waived its immunity. See Stileks, 985 F.3d at 877. Like Pakistan, Moldova based its argument on the language of the treaty. See id. at 878. The Circuit found that Moldova's arbitrability argument was cognizable under the New York Convention, not under FSIA. See id. ("If Moldova is correct, it might have a defense under the New York Convention[…]"). That Convention allows for rejecting an award when the award concerns issues "not contemplated by or not falling within the scope of submission to arbitration" or that are "beyond the scope of the submission to arbitration." New York Convention art. V(1)(c).
The Circuit construed Moldova's arbitrability argument as arising under the Convention, even though Moldova used that argument to "bolster its claim of sovereign immunity" under FSIA. Id. The Circuit rejected that tactic. "[T]he arbitrability of a dispute is not a jurisdictional question under the FSIA" and an attempt to argue arbitrability under FSIA "conflates the jurisdictional standard of the FSIA with the standard for review under" an international arbitral framework. Id. (quoting Chevron, 795 F.3d at 205–06).
So too here. To be sure, precedents under the New York Convention do not bind the interpretation of an award under a different convention. But the two Conventions are comparable enough on this point. As in the New York Convention, the ICSID Convention grants a tribunal the authority to be "the judge of its own competence." ICSID Convention, art. 41(1). Stated simply, the ICSID Tribunal determines its jurisdiction over a dispute. Thus, ICSID's jurisdictional power—as agreed to by Pakistan's signature on the Treaty—renders binding on this Court the Tribunal's arbitrability determination. See Stileks, 985 F.3d at 879. The Court therefore has "no authority to delve into" the merits of Pakistan's argument. Id. The Tribunal determined that it had jurisdiction over the dispute. See J&L ¶ 648. The Court cannot disturb that conclusion.
Now assured of jurisdiction, the Court decides whether the Award merits full faith and credit. Recall that the ICSID implementing statute requires courts to give awards "the same full faith and credit as if the award were a final judgment of" a state court. 22 U.S.C. § 1650a(a). The Court thus treats the Award "in the same manner as a state court judgment" and consults "established procedures for enforcing state court judgments in federal court." TECO, 414 F. Supp. 3d at 101–02 (cleaned up).
Pakistan first argues that the Tribunal lacked jurisdiction, thus precluding full faith and credit to the Award. See Mot. at 35–37. Unlike its earlier jurisdictional arguments, Pakistan argues here that the Treaty's definition of "investment" does not cover Tethyan's interest in the original joint venture. See id. at 36. The Tribunal held otherwise. See . Under Pakistan's theory now, the Tribunal was mistaken and thus never had jurisdiction of the dispute. See Mot. at 36–37.
Longstanding precedent bars this attempt to recycle a losing jurisdictional argument. "[A] judgment is entitled to full faith and credit—even as to questions of jurisdiction—when the second court's inquiry discloses that those questions have been fully and fairly litigated and finally decided in" the original court. Durfee v. Duke, 375 U.S. 106, 111 (1963). In its filings before the Tribunal, Pakistan made the same argument it does now: The definition of "asset" divested the Tribunal of jurisdiction. See Davis Decl., Ex. B at 132–154, ECF No. 36-2 (Pakistan Counter-Memorandum); Ex. C at 84–110, ECF No. 36-3 (Pakistan Rejoinder). The Tribunal rejected it. See . Thus, Pakistan's argument was "fully and fairly litigated and finally decided" before the Tribunal. Durfee, 375 U.S. at 111. Pakistan cannot use the same previously litigated jurisdictional argument—even one about subject matter jurisdiction—to deny full faith and credit to the Award. See Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 706 n.9 (1982) ("A party that has had an opportunity to litigate the question of subject-matter jurisdiction may not, however, reopen that question in a collateral attack upon and adverse judgment.").
The Court disagrees. Due process constrains awards of only punitive damages, not compensatory ones. See State Farm Mut. Auto Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003). Pakistan suggests that the Award is "so large as to be akin to a punitive damages award." Reply at 30. Not so. The Tribunal fashioned a figure to quantify "the market value" of Tethyan's investment had Pakistan not expropriated that investment. Award ¶ 273. That figure included the "future profits" of the investment absent expropriation. Id. ¶ 335. Repayment of market value and future profits "redress[ed] the concrete loss [Tethyan] has suffered" from Pakistan's conduct, a hallmark of compensatory damages. Campbell, 538 U.S. at 416 (cleaned up). Nowhere did the Tribunal say that the $6 billion was "aimed at deterrence or retribution," the "broader function" of punitive damages. Id. And Pakistan offers no authority imposing due process constraints on compensatory damages. Thus, due process does not limit the type of damages awarded here.
For these reasons, the Court will deny Pakistan's motion to stay or dismiss Tethyan's Petition. The Award is final and Pakistan is "obliged to abide by and comply with" it. ICSID Convention art. 53(1). The Court likewise must "enforce the pecuniary obligations imposed by" the Award. Id. art. 54(1); see also 22 U.S.C. § 1650a(a). A separate Order will issue today.
Dated: March 10, 2022
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