The opinion of the court was delivered by: SMITH, JR.
The Libyan American Oil Company (LIAMCO) brings this action to confirm and enforce an arbitration award rendered on April 12, 1977, in Geneva, Switzerland, against the Socialist People's Libyan Arab Jamahirya (Libya). The arbitral award was rendered pursuant to a clause contained in certain petroleum concessions entered into by LIAMCO and Libya in 1955. In 1973 and 1974 Libya nationalized both LIAMCO's rights under the concessions and certain of its oil drilling equipment. Following unsuccessful negotiations regarding compensation, LIAMCO rejected the terms of the nationalization and initiated proceedings under the arbitration clause. Libya, maintaining that the nationalization superseded the concessions altogether, refused to participate in the Geneva proceedings. The matter is now before the Court upon LIAMCO's petition for confirmation of the award and Libya's opposition, styled a motion to dismiss. LIAMCO invokes the jurisdiction of this Court pursuant to 28 U.S.C. § 1330(a) and (b) (actions against foreign states), arguing that Libya is not immune under the Foreign Sovereign Immunities Act of 1976 (FSIA) (codified at 28 U.S.C. §§ 1330, 1332(a)(2)-(4), 1391(f), 1441(d), and 1602-1611). LIAMCO further contends that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Convention) (codified at 9 U.S.C. §§ 201-208) requires the confirmation of the award. Service has been complied with in accord with the terms of 28 U.S.C. § 1608. Respondent Libya does not challenge the validity of the underlying award. Instead it mounts a two pronged defense arguing first that this Court is without jurisdiction, and second, that even should the Court find jurisdiction, it should refrain from enforcing the award under the Convention because of the act of state doctrine.
The jurisdictional question
Libya is a foreign state, 28 U.S.C. § 1603(a), and therefore entitled to immunity from the jurisdiction of the United States courts according to the FSIA, 28 U.S.C. § 1604, unless some exception set forth in sections 1605-1607 of the same title applies. If an exception to immunity can be demonstrated, then this Court has jurisdiction pursuant to section 1330, provided all the requirements of subsections (a) and (b) are met.
The legislative history clarifies that before United States courts may exercise jurisdiction over a foreign sovereign, the FSIA requires a showing not only of particular reasons for denying sovereign immunity (s 1330(a)), but also of the traditional requirements for in personam jurisdiction, including the requirements of due process (s 1330(b)).
(b) Personal Jurisdiction. Section 1330(b) provides in effect, a Federal long-arm statute over foreign states . . . . The requirements of minimum jurisdictional contacts and adequate notice are embodied in the provision. Cf. International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945), and McGee v. International Life Insurance Co., 355 U.S. 220, 223, 78 S. Ct. 199, 2 L. Ed. 2d 223 (1957). For personal jurisdiction to exist under section 1330(b), the claim must first of all be one over which the district courts have original jurisdiction under section 1330(a), meaning a claim for which the foreign state is not entitled to immunity. Significantly, each of the immunity provisions in the bill, sections 1605-1607, requires some connection between the lawsuit and the United States, or an express or implied waiver by the foreign state of its immunity from jurisdiction. These immunity provisions, therefore, prescribe the necessary contacts which must exist before our courts can exercise personal jurisdiction. Besides incorporating these jurisdictional contacts by reference, section 1330(b) also satisfies the due process requirement of adequate notice by prescribing that proper service be made under section 1608 of the bill. Thus, sections 1330(b), 1608 and 1605-1607 are all carefully interconnected. H.R.Rep. No. 1487, 94th Cong., 2d Sess. 13, reprinted in (1976) U.S.Code Cong. & Admin.News, p. 6604, at p. 6612.
Subsection (b) states that "(personal) jurisdiction over a foreign state shall exist as to every claim for relief over which the district courts have jurisdiction under subsection (a) where service has been made under section 1608 of this title." 28 U.S.C. § 1330(b). Petitioner avers that § 1608 notice has been given and respondent does not contest this point. It remains to determine whether one of the exceptions to immunity under subsection (a) applies.
As noted in the legislative history quoted above, original jurisdiction under subsection (a) may be established either by "some Connection between the lawsuit and the United States, or an express or implied Waiver by the foreign state." (emphasis added). Section 1605(a)(1) provides that a foreign state is not immune if it has "waived its immunity either explicitly or by implication." 28 U.S.C. § 1605(a)(1). Petitioner LIAMCO maintains that Libya implicitly waived its sovereign immunity by expressly agreeing to the arbitration and choice of law clauses negotiated in 1966 and 1967, more than ten years after the concessions were originally entered into. LIAMCO supports its interpretation of the effect of those clauses by reference to another passage in the legislative history of the FSIA.
A recent case in this Court also supports this view. In Ipitrade Int'l, S.A., v. Federal Republic of Nigeria, 465 F. Supp. 824 (D.D.C.1978), an action for enforcement of an arbitral award based on breach of contract, the Court held that the foreign sovereign's "agreement to adjudicate all disputes arising under the contract in accordance with Swiss law and by arbitration under International Chamber of Commerce rules constitute(d) a waiver of sovereign immunity under the Act." 465 F. Supp. at 826. As in the present case, the award was granted in a foreign jurisdiction but sought to be enforced here. In the case at bar, the arbitration clause agreed to by Liamco and Libya was a special amendment to the original concession. The 1955 agreement had provided that any eventual arbitration should take place in Libya's capitol, Tripoli. The clause that LIAMCO proposed in 1966, however, provided that arbitration should take place either where the parties agreed, or where the arbitrators might agree. Libya agreed to this provision. Although the United States was not named, consent to have a dispute arbitrated where the arbitrators might determine was certainly consent to have it arbitrated in the United States.
Libya thus waived its defense of sovereign immunity for the purposes of § 1330(a) and because there is no suggestion that the requirements of notice under § 1330(b) have not been met, this Court has jurisdiction to recognize and enforce the award. The question of whether to exercise that jurisdiction remains.
The act of state doctrine
The Convention under which LIAMCO would have this Court confirm the arbitral award plainly favors enforcement of foreign awards in this forum.
The court Shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said ...