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INTERNATIONAL TECHNOLOGIES INTEGRATION v. P.L.O.

June 22, 1999

INTERNATIONAL TECHNOLOGIES INTEGRATION, INC., PLAINTIFF,
v.
THE PALESTINE LIBERATION ORGANIZATION AND THE PALESTINIAN NATIONAL AUTHORITY, DEFENDANTS.



The opinion of the court was delivered by: Kollar-kotelly, District Judge.

MEMORANDUM OPINION

To resolve a dispute arising under an agreement between the Plaintiff International Technologies Integration, Inc. ("ITI") and the Defendants the Palestine Liberation Organization ("PLO") and the Palestinian National Authority ("PNA"), ITI commenced arbitration by filing a Demand for Arbitration with the American Arbitration Association ("AAA") and forwarding copies of the Demand by both registered mail, return-receipt requested and facsimile to the PNA's president and two ministers. To neither this Demand nor to numerous other notices of the arbitration proceedings sent by both ITI and the AAA did the Defendants respond. On October 15, 1997, after conducting an ex parte arbitration, an arbitrator found that the PLO and the PNA were liable to ITI in the amount of $18,750,000 for breach of contract. More than ninety days after the Defendants were served with the arbitrator's award, ITI filed a motion to confirm the award in the District of Columbia Superior Court, which was served on the Defendants by registered mail, return-receipt requested at the same addresses to which all previous arbitral notices had been sent. Responding to the Superior Court summons, the Defendants removed to this Court pursuant to 28 U.S.C. § 1441(d), and concomitantly raised several affirmative defenses, including lack of notice, in moving to vacate the arbitration award.

Only two issues need be resolved by this Court: 1) did the Defendants receive adequate notice of the arbitration proceedings and 2) if so, are they now precluded from moving to vacate the arbitrator's award. After reviewing the parties' briefs, exhibits, supplemental responses to this Court's May 27, 1999 Order, and comments at oral argument, the Court answers each issue in the affirmative. Accordingly, ITI's motion to confirm is granted.

I. BACKGROUND

On September 13, 1993, the PLO, acting as representative of the Palestinian people, and the Government of Israel signed the Declaration of Principles on Interim Self-Government Arrangements, which extended limited political autonomy to Palestinians within the West Bank and the Gaza Strip. Emerging from this historic accord was the PNA, the political entity in which is reposed the Palestinian executive, legislative, and judicial powers. Among the PLO's chief developmental objectives was to "rebuild and modernize the telecommunications network in the Palestinian Territory." Decl. of Mohammed Rachid ¶ 2.*fn1 ITI is an advanced-technology, research, and engineering firm incorporated in the Commonwealth of Virginia that provides telecommunications services throughout the world. See Decl. of Howard Graff ¶ 2. On October 3, 1993, ITI executed two substantively identical agreements*fn2 with both the PLO and the PNA, under which the PNA*fn3 allegedly granted to ITI the exclusive, non-terminable right to develop a domestic and international communications and telecommunications network in the West Bank, Jericho, and the Gaza Strip. See id. at Exs. A & B.

Three discrete provisions in the Agreement, which will receive more elaborate examination later, warrant brief attention at the outset. First, in Article 2.1 of the Agreement, the parties elected to resolve all disputes by submitting them to binding arbitration in Washington, D.C. under the aegis of the AAA. Second, Article 3 specified that the Agreement was to be interpreted and enforced in accordance with and governed by the laws of the state of Virginia. And lastly, Section 8.2 of the Conditions of Contract for Telecommunication Concession (Sharing) Agreement — Gaza Strip/West Bank ("Conditions of Contract"), a document annexed to the Agreement, specified that

  [a]ny notice, demand or other communication required
  or permitted to be given pursuant to the Agreement
  shall be in writing and shall be (i) personally
  delivered to an individual then designated as a
  party's representative . . . (ii) transmitted by
  postage prepaid registered mail (airmail if
  international), or (iii) transmitted by telefax or
  telex (with answerback confirmation).

Conditions of Contract, § 8.2 (Decl. of Graff at Ex. C). Section 8.2 further provided that notices to the PNA were to be addressed to the PNA in Jericho, Palestine, directed to the attention of "H.E. The President." Beyond these specifications, however, Section 8.2 was silent, if not cryptic. Although it indicates that a post office box is part of the address, there is merely a blank line following the "P.O. Box" line. Moreover, where there should be numbers or other data, only blank lines follow such categories as "Telex Number," "Answerback," and "Fax." See Conditions of Contract, § 8.2, at 16.

At the time that the parties entered into the Agreement, Chairman Arafat was residing in Tunis, Tunisia, where, in fact, the contract was signed. See Decl. of Dennis F. Schonacher ¶ 2; Decl. of Graff at Exs. A (Agreement between ITI and the PLO indicating that "[t]his AGREEMENT is made and entered into in Tunisia on the Third day of October 1993. . . ."); id. at Ex. B (Agreement between ITI and the PNA indicating that "[t]his AGREEMENT is made and entered into in Tunisia on the third day of October 1993. . . ."). Once Chairman Arafat permanently moved to Palestine, ITI directed all written correspondence with the Office of the President of the PNA to the Gaza address. See Decl. of Schonacher ¶ 4; id. at Ex. 1 (various letters sent by ITI to the Office of President in Gaza). Moreover, ITI conducted all telephone and facsimile communications with the Office of the President by dialing Gaza phone numbers. See id. ¶ 4. Indeed, it was in Gaza that Chairman Arafat, accompanied by representatives from ITI, MCI, and Bezeq, an Israeli telecommunications company, announced a formal transfer of the telecommunications system in Palestine from Bezeq to ITI. See id. ¶ 5.

Approximately three years after the parties executed the Agreement, ITI concluded that the PNA wrongfully terminated the Agreement, and, pursuant to Article 2.1 of the Agreement, commenced arbitration by filing a Demand for Arbitration ("Demand") with the AAA on November 12, 1996. ITI, in turn, served copies of the Demand on Yasser Arafat, Chairman of the Executive Committee of the PLO and President of the PNA, His Excellency Eng. Imad Al Falouji, Minister of Post and Communication, and His Excellency F. Abu-Medein, Minister of Justice. For each of the three PNA officials on whom ITI served a copy of the Demand, ITI employed both registered mail, return-receipt requested and facsimile transmission — totaling six separate notices to the PNA.*fn4 All three facsimiles were transmitted successfully, see Decl. of Graff ¶ 7 and Exs. F, G, & H (copies of facsimile confirmations to all three recipients), and a stamped return-receipt indicates that the Minister of Post & Communications received the Demand on November 28, 1996. See id. at Ex. I (copy of stamped return-receipt to H.E. Imad Al Falouji); see also id. at Ex. J (copy of the Affidavit of Service of Lynn Wiegand (original was submitted to the Arbitrator), attesting that the Demand was served on each of the three PNA officials by registered mail, return-receipt requested and by facsimile). Copies of the Demand were served on each of the three PNA officials at the Gaza addresses that ITI had consistently used to communicate successfully with the PNA. Despite these notices, the PNA never contacted ITI.

Meanwhile, the AAA administrator, Luis M. Martinez, was taking preliminary steps to orchestrate ITI's arbitration demand. On December 5, 1996, he sent a letter to both parties to advise them that the AAA had received ITI's Demand, that the PNA had forty-five days from that point to file a statement of defense and counter-claims, and that he hoped to schedule an administrative conference. See Decl. of Luis M. Martinez ¶ 3 & Ex. A. AAA documents indicate that a facsimile of Martinez' letter was successfully transmitted to the PNA's Ministry of Post and Communication. See id. at Ex. B. A stamped copy of the Martinez letter that was sent to Minister Imad Al Falouji bears an official PNA stamp that reads, according to the certified translation: "The Palestinian National Authority, Ministry of Post and Communication, Office of the Minister." See Decl. of Graff at Ex. K (containing stamped-copy of letter and certified translation). The translation also indicates "American Arbitration Association No. 266/26" and the date of "12/12/96." The PNA did not respond.

Two months later, Martinez sent another letter to ITI and the PNA's Minister of Post and Communication. See Decl. of Martinez ¶ C. While notifying the parties of prospective arbitrators and requesting their preferences, Martinez also used this opportunity to admonish the PNA about the consequences of failing to participate in the upcoming arbitration:

  Failure to [submit a list of preferred arbitrators]
  will be deemed an acceptance of the entire list.
  Please note that this Association has not received a
  response from the Respondent. It is our policy that
  absent a Court Order or an agreement by the parties,
  the arbitration will proceed as to all parties. If
  one party fails to participate the arbitration will
  proceed exparte [sic], meaning one party. In the
  event that any party does not participate it is
  advised that they attend the hearings because failure
  to attend will not prevent the arbitrator from
  issuing an award that can be enforced in either
  country.

Decl. of Martinez at Ex. C. As he did with his December letter, Martinez faxed a copy of his letter to the PNA's Minister of Post and Communication. Likewise, AAA records indicate that the fax was sent successfully, see id. at Ex. D, and the stamp affixed to the fax cover sheet has been translated as: "Stamp of The Palestinian National Authority, Ministry of Post and Communication, Office of the Minister." Decl. of Graff at Ex. L. Having received no response from the PNA, the AAA designated Biagio Civale as Arbitrator, and through Martinez, issued a Notice of Hearing for March 28, 1997. See Decl. of Martinez at Ex. E. Once again, a stamp on the facsimile cover sheet sent to the PNA reads: "Stamp of The Palestinian National Authority, Ministry of Post and Communication, Office of the Minister." Handwritten notations also indicate that the facsimile was "Received 03/26/____7." Decl. of Graff at Ex. M.

Presumably concerned about the PNA's absence, Arbitrator Civale ordered ITI to contact the Office of the PLO in Washington, D.C. about the pending arbitration. See Decl. of Graff ¶ 17. On April 8, 1997, Counsel for ITI complied by sending a brief letter to Minister Imad Al Falouji by facsimile and registered mail, return-receipt requested to both the Gaza address as well as the Office of the PLO in Washington, D.C., in care of Mr. Said Hamad, the Deputy Chief Representative of the PLO. See id. A stamp on the facsimile cover sheet sent to the Office of the PLO in Washington, D.C. reads: "Stamp of The Palestinian Liberation Organization." Handwritten in English on the face of the document appear the words: "Received APR 11, 1997." See id. at Ex. N. This letter also failed to precipitate a response from the PNA. Accordingly, pursuant to the AAA's rules, the Arbitrator conducted the proceeding ex parte.

To substantiate its claim, ITI submitted a number of affidavits and other written documentation to the Arbitrator between April and October of 1997. See Decl. of Graff ¶ 19. Notwithstanding the PNA's absence, Arbitrator Civale directed ITI to serve the PNA with copies of every submission that it tendered to him. See id. ¶ 20. Significantly, ITI served copies of its arbitral submissions on the PNA's President, Yasser Arafat, the Minister of Justice, F. Abu-Medein, and the Minister of Post and Communication, Imad Al Falouji at their Gaza addresses. See id. Because the question of notice assumes dispositive significance in this litigation, it is essential to chronicle ITI's various submissions:

  • Three returned receipts to President Arafat,
  Minister F. Abu-Medein, and Minister Imad Al Falouji
  acknowledge that the PNA received ITI's April 25,
  1997 letter to Arbitrator Civale containing ITI's
  witness list and suggested testimony. See id. at
  Ex. O.
  • Three facsimile confirmations sent to President
  Arafat, Minister F. Abu-Medein, and Minister Imad Al
  Falouji indicate that ITI's April 25, 1997 letter was
  transmitted successfully. See id. at Ex. P.
  • Three DHL Shipment Airwaybills indicate that ITI
  mailed its initial submissions to President Arafat,
  Minister F. Abu-Medein, and Minister Imad Al Falouji
  on May 12, 1997. See id. at Ex. Q.
  • A DHL log indicates that ITI's May 12, 1997 initial
  submissions were delivered to H.E. Eng. Imad Al
  Falouji.
  • DHL Airwaybill 9146324924, which contained ITI's
  May 12, 1997 initial submissions that were mailed to
  President Arafat, was received on May 20, 1997 by
  "Yousra." ITI maintains, and the PNA has not
  suggested to the contrary, that "Yousra" refers to
  Yousra Jamil Hassanat, who works in the PNA
  Presidential Office in Gaza, and who is responsible
  for President Arafat's "In" & "Out" mail. See id.
  at Ex. S.
  • DHL Airwaybill 9146325134, which contained ITI's
  May 12, 1997 initial submissions that were mailed to
  Minister F. Abu-Medein, was received on May 20, 1997
  by "Nahed." Unchallenged by the PNA, counsel for ITI
  has averred that "Nahed" refers to Nahed Ichtaouie,
  who serves as the private secretary to Minister F.
  Abu-Medein. See id. at Ex. T.
  • DHL Airwaybill 9100955861, which contained ITI's
  subsequent May 15, 1997 submission that was mailed to
  Minister F. Abu-Medein, was received on June 2, 1997
  by "Rahada Bsaiso." Counsel for ITI maintains that
  Rahada Bsaiso is the assistant to the private
  secretary to Minister F. ...

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