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Contintental Transfert Technique Limited v. Federal Government of Nigeria

March 23, 2010

CONTINTENTAL TRANSFERT TECHNIQUE LIMITED, PLAINTIFF,
v.
FEDERAL GOVERNMENT OF NIGERIA, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Paul L. Friedman United States District Judge

OPINION

This is an action to enforce an arbitral award issued in the United Kingdom under Nigerian law. The Clerk of this Court entered a default in this case on February 13, 2009. Plaintiff Continental Transfert Technique Limited ("Continental") then moved for the entry of default judgment against the defendants, the Federal Government of Nigeria, the Attorney General of Nigeria, and the Minister of the Interior of Nigeria (collectively, "Nigeria"). After the filing and service of that motion, Nigeria moved to dismiss Continental's complaint. While the motions to dismiss and for default judgment were pending, Continental filed an amended complaint, which Nigeria then moved to dismiss.

There are four motions currently pending before the Court: (1) Continental's motion for default judgment, (2) Nigeria's motion to vacate the Clerk's entry of default, (3) Nigeria's motion to dismiss Continental's original complaint, and (4) Nigeria's motion to dismiss Continental's amended complaint. Based on the parties' arguments, the relevant legal authorities, and the entire record in this case, the Court will grant Nigeria's motion to vacate the entry of default and deny the motion for default judgment. It will also deny both motions to dismiss.*fn1

I. BACKGROUND

In 1999 Continental, a Nigerian corporation, entered into a contract with the Nigerian government to produce "computer-compatible identification cards." Am. Compl. ¶¶ 10-11. The contract contained the following arbitration clause:

In the event of any dispute[,] claim or difference which may arise out of or in relation to this contract and touching on the performance or breach thereof,... the matter shall be referred to arbitration in accordance with the provisions of the Arbitration and Concil[ia]tion Act[,] Cap. 19[,] Vol. 1[,] Laws of the Federation of Nigeria 1990.... [B]oth parties shall appoint an arbitrator who shall preside over the matter. The Law governing the proceedings shall be Nigeria[n] Law and the award of the arbitrators shall be final and binding on all the parties hereto.

Am. Compl., Ex. B (Contract) at 8-9.

Claiming that Nigeria had failed to perform its obligations under the contract, Continental initiated arbitration pursuant to the contract's arbitration clause in 2007. Am. Compl. ¶ 17. Nigeria disputed Continental's claims and raised counterclaims of its own. Id. ¶ 18. The two parties then each selected one arbitrator to serve on the panel that would decide their claims; those two arbitrators in turn selected a third panel member. Id. ¶ 20. At a series of hearings held at the International Dispute Resolution Centre ("ICSID") in London, counsel for each party presented witnesses and documentary evidence to the arbitral panel in June 2008. Id. ¶¶ 20-22. On August 14, 2008, the arbitrators issued their decision ("the arbitral award"), finding in Continental's favor as to some claims and in Nigeria's as to others. Id. ¶ 24. Once damages owed to Nigeria were set against those owed to Continental, the arbitrators determined that Nigeria was liable to Continental in the amount of approximately 29.7 million Nigerian naira, or around 252 million dollars in United States currency. Id. ¶ 24. Nigeria was also ordered to pay Continental's costs as well as 95 percent of the fees arising from the arbitration itself. Id. ¶¶ 25-26.

On November 25, 2008, Continental filed the original complaint in this action, seeking enforcement of the arbitral award under the Federal Arbitration Act, 9 U.S.C. §§ 201 et seq., and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, opened for signature June 10, 1958, 21 U.S.T. 2517, reprinted in 9 U.S.C. § 201 (historical and statutory notes) ("the New York Convention"). Pursuant to 28 U.S.C. § 1608(a)(3), the Clerk of this Court, at plaintiff's request, effected service on Nigeria by sending the appropriate documents to the head of Nigeria's Ministry of Foreign Affairs. The defendants accepted service on December 11, 2008. Return of Service/Affidavit, Docket No. 7; Mot. to Stay at 3.

While those events occurred during the progress of the litigation before this Court, Continental filed a related action in the United Kingdom. On December 9, 2008, roughly two weeks after filing the instant action before this Court, Continental filed a claim form in the United Kingdom's High Court of Justice ("the English court"), seeking to enforce the arbitration award there. Am. Compl. ¶ 30. In an order issued on December 19, 2008, the High Court gave Continental "leave to enforce the arbitration award... in the same manner as a Judgment or Order" and ordered that "judgment be entered against the Defendants in the terms of the said Award." Am. Compl., Ex. D at 1. The English court also instructed Nigeria that under English law, "you have the right to make an application to the Court within 2 months and 22 days after service of the Order to set aside this Order." Id. at 2. Continental would gain the right to enforce the award only after those 2 months and 22 days had passed, or, if Nigera moved to vacate the award, after that motion had been adjudicated. Id.

The English court's December 19, 2008 order was served on Nigeria on March 13, 2009. Am. Compl. ¶ 33. In the meantime, on February 9, 2009, the time within which Nigeria was required to answer or otherwise respond to Continental's complaint before this Court expired. On February 12, 2009, Continental requested entry of default against Nigeria, and the Clerk of the Court duly entered the default on February 13, 2009. On February 18, 2009, Continental filed a motion for default judgment, which was mailed to Nigeria by the Clerk of the Court on February 20.

On March 25, 2009 - after Nigeria had received both the motion for default judgment and the preliminary order from the United Kingdom's High Court - Nigeria appeared in the litigation before this Court, moving for a temporary stay of the proceedings so that the defendants could respond to Continental's motion and move to vacate the Clerk's entry of default. See Mot. to Stay at 5. The Court granted the motion for a stay on April 24, 2009, ordering Nigeria to submit its motion to vacate the default by May 11, 2009.

On April 20, 2009, Nigeria initiated proceedings to set aside the arbitration award before Nigeria's Federal High Court, Lagos Division ("the Nigerian court"). MTD1, Okoli Decl. ¶ 19. Nigeria's filing in the Nigerian court requested the following relief: (1) "[a]n Order enlarging the time within which to apply to set aside the Award," MTD1, Okoli Decl., Ex. A at 2, ¶ 1 - requested because the period during which Nigeria could have timely applied under Nigerian law to set aside the award had already elapsed, id. at 6, ¶ 18; (2) "[a] declaration" that the arbitration in question was a "domestic commercial arbitration subject to Nigerian municipal law, and not an international commercial arbitration to which the 1958 New York Convention applies," id. at 2, ¶ 3; (3) "[a] declaration that the arbitral tribunal misconducted [sic] itself in rendering the Final Award, particularly when the tribunal awarded damages for loss of profits to the defendants contrary to the agreement of the parties," id. at 2, ¶ 4; (4) "[a]n Order setting aside the Award," id. at 2, ¶ 5; and (5) an injunction "restraining the defendant... from seeking or continuing to seek recognition and enforcement of the aforesaid Award, in the United States or in any part of the world." Id. at 2, ¶ 6.

On April 23, 2009, without hearing argument or receiving briefs from Continental, the Nigerian court issued an ex parte order in which it (1) granted Nigeria an extension of time in which to apply to vacate the arbitration award, and (2) barred Continental "from seeking or continuing to seek to [sic] the recognition and enforcement of the Final Award... pending the hearing and determination" of Nigeria's motion for an "interlocutory injunction" on April 27, 2009. MTD1, Okoli Decl., Ex. B at 2, ¶¶ 1, 4. The April 27th hearing on Nigeria's motion for an injunction subsequently was delayed until May 20, 2009. Status Report ¶ 4. Meanwhile, Nigeria moved in this Court on May 11, 2009, to set aside the clerk's entry of default and to dismiss Continental's complaint. See MTD1 at 1. While that motion was pending in this Court, Continental moved on May 20 before the Nigerian court to vacate the order issued ex parte by that court on April 23. The court denied that motion on June 16, 2009. MTD2, Okoli Decl., Ex. F. at 24. Progress in the Nigerian litigation since that date appears to have stalled; the judge assigned to the case retired "on or about September 5, 2009," and "[a] new judge has not yet been assigned." Status Report ¶ 7.

On June 23, 2009, after Nigeria had filed its motion to vacate and to dismiss in this Court, Continental applied to the English court for an order stating that the "Interim Order f[ro]m the Court dated 19 December 2008 is now absolute, and [Continental] is now entitled to apply for enforcement of this judgment." MTD2, Okoli Decl., Ex. A ¶ 3(i). Continental claimed to seek an "absolute" order because it believed Nigerian courts would require it "to show that the interim Order had become absolute[] by producing additional documentary evidence." Id. ¶ 15. Specifically, Continental believed that Nigerian courts would require from the English court an order acknowledging that "(i) the Claim Form and Order of 19 December 2008 were validly served on the Defendants; (ii) the 2 month 22 day period for the Defendants to apply to the court to set aside the Order had expired; and (iii) the Defendants did not apply to the Court to have this Order set aside during the relevant period." Id. ¶¶ 15-19. The English court responded on June 26, 2009, by issuing an updated version of its December 19, 2008 order ("the final order"), which again purported to enter judgment for Continental "in the terms of the said [arbitration] award."

Am. Compl., Ex. F ¶ 2. The updated order also provided that "[t]his Order is absolute," and that Continental "is entitled to apply for enforcement of this judgment." Id. ¶ 3.

After the issuance of the English court's final order, Continental filed an amended complaint in this Court on November 25, 2009. Continental's claim requesting enforcement of the arbitration award under the New York Convention remained the same, but the amended complaint contained a second, newly added claim for relief: a request for enforcement of the English court's final order in the United States pursuant to the District of Columbia's Uniform Foreign-Money Judgments Recognition Act, D.C. Code §§ 15-381 et seq. ("UFMJRA"). Am. Compl. ¶¶ 44-48. In January 2010 Nigeria filed a motion to dismiss the amended complaint, incorporating the arguments from its first motion to dismiss by reference and making new arguments in response to Continental's claim under the UFMJRA. See MTD2 at 1.

II. MOTIONS FOR DEFAULT JUDGMENT, TO VACATE ENTRY OF DEFAULT, AND TO DISMISS THE ORIGINAL COMPLAINT

Continental moved for the entry of default judgment against Nigeria after the defendants failed to make a timely response to the original complaint. When Continental filed an amended complaint, however, that complaint superseded the original one. See 6 CHARLES ALAN WRIGHT, ARTHUR R. MILLER, & MARY KAY KANE, FEDERAL PRACTICE & PROCEDURE § 1476 (2d ed. 1990). Continental's motion for a default judgment thus applies to a complaint that no longer forms the basis for this litigation, and the motion therefore is moot. See United States v. Aegis Ins. Co., Civil Action No. 08-1728, 2009 WL 577286, at *2 (M.D. Pa. Mar. 5, 2009) (filing of an amended complaint moots pending motion for default judgment); Rock v. Am. Express Travel Related Servs. Co., Inc., Civil Action No. 08-0853, at *1 (N.D.N.Y. Dec. 17, 2008) (same); Best Western Int'l, Inc. v. Melbourne Hotel Investors, LLC, Civil Action No. 06-2276, 2007 WL 2990132, at *1 (D. Ariz. Oct. 10, 2007) (same); Nelson v. Nationwide Mortgage Corp., 659 F. Supp. 611, 615 (D.D.C. 1987) (same). Accordingly, the Court will deny the motion for default judgment as moot and grant Nigeria's motion to vacate the clerk's entry of default.

Because Nigeria's first motion to dismiss was directed at Continental's original complaint, that motion, too, is moot and will be denied. The arguments contained in that motion are incorporated by reference into Nigeria's second motion to dismiss and will be analyzed as part of that motion.

III. NIGERIA'S MOTION TO DISMISS THE FEDERAL ARBITRATION ACT CLAIM IN THE AMENDED COMPLAINT

In its motion to dismiss Continental's amended complaint, Nigeria requests dismissal of Continental's claim for enforcement of the arbitral award on the grounds that (1) the arbitration award in question is "domestic" rather than "international" in character and so cannot be enforced under the New York Convention, MTD1 at 5; (2) Nigeria is not amenable to suit because it has not waived sovereign immunity, id. at 7; (3) the Court does not have personal jurisdiction over the defendants, id. at 8; (4) dismissal is warranted by the doctrine of forum non conveniens, id. at 9; and (5) this matter should be adjourned because ...


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