The opinion of the court was delivered by: Ellen Segal Huvelle United States District Judge
Global Distressed Alpha Fund I LP ("Global Distressed" or "Petitioner"), as the successor-in-interest to SASEA Holding in Bankruptcy ("SASEA"), has filed a petition to confirm two foreign arbitral awards against Red Sea Flour Mills Co. Ltd. ("Red Sea" or "Respondent") pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, June 10, 1958, 21 U.S.T. 2517, T.I.A.S. No. 6997, 330 U.N.T.S. 38 ("the New York Convention") and Chapter 2 of the Federal Arbitration Act, 9 U.S.C. §§ 201-208. (Petition to Confirm Foreign Arbitral Awards ("Petition"), Jan. 21, 2010 [dkt. #1].) A default has been entered against Red Sea, which has neither responded to the Petition nor appeared in the case. (Entry of Default, June 30, 2010 [dkt. #9].) Before the Court is petitioner's motion for a default judgment confirming the awards. (Mot. for Default Judgment, July 2, 2010 [dkt. #10].) For the reasons stated herein, Petitioner's motion for default judgment will be granted and an order confirming the awards and entering judgment for Petitioner and against Respondent will be issued.
Red Sea is a company organized and existing under the laws of the Republic of Yemen, with its principal place of business in Sana'a, Republic of Yemen. (Petition ¶ 5.) Red Sea operates one of the largest milling plants in Yemen. (Id.) SASEA, prior to its bankruptcy in 1992, was a Swiss holding company for a large group of corporations. (Id., Att. 1, Ex. B, at 5.) During the 1980's, Red Sea accumulated a number of unpaid debts to SASEA and several of its affiliated companies. (Id. ¶ 10.) On September 13, 1991, Red Sea and SASEA entered into a Memorandum of Agreement to settle these debts. (Id. ¶ 10 & Att. 1, Ex. A.) Pursuant to the Memorandum of Agreement, Red Sea agreed to pay SASEA a sum equivalent to the balance it owed as of December 31, 1990,*fn2 plus 6% annual interest, via monthly installment payments. (Id. ¶ 11.) Article 6 of the Memorandum of Agreement provided that "[a]ny difficulties arising when this agreement is put into effect or from the consequences thereof, or arising from the interpretation of this agreement or of its consequences will come under the jurisdiction of an Arbitration Tribunal based in Geneva (Switzerland)." (Id. ¶ 13 & Att. 1, Ex. A, at 4.)
Red Sea failed to repay any of the amounts due under the Memorandum of Agreement. (Id. ¶ 12.) On August 9, 2001, SASEA filed two requests for arbitration: the first sought an award of $85,582,740; the second sought interest on that amount from December 31, 1990 until full payment was made. (Id. ¶ 13-14 & Att. 1, Ex. B, at 5.) On October 10, 2002, a three-member arbitral tribunal was duly constituted in Geneva, Switzerland.*fn3 (Id. ¶ 14 & Att. 1, Ex. A, at 5.) For the next four years, the arbitral tribunal conducted proceedings, which included written submissions, discovery and factual investigation, and two major witness hearings. (Id. ¶ 15.) In the first phase, Red Sea, through counsel, filed written submissions and participated in the first witness hearing, but then its participation ceased. (Id.)
On January 22, 2007, the arbitral tribunal issued its "Award on the Principal Amount" ("Award on Principle") (Id. ¶ 2 & Att. 1, Ex. B (certified copy of Award on Principal).) The Award on Principal declared that Red Sea was required to pay SASEA $82,733,989 as "the total principal amount" and that all claims exceeding that amount were dismissed. (Id., Att. 1, Ex. B, ¶ 293, at 68.) The Award on Principal structured Red Sea's payments as follows: (1) $3,654,627, representing the amount that Red Sea owed pursuant to paragraph 2(c) of the Memorandum of Agreement, to be paid immediately; (2) $27,725,725, representing all monthly payments due and owing from May 30, 1993 to November 30, 2005, pursuant to Article 1 of the Memorandum of Agreement, to be paid immediately; and (3) the remaining balance of $51,353,637, to be paid in monthly payments of YER20,000,000*fn4 "as from December 31, 2005" until paid in full. (Id.) The Award on Principal also ordered Red Sea to pay CHF810,000*fn5 in arbitration fees and costs, and CHF1,789,591.23 in legal fees and expenses. (Id. at 68-69.)
On May 18, 2007, the arbitral tribunal issued its "Award on Interest." (Id. ¶ 2 & Att. 1, Ex. C.) The Award on Interest ordered Red Sea to pay SASEA the following amounts: (1) 6% simple interest per annum on the unpaid principal amount of $3,654,627 from September 13, 1991, until full payment; (2) $15,302,525, to be paid immediately, representing accrued 6% simple interest on overdue monthly payments which should have been made from May 30, 1993, to November 30, 2005; (3) 6% simple interest per annum on "the overdue monthly payments which [Red Sea] should have made to SASEA" from December 31, 2005, to April 30, 2007; (4) 6% simple interest per annum for "late payment of all monthly payments which become due and owing" from May 31, 2007, until the "remaining balance of the total principal amount of... $82,733,989 is paid in full." (Id., Att. 1, Ex. C, at 23.) The Award on Interest also ordered Red Sea to pay an additional CHF90,000 in arbitration fees and costs. (Id., Att. 1, Ex. C, at 23-24.) Red Sea has not complied with the terms of either Award. (Id. ¶ 18.)
Effective December 1, 2009, SASEA sold and assigned all rights, claims and interests arising out of or related to both Awards to Global Distressed, a limited partnership established under the laws of Bermuda and managed by CI Management Services S.A., 30a Route de Chene, 1208 Geneva, Switzerland. (Id. ¶ 3 & Att. 1, Ex. D.) On January 21, 2010, Global Distressed, as SASEA's successor-in-interest, filed the pending Petition to confirm both awards. (Id.) Attached to the Petition were certified copies of the Memorandum of Understanding, the Award on Principal, the Award on Interest, and the Deed of Assignment from SASEA to Global Distressed. (Id., Att. 1, Exs. A-D.) The Petition asks the Court to (1) confirm the awards against Red Sea; (2) enter judgment based on the Award on Principal in the exact amounts and terms and conditions for payment provided therein; and (3) enter judgment based on the Award on Interest that reflects Petitioner's calculation of interest now due on certain of the underlying obligations; and (4) award post-judgment interest pursuant to 28 U.S.C. § 1961 on any judgment entered. (Petition at 9.)
Petitioner was forced to attempt to serve Red Sea on multiple occasions and using a variety on methods due to Red Sea's efforts evade service. (Order, June 18, 2010 [dkt #8].) Ultimately, service was accomplished as of April 5, 2010, under either Federal Rule of Civil Procedure 4(f)(2)(A) or 4(f)(2)(C)(ii). (Id.) On June 30, 2010, after Red Sea failed to respond to the Petition, the Clerk of Court entered a default. (Entry of Default, June 30, 2010 [dkt. #9].) On July 2, 2010, Petitioner moved for a default judgment pursuant to Federal Rule of Civil Procedure 55(b)(2). (Mot. for Default Judgment, July 2, 2010 [dkt. #10].) Red Sea has not responded to the entry of default or the motion for default judgment.
The New York Convention, as ratified and implemented by Chapter 2 of the Federal Arbitration Act, 9 U.S. C. §§ 201-208, is a multilateral treaty, ratified by the United States, which authorizes the recipient of a foreign arbitral award that falls under the Convention to seek confirmation of the award in federal district court. See 9 U.S.C. § 201 (providing that the New York Convention "shall be enforced in the United States courts in accordance with this chapter); id. § 203 (providing that "[a]n action or proceeding falling under the Convention shall be deemed to arise under the laws and treaties of the United States" and "[t]he district courts of the United States... shall have original jurisdiction over such an action or proceeding, regardless of the amount in controversy"). An arbitral award falls under the Convention if it was made in the "territory of a State other than the State where the recognition and enforcement" of the award is sought, New York Convention, Art. I, ¶ 1, it was made in another "Contracting State" -- a state that is a party to the Convention, see Creighton Ltd. v. Gov't of the State of Qatar, 181 F.3d 118, 121 (D.C. Cir. 1999), and it "aris[es] out of a legal relationship, whether contractual or not, which is considered as commercial" and that, with certain limited exceptions, is not "entirely between citizens of the United States." 9 U.S.C. § 202.*fn6 A petition seeking confirmation must be filed "[w]ithin three years after an arbitral award falling under the Convention is made." Id. § 207. If a timely petition for confirmation has been filed, 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 Convention." Id.
Article V of the New York Convention specifies the following grounds for refusing confirmation:
1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:
(a) The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication ...