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Duke Energy International Peru Investments No. 1 Ltd v. Republic

September 14, 2012


The opinion of the court was delivered by: James E. Boasberg United States District Judge


Petitioner Duke Energy International Peru Investments No. 1 Ltd. (DEI) filed this action to confirm an Award issued by an international arbitrator pursuant to 22 U.S.C. § 1650a and Article 54 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). Respondent Republic of Peru now brings the instant Motion to Dismiss or, in the alternative, to remand the dispute to the arbitrator for further clarification. Respondent first argues that Petitioner has failed to state a claim on which relief can be granted. It also contends that, in the alternative, the Award is ambiguous and should be remanded to the arbitrator for clarification or dismissed under the doctrine of forum non conveniens. Because the Court disagrees and finds that Petitioner has sufficiently pled a claim for relief and that remand is not warranted, it will deny Respondent's Motion. The Court further holds that because the Award is clear and requires no further determination, it need not reach Respondent's arguments under the doctrine of forum non conveniens.


The background facts in this case are largely agreed upon. The underlying dispute here concerns a tax assessment issued by the Peruvian tax authority, the Superintendencia Nacional de Administracion Tribunaria (SUNAT). During the 1990s, the Peruvian government made certain legal guarantees to foreign investors to encourage their investment. See Mot. at 2. These guarantees were memorialized in "legal stability agreements" (LSAs), including the one between Peru and DEI at issue here. Id. at 3. In this case, DEI agreed to make a capital contribution to Egenor S.A.A., a recently privatized Peruvian electricity company, in exchange for legal stability with respect to a variety of issues, including income taxes. Id. The LSA also required that disputes arising under the agreement be submitted to an ICSID Tribunal for arbitration. Id.

Between 1999 and 2002, DEI and its affiliates acquired nearly 100 percent ownership in Egenor S.A.A., which became known as DEI Egenor. Id. On November 26, 2001, SUNAT assessed a tax liability against DEI Egenor of $48 million, claiming Egenor S.A.A. had underpaid its taxes from 1996 to 1999. Id. DEI Egenor exhausted its administrative remedies in Peru and ultimately paid a portion of the assessment. Id.

In October 2003, DEI initiated arbitration proceedings against Peru before an ICSID Tribunal, claiming that SUNAT's assessment violated the tax-stability provisions of the 2001 LSA. Id. at 4. The Tribunal found for DEI as to certain of its claims, and it issued an award on August 18, 2008, ordering Peru to pay damages in the amount of $18,440,746 plus interest. See Amended Pet., Declaration of Andrew H. Marks, Exh. B (Award), ¶ 488. Peru challenged the Tribunal's decisions on jurisdiction and damages before an ad hoc committee appointed under the ICSID, which rejected those challenges in March 2011 and let the Award stand. See Marks Decl., Exh. D (Annulment Decision), ¶ 269.

Meanwhile, on February 1, 2008, Law 29191 became effective, amending the Peruvian Tax Code to modify the interest rates used on refunds paid to taxpayers. See Pet., ¶¶ 14-15; Amended Pet., Declaration of Rocio V. Liu Arevalo, ¶¶ 7-9. As amended, Article 38 of the Peruvian Tax Code provides for two interest rates for such refunds, one for payments "made as a consequence of any document issued by [SUNAT]" and one for all other overpayments. See

Pet., ¶¶ 14-15. Following the March 2011 committee decision, Peru tendered payment of the damages called for in the Award, but paid only interest as calculated using the rate in effect prior to the enactment of Law 29191. Id., ¶ 18. DEI accepted payment of the undisputed amount, but reserved the right to pursue legal action to collect what it alleges is the remaining balance. Id., ¶19.

On September 6, 2011, DEI brought this action to confirm the Award, seeking, inter alia, a judgment awarding DEI the difference between the interest required by amended Article 38 and the interest already paid. See Pet., ¶¶ 26-29. Peru has now filed this Motion to Dismiss or Remand, arguing that the Petition fails to state a claim on which relief can be granted under Fed. R. Civ. P. Rule 12(b)(6), or even if it does, the case should be remanded to the ICSID Tribunal for further proceedings or dismissed under the doctrine of forum non conveniens.

II.Legal Standard

In evaluating Defendant's Motion to Dismiss, the Court must "treat the complaint's factual allegations as true . . . and must grant plaintiff 'the benefit of all inferences that can be derived from the facts alleged.'" Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000) (quoting Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir. 1979)) (internal citation omitted); see also Jerome Stevens Pharms., Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005). The Court need not accept as true, however, "a legal conclusion couched as a factual allegation," nor an inference unsupported by the facts set forth in the Complaint. Trudeau v. Fed. Trade Comm'n, 456 F.3d 178, 193 (D.C. Cir. 2006) (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)) (internal quotation marks omitted).

Rule 12(b)(6) provides for the dismissal of an action where a complaint fails "to state a claim upon which relief can be granted." When the sufficiency of a complaint is challenged under Rule 12(b)(6), the factual allegations presented in it must be presumed true and should be liberally construed in plaintiff's favor. Leatherman v. Tarrant Cnty. Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 164 (1993). The notice-pleading rules are "not meant to impose a great burden on a plaintiff," Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347 (2005), and he must thus be given every favorable inference that may be drawn from the allegations of fact. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 584 (2007). Although "detailed factual allegations" are not necessary to withstand a Rule 12(b)(6) motion, id. at 555, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (internal quotation omitted). Plaintiff must put forth "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Though a plaintiff may survive a 12(b)(6) motion even if "recovery is very remote and unlikely," Twombly, 550 U.S. at 555 (citing Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)), the facts alleged in the complaint "must be enough to raise a right to relief above the speculative level." Id. at 555.


A. Failure to State ...

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