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Belize Bank Ltd. v. Government of Belize

United States District Court, District of Columbia

June 8, 2016

The Belize Bank Limited, Petitioner,
v.
Government of Belize, Respondent.

          MEMORANDUM OPINION

          Amit P. Mehta United States District Judge

         I. INTRODUCTION

         This case is one in a recent series of cases filed in this District Court in which Respondent Government of Belize finds itself seeking to prevent the confirmation of an international arbitration award entered against it. In two cases that preceded this one-Belize Social Development Ltd. v. Government of Belize, No. 09-cv-2170 (RJL), and BCB Holdings Ltd. v. Government of Belize, No. 14-cv-1123 (CKK)-the district courts confirmed the arbitration awards at issue and, in both cases, the Court of Appeals affirmed the district courts’ rulings.[1]In Belize Social Development and BCB Holdings, the Government of Belize raised many of the same arguments that it has raised in this case. This court, therefore, does not write on a clean slate. Indeed, as will be seen, the Court of Appeals’ decisions in Belize Social Development and BCB Holdings foreclose several of Respondent’s arguments made in these proceedings.

         Petitioner The Belize Bank Limited (“Bank”) brings this action against Respondent Government of Belize (“Belize”) to enforce a 2013 arbitration award issued by the London Court of International Arbitration in London, England. The Bank was awarded BZ$36, 895, 509.46[2] plus interest and now seeks to confirm the award under the Federal Arbitration Act, 9 U.S.C. § 201, et seq., which codifies the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

         For the reasons below, the Bank’s Petition to Confirm the Foreign Arbitration Award will be granted and Belize’s Motion to Dismiss the Petition will be denied.

         II. BACKGROUND

         A. Factual Background

         From 2001 to 2004, the Bank entered into various loan agreements with Universal Health Services Company Limited, a health services provider in Belize. Pet. to Confirm Foreign Arbitration Award, ECF No. 1 [hereinafter Pet.], ¶ 14. In December 2004, Said Musa, Belize’s then-Prime Minister and Minister of Finance, signed a “Guarantee and Postponement of Claim Agreement” (“Guarantee”) on the behalf of Belize, which purported to guarantee payment to the Bank of all debts and liabilities owed to the Bank by Universal Health Services. Resp’t’s Prelim. Resp. to Pet., ECF No. 13 [hereinafter Resp.], at 3.

         In early 2007, it became apparent to the Bank that Universal Health Services would be unable to service its debt to the Bank. Pet. ¶ 15. When Belize declined to satisfy the debt under the Guarantee, Belize entered into a Settlement Deed with the Bank in March 2007 to discharge its liability under the Guarantee. Id. ¶ 16. Integrated into the Settlement Deed was a Loan Note that obligated Belize to pay the Bank a total of BZ$33, 545, 820, with interest accruing daily and compounded monthly on demand or in any event no later than September 23, 2007. Id. ¶ 17. Belize, however, failed to pay the Bank the first monthly interest payment, which was due on April 23, 2007. Id. ¶ 20. On May 9, 2007, the Bank notified Belize that it was in default on the Loan Note and invoked a provision accelerating the full amount of the principal together with all accrued interest. Id. Belize did not respond to the demand or make any payment. Id.

         The Bank then invoked a dispute resolution clause contained in the Settlement Deed, requiring the parties to arbitrate any disputes in London, England, under the Rules of the London Court of International Arbitration (“LCIA”). Id. ¶¶ 18, 22. The Bank commenced arbitration proceedings under the LCIA Rules in May 2007, seeking, among other things, a declaration that the Settlement Deed and Loan Note were valid and payment of the sums due under the Loan Note. Id. ¶ 22. Belize did not, however, participate in the arbitration. Id. ¶ 23. In July 2007, the arbitral tribunal rendered a Partial Award on Jurisdiction, holding that it had jurisdiction over the dispute. Id. ¶ 25. Following the Partial Award, in January 2008, the Bank and Belize entered into a settlement agreement (“2008 Settlement Agreement”) that terminated the arbitration proceedings before entry of a Final Award. Id. ¶ 26.

         In February 2008, following elections, the government of Belize changed. Id. ¶ 27. The new government sought to invalidate the 2008 Settlement Agreement through litigation in the Belizean courts. Id. ¶¶ 27-28. The Bank, however, succeeded in obtaining an order from the Belizean Supreme Court-a trial level court-that stayed the local litigation in favor of arbitration proceedings. Id. ¶ 32. Deeming the litigation to be a violation of the 2008 Settlement Agreement, the Bank re-initiated arbitration under the LCIA Rules on July 9, 2008. Id. ¶ 33. In the 2008 Arbitration, the Bank sought a declaration that the 2008 Settlement Agreement was valid and payment of the amounts owed under that Agreement. Id. Alternatively, the Bank asserted that, if the 2008 Settlement Agreement was not valid, the Bank was entitled to collect damages based on Belize’s breach of the Loan Note attached to the Settlement Deed. Id.

         Again, Belize did not initially participate in the 2008 Arbitration. Id. ¶ 34. The LCIA appointed the same arbitral tribunal that presided in the prior proceedings. Id. The panel issued the First Partial Award on August 4, 2009, holding that the panel “had jurisdiction over the Bank’s claims arising out of the 2008 Settlement Agreement. . . . [but] that part of the 2008 Settlement Agreement was void.” Id. ¶ 36. The tribunal reserved for later consideration all other issues, including the Bank’s alternative claims under the Settlement Deed and Loan Note. Id.

         Following a two-year stay to allow for the conclusion of new litigation filed in the Belizean courts, the second phase of the 2008 Arbitration began in late 2011. Id. ¶ 41. Belize elected to participate in that phase of the proceedings. Id. Belize soon thereafter made various challenges to the composition of the arbitral panel, which the LCIA denied. Id. ¶¶ 42-45. Belize then withdrew from the 2008 Arbitration. Id. ¶ 46.

         On January 15, 2013, the arbitral tribunal entered a Final Arbitration Award in favor of the Bank. Id. ¶ 47. The panel found that the Loan Note was valid and enforceable and that Belize had breached it. Id. It ordered Belize to pay the Bank the sum of BZ$36, 895, 509.46, plus interest at 17%, compounded on a monthly basis from September 8, 2012, until the date of payment. Id. Belize refused the Bank’s demand for payment in the full amount of the Final Award. Id. ¶ 48.

         B. Procedural History

         On April 18, 2014, the Bank filed in this court a Petition to Confirm Foreign Arbitration Award and to Enter Judgment. See generally Pet. Belize moved to dismiss the Petition, see generally Mem. of P. & A. in Supp. of Resp’t’s Mot. to Dismiss, ECF No. 12-1 [hereinafter Mot. to Dismiss], and filed a Preliminary Response to the Petition, see generally Resp. The Petition and the Motion to Dismiss are now ripe for consideration.

         III. DISCUSSION

         A. Belize’s Motion to Dismiss

         Belize advances a host of arguments for dismissal of the Bank’s confirmation petition. They are as follows: (1) the court lacks subject matter jurisdiction because Belize has foreign sovereign immunity under the Foreign Sovereign Immunities Act (“FSIA”); (2) dismissal is appropriate under the doctrine of forum non conveniens; (3) the court lacks personal jurisdiction over Belize; and (4) dismissal is warranted on grounds of international comity. The court considers each of these arguments in turn.

         1. Subject Matter Jurisdiction

         Our Court of Appeals recently has explained that:

Where jurisdiction is sought over a foreign sovereign for the enforcement of an arbitral award, we have held two conditions must be satisfied: “First, there must be a basis upon which a court in the United States may enforce a foreign arbitral award; and second, [the foreign sovereign] must not enjoy sovereign immunity from such an enforcement action.”

Diag Human, S.E. v. Czech Republic-Ministry of Health, No. 14-7142, 2016 WL 3064507, at *2 (D.C. Cir. May 31, 2016) (quoting Creighton Ltd. v. Gov’t of the State of Qatar, 181 F.3d 118, 121 (D.C. Cir. 1999)). As the Court of Appeals did in Diag Human, ...


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