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Africard Co. Ltd. v. Republic of Niger

United States District Court, District of Columbia

September 27, 2016

AFRICARD CO. LTD., Petitioner,
v.
REPUBLIC OF NIGER, Respondent.

          MEMORANDUM OPINION

          AMY BERMAN JACKSON United States District Judge

         Petitioner Africard Company, Ltd. (“Africard”) has filed a petition to confirm an arbitration award against respondent, the Republic of Niger, pursuant to Section 207 of the Federal Arbitration Act, 9 U.S.C. § 207. Pet. to Confirm Foreign Arb. Award & to Enter J. [Dkt. # 1] (“Pet.”) ¶ 1. The petition arises from Niger's 2011 contract with Africard to produce biometric and electronic passports. Id. ¶ 12. According to the terms of the parties' agreement, Africard was contracted to produce a minimum of one million biometric and electronic passports, but Africard alleges that on March 24, 2011, Niger unilaterally cancelled the agreement. Id. ¶¶ 13-14.

         Africard ultimately referred the dispute to arbitration in Abidjan, Côte d'Ivoire.[1] Pet. ¶ 14. On June 9, 2014, the arbitral tribunal issued an Interim Procedural Award, concluding that “the unilateral termination by the State of Niger of the Agreement of October 13, 2011 for the production of biometric and electronic passports in the Republic of Niger [was] abusive and wrongful.” Interim Procedural Award, Ex. D to Decl. of Christopher D. Man [Dkt. # 1-5] (“Interim Award”) at 33. The tribunal ultimately awarded Africard 44, 740, 781 West African CFA Francs as compensation for costs incurred, 15, 440, 533, 316 West African CFA Francs as compensation for lost profits, 1, 000, 000, 000 West African CFA Francs for reputational harm incurred, and 156, 747, 299 West African CFA Francs for the cost of the arbitral proceedings. Final Award, Ex. F to Man Decl. [Dkt. # 1-7] (“Final Award”) ¶ 64. However, as of February 4, 2016, Niger had not paid any amount of the Final Award. Pet. ¶ 22.

         Africard filed its petition to confirm the arbitration award on February 4, 2016. Pet. After Niger was served, and failed to timely answer, the Clerk of Court entered a default against it. Clerk's Entry of Default [Dkt. # 13]. On May 13, 2016, Africard filed a motion for default judgment. Mot. for Default J. as to Repub. of Niger & Confirmation of Arb. Award [Dkt. # 14] (“Mot.”); Mem. of Law in Supp. of Mot. [Dkt. # 14] (“Mem.”). Though Africard served Niger with a copy of the motion, Niger did not respond. Because the record indicated that counsel for Africard had been contacted by an attorney who conveyed a request on behalf of Niger but also indicated that he had not been retained to defend this action, see Decl. of Mark D. Beckett [Dkt. # 14-21], on July 7, 2016, the Court entered an order asking petitioner to update the Court on whether it had any further contact with that lawyer. Min. Order (July 7, 2016). Petitioner responded, noting that it had received no further communications from Niger's attorneys on this matter, and it informed the Court that Niger's application to set aside the arbitration award had been denied. Status Report (July 19, 2016) [Dkt. # 22].

         STANDARD OF REVIEW

         Under the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602 et seq., a court shall not enter a default judgment against a foreign state “unless the claimant establishes his claim or right to relief by evidence satisfactory to the court.” 28 U.S.C. § 1608(e). This standard is identical to the standard for entry of default judgments against the United States under Federal Rule of Civil Procedure 55(d). Hill v. Repub. of Iraq, 328 F.3d 680, 683 (D.C. Cir. 2003). As a result, the court cannot treat the allegations asserted in the petition as true, and must “inquire further before entering judgment against parties in default.” Rimkus v. Islamic Repub. of Iran, 750 F.Supp.2d 163, 171 (D.D.C. 2010). Upon evaluating petitioner's claim, though, the court “may accept the plaintiff's uncontroverted factual allegations if they are supported by documentary and affidavit evidence.” Lanny J. Davis & Assocs LLC v. Repub. of Eq. Guinea, 962 F.Supp.2d 152, 161 (D.D.C. 2013).

         ANALYSIS

         I. The Court has subject matter jurisdiction over this dispute.

         Before the Court may consider whether Africard is entitled to a default judgment in this matter, it must assess whether it has subject matter jurisdiction over this dispute. Federal courts are courts of limited jurisdiction and the law presumes that “a cause lies outside this limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); see also Gen. Motors Corp. v. EPA, 363 F.3d 442, 448 (D.C. Cir. 2004) (“As a court of limited jurisdiction, we begin, and end, with an examination of our jurisdiction.”).

         A. The Court can exercise jurisdiction under the Federal Arbitration Act.

         The Federal Arbitration Act (“FAA”) codifies an international convention known as the New York Convention into U.S. law. 9 U.S.C. § 201 et seq. Section 202 of the FAA specifies that: “[a]n arbitration agreement or arbitral award arising out of a legal relationship, whether contractual or not, which is considered as commercial . . . falls under the [New York] Convention.” 9 U.S.C. § 202. The “district courts of the United States . . . shall have original jurisdiction over [an action or proceeding falling under the Convention], regardless of the amount in controversy.” 9 U.S.C. § 203.

         As the Second Circuit has explained, a court will have subject matter jurisdiction under the FAA when: “(1) there is a written agreement; (2) the writing provides for arbitration in the territory of a signatory of the convention; (3) the subject matter is commercial; and (4) the subject matter is not entirely domestic in scope.” U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., 241 F.3d 135, 146 (2d Cir. 2001).

         Africard has identified a written agreement - the “Agreement for the Production of Biometric and Electronic Passports (E-Passports) in the Republic of Niger” - that governed the parties' conduct in this case. Ex. 3 to Mot. [Dkt. # 14-4] (“Agreement”).[2] And Article 25 of the Agreement provides that “any dispute shall be submitted by one of the parties for arbitration by the OHADA Common Court of Justice and Arbitration” in Côte d'Ivoire. Id., Art. 25. Côte d'Ivoire, Niger, and the United States are all parties to the New York Convention. See Contracting States, http://www.newyorkconvention.org/countries; see also Creighton Ltd. v. Gov't of Qatar, 181 F.3d 118, 121 (D.C. Cir. 1999) (“[T]he critical element is the place of the award: if that place is in the territory of a party to the Convention, all other Convention states are required to recognize and enforce the award, regardless of the citizenship or domicile of the parties to the arbitration.”), quoting Restatement (Third) of Foreign Relations Law § 487 cmt b (1987). Further, the subject matter of the agreement is not entirely domestic in scope, because it involves a dispute originating in Niger, and none of the parties are citizens of the United States. See 9 U.S.C. § 202 (“An agreement or award arising out of [a commercial relationship] which is entirely between citizens of the United States shall not be deemed to fall under the Convention . . . .”).

         Finally, the subject matter of the agreement is clearly commercial. As the D.C. Circuit recently recognized, the term “commercial” as used in the New York Convention, though it does not have a specific statutory definition, refers to “matters or relationships, whether contractual or not, that arise out of or in connection with commerce.” Belize Social Dev. Ltd. v. Gov't of Belize, 794 F.3d 99, 103-04 (D.C. Cir. 2015), citing Restatement (Third) of U.S. Law of Int'l Commercial Arb. § 1-1 (2012); Restatement (Third) of Foreign Relations Law § 487 cmt. f (1987) (explaining that “the fact that an agreement to arbitrate is in the contract between a government and a private person may confirm its commercial character.”). The Belize court added that “the full scope of ‘commerce' and ‘foreign commerce' as those terms have been broadly interpreted, is available for arbitral agreements and awards.” 794 F.3d at 104, citing Island Territory of Curacao v. Solitron Devices, Inc., 356 F.Supp. 1, 13 (S.D.N.Y. 1973).

         The dispute in this case, which arises out of a service contract between a company and a government to provide biometric and electronic passports, Mem. at 11, clearly “arise[s] out of or in connection with commerce.” See Belize, 794 F.3d at 104.

         Because the Court finds that each of the four factors of the U.S. Titan test have been met, it finds that it has jurisdiction under the FAA. The next question to consider is whether Niger nonetheless enjoys foreign sovereign immunity in this enforcement action under the Foreign Sovereign Immunities Act. See Creighton Ltd., 181 F.3d at 121.

         B. The Court can exercise jurisdiction under the FSIA.

         The Foreign Sovereign Immunities Act (“FSIA”) is the “sole basis for obtaining jurisdiction over a foreign state in the courts of [the United States].” Belize, 794 F.3d at 101, quoting Argentine Repub. v. Amerada Hess Shipping Corp., 488 U.S. 428, 443 (1989). Under the FSIA, 28 U.S.C. § 1602 et seq., “a foreign state is presumptively immune from the jurisdiction of United States courts, ” and “unless a specified exception applies, a federal court lacks subject-matter jurisdiction over a claim against a foreign state.” Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993). Because “subject matter jurisdiction in any such action depends on the existence of one of the specified exceptions . . . [a]t the threshold of every action in a district court against a foreign state . . . the court must satisfy itself that one of the exceptions applies.” Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 493-94 (1983); see also Belize, 794 F.3d at 101 (describing the FSIA's terms as “absolute”).

         Arbitral awards that are subject to the New York Convention fall under the “treaty” exception to the FSIA. That exception provides that:

(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case . . .
(6) in which the action is brought . . . to confirm an award made pursuant to . . . an agreement to arbitrate, if . . . (B) the agreement or award is or may be governed by a treaty or other international agreement in force for the United States calling for the recognition and enforcement of arbitral awards.

28 U.S.C. § 1605. It is well settled that the New York Convention gives rise to jurisdiction under the treaty exception. Creighton Ltd., 181 F.3d at 123-24 (“Indeed, it has been said with authority that the New York Convention ‘is exactly the sort of treaty Congress intended to include in the arbitration exception.'”), quoting Cargill Int'l S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1018 (2d Cir. 1993). So Niger does not enjoy sovereign immunity under the FSIA.

         II. Africard appropriately served Niger according to the requirements of the FSIA.

         The Court next considers whether Niger is properly on notice of this lawsuit. The FSIA requires that foreign states must ...


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