United States District Court, District of Columbia
Document Nos.: 16
MEMORANDUM OPINION GRANTING IN PART AND DENYING IN
PART DEFENDANT'S MOTION TO DISMISS
RUDOLPH CONTRERAS United States District Judge
Hardy Exploration & Production (India), Inc.
(“HEPI”) has filed a Petition to confirm an
arbitration award (“Award”) against Respondent,
the Government of India (“India”), acting through
its Ministry of Petroleum and Natural Gas
(“Ministry”). See generally Pet. Confirm
Arbitration Award (“Pet.”), ECF No. 1. HEPI filed
its Petition pursuant to Section 207 of the Federal
Arbitration Act. 9 U.S.C. § 207. Because India is a
foreign state, HEPI must effect service under the Foreign
Sovereign Immunities Act (“FSIA”). 28 U.S.C.
§ 1608. India moves to dismiss the Petition, arguing
that HEPI did not properly effect service on India and, thus,
that this Court lacks personal jurisdiction over India.
See generally Specially-Appearing Resp't's
Mot. Dismiss (“Mot. Dismiss”), ECF No. 16;
Specially-Appearing Resp't's Mem. Law Supp. Mot.
Dismiss (“Resp't's Mem.”), ECF No. 16-1.
India's motion is now ripe and ready for decision.
Court finds that HEPI has failed to demonstrate that it
properly served India. The contract between the parties does
not constitute a special arrangement for service for the
purposes of the FSIA, and, therefore, India has not been
served. The Court will not, however, dismiss the Petition.
Instead, HEPI will be permitted another opportunity to serve
India by relying on the other methods for service identified
in the FSIA.
Court will begin its analysis by providing an overview of the
facts giving rise to this dispute before turning to the
parties' subsequent arbitration and litigation.
case originates in the parties' participation in a
Production Sharing Contract (“PSC”) for the
development and production of hydrocarbons. The PSC governs
the exploration of a geographic block called CY-OS/2 (the
“Block”) found off the southeastern coast of
India. See Pet. ¶ 5; Decl. of Ian MacKenzie
(“MacKenzie Decl.”) ¶ 3, ECF No. 1-2.
See generally Production Sharing Contract
(“PSC”), MacKenzie Decl., Ex. 2, ECF No. 1-4. The
PSC has been in force since November 19, 1996. See
Pet. ¶ 6; see also PSC at 136. At that time, an
agreement was reached by three private companies, India's
state-owned oil company, and “the President of India,
acting through the Joint Secretary, Ministry of Petroleum and
Natural Gas.” See Pet. ¶ 6 (quoting PSC
at 1). The PSC permitted the private companies to explore the
Block and, if they found commercially viable hydrocarbon
reserves, extract those resources under a production sharing
arrangement. See Pet'r's Mem. Law Supp. Pet.
to Confirm Arbitration Award (“Pet'r's
Mem.”) at 2-3, ECF No. 1-1; PSC art. 14-15.
was not an original participant in the PSC. See Pet.
¶ 7. Instead, HEPI acquired a 25% participation share in
the PSC from one of the original private companies in 1997.
See Pet'r's Mem. at 3. HEPI's interest
was confirmed in the initial addendum to the PSC executed on
March 30, 2000. See MacKenzie Decl., Ex. 3 at 1-2,
ECF No. 1-5. Subsequently, each of the other private
companies decided not to participate further in the PSC, and
HEPI acquired a 100% participation share. See
Pet'r's Mem. at 3; see also Arbitration
Award at 3, MacKenzie Decl., Ex. 1, ECF No. 1-3. This change
was reflected in the second addendum to the PSC, which was
executed on August 17, 2001. See MacKenzie Decl.,
Ex. 4 at 1-2, ECF No. 1-6. Finally, HEPI transferred a 25%
share of its interest in the PSC to GAIL (India) Ltd., a
state-owned, Indian company in the business of gas processing
and distribution. See Pet'r's Mem. at 3.
This change was reflected in an additional amendment to the
See generally MacKenzie Decl., Ex. 5, ECF No. 1-7.
India was a signatory to each of these three amendments to
the PSC. See MacKenzie Decl., Ex. 3 at 6; Ex. 4 at
4; Ex. 5 at 5. HEPI continued to own a 75% share during the
period giving rise to the underlying dispute between the
parties. See Pet'r's Mem. at 4.
2006, an exploratory well drilled in the Block yielded
hydrocarbons. See Id. at 4; Arbitration Award at 6.
HEPI and GAIL alerted the Ministry of Petroleum and Natural
Gas about the discovery on January 8, 2007. See
Pet'r's Mem. at 4; Arbitration Award at 6-7. The PSC
defined the procedure the parties would follow in the event
of such a discovery. See PSC art. 9. Under the PSC,
an appraisal period followed any discovery of hydrocarbons.
See Pet'r's Mem. at 4; Arbitration Award at
7. At the end of the appraisal period, the PSC required the
participating companies to issue a determination as to
whether the discovery was a “Commercial Discovery,
” meaning that the production of the hydrocarbons would
be economically feasible. See Pet'r's Mem.
at 4; PSC arts. 9.5, 21.4.4. The PSC provided different
appraisal period durations depending on the type of
hydrocarbons discovered. See Pet'r's Mem. at
4. If the discovery was crude oil, as defined by the PSC, the
appraisal period would be two years. See PSC art.
9.5. If the discovery was natural gas, on the other hand, the
appraisal period would be five years. See PSC art.
parties disagreed about whether the discovery was crude oil
or natural gas. See Pet'r's Mem. at 5. The
Ministry maintained that the discovery was crude oil, and
informed HEPI that its rights to the Block were relinquished
after the shorter two-year appraisal period concluded on
January 7, 2009. See Pet'r's Mem. at 5;
Arbitration Award at 9-10. During 2009 and 2010, HEPI pursued
a number of avenues in an attempt to convince the Ministry to
change its position. See Pet'r's Mem. at 5;
Arbitration Award at 10-12. The Ministry refused, insisting
that the discovery was crude oil and that HEPI had forfeited
its rights to the Block. See Pet'r's Mem. at
The Arbitration and Subsequent Litigation
includes an arbitration provision. See PSC art. 33.
Specifically, Article 33 of the PSC provides that “any
unresolved dispute, difference or claim which cannot be
settled amicably within a reasonable time may . . . be
submitted to an arbitral tribunal for final decision.”
PSC art. 33.3. Article 33 sets forth the procedures for any
arbitration, including selecting Kuala Lumpur, Malaysia as
the venue. See PSC art. 33.12. The PSC provides that
“[t]he decision of the arbitral tribunal, and, in the
case of difference among the arbitrators, the decision of the
majority, shall be final and binding upon the Parties.”
PSC art. 33.8.
initiated an arbitration proceeding following the
parties' inability to resolve which assessment period
applied to the discovery of hydrocarbons in the Block.
See Pet'r's Mem. at 5. Both HEPI and India
nominated former Chief Justices of the Supreme Court of India
to serve as party-appointed arbitrators, and the two
party-appointed arbitrators nominated another former Chief
Justice to serve as the presiding arbitrator. See
Pet'r's Mem. at 5; Arbitration Award at 4. The
Tribunal first turned to preliminary issues, and issued an
order on May 28, 2011 finding that the dispute between the
parties was subject to arbitration and within the
Tribunal's jurisdiction. See MacKenzie Decl.,
Ex. 7, ECF No. 1-9; see also Arbitration Award at 4.
considering the merits of the dispute, the Tribunal issued a
unanimous award on February 2, 2013 in Kuala Lumpur,
Malaysia. See Arbitration Award at 43. On the
central question, the Tribunal found that “the nature
of the discovery in the Block . . . would unequivocally
qualify under the term of the [PSC] as Non Associated Natural
Gas.” Id. at 28. Because the discovery was
natural gas, not crude oil, the Tribunal decided that HEPI
was “denied the time provided for in the contract for
appraisal and to come to [a] conclusion about the
commerciality of the discovery.” Id. at 35.
The Tribunal concluded that severing HEPI's interest in
the Block was “illegal, being on the erroneous
impression that the discovery was Oil.” Id. at
remedy, the Tribunal stated that “the parties shall be
immediately relegated to the position in which they stood
prior to the order of the relinquishment and the block shall
be restored to [HEPI].” Id. The Tribunal also
awarded HEPI financial compensation of 5 billion Indian
Rupees, see id., which HEPI alleges corresponds to
roughly $74 million, see Pet'r's Mem. at 7
n.1. Finally, the Tribunal also ordered India to pay certain
costs of the arbitration. See Arbitration Award at
alleges that India has not complied with the Award.
See Pet'r's Mem. at 7. HEPI's declarant,
Mr. Ian MacKenzie, states that no legal proceedings related
to the Award have been filed in Malaysia, the venue of the
arbitration. See MacKenzie Decl. ¶ 9. India
did, however, file a petition in Delhi High Court challenging
the Award in July 2013. Id. ¶ 6. In November
2013, HEPI filed its own petition to enforce the award in the
same court. Id. ¶ 8. India's petition was
dismissed by the Delhi High Court on July 9, 2015.
Id. ¶ 6. A request for reconsideration of that
decision was rejected on January 20, 2016. Id.
¶ 7. HEPI's petition to enforce the award in India
remained pending in the Delhi High Court in January 2016.
Id. ¶ 8.
Proceedings before this Court
January 28, 2016, HEPI filed this Petition before the Court,
seeking the confirmation of the Award. See generally
Pet. On February 17, 2016, HEPI filed a Certificate of
Service asserting that India was served by Federal Express
and attaching the relevant receipts and confirmations.
See Pet'r's Certificate of Service, ECF No.
10. India moves to dismiss the Petition. See
generally Mot. Dismiss. India argues that HEPI's
method of service, delivery by Federal Express, is
insufficient under the FSIA. See Resp't's
Mem. at 1. India also argues that this Court lacks personal
jurisdiction over it because of HEPI's purportedly faulty
service. See Id. at 1-2. For these two reasons,
India argues that the Petition must be dismissed. See
Id. At this time, India has not addressed the merits of
HEPI's Petition. See Id. at 2.
response, HEPI argues that the PSC specifically contemplates
service by Federal Express, and that method therefore
constitutes a special arrangement for service for the
purposes of the FSIA. See Pet'r's Mem. P.
& A. Opp'n to Resp't's Mot. Dismiss
(“Pet'r's Opp'n”) at 6-13, ECF No.
17. Because the parties agree that the PSC is governed by
Indian law, HEPI also provides the declaration of former
Indian Supreme Court Justice Deepak Verma, who discusses
principles of Indian contract law. See Id. at 6;
see also Decl. of Justice Deepak Verma (“Verma
Decl.”), ECF No. 17-1. In the alternative, HEPI argues
that it should be given additional time to serve India if
this Court determines that HEPI's first attempt was not
effective. See Pet'r's Opp'n at 13-15.
Finally, HEPI requests leave to skip one of the usual steps
in serving foreign states under the FSIA. See Id. at
reply, India provides a competing declaration prepared by
former Chief Justice of the Indian Supreme Court K.G.
Balakrishnan. See Specially-Appearing
Resp't's Reply Mem. of Law Supp. Mot. Dismiss
(“Resp't's Reply”) at 1, ECF No. 20;
see also Decl. of Justice K.G. Balakrishnan
(“Balakrishnan Decl.”), ECF No. 20-1. India
argues that portions of Justice Verma's interpretation of
the PSC are inadmissible because they consist of legal
conclusions. See Resp't's Reply at 3-5.
India also argues that Chief Justice Balakrishnan's
explanation of Indian contract law is more persuasive.
See Id. at 5-7. Finally, India restates its position
that the Petition must be dismissed, and that, if the Court
permits HEPI another opportunity to serve India, HEPI must
strictly comply with the usual requirements of the FSIA.
See Id. at 17-21.
of process, under longstanding tradition in our system of
justice, is fundamental to any procedural imposition on a
named defendant.” Murphy Bros., Inc. v. Michetti
Pipe Stringing, Inc., 526 U.S. 344, 350 (1999).
“Before a federal court may exercise personal
jurisdiction over a defendant, the procedural requirement of
service of summons must be satisfied.” Omni Capital
Int'l, Ltd. v. Rudolf Wolff & Co., Ltd., 484
U.S. 97, 104 (1987). When the propriety of service is
challenged, “[b]y the plain text of Rule 4, the
plaintiff has the burden to ‘demonstrate that the
procedure employed to deliver the papers satisfies the
requirement of the relevant portions of Rule 4.'”
Mann v. Castiel, 681 F.3d 368, 372 (D.C. Cir. 2012)
(quoting 4A Charles Wright & Arthur Miller, Federal
Practice and Procedure § 1083 (3d ed. 2002 &
FSIA is the source of jurisdiction in federal court over
claims against foreign states, their agencies, or their
instrumentalities. See Argentine Republic v. Amerada Hess
Shipping Corp., 488 U.S. 428, 443 (1989). Under the
FSIA, “subject matter jurisdiction plus service of
process equals personal jurisdiction.” Practical
Concepts, Inc. v. Republic of Bolivia, 811 F.2d 1543,
1548 n.11 (D.C. Cir. 1987) (quoting Tex. Trading &
Milling Corp. v. Fed. Republic of Nigeria, 647 F.2d 300,
308 (2d Cir. 1981)). “[A] rule 12(b)(5) motion is the
proper vehicle for challenging the mode of delivery or the
lack of delivery of the summons and complaint.”
Candido v. District of Columbia, 242 F.R.D. 151, 162
(D.D.C. 2007) (quoting 5B Charles Wright & Arthur Miller,
Federal Practice & Procedure § 1353 (3d ed.
2006)). There are two requirements to obtain personal
jurisdiction over a foreign state under the FSIA. First,
there must be an exception to the sovereign immunity that
otherwise applies under 28 U.S.C. §§ 1605-07
“or under any applicable international
agreement.” See 28 U.S.C. § 1330(a).
Second, service must be made by one of the means identified
in 28 U.S.C. § 1608. See Id. § 1330(b).
Court can exercise personal jurisdiction over India only if
it has been properly served pursuant to the FSIA. The central
question before the Court is whether the agreement between
the parties, embodied in the PSC, constitutes a special
arrangement for service. Relying on Indian contract law
principles and federal case law, the Court finds that the
relevant language of the PSC does not constitute a special
arrangement for service. Thus, India has not been properly
served and this court lacks personal jurisdiction over India.
At this time, however, the Court finds that dismissal of the
Petition would be inappropriate. Therefore, HEPI will be
afforded another opportunity to effect service on India.
Service of the Petition
core of India's argument is that HEPI's service of
process was insufficient under the FSIA. A federal court may
exercise personal jurisdiction over a foreign state that has
been properly served. See 28 U.S.C. § 1330(b);
see also TMR Energy Ltd. v. State Prop. Fund of
Ukr., 411 F.3d 296, 299 (D.C. Cir. 2005) (“The
FSIA confers . . . subject matter jurisdiction as to any
claim for relief in personam with respect to which the
foreign state is not entitled to immunity, and personal
jurisdiction follows where proper service has been made . . .
.” (citations and internal quotation marks omitted)).
The Federal Rules of Civil Procedure provide that a
“foreign state or its political subdivision, agency, or
instrumentality must be served in accordance with 28 U.S.C.
§ 1608.” Fed.R.Civ.P. 4(j)(1). The parties agree
that Respondent is a sovereign state and therefore service in
this case is governed by 28 U.S.C. § 1608(a).
See Pet'r's Mem. at 8; Resp't's ...