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Salini Costruttori S.P.A. v. Kingdom of Morocco

United States District Court, District of Columbia

February 10, 2017

SALINI COSTRUTTORI S.P.A., Petitioner,
v.
KINGDOM OF MOROCCO, Respondent.

          MEMORANDUM OPINION

          TANYA S. CHUTKAN United States District Judge

         Petitioner, Salini Costruttori S.p.A. (“Salini”), brings this action against the Kingdom of Morocco (“Morocco”), to enforce a 2011 arbitration award issued by the International Chamber of Commerce (“ICC”) International Court of Arbitration in Paris, France. The two parties executed an agreement for a construction project in Morocco, but several disputes arose out of the agreement, after which Salini filed a Request for Arbitration against Morocco with the ICC. The ICC decision ordered Morocco to pay Salini several sums of money, including interest and reimbursement for various duties and taxes paid by Salini throughout the construction process. Salini then filed a petition in Morocco's courts seeking recognition and enforcement of the arbitration award. The Administrative Court of Rabat entered judgment in the case, ordering the enforcement of all of the parts of the award except for those requiring Morocco to repay Salini for various taxes it had levied against Salini, finding that aspect of the award to be outside the jurisdiction of the international arbitration court. Salini appealed the portion of the judgment involving the repayment of taxes, and the Administrative Court of Appeal of Rabat affirmed the lower court's decision. Salini then appealed to the Moroccan Court of Cassation, the country's highest civil court; that appeal remains pending. Morocco paid Salini the amount of the award that the Administrative Court upheld: 167, 695, 954.30 MAD (Moroccan dirham).

         Salini filed this Petition to Recognize, Confirm, and Enforce the arbitral award pursuant to the Federal Arbitration Act (FAA) in order to address the difference between the amount Morocco has already fulfilled and the total amount of the ICC award, plus accrued interest. Chapter two of the FAA codifies the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958 (“the New York Convention”). 9 U.S.C. §§ 201, et seq. Also before the court is Morocco's motion to dismiss the Petition under Federal Rules of Civil Procedure 12(b)(1)-for lack of jurisdiction, and 12(b)(6)-for failure to state a claim pursuant to Section 207 of the FAA.[1] The FAA requires that the court not confirm the award if it “finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the [New York] Convention, ” and Article V(1)(e) of the Convention describes as possible grounds for denial of confirmation that “[t]he award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.” 9 U.S.C. § 207; New York Convention art. V(1)(e), June 10, 1958, 330 U.N.T.S. 38.

         For the reasons below, Salini's Petition to Recognize, Confirm, and Enforce a Final, Binding Arbitral Award will be GRANTED and Morocco's Motion to Dismiss the Petition will be DENIED.

         I. BACKGROUND

         On May 21, 2004, Salini entered into Agreement AH03/2004 (“Construction Agreement”) with Morocco, specifically the Ministry of Equipment and Transportation, to construct a road between two Moroccan cities. (Pet. ¶ ¶ 5-6). The Construction Agreement contains an arbitration clause, which allows either party to submit a dispute to either Morocco or to an arbitral award. (Pet. ¶ 9). In 2008, disputes arose between the parties related to, in part, “(i) the reimbursement by Morocco of direct and indirect taxes paid by Salini to its suppliers; (ii) the termination of the Agreement and the timing thereof; and (iii) the financial consequences of the partial execution of the Agreement and its termination.” (Pet. ¶ 12). The parties were unable to settle their dispute amicably, and Salini filed its Request for Arbitration against Morocco with the ICC on August 13, 2009. (Pet. at ¶ 13). The Arbitration took place in Paris, France (Pet. Ex. D at 103), and on December 5, 2011, the Arbitral tribunal rendered its Final Award. (Pet. at ¶ 17).

         In the Final Award, the Arbitral tribunal decided that:

1. It had proper jurisdiction to rule on the dispute.
2. Salini's attempt at terminating the agreement as of January 10, 2008, was invalid.
3. Morocco's August 1, 2008, termination of the agreement was the proper termination date.
4. The date of final taking over of the project was April 7, 2009.
5. Morocco was to pay Salini, by way of the works carried out, an amount of €8, 158, 518.87 plus [Value Added Tax (“VAT”)] at a rate of 20% for the part not financed by the European Union.
6. Morocco was to pay Salini by way of interest on the principal amount of €8, 158, 518.87, calculated until June 30, 2010, an amount of €1, 040, 000.00.
7. Morocco was to pay Salini interest on this amount of €8, 130, 000.00, calculated from l July 2010 at the [European Central Bank (“ECB”)] rate plus 3.5 percentage points, until its complete payment.
8. The agreement contained a commitment by Morocco not to impose on Salini duties or taxes, and that in the event Morocco did impose any, it would be liable to reimburse Salini.
9. Morocco was to pay Salini, by way of reimbursement of the duties and taxes on cement, heating oil, and extractions, an amount of €5, 212, 183.39, plus interest at the ECB rate plus 3.5 percentage points, starting from 13 August 2009 until complete payment of the principal.
10. Morocco was to reimburse all other duties and taxes to Salini, plus interest at ECB rate plus 3.5 percentage points, starting from the day after payment by Salini of the said taxes and duties and until complete reimbursement 11. Morocco was to pay Salini €2, 140, 600.16 by way of changes in the quantity of certain items, plus VAT at a rate of 20%.
12. Morocco was to pay Salini interest on this amount of €2, l40, 600.l6, calculated from 1 July 2010 at the ECB rate plus 3.5 percentage points, until complete payment.
13. Salini was to pay Morocco the amount of €500, 000.00 for delay damages plus interest at the ECB rate plus 3.5 percentage points, starting from 18 November 2009, until complete payment of the principal.
14. Salini was to pay Morocco, for the necessity of drawing up a new contract with another ...

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