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Venco Imtiaz Construction Co. v. Symbion Power LLC

United States District Court, District of Columbia

May 31, 2017

VENCO IMTIAZ CONSTRUCTION COMPANY, Plaintiff.
v.
SYMBION POWER LLC, Defendant.

          MEMORANDUM OPINION

          JOHN D. BATES United States District Judge.

         A construction company and its subcontractor are engaged in a long-running dispute over payment for a power plant construction project in Kabul, Afghanistan, between 2008 and 2010. The subcontractor, Venco Imitiaz Construction Company (Venco), eventually won an arbitration award requiring the contractor, Symbion Power LLC (Symbion), to pay $ 8.5 million for the work that Venco performed. Venco now seeks enforcement of that award. Symbion challenges that award here, and also in a separate court proceeding in the United Kingdom. For the reasons explained below, the Court will grant Venco's motion for enforcement of the award, deny Symbion's motion for a stay, and deny as moot Venco's motion, in the alternative, for security.

         BACKGROUND

         In 2008, the U.S. Agency for International Development began funding a project to build a power plant in Kabul. The delays and disagreements began shortly thereafter. The facts that follow are undisputed, however, unless otherwise noted.

         USAID hired a U.S.-based firm, The Louis Berger Group/Black & Veatch Special Projects Corporation (LBG/BV) to manage the project. LBG/BV then hired Symbion as is its primary contractor. Symbion in turn hired Venco as a subcontractor responsible for certain portions of the plant construction, namely for the “power blocks” that would house the electrical generators. Resp.'s Br. [ECF No. 7] at 3. LBG/BV and Symbion had a dispute over who was responsible for construction delays (these disputes were unrelated to Venco's work) and, as a result, LBG/BV withheld payment from Symbion. Id. at 3-4; Pet.'s Br. [ECF No. 1-7] at 1. Symbion, in turn, withheld payment from Venco. Resp.'s Br. at 4; Pet.'s Br. at 1. Symbion argues that its contract with Venco permits this, i.e., that the contract conditions payment to Venco on Symbion's receipt of payment from LBG/BV. Resp.'s Br. at 6. Venco takes the opposite view. Pet.'s Br. at 2-3.

         According to Symbion, in 2009 LBG/BV and Symbion began arbitration proceedings before a Tribunal of the International Court of Arbitration (ICC), as provided for in their contract. Resp.'s Br. at 5. That tribunal concluded that LBG/BV breached its contract and was not justified in withholding payment from Symbion, but also found that under the terms of the contract, Symbion could not rely on the invoices that it submitted as evidence that it was entitled to full payment. See ICC Case No. 16383/VRO, Symbion Power LLC v. LBG/BV, Final Award (Oct. 24, 2012), Ex. 4 to Resp.'s Br. [ECF Nos. 7-7-7-13] (hereinafter “Prior Award”) at 171-73. Instead, the tribunal found that Symbion was required to separately prove the value of its work with evidence beyond the invoices, and was only entitled to payment for the amounts it could separately prove. Id. Venco was not a party to that arbitration proceeding nor did it participate in it in any way.

         Separately, in 2013 Venco filed a request for arbitration with the ICC against Symbion, as required by the arbitration clause in their contract. Pet.'s Br. at 3; Resp.'s Br. at 6. A three-arbitrator panel was empaneled pursuant to ICC rules. Pet.'s Br. at 3-4; Resp.'s Br. at 6-7. Before the panel, Venco argued that Symbion had breached its contract by failing to make the required payments. Pet.'s Br. at 2-3; Resp.'s Br. at 6. Symbion argued that its payments to Venco were predicated on receiving payment from LBG/BV, and also raised counterclaims against Venco for tortious interference with contract, breach of the implied covenant of good faith and fair dealing, and malicious prosecution and abuse of process. Resp.'s Br. at 6. LBG/BV was not a party to the Venco-Symbion arbitration. The arbitration panel reviewed briefings, received written evidence, and held an evidentiary hearing from November 2 through November 11, 2015, where it heard testimony from fact and expert witnesses. See ICC Case No. 19335/AGF/ZF, Venco Imtiaz Constr. Co. v. Symbion Power LLC, Final Award (Jul. 11, 2016), Ex. 2 to Pet.'s Br. [ECF No. 1-2] (hereinafter “Final Award”) at 22-24. The panel ultimately issued an award on July 11, 2016, finding almost entirely in Venco's favor. See id. at 140-42. The panel ordered Symbion to pay all unpaid invoices that Venco had submitted, plus interest, attorney's fees, and the cost of arbitration. Id. It also dismissed all of Symbion's counterclaims. Id. In total, this amounted to $ 8, 462, 516.78. Id.

         On August 8, 2016, Symbion filed a motion in the United Kingdom to set aside the award. Venco, in turn, filed the instant motion in this Court to confirm and enforce the award. Petition [ECF No. 1]. Symbion not only opposes Venco's motion, but also filed a motion asking this Court to stay further proceedings pending the outcome of the U.K. proceedings. Resp.'s Br. at 1-2. Symbion's primary argument is that the arbitration proceeding at issue here interpreted the contract in a manner inconsistent with the prior arbitration award between Symbion and LBG/BV, and therefore enforcement of the award in this Court would violate the public policy of issue preclusion. Id. at 1. Venco opposes Symbion's motion for a stay, but in the alternative, requests that if a stay is granted, that Symbion be required to post security in the full amount of the arbitration award. Pet.'s Reply & Opp'n [ECF No. 13] at 1. Symbion opposes the request for security. Resp.'s Reply [ECF No. 17] at 1.

         Since the parties completed briefing in this matter, the U.K. High Court of Justice in London, England, has dismissed Symbion's challenge to the arbitral award. See Symbion Power LLC v. Venco Imtiaz Constr. Co., [2017] EWHC 348 (TCC) (March 10, 2017), Ex. 1 to Status Report [ECF No. 22-1]. Based on the parties' representation during a hearing before this Court on April 18, 2017, Symbion intends to seek leave to appeal that decision. This Court has not been advised of the time frame in which the U.K. appellate court would grant or deny leave to appeal, or of the time frame in which that court might issue a judgment on the merits, should leave to appeal be granted.

         LEGAL STANDARD

         Venco seeks enforcement of its arbitration award under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. See Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958 (“New York Convention”), 21 U.S.T. 2517, codified at 9 U.S.C. §§ 201-08. Under the New York Convention, which is codified as part of the Federal Arbitration Act (FAA), a “court shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention.” Id. § 207. The FAA therefore “‘reflects an emphatic federal policy in favor of arbitral dispute resolution.'” Marmet Health Care Ctr., Inc. v. Brown, 565 U.S. 530, 533 (2012) (per curiam) (quoting KPMG LLP v. Cocchi, 565 U.S. 18, 21 (2011)). This emphatic federal policy is equally true in enforcing foreign arbitration awards. See TermoRio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928, 933-34 (D.C. Cir. 2007) (citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985)); see also Newco Ltd. v. Gov't of Belize, 650 F. App'x 14, 16 (D.C. Cir. 2016) (nonprecedential).

         One of the enumerated grounds for a court to decline to enforce an award is if “[t]he recognition or enforcement of the award would be contrary to the public policy of [the] country” where enforcement is sought. New York Convention, art. V(2)(b). Wary of the potentially vast possibilities of this exception, “courts have been careful not to stretch the compass of ‘public policy.'” TermRio, 487 F.3d at 938. Rather, the “public policy defense is to be construed narrowly to be applied only where enforcement would violate the [United States'] most basic notions of morality and justice.” Id. (quoting Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 364 F.3d 274, 306 (5th Cir. 2004)); see also Enron Nigeria Power Holding, Ltd. v. Fed. Republic of Nigeria, 844 F.3d 281, 289 (D.C. Cir. 2016); Belize Bank Ltd. v. Gov't of Belize, 852 F.3d 1107, 1111 (D.C. Cir. 2017); cf. Nat'l R.R. Passenger Corp. v. Fraternal Order of Police, No. 16-7004, slip op. at 9 (D.C. Cir. Apr. 28, 2017) (describing similar public policy exception in Railway Labor Act as only applicable when “arbitration award . . . transgresses well defined and dominant laws and legal precedents” (internal quotation marks omitted)). Here, Symbion, as the party challenging enforcement of the award, “‘bears the burden of proof' of meeting this exacting standard.” Belize Bank, 852 F.3d at 1111.

         ANALYSIS

         I. Issue Preclusion And The Public Policy Exception

         Symbion argues that the earlier arbitration award between Symbion and LBG/BV should have had a preclusive effect on the subsequent arbitration award between Symbion and Venco, and that enforcing this later award would violate the public policy of issue preclusion. In particular, Symbion argues that the LBG/BV award determined that a contractor (such as Venco) could not rely only on invoices to establish damages, and instead must prove the actual value of the work performed. See Resp.'s Br. at 9.

         Issue preclusion (sometimes known as collateral estoppel) “bars ‘successive litigation of an issue of fact or law actually litigated and resolved in a valid court determination essential to the prior judgment, ' even if the issue recurs in the context of a different claim.” Taylor v. Sturgell, 553 U.S. 880, 892 (2008) (quoting New Hampshire v. Maine, 532 U.S. 742, 748 (2001)); see also Southern Pac. R. Co. v. United States, 168 U.S. 1, 48-49 (1897) (defining issue preclusion as the “general principle . . . that a right, question, or fact distinctly put in issue, and directly determined by a court of competent jurisdiction, as a ground of recovery, cannot be disputed in a subsequent suit between the same parties or their privies”). Issue preclusion is “[a] fundamental precept of common-law adjudication” that saves litigants ...


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