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Sterling Merchant Finance Ltd. v. Republic of Cabo Verde

United States District Court, District of Columbia

June 13, 2017

STERLING MERCHANT FINANCE LTD., Sterling,
v.
REPUBLIC OF CABO VERDE, Respondent.

          MEMORANDUM OPINION

          ELLEN SEGAL HUVELLE United States District Judge

         Petitioner Sterling Merchant Finance Ltd. (“Sterling”) brings this action against Respondent Republic of Cabo Verde (“Cabo Verde”), pursuant to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 21 U.S.T. 2517, T.I.A.S. No. 6997 (the “New York Convention”), to confirm a foreign arbitral award. Before the Court is Sterling's motion for default judgment. (Mot. for Default Judgment, ECF No. 20.) For the reasons set forth herein, the Court will grant the motion and confirm the underlying arbitral award.

         BACKGROUND

         Sterling is a limited liability company, organized in accordance with the laws of the State of Delaware and engaged in the business of investment banking, private equity, and international consulting.[1] (Pet. ¶ 11.) Cabo Verde is a foreign state, as defined in the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602 et seq. (Pet. ¶ 12.) On or about October 30, 2006, Sterling and Cabo Verde entered into a contract, pursuant to which Cabo Verde agreed to pay Sterling $950, 490.62 to manage Cabo Verde's airline and flag carrier, Transportes Aereos Cabo Verde (“TACV”), for a one-year period. (Pet. ¶¶ 13, 14 & Ex. B (“Management Contract”).) On December 1, 2006, the management of TACV was transferred to Sterling. (Pet. ¶ 14.) Sterling fully performed all the services required under the Management Contract, the final act of which was the submission of a final report on November 30, 2008. (Pet. ¶ 15.) Cabo Verde, however, failed to pay Sterling all of the money that it was due, thereby breaching the Management Contract. (Pet. ¶ 15.)

         Sterling attempted to collect the money it was owed or to reach a settlement. (Pet. ¶ 17.) On June 30, 2014, after those efforts were unsuccessful, it invoked the Management Contract's arbitration clause.[2] (Pet. ¶ 17.) On January 12, 2015, the matter was submitted to arbitration before a Sole Arbitrator, who was appointed by the Permanent Court of Arbitration, seated in the Hague in the Netherlands.[3] (Pet. ¶¶ 17-19 & Exs. C & D.) On November 27, 2015, the Sole Arbitrator issued his final decision, concluding that Cabo Verde had breached its obligations to Sterling under the Management Contract. (Pet. ¶ 20 & Ex. E (“Arbitral Award”).) As relief, the Arbitral Award:

1. Orders the Republic of Cabo Verde to pay to Sterling Merchant Finance Ltd. an amount of USD 190, 098.12 due under Invoice No. RBJ/pd/372;
2. Orders the Republic of Cabo Verde to pay to Sterling Merchant Finance Ltd. interest at a simple annual rate of 8% p.a. [per annum] on the amount stated in para. 273(1) supra [USD 190, 098.12] from 29 January 2009 until full payment;
3. Orders the Republic of Cabo Verde to pay to Sterling Merchant Finance Ltd. USD 7, 616 and EUR 375 as arbitration costs;
4. Orders the Republic of Cabo Verde to pay to Sterling Merchant Finance Ltd. interest at a simple annual rate of 8% p.a. [per annum] on the amount stated in para. 273(3) supra [USD 7, 616 and EUR 375] from the date of this award until full payment; and
5. Dismisses all other claims and prayers for relief.

(See Pet. ¶¶ 20-22 & Arbitral Award ¶ 273.) To date, Cabo Verde has not complied with the Arbitral Award.

         On June 24, 2016, Sterling filed the pending petition to confirm the Arbitral Award. Because Cabo Verde is a foreign state, Sterling was required to effect service in accordance with the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. §§ 1602-1610. (See Order, Oct. 12, 2016, ECF No. 6.) On January 6, 2017, Sterling requested that the Clerk of the Court effect service, in accordance with 28 U.S.C. § 1608(a)(3), [4] by mailing a copy of the Petition, Summons, and Notice of Suit to Cabo Verde's Foreign Minister through a courier, DHL World Wide Express. (Affidavit Requesting Foreign Mailing, ECF No. 9.) The Clerk complied (see Certificate of Mailing, ECF No. 12), and Cabo Verde received the mailing on January 10, 2017. (See Return of Service, ECF No. 11.) Cabo Verde's response to the petition was due on March 11, 2017. (Id.) No response was filed. On April 28, 2017, Sterling requested that the Clerk enter a default against Cabo Verde (Aff. for Default, ECF No. 18), which the Clerk did on May 1, 2017. (Clerk's Entry of Default, ECF No. 19.) Sterling then filed the pending motion for default judgment.

         ANALYSIS

         Sterling's motion for default judgment asks the Court to confirm the Arbitral Award and to enter judgment against Cabo Verde in accordance with its terms. Before granting a default judgment against a foreign state, the Court must satisfy itself that it has subject matter jurisdiction over the claims, personal jurisdiction over the defendant, and that “the claimant [has] establishe[d] his claim or right to relief by evidence satisfactory to the court.” 28 U.S.C. § 1608(e).

         I. ...


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