United States District Court, District of Columbia
D. BATES United States District Judge.
a dispute over enforcement of an arbitration award. Mesa
Power Group, LLC (“Mesa”), an energy company,
believes that the government of Canada violated the North
American Free Trade Agreement in how it awarded various
renewable energy contracts in Ontario. An arbitration panel
disagreed. Mesa now petitions this Court to vacate that
award; Canada counter-petitions for enforcement of the award.
Given a federal court's narrow power to review the
substance of arbitration awards, the Court will deny
Mesa's petition to vacate and grant Canada's
counter-petition to enforce the award. Canada also argues
that Mesa's petition is frivolous and in bad faith, and
therefore requests that this Court award it attorney's
fees. The Court will deny that request.
2009, the government of the Canadian province of Ontario
launched a program designed to encourage renewable energy,
known as the Feed-in-Tariff (FIT) program. Mesa Power
Grp., LLC v. Gov't of Canada, Case No. 2012-17,
Final Award, ¶ 13 (Perm. Ct. Arb., March 24, 2016), Ex.
1 to Resp.'s Br. [ECF No. 22-2] (hereinafter
“Award”). Mesa is an energy company that made
significant investment in the production of renewable energy
in the region with the hope of being awarded a contract
through the FIT program. Pet.'s Br. [ECF No. 1-1] at 5.
After Ontario announced the FIT program, it entered into a
separate contract, outside of the FIT program, to provide
renewable energy to the same electrical grid. Award
¶¶ 38-39. This contract, the Green Energy
Investment Agreement (GEIA) was with two Korean companies
known as the Korean Consortium. Id.
believes that when Ontario announced the FIT program, it
pledged to award all of the electric grid capacity
through FIT, and that Ontario's decision to enter the
GEIA reneged on this pledge. Pet.'s Br. at 5-6. Mesa also
believes that the GEIA contained fewer requirements of
investors than the FIT program did. Id. Mesa
contends that these unfair practices amount to a violation of
NAFTA, which, broadly speaking, requires signatory nations to
treat investors fairly. Id. at 6-9.
asserted these claims through arbitration, as provided for in
NAFTA Article 1116, in October of 2011. Award ¶ 207;
North American Free Trade Agreement, Can.-Mex.-U.S., art.
1116, Dec. 17, 1992, 32 I.L.M. 605, 640 (1993)
(“NAFTA”). Specifically, Mesa argued that Canada
violated several articles of NAFTA Chapter 11. See
Award ¶ 208. First and foremost, Mesa claimed that
Canada violated Article 1105(1)'s requirement that
signatory nations treat investors from another signatory
nation “in accordance with international law, including
fair and equitable treatment.” NAFTA Art. 1105(1);
Award ¶ 208. Mesa also claimed that Canada improperly
imposed domestic content requirements in violation of Article
1106, and that Canada treated other investors more favorably
in violation of Articles 1102 and 1103. Award ¶ 208.
provides that arbitration proceedings are governed by NAFTA
itself and the 1976 rules of the United Nations Commission on
International Trade Law (UNCITRAL Rules). See NAFTA
Art. 1120(2). A tribunal of three arbitrators was duly
constituted pursuant to these rules. It reviewed extensive
briefing, received factual and expert evidence, and held an
oral hearing on October 26-31, 2014. Award ¶¶
43-180 (evidence), ¶ 181 (oral hearing). The tribunal
also received post-hearing briefs, id. ¶ 186,
and briefs from the governments of the United States and
Mexico, id. ¶¶ 192-204.
March 24, 2016, the tribunal issued its award. It determined
that the FIT program was “procurement” by a
government (namely, Canada) as defined by Article 1108, and
therefore the requirements of Articles 1102, 1103, and 1106
did not apply. Id. ¶ 465 (“The Tribunal
holds that the FIT program constitutes procurement by the
Government of Ontario . . . .”); see also id.
¶¶ 403-466 (providing analysis); ¶ 335
(regarding Mesa's claim under Article 1106). The tribunal
therefore did not consider Mesa's claims under those
articles. It did consider Mesa's Article 1105 claim,
however, and ultimately determined that Canada did not
violate that provision. Id. ¶ 682. It also
determined that Canada did not enter into the GEIA agreement
in secret, or after promising to award all of the grid
capacity through FIT. Id. ¶ 582. The tribunal
in fact found that Mesa was aware that the Korean Consortium
had the right to reserve a certain amount of the grid
capacity before Mesa made any investments in the region.
Id. The tribunal, after finding for Canada on all
claims, awarded the costs and fees of arbitration to Canada.
Specifically, it ordered payment of CAD 1, 116, 000 for the
cost of arbitration, and CAD 1, 832, 701, representing 30% of
Canada's costs of engaging in arbitration. Id.
arbitrator, Judge Charles N. Brower, concurred in part and
dissented in part. Award (Brower, J., concurring in part and
dissenting in part), Ex. 2 to Pet.'s Br. [ECF No. 1-3].
With respect to Article 1105, he agreed that the tribunal
stated the proper standard, but would have applied it
differently. Id. ¶ 3. Specifically, he would
have found that Canada violated Article 1105 by treating the
Korean Consortium more favorably than the applicants to the
FIT program, and by awarding some of the grid capacity
through GEIA rather than the FIT program. Id.
¶¶ 4-24. In particular, Brower would have held that
Canada's decision-making regarding the Korean Consortium
crossed over from the realm of reasonable policy choices into
unfair treatment in violation of Article 1105. Id.
¶ 17. Brower also would have held that the FIT program
is not “procurement” as defined by Article 1108.
Id. ¶¶ 25-34.
now asks this court to vacate the award pursuant to § 10
of the Federal Arbitration Act (FAA), 9 U.S.C. § 10.
Specifically, Mesa contends that vacatur is proper because
the arbitrators “exceeded their powers” as
defined by § 10(a)(4) and were “guilty of
misconduct . . . or . . . misbehavior by which the rights of
[Mesa were] prejudiced” as defined by § 10(a)(3).
It also argues that the tribunal acted “in manifest
disregard of the law, ” which the D.C. Circuit has
recognized as a valid ground for vacating an arbitral award.
See LaPrade v. Kidder, Peabody & Co., Inc., 246
F.3d 702, 706 (D.C. Cir. 2001) (internal quotation marks
omitted). Mesa identifies two of the tribunal's actions
that it believes violate these provisions. First, Mesa
asserts that the tribunal's interpretation of the term
“procurement” in Article 1108 was such a
departure from the text of NAFTA that it justifies vacatur.
Second, Mesa contends that the tribunal improperly granted
“deference” to Canada's decision-making
regarding the FIT program and entering the GEIA contract such
that the proceedings were inappropriately biased, justifying
Court reviewed full briefing from the parties and held an
oral argument on June 1, 2017.
is a preliminary issue regarding the controlling choice of
law. Canada asserts that the precedent of the Eleventh
Circuit, rather than the D.C. Circuit, controls, because the
seat of this arbitration was Miami, Florida. If Eleventh
Circuit decisions control, then the legal standard is much
more favorable to Canada: under Eleventh Circuit precedent
the grounds for vacating an award enumerated in § 10 of
the FAA are not applicable to a foreign arbitral award (like
this one), nor is the additional grounds of “manifest
disregard of the law” available. See
Resp.'s Br. [ECF No. 22] at 14-15 (citing Indus. Risk
Ins. v. M.A.N. Gutehoffnungshutte GmbH, 141 F.3d 1434
(11th Cir. 1998)).
argument relies on Article V(1)(e) of the New York Convention
on the Recognition and Enforcement of Foreign Arbitral
Awards, which, as the name suggests, governs enforcement of
arbitral awards issued in foreign proceedings, and is
incorporated in the Federal Arbitration Act. See
Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, June 10, 1958 (“Convention”), 21
U.S.T. 2517, codified at 9 U.S.C. §§
201-08. Article V(1)(e) of the Convention states that a court
may vacate an award if it “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.”
“The phrase ‘under the law of which' in
Article V(1)(e) . . . refers to the procedural law governing
the arbitration, not the substantive law governing the
Agreement.” Belize Soc. Dev. Ltd. v. Gov't of
Belize, 668 F.3d 724, 727 (D.C. Cir. 2012). Thus,
because the parties agree that the seat of the arbitration
was in Florida-which is within the Eleventh Circuit-Canada
argues that the procedural law of the Eleventh Circuit
this position contradicts the weight of the decisions that
have considered similar issues. Neither party has provided
the Court with any cases discussing which circuit's
precedent governs confirmation (or vacatur) of an arbitral
award when the arbitration took place in one circuit and the
case is filed in a different circuit. However, there is
extensive case law and legal commentary regarding which
circuit's precedent applies when a federal question case
is transferred from one circuit to another: the law of the
transferee court (here, the D.C. Circuit) rather than the
transferor court (here, the Eleventh Circuit) governs. This
is true in the context of transfers for the parties'
convenience under 28 U.S.C. § 1404, transfers to obtain
proper venue under § 1406, and transfers for
multi-district litigation under § 1407. See Lafferty
v. St. Riel, 495 F.3d 72, 83 (3d Cir. 2007) (transfer
under § 1406); Hartline v. Sheet Metal Workers'
Nat. Pension Fund, 286 F.3d 598, 599 (D.C. Cir. 2002)
(per curiam) (transfer under § 1404); In re Korean
Air Lines Disaster, 829 F.2d 1171, 1176 (D.C. Cir. 1987)
(transfer under § 1407); see generally Charles
A. Wright & Arthur R. Miller, 15 Fed. Prac. &
Proc. § 3846 (4th ed.) (citing, inter
alia, cases from the First, Second, Ninth and Eleventh
Circuits reaching similar conclusions); see also
Int'l Union of Painters & Allied Trades, Local Unions
No. 970 & 1144, AFL-CIO v. NLRB, 309 F.3d 1, 6 (D.C.
Cir. 2002) (“To the extent that [plaintiff] asks us to
create special circuit law depending on the geographic
origins of a case, it asks us . . . to abandon the federal
circuits' normal task of trying to determine federal law
as correctly as possible.”).
rule-that the transferee court's interpretation of
federal law controls-makes sense given the nature of federal
law. While there are “differences between different
states' laws, ” there is “unitary federal
law” and “each [federal court] has an obligation
to engage independently in reasoned analysis”
interpreting that law. In re Korean Air Lines
Disaster, 829 F.2d at 1175-76. When a federal court
interprets federal law, “[b]inding precedent for all is
set only by the Supreme Court, and for the district courts
within a circuit, only by the court of appeals for that
circuit.” Id. at 1176; see also
Richard L. Marcus, Conflict Among Circuits and Transfers
within the Federal Judicial System, 93 Yale L.J. 677,
721 (1984)). This is in contrast to when a federal court sits
in diversity jurisdiction, where there are reasons based on
comity and federalism for the substantive law of the
transferor jurisdiction-that is, the state law of the
transferor jurisdiction-to apply. See Van Dusen v.
Barrack, 376 U.S. 612, 637-42 (1964). But when a court
has federal question jurisdiction, these rationales do not
apply. See In re Korean Air Lines Disaster, 829 F.2d
at 1176. The only exception to this general rule-one that is
not applicable here-is if the transferor court already
decided an issue (based on its own interpretation of the law)
and thus the “law of the case” governs that issue
even in the transferee court. See Hill v. Henderson,
195 F.3d 671, 678 (D.C. Cir. 1999).
the case was not transferred under §§ 1404, 1406,
or 1407-indeed, it was not transferred at all. Rather, the
arbitration took place within the Eleventh Circuit but the
petition was filed in this Circuit. Still, the same reasoning
likely applies: there is one federal law, and this Court has
an obligation to interpret the law “as correctly as
possible.” That might be why, during oral argument,
counsel for the respondent could not identify a single case
in which a district court applied an interpretation of
federal law from another circuit that contradicted the
precedent of the circuit where the district court was
located. Interpreting the law “as correctly as
possible” requires interpreting the law within the
bounds of controlling precedent-which in this district, means
D.C. Circuit and Supreme Court precedent.
the Court need not actually decide this issue. Even under
D.C. Circuit precedent-which is more favorable to Mesa and
which Mesa believes should apply-Mesa's arguments still
fail. Thus, the Court will assume, without deciding, that