United States District Court, District of Columbia
MEMORANDUM OPINION AND ORDER
RANDOLPH D. MOSS UNITED STATES DISTRICT JUDGE
TECO Guatemala Holdings, LLC (“TECO”) commenced
this action by filing a petition to confirm an arbitral award
rendered by the International Centre for Settlement of
Investment Disputes (“ICSID”) against the
Republic of Guatemala (“Guatemala”). Dkt. 1.
Although all agree that the role of a federal court asked to
confirm an ICSID award is limited, Guatemala requests that
the Court dismiss TECO's petition for failure to state a
claim. Dkt. 23. Guatemala maintains, in short, that ICSID
annulled the arbitral award and that, as a result, there is
nothing for this Court to confirm. TECO, unsurprisingly,
disagrees and submits that the arbitral award that it seeks
to enforce is alive and well. Dkt. 26. As explained below,
TECO has the better argument and, accordingly, the Court will
DENY Guatemala's motion to dismiss
TECO's petition, Dkt. 23.
ICSID Structure and Enforcement
1960s, the World Bank “spearheaded” an effort to
develop a “multilateral treaty aimed at encouraging and
facilitating private foreign investment in developing
countries.” Mobil Cerro Negro, Ltd. v. Bolivarian
Republic of Venezuela, 863 F.3d 96, 100 (2d Cir. 2017)
(citing Anthony R. Parra, The History of ICSID
11-12, 24-26 (Oxford 2012)). The product of that effort was
the International Convention on the Settlement of Investment
Disputes between States and Nationals of Other States
(“ICSID Convention”), Mar. 18, 1965, 17 U.S.T.
1270, a multilateral treaty designed “to promote
economic development and private international investment by
providing a legal framework . . . to resolve . . . disputes
between private investors and governments.” Micula
v. Gov't of Romania, 104 F.Supp.3d 42, 44 (D.D.C.
2015). Most significantly for present purposes, the ICSID
Convention established the International Centre for
Settlement of Investment Disputes-or “ICSID, ” as
it is commonly known-which has the authority to convene
arbitration panels “to adjudicate disputes between
international investors and host governments in
‘Contracting States.'” Mobil Cerro Negro,
Ltd., 863 F.3d at 101. The United States is a signatory
to the ICSID Convention, see Int'l Ctr. for
Settlement of Inv. Disputes, List of Contracting States
and Other Signatories of the Convention (last visited
Sept. 29, 2018), and Congress has enacted implementing
legislation, see Convention on the Settlement of
Investment Disputes Act of 1966, Pub. L. 89-532, 80 Stat. 334
(1966) (codified at 22 U.S.C. §§ 1650 and 1650a).
ICSID Convention provides an international framework for
adjudicating and enforcing investor-state disputes. First,
“[a]ny Contracting State or any national of a
Contracting State” may request that ICSID convene an
arbitration tribunal. See ICSID Convention art. 36.
The tribunal, consisting of either a single arbitrator or
“any uneven number of arbitrators, ” id.
art. 37, considers the dispute and issues a written award,
which “deal[s] with every question submitted to the
[t]ribunal, and state[s] the reasons upon which it is based,
” id. art. 48. If either party contests the
tribunal's award, it may request “revision”
if there is a newly-discovered material fact previously
unknown to the parties and arbitrator, see Id. art.
51, or “annulment” if a party challenges the
tribunal's substantive decision, id. art. 52.
When a party seeks annulment, ICSID convenes an ad
hoc committee of three members, which is authorized
“to annul the award or any part thereof.”
Id. At a party's request, enforcement of an
award is “stayed provisionally until the
[c]ommittee” renders its decision. Id. But,
“[e]xcept to the extent that enforcement” has
been stayed, the tribunal's award remains “binding
on the parties and shall not be subject to any appeal or to
any other remedy” other than those set forth in the
ICSID Convention. Id. art. 53. Following an
annulment, either partial or full, either party may request
resubmission of the dispute to a new tribunal-although if an
award had been annulled only in part, the new tribunal is
prohibited from reconsidering any non-annulled portion of the
award. Id. r. 55. As Guatemala acknowledges,
“[p]artially annulled awards can be enforced.”
Dkt. 23-1 at 22.
is not empowered to enforce awards. Instead, prevailing
parties must register their awards with a court of a member
state. The courts of member states are required to
“recognize an award . . . as binding and [to] enforce
the pecuniary obligations imposed by that award within its
territories as if it were a final judgment of a court in that
[s]tate, ” or, for a member state with “a federal
constitution, ” to “treat the award as if it were
a final judgment of the courts of a constituent state.”
Id. art. 54. A member state is “not permitted
to examine an ICSID award's merits, its compliance with
international law, or the ICSID tribunal's jurisdiction
to render the award;” all it may do is “examine
the judgment's authenticity and enforce the obligations
imposed by the award.” Mobil Cerro Negro,
Ltd., 863 F.3d at 102. Consistent with this obligation,
the U.S. implementing legislation confers exclusive
jurisdiction on the federal district courts to enter awards,
see 22 U.S.C. § 1650a(b), and provides that an
ICSID arbitration award “shall be enforced and shall be
given the same full faith and credit as if the award were a
final judgment of a court of general jurisdiction of one of
the several States.” 22 U.S.C. § 1650a(a).
Guatemala and TECO's Dispute
ICSID arbitration at issue in this case involves a dispute
between TECO Guatemala Holdings, LLC (hereinafter
“TECO”), an energy company incorporated in the
United States, and the Republic of Guatemala. Dkt. 1 at 2
(Pet. ¶ 2). In 1997, Guatemala announced a plan to
privatize Empresa Eléctrica de Guatemala, S.A.
(“EEGSA”), the largest electricity distribution
company in the country. Id. at 4 (Pet. ¶ 9). A
consortium of energy companies, including TPS de Ultramar
Guatemala, S.A. (“TPS”), a subsidiary of TECO
Energy, created an investment company that acquired a
controlling interest in EEGSA in July 1998. Id.
(Pet. ¶ 10). TPS held a “21 percent” share
of the consortium, and from 1998 until the sale of the
consortium in 2010, the consortium maintained “an
approximate 81 percent controlling interest in EEGSA.”
Id. (Pet. ¶ 10). In 2005, TPS's shares in
the consortium were transferred to TECO. Id. (Pet.
arbitration between TECO and Guatemala concerned the
electricity rates paid to EEGSA and other distribution
companies. Among other components, the applicable rates
incorporated a Value Added for Distribution-or
“VAD”-which was intended to compensate the
distributors for operating expenses and infrastructure and to
provide a fair return on investment. Id. (Pet.
¶ 12). The VAD was recalculated every five years by a
Guatemalan regulatory agency, the National Electric Energy
Commission (“CNEE”), which published the
electricity rates for EEGSA and other electricity
distributors in accordance with Guatemalan law. Id.
According to TECO, the process by which NCEE set the VAD for
the 2008-2013 tariff period was unlawful in multiple respects
and, as a result, violated Guatemala's obligation under
Article 10.5 of the Dominican Republic-Central America Free
Trade Agreement (“DR- CAFTA”), 43 I.L.M. 514
(2004), “to afford protected investments fair and
equitable treatment.”Id. at 5 (Pet. ¶
14). CNEE's actions resulted in “cash flow
losses” for TECO and, according to TECO, ultimately led
to the sale of the company “at a depreciated
value” in 2010. Id. at 5 (Pet. ¶¶
13-14). Pursuant to Articles 10.15 and 10.16 of the DR-CAFTA,
TECO filed a claim in arbitration against Guatemala in
October 2010. Id. at 5-6 (Pet. ¶¶ 15-16).
That proceeding was governed by the ICSID Convention and the
ICSID Rules and Procedures for Arbitration Proceedings.
Id. at 5 (Pet. ¶ 15).
Procedural History before the ICSID
DR-CAFTA arbitration, TECO sought damages in the amount of
$243, 585, 335. Id. at 6 (Pet. ¶ 17). That
total was the sum of two distinct claims for relief:
TECO sought $21, 100, 552 to compensate it for the
“portion of the cash flow EEGSA lost from August 1,
2008, when the VAD took effect, until October 21, 2010, when
[TECO] sold its ownership interest in EEGSA.”
Id. (Pet. ¶ 17). That amount, according to
TECO, was necessary to compensate it for the revenue that it
would have received during the relevant period had Guatemala
not understated the VAD. TECO refers to this claim as its
“historical loss” or “cash flow
TECO sought $222, 484, 783 to compensate it for “the
damages [it] suffered . . . as a result of the impaired value
at which [TECO] sold its ownership interest in EEGSA.”
Id. at 7 (Pet. ¶ 17). This amount, according to
TECO, was necessary to compensate it for the depreciated
market value of the consortium, and thus the depreciated
market value of TECO's share, resulting from the
understated VAD. TECO refers to this claim as its “loss
of value” claim. Id. (Pet. ¶ 17).
December 19, 2013, the ICSID arbitration Tribunal found that
Guatemala had violated the DR-CAFTA. See Id. (Pet.
¶¶ 18-19); see also Dkt. 1-2 at 3 (Arb.
Award). TECO's success on its damage claims, however, was
mixed. The Tribunal found the TECO had presented sufficient
evidence to establish an “historical loss” of
$21, 100, 552. Dkt. 1-2 at 146 (Arb. Award ¶ 742). As
the Tribunal explained, the evidence showed that TECO was
entitled to its “share of the higher revenues that
EEGSA would have received had the CNEE observed due process
in the tariff review, ” which was calculated
“from the moment the high revenues would have been
first received until the moment when [TECO] sold its share in
EEGSA.” Id. But the Tribunal was not persuaded
that TECO had offered evidence sufficient to prevail on its
“loss of value” claim for $222, 484, 783.
Id. at 146-47 (Arb. Award ¶¶ 744-749). As
to that claim, the Tribunal found that there was not
“sufficient evidence of the existence and quantum of
the losses that were allegedly suffered as a consequence of
the sale” of the consortium at a depreciated price.
Id. at 147 (Arb. Award ¶ 749).
final paragraph of the Tribunal's decision ...