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Konoike Construction Co. Ltd. v. Ministry Of Works

United States District Court, District of Columbia

March 7, 2019

KONOIKE CONSTRUCTION CO. LTD., Plaintiff,
v.
MINISTRY OF WORKS, TANZANIA, et al., Defendants.

          MEMORANDUM OPINION

          RICHARD J.LEON UNITED STATES DISTRICT JUDGE

         Plaintiff Konoike Construction Co. Limited ("Konoike" or "plaintiff) filed this action to confirm an arbitral award entered in its favor by the International Chamber of Commerce's International Court of Arbitration ("ICC"). The ICC determined that defendants, the Ministry of Works of Tanzania, the Tanzanian National Roads Agency, the Ministry of Transport of Tanzania, and the Attorney General of the United Republic of Tanzania (collectively, "Tanzania" or "defendants"), owed Konoike outstanding payments on a road construction contract. After the deadline to respond to Konoike's petition to confirm its arbitral award passed without response, the Clerk of the Court declared each defendant in default, and Konoike moved for entry of a default judgment.

         Konoike's motion prompted Tanzania to begin participating in this case. Tanzania opposed the motion for default judgment and, in its opposition brief, asked that its default be set aside. I now have before me dueling requests to enter judgment on, and to set aside, the Clerk's default.

         While I can set aside a default "for good cause," Fed.R.Civ.P. 55(c), I cannot say that the record before me demonstrates the requisite good cause here. The record does, however, establish that Konoike's ICC award qualifies for judicial confirmation under the applicable statute and convention. Accordingly, I will GRANT Konoike's motion for entry of default judgment and CONFIRM its arbitral award. Konoike also seeks an award of attorneys' fees and costs, but because Tanzania has not unjustifiably refused to abide by the ICC award, that portion of Konoike's request will be DENIED.

         BACKGROUND

         Konoike is a Japanese limited liability company that, in 2003, entered into a contract with the Tanzanian Ministry of Works to upgrade a seventy-nine-mile stretch of road between the cities of Dodoma and Manyoni in central Tanzania. See Pet. Confirm Arb. Award ("Pet.") ¶¶8, 14 [Dkt. # 1]. After a series of delays and disputes, Konoike terminated the contract, in 2008, having completed most, but not all, of the anticipated work. Id. ¶¶ 15-18. Konoike then initiated arbitration, seeking payments due under the contract, compensation for delays and disruptions to the project, and costs arising from the contract's termination. Id. ¶¶ 19-23. Tanzania participated in the arbitration but ultimately lost. Id. ¶¶23-30. And in 2016, the ICC awarded Konoike contract damages of TZS 20, 714, 401, 234.00; USD 38, 964, 296.00; and JPY 324, 734, 551.00. Id. ¶¶29-30. The arbitral award also provided that Tanzania must (i) indemnify Konoike for "any final amount of [value-added tax ("VAT")], . . . which the Tanzanian Revenue Authority seeks to recover on sums awarded in the underlying arbitration in excess of any VAT which [Konoike] has so far paid in respect of the Project or the Contract"[1]at issue; (ii) indemnify Konoike for "any interest, fines, penalties and/or other charges that may be imposed on [Konoike] in relation to VAT on the Project or Contract, provided that any such interest, fines, penalties or other charges do not arise in whole or in part from any fault on the part of Konoike; (iii) pay Konoike's arbitration costs of TZS 677, 864.82; USD 141, 425.12; JPY 16, 446, 083.30; and GBP 7, 435, 908.79; and (iv) pay to Konoike the ICC's arbitration costs of USD 534, 220.00. Pet. Ex. 1 at 282-83 [Dkt. # 1-2].

         Konoike petitioned this Court to confirm the ICC award on September 26, 2017. See Pet. at 9. The petition included a request that Tanzania pay the attorneys' fees and costs associated with this proceeding. See Id. Three months later, in January 2018, Konoike filed an affidavit in support of default, noting that no response to its petition had been filed. See [Dkt. #17]. The Clerk entered default against Tanzania the next day, see [Dkt. ## 18-21], and in March, Konoike moved for entry of default judgment on its petition, see PL's Mot. Default J [Dkt. # 22]. Tanzania appeared in the case shortly after the motion for default judgment was served, and it now opposes the motion and asks that the default be set aside. See Defs.' Mem. Opp. Mot. Default J. ("Opp.") [Dkt. # 36], The parties' requests are ripe for resolution.

         ANALYSIS

         I. Confirmation of the ICC Award

          Konoike seeks confirmation of its ICC award pursuant to the New York Convention, as implemented by Chapter 2 of the Federal Arbitration Act, 9 U.S.C. §§ 201-208. Pet. ¶ 1. The New York Convention applies when

(i) [a foreign arbitral] award arises from a commercial legal relationship between the parties; (ii) there was a written agreement to arbitrate disputes arising from that relationship; (iii) the agreement provided for arbitration proceedings to take place in a signatory country to the New York Convention; and (iv) at least one of the parties is not an American citizen.

Newco Ltd. v. Gov't of Belize, 156 F.Supp.3d 79, 81 (D.D.C. 2015).

         Each of the Convention's requirements is satisfied here. Konoike's ICC award arose from a contract dispute between Konoike and Tanzania. See Pet. Ex. 1 at 24-25. The contract at issue, including the arbitration clause, was memorialized in writing. See Pet. Ex. 3 § 20.6 [Dkt. # 1-4]. The parties agreed that the arbitration would take place in England, see Pet. Ex. 1 at 13, a signatory to the New York Convention, see Belize Soc. Dev. Ltd. v. Gov `t of Belize, 5 F.Supp.3d 25, 35 n.l 1 (D.D.C. 2013). And no party to the arbitration is an American citizen. See Pet. ¶¶8-13.

         When an arbitral award is subject to the New York Convention, Congress has provided that federal district courts have jurisdiction over confirmation proceedings. See 9 U.S.C. § 203; Newco, 156 F.Supp.3d at 82. That jurisdiction extends to proceedings against foreign sovereigns, see 28 U.S.C. § 1605(a)(6), and courts may assert personal jurisdiction over foreign sovereigns in a New York Convention proceeding "where service has been made pursuant to the Foreign Sovereign Immunities Act," Newco, 156 F.Supp.3d at 82 (citing 28 U.S.C. ยงยง 1330(a), 1608). Tanzania concedes that it "was served with the petition, summons, notice of suit and accompanying documents in this case on October 23, 2017," and raises no suggestion that service ...


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