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Enka Insaat Ve Sanayi A.S. v. The Gabonese Republic

United States District Court, District of Columbia

September 9, 2019

ENKA INSAAT VE SANAYI A.S., Petitioner,
v.
THE GABONESE REPUBLIC and L'AGENCE NATIONALE DES GRANDS TRAVAUX, Respondents.

          MEMORANDUM OPINION

          COLLEEN KOLLAR-KOTELLY, UNITED STATES DISTRICT JUDGE

         The underlying suit arises from Petitioner Enka Insaat Ve Sanayi A.S.'s [1] Petition to Confirm [a Foreign] Arbitration Award in the approximate amount of $49, 000, 000.00 against Respondents the Gabonese Republic and L'Agence Nationale Des Grands Travaux, and the subsequent entry of a default against both Respondents.[1] The Gabonese Republic and L'Agence Nationale Des Grands Travaux move to vacate the Petitioner's default and in so doing, they request that this Court balance the following three factors: (1) whether the default as willful; (2) whether setting aside the default would prejudice the Petitioners; and (3) whether their alleged defenses are meritorious. These three factors will be addressed in turn in this Opinion.

         I. Background

         Petitioner Enka Insaat Ve Sanayi A.S. (“Enka” or “Petitioner”) filed its Petition in this Court on October 25, 2018. Pursuant to two [12] Certificates of Clerk, the summons, complaint and related papers were sent by DHL to the Respondents on November 2, 2018. Petitioner filed [13, 14] Returns of Service/Affidavits on November 7, 2018, for Respondents The Gabonese Republic (“Gabon”) and L'Agence Nationale Des Grands Travaux (“ANGT”) (collectively, the “Respondents”). Petitioner's [13-1, 14-1] attached DHL receipts show a signature by “Service Courrier” as proof of delivery to the Ministry of Foreign Affairs in Gabon and a signature “Mouloungui” as proof of delivery to ANGT.

         On January 10, 2019, Petitioner filed its [15] Motion for Entry of Default, noting that more than sixty (60) days had passed since the Defendants [Respondents] had been served and they had filed no answer or other responsive pleading. The Clerk of the Court entered a [16] Default against Defendants Gabonese Republic and L'Agence Nationale Des Grands Travaux on January 17, 2019. On January 22, 2019, Petitioner submitted [17, 18] Affidavits of Foreign Mailing regarding the entry of Default, and the following day, Petitioner filed its [19] Motion for a Default Judgment. On January 28, 2019, the Clerk's Office docketed its [20, 21] Certificates of Clerk acknowledging the mailing by DHL of a copy of the Request for Entry of Default, Affidavit, Default, Motion for Default Judgment with attachments, and a translation of these documents to the Defendants [Respondents]. On February 11, 2019, Petitioner filed its [22, 23] Certificates of Service with regard to the entry of default and motion for default judgment. On that same day, counsel for Respondents filed a [24] Notice of Appearance and a [26] Motion for Order to Respond by March 1, 2019 to the motion for entry of default and motion for default judgment (which had not yet been ruled upon by this Court). Respondents' request to respond by March 1, 2019 was granted by the Court, and on March 1, 2019, Respondents filed their [29] Motion to Vacate Entry of Default (“Mot. to Vacate”), which is the subject of this Memorandum Opinion.

         The Respondents' [29-1] Memorandum in support of their Motion to Vacate supplements their Motion to Vacate and also responds to the Petitioner's Motion for Default Judgment. Upon review of the docket in this case, the Court will address the Respondents' Motion to Vacate independently of the Petitioner's Motion for Default Judgment. Accordingly, this Memorandum Opinion shall not focus upon the ultimate merit of the legal defenses propounded by the Respondents (in response to the motion for default judgment) but rather upon whether the Respondents have met the standard for vacating the Petitioner's default. Upon consideration of the pleadings, [2] the relevant legal authorities, and the record for purposes of this motion, the Court GRANTS Respondent's Motion [29] Motion to Vacate Entry of Default.

         II. Legal Standard

         Pursuant to Rule 55(c) of the Federal Rules of Civil Procedure, a “court may set aside an entry of default for good cause.” In demonstrating good cause, the party moving to set aside a default must “provide an explanation for the default of [ ] give reasons why vacation of the default entry would serve the interests of justice.” Haskins v. U.S. One Transp., LLC, 755 F.Supp.2d 126, 129 (D.D.C. 2010).

         The United States Court of Appeals for the D.C. Circuit (“the D.C. Circuit”) has indicated that there is a presumption against default judgments in cases involving foreign sovereigns. See, e.g., Practical Concepts, Inc. v. Republic of Bolivia, 811 F.2d 1543, 1551-52 (D.C. Cir. 1987) (“[I]t is in the interest of the United States' foreign policy to encourage foreign states to appear before our courts in cases brought under the FSIA.) “When a defendant foreign state has appeared and asserts legal defenses, albeit [even] after a default judgment has been entered, it is important that these defenses be considered carefully and, if possible, that the dispute be resolved on the basis of all relevant legal arguments.” Id. at 1552; see also Acee v. Republic of Iraq, 658 F.Supp.2d 124 (D.D.C. 2009) (“Default judgments are generally disfavored by courts perhaps because it seems inherently unfair to use the court's power to enter and enforce judgments as a penalty for delays in filing.”) (internal quotation marks and citation omitted). “There is a strong presumption against the entry of a default judgment against a foreign state that has appeared in the case and expressed a desire to contest the claims, ” Owens v. Republic of Sudan, 374 F.Supp.2d 1, 9 (D.D.C. 2005), and a preference that a case proceed on the merits with parties participating in their own defense. Jackson v. Beech, 636 F.2d 831, 836 (D.C. Cir. 1980); Republic of Kazakhstan v. Stati, 325 F.R.D. 507, 509 (D.D.C. 2018).

         III. Analyzing whether to Vacate the Default

         In determining whether or not to set aside a default, a court must consider: (1) the willfulness of the respondent's default, if any; (2) whether there is any prejudice to the petitioner; and (3) the merit of respondent's alleged defenses. Keegel v. Key West & Caribbean Trading Co., 627 F.2d 372, 373 (D.C. Cir. 1980); Acee, 658 F.Supp.2d at 127 . With regard to the third factor, a defense is considered meritorious if it contains “'even a hint of a suggestion' which, if proven at trial, would constitute a complete defense.” Acee, 658 F.Supp.2d at 129 (quoting Keegel, 627 F.2d 372, 374 (D.C. Cir. 1980)). Each of these three factors will be addressed by this Court below.

         A. Was the Respondents' Default Willful?

         The first factor for this Court's consideration is the willfulness of Respondents' default. In the instant case, the Respondents assert that their failure to respond to the Petition was not willful, but instead “resulted from bureaucratic challenges, and their limited familiarity with their obligations in tis foreign judicial proceedings.” Mem. in Support of. Mot. to Vacate, ECF No. 29-1, at 16.[3]See FG Hemisphere Assocs., LLC v. Democratic Republic of Congo, 447 F.3d 835, 841 (D.C. Cir. 2006) (instructing courts to consider “substantial political and institutional differences” between the United States and foreign countries when considering delays and/or failures to respond due to bureaucracy and procedural steps in the foreign countries); see alsoAfrica Growth Corp. v. Republic of Angola, Civ. A. No. 17-2469 (BAH), 2018 ...


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