United States District Court, District of Columbia
P. MEHTA UNITED STATES DISTRICT COURT JUDGE.
Viorel Micula, Ioan Micula, and three entities they control
have asked this court to confirm an arbitration award entered
in their favor against Respondent Government of Romania
(“Romania”) by a tribunal convened under the
International Convention on the Settlement of Investment
Disputes between States and Nationals of Other States.
Confirming the award would render it an enforceable judgment
in the United States. Romania raises a host of objections to
confirming the award, including a challenge to the
court's subject matter jurisdiction. The European
Commission, appearing as amicus curiae, also advocates
against confirming the award.
reasons that follow, the court grants the petition to confirm
the arbitration award and enters judgment in favor of
The ICSID Convention
International Convention on the Settlement of Investment
Disputes between States and Nationals of Other States
(“Convention”) is “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). The Convention carries out that
purpose by providing a legal framework and procedural
mechanism to resolve disputes between private investors and
governments. See Convention on the Settlement of
Investment Disputes between States and Nationals of Other
States Preamble, Mar. 18, 1965, T.I.A.S. No. 6090, 17 U.S.T.
1270. The Convention establishes the International Centre for
Settlement of Investment Disputes, or “ICSID, ”
as an international institution that operates under the
auspices of the World Bank. See Mobil Cerro Negro,
863 F.3d at 101. ICSID convenes arbitration panels “to
adjudicate disputes between international investors and host
governments in ‘Contracting States.'”
Id. Romania and Sweden are signatories to the ICSID
Convention. So, too, is the United States.
Contracting State or any national of a Contracting
State” may ask ICSID to convene an arbitral tribunal to
resolve a dispute. Convention art. 36. The tribunal is tasked
with adjudicating the dispute and, if warranted, issuing a
written award that addresses “every question submitted
to the Tribunal” and “state[s] the reasons upon
which [the award] is based.” Id. art. 48. A
party may contest the tribunal's decision, consistent
with the procedures set forth in the Convention. See
Id. arts. 51-52. But critically, “except to the
extent that enforcement [is] stayed, ” the
tribunal's ruling is “binding on the parties and
shall not be subject to any appeal or to any other
remedy” other than those afforded under the Convention.
Id. art. 53. In other words, the domestic courts of
member countries lack the authority to review the merits of a
decision by an ICSID tribunal.
Convention does not, however, confer upon ICSID the power to
enforce arbitral awards. It left that function to its
Contracting States. Article 54(1) of the Convention provides:
“Each Contracting State shall recognize an award
rendered pursuant to this Convention as binding and enforce
the pecuniary obligations imposed by that award within its
territories as if it were a final judgment of a court in that
State.” Id. art. 54(1). Contracting States
that, like the United States, have a federal system of
government “may enforce such an award in or through
[their] federal courts and may provide that such courts shall
treat the award as if it were a final judgment of the courts
of a constituent state.” Id.
ICSID Convention also is not self-executing. See Medellin
v. Texas, 552 U.S. 491, 505-06 (2008) (explaining when a
treaty obligation requires legislation to become domestic
law). Contracting States must “take such legislative or
other measures as may be necessary for making the provisions
of this Convention effective in [their] territories.”
Convention art. 69. In the United States, Congress gave the
ICSID Convention domestic effect by passing the Convention on
the Settlement of Investment Disputes Act of 1966.
See Convention on the Settlement of Investment
Disputes Act of 1966, Pub. Law 89-532, 80 Stat. 334 (1966)
(codified at 22 U.S.C. §§ 1650 and 1650a). Section
3 of the Act addresses the enforcement of ICSID arbitration
awards in the United States. It provides in relevant part:
“The pecuniary obligations imposed by [an ICSID] 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). Federal courts are vested with
“exclusive jurisdiction over actions and
proceedings” to enforce ICSID awards. Id.
Events Leading to the ICSID Arbitration
case arises out of a dispute between Swedish investors and
Romania. Following the overthrow of the communist regime of
Nicolae Ceausescu in December 1989, the country of Romania
found itself in dire economic and social circumstances.
See Ioan Micula, et al. v. Romania, ICSID No.
ARB/05/20 (Dec. 11, 2013), ECF No. 1-1-1-4 [hereinafter Final
Decision], ¶ 137. In response to these problems, Romania
adopted a series of measures designed to attract and promote
investment. Id. ¶¶ 138-144. Among the
measures was Emergency Government Ordinance No. 24/1998
(“EGO 24”), which established a framework for
granting incentives to invest in “disfavored”
regions of Romania. Id. ¶ 145.
petitioners in this case are Swedish nationals Viorel and
Ioan Micula, along with three companies they control, SC
European Food S.A., SC Starmill S.R.L., and S.C. Multipack
S.R.L. See Petition to Confirm ICSID Award, ECF No.
1 [hereinafter Pet.], ¶¶ 8-12. Starting in 1998, in
reliance on the incentives offered by EGO 24, Petitioners
began to build an integrated food platform designed to
produce consumer products and beverages for the Romanian
market. Final Decision ¶¶ 166-172.
August 2004, Romania thwarted Petitioners' plans when it
announced that it would repeal EGO 24, effective February 22,
2005. Id. ¶ 241. Romania made the repeal
decision as part of the process of becoming a member of the
European Union (“EU”). Id. ¶¶
234-239. The action followed Romania's receipt of advice
from the European Commission-an institution of the European
Union that is responsible for ensuring the proper application
of EU treaties-that the incentives constituted “state
aid” that was incompatible with the EU's
prohibition of such anticompetitive schemes. Id. The
incentives' repeal caused Petitioners to suffer cash
constraints that prevented them from completing the projects
they had planned in reliance on EGO 24. Id. ¶
The ICSID Arbitration
2002, Romania entered a bilateral investment treaty
(“Sweden-Romania BIT”) with the Kingdom of
Sweden, which entered into force on April 1, 2003. Final
Decision ¶ 226. That treaty granted certain
protections to each country's investors who invested in
the other country, including the right to arbitrate
investment disputes. See Agreement between the
Government of the Kingdom of Sweden and the Government of
Romania on the Promotion and Reciprocal Protection of
Investments art. 2, Swed.-Rom., May 29, 2002, Law No.
541/2002 (Rom.) [hereinafter Sweden-Romania BIT]. Pertinent
to the parties' dispute is Article 7 of the
Sweden-Romania BIT. See generally Ioan Micula, et al. v.
Romania, ICSID No. ARB/05/20 (Sept. 24, 2008), ECF No.
62-2. It provides that disputes concerning investments are to
be settled by international arbitration, before either an
ICSID arbitral tribunal or an ad hoc tribunal established
under the Arbitration Rules of the United Nations Commission
on International Trade Law. See Id. ¶ 57;
Sweden-Romania BIT art. 7.
response to Romania's decision to revoke financial
incentives, Petitioners initiated arbitration proceedings
against Romania before an ICSID tribunal on August 2, 2005.
Final Decision ¶ 10. Petitioners claimed that they had
made investments in certain regions of Romania in reliance on
the economic incentives. Id. ¶ 131. The
revocation of those incentives, Petitioners alleged, caused
them to suffer significant financial losses, for which
Romania was liable. Id. ¶¶ 131, 262. The
ICSID tribunal agreed. In December 2013, the tribunal ruled
for Petitioners and awarded monetary damages of 376, 433, 229
Romanian Leu (RON)-the equivalent of $116, 317, 868-plus
interest at the rate of the three-month Romanian Interbank
Offer Rate, plus 5%, compounded on a quarterly basis with
respect to certain amounts and periods (“the
Award”). Id. ¶ 1329.
Romania Joins the European Union
in parallel with the ICSID arbitral tribunal proceedings,
Romania continued taking steps necessary to join the EU.
Id. ¶¶ 246-47. Romania formally joined the
EU on January 1, 2007-after Petitioners invoked
their right to arbitration under the Sweden-Romania BIT but
before the ICSID tribunal ruled in favor of
Petitioners. Id. ¶¶ 247-49.
after the ICSID tribunal issued the award, the European
Commission advised Romania that implementing or executing the
Award would constitute impermissible new state aid, about
which Romania would be required to notify the Commission.
See Commission Decision (EU) 2015/1470 of 30 March
2015, ECF No. 51-2 [hereinafter State Aid Decision], ¶
2. Three months later, in May 2014, the Commission issued a
“suspension injunction, ” prohibiting Romania
from taking any action to fulfill any part of the Award not
yet paid until the Commission reached a final decision on
whether the Award constituted state aid. Id. ¶
result of the suspension injunction, Romania returned to
ICSID. Invoking Article 52 of the Convention, Romania asked
ICSID to convene an ad hoc tribunal for the purpose of
annulling the Award. Id. ¶ 28. ICSID did so,
and on August 7, 2014, the tribunal agreed to stay
enforcement of the Award. Id. It conditioned the
stay, however, on Romania's committing, without
qualification, to pay the full Award if the ICSID tribunal
decided not to annul the Award. Id. Romania declined
to provide the unconditional commitment to pay. Id.
¶ 29. The tribunal then lifted the stay of enforcement
on September 7, 2014. Id.
a year after issuing the suspension injunction, on March 30,
2015, the Commission issued its decision on whether the Award
constituted state aid in violation of EU law (“the
State Aid Decision”). The Commission found that it did.
Id. ¶ 125. The Commission concluded that,
because the benefits generated by Romania's incentive law
was unlawful state aid, so too was the Award, which sought to
compensate Petitioners for the advantages negated by the
incentives' repeal. Id. ¶¶ 95, 109-24.
The Commission rejected Petitioners' view that the ICSID
Convention controlled, reasoning that EU law superseded the
Sweden-Romania BIT. Id. ¶¶ 126-29. The
State Aid Decision concluded by ordering Romania not to pay
any further amounts on the Award and to recover any amounts
already paid. Id. at 33, art. 2. Petitioners filed
an appeal of the State Aid Decision with the General Court of
the Court of Justice of the European Union, a constituent
court of the EU's highest court, the Court of Justice of
the European Union (CJEU).
meantime, the annulment proceedings before the ICSID ad hoc
tribunal continued. Almost a year after the State Aid
Decision, the ad hoc tribunal issued its final decision on
February 26, 2016. It rejected Romania's effort to annul
the Award. See Ioan Micula, et al. v. Romania, ICSID
No. ARB/05/20 (Feb. 26, 2016), ECF No. 1-5. In so doing, the
tribunal summarily rejected the argument put forward by the
European Commission, which had intervened, that the Award was
incompatible with EU law on state aid. See Id.
¶¶ 308-28. The ICSID ad hoc tribunal's decision
thus created a direct conflict with the Commission's
State Aid Decision.
Petitioners' Efforts to Confirm the Award in the United
Petitioners and Romania duked it out before the Commission
and ICSID over the validity of the Award, Petitioners came to
the United States to attempt to “confirm” the
Award under 22 U.S.C. § 1650a. A confirmed Award would
render it an enforceable judgment in United States courts.
See generally Micula v. Gov't of Rom., 104
F.Supp.3d 42, 44 (D.D.C. 2015) [hereinafter Micula
I]. Petitioners' efforts to confirm the Award, and
Romania's corresponding efforts to resist confirmation,
have proceeded on a long, winding road over five years along
the I-95 corridor from Washington, D.C., to New York City,
and back to Washington, D.C.
opening act took place here, before this court. On April 11,
2014, Petitioner Viorel Micula, proceeding only on his own
behalf, filed a petition to confirm the Award. Citing the
practice of the federal District Courts in the Southern
District of New York (“SDNY”), Viorel urged this
court to confirm the Award though an ex parte, summary
proceeding. See Id. at 46. For that reason, Viorel
never served the Government of Romania, and Romania did not
formally appear. See Id. at 47. This court, however,
refused to confirm the Award in an ex parte proceeding.
See Id. at 52. The court held that § 1650a did
not permit ex parte confirmation of an ICSID award, but
instead required a petitioner to “file a plenary
action, subject to the ordinary requirements of process under
the Foreign Service Immunities Act
[“FSIA”].” Id. Viorel elected not
to file such an action and voluntarily dismissed his
days after this court ruled, the other Petitioners, later
joined by Viorel, sought a presumably more favorable legal
terrain and filed a petition for confirmation in the SDNY.
They initially found success. On April 21, 2015, the court
confirmed the Award in an ex parte, summary proceeding,
thereby converting the Award to a judgment. See Micula v.
Gov't of Rom., No. 15 MISC. 107, 2015 WL 4643180, at
*2 (S.D.N.Y. Aug. 5, 2015) (allowing proceeding to move
forward ex parte). Romania later appeared and asked
another judge in the SDNY to vacate the judgment on the
ground that the ex parte proceeding violated the FSIA.
See Id. at *3. Also, the European Commission filed
an amicus brief in those proceedings, and it urged the court
either to abstain from exercising jurisdiction or vacate the
judgment on the grounds of foreign comity, the act of state
doctrine, and the foreign compulsion doctrine, each argument
premised on the ongoing proceedings in Europe. See
Id. at *2, *6-8. The court in the SDNY rejected all of
these arguments and re-affirmed the judgment against Romania.
See Id. at *3-8; see also Micula v. Gov't of
Rom., No. 15 MISC. 107 (LGS), 2015 WL 5257013 (S.D.N.Y.
Sept. 3, 2015) (rejecting second motion for reconsideration
by Romania). Romania appealed.
victory proved to be fleeting. At the same time Romania was
prosecuting its appeal, another sovereign, the Bolivarian
Republic of Venezuela, was also fighting an SDNY District
Court's ex parte confirmation of an ICSID award in the
Second Circuit. On July 11, 2017, the Second Circuit issued
its decision in Mobil Cerro Negro, Ltd. v. Bolivarian
Republic of Venezuela. The case involved three key
holdings. The first was that the FSIA provides the sole basis
for subject matter jurisdiction for proceedings under §
1650a, and that § 1650a does not itself confer such
jurisdiction. 863 F.3d at 112-15. Second, the court held the
FSIA controls the manner of obtaining personal jurisdiction
over a sovereign, and therefore confirming an ICSID award
pursuant to a summary, ex parte proceeding was improper.
See Id. at 116-21. Finally, the court found that a
proceeding pursuant to § 1650a must be initiated like a
procedure to enforce a state court judgment-by way of a
plenary action with service upon the foreign sovereign.
See Id. at 121-24.
on these rulings in Mobil Cerro Negro, another panel
of the Second Circuit on October 23, 2017, vacated the
judgment against Romania. See Micula v. Gov't of
Romania, 714 Fed. App'x 18, 21-22 (2d Cir. 2017).
The panel also made clear that, under the FSIA's venue
provision, venue was proper only in the ...