United States District Court, District of Columbia
MEMORANDUM OPINION
RANDOLPH D. MOSS, United States District Judge.
Petitioner
TECO Guatemala Holdings, LLC (“TECO”) commenced
this action by filing a “Petition to Confirm an
Arbitration Award” rendered by the International Centre
for Settlement of Investment Disputes (“ICSID”)
against the Republic of Guatemala (“Guatemala”).
Dkt. 1. In response, Guatemala filed a motion to dismiss for
failure to state a claim, Dkt. 23, which the Court denied,
Dkt. 34. The case is now before the Court on TECO's
motion for judgment on the pleadings, or in the alternative,
motion for summary judgment, Dkt. 36, and Guatemala's
cross-motion for summary judgment, for limited discovery, and
for a stay, Dkt. 39. For the reasons explained below, the
Court will GRANT TECO's motion for
summary judgment and will DENY
Guatemala's cross-motion.
I.
BACKGROUND
Because
the relevant facts are set forth in detail in the Court's
prior opinion, TECO Guatemala Holdings, LLC v. Republic
of Guatemala, No. 17-102 (RDM), 2018 WL 4705794, at *1-4
(D.D.C. Sept. 30, 2018) (“TECO I”), the
Court will only briefly summarize them here.
A.
ICSID Convention Structure and Award Enforcement
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, 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)
(citing Anthony R. Parra, The History of ICSID 11-12, 24-26
(2012)), to which the United States is a signatory,
see Convention on the Settlement of Investment
Disputes Act of 1966, Pub. L. No. 89-532, 80 Stat. 334
(codified at 22 U.S.C. §§ 1650 and 1650a) (the
treaty's implementing statute). The ICSID Convention
provides an international framework for adjudicating and
enforcing investor-state disputes. Under the Convention, any
“Contracting State or any national of a Contracting
State” may request that ICSID convene an arbitration
tribunal. See ICSID Convention art. 36(1). The
tribunal then considers the dispute and issues a written
award, that “deal[s] with every question submitted to
the [t]ribunal, and state[s] the reasons upon which it is
based.” Id. art. 48(3).
The
Convention also establishes procedures for parties to
challenge or otherwise seek relief from an award entered by
an ICSID tribunal. Either party may request “revision
of the reward” based on the “discovery of”
a material fact that “was unknown to the [t]ribunal and
to the applicant” at the time “the award was
rendered, ” see id. art. 51(1), or an
“annulment of the award” based on specified
grounds, including “that the [t]ribunal . . .
manifestly exceeded is powers, ” “that there was
corruption on the part of a member of the [t]ribunal, ”
that the proceeding “serious[ly] depart[ed] from a
fundamental rule of procedure, ” or “that the
award . . . failed to state the reasons on which it [was]
based, ” id. art. 52(1). 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” on one or more of the specified
grounds. Id. art. 52(3). The committee may, if
appropriate, “stay enforcement of the award pending its
decision and, at a party's request, enforcement of the
award is “stayed provisionally until the
[c]ommittee” renders its decision on that request.
Id. art. 52(5). 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(1). Following an annulment, either partial or full,
either party may request resubmission of the dispute to a new
tribunal, id. art. 52(6)-although if an award had
been annulled only in part, the new tribunal is prohibited
from reconsidering any non-annulled portion of the award.
Rule 55(3), ICSID Rules of Procedure for Arbitration
Proceedings. The new tribunal may, if appropriate,
“stay . . . the enforcement of the unannulled portion
of the award until the date its own award is rendered,
” id. at Rule 55(3), but, as Guatemala
acknowledges, in the absence of such a stay,
“[p]artially annulled awards can be enforced, ”
Dkt. 23-1 at 22.
ICSID
is not empowered to enforce awards. Instead, prevailing
parties must seek “recognition or enforcement” of
their awards with a court of a member state. ICSID Convention
art. 54. The courts of member states, however, play only a
limited role. The Convention requires member-state courts 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(1). Under the U.S. implementing statute,
an ICSID award “shall create a right arising under a
treaty of the United States, ” and, as required by the
treaty, “[t]he pecuniary obligations imposed by such an
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). The statute further
specifies that the Federal Arbitration Act
(“FAA”), 9 U.S.C. § 1 et seq.,
which permits courts to vacate FAA awards “procured by
corruption, fraud, or undue means, ” id. at
§ 10, does “not apply to enforcement of [ICSID]
awards.” 22 U.S.C. § 1650a(a). As a result, under
both the ICSID Convention and the U.S. implementing
legislation, a U.S. court 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 the court 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.
B.
Guatemala and TECO's Dispute
The
ICSID arbitration at issue in this case involved a dispute
between TECO, which is an energy company incorporated in the
United States, and the Republic of Guatemala. Dkt. 1 at 2
(Pet. ¶¶ 2-3). The dispute began with
Guatemala's decision in 1997 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 a subsidiary of TECO Energy, created an
investment company that acquired a controlling interest in
EEGSA in July 1998. Id. (Pet. ¶ 10). The TECO
Energy subsidiary held a substantial interest in the
consortium, and from 1998 until the sale of the consortium in
2010, the consortium maintained a “controlling interest
in EEGSA.” Id. (Pet. ¶ 10). In 2005, the
TECO Energy subsidiary's shares in the consortium were
transferred to TECO. Id. (Pet. ¶ 11).
The
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 CNEE set
the VAD for the 2008-2013 period was unlawful in various
respects and, as a result, violated Guatemala's
obligation under the Dominican Republic-Central America Free
Trade Agreement (“DR-CAFTA”), 43 I.L.M. 514
(2004), “to afford protected investments fair and
equitable treatment.” Dkt. 1 at 5 (Pet. ¶ 14). The
United States is a party to the DR-CAFTA.
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 the
DR-CAFTA, TECO filed a claim in arbitration against Guatemala
in October 2010. Id. at 5-6 (Pet. ¶¶
15-16). That arbitration was governed by the ICSID
Convention. Id. at 5 (Pet. ¶ 15).
C.
Procedural History before the ICSID
In the
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: First, TECO
sought $21, 100, 552 to compensate it for the “portion
of the cash flow . . . lost from August 1, 2008, when the
[disputed rates] took effect, until October 21, 2010, when
[TECO] sold its ownership interest in EEGSA.”
Id. (Pet. ¶ 17). TECO refers to this claim as
its “historical loss” or “cash flow
value” claim. Second, 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.” Id. at 7 (Pet. ¶
17). TECO refers to this claim as its “loss of
value” claim. Id. at 6-7 (Pet. ¶ 17). On
December 19, 2013, the ICSID arbitration tribunal found that
Guatemala had violated the DR-CAFTA. See Id. (Pet.
¶ 18); see also Dkt. 1-2 at 3 (Tribunal Award).
TECO's
success on its damage claims, however, was mixed. The
tribunal found that TECO had presented sufficient evidence to
establish a “historical loss” of $21, 100, 552.
Dkt. 1-2 at 146 (Tribunal Award ¶ 742). 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 (Tribunal Award ¶ 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. On April 18, 2014, TECO filed an application
with ICSID to annul the tribunal's award in part, and,
that same day, Guatemala filed a petition seeking to annul
the award in full. Dkt. 1 at 7 (Pet. ¶ 20). TECO sought
to annul the award only to the extent that it denied the
company's “loss of value” claim, denied its
request for interest on its “historical losses”
claim for the period from August 1, 2009 until October 21,
2010, and denied its “claimed interest rate applicable
to pre-award interest.” Id. (Pet. ¶ 20).
Guatemala, on the other hand, sought to annul the
Tribunal's award in its entirety. Id. (Pet.
¶ 20).
In
response, ICSID convened an ad hoc committee to
consider the annulment requests. Dkt. 1 at 7 (Pet. ¶
21); see also Dkt. 1-3 (Annulment Decision). The
committee rejected each of Guatemala's challenges to the
tribunal's finding that it had violated the DR-CAFTA.
See Dkt. 1-3 at 88-95 (Annulment Decision
¶¶ 274-300); id. at 98-103 (Annulment
Decision ¶¶ 308-323); id. at 104-106
(Annulment Decision ¶¶ 327-331). In contrast, the
committee was persuaded by TECO's contention that the
tribunal's “decision on the [company's] loss of
value claim [did] not meet the standards” required by
the ICSID convention, id. at 42 (Annulment Decision
¶ 127), because “the [t]ribunal's reasoning .
. . [was] not clear at all, ” id. (Annulment
Decision ¶ 128). It, accordingly, decided that the
tribunal's decision on TECO's “loss of value
claim . . . need[ed] to be annulled.” Id.
(Annulment Decision ¶ 127). The committee also concluded
that the tribunal erred in declining to award TECO
“interest on historical damages for the period before
EEGSA's sale.” Id. at 63 (Annulment
Decision ¶ 198). Finally, the committee noted that the
automatic stay of enforcement terminated as of the date of
its decision. Id. at 120-21 (Annulment Decision
¶ 382).
D.
Proceedings in this Court
On
January 16, 2017, TECO initiated this action, seeking to
“confirm and recognize” the “Final
Award” and the entry of judgment against Guatemala
“in the amounts stated in the Award and the Annulment
decision.” Dkt. 1 at 9 (Pet. ¶ 27). TECO contends
that it “is entitled to damages in the amount of . . .
$21, 100, 552 [for its historical loss], plus interest on
that amount at the U.S. Prime rate plus two percent as from
October 21, 2010 until the date of full payment, compounded
annually.” Id. (Pet. ¶ 28). TECO also
seeks entry of judgment awarding it (1) “half of its
costs of ICSID's administrative expenses and fees related
to its application for ...