For more than thirty years prior to this summer, the procedures governing how the holder of a monetary award against a foreign sovereign issued in an arbitration before the International Centre for Settlement of Investment Disputes (“ICSID”) could enforce that award, that is, turn it into an enforceable judgment, were not at all clear. Two lines of authority developed — one permitting the ICSID award-holder to pursue summary, often ex parte proceedings, and the other requiring the award-holder to commence a full plenary action, with notice and other protections provided to the sovereign. Several weeks ago, in Mobil Cerro Negro, Ltd. v. Bolivarian Republic of Venezuela, No. 15-707 (2d Cir. July 11, 2017) (“Mobil Cerro”), a unanimous Second Circuit panel clarified matters, reversing a Southern District of New York ruling authorizing the former approach and holding that U.S. District Court actions to enforce ICSID awards must comply with the personal jurisdiction, service, and venue requirements of the Foreign Sovereign Immunities Act (“FSIA”) and afford full plenary proceedings upon notice to the sovereign.
As commentators have recognized, Mobil Cerro surely will engender changes in the procedures controlling federal actions to enforce ICSID awards against foreign sovereigns, including:
However, Mobil Cerro did not alter many aspects of such actions, including:
Two final points bear mention. First, Mobil Cerro will likely have a much larger impact on the procedures governing, than the substantive outcomes of, ICSID enforcement actions against foreign sovereigns. And second, Mobil Cerro has little, if anything, to say about the next (and usually much trickier) step in the litigation process after enforcement of an ICSID award and receipt of a federal court judgment premised thereupon — actually executing upon the property or assets of the foreign sovereign.
If you have questions about Mobil Cerro or international arbitration in general, please contact James J. McGuire.