In a terse “Memo Endorsed” Order issued in Eiser Infrastructure Limited et al. v. Kingdom of Spain, No. 17-CV-3808 (LAK) (S.D.N.Y. Nov. 13, 2017), Judge Lewis A. Kaplan expressly followed the Second Circuit’s very recent decisions in Mobil Cerro Negro, Ltd. v. Bolivarian Republic of Venezuela, 863 F.3d 96 (2d Cir. 2017), (“Mobil Cerro”) and Micula v. Gov’t of Romania, 2017 WL 4772435 (2d Cir. Oct. 23, 2017), (“Micula”) and held that the Foreign Sovereign Immunities Act requires creditor plaintiffs seeking to enforce an ICSID award against a foreign sovereign to commence a full, plenary action (and not institute ex parte or summary proceedings) against that sovereign.
Eiser’s facts follow a familiar pattern. Two foreign entities sought to enforce a May 2017 ICSID arbitral award in their favor of approximately $151 million (USD) against the Kingdom of Spain (“Spain”) by filing, that same month, an ex parte Petition in the Southern District of New York. In late June 2017, shortly before the Second Circuit’s July 11, 2017 decision in Mobil Cerro barring ex parte proceedings against foreign sovereigns in such circumstances, Judge Kaplan granted the Petition and entered Judgment against Spain.
The day after the issuance of Mobil Cerro, Spain notified Judge Kaplan about the Second Circuit’s ruling and requested that the District Court vacate its Judgment. Petitioners thereafter objected, arguing that the Micula matter was (then) before the Second Circuit, presented similar issues, and could alter the “legal landscape.” Petitioners, thus, asked the District Court to demur in ruling on Spain’s application until the Second Circuit decided Micula. Judge Kaplan rendered no ruling for over two months. Then, in late October 2017, the Micula decision came down and essentially upheld and followed Mobil Cerro.
The day following publication of the Micula decision, Spain alerted Judge Kaplan thereto and again asked that he vacate the Judgment in favor of Petitioners. Spain asserted that “[t]he Second Circuit has now issued its decision in Micula which reaffirms the holdings in Mobil that the FSIA governs actions to enforce ICSID awards, that the FSIA does not permit the use of summary ex parte enforcement procedures and that the Petitioners were, instead, required to file a plenary action to enforce their ICSID award.”
Judge Kaplan agreed. On November 13, 2017, he caused Spain’s June 28, 2017 “Notice of Motion to Vacate Ex Parte Judgment” to be stamped “Memo Endorsed” and tersely ruled, as follows:
It is no surprise that Judge Kaplan would follow two very recent, consistent, and authoritative Second Circuit decisions. What is somewhat surprising is that while vacating the Judgment against Spain, Judge Kaplan ordered the Clerk to “reopen the case.” In the wake of the holdings in Mobil Cerro and Micula that ICSID enforcement actions must comply, inter alia, with the FSIA’s venue requirements, one wonders why Judge Kaplan did not entirely dismiss the action on that ground. Indeed, the FSIA provides that such actions should be commenced in the District of the District of Columbia, unless “a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated” in another District. 28 U.S.C. § 1391(f). It may be that Petitioners invoked that exception earlier in the case or, alternatively, that neither party made a record upon which the Court could decide the issue. In any event, we believe it to be unlikely that Judge Kaplan in reopening the matter was indicating some reservation about the applicability of the FSIA’s venue provisions in the premises.
In short, Eiser demonstrates that Mobil Cerro and Micula are entrenched as good law.
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