District Court Holds that FSIA Does Not Preclude ICSID Judgments From Being Enforced in an Ex Parte Proceeding Under New York Law

The World in U.S. Courts: Spring 2015 - Torture Victims Protection Act (TVPA)/Anti-Terrorism and Effective Death Penalty Act of 1996 (ADEPA)/Foreign Sovereign Immunity Act (FSIA)

Mobil Cerro Negro, Ltd. v. Bolivarian Republic of Venezuela, U.S. District Court for the Southern District of New York, February 13, 2015

Venezuelan affiliates of ExxonMobil obtained an arbitration award against Bolivia in a proceeding under the auspices of the International Centre for Settlement of Investment Disputes ("ICSID"), a treaty organization to which the U.S. is a signatory. While federal law recognizes a right to enforce ICSID judgments, it specifies no procedure for doing so. In this case, the District Court in New York addressed the question whether Mobil's award may be reduced to a federal court judgment via an ex parte proceeding available under New York law in which Venezuela would not be a participant, or whether Mobil would be required to file a normal "plenary" lawsuit.

Because the federal statute did not address the manner by which an ICSID award is to be reduced to judgment, the District Court concluded that it was appropriate to "borrow" the law of the forum, New York, including its ex parte procedure. The District Court rejected Venezuela's argument that the FSIA precluded application of the ex parte procedure or at least overrode provisions of the ex parte procedure that supposedly afforded the country less protection against the assertion of subject matter and personal jurisdiction than did the FSIA.

The District Court also rejected Venezuela's claim that no basis for personal jurisdiction existed, observing that independent grounds for jurisdiction are not necessary in actions enforcing arbitral judgments where jurisdiction to arbitrate existed, and that a country's participation in ICSID in any event constitutes consent to be sued in an enforcement proceeding.

[Editor's Note: The Mobil Cerro Negro case is also discussed in the Arbitration section of this report.]

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