SUSAN L. CARNEY, Circuit Judge.
This case requires us to examine the authority of a United States district court to adjudicate an arbitral award-creditor's ex parte petition for entry of a federal judgment against a foreign sovereign premised on an award made under the International Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the "ICSID Convention" or "Convention"). The award in this case arose from a dispute submitted to the International Centre for the Settlement of Investment Disputes by certain subsidiaries of ExxonMobil Corporation (collectively, "Mobil") and the Bolivarian Republic of Venezuela ("Venezuela"). Directing Venezuela to pay Mobil approximately $1.6 billion, the award was announced on October 9, 2014 (the "Award"). The following day, Mobil filed an ex parte petition asking the U.S. District Court for the Southern District of New York to recognize the Award and to enter judgment based on it. The Motion Term Part I judge granted the petition and entered judgment in the full amount awarded by the ICSID panel.
Venezuela learned of the judgment's entry by letter delivered electronically to its legal counsel soon after the court's action and promptly moved under Federal Rule of Civil Procedure 60(b) to vacate the judgment for both lack of subject matter and personal jurisdiction. The District Court judge subsequently assigned to the case denied the motion, concluding that it had subject matter jurisdiction under certain exceptions to sovereign immunity recognized in one provision of the Foreign Sovereign Immunities Act of 1976 ("FSIA"), 28 U.S.C. § 1605, and in 22 U.S.C. § 1650a ("Section 1650a"), the statute enabling U.S. participation in the ICSID Convention. See Mobil Cerro Negro Ltd. v. Bolivarian Republic of Venezuela ("Mobil Cerro Negro"), 87 F.Supp.3d 573, 587-90 (S.D.N.Y. 2015). The ex parte procedures—which did not satisfy the FSIA's requirements for personal jurisdiction—were sufficient, the District Court reasoned, because a procedural "gap" in Section 1650a permitted courts to take guidance from New York state law. Id. at 583-86. Accordingly, it turned to the summary procedures for recognizing and enforcing "foreign judgments" that are set forth in New York Civil Practice Law and Rules ("N.Y. CPLR") Article 54. Id. at 584. The District Court disclaimed any need to obtain personal jurisdiction over Venezuela under the FSIA, in light of Venezuela's participation in the Convention and the permission given by N.Y. CPLR Article 54 for New York state courts to enter "foreign judgments" even absent jurisdiction over the judgment debtor. Id. at 590-602.
We conclude that the District Court erred in declining to vacate the judgment. We reject Mobil's argument that Section 1650a provides an independent grant of subject-matter jurisdiction for actions against foreign sovereigns and decide that the FSIA provides the sole basis for subject-matter jurisdiction over actions to enforce ICSID awards against a foreign sovereign. Because actions to enforce ICSID awards against a foreign sovereign fall within the FSIA's comprehensive scheme, plaintiffs pursuing such actions must satisfy the FSIA's procedural requirements. The District Court was therefore mistaken in excusing Mobil from complying with the FSIA's service and venue requirements. The ex parte proceedings that Mobil utilized are neither permitted by the FSIA nor required by Section 1650a. The FSIA's procedural requirements regarding notice and venue serve Congress's stated goals of promoting comity with other sovereigns and ensuring the United States' consistency of approach with respect to federal courts' interactions with foreign sovereigns. The ICSID Convention's significant, but more modest, aims of allowing streamlined enforcement of authenticated ICSID arbitral awards and restricting substantive appeals of those awards to ICSID pose no significant conflict with the FSIA and can readily be accommodated by the FSIA's comprehensive regime.
Although several courts of the Southern District of New York (the "Southern District") have from time to time allowed such ex parte proceedings as occurred here to provide the basis for entry of a federal judgment against a foreign sovereign, district courts in other districts have not, and have given precedence to the FSIA. We think the correct view is the latter: ICSID award-creditors must pursue federal court judgments to enforce their awards against a foreign sovereign by filing a federal action on the award against the sovereign, serving the sovereign with process in compliance with the FSIA, and meeting the FSIA's venue requirements before seeking entry of a federal judgment, whether through a motion for judgment on the pleadings or for summary judgment. Those requirements were not met here. The court entering judgment needed, but lacked, personal jurisdiction over Venezuela under the FSIA.
We therefore REVERSE the District Court's order denying Venezuela's motion to vacate, VACATE the judgment entered in favor of Mobil, and REMAND the cause to the District Court with instructions to dismiss the ex parte petition.
I. Statutory background
The present appeal requires us to harmonize the ICSID Convention and its enabling statute, 22 U.S.C. § 1650a, with the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1330, 1391(f), 1441(d), 1602-1611. We therefore begin with an overview of the relevant texts, as these provide the setting for the issues presented on appeal.
The ICSID Convention
Between 1962 and 1965, the World Bank spearheaded development of the ICSID Convention, a multilateral treaty aimed at encouraging and facilitating private foreign investment in developing countries. See Anthony R. Parra, The History of ICSID 11-12, 24-26 (Oxford 2012) ("Parra, History"); Convention on the Settlement of Investment Disputes: Hearing on H.R. 15785 before the H. Comm. on Foreign Affairs, Subcomm. on Int'l Organizations and Movements, 89th Cong. 2-3 (1966) ("H.R. 15785 Hearing") (statement of Hon. Fred B. Smith, Gen. Counsel, Dep't of Treasury) ("Smith House Statement"). According to Parra (a former ICSID Deputy Secretary-General and Legal Adviser), the "immediate origins" of the Convention stem from the period between 1955 and 1962, when the "retreat of colonialism" quickly increased the number of developing countries. Parra, History, at 11. The amount of governmental development assistance available for these countries fell far short of their growing economic needs, leading to a widely shared hope "that private foreign investment would become an increasingly important source of funds." Id. at 12. Private investors were wary of investment in these countries, however, citing risks of expropriation and other "government measures that might tend to impair the rights or assets of foreign investors." Id. To help allay these concerns, the World Bank was called upon to create an effective and neutral dispute settlement forum.
The ICSID Convention was the result. See International Convention on the Settlement of Investment Disputes between States and Nationals of Other States ("ICSID Convention"), Mar. 18, 1965, T.I.A.S. No. 6090, 17 U.S.T. 1270. The Convention established an international institution—the International Centre for Settlement of Investment Disputes, based in Washington, D.C. (the "Centre" or "ICSID")—under whose authority arbitration panels may be convened to adjudicate disputes between international investors and host governments in "Contracting States"—those countries whose governments have adopted the Convention.
The Centre convenes arbitral tribunals in response to requests made by either a member state or a national of a member state. ICSID Convention arts. 36-37. At the conclusion of the proceedings, the tribunals issue written awards that address "every question submitted to the Tribunal," and "state the reasons upon which [the award] is based." Id. art. 48. Of particular note here, Article 53 of the Convention provides that a party dissatisfied with an award may challenge it on various grounds, but may do so only through proceedings at the Centre and not collaterally in the courts of member states.
Member states' courts are thus not permitted to examine an ICSID award's merits, its compliance with international law, or the ICSID tribunal's jurisdiction to render the award; under the Convention's terms, they may do no more than examine the judgment's authenticity and enforce the obligations imposed by the award. Thus, the Convention reflects an expectation that the courts of a member nation will treat the award as final. See Schreuer, Commentary, at 1139-41 (describing principle of finality of awards and reporting that principle was the subject of "extensive discussion").
The Convention also envisions, however, that participating sovereign states remain subject to the immunity and other relevant laws of the jurisdictions in which enforcement is sought: Thus, Article 55 declares, "Nothing in Article 54 shall be construed as derogating from the law in force in any Contracting State relating to immunity of that State or of any foreign State from execution." ICSID Convention art. 55.
The ICSID enabling statute: Section 1650a
In August 1966, after ratifying the Convention, Congress adopted legislation to implement its provisions. Pub. L. No. 89-532, 80 Stat. 344 (1966) ("An Act [t]o facilitate the carrying out of the obligations of the United States under the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, signed on August 27, 1965, and for other purposes."). As relevant here, Section 3 of the brief Convention on the Settlement of Investment Disputes Act of 1966 is codified at 22 U.S.C. § 1650a. So codified, subsection (a) of Section 1650a provides in full:
22 U.S.C. § 1650a(a). Subsection (b) of Section 1650a gives exclusive jurisdiction over "actions and proceedings under subsection (a)" to the federal district courts, "regardless of the amount in controversy."
The Foreign Sovereign Immunities Act
The Foreign Sovereign Immunities Act of 1976, Pub. L. 94-583, 90 Stat. 2891 (1976), governs the jurisdiction of United States courts over actions against foreign sovereigns. Its enactment marked a watershed moment in the foreign relations law of the United States.
As the Supreme Court described the pre-FSIA regime, "[f]or more than a century and a half, the United States generally granted foreign sovereigns complete immunity from suit in the courts of this country." Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 486 (1982). Chief Justice Marshall's seminal opinion in The Schooner Exchange v. McFaddon provided the roots for the United States' embrace of the so-called "absolute theory" of sovereign immunity. See 7 Cranch 116 (1812). There, the Chief Justice wrote that a ship from Napoleonic France, "having entered an American port open for her reception[,] . . . must be considered as having come into the American territory, under an implied promise, that while necessarily within it, and demeaning herself in a friendly manner, she should be exempt from the jurisdiction of the country." Id. at 147. The "implied promise" was that a foreign sovereign would receive absolute immunity in the courts of the United States: the host sovereign "wa[i]ve[d] the exercise of a part of that complete exclusive territorial jurisdiction" to which it was otherwise entitled, because "all sovereigns impliedly engage[d] not to avail themselves of a power over their equal, which a romantic confidence in their magnanimity has placed in their hands." Id. at 137-38; see Robert B. von Mehren, The Foreign Sovereign Immunities Act of 1976, 17 Colum. J. Transnat'l L. 33, 35-36 & n.10 (1978) ("R. von Mehren, FSIA"). Despite this broad language, The Schooner Exchange made clear that immunity was "a matter of grace and comity," and the Court therefore continued to "defer to the [case-by-case] decisions of the political branches—in particular, those of the Executive Branch—on whether to take jurisdiction over actions against foreign sovereigns and their instrumentalities." Verlinden, 461 U.S. at 486 (citing Ex Parte Republic of Peru, 318 U.S. 578 (1943), and Mexico v. Hoffman, 324 U.S. 30 (1945)).
In 1952, the State Department announced a change in course: it issued the "Tate Letter," a landmark policy statement expressing the Executive Branch's adoption of a more nuanced, "restrictive theory" of sovereign immunity, under which sovereigns would enjoy immunity as to their public acts, but not as to their private or commercial activities outside of their territories. See Ltr. from Jack B. Tate, Acting Legal Adviser, Dep't of State, to Acting Att'y Gen. Philip B. Perlman (May 19, 1952), available at Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682, 711-15 (1976) (Appendix 2). Despite the Tate Letter's clear policy statement, however, immunity determinations continued to be made by the State Department on a case-by-case basis, at times suggesting "immunity in cases where immunity would not have been available under the restrictive theory." Republic of Argentina v. NML Capital, Ltd., 134 S.Ct. 2250, 2255 (2014) (quoting Republic of Austria v. Altmann, 541 U.S. 677, 690 (2004)). When the State Department did not make a suggestion as to immunity, United States courts made the determinations "by reference to prior State Department decisions." Id. (quoting Verlinden, 461 U.S. at 487); see also R. von Mehren, FSIA, at 41-42. As a result, the patchwork quilt of immunity decisions continued to grow, with "sovereign immunity decisions . . . [being] made in two different branches, subject to a variety of factors, sometimes including diplomatic considerations," resulting in standards that "were neither clear nor uniformly applied." NML Capital, Ltd., 134 S. Ct. at 2255 (quoting Verlinden, 461 U.S. at 488) (alteration in original).
In 1976, Congress stepped in to rectify the resulting disarray by passing the Foreign Sovereign Immunities Act. In the FSIA, which is codified at 28 U.S.C. §§ 1330, 1391(f), 1441(d), and 1602-1611, Congress, "[f]or the most part," adopted the restrictive theory of foreign sovereign immunity and vested responsibility for immunity determinations in the federal judiciary. Verlinden, 461 U.S. at 488-89. The FSIA was designed "to free the Government from the case-by-case diplomatic pressures, to clarify the governing standards, and to `assur[e] litigants that . . . decisions are made on purely legal grounds and under procedures that insure due process.'" Id. at 488 (quoting H.R. Rep. No. 94-1487, 1976 U.S.C.C.A.N. 6604, 6656 (1976)) (alterations in original). To this end, "the Act contains a comprehensive set of legal standards governing claims of immunity in every civil action against a foreign state or its political subdivisions, agencies, or instrumentalities." Id. Congress declared categorically in the statute itself, "Claims of foreign states to immunity should henceforth be decided by courts of the United States and of the States in conformity with the principles set forth in this chapter." 28 U.S.C. § 1602.
The FSIA provides that, "[s]ubject to existing international agreements to which the United States is a party," foreign sovereigns "shall be immune from the jurisdiction of the courts of the United States and of the States" except as provided by one of the FSIA's exceptions to jurisdictional immunity. 28 U.S.C. § 1604; see id. § 1605 ("General exceptions to the jurisdictional immunity of a foreign state"). Under the FSIA, federal courts are empowered to exercise personal jurisdiction over a foreign sovereign when two conditions obtain: (1) an exception from jurisdictional immunity established by the FSIA applies, and (2) the sovereign has been served with process in accordance with the FSIA's provisions. See 28 U.S.C. § 1330(b); Shapiro v. Republic of Bolivia, 930 F.2d 1013, 1020 (2d Cir. 1991) ("Under the FSIA . . . personal jurisdiction [over a foreign sovereign] equals subject matter jurisdiction plus valid service of process.").
We have held that the FSIA's immunity provisions do not shield a foreign sovereign from federal courts' exercise of jurisdiction over a civil action to enforce an ICSID award: the waiver and arbitration exceptions to immunity that are found in subsections 1605(a)(1) and (a)(6), respectively, apply, and allow such an action to proceed. See Blue Ridge Inv., L.L.C. v. Republic of Argentina, 735 F.3d 72, 83-85 (2d Cir. 2013) (applying FSIA exceptions to sovereign immunity to find jurisdiction over sovereign in appeal from denial of sovereign immunity in plenary action for enforcement of ICSID award). Subsection (a)(1) of Section 1605 (the "waiver exception") divests foreign sovereigns of immunity when the sovereign "has waived its immunity either explicitly or by implication." 28 U.S.C. § 1605(a)(1). Subsection (a)(6) (the "arbitration exception") deprives the sovereign of immunity when an action is brought either "to enforce an agreement made by the foreign state with or for the benefit of a private party to submit to arbitration" or "to confirm an award made pursuant to such an agreement to arbitrate" if the agreement or award is subject to a treaty. Id. § 1605(a)(6).
ICSID awards in federal district courts
Nationally, district courts confronting requests to enter federal judgments upon ICSID awards against foreign sovereigns have adopted various approaches to "recognition" and "enforcement" of ICSID awards. Compare Micula v. Government of Romania ("Micula I"), 104 F.Supp.3d 42 (D.D.C. 2015) (requiring plenary action governed by FSIA), and Continental Casualty Co. v. Argentine Republic, 893 F.Supp.2d 747 (E.D. Va. 2012) (contemplating plenary action governed by FSIA), with Mobil Cerro Negro, 87 F.Supp.3d 573 (S.D.N.Y. 2015) (permitting ex parte action), and Siag v. Arab Republic of Egypt, No. M-82, 2009 WL 1834562 (S.D.N.Y. June 19, 2009) (same); see also Viren M. Mascarenhas & Camilla Gambarini, US Courts Adopt Different Approaches Regarding Recognition of ICSID Awards, 20 IBA Arbitration News 37 (2015). No United States court of appeals appears to have yet given studied consideration to how ICSID awards may be converted into federal judgments and enforced in federal courts, but two distinct approaches have developed in the district courts.
The first approach permits entry of judgment on an ICSID award through ex parte proceedings like those at issue here. Since 1986, in the few reported opinions that have addressed the issue, district courts in the Southern District have acted on applications to enforce ICSID awards against foreign sovereigns by entering judgments ex parte. See Siag, 2009 WL 1834562; Liberian E. Timber Corp. v. Government of Republic of Liberia ("LETCO"), 650 F.Supp. 73 (S.D.N.Y. 1986); see also Micula v. Government of Romania ("Micula II"), No. 15 Misc. 107, 2015 WL 4643180 (S.D.N.Y. Aug. 5, 2015).
The district courts adopting this approach interpret the Convention and Section 1650a to require some sort of summary procedure to recognize the ICSID award, and generally look to state law for the appropriate procedure. But see Miminco, LLC v. Democratic Republic of Congo, 79 F.Supp.3d 213, 217 n.3 (D.D.C. 2015) (granting ex parte petition, but declining to adopt procedures for enforcing a foreign judgment from District of Columbia Code). For example, in Siag, the Southern District's most thorough discussion of the procedure for recognizing and enforcing ICSID awards before the District Court's opinion here, private ICSID award-creditors moved the district court to enter judgment ex parte on an ICSID award, having provided no advance notice of the motion to the ICSID award-debtor, the Arab Republic of Egypt. 2009 WL 1834562, at *1. Relying on the language of the ICSID Convention and Section 1650a, the Siag court concluded that it should "treat an ICSID arbitration award as [it] would the final judgment of state court," and, based on its reading of our decision in Keeton v. Hustler Magazine, Inc., 815 F.2d 857 (2d Cir. 1987), turned to New York's CPLR Article 54 to define the procedures to be employed in such a case. Siag, 2009 WL 1834562, at *2.
Article 54 authorizes New York state courts to enforce "foreign judgments," defined as "any judgment, decree, or order of a court of the United States or of any other court which is entitled to full faith and credit in this state, except one obtained by default in appearance, or by confession of judgment." N.Y. CPLR 5401. Under these rules, a New York state court clerk may enter a judgment upon presentation of a duly authenticated "foreign judgment" and in the absence of the party as to whom the judgment applies. N.Y. CPLR 5402.
The second approach requires award-creditors to pursue a plenary action in compliance with the FSIA's personal jurisdiction, service, and venue requirements in order to enforce an ICSID award. Courts adopting this approach do not read Section 1650a to require summary enforcement and turn to the FSIA for guidance regarding how to bring an enforcement action against a foreign sovereign. See Micula I, 104 F.Supp.3d 42; Continental Casualty Co., 893 F.Supp.2d 747.
In Continental Casualty, an ICSID award-creditor filed an action in the Eastern District of Virginia seeking recognition—but not enforcement—of an ICSID award against Argentina. 893 F. Supp. 2d at 748. Argentina moved to dismiss for lack of subject matter and personal jurisdiction and for improper venue. Id. At the outset, the district court concluded that Section 1650a is not "itself a grant of subject matter jurisdiction," and that the sole basis for jurisdiction over a foreign sovereign is the FSIA. Id. at 750. The court ruled that it had subject matter jurisdiction under the FSIA's arbitration exception to immunity, 28 U.S.C. § 1605(a)(6), and that it had personal jurisdiction over Argentina because the foreign sovereign had not challenged service of process and the FSIA's service requirements had otherwise been satisfied, 28 U.S.C. § 1608. Id. at 751-52. But the action could not proceed, the court held, because venue did not lie in the Eastern District of Virginia; rather, the FSIA's venue provision, 28 U.S.C. § 1391(f)(4), required that the action be brought in the District of Columbia. Id. at 754.
The Micula I court adopted the approach presented in Continental Casualty, finding recourse to the FSIA's procedures "consistent with [the] text and structure" of Section 1650a. 104 F. Supp. 3d at 49. It phrased the question succinctly:
Id. at 44. Observing that Section 1650a uses only the term "enforce"—and not "recognize," "confirm," or "register," it concluded that Section 1650a does not contemplate recognition of ICSID awards as a judicial act separate from enforcement. Id. at 49. The plaintiff, an ICSID award-creditor, requested ex parte entry of judgment on its ICSID award rendered against the Government of Romania. Id. at 44. The court rebuffed this request, reasoning that Section 1650a "does not permit use of such an ex parte procedure. . . . [Micula] must file a plenary action, with proper service on the Government of Romania under the Foreign Sovereign Immunities Act of 1976." Id. The court explained that, as is the case for a creditor seeking to enforce a state court judgment, the ICSID award-creditor must file a "suit on the judgment as a debt" in a "plenary proceeding" against the sovereign. Id. at 49 (citing Continental Casualty, 893 F. Supp. 2d at 754).
With these competing approaches to reconciling the ICSID Convention, Section 1650a, and the FSIA in mind, we now turn to the present controversy.
II. Factual background
The underlying Award
The parties do not dispute the basic facts giving rise to the ICSID panel's decision.
During the 1990s, Mobil (acting through the petitioner subsidiary entities)
In early 2007, in conjunction with the country's nationalization of its oil industry, the Venezuelan government seized Mobil's interests in the projects. The seizures were ratified by the National Assembly of Venezuela. Following the seizures, Mobil submitted a request for arbitration to the International Centre for Settlement of Investment Disputes, seeking compensation from Venezuela for its losses from the expropriation.
Seven years later, on October 9, 2014, after lengthy arbitral proceedings in which both Mobil and Venezuela participated, a panel of ICSID arbitrators issued a unanimous award in Mobil's favor. The panel ordered Venezuela to pay Mobil approximately $1.6 billion, plus 3.25% interest compounded annually and accruing from June 27, 2007 (the date of the expropriation), until payment.
The ex parte petition to recognize the Award
One day after the ICSID panel announced the Award, Mobil filed an ex parte petition in the Southern District of New York, asking the court to "recognize" the Award "pursuant to 22 U.S.C. § 1650a," and to enter judgment directly on that Award in the amount of the full $1.6 billion, plus accrued interest at the rate specified in the Award. J.A. 14-21. Mobil provided the court with a certified copy of the Award in support of its application. "Ex parte recognition is appropriate," Mobil explained, because "[r]ecognition of a state court judgment is a clerical function that does not require notice until after a judgment has been entered." J.A. 24. In support, it cited the ICSID Convention, Section 1650a, and N.Y. CPRL Article 54.
Sitting in the district's Motion Term Part I, a calendar established primarily for emergency and miscellaneous matters,
The motion to vacate the Award
Immediately after the judgment was entered, Mobil electronically delivered to Venezuela's legal counsel notice of the judgment together with a demand for immediate payment. Venezuela then moved to vacate the judgment. In February 2015, the District Court (Engelmayer, J.) denied the motion to vacate, explaining its reasoning in a thorough and thoughtful decision. Mobil Cerro Negro, 87 F.Supp.3d 573.
The District Court briefly addressed Venezuela's argument that the Motion Term Part I Court lacked subject matter jurisdiction over a recognition action. The court concluded that two exceptions to immunity in the FSIA, the waiver and arbitration exceptions to immunity, confer subject matter jurisdiction over actions arising out of ICSID awards, citing this Court's decision in Blue Ridge Investments, 735 F.3d at 83-84, in support of this conclusion. Mobil Cerro Negro, 87 F. Supp. 3d at 588. The court also noted a third potential basis for subject matter jurisdiction: the opening clause of the FSIA's grant of sovereign immunity, which declares foreign sovereigns "immune from the jurisdiction" of federal and state courts except as provided in Sections 1605 to 1607 and "[s]ubject to existing international agreements to which the United States is a party at the time of the enactment of [the FSIA]." Id. (quoting 28 U.S.C. § 1604). The court suggested that the ICSID Convention might be such an agreement.
The District Court dedicated the remainder of its opinion to addressing two arguments it characterized as "procedural": Venezuela's argument that Section 1650a does not authorize "borrowing" New York's ex parte procedures and that, even if Section 1650a once authorized such procedures, the FSIA supersedes it when an action is brought against a foreign sovereign and "imposes service-of-process, personal jurisdiction, and venue requirements not met here." Id. at 577.
The District Court first examined whether the ex parte procedures were authorized by the ICSID Convention and Section 1650a. Looking to the text of the Convention and Section 1650a, the court concluded that neither the Convention nor the statute specifies "the procedural mechanism by which an arbitral award is to be converted into a federal judgment." Id. at 579. From the statute's silence in this respect, the court identified a "gap" in Section 1650a regarding how federal courts are expected to "enforce" ICSID awards—that is, how to convert them into enforceable federal judgments. After noting the Southern District decisions that previously addressed applications to enforce ICSID awards and offering its own examination of Section 1650a, the court ruled that the gap could be filled by reference to state law, specifically New York's CPLR Article 54.
Importing these provisions into Section 1650a, the District Court concluded that it could enter the requested judgment against Venezuela ex parte, without requiring Mobil to comply with the procedural prerequisites to suits against foreign sovereigns imposed by the FSIA. The court reasoned that to apply the procedural requirements of the later-enacted FSIA would unacceptably run afoul of the expectations of streamlined procedures reflected in the ICSID Convention and implicit in Section 1650a; it therefore dispensed with them in favor of the summary New York procedures. Id. at 599. It further found that its exercise of personal jurisdiction over Venezuela—if personal jurisdiction was needed
The District Court therefore denied Venezuela's motion to vacate the judgment. The court acknowledged at the same time that, after Venezuela moved to vacate the judgment, it also applied to ICSID for an annulment of the Award. The ICSID Secretary-General stayed enforcement of the award pending determination of the annulment request, and the District Court likewise stayed enforcement of the award pending ICSID's resolution of Venezuela's request. See Venezuela Holdings, B.V. et al. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/27, Decision on the Stay of the Enforcement of the Award, ¶ 10 (Sept. 17, 2015); Opinion & Order, Mobil Cerro Negro Ltd. v. Bolivarian Republic of Venezuela, No. 1:14-cv-8163 (S.D.N.Y. Feb. 13, 2015), ECF No. 37.
In a separate motion, Venezuela asked the District Court to "clarify" the interest rate imposed by the ex parte judgment, which had incorporated the 3.25% post-judgment interest rate provided for by the Award. Mobil Cerro Negro, No. 1:14-cv-8163, ECF Nos. 38-40 (S.D.N.Y. Feb. 13, 2015). The court denied the motion, concluding that any change to the post-judgment interest rate would constitute a substantive revision to the Award and that such revisions are contrary to the ICSID Convention and Section 1650a.
The present appeal
Venezuela timely appealed the District Court's denial of its motion to vacate the ex parte judgment and its motion to adjust the interest rate applicable to the Award. On appeal, Venezuela argues that the District Court erred in not requiring Mobil to bring a plenary action before entering judgment on the Award; that the District Court lacked subject matter jurisdiction and personal jurisdiction over Venezuela under the FSIA; and that the federal interest rate on judgments established by 28 U.S.C. § 1961 governs the Award, not the rate set by the ICSID panel and adopted by the District Court. Mobil, in contrast, maintains that federal courts may use forum state procedures to enter federal judgments against foreign sovereigns on ICSID awards and that summary proceedings are adequate. It submits that the District Court had subject matter jurisdiction over its enforcement action under both Section 1650a and the FSIA, and did not need personal jurisdiction over Venezuela to enforce the Award. Finally, it argues that the District Court was not at liberty to alter the interest rate imposed by the ICSID panel.
This Court, after hearing oral argument from the parties, requested the views of the United States through the Office of Legal Adviser at the Department of State, on three issues: (1) whether 22 U.S.C. § 1650a provides a basis for subject matter jurisdiction over an award enforcement action against a foreign sovereign, or whether the FSIA establishes the sole source of jurisdiction over such actions; (2) the lawfulness of a federal court's resort to state procedures allowing an ex parte entry of judgment on an ICSID award against a foreign sovereign; and (3) the federal court's authority to modify an interest rate imposed by an ICSID tribunal.
In response, in March 2016, the United States joined Venezuela in taking the position that the FSIA provides the sole source of subject matter jurisdiction over an action to enforce an ICSID award against a foreign sovereign and that the FSIA's procedural rules must be followed in such proceedings. See United States Br. as Amicus Curiae ("U.S. Br."), Mobil Cerro Negro Ltd. v. Bolivarian Republic of Venezuela, No. 15-707 (2d Cir. Mar. 30, 2016), ECF No. 87. It submitted that the District Court's use of New York's ex parte procedures to enter a federal judgment on the Award was improper under the FSIA; it agreed with Mobil, however, that the District Court was correct to decline to amend the interest rate included in the Award.
During the pendency of this appeal, an ICSID ad hoc Committee annulled a large portion of the original $1.6 billion Award. See Venezuela Holdings, B.V., ICSID Case No. ARB/07/27, Decision on Annulment, ¶ 196 (Mar. 9, 2017); Letter pursuant to Fed. R. App. P. 28(j) on behalf of Appellant Bolivarian Republic of Venezuela ("Venezuela 28(j) Letter"), Mobil Cerro Negro Ltd. v. Bolivarian Republic of Venezuela, No. 15-707 (2d Cir. Mar. 22, 2017), ECF No. 102. The Committee concluded that the original panel failed adequately to consider the compensation provisions contained in one of the Venezuela-Mobil agreements (the Cerro Negro Association Agreement) and the Venezuelan legislation approving the project (the Cerro Negro Congressional Authorization). As modified by this decision, the Award now gives Mobil compensation totaling $188,342,482, "a fraction of the original award of $1,600,042,482," Venezuela 28(j) Letter at 2, but nonetheless a substantial sum.
Rule 60(b) of the Federal Rules of Civil Procedure provides an avenue to relief from a final judgment when the judgment is "void." Fed. R. Civ. P. 60(b)(4). A judgment is void for purposes of the Rule if the court entering judgment lacked subject matter or personal jurisdiction over the judgment debtor. See City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 138 (2d Cir. 2011). We review de novo a district court's denial of a Rule 60(b)(4) motion. Id.
This appeal requires us to reconcile the ICSID Convention and Section 1650a with the FSIA, so that we may determine the appropriate procedures for converting an ICSID award into a federal judgment. The parties in this appeal each advocate for one of the two approaches adopted by the district courts.
Mobil supports the approach adopted by district courts in the Southern District and applied by the District Court here. Mobil argues that federal courts may enter judgment on ICSID awards summarily, according to the procedures used in the state courts of the forum state—here, on an ex parte petition by the award-creditor. Mobil contends, and the District Court ruled, that this approach best accords with the provisions of the ICSID Convention precluding award-debtors from raising substantive challenges to the award in domestic courts.
Venezuela and the United States as amicus curiae, in contrast, endorse the approach adopted by district courts in the District of Columbia and in the Eastern District of Virginia. Venezuela and the United States would require that award-creditors file a complaint seeking entry of judgment on the award; serve the complaint on the foreign sovereign award-debtor; and comply with the venue requirements of the FSIA, with these three steps conferring jurisdiction over the foreign sovereign in the federal district court and permitting that court to enter a valid judgment. This procedure would not necessarily permit a substantive challenge to a duly authenticated award, but it would allow the defendant sovereign to appear and be heard before entry of judgment.
Resolution of this dispute requires us to answer whether Section 1650a provides an independent source of jurisdiction over a foreign sovereign award-debtor or whether the later-enacted FSIA offers the sole basis for federal courts' jurisdiction over foreign sovereigns. It also requires us to consider whether, even if the FSIA provides the sole source of jurisdiction over foreign sovereigns, Section 1650a empowers courts asked to enforce ICSID awards to modify the FSIA's procedural requirements and adopt state court summary procedures for enforcing judgments in each state in which enforcement is sought.
For the reasons set forth below, we agree with Venezuela and the United States as amicus curiae that the FSIA controls actions to enforce ICSID awards. We conclude that the FSIA provides the sole source of jurisdiction—subject matter and personal—for federal courts over actions brought to enforce ICSID awards against foreign sovereigns; that the FSIA's service and venue requirements must be satisfied before federal district courts may enter judgment on such awards; and that Section 1650a does not contemplate "recognition" of an ICSID award as a proceeding separate from "enforcement." Although the FSIA provides subject matter jurisdiction over this proceeding, the FSIA's service and venue requirements have not been satisfied here. Accordingly, the District Court lacked personal jurisdiction over Venezuela. The District Court's Rule 60(b) order must therefore be reversed and its judgment must be vacated.
I. Subject matter jurisdiction
Mobil argues that Section 1650a provides its own independent grant of subject matter jurisdiction when it states that an ICSID award "shall create a right arising under a treaty of the United States" and provides federal district courts with "exclusive jurisdiction" over such action. Appellees' Br. at 40 (quoting 22 U.S.C. § 1650a(a)-(b)) (emphasis omitted). Mobil further argues that ICSID enforcement actions are exempted from the requirements of the later-enacted FSIA by the reservation in FSIA Section 1604 that its provisions were adopted "[s]ubject to existing international agreements to which the United States is a party." Id. at 41-42 (quoting 28 U.S.C. § 1604) (emphasis omitted).
Venezuela does not contest that Section 1650a could serve as a grant of subject matter jurisdiction over some actions to enforce ICSID awards; rather, it argues that Section 1650a cannot confer subject matter jurisdiction on federal courts when the ICSID award-debtor is a foreign sovereign. In such a case, it urges us to conclude, the FSIA takes precedence. The ICSID Convention is not, it argues, one of the "existing international agreements" exempted from the FSIA's operation. 28 U.S.C. § 1604.
The District Court found that, if the FSIA applied to this case, subject matter jurisdiction could arise from two exceptions to sovereign immunity found in the FSIA: the implied waiver exception and the arbitration exception, which we have discussed above. See 28 U.S.C. §§ 1605(a)(1), (6). On this point, we are in accord with the District Court. Indeed, our Court recently held as much in Blue Ridge Investments, 735 F.3d 72. We disagree, however, with Mobil's assertion that Section 1650a also provides a grant of subject matter jurisdiction to the federal courts over award enforcement actions against foreign sovereign award-debtors, and that the FSIA did not abrogate that grant (if ever Section 1650a embodied such a grant). We reject this argument primarily for two reasons.
First, the Supreme Court's decision in Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428 (1989), suggests that, even if Section 1650a once granted subject matter jurisdiction, after passage of the FSIA, Section 1650a cannot fairly be read to serve as an independent source of subject matter jurisdiction over a foreign sovereign. The Supreme Court's emphatic and oft-repeated declaration in Amerada Hess that the FSIA is the "sole basis for obtaining jurisdiction over a foreign state in our courts," id. at 434; see also Republic of Austria v. Altmann, 541 U.S. 677, 699 (2004) (quoting Amerada Hess, 488 U.S. at 434-35); Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993) (same), is difficult to reconcile with an approach that preserves the potential of Section 1650a to serve as an alternative. Recently, the Supreme Court emphasized that the FSIA is "comprehensive"—a term the Court has used "often and advisedly to describe the Act's sweep"—meaning that "after the enactment of the FSIA, the Act—and not the pre-existing common law—indisputably governs the determination of whether a foreign state is entitled to sovereign immunity." NML Capital, Ltd., 134 S. Ct. at 2255-56 (alterations and citation omitted). We have similarly reiterated our understanding of the categorical nature of this declaration in Kirschenbaum v. 650 Fifth Avenue and Related Properties, 830 F.3d 107, 122 (2d Cir. 2016) ("The FSIA provides the exclusive basis for obtaining subject matter jurisdiction over a foreign state."), and Blue Ridge Investments, 735 F.3d at 83 ("The only source of subject matter jurisdiction over a foreign sovereign or its instrumentalities in the courts of the United States is the FSIA. . . ."). The comprehensiveness of the FSIA's framework suggests that Section 1650a should not be read as providing an independent basis for courts to exercise subject matter jurisdiction over foreign sovereigns, or, at the very least, should no longer be read as providing such a basis, even if it once did.
Second, although the question is not free from doubt, we are not persuaded by Mobil's argument that FSIA Section 1604's carve-out for "existing international agreements" includes the Convention. In Amerada Hess, the Supreme Court explained that international agreements that predate the FSIA are excluded from the Act's reach only when they expressly conflict with the Act's immunity provisions. See 488 U.S. at 442 (explaining that Section 1604's carve-out "applies when international agreements expressly conflict with the immunity provisions of the FSIA" (emphasis added) (alterations and citation omitted)); see also H.R. Rep. No. 94-1487, at 6616 ("In the event an international agreement expressly conflicts with [the FSIA], the international agreement would control. . . . [But] the international agreement would control only where a conflict was manifest." (emphases added)). Because actions to enforce ICSID awards rendered against foreign sovereigns fall neatly into the FSIA's specific exemptions from immunity under Sections 1605(a)(1) (waiver) and (6) (arbitration), see Blue Ridge Invs., 735 F.3d at 83-86, we see no conflict between the FSIA's immunity provisions and the ICSID Convention or Section 1650a that would trigger Section 1604's carve-out as construed by the Supreme Court.
Section 1650a's legislative history also undermines the argument that FSIA Section 1604 exempts the ICSID Convention and Section 1650a from the FSIA's jurisdictional provisions. The legislative record strongly suggests that, when Congress enacted Section 1650a in 1966, a decade before it passed the FSIA, it contemplated that actions against foreign sovereigns under Section 1650a would remain subject to sovereign immunity. Thus, during his appearance before the House Committee on Foreign Affairs, Deputy Legal Adviser at the Department of State Andreas Lowenfeld testified tellingly: "Basically what this convention says is that the district court shall have jurisdiction over the subject matter. As to whether it has jurisdiction over a party, there is nothing in the convention that will change the defense of sovereign immunity." H.R. 15785 Hearing, at 18 (statement of Andreas F. Lowenfeld, Deputy Legal Advisor, Dep't of State). He elaborated that if, for example, "someone wants to sue Jersey Standard in the United States, on an award, no problem. If somebody wants to sue Peru or the Peruvian Oil Institute, why it would depend on whether in the particular case that entity would or would not be entitled to sovereign immunity." Id. (paragraph break omitted).
His testimony is consonant with the venerable canon of construction that Congress is presumed to legislate with familiarity of the legal backdrop for its legislation. See Midlantic Nat'l Bank v. N.J. Dep't of Envtl. Prot., 474 U.S. 494, 501 (1986) ("The normal rule of statutory construction is that if Congress intends for legislation to change the interpretation of a judicially created concept, it makes that intent specific."). We are aware of no contrary textual or record indication that Congress intended to exclude proceedings brought under Section 1650a from the ordinary operation of sovereign immunity, either as the principle of immunity stood before or after the enactment of the FSIA.
The Supreme Court's consideration of the Alien Tort Statute ("ATS"), 28 U.S.C. § 1350, in Amerada Hess is also instructive. There, the Court rejected the argument that the ATS—which, like Section 1650a, predates the FSIA—continued to confer subject matter jurisdiction over a foreign sovereign after the FSIA's enactment. Amerada Hess, 488 U.S. at 436-38. To the extent the ATS ever provided a source of subject matter jurisdiction over foreign sovereigns, the Amerada Hess Court found it could no longer confer that authority after the passage of the FSIA, nor did Congress's failure to repeal the ATS when it enacted the FSIA counsel otherwise. Id. at 437. The Court viewed as particularly significant in this regard the fact that the ATS "does not distinguish among classes of defendants," and could therefore continue to have "the same effect after the passage of the FSIA as before with respect to defendants other than foreign states." Id. at 438 (emphasis added). In other words, any conferral of subject matter jurisdiction stemming from the ATS would be unaffected as to non-sovereign defendants, but the ATS could not confer subject matter jurisdiction over foreign sovereigns after passage of the FSIA.
The same is true here. Section 1650a does not "distinguish" among classes of private defendants: it states broadly that "[t]he district courts of the United States . . . shall have exclusive jurisdiction over actions and proceedings" to enforce ICSID awards. 22 U.S.C. § 1650a(b). Section 1650a's grant of subject matter jurisdiction over private defendants may remain intact
Combined with the legislative history that suggests that Congress expected actions under Section 1650a to be governed by sovereign immunity, Amerada Hess in its holding as well as in its language confirms our decision that Section 1650a does not constitute an independent grant of subject matter jurisdiction over a foreign sovereign. The FSIA provides the sole basis for subject matter jurisdiction over actions in federal court to enter judgment against foreign sovereigns on ICSID awards.
II. Personal jurisdiction
Scope of the FSIA
Having concluded that the FSIA provides the sole basis for subject matter jurisdiction in cases brought to enforce ICSID awards, we must now determine whether the FSIA also controls the procedures by which such actions must be brought against a foreign sovereign award-debtor. We conclude that it does.
At Mobil's urging, the District Court concluded that the FSIA's service and venue requirements had no bearing on Mobil's application for enforcement. The court first observed that the FSIA "leaves congressional intent unclear" regarding whether its service of process and venue requirements apply in the ICSID award context. Mobil Cerro Negro, 87 F. Supp. 3d at 593. Having identified this ambiguity, the court then turned to its own interpretation of the "objectives of the ICSID Convention and of Congress" in passing Section 1650a to determine whether the summary procedures invoked by Mobil would be appropriate. Id. at 599.
We find no such ambiguity in the FSIA's text. As the Supreme Court has advised, "[a]lthough a major function of the [FSIA] . . . is to regulate jurisdiction of federal courts over cases involving foreign states, the Act's purpose is to set forth comprehensive rules governing sovereign immunity," including "procedures for commencing lawsuits against foreign states." Verlinden, 461 U.S. at 495 n.22 (internal quotation marks and citation omitted); see also H.R. Rep. No. 94-1487, at 6606 ("[T]his bill would for the first time in U.S. law, provide a statutory procedure for making service upon, and obtaining in personam jurisdiction over, a foreign state. . . ."). The Act was intended to "provide when and how parties can maintain a lawsuit against a foreign state." H.R. Rep. No. 94-1487, at 6604. The FSIA prescribes comprehensive procedures for bringing suit against foreign sovereigns, including suit for "recognition and enforcement of arbitral awards," 28 U.S.C. § 1605(a)(6), as to which the foreign state may be found to have waived the immunity otherwise conferred. Thus it is not Section 1650a's silence on enforcement of ICSID awards that guides our reasoning. Rather, we accord conclusive weight to the affirmative and sweeping provisions in the FSIA's comprehensive statutory scheme and the observation that the FSIA makes no provision for summary procedures in any instance.
In fact, the FSIA explicitly contemplates the exercise of federal court jurisdiction over actions to enforce international arbitral awards against foreign sovereigns under the exemption from immunity provided by Section 1605(a)(6). And nowhere in the FSIA did Congress expressly exempt actions against foreign sovereigns under Section 1605(a)(6) from the statute's service or venue requirements. See 28 U.S.C §§ 1391(f), 1608. Indeed, nowhere in the FSIA did Congress provide an expedited procedure to enter a federal judgment against a foreign sovereign in any circumstance. Cf. H.R. Rep. No. 94-1487, at 6612 (noting "sections 1330(b) [personal jurisdiction provision], 1608 [service of process provision], and 1605-1607 [foreign sovereign immunity provisions] are all carefully interconnected"). We simply see no reason to conclude that an action to enforce an ICSID award, which is comfortably encompassed within Section 1605(a)(6), would be exempt from the FSIA's procedural requirements.
Conflict with the ICSID Convention or Section 1650a
The District Court rejected this straightforward application of the FSIA's service and venue provisions, in part, based on its concern that requiring compliance with these provisions of the FSIA "would bring the FSIA into grave tension with the objectives of the ICSID Convention and of Congress." Mobil Cerro Negro, 87 F. Supp. 3d at 599. It thus endorsed instead the adoption of New York state procedures, which it viewed as more consistent "Congress's expectation" that ICSID award recognition "would be automatic and not subject to contest." Id. at 600.
At the outset, we note that, in interpreting the ICSID Convention and its enabling act, we owe particular deference to the interpretation favored by the United States. Medellín v. Texas, 552 U.S. 491, 513 (2008) ("It is . . . well settled that the United States' interpretation of a treaty is entitled to great weight." (internal quotation marks and citation omitted)). In its brief amicus curiae, the United States articulates its view that "the mechanics of enforcing ICSID awards are not and never were governed by treaty," U.S. Br. at 13, and that neither the Convention nor Section 1650a "requires or forbids any particular set of procedures," id. at 16. Instead, the ICSID Convention "reserves the means of enforcement to member states, which enforce awards in the same way that they enforce domestic judgments." Id. at 13.
We agree with the United States that the FSIA's requirements and the United States' obligations under the ICSID Convention do not stand in significant tension. As we have noted, the ICSID Convention contemplates treatment of an award "as if it were a final judgment of the courts of a constituent state." ICSID Convention art. 54. Article 54 affords ICSID arbitral awards the status of final state court judgments, and was included in the Convention at the insistence of the United States. See Schreuer, Commentary, at 1143. It does not, however, dictate the nature of the proceedings through which ICSID awards will be enforced in the United States.
The United States was faithful to this provision when it enacted Section 1650a, requiring the federal courts to accord ICSID awards "full faith and credit as if the award were a final judgment of . . . one of the several States." 22 U.S.C. § 1650a(a). The legislative history suggests that this provision was intended to immunize ICSID awards from substantive assault outside the ICSID tribunal. See, e.g., Smith House Statement at 4 ("[A]n action would have to be brought on the award in a U.S. district court. . . . In such an enforcement action, the district court would be required to give full faith and credit to the arbitral award. Essentially, this means that district courts would be precluded from inquiring into the merits of the underlying controversy."). Requiring an enforcement action to comply with the FSIA does not contravene this mandate.
To require that a civil action be prosecuted to conclusion before entering judgment on an ICSID award will not relieve federal courts of the responsibility under the Convention and Section 1650a to enforce ICSID awards as final. See ICSID Convention art. 53(1) (providing that ICSID awards "shall not be subject to any appeal or to any other remedy except those provided for in [the] Convention"); 22 U.S.C. § 1650a(a) (providing that "pecuniary obligations imposed by [ ] an award . . . 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"); see also Schreuer, Commentary, at 1139-41.
Litigation on actions to enforce awards need not be protracted. That the action might be referred to as "plenary" as opposed to "summary" does not portend a proceeding in which the court must entertain all manner of substantive defenses, or even defenses cognizable under the Federal Arbitration Act. Used in this context, the word "plenary" signals merely the need for commencing an action under Federal Rule of Civil Procedure 3, service of the complaint in compliance with Rule 4 (as modified by the FSIA), and the opportunity for the defendant sovereign to appear and file responsive pleadings. To initiate such an action, an ICSID award-creditor may file a complaint in district court, detailing the terms of the award, establishing proper venue, and furnishing a certified copy of the award. After the complaint is filed and service effected, the award-creditor may file a motion for judgment on the pleadings, for instance, or a motion for summary judgment. The ICSID award-debtor would be a party to the action and would be able to challenge the United States court's jurisdiction to enforce the award—for instance, on venue grounds—but would not be permitted to make substantive challenges to the award.
Moreover, requiring compliance with the FSIA facilitates an enforcement regime for ICSID awards that has a greater prospect of consistency across the nation. The District Court discounted any need for uniformity of enforcement in the ICSID context, observing that each member state to the Convention will enforce awards according to different procedures. But in so reasoning, the District Court overlooked the Congressional intent, manifest in the enabling legislation's history and text, to provide for uniform enforcement within the United States. Congress vested exclusive jurisdiction over enforcement of ICSID awards in the federal courts. See 28 U.S.C. § 1650a(b). Testimony given by the General Counsel of the Treasury before the Senate Committee on Foreign Relations reflects that in enacting Section 1650a, Congress was guided by a desire to provide a uniform enforcement procedure throughout the United States:
S. Rep. No. 89-1374, at 17 (1966), as reprinted in 1966 U.S.C.C.A.N. 2617, 2619 (emphasis added). Calling upon different state procedures in each of the states in which district courts sit at the entry-of-judgment phase would actively undermine the goal of establishing a nationally uniform procedure for enforcement of ICSID awards. Indeed, such a regime could be expected to achieve the opposite result, in which each state could potentially require a distinct procedure.
We are confident that our decision that actions to enforce ICSID awards against foreign sovereigns must comply with the FSIA's service and venue provisions is consistent with the United States' obligations under the ICSID Convention.
"Recognition" under Section 1650a
The District Court's contrary reasoning also derived from the notion that "recognition," and not just "enforcement," was part of the District Court's task. The District Court viewed recognition, like confirmation in the context of other arbitral proceedings, as a mere ministerial act preliminary to enforcement.
As noted above, Article 54 of the Convention requires member states to "recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award." ICSID Convention art. 54 (1)-(2) (emphasis added). In this, the Convention seems to refer to "recognition" and "enforcement" as if they were distinct actions. See Schreuer, Commentary, at 1128 (describing "recognition" as "the formal confirmation that the award is authentic and that it has the legal consequences provided by the law" and noting that it may be "a step preliminary to enforcement").
But the Convention is not self-executing. See Medellín, 552 U.S. at 505-06 & n.3 (treaties not specified as self-executing can be enforced only pursuant to implementing legislation); id. at 533-34 & n.1 (Stevens, J., concurring) (citing Section 1650a as an example). We must therefore focus in the first instance on the terms of the ICSID enabling act, Section 1650a, to determine the scope of a federal court's authority with respect to awards under the Convention, and refer to the Convention only for aid in construing Section 1650a where needed.
In contrast to the Convention, Section 1650a(a) refers to enforcement, but not to recognition: it directs only that "[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) (emphasis added). It makes no mention of recognition as a separate, additional judicial action, and we think that its framing was intentional.
Other language from Section 1650a confirms this conclusion. Section 1650a(b) grants federal courts "exclusive jurisdiction over actions and proceedings under subsection (a)." Id. § 1650a(b) (emphasis added). The terms "actions" and "proceedings" typically connote something more than a summary ex parte conference leading to entry of a judgment on an award: after all, those terms are the foundation of the Federal Rules of Civil Procedure. Rule 1 provides, for example, "These rules govern the procedure in all civil actions and proceedings in the United States district courts," subject to a few exceptions not relevant here.
Further, Section 1650a directs that "[t]he Federal Arbitration Act . . . shall not apply to enforcement of awards rendered pursuant to the [ICSID Convention]." 22 U.S.C. § 1650a(a). This exemption carries two resonances of import here. First, the FAA specifically provides for confirmation of domestic arbitral awards by court order, not through an "action" or "proceeding." 9 U.S.C. § 9 ("[A]t any time within one year after the award is made any party to the arbitration may apply . . . for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed [elsewhere in] this title." (emphasis added)). That Congress so provided many years earlier suggests that, although it knew how to provide for summary procedures in the arbitral context, it simply elected not to do so in Section 1650a.
Second, the FAA prescribes grounds for vacating an arbitral award where the award was tainted by, among other things, fraud, corruption, or misconduct by the arbitrator. See 9 U.S.C. § 10. By expressly precluding the FAA's application to enforcement of ICSID Convention awards, Congress intended to make these grounds of attack unavailable to ICSID award-debtors in federal court enforcement proceedings. See 112 Cong. Rec. 13148, 13149 (daily ed. June 15, 1966) (written statement of Sen. Fulbright) (conveying that substantive attack to ICSID awards on grounds provided by FAA can be made "only through the annulment proceedings provided for in the Convention," not in federal court). Congress's exclusion of the FAA's provisions from Section 1650a may suggest an expectation that actions to enforce ICSID awards would not be protracted, as emphasized by the District Court. But the exclusion of the substantive attacks available under the FAA from ICSID award actions does not, in our judgment, imply an intention that a foreign sovereign award-debtor be denied notice of the action to enforce the award and the occasion to make non-merits challenges to the award: for example, to question the authenticity of the award presented for enforcement, the finality of the award, or the possibility that an offset might apply to the award that would make execution in the full amount improper. If the debtor were not entitled to notice of an enforcement attempt, it would have no opportunity to level such attacks before the award became a federal judgment. Nor would remitting these challenges to the execution stage, which often would occur piecemeal and in various jurisdictions, be adequate, efficient, or in keeping with the general background of sovereign immunity law in the United States.
Our reading of Section 1650a thus suggests that Congress did not contemplate federal court "recognition" of ICSID awards; it contemplated only enforcement. And enforcement should proceed, the statute directs, "as if the award were a final judgment of a [state court]" for which enforcement were sought in federal court and which is owed full faith and credit. 22 U.S.C. § 1650a. Accordingly, we turn briefly to what it means to "enforce" a state court judgment in federal court and award it full faith and credit.
"Full faith and credit" under Section 1650a
Section 1650a requires federal courts to "enforce" ICSID awards and accord them "the same full faith and credit as if [they] were [ ] final judgment[s] of a court of general jurisdiction of one of the several States." 22 U.S.C. § 1650a(a). To identify the type of action necessary to enforce ICSID awards in compliance with Section 1650a, we look to established procedures for enforcing state court judgments in federal court.
Since 1948, federal courts have been directed by 28 U.S.C. § 1738 to accord state court judgments full faith and credit. See Pub. L. No. 80-773, 62 Stat. 869, 947 (1948) (codified at 28 U.S.C. § 1738).
In further support for this view, we note in contrast that, by statute first enacted in 1948, federal district courts have been empowered summarily to register the judgments of other federal district courts to permit enforcement in the registering district. See Pub. L. 80-773, 62 Stat. 869, 958 (codified at 28 U.S.C. § 1963) ("A judgment in an action for the recovery of money or property entered in any [federal court] may be registered . . . in any other district. . . .")
An examination of the available legislative history of Section 1650a also tends to confirm our view that Congress did not invite the incorporation of summary enforcement procedures against foreign sovereign award-debtors. During a hearing on the bill proposing what became Section 1650a, Senator Fulbright offered a copy of the proposed legislation and an analysis section that advised:
112 Cong. Rec. at 13149 (emphasis added). Senator Fulbright continued that, "[i]n such an enforcement action the United States District court would be required to give full faith and credit to the arbitral award." Id. The proximity of his comment on full faith and credit to his remark about the need for an "action" to be brought highlights that full faith and credit, as used in Section 1650a, meant something less than automatic recognition and conversion of the award into a federal judgment, contrary to what Mobil now suggests. Nor was Senator Fulbright's prepared text an offhand comment. The General Counsel of the Treasury testified to the same effect before the House Committee on Foreign Affairs. See Smith House Statement at 4 ("[A]n action would have to be brought in a U.S. district court to enforce the final judgment of a State court.").
Based on our reading of Section 1650a, our discussion of the enforcement mechanism traditionally available to federal courts to enforce state court judgments, and our review of Section 1650a's legislative history, we conclude that Section 1650a mandates enforcement of ICSID awards in federal court through an action on the award and not through an ex parte order.
Mobil and the District Court rely heavily on our decision in Keeton v. Hustler Magazine, Inc., 815 F.2d 857 (2d Cir. 1987), to reach a contrary conclusion regarding the import of Section 1650a's directive that the Award be enforced like a state court judgment. In doing so, however, Mobil and the District Court rely on an erroneous reading of Keeton introduced by the district court in Siag. See 2009 WL 1834562, at *2-3.
In Keeton, a judgment creditor received a judgment in the District of New Hampshire. 815 F.2d at 857. She filed this judgment in the New York Supreme Court using the procedures specified in N.Y. CPLR 5402. Id. at 858.The judgment debtor then removed the action to the Southern District and sought to enjoin enforcement of the judgment, arguing, inter alia, that the judgment creditor should have applied the procedures for registering judgments of one federal district court in another federal district court, that is, 28 U.S.C. § 1963. Id. On appeal, this Court affirmed the propriety of registering the New Hampshire federal judgment in New York state court using N.Y. CPLR Article 54, rather than the procedure offered by Section 1963. Id. at 861 (holding that "Article 54 was meant to be available for enforcement of out-of-state federal judgments and sister-state judgments" and that "this clear intention should not be overridden simply because the same result could also be achieved by the two-step procedure offered by section 1963"). Keeton thus addressed only the registration in state court of a federal district court judgment entered in another district.
In Siag, the district court concluded that, because Section 1650a requires that ICSID awards be treated "as if the award were a final judgment of a court of general jurisdiction of one of the several states," and Keeton "observed" that CPLR Article 54 "provide[s] a vehicle through which the judgment of a `sister state' could be enforced in New York," judgment could be entered on ICSID awards using the summary procedures provided for in N.Y. CPRL 5402. Siag, 2009 WL 1834562, at *1-3. But Keeton did not concern a federal court's action on an out-of-district state court judgment. Siag's reliance on Keeton was therefore misplaced. Keeton addressed a scenario that is the reverse of that presented here: Keeton dealt with a state court's treatment of a federal court judgment, whereas ICSID awards are to be treated by federal courts as state court judgments. Siag is thus unpersuasive, and the procedures adopted by courts in the Southern District relying upon Siag should no longer be applied.
Our conclusion that Section 1650a does not support summary registration for converting ICSID awards into federal judgments, but rather requires commencement of an action on the award in federal court, brings Section 1650a into alignment with our interpretation of the FSIA. Following Supreme Court precedent, we have consistently described the FSIA as providing the sole source of subject matter jurisdiction over foreign sovereigns. We continue to do so today.
Section 1650a of Title 22 requires federal courts to enforce ICSID awards as if they were final judgments of state courts—that is, pursuant to civil actions brought under the Federal Rules of Civil Procedure on such awards. The FSIA provides the sole basis for United States courts' subject matter jurisdiction over foreign sovereigns, and Section 1650a embodies no exception to that rule. As a result, when the ICSID award-debtor is a foreign sovereign, the FSIA's procedural mandates control, including the requirements that process be served to obtain personal jurisdiction under 28 U.S.C. § 1330(b), and venue be proper under 28 U.S.C. § 1391(f).
In light of our conclusion that the District Court did not have subject matter jurisdiction under Section 1650a and that the FSIA governs all aspects of this action, it follows further that the District Court's judgment was void: Mobil did not serve Venezuela in accordance with the FSIA, 28 U.S.C. § 1608, and the District Court therefore did not have personal jurisdiction over Venezuela, 28 U.S.C. § 1330(b). Furthermore, Mobil's ex parte petition is devoid of any assertion that venue in the Southern District of New York is appropriate under the FSIA, nor is the propriety of that venue apparent from the face of the petition. We therefore reverse the District Court's order denying Venezuela's Rule 60(b) motion to vacate, and we vacate the judgment against Venezuela without prejudice to Mobil's filing an action to enforce the ICSID award in a court in which venue is permitted under the FSIA. Because we vacate the judgment, we need not consider whether the District Court properly refused to adjust the interest rate imposed by the ICSID tribunal on the Award.
The District Court's order denying Venezuela's motion to vacate is
"Confirmation" appears to have developed a particular meaning in the context of the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., including those of its provisions that enable the New York Convention (governing judicial treatment of certain foreign arbitral awards), see id. § 201 et seq. In FAA practice, an order "confirming" an arbitral award must be issued upon timely application of any party to the arbitration and upon prior notice served upon the adverse party unless the award is vacated, modified, or corrected as provided for by the Act. Id. §§ 9-11, 207. Judgment entered on the basis of an order confirming the award has "the same force and effect, in all respects, as, and [is] subject to all the provisions of law relating to, a judgment in an action; and it may be enforced as if it had been rendered in an action in the court in which it is entered." Id. § 13. We explained in CBF Indústria that "confirmation," as used in the FAA sections enabling the New York Convention, "is the equivalent of `recognition and enforcement' as used in the New York Convention for the purposes of foreign arbitral awards." 850 F.3d at 72. No separate proceeding is required to "confirm" a foreign arbitral award under the New York Convention; an award-creditor need file only a single action to enforce the foreign New York Convention award under the FAA. Id. at 74.
"Recognition" and "enforcement" thus appear to have taken on the basic meaning (in the foreign arbitral context) of converting the judgment of another jurisdiction into a federal judgment on which execution (attachment, imposition of a lien, garnishment) may occur. See Fed. R. Civ. P. 69(a)(1) ("A money judgment is enforced by a writ of execution, unless the court directs otherwise. The procedure on execution—and in proceedings supplementary to and in aid of judgment or execution—must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies."). We think it significant that, unlike the FAA, the ICSID Convention and Section 1650a do not refer to judicial "confirmation."