Enforcement of an arbitration award issued in London against the Belize government was denied in Belize but granted by a United States court despite legislation in Belize making enforcement illegal. BCB Holdings Ltd. v. Gov't of Belize, 110 F. Supp. 3d 233 (D.D.C. 2015), aff'd, 650 F. App'x 17 (D.C. Cir. 2016), cert. denied, 137 S. Ct. 619 (2017), and enforcement granted, No. CV 14-1123 (CKK), 2017 WL 486911 (D.D.C. Feb. 6, 2017).
Factual Background
To settle a prior dispute, the petitioners BCB Holdings Limited and Belize Bank Limited (collectively, the petitioners) entered into an agreement in which the Government of Belize, (GOB) promised them favorable tax treatment. The petitioners claimed that the GOB breached its agreement when it rejected their tax returns and denied them the tax benefits they had been promised.
On August 18, 2009, the petitioners won an award against the GOB in an arbitration proceeding (which the GOB did not attend) brought before the London Court of International Arbitration. The petitioners sought to enforce the award in Belize, but on July 26, 2013, Belize's highest court ruled that the award was invalid and unenforceable as "repugnant to public policy."
On July 1, 2014, the petitioners filed a petition in the United States District Court in the District of Columbia seeking to confirm the arbitration award. Jurisdiction was obtained under 9 U.S.C. § 201 of the Federal Arbitration Act, which allows for enforcement of the New York Convention in United States Courts. 9 U.S.C. § 201 (West, 2017). Ultimately, the District Court confirmed the award which, with prejudgment interest, was for about $27,430,000.
On January 27, 2017, in response to this arbitration, the GOB enacted legislation that made it a criminal offense to seek to enforce judgments against the GOB if a court in Belize had determined that the judgment was unlawful. Subsequently, the GOB requested that a Belize court grant it an injunction under this legislation to prevent the petitioners from further enforcement efforts. The injunction was granted within a matter of hours without the petitioners receiving adequate notice to attend the judicial proceedings.
District Court's Second Ruling
After learning of the legal steps the GOB had taken in Belize, the petitioners filed a motion in the District Court for an injunction to prevent the GOB from continuing to interfere with the petitioners' efforts to enforce their judgment. At the same time, the petitioners also moved for an order determining that certain statutory requirements were met and that they were entitled to enforce their judgment against any assets of the GOB in the United States. The District Court determined that sufficient notice had been given and enough time had passed so that the requirements of 28 U.S.C. §1610 (c) were satisfied and the judgment could be enforced against the assets of the GOB in any appropriate jurisdiction. The court also ruled that, in light of that determination, the petitioners motion for an injunction was deemed unnecessary and that motion was denied without prejudice. In making its rulings, the District Court noted that, pursuant to 28 U.S.C. §1610 (a)-(b), the property of a foreign state that is located in the United States is not immune from attachment if the judgment that is being enforced confirms an arbitration award rendered against that foreign state. It also noted that under the New York Convention, only the nation in which an arbitration award is made, referred to as the primary jurisdiction, may set aside that award. All other jurisdictions are categorized as secondary jurisdictions. Although secondary jurisdictions may refuse to enforce an award, "their doing so does not prevent other jurisdictions from enforcing it." Here, the award was issued in the United Kingdom, not Belize. Accordingly, the GOB's refusal to enforce the award did not prevent the award from being enforced in the United States or in other jurisdictions that were signatories to the New York Convention.
Practice Point
This case illustrates how the New York Convention can assist parties seeking to enforce an arbitration award arising from an international dispute.