Tethyan Copper Company Pty Limited v. Islamic Republic of Pakistan ( 2022 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
TETHYAN COPPER COMPANY PTY
LIMITED,
Plaintiff,
Case No. 1:19-cv-02424 (TNM)
v.
ISLAMIC REPUBLIC OF PAKISTAN,
Defendant.
MEMORANDUM OPINION
Since 1966, Congress has required federal courts to grant full faith and credit to arbitral
awards from the International Centre for Settlement of Investment Disputes (ICSID). See 22
U.S.C. § 1650a(a). This case involves the intersection of that mandate with the standards for
waiver of sovereign immunity by foreign states.
In 2019, ICSID issued a $6 billion award against the Government of Pakistan. The award
arose out of a long dispute between Pakistan and Tethyan Copper Company, an Australian
mining company. Tethyan had submitted the dispute to ICSID arbitration according to the terms
of a bilateral investment treaty signed in 1998 between Pakistan and Australia. Pakistan argued
that ICSID did not have jurisdiction over the dispute. A tribunal disagreed and issued its award
against Pakistan. Tethyan then petitioned this Court to recognize and enforce the award.
Pakistan essentially appealed the award at ICSID, seeking a wholesale annulment of the
award or a modification of it. Those actions triggered automatic provisional stays of
enforcement, all of which the Court applied to these proceedings. But those stays have all
expired. Now, two years after Tethyan filed its petition—and over a decade after Tethyan
commenced arbitration—Pakistan asks the Court to stay proceedings or, in the alternative, to
dismiss the petition entirely. Because Pakistan has not shown its entitlement to a stay and D.C.
Circuit precedent demands deference to arbitrability determinations by ICSID, the Court will
deny both requests.
I.
This well-tenured dispute began in 2006, when Tethyan entered a joint venture with a
Pakistani province, Balochistan. See Petition ¶ 7, ECF No. 1 (Pet.). Under that agreement,
Tethyan could “explore potential copper and gold mining” in the province. Id. In 2011, Tethyan
applied to Balochistan for a lease to mine the Reko Diq deposit, located in the province’s
northwest. See id. Despite the joint venture, Balochistan denied the application. See id. That
decision triggered events that ultimately landed the dispute here.
Nine months after the application denial, Tethyan referred the dispute to ICSID. See id.
¶ 11. That body was formed by the ICSID Convention, a multilateral agreement signed by 164
nations—including Australia, Pakistan, and the United States—that provides a framework for
arbitrating investment disputes between contracting states and nationals of other contracting
states and for recognition of any resulting awards. See ICSID Convention, pmbl., Pet. Ex. 2,
ECF No. 1-2. Tethyan made the referral under a bilateral investment treaty between Australia
and Pakistan (Treaty). 1 The Treaty provides that when a signatory nation and an investor of the
other nation cannot resolve a dispute among themselves, “either party to the dispute
may . . . refer the dispute to [ICSID].” Treaty, art. 13(2)(b). ICSID convened a Tribunal in 2012
to arbitrate. See Pet. ¶ 12.
The Tribunal took its time. Over four years, it conducted 32 days of hearings. See id.
¶ 13. Finally, in November 2017, the Tribunal issued a Decision on Jurisdiction and Liability.
1
The full text of this treaty is attached to the Petition. See Pet. Ex. 3, ECF No. 1-3.
2
See Rozen Decl., Ex. B at 635–1020, ECF No. 1-1 (J&L). 2 The Tribunal first decided, over
Pakistan’s objections, that it had jurisdiction to hear Tethyan’s claims. See id. ¶ 688. Next, it
held that Tethyan had a legitimate expectation that Balochistan would approve the mining
application and that Tethyan had relied on that expectation. See id. ¶ 958. Balochistan rejected
the application on pretextual grounds so that Balochistan could start its own mining project using
Tethyan’s hard work. See id. ¶ 1264. Pakistan thus, through one of its provincial governments,
had expropriated the value of Tethyan’s investment, thereby violating multiple provisions of the
Treaty. See id. ¶ 1449. Tethyan was entitled to “all damages and losses resulting from”
Pakistan’s breaches. Id.
In July 2019, the Tribunal issued its damages determination. See Rozen Decl., Ex. A at
5–633, ECF No. 1-1 (Award). The Tribunal directed Pakistan to pay $4.087 billion in
compensation, pre-award interest dating from the start of arbitration proceedings, $2.53 million
in arbitration costs, $59.4 million in Tethyan’s legal costs, and post-award interest compounded
annually. See id. ¶ 1858. All told, the Award totals about $6 billion. See Mot. to Stay at 10,
ECF No. 34 (Mot.).
One month later, Tethyan petitioned this Court to enter an order confirming the Award
and to enter judgment in the specified amounts. See Pet. From there, this case devolved into
several contemporaneous stays. In November 2019, Pakistan applied to ICSID to annul the
award. See Conlon Decl., Ex. A, ECF No. 34-3. As required by ICSID rules, that application
triggered a provisional stay of enforcement. See Conlon Decl., Ex. E at 3, ECF No. 34-7. The
Court likewise stayed its own proceedings. See Hr’g Tr. at 6, ECF No. 30.
2
All page citations refer to the pagination generated by the Court’s CM/ECF system. For the
ICSID’s decisional documents, the Court gives the page numbers now for the entire document
but throughout this Opinion will cite to paragraph numbers used in those documents.
3
Seven months later, the Annulment Committee concluded that it would maintain a stay
under certain conditions. The Committee required Pakistan to (1) provide a letter of credit for
25% of the Award and (2) submit a letter from the nation’s Minister of Finance promising that, if
the Committee did not annul the Award, Pakistan would recognize it, pay it within 120 days, and
not interfere in Pakistani courts with any amount recovered by Tethyan. See Joint Status Report
at 2, ECF No. 31. If Pakistan did not comply with these requirements, the Committee would lift
the provisional stay of enforcement against half of the Award. See id. at 2–3. For Tethyan to
execute on that half, however, the Committee required Tethyan to promise that it would place
any collected amounts into an escrow account controlled by an international escrow agent. See
id. at 3.
Pakistan did not comply with the Committee’s conditions, so in October 2020 the
Committee lifted the stay for half of the Award. See Joint Status Report at 2, ECF No. 33. The
Court likewise lifted its own stay. See Min. Order, Nov. 9, 2020.
Pakistan then moved to stay proceedings here until the Annulment Committee finishes its
work. In the alternative, Pakistan moved to dismiss Tethyan’s Petition. See Mot. That motion
became ripe in early 2021. Before the Court could rule, however, Pakistan filed another
application with ICSID, this time to revise the Award. 3 See Joint Status Report at 1, ECF No.
3
One might think that ICSID annulment and revision proceedings are the same. Indeed,
Pakistan’s revision and annulment applications seek the same outcome—a declaration that
Tethyan is not entitled to damages. See Amdt. to Renewed Motion to Stay at 7, ECF No. 46-1
(Renewed Mot.). But the proceedings differ in bases and bodies. A party may request revision
based only on previously unknown facts that are “of such a nature as decisively to affect the
award.” ICSID Convention art. 51(1). In contrast, a party can move to annul an award on
several grounds. See id. art. 52(1). And ICSID appoints a new panel of arbitrators to handle an
annulment application. See id. art. 52(3). Revision applications go instead to the original
tribunal that rendered the award. See id. art. 51(3). These details do not affect the Court’s
analysis, but they help situate the multiple proceedings at issue.
4
41. As before, that application triggered a provisional stay on enforcement of the Award. See id.
At the parties’ request, the Court again stayed its proceedings “while the [ICSID] stay of
enforcement remains in place.” Minute Order, Mar. 25, 2021.
The Centre lifted that provisional stay six months later. See Joint Status Report at 2, ECF
No. 42. Since then, Pakistan has moved for a stay pending revision proceedings. 4 See Renewed
Mot. That later motion is ripe for disposition, as is Pakistan’s earlier motion to stay or to
dismiss. The Court addresses both motions.
II.
After ratifying the ICSID Convention, Congress passed legislation to implement the
Convention’s provisions. Specifically, 22 U.S.C. § 1650a(a) provides that ICSID awards “create
a right arising under a treaty of the United States.” District courts “shall [ ] enforce[ ]” those
awards and give an award “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). Congress also
prohibited courts from using the more robust form of judicial review available under the Federal
Arbitration Act to analyze ICSID awards. See id.
These provisions mandate an “exceptionally limited” role for the Court in enforcing an
ICSID award. TECO Guatemala Holdings, LLC v. Repub. of Guatemala, 414 F. Supp. 3d 94,
101 (D.D.C. 2019). That said, courts do more than rubber stamp. The Court must ensure that it
has subject-matter and personal jurisdiction; that the award is authentic; and that its enforcement
order tracks the award. See id.; see also Mobil Cerro Negro, Ltd. v. Bolivarian Repub. of
Venezuela, 863 F.3d 96, 112 (2d Cir. 2017) (holding that 22 U.S.C. § 1650a does not provide an
4
To be clear, Pakistan has two ongoing ICSID proceedings—annulment and revision. Pakistan
asks the Court for a stay until both proceedings end.
5
independent grant of subject matter jurisdiction over actions to enforce ICSID awards). And to
give “full faith and credit” to an ICSID award as if it were a final judgment in a state, the Court
consults the “established procedures for enforcing state court judgments in federal court.”
TECO, 414 F. Supp. 3d at 101 (cleaned up). The Court’s role thus entails “more than summary
enforcement” of an award. Id. at 102.
The Foreign Sovereign Immunities Act (FSIA) guides the Court’s jurisdictional analysis.
FSIA is the “sole basis for obtaining jurisdiction over a foreign state” in U.S. courts. Argentine
Repub. v. Amerada Hess Shipping Corp., 488 U.S. 428, 434 (1989). Generally, FSIA immunizes
foreign sovereigns from suit in federal courts, but “that grant of immunity is subject to a number
of exceptions.” Mohammadi v. Islamic Repub. of Iran, 782 F.3d 9, 13–14 (D.C. Cir. 2015). The
parties dispute the applicability of two exceptions.
III.
The Court first considers Pakistan’s request for a stay. Admittedly, courts usually must
establish jurisdiction before moving onto any merits issue. See Foster v. Chatman, 578 U.S.
488, 496 (2016). Yet when a court contemplates on non-jurisdictional “threshold grounds” a
delayed hearing of a case’s merits, it may consider those grounds first. Sinochem Int’l Co. v.
Malaysia Int’l Shipping Corp., 549 U.S. 422, 431 (2007) (cleaned up). As many judges in this
district have held, “[t]he stay of a petition to enforce an arbitration award is one such threshold
issue.” Masdar Solar & Wind Cooperatief U.A. v. Kingdom of Spain, 397 F. Supp. 3d 34, 38
(D.D.C. 2019); see also RREEF Infra. (G.P.) Ltd v. Kingdom of Spain, No. 19-cv-3783 (CJN),
2021 WL 1226714, at *2 (D.D.C. Mar. 31, 2021).
Generally, courts have an inherent power to stay proceedings before them. See Landis v.
N. Am. Co., 299 U.S. 248, 254 (1936). Tethyan argues, however, that only ICSID can impose a
6
stay on enforcement of its own awards. Under this argument, Congress’s direction in 22 U.S.C.
§ 1650a that courts “shall” enforce ICSID awards withdraws courts’ discretionary authority to
delay enforcement of a valid award. See Opp’n to Mot. at 45–49, ECF No. 35 (Opp’n). This
argument contradicts most decisions in this district. See Mot. at 15–16 (collecting cases).
Indeed, Tethyan identifies no court that has held that it lacks the power to stay enforcement of an
ICSID award. In any event, the Court need not linger on this point. The Court assumes that it
can stay ICSID proceedings. This assumption does not hurt Tethyan because, as discussed
below, the Court will deny the motion for a stay.
When confronted with a request for a stay, the Court “weigh[s] competing interests and
maintain[s] an even balance between the court’s interest in judicial economy and any possible
hardship to the parties.” Belize Soc. Dev. Ltd. v. Gov’t of Belize, 668 F.3d 724, 732–33 (D.C.
Cir. 2012) (cleaned up). Put simply, the Court considers “the benefits of a stay, the hardship to
[Pakistan] of denying a stay, and any injury to [Tethyan] from issuing a stay.” Hulley Enters.
Ltd. v. Russian Fed., 211 F. Supp. 3d 269, 280 (D.D.C. 2016). 5
Start with the benefits of a stay to judicial economy. Pakistan argues that the
Committee’s eventual decision could impact proceedings here. That is so because, as both
parties admit, Pakistan’s arguments to the Committee are the same arguments it raised here. See
Mot. at 18; Opp’n at 31. Denying a stay would force Pakistan to litigate those issues in two
5
Pakistan argues that the Court should also consider the public interest of a stay, specifically its
allegedly beneficial effect here on U.S. foreign policy towards Pakistan. But Pakistan cites no
binding authority requiring the Court to consider foreign policy and even admits that “public
policy is not an express factor in the balancing test at issue.” Pakistan Reply in Support of Mot.
at 17, ECF No. 37 (Reply). And Pakistan offers no persuasive reason why timely enforcement of
ICSID awards does not also serve foreign policy. See Opp’n at 55. The Court accordingly will
not consider those issues in its stay analysis. In any event, the Court disagrees. See Chevron
Corp. v. Ecuador, 795 F.3d 200, 209 (D.C. Cir. 2015) (“[E]nforcement of the arbitral award is
fully consistent with the public policy of the United States . . . .”).
7
places. And, Pakistan says, a stay now ensures that the Court does not issue a ruling inconsistent
with ICSID’s final annulment decision.
The Court acknowledges that litigating the same issues in two forums often does not
advance judicial economy. Accord RREEF, 2021 WL 1226714, at *3. But Pakistan protests too
much. Briefing before this Court on those issues is now complete—Pakistan thus has already
litigated them in at least one place. The Court need not wait to decide fully briefed issues.
Indeed, judicial economy also favors swift adjudication.
More, the likelihood of annulment by the Committee is low. Based on historical data,
Pakistan predicts its own chances of annulment at less than 30%. See Reply at 12. That minor
chance of annulment—and therefore of inconsistent rulings between this Court and ICSID—does
not warrant further delay on fully briefed and ripe merits issues. Annulment is possible but
unlikely.
So too for Pakistan’s revision proceedings. Pakistan points to no time when ICSID has
granted a revision application. See Reply in Support of Renewed Mot. at 4, ECF No. 49
(Renewed Reply). And although Pakistan cites one judge in this district who stayed proceedings
pending revision at ICSID, the judge did so summarily by minute order. See July 24, 2019
Minute Order, Karkey Karadeniz Uretim A.S. v. Islamic Repub. of Pakistan, No. 18-cv-1461
(D.D.C., voluntarily dismissed Dec. 30, 2019). That decision is therefore of limited persuasive
value.
In sum, a stay would not benefit judicial economy. The parties have fully briefed the
relevant issues, and ICSID likely will not modify the Award. At most, the low chance of
modification means judicial economy is in equipoise between proceeding now or granting a stay.
8
Next, hardship to Pakistan of denying a stay. Pakistan suggests a litany of bad
consequences from proceeding to the merits and enforcing the Award. 6 Enforcement and
collection of assets would, Pakistan says, essentially negate its 2019 $6 billion loan from the
International Monetary Fund, derail its economic stability, diminish its ability to fight
COVID-19, and force it to engage in costly enforcement litigation around the world. See Mot. at
20–21. Pakistan acknowledges that the escrow requirement provides some protection. See
Reply at 15. But, according to Pakistan, $3 billion in escrow means that money is unavailable to
respond to COVID-19. Escrow also does not preclude enforcement actions against Pakistan’s
non-cash assets, nor does it change that Pakistan will engage in global litigation against
enforcement. See id.These arguments misconstrue the posture of this case. If the Court were to proceed to the
merits and enter judgment, that is but a preliminary step. Tethyan can execute that judgment
only once the Court determines that “a reasonable period of time has elapsed” after entry of
judgment. 28 U.S.C. § 1610(c). Tethyan will not immediately begin attachment of Pakistan’s
assets into escrow. True, Tethyan could proceed with an execution action “as quickly as
possible.” Reply at 14. But what qualifies as a reasonable amount of time before execution
“will of course vary according to the nuances of each case.” Ned Chartering and Trading, Inc. v.
Repub. of Pakistan, 130 F. Supp. 2d 64, 67 (D.D.C. 2001). Pakistan offers no reason why it
could not argue those nuances—including the considerations it suggests now—during attachment
and execution proceedings.
6
Pakistan assumes in these arguments that the Court, if it moves to the merits, will deny
Pakistan’s motion to dismiss and will enter judgment to enforce the Award. The Court makes
the same assumption in assessing Pakistan’s arguments.
9
Pakistan’s concerns about global litigation also do not sway the Court. Pakistan assumes
that if this Court proceeds now, other jurisdictions will do the same. They might not. They
might disagree with this Court and grant stays of their own. Or they might otherwise delay
enforcement and attachment. That Pakistan needs to litigate elsewhere is thus not so imposing a
specter that the Court need delay its adjudication of fully briefed and ripe issues.
Finally, consider the hardship to Tethyan from a stay. The obvious harm arises from
Tethyan’s wait of over a decade for compensation. That delay hurts the economic interests of
not only the company but also of its shareholders and employees, who poured money and effort
into Tethyan’s exploration of Balochistan. A stay only prolongs justice denied.
Pakistan’s past conduct also increases the likelihood of Tethyan’s harm from a stay.
Pakistan flouted ICSID’s conditions for a prolonged stay when it failed either to provide a letter
of credit for 25% of the Award or to recognize the Award. The Court thus credits Tethyan’s
worry that Pakistan might use a stay to avoid “preserv[ing]” its U.S. assets “while the annulment
proceedings continue.” Opp’n at 52. Pakistan has provided no guarantee that, if the Court stays
the case and the Committee does not find in Pakistan’s favor, it will abide by that decision. 7 A
stay is cold comfort to Tethyan.
Pakistan retorts that it has “never been non-compliant with an ICSID award.” Reply at
17. Pakistan’s boast proves hollow. Its own examples of alleged compliance differ markedly
from this case. Those arbitrations either settled, were discontinued by the claimant, or ended in a
finding of no liability. See id. at 17, n.6. In none of those instances did Pakistan ultimately pay
7
Pakistan notes that though courts often require movants to post security during a stay, courts in
this circuit do not require security from sovereign states. See Mot. at 19. Fair enough, but that
fact is largely irrelevant. Pakistan can give other assurances of eventual compliance with and
payment of the Award. It has failed to do so.
10
an Award in full. The Court thus cannot predict Pakistan’s compliance with this Award based on
that history.
Pakistan also responds that at least one judge in this district has granted a stay during
ICSID annulment proceedings even when the defendant failed to abide by the Centre’s
conditions for a prolonged stay. See Union Fenosa Gas, S.A. v. Arab Repub. of Egypt, No. 18-
cv-2395 (JEB), 2020 WL 2996085, at *5 (D.D.C. Jun. 4, 2020). But that underlying arbitral
award “garnered a dissent, a relatively rare outcome” in ICSID decisions. Id. at *4. The court
credited that dissent as rendering the likelihood of annulment more than “wishful thinking.” Id.
Here, in contrast, Pakistan involves only wishful thinking that the Committee will annul the
Award, and no member of the original tribunal dissented. More, Union Fenosa is expressly
limited to its facts. The court there based its decision on “several unique circumstances,”
including the dissent, id., and refused to “suggest that a stay is always or even often warranted
whenever a losing party petitions to annul” an award, id. at *5. Given those statements, this
Court also bases its decision on the unique facts of this case.
In sum, those facts are: The parties have fully briefed all issues, making a stay somewhat
detrimental to judicial economy; the preliminary nature of these proceedings means that denying
a stay would not irreparably harm Pakistan; and granting a stay would prejudice Tethyan,
particularly given Pakistan’s refusal to commit to paying the Award. The Court thus will deny
Pakistan’s motion to stay proceedings.
* * *
11
During briefing, the D.C. Circuit decided LLC SPC Stileks v. Republic of Moldova, 985
F.3d 871 (D.C. Cir. 2021). The parties informed the Court of this decision and debate its
applicability here.
The Circuit affirmed denial of a motion to stay enforcement of an arbitral award pending
an application to vacate the award. See id. at 880. The award there arose under a different
arbitral framework—the New York Convention. So the court reviewed several New York
Convention-specific factors from a leading case, Europcar Italia, S.p.A. v. Maiellano Tours, Inc.,
156 F.3d 310, 317–18 (2d Cir. 1998). The D.C. Circuit determined that district courts must,
when considering a stay under the New York Convention, consider “(1) the general objectives of
arbitration—the expeditious resolution of disputes and the avoidance of protracted and expensive
litigation”; and “(2) the status of the foreign proceedings and the estimated time for those
proceedings” to resolve. Stileks, 985 F.3d at 879–80.
Those two factors—though from a different and accordingly nonbinding context—
militate against a stay here. Tethyan filed for arbitration in 2011, over ten years ago. Pakistan
registered its annulment application over two years ago, see Mot. at 11, and its revision
application over one year ago, see Joint Status Report at 1, ECF No. 41. Adding a stay to such a
well-tenured dispute “hardly” promotes its “expeditious resolution.” Stileks, 985 F.3d at 880
(cleaned up). And Pakistan submits no evidence, projection, or prediction about when the
Committee or the Tribunal will finish their annulment and revision work. The Court thus has no
“estimated time for those proceedings”—denying a stay might force Tethyan to “sit on its
award” for much longer, another fact supporting a merits determination now. Id.
12
IV.
The Court next turns to Pakistan’s motion to dismiss Tethyan’s Petition. Pakistan first
argues that it has not waived its sovereign immunity under FSIA and that the Court therefore has
no subject matter jurisdiction. Tethyan responds that multiple FSIA exceptions apply to waive
that immunity. Pakistan argues in the alternative that the Court should not give the Award full
faith and credit. The Court confronts these arguments in turn.
A.
Recall that a foreign sovereign is immune from suit unless a FSIA exception applies. See
Mohammadi, 782 F.3d at 13–14. The arbitration exception is at issue here. That exception
waives sovereign immunity in cases brought “to confirm an award made pursuant to [ ] an
agreement to arbitrate” if the award “is or may be governed by a treaty or other international
agreement in force for the United States calling for the recognition and enforcement of arbitral
awards.” 28 U.S.C. § 1605(a)(6).
In arguing that neither exception applies, Pakistan makes the same argument. According
to Pakistan, it never agreed, under the Treaty’s terms, to arbitrate this case at ICSID. Article
13(2)(b) of the Treaty allows “either party” to refer a dispute to the ICSID for arbitration. But
when an investor of either nation makes that referral, Article 13(3)(a) says that the other nation
“shall consent in writing to the submission of the dispute to the [ICSID] within thirty days” of
receiving the investor’s request to refer. Treaty, art. 13(3)(a). Pakistan asserts that it never
provided such written consent. See Mot. at 29. Thus, it never agreed to arbitrate at ICSID.
The Court need only analyze this argument under the arbitration exception, which
requires “an agreement to arbitrate.” 28 U.S.C. § 1605(a)(6). Under that exception, “the
existence of an arbitration agreement, an arbitration award[,] and a treaty governing the award
13
are all jurisdictional facts that must be established.” Stileks, 985 F.3d at 877. The only question
in dispute now is the existence of an arbitration agreement.
In disputes over the existence of an arbitration agreement, the D.C. Circuit applies a
burden-shifting framework. See Chevron, 795 F.3d at 204. The plaintiff has a prima facie
burden of production to show an arbitration agreement. See id. at 204. A plaintiff carries that
burden by producing “copies of the [underlying treaty], the notice[ ] of arbitration, and the
tribunal’s decision.” Stileks, 985 F.3d at 877 (citing Chevron, 795 F.3d at 204). That production
creates “a presumption” that the treaty and notice of arbitration “constituted an agreement to
arbitrate.” Chevron, 795 F.3d at 205. The foreign sovereign then has a “burden of persuasion”
to rebut that presumption “by a preponderance of the evidence.” Id. at 204.
Tethyan makes a prima facie case by presenting the Award, the Treaty, and its notice of
arbitration. See Treaty; Award; Davis Decl., Ex. A, ECF No 36-1 (Request for Arbitration).
That production entitles Tethyan to a presumption of a valid arbitration agreement. Chevron,
795 F.3d at 205. To rebut that presumption, Pakistan must show “by a preponderance of the
evidence” that those combined documents do not constitute a valid arbitration agreement. Id. at
205. But has Pakistan done so?
Recall that the Tribunal determined that it had jurisdiction over the dispute, see J&L
¶ 648. That determination included a conclusion that Pakistan had given written consent to the
Tribunal’s arbitration. See id. ¶ 646. In essence, the Tribunal made an arbitrability conclusion
that the parties had agreed to arbitrate. See Henry Schein, Inc. v. Archer and White Sales, Inc.,
139 S. Ct. 524, 529 (2019) (defining as a gateway question of arbitrability “whether the parties
have agreed to arbitrate” (cleaned up)). Tethyan argues that this Court must accept the
Tribunal’s arbitrability decision as binding for purposes of this action. See Opp’n at 28–30.
14
Pakistan disagrees, saying the Court should make its own independent determination on the
existence of an agreement. See Reply at 18–20.
The Court takes its cue from Chevron, which held that FSIA did not require a de novo
review of arbitrability. 795 F.3d at 204–05. There, the D.C. Circuit found that the petitioner had
made a prima facie case of an agreement. See id. at 205. The Circuit then affirmed the district
court’s conclusion—though not made in a FSIA jurisdictional analysis—that the prima facie
documents constituted an agreement between the parties. See id. The Circuit thus found
jurisdiction under the FSIA. See id. at 206.
The district court’s reasoning in Chevron—affirmed by the Circuit—confirms this
Court’s jurisdiction under the FSIA. Ecuador argued that “it never consented to arbitrate the
underlying dispute.” Chevron Corp. v. Repub. of Ecuador, 949 F. Supp. 2d 57, 63 (D.D.C.
2013). Like Pakistan here, Ecuador sought an “independent, de novo determination” by the
district court on arbitrability. Id. Judge Boasberg rejected that argument as “counter to the clear
teaching in this circuit on the purpose and role of the FSIA” as a jurisdictional statute speaking
only “to the power of the court rather than to the rights and obligations of the parties.” Id.(cleaned up). Inquiring into the arbitrability of the underlying dispute would examine the
contractual rights of the parties to arbitration “and would thus be beyond the reach of the FSIA’s
cabined jurisdictional inquiry.” Id.The Circuit’s affirmance of that conclusion, see Chevron, 795 F.3d at 205, n.3, means
that under FSIA—rather than under the New York Convention—arbitrability does not affect the
Court’s jurisdiction. Indeed, the Circuit has recently said so. See Stileks, 985 F.3d at 878
(“[T]he arbitrability of a dispute is not a jurisdictional question under the FSIA.”).
15
Pakistan responds that the D.C. Circuit misread Judge Boasberg’s opinion and that this
Court still should analyze de novo the Treaty’s language. See Reply at 20. That request runs
headlong into Stileks. There, Moldova argued that the underlying treaty “did not give the arbitral
tribunal jurisdiction of the dispute” and thus Moldova had not waived its immunity. See Stileks,
985 F.3d at 877. Like Pakistan, Moldova based its argument on the language of the treaty. See
id. at 878. The Circuit found that Moldova’s arbitrability argument was cognizable under the
New York Convention, not under FSIA. See id. (“If Moldova is correct, it might have a defense
under the New York Convention[.]”). That Convention allows for rejecting an award when the
award concerns issues “not contemplated by or not falling within the scope of submission to
arbitration” or that are “beyond the scope of the submission to arbitration.” New York
Convention art. V(1)(c).
The Circuit construed Moldova’s arbitrability argument as arising under the Convention,
even though Moldova used that argument to “bolster its claim of sovereign immunity” under
FSIA. Id. The Circuit rejected that tactic. “[T]he arbitrability of a dispute is not a jurisdictional
question under the FSIA[ ]” and an attempt to argue arbitrability under FSIA “conflates the
jurisdictional standard of the FSIA with the standard for review under” an international arbitral
framework. Id. (quoting Chevron, 795 F.3d at 205–06).
Pakistan’s argument arises under the ICSID Convention, which has no provision like the
New York one allowing non-recognition for awards outside the scope of a submission to
arbitration. Pakistan thus attempts to argue arbitrability only at FSIA’s jurisdictional stage, not
some later merits stage. Stileks forecloses that argument and confirms that Pakistan’s
arbitrability argument cannot defeat the presumption that Pakistan agreed to arbitrate with
Tethyan.
16
And even if the Court misreads that portion of Stileks, the next portion mandates
deference to the Tribunal’s arbitrability decision. The Circuit reviewed de novo whether
Moldova, through its signature on the treaty, had assigned arbitrability determinations to the
tribunal. See id. at 878–79. The Circuit determined that by signing the treaty, Moldova had
agreed to arbitrate before a tribunal with “the power to rule on its own jurisdiction.” Id. at 878
(quoting New York Convention rules). The Circuit looked to Henry Schein, which held that
when an agreement assigns arbitrability decisions to an arbitrator, “a court possesses no power to
decide the arbitrability issue.” 139 S. Ct. at 529. Thus, because Moldova had signed a treaty
granting arbitrability authority to the tribunal, “it [was] up to the tribunal to determine what the
treaty means.” Stileks, 985 F.3d at 879. The Circuit thus needed to “accept the arbitral tribunal’s
determination” that the treaty encompassed the claims against Moldova. Id. The Circuit had “no
authority to delve into the merits of Moldova’s argument” to the contrary. Id.
So too here. To be sure, precedents under the New York Convention do not bind the
interpretation of an award under a different convention. But the two Conventions are
comparable enough on this point. As in the New York Convention, the ICSID Convention
grants a tribunal the authority to be “the judge of its own competence.” ICSID Convention, art.
41(1). Stated simply, the ICSID Tribunal determines its jurisdiction over a dispute. Thus,
ICSID’s jurisdictional power—as agreed to by Pakistan’s signature on the Treaty—renders
binding on this Court the Tribunal’s arbitrability determination. See Stileks, 985 F.3d at 879.
The Court therefore has “no authority to delve into” the merits of Pakistan’s argument. Id. The
Tribunal determined that it had jurisdiction over the dispute. See J&L ¶ 648. The Court cannot
disturb that conclusion.
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In other words, whether or not Pakistan agreed to arbitrate this dispute, it certainly agreed
to be bound by the ICSID Convention, including the provisions granting tribunals the authority
to decide whether a signatory agreed to arbitrate. And the Tribunal found Pakistan agreed to
arbitrate this dispute.
In sum, Pakistan’s arbitrability argument is not cognizable under FSIA. And even if it
were, D.C. Circuit precedent requires the Court to defer to the Tribunal’s arbitrability
determination. According to the Tribunal, Pakistan agreed to arbitrate. Beyond that, Pakistan
does not dispute that the ICSID Convention is an international agreement “in force for the United
States calling for the recognition and enforcement or arbitral awards.” 28 U.S.C. § 1605(a)(6).
Based on the Court’s determination on the agreement to arbitrate, this action is “to confirm an
award” governed by the ICSID Convention and “made pursuant to [ ] an agreement to arbitrate.”
Id. Thus, the FSIA waives Pakistan’s sovereign immunity. The Court therefore has jurisdiction 8
over this action. 9
8
Pakistan concedes that the Court has personal jurisdiction over it based on Tethyan’s
compliance with FSIA’s service provisions. See Reply at 28, n.7; see also In re Sealed Case,
932 F.3d 915, 922 (D.C. Cir. 2019) (“Unlike subject-matter jurisdiction, however, personal
jurisdiction can be waived, meaning a party may consent to a court’s personal jurisdiction.”
(cleaned up)).
9
Because the Court determines that the arbitration exception applies, it need not consider
whether the waiver exception also applies. See Bell Helicopter Textron, Inc. v. Islamic Repub. of
Iran, 734 F.3d 1175, 1182–83 (D.C. Cir. 2013) (noting a foreign state is immune under the FSIA
“unless one of the enumerated exceptions applies”). The Court therefore also need not determine
the preclusive effect of a decision by the High Court in the British Virgin Islands. That court
held that Pakistan’s signature on the ICSID Convention did not impliedly waive the nation’s
sovereign immunity under U.K. law. See Conlon Decl., Ex. B ¶ 51, ECF No. 46-4. By
Pakistan’s own admission, that conclusion—assuming this Court gives it preclusive effect—
would waive Pakistan’s immunity only under the waiver exception. See Renewed Mot. at 13. It
does not affect the Court’s consideration of the arbitration exception.
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B.
Now assured of jurisdiction, the Court decides whether the Award merits full faith and
credit. Recall that the ICSID implementing statute requires courts to give awards “the same full
faith and credit as if the award were a final judgment of” a state court. 22 U.S.C. § 1650a(a).
The Court thus treats the Award “in the same manner as a state court judgment” and consults
“established procedures for enforcing state court judgments in federal court.” TECO, 414 F.
Supp. 3d at 101–02 (cleaned up).
Pakistan first argues that the Tribunal lacked jurisdiction, thus precluding full faith and
credit to the Award. See Mot. at 35–37. Unlike its earlier jurisdictional arguments, Pakistan
argues here that the Treaty’s definition of “investment” does not cover Tethyan’s interest in the
original joint venture. See id. at 36. The Tribunal held otherwise. See J&L ¶¶ 631–642. Under
Pakistan’s theory now, the Tribunal was mistaken and thus never had jurisdiction of the dispute.
See Mot. at 36–37.
Longstanding precedent bars this attempt to recycle a losing jurisdictional argument.
“[A] judgment is entitled to full faith and credit—even as to questions of jurisdiction—when the
second court’s inquiry discloses that those questions have been fully and fairly litigated and
finally decided in” the original court. Durfee v. Duke, 375 U.S. 106, 111 (1963). In its filings
before the Tribunal, Pakistan made the same argument it does now: The definition of “asset”
divested the Tribunal of jurisdiction. See Davis Decl., Ex. B at 132–154, ECF No. 36-2
(Pakistan Counter-Memorandum); Ex. C at 84–110, ECF No. 36-3 (Pakistan Rejoinder). The
Tribunal rejected it. See J&L ¶ 642. Thus, Pakistan’s argument was “fully and fairly litigated
and finally decided” before the Tribunal. Durfee, 375 U.S. at 111. Pakistan cannot use the same
previously litigated jurisdictional argument—even one about subject matter jurisdiction—to
19
deny full faith and credit to the Award. See Ins. Corp. of Ireland, Ltd. v. Compagnie des
Bauxites de Guinee, 456 U.S. 694, 706 n.9 (1982) (“A party that has had an opportunity to
litigate the question of subject-matter jurisdiction may not, however, reopen that question in a
collateral attack upon and adverse judgment.”).
Pakistan next argues that the Court should deny full faith and credit because the
Tribunal’s $6 billion award violates due process. See Mot. at 37–40.
The Court disagrees. Due process constrains awards of only punitive damages, not
compensatory ones. See State Farm Mut. Auto Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003).
Pakistan suggests that the Award is “so large as to be akin to a punitive damages award.” Reply
at 30. Not so. The Tribunal fashioned a figure to quantify “the market value” of Tethyan’s
investment had Pakistan not expropriated that investment. Award ¶ 273. That figure included
the “future profits” of the investment absent expropriation. Id. ¶ 335. Repayment of market
value and future profits “redress[ed] the concrete loss [Tethyan] has suffered” from Pakistan’s
conduct, a hallmark of compensatory damages. Campbell, 538 U.S. at 416 (cleaned up).
Nowhere did the Tribunal say that the $6 billion was “aimed at deterrence or retribution,” the
“broader function” of punitive damages. Id. And Pakistan offers no authority imposing due
process constraints on compensatory damages. Thus, due process does not limit the type of
damages awarded here.
The Court will give the Award full faith and credit as required by 22 U.S.C. § 1650a(a).
V.
For these reasons, the Court will deny Pakistan’s motion to stay or dismiss Tethyan’s
Petition. The Award is final and Pakistan is “obliged to abide by and comply with” it. ICSID
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Convention art. 53(1). The Court likewise must “enforce the pecuniary obligations imposed by”
the Award. Id. art. 54(1); see also 22 U.S.C. § 1650a(a). A separate Order will issue today.
2022.03.10
16:02:05 -05'00'
Dated: March 10, 2022 TREVOR N. McFADDEN, U.S.D.J.
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