Federal Judge Confirms $42 Million Arbitration Award Against Dominican State

by Tara Arick on December 31, 2012 · 0 comments

in Contract Law,martindale.com

- From LexisNexis® Mealey’s™ Daily Legal News.

After finding that no exceptions under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards applied and noting that the Dominican State failed to respond, a District of Columbia federal judge on Dec. 20 confirmed a $ 42,547,577.84 international arbitration award in favor of a company that contracted to complete a highway project (Concesionaria Dominicana De Autopistas Y Carreteras S.A. v. The Dominican State, No. 12-cv-1335, D. D.C.; 2012 U.S. Dist. LEXIS 179734).

Concession Contract

Concesionaria Dominicana de Autopistas y Carreteras, S.A. (CODACSA) filed a petition to confirm an arbitration award that was issued against the Dominican State in the U.S. District Court for the District of Columbia.

CODACSA filed its petition pursuant to the Convention.

CODACSA and the Dominican State entered into a concession contract for the development of several stretches of highway extensions. After the contract was approved and enacted by the Dominican government, CODACSA alleged that the Dominican State breached the agreement by failing to provide a contractually required bank guarantee.

Award

CODACSA filed arbitration proceedings against the Dominican State before the Arbitration Court of the International Chamber of Commerce (ICC). The ICC found that the Dominican State had breached the concession contract and awarded CODACSA $ 33,683,759.67 in damages, fees and interest. The ICC subsequently issued an addendum to the award, establishing revised damage calculations in favor of CODACSA. The tribunal found that CODACSA was entitled to $ 42,547,577.84 in damages.

CODACSA requested that the Dominican State provide assurances that it would pay the award within an applicable 60-day period. The Dominican State acknowledged receipt of CODACSA’s request for assurances but did not respond. The Dominican State did not respond to CODACSA’s petition to confirm filed in the District Court and did not appear in the case. CODACSA moved for a default judgment.

FSIA

Judge Robert L. Wilkins said that he first had to review how the Foreign Sovereign Immunities Act (FSIA) would apply in the case because the Dominican State is a foreign state. Judge Wilkins said the award that CODACSA sought to confirm plainly fell under the Convention. Judge Wilkins said the award arose from CODACSA’s commercial relationship with the Dominican State pursuant to a concession agreement. Judge Wilkins said the FSIA’s arbitration exception gave the District Court jurisdiction over the case.

Since the District Court has jurisdiction under Title 28 U.S. Code Section 1605(a)(6)(B) and CODACSA properly served the Dominican State under Title 28 U.S. Code 1608(a)(3), Judge Wilkins said, the District Court also has personal jurisdiction over the Dominican State.

Petition

Judge Wilkins said the Dominican State did not argue that any of the exceptions to confirmation under the Convention applied to the award. Based on an independent review of CODACSA’s arguments, Judge Wilkins said that none of the grounds for denying confirmation existed.

Judge Wilkins found that CODACSA was entitled to confirmation of the award and a judgment against the Dominican State.

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